INSIGHTS is a monthly publication of BDB LAW to inform, update and provide perspectives to our clients and readers on significant tax-related court decisions and regulatory issuances (includes BIR, SEC, BSP and various government agencies).

DISCLAIMER: The contents of this Insights are summaries of selected issuances from various government agencies, Court decisions and articles written by our experts. They are intended for guidance only and as such should not be regarded as a substitute for professional advice.

Copyright © 2019 by Du-Baladad and Associates (BDB Law). All rights reserved. No part of this issue covered by this copyright may be produced and/or used in any form or by any means – graphic, electronic and mechanical without the written permission of the publisher.

It is not required that the request for additional documents by the taxing authority be made in written form. All subsequent verbal request made by the tax authority are sufficient for the purpose of determining the reckoning point of the 120-day period.

In granting the petition, the Supreme Court (SC) held that there is no requirement in the Tax Code or in RMC No. 49-2003 that the taxing authority's request for additional documents should be made in a specific form. Stated differently, nowhere in the law does it require that the request for additional documents must always and absolutely be made in written form. While written requests would be preferred because it would be easier for the BIR to keep track of the documents submitted by the taxpayer in response thereto, the law does not explicitly prohibit verbal requests for additional documents as long as they are duly made by authorized BIR officials.

Here, the 120-day period should be reckoned from April 29, 2014, the time the taxpayer’s corresponding submission of complete documents in response to the BIR’s verbal requests for additional documents. The BIR had 120 days from such time or until August 27, 2014 to act on the taxpayer’s administrative claim for refund but failed to act within such period. Thus, the taxpayer had thirty (30) days or until September 26, 2014, to file its judicial claim. Since its Petition for Review was filed before the CTA on September 25, 2014, it timely fell within the 30-day period to file a judicial claim. (Zuellig-Pharma Asia Pacific Ltd. Phils. ROHQ v. Commissioner of Internal Revenue, G.R. No. 244154, July 15, 2020)

Note: This case applies only to claims for refund prior to the effectivity of RMC No. 54-2014. Under RMC 54-2014, the taxpayer is now required to submit complete documents upon its filing of an administrative claim for VAT refund/tax credit, as no other documents shall be accepted thereafter.

Both the administrative and judicial claim for refund must be filed within the 2-year prescriptive period from the time of payment of tax.

The taxpayer filed an appeal, by way of Petition for Review, before the CTA Division against the inaction of the BIR on its claim for refund of the alleged erroneously collected Capital Gains Tax (CGT).

In ruling against the taxpayer, the CTA ruled that since both the administrative and judicial claims for refund refer to "erroneously or illegally collected" internal revenue taxes, both claims must be filed within the 2-year period. The 2-year prescriptive period commences to run from the time the refund is ascertained, i.e., the date such tax was paid, and not upon the discovery by the taxpayer of the erroneous or excessive payment of taxes. The period for filing of both administrative and judicial claims for refund is not only mandatory but also jurisdictional.

Here, since the taxpayer paid the CGT on July 5, 2013, it had two (2) years therefrom or until July 5, 2015 within which to file both its administrative and judicial claims for refund. Thus, the filing of taxpayer's administrative and judicial claims for refund on July 3, 2018 and July 6, 2018, respectively, was beyond the 2- year prescriptive period under the 1997 NIRC, as amended. (Euroversal Properties, Inc. v. Commissioner of Internal Revenue, CTA Case No. 9869, August 3, 2020)

Note: In this case, although the seller is the statutory taxpayer of the CGT, the actual cash used to pay the same came from the buyer which withheld it from the purchase price and correspondingly remitted it to the BIR. Thus, with the rescission of the Contract to Sell, it was the seller, that had the obligation to restitute the initial down payment as well as the CGT advanced by the buyer on its behalf. It is the buyer not the seller that can actually raise a howl based on equity and not the seller.

As part of due process in the issuance of tax assessments, the PAN and FLD must show, among others, in detail the facts on which the assessment is based; otherwise said assessment shall be void.

The CTA held that one of the due process requirements in the issuance of tax assessments is that the taxpayer must be informed in writing of the law and of the facts on which the assessment is made. Such requirement must be embodied not only in the PAN, but also in the FLD and FAN. In case the BIR fails or effectively fails to observe, inter alia, the said requirement, it shall have the effect of rendering the subject deficiency tax assessment void, and of no force and effect, since such failure violates the due process rights of the concerned taxpayer.

Here, the BIR totally ignored the request of the taxpayer to be informed of the factual bases of the subject withholding tax assessments. Apparently, the BIR never, at any point, explained or showed how the figures reflected in the said undated PAN, as well as in the FLD and FANs, as the bases for the withholding tax assessments, were determined, thereby violating taxpayer's right to due process. (Morning Star Milling Corporation v. Commissioner of Internal Revenue, CTA Case No. 9294, August 26, 2020)

The taxpayer should not wait for the BIR to come up with a decision after the lapse of the 120-day period it must file a judicial appeal with the CTA within 30 days from the expiration of the 120-day period.

In ruling against the taxpayer, the CTA held that the judicial claim shall be filed within a period of 30 days after the receipt of the BIR's decision or ruling, or after the expiration of the 120-day period, whichever is sooner. In case the BIR fails to act on the taxpayer's administrative claim for tax credit or refund within the 120-day prescribed period, the taxpayer may treat such inaction as a denial of its claim. Thus, the taxpayer should no longer wait for the BIR to come up with a decision before it files an appeal to the CTA. Any claim filed in a period less than or beyond the 120+30 days provided by the 1997 NIRC, as amended, is outside the jurisdiction of the CTA.

Here, the taxpayer filed a judicial claim beyond the 30-day period prescribed under Section 112(C) of the 1997 NIRC, as amended. Thus, the same fell outside the jurisdiction of the CTA. (Lantro Philippines, Inc. v. Commissioner of Internal Revenue, CTA Case No. 9436, August 26, 2020)

Note: Section 112 (c) of the NIRC, as amended by the TRAIN Law, no longer expressly provides the remedy of elevating the unacted claim after the expiration of the 120-day period (now 90 days).

It is only the CIR or his duly authorized representatives who can authorize the audit examination of taxpayers for purposes of assessment of any deficiency taxes.

The CTA held that the only BIR officials authorized to issue and sign Letters of Authority (LOA) are the Regional Directors, the Deputy Commissioners and the Commissioner. Considering that only the said officials are given the power to authorize examination of taxpayers for assessment purposes through the issuance of an LOA, it is only them who can effect any modification or amendment to a previously-issued LOA, should the need therefor arises.

Hence, a Revenue District Officer does not have any power to authorize audit examination of taxpayers or to effect any modification or amendment to a previously-issued LOA. Thus, considering that the revenue officers named in the LOA were different from those who actually examined taxpayer's books of accounts and other accounting records, the assessment issued against taxpayer shall be void.

Absent any prior authority on the part of the revenue officers who conducted the audit examination of taxpayer's books of accounts and other accounting records, the deficiency tax assessment arising therefrom is a nullity. (Scicindustrial Corp. v. Bureau of Internal Revenue, CTA Case No. 9616, August 27, 2020)

Revenue Regulations No. 20-2020, August 17, 2020 - This amends certain provisions of Revenue Regulations (RR) No. 6-2013 in relation to RR No. 6-2008 relative to the imposition of tax for the sale, barter, exchange or other disposition of shares of stock not traded through the local stock exchange.

The rules are as follows:

a. For common shares of stock, the book value based on the latest available financial statements duly certified by an independent public accountant prior to the date of sale, but not earlier than the immediately preceding taxable year, shall be considered as the prima facie fair market value.

b. For preferred shares of stock, the liquidation value, which is equal to the redemption price of the preferred shares as of balance sheet date nearest to the transaction date, including any premium and cumulative preferred dividends in arrears, shall be considered as fair market value.

c. In case there are both common and preferred shares, the book value per common share is computed by deducting the liquidation value of the preferred shares from the total equity of the corporation and dividing the result by the number of outstanding common shares as of balance sheet date nearest to the transaction date.

d. For this purpose, the book value of the common shares of stock or the liquidation value of the preferred shares of stock need not be adjusted to include any appraisal surplus from any property of the corporation not reflected or included in the latest audited financial statements, in order to determine the fair market value of the shares of stock. The latest audited financial statements shall be sufficient in determining the fair market value of the shares of stock subject of the sale, barter, exchange, or other disposition.

Revenue Memorandum Order No. 27-2020, July 21, 2020 - This prescribes the BIR Digital Transformation (DX) Roadmap for 2020-2030, which enumerates the programs, outcomes and corresponding timelines that will help the BIR in carrying out its mission to improve revenue collections to fund the national government programs and initiatives under the 10-Point Socio Economic Agenda.

The BIR DX Roadmap Phases shall be composed of four (4) major programs with corresponding initiatives, as follows:

a. Innovating TP Experience with BIR Service processes – for elevating taxpayer experience and innovating BIR processes;

b. Enhancing Administration and Support Services of BIR – for driving efficiency on BIR internal processes;

c. Aligning policies to a BIR Digital Workplace – for reformulating BIR policies and National Internal Revenue Code to enable DX in BIR;

d. Enabling the Digital Backbone of BIR – for adopting and integrating digital technology in BIR.

Revenue Memorandum Circular No. 79-2020, August 5, 2020 - This provides the guidelines for the filing of various returns and payment of tax due thereon by taxpayers under the jurisdiction of National Capital Region (NCR), Bulacan, Cavite, Laguna and Rizal during the period of Modified Enhanced Community Quarantine (MECQ).

The relevant guidelines are as follows:

a. All concerned taxpayers duly registered under the jurisdiction of Revenue District Office (RDO) Nos. 24 to 34 and 38 to 54B may file their tax returns and pay the internal revenue taxes at the nearest Authorized Agent Banks (AABs), notwithstanding RDO jurisdiction.

b. Said taxpayers may also file and pay the corresponding tax to the concerned Revenue Collection Officers (RCOs) of the nearest RDO, even in areas where there are AABs, provided that payment of internal revenue taxes in cash should not exceed Twenty Thousand Pesos (₱20,000.00) while check payment will have no limitation if the same is made with the RCO in the district office.

c. Provided further, that all checks shall be made payable to Bureau of Internal Revenue (with or without “Name and TIN of the taxpayer” written on the check, as previously required), and that the name and branch of the receiving AAB may no longer be indicated therein.

Revenue Memorandum Circular No. 81-2020, August 5, 2020 - This provides the clarification on Annex 4 – Citizen/Client Satisfaction Survey (CCSS) of the Inter-Agency Task Force (IATF) Memorandum Circular No. 2020-1 by the Secretary of the Department of Budget and Management (DBM).

This clarifies the guidelines and requirements in accomplishing the Agency/Citizen Client Satisfaction Survey (CCSS) Report and Agency Best Practice Report in relation to the grant of the Performance-Based Bonus (PBB) for Fiscal Year (FY) 2020.

Revenue Memorandum Circular No. 83-2020, August 6, 2020 – This addresses the issues and concerns of taxpayers regarding the tax implications of measures being implemented to prevent the spread of COVID-19 on cross-border matters.

The guidelines are as follows:

Income from Employment

The residence State has an exclusive right to tax the employment income derived by its resident taxpayers, except when the employment is exercised in another Contracting State, in which case, the latter State may tax the employment income subject to the provision of relief by the former State.

However, even if employment is exercised in the Philippines, the employment income will not be subject to tax in the Philippines if the following conditions concur:

a. The employee has not been present in the Philippines for more than 183 days (more than 120 days for residents of Poland; at least 90 days for residents of the United States of America) in aggregate in the year of income, fiscal year, calendar year, or any twelvemonth period, depending on the applicable DTA;

b. His/her remuneration is paid to him/her by, or on behalf of, an employer that is not a resident of the Philippines; and

c. His/her remuneration is not deductible against the profits of a permanent establishment which the foreign employer has in the Philippines.

Conversely, the Philippines may tax the employment income of an individual who is a resident of another contracting state only if any of the following three tests is met:

a. The employee is present for more than 183 days (more than 120 days for residents of Poland; at least 90 days for residents of the United States of America) in the Philippines; or
b. The employer is a resident of the Philippines; or
c. A non-resident employer has a permanent establishment in the Philippines which bears the remuneration.

Special Tax Residency Rules

Where an individual is prevented from leaving the Philippines on his or her scheduled day of departure as a result of the travel restrictions imposed by the government, the individual will not be regarded as being present in the Philippines for tax residence purposes for the period after the scheduled day of departure. It is considered as "force majeure" for the purpose of establishing such individual's tax residence, provided that he or she leaves the Philippines as soon as the circumstances would permit, such as when the travel restrictions and/or quarantine measures have been lifted.

Inadvertent Creation of Permanent Establishment (PE)

The effects of COVID-19 will not result in the creation of a PE if the following requirements are met:

a. The non-resident foreign company did not have a permanent establishment in the Philippines before the effects of COVID-19;
b. There are no other changes in the company's circumstances save for the extended stay of its employee, partner or agent in the Philippines because of travel restrictions; and
c. The employee, partner or agent should leave the country as soon as the circumstances would permit.

Revenue Memorandum Circular No. 85-2020, August 27, 2020 - This disseminates RA No. 11321.

This circularizes RA No. 11321, entitled “An Act Instituting the Farmers and Fisherfolk Enterprise Development Program of the Department of Agriculture”.

Revenue Memorandum Circular No. 87-2020, August 27, 2020 - This disseminates RA No. 11335.

This circularizes RA No. 11335 entitled "An Act Converting the Guimaras State College in the Province of Guimaras into a State University to be known as the Guimaras State University, and Appropriating Funds Therefor".

Revenue Memorandum Circular No. 89-2020, August 27, 2020 - This disseminates RA No. 11336.

This circularizes RA No. 11336 entitled "An Act Converting the Carlos Hilado Memorial State College in the City of Talisay, and all its Satellite Campuses located in the City of Bacolod and in the Municipality of Binalbagan, all in the Province of Negros Occidental, into a State University to be known as The Carios Hilado Memorial State University, and Appropriating Funds Therefor".

Revenue Memorandum Circular No. 91-2020, August 27, 2020 - This disseminates RA No. 11328.

This circularizes RA No. 11328, entitled "An Act Separating the Sitios of Guina-ang, Madopdop, Mallango, Lanlana and San Pablo from Barangay Lacnog, City of Tabuk, Province of Kalinga and Constituting Them into a Separate and Independent Barangay to be known as Barangay Lacnog West".

MC NO. 24 S. 2020, August 24, 2020 – This provides for the guidelines on posting of additional securities deposit, substitution of securities deposit and change of resident agent.

The Circular extended the deadline for posting of additional securities deposit and substitution of securities deposit to align the same with the extended deadline of the AFS, subject to the following guidelines:

1. Posting of additional securities deposit for branch offices whose submission of AFS was extended pursuant to MC Nos. 17 and 18, s. 2020 shall be extended until October 29, 2020.
2. Securities deposit that matured during the period of extension pursuant to MC nos. 17 and 18, s. 2020 shall be extended until October 29, 2020.
3. Said extensions shall automatically be applied without need for a request from the affected branch offices.
4. For corporations incorporated prior to February 23, 2019, the adjustment in the computation of additional securities deposit based on the new figures of Sec. 143 of the RCC and compliance with the increase in initial deposit amounting to Five Hundred Thousand Pesos (P500,000.00) will commence on August 1, 2021, unless the foreign corporation opts to comply the minimum amount of Five Hundred Thousand Pesos (P500,000.00) imposed by the RCC.
5. For foreign corporations licensed on February 23, 2019 or onwards, the minimum of Five Hundred Thousand Pesos (P500, 000.00) shall be imposed, as required by Sec. 143 of the RCC. Any additional securities deposit for these corporations shall adopt the adjustment in the computation based on the figures of Sec. 143 of the RCC.

Applications on request for change of resident agent filed and reviewed before March 16, 2020 with issued Payment Assessment Form (PAF), those filed before the quarantine period but issued a PAF during the quarantine period and those filed and reviewed during the quarantine period without issuance of PAF will not incur penalty if payment of appropriate fees are made on or before September 30, 2020. Hence, penalty shall commence to run on October 1, 2020.

MC NO. 22 S. 2020, August 18, 2020 – This provides for the guidelines on corporate term, under Section 11 of the Revised Corporation Code of the Philippines (RCC).

The corporate term of a corporation with certificate of incorporation issued prior to the effectivity of the RCC and which shall continue to exist shall be deemed perpetual upon the effectivity of the RCC, without any action on the part of the corporation. The corporation may, however, amend the Articles of Incorporation to reflect its perpetual corporate term subject to the payment of filing fees and voting requirements required by law and regulations. If the corporation elects to continue with its corporate term as provided in the Articles of Incorporation, it shall file and submit a Notice with attached Director’s Certificate to the SEC within a period of two years from February 23, 2019 otherwise, it shall be treated as perpetual after the lapse of the two-year period.

Corporations that were incorporated prior to the effectivity of the RCC and those incorporated under the RCC may extend or shorten the corporate term or change the specific corporate term to perpetual corporate term or vice versa by amending their Articles of Incorporation subject to the voting requirements provided by law and regulations.

MC NO. 20 S. 2020, August 11, 2020 – This provides for SEC rules on the number of independent directors and sectoral representatives of exchanges and other organized markets.

Independent Directors shall constitute at least 1/3 of the members of the board of directors of exchanges and other organized markets. Said independent director shall have the relevant experience in or working knowledge of the capital or financial markets for at least three years prior to his election.

As regards Sectoral Representatives, there shall be at least four persons representing the interests of issuers, investor, and other market participants, with each sector having at least one representative, in the board of directors of an exchange or other organized market. A person who is elected as director to represent a sector shall have had the relevant experience in or working knowledge of the related sector and the capital or financial markets for at least three years prior to the person’s election. Said person may be elected as director for a maximum period of ten years with a mandatory cooling off period of at least one year after the first five years.

NOTICE, dated 11 August 2020 – Extension of Deadlines and Interim Procedures for the submission of printed/hard copies of annual reports.

A. Annual Financial Statements

B. General Information Sheet

Corporations, which held their annual stockholders’ or members’ meetings during the previously imposed ECQ or MECQ, shall have until 30 September 2020 to submit the printed or hard copies of their GIS to the SEC Main Office and Extension Offices.

Filing may be made to the SEC Main Office, SEC Extension Offices or Email Submissions (Optional) subject to the requirements and qualifications provided by the SEC.

BSP Circular No. 1093 dated August 20, 2020 – This contains amendments to the Manual of Regulations for Banks (MORB) on the real estate limits of universal and commercial banks (UBs/UKs) and thrift banks (TBs).

For UBs and UKs, total real estate loans shall not exceed twenty five percent (25%) of the total loan portfolio net of interbank loans. A Real Estate Stress Test (REST) Limits is a prudential limit set for real estate exposures of UBs/KBs. For this purpose, the stress test will be undertaken on a UBs/KBs Real Estate Exposures (REEs) under an assumed write-off of twenty-five percent (25%). If the UB/KB does not meet either or both the REST limits, it shall incorporate assessment of risks from this exposure in its Internal Capital Adequacy Assessment Process (ICAAP).

For TBS, a prudential limit is set for real estate exposures. For this purpose, a stress test will be undertaken on the TB’s REEs under an assumed write-off of twenty-five percent (25%). If a TB which is a subsidiary of a UB/KB doesn’t meet either or both the REST limits, it shall incorporate assessment of risks from this exposure in the group-wide ICAA of its parent UB/KB. If a TB which is not a subsidiary of a UB/KB does not meet either or both the REST limits, it shall incorporate assessment of risks from this exposure in its capital planning process.

Circular Letter No. CL-2020-040 dated August 8, 2020 – This is addressed to all non-bank financial institutions with quasi-banking functions and/or trust authority for the publication/posting of Statement of Condition and/or Consolidated Statement of Condition.

The Circular Letter calls on the abovementioned institutions to publish their respective Statement of Condition side-by-side with its Consolidated Statements of Condition, if applicable, as of June 30, 2020. Publication should be made in a newspaper of general circulation in the city/province where the principal office of the institution is located. However, if no newspaper is published therein, then in a newspaper published in Metro Manila or in the nearest city/province within twenty (20) working days from the date of the Circular Letter.

The original and a copy of the Statement of Condition and/or Consolidated Statement of Condition shall be scanned and submitted in pdf format within twenty (20) working days from the date of the Circular Letter at This email address is being protected from spambots. You need JavaScript enabled to view it.. Copies of the Statement of Condition and Consolidated Statement of Condition, as published, together with the publisher’s certificate shall also be scanned and submitted to the link mentioned within five (5) working days from the date of publication.

Circular Letter No. CL-2020-038 dated August 8, 2020 – This is addressed to all banks for the publication/posting of their Balance Sheet (BS) and Consolidated Balance Sheet (CBS).

The Circular letter calls on the abovementioned institutions to publish/post their Balance Sheet together with its Consolidated Balance Sheet, if applicable, as of June 30, 2020.

Memorandum No. M-2020-066 dated August 19, 2020 – This is addressed to all BSP-Supervised Financial Institutions (BSFIs) regarding SMS-Based Attacks Targeting Customers of Financial Institutions.

The Memorandum reminds all BSFIs to intensify information security awareness and education campaigns for their employees, clients, and other relevant stakeholders against SMS-based attack such as SMiShing and SMS spoofing. BSFI should revisit multi-factor authentication (MFA) controls implementation to address inherent vulnerabilities and weaknesses arising from SMS-based sending of one-time PINs (OTPs). Also, BSFIs should adopt multi-layer controls such as, but not limited to, calibration of fraud management system rules and parameters and conduct of threat hunting exercises to detect unusual activities and takedown phishing sites.

Memorandum No. M-2020-064 dated August 17, 2020 – This is addressed to all concerned banks regarding the documentary requirements and procedures on the use of bank asset (real property in the name of the bank) as underlying collateral for rediscounting.

DOCUMENTARY REQUIREMENTS:

1. Original Certificate of Title (OCT), Transfer Certificate of Title (TCT), or Condominium Certificate of Title (CCT);
2. Tax Declaration (TC);
3. Real Estate Tax Receipt for the current year and Tax Clearance;
4. For agricultural land measuring over five hectares, clearance from the Department of Agrarian Reform;
5. Current insurance policy and official receipt evidencing payment of insurance premium on improvements, if any;
6. Appraisal Report by an acceptable independent appraiser, dated not later than six months from date of application; and
7. Deed of Real Estate Mortgage (REM) – Bank Asset in favor of the BSP with the following attachments: i.) technical description of the properties mortgaged; and ii.) copy of Board Resolution authorizing the pledge/mortgage of the Bank’s property.

Memorandum No. M-2020-061 dated August 3, 2020 – This is addressed to all BSP-Supervised Financial Institutions (BSFIs) regarding the Supervisory Expectations on the Measurement of Expected Credit Losses (ECL) and the treatment of regulatory relief measures granted amid the novel Coronavirus Disease 2019 (Covid-19) Pandemic.

BSFIs shall be guided by the supervisory expectations on the measurement of ECL under the Philippine Financial Reporting Standards (PFRS) 9 considering the uncertainties brought about by the COVID-19 pandemic. The supervisory expectations provide that BSFIs that will avail of the regulatory relief measures to exclude eligible loans from past due and non-performing classifications and to stagger the booking of allowance for credit losses shall continue to report actual past due and non-performing loans and allowance for credit losses in the Financial Reporting Package (FRP) and the Capital Adequacy Ratio (CAR) Reports. The application of the regulatory relief measures shall be reflected in the supplemental report that will be submitted to the BSP.

Approval of the Commission is required only if the change in the ownership of a company which indirectly owns a domestic insurance and/or reinsurance broker company would affect the ownership structure of the latter. (LO-2020-10, August 27, 2020.).

In a letter dated July 20, 2020, it requested the Commission’s confirmation that no prior approval is required for a change in ownership in a company that indirectly owns an insurance/reinsurance brokerage company in the Philippines.

In Circular Letter No. 2017-09 it requires prior approval of this Commission in case of acquisition of ownership of any domestic insurance broker and reinsurance broker. In reply, the IC opined that the acquisition contemplated under the Circular is one wherein there is a change in ownership over the domestic insurance and/or reinsurance broker. Thus, it is of view that approval from this Commission is required only if the change in the ownership of a company which indirectly owns a domestic insurance and/or reinsurance broker company would affect the ownership structure of the latter. (LO-2020-10, August 27, 2020.)

Inclusion of a Surety Company in the Negative List of the GPPB results in the rejection of the surety bonds it issued. (LO-2020-08, August 19, 2020.).

In a letter dated February 10, 2020, the Department of Public Works and Highways (DPWH) requested the Insurance Commission (IC) to issue a Legal Opinion with regard to the effect of inclusion of a Surety Company in the Negative List of the Government Procurement Policy Board (GPPB).

The IC opined that pursuant to the Guidelines for the Establishment of Negative List of Surety and/or Insurance Companies, the effect of Inclusion in the Negative List posted in the website of the GPPB are the following:

1. It shall result in the rejection of the surety bonds issued by the suspended surety/insurance company submitted as bid, performance or warranty security in the relevant procurement activities of NGAs, GOCCs, GFIs, SUCs and LGUs during the period of inclusion and suspension.
2. The Bids and Awards Committee (BAC) shall ensure that surety bonds issued as bid, performance or warranty security submitted are not issued by surety companies included in the list. Any bidder who submits a surety bond issued by a surety company in the Negative Lost shall be declared ineligible.
3. Considering that surety companies are subject to the jurisdiction and supervision of the IC, the list may serve as basis for the pursuit of complaint/s filed before the IC, if any.

Thus, the procuring entity has the right to reject the security or bond issued by Surety should it be found in the GPPBs Negative List during the time it has been acquiring its services. (LO-2020-08, August 19, 2020)

The insurer of the guilty party may validly require the insured in a motor car insurance policy to submit a Certificate of No Claim secured from the third-party insurer in relation to such claim. Failure to submit the Certificate of No Claim can delay the claims process or if warranted after investigation, deny the claim for third-party property damage. (LO-2020-06, August 7, 2020.).

In a letter received by the Insurance Commission (IC) on February 4, 2020, it requested the IC to issue a Legal Opinion relative to the propriety of the insurer of the guilty party requiring the submission of a Certificate of No Claim from the third-party claimant in the event of a motor insurance claim arising from third-party property damage.

The IC in reply, state that in case of third-party property damage claims, insurers typically require the submission of a Certificate of No Claim to prevent double claims. It is a document that certifies that the third party has not made any claims from their own insurance, thereby preventing them from filing a double claim in the future. The Certificate of No Claim being essential in the assessment of the validity and compensation of the third-party property damage claim, the insurer may thus validly require the insured in a motor car insurance policy to submit a Certificate of No Claim secured from the third-party insurer in relation to such claim. The failure to submit the same can delay the claims process or if warranted after investigation, deny the claim for third-party property damage. (LO-2020-06, August 7, 2020.)

Circular Letter 2020-81, August 3, 2020 – This provides for the guidelines on the operations of regulated entities under the Modified Enhanced Community Quarantine (MECQ) effective August 4 to 18, 2020.

This Circular state that entities regulated by the Insurance Commission (IC) may operate at fifty percent (50%) operational capacity in areas covered by the MECQ, while encouraging work-from-home and other flexible work arrangements, where applicable. Regulated entities seeking to resume or maintain on-site operations shall issue Certificate/s of Employment to those who will form part of their on-site workforce and shall direct their employees to bring company IDs, valid IDs and such other documents or identifications for easy determination of compliance with relevant guidelines. However, regulated entities seeking to maintain a maximum of fifty percent (50%) on-site operations in areas under MECQ shall not be required to secure a certification to that effect from the IC.