Makati RTC declares invalid RMC 65-2012 subjecting condominium corporation to VAT and income tax

A decision issued by the Makati Regional Trial Court (RTC) dated September 5, 2013 declaring Revenue Memorandum Circular (RMC) No. 65-2012, subjecting condominium corporation to VAT and income tax as invalid.  This decision was issued by the RTC with Judge Encarnacion Jaja G. Moya as the Presiding Judge.


The Decision

This decision was a result of the petition filed by First e-Bank Tower Condominium Corporation, as represented by Engr. Victorio M. Amante, versus the Bureau of Internal Revenue, as represented by Commissioner Kim S. Jacinto-Henares and Revenue District Officer Ricardo B. Esperitu.

The excerpts of the decision is shown below. 

Makati RTC Decision


As this resolution is only at the Makati RTC level, there is a possibility that the decision be reversed by the higher courts, Court of Appeals and the Supreme Court.

Impacts to and Reaction of Condo Corps

A number of condominium corporations have already complied with the provisions of the RMC 65-2012.  These condominium corporations already printed “VAT” official receipts and began charging the unit owners with VAT.  They also filed their quarterly income tax returns considering the provisions of RMC No. 65-2012 and some paid regular income tax, and others, minimum corporate income tax.

This decision creates a confusion on the part of the condominium corporations and are now questioning both issuances, “ano ba talaga?”.  Some of them wants to stop issuing VATable receipts in connection with the resolution issued, but some are afraid to stop issuing VATable receipts due to the fear that the decision may still be reversed by the higher court.

The question now is that how long do they have to wait and what will they do while they wait?  Another question they have is, in the event that the decision of the Makati RTC is held, what will happen with the VAT and income taxes already paid?

All we have to do now is wait.  But for some entities that are finalizing their fiscal year end financial statements and income tax returns, they can’t afford to incur penalties so they have to decide whether to take the risk and consider the RMC 65-2012 as invalid, or continue to comply to be safe.

Hopefully we can get more updates regarding these matter the soonest.

You can download the Makati RTC Resolution, Click Here.

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Disclaimer: Opinions expressed in this article are that of the author and information provided are for general conceptual guidance for public information and are not substitute for expert advice. Contact for more information and if you want to avail professional services. Find us on Facebook!

Orlando Calundan is a CPA who has exposures in FS audit of entities in various industries such as real estate, food/restaurants, manufacturing, service organizations and BPOs, automotive, holding/investment companies and more. He also has exposure on internal audit engagements.

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