cta_decision CTA Case No. 99679967 2023-09-11

BENGUET ELECTRIC COOPERATIVE,INC. (BENECO), represented by GERARDO P. VERZOSA, General Manager v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY SPECIAL SECOND DIVISION BENGUET ELECTRIC CTA Case No. 9967 COOPERATIVE, INC. Members: (BENECO), represented by BACORRO-VILLENA, Acting Chairperson, GERARDO P. VERZOSA, and General Manager, CUI-DAVID,ll,_ Petitioner, -versus- THE COMMISSIONER ON INTERNAL REVENUE, Promulgated: Respondent. SEP 1 ] / ; / X------------------------------------- ----------X ~ I~"' f'". DECISION BACORRO-VILLENA, J.: At bar is a Petition for Review� filed by petitioner Benguet Electric Cooperative, Inc. (petitioner/BENECO) pursuant to Section 3(a)2 , Rule 8, in relation to Section 3(a)(1)3, Rule 4, of the Revised Rules of the Court) Filed on 30 October 2018, Division Docket, pp. 10�20. SEC. 3. Who moy appeal; period tofile petition. - (a) A party adversely affected by a decision, ruling or the inaction of the Commissioner of Internal Revenue on disputed assessments or claims for refund of internal revenue taxes, or by a decision or ruling of the Commissioner of Customs, the Secretary of Finance, the Secretary of Trade and Industry, the Secretary of Agriculture, or a Regional Trial Court in the exercise of its original jurisdiction may appeal to the Court by petition for review filed within thirty days after receipt of a copy of such decision or ruling, or expiration of the period fixed by law for the Commissioner of Internal Revenue to act on the disputed assessments. In case of inaction of the Commissioner of Internal Revenue on claims for refund of internal revenue taxes erroneously or illegally collected, the taxpayer must file a petition for review within the two�year period prescribed by law from payment or collection of the taxes. SEC. 3. Cases within the jurisdiction of the Court in Division. - The Court in Division shall exercise: (a) Exclusive original over or appellate jurisdiction to review by appeal the following: ( 1) Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other

CTA Case No. 9967 Inc. (BENECO), as represented by Gerardo P. Verzosa, General Benguet Electric Cooperative, Manager v. The Commissioner of Internal Revenue DECISION Page 2 of20 - -- - --- --- --- --- --- --- --- --- --- --- - -- - -- - -- - -- - -- - -- - -- - --- --- --- x x--- ------ of Tax Appeals4 (RRCTA). It seeks to set aside and annul the Final Decision on Disputed Assessment (FDDA), dated 15 March 2018s, assessing petitioner for deficiency minimum corporate income tax (MCIT) for taxable year (TY) 2015 in the amount ofP12,125,301.16. PARTIES OF THE CASE Petitioner is an electric distribution utility with principal office aaPdnrdedsreidnsesonnat-itpaNlroDof.eit4c,reeBelea(crPatrDnigc)aNycooS.oo2pu6et9rh6atDwivriietvhea,dnuBleyaxgcuoliuorsgiCavnietiyfz.reaIdnt cihsbiyasenviosirnstu-useetdocbokyf the National Electrification Administration (NEA) to operate an electric light and power distribution service for Baguio City and the 13 municipalities of Benguet, i.e., Atok, Bakun, Bokod, Buguias, Kabayan, Kapangan, Kibungan, Itogon, La Trinidad, Mankayan, Sablan, Tuba, and Tublay. 7 RaRpNosefeeasfnvvitecaieesoelnnstnOmuuaiaeeteneslBnIi((IntmtrRBshte,epIeNsRrorpneas)oafoteuilndtownhRdnideieneatrsvnhlretoeOh/nlftCfaauhfitneIienicRdotCe,en)poBrotndrihuwseaeielsle(rdtpNrerhioentIeovngRoed,roChneBre)unaIaoeRotudtfhttRh1Caeo9ooxrof9aermm7distt,,,hymaaDfetseitsiteealoBssrimismuooaedrnarerneneiadcosr,uiietQdnhdoegoue,fferuadznncIIoinndhdsnttaepheerruCorrgntntileehtdaaysdesll,. FACTS OF THE CASE n SeptPeumrsbuearn2t0t1o7,LpeettteitrioonfAerurtehcoeriivtyed(LaOPAre)lNimo.inoaor9y-A20s1s6e-sosomoeonotoN66o, toincy matters arising under the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue[.] 4 A.M. No. 05-11-07-CTA dated 22 November 2005. 6 ECTPOTERRHxRHLREhEEEEPEGiSACERbASCATEiTNAtRRFLI"NIIIOIDZPBOFGRA-IIFO5NCT"TBARGI,AOHJETDENENPIICOiTUD.vTSNP"BisINRLVioPADOOIECnOTEMF, WCIDAPOOTLRCEoTNHAEcRTIAkEOSRSNeLCINtNOPR,A.GAHEpINB6pLNID0LI.EDN3IA2CP8G6ADT.P5AIRCET-NN2VTIENFAE7IREDIVS1TCML.IIFAOTOOSOITPNNERAMIASONO,ELANDTNNAHTCAPPEOAOPDORNRRFMLPODEIEICUAPNILTYRRIEISPICOCATOONTORTSVRSIABENIEJSTFCGER.OIOCCARTTNOGTIH"OEVHEPEAEESSINERRRFEAAOOVCTPREIICCVESEORESTSAARHBPTRTAEOIYOOSRNIAASFTST,LTO,TIINTTTOAAHDHNINSLEE, Paragraph (Par.) I, Petition for Review, supra at note I.

CTA Case No. 9967 Benguet Electric Cooperative, Inc. (BENECO), as represented by Gerardo P. Verzosa, General Manager v. The Commissioner of Internal Revenue DECISION x--------------------------------------------------------------------------x (PAN) with Details of Discrepancies dated 30 August 20178, assessing it with deficiency MCIT forTY 2015 in the amount ofP10.498,195�57 based on Revenue Memorandum Circular (RMC) No. 74-2013.9 The PAN was issued by Officer-in-Charge Regional Director (OIC-RD) Conrado C. Lee (Lee) of the BIR Cordillera Administrative Region (BIR-CAR), Revenue Region No. 2. Subsequently, on 12 October 2017, respondent issued an Amended PAN10 with Details of Discrepancies assessing petitioner with higher deficiency MCIT ofP12,027.468.86. Later, or on o6 November 2017, petitioner received the Formal Letter ofDemand/[Final] Assessment Notice (FLD/FAN) with Details of Discrepancies dated 25 October 201711, demanding payment of deficiency MCIT P12,125,]0l.l6 after interest adjustment. On 05 December 2017, petitioner filed a "Motion for Reconsideration (By Way of Protest to the Final Letter of Demand [FLD]/[Final] Assessment Notice [FAN])"12 and argued that it is exempted from payment of income tax and that respondent's assessment is irregular and unconstitutional. In addition, petitioner claimed that respondent's basis, i.e., RMC No. 74-2013, is invalid because it was issued based on the erroneous assumption that the tax exemptions under Section 3913 of PD 26914 were effectively withdrawn by PD 195515 and Executive Order (EO) No. 93.16 As a response to petitioner's protest, on 15 March 2018, respondent (through OIC-Assistant RD Douglas A. Rufino [OIC-ARD Rufino~ Exhibit "P�l ", Division Docket, pp. 237-238. 9 Circularizing the tax implications of Electric Cooperatives (EC) registered with the National Electrification Administration (NEA) pursuant to BIR Ruling No. 398-2013 dated November 4, 2013. 10 Exhibit "P-2", Division Docket, pp. 239-240. II Exhibit "P-3", id., pp. 241-242. 12 Exhibit "P-4", id., pp. 243-253. 13 SEC. 39. Assistance to Cooperatives; Exemptionfrom Taxes, Imposts, Duties, Fees; Assistancefrom the National Power Corporation. ... 14 Supra at note 6. IS WITHDRAWING. SUBJECT TO CERTAIN CONDITIONS, THE DUTY AND TAX PRIVILEGES GRANTED TO PRIVATE BUSINESS ENTERPRISES AND/OR PERSONS ENGAGED IN ANY ECONOMIC ACTIVITY, AND FOR OTHER PURPOSES. 16 WITHDRAWING ALL TAX AND DUTY INCENTIVES, SUBJECT TO CERTAIN EXCEPTIONS, EXPANDING THE POWERS OF THE FISCAL INCENTIVES REVIEW BOARD AND FOR OTHER PURPOSES.

CTA Case No. 9967 Benguet Electric Cooperative, Inc. (BENECO), as represented by Gerardo P. Verzosa, General Manager v. The Commissioner of Internal Revenue DECISION x--------------------------------------------------------------------------x issued the Final Decision on Disputed Assessmene7 (FDDA) which petitioner received on 27 March 2018. Opting for an administrative remedy, on 25 April 2018, petitioner filed an "Appeal (on the Final Decision on Disputed Assessment of the Regional Director)"18 (Appeal on the FDDA) with the CIR's office. Pending the CIR's action on its appeal, petitioner filed the instant Petition for Review19 before this Court on 30 October 2018. PROCEEDINGS BEFORE THE COURT After several extensions of time were granted20, on o8 February 2019, respondent filed his or her Answer21 and interposed that petitioner is not exempted from payment of taxes because it failed to provide any certification for its alleged exemption. Section 39 of PD 269 also states categorically that electric cooperatives, such as petitioner, enjoy income tax exemptions for a period of 30 years only. Upon the lapse of the said period, the exemption shall cease. In petitioner's case, the 3o-year period ended on 05 October 2003, hence it already lost its privilege. Respondent likewise contended that RMC No. 74-2013 is a valid legal basis since it adopts the Fiscal Incentive Review Board's (FIRB's) I' determination of the taxability of electric cooperatives (as laid down in FIRB Resolution No. 024-8722). Similarly, the FDDA is valid because 17 Exhibit "P-5'', Division Docket, pp. 265-271. 18 Exhibit "P-5A'', id.� pp. 279-287; BIR Records, pp. 683-692. 19 Supra at note I. 20 See Resolution dated 05 December 2018, Division Docket, p. 53; Resolution dated 20 December 2018, id., p. 59; and Order dated 06 February 2019, id., p. 64. 21 !d., pp. 65-72. 22 BE IT RESOLVED, AS IT IS HEREBY RESOLVED, That the tax and duty exemption privileges of electric cooperatives granted under the terms and conditions of Presidential Decree No. 269 (Creating the National Electrification Administration as a corporation, prescribing its powers and activities, appropriating the necessary funds therefor and declaring a national policy objective for the total electrification ofthe Philippines on an area coverage basis; the organization, promotion and development of electric cooperatives to attain the said objective, prescribing terms and conditions for their operations, the repeal of Republic Act No. 6038, and for other purposes), as amended, are restored effective July I, 1987: Provided, however, That, income from their electric service operations and other sources including the interest income from bank deposits and yield or any other monetary benefit from bank deposits and yield or any other similar arrangements shall remain taxable; Provided, further, That the electric cooperatives shall furnish the FIRB on an annual basis or as often as the FIRB may require them to do so, statistical and financial statements of their operations and other information as may be required, for purposes of effective and efficient tax and duty exemption availment.

CTA Case No. 9967 Benguet Electric Cooperative, Inc. (BENECO), as represented by Gerardo P. Verzosa, General Manager v. The Commissioner of Internal Revenue DECISION x--------------------------------------------------------------------------x was issued by the CIR's duly authorized representative through OIC- ARD Rufino. After an unsuccessful mediation23, the case was set for pre-trial conference. Petitioner and respondent filed their Pre-Trial Briefs on 07 October 201924 and 07 February 2o2o2 s, respectively. After the pre-trial conference'6, respondent transmitted to the Court the BIR Records of the case with one (1) folder consisting of 699 pages.27 Subsequently, the Court issued the Pre-Trial Order on 22 June 2020.28 Thereafter, trial ensued.29 On 26 January 2021, pet1t10ner presented as its lone witness, Rowina MC. Damian (Damian) who testified, by way of her Judicial Affidavit3�, stating that: (1) she is the Accounting Associate under the Non-Network Services Department of BENECO; (2) petitioner is exempted from income tax pursuant to Section 39 of PD 269; (3) the 30-year expiration period under the said provision is applicable to other taxes and not to income taxes; (4) as proof of its exemption, a letter reply3' from then ACIR James H. Holdan (Holdan) declares that petitioner is permanently exempted from income tax; (5) this Court ruled in Court of Tax Appeals (CTA) Case No. 937632 that electric cooperatives are permanently exempted from payment of income taxes; (6) as a non-stock, non-profit cooperative, petitioner does not earn profit or gain from its operations, hence there is no income to be taxed; (7) should petitioner be subjected to the payment of income taxes, it must be based on the distribution, supply and metering (DSM) charges only; (8) petitioner should not be liable for income taxes assessed on other charges (referred to as "Pass Through" charges) that are remitte~/ to different government agencies; and, (9) petitioner is liable foJ' 23 Mediator's Report dated 04 July 2019, Division Docket, p. 85. 24 !d., pp. 94-99. !d., pp. 122-124. 26 See Order dated II February 2020, id., pp. 131-132. 17 See Compliance filed on II February 2020, id., pp. 134-136. 28 !d., pp. 155-159. 29 See Order dated 26 January 2021, id., pp. 226-227. 30 Exhibit "P-14", id., pp. I01-112. 31 Exhibit "P-6", id., pp. 288-290. 32 Agusan Del Norte Electric Cooperative, Inc. v. Commissioner ofinternal Revenue, eta/., 05 August 2019. Raffled to Special First Division. Penned by Associate Justice Cielito N. Mindaro-Grulla (Ret.) and concurred by Presiding Justice Roman G. Del Rosario and Associate Justice Erlinda P. Uy (Ret.)

CTA Case No. 9967 Benguet Electric Cooperative, Inc. (BENECO), as represented by Gerardo P. Verzosa, General Manager v. The Commissioner of Internal Revenue DECISION Page 6 of20 X--------------------------------------------------------------------------X deficiency MCIT in the amount of P2,595.414.oo as opposed to the alleged deficiency taxes ofP12,125,J01.16 (reflected in the FDDA). Respondent did not conduct a cross-examination and admitted the due execution and existence of all of petitioner's exhibits as enumerated in the Pre-Trial Order. Moreover, respondent manifested that he or she will no longer present any evidence. Accordingly, the Court ordered the parties to file the necessary pleadings.J3 On 10 February 2021, petitioner filed its "Formal Offer of Evidence with Manifestation"34 (FOE), to which respondent filed his or her "Comment (Re: Formal Offer of Evidence with Manifestation)"3s on 05 March 2021. In the Resolution dated o8 July 202136, the Court admitted all of petitioner's documentary evidence, except Exhibit "P-sA" 37 for failure of its witness to identify it. Later, petitioner filed its Memorandum38 on 17 August 2022. Following respondent's failure to file his or her memorandum within the allowed period39, the Court submitted the case for decision.4� ISSUES As agreed during the pre-trial conference, the tssues for this Court's resolution are as follows4': I. WHETHER PETITIONER BENGUET ELECTRIC COOPERATIVE (BENECO) IS LIABLE FOR DEFICIENCY INCOME TAX; AND, II. I WHETHER RESPONDENT COMMISSIONER OF INTERNAL REVENUE'S (CIR'S) ASSESMENT AND COMPUTATION OF DEFICIENCY INCOME TAX IS CORRECT 33 Supra at note 28. 34 Division Docket, pp. 231-236. 35 ld., pp. 389-391. 36 ld., pp. 402-404. 37 Offered as Appeal to the FDDA. 38 Division Docket, pp. 407-425. 39 See Records Verification dated 0 I September 2022, id., p. 427. 40 See Resolution dated 13 September 2022, id., p. 428. 41 See Pre-Trial Order, supra at note 28.

CTA Case No. 9967 Benguet Electric Cooperative, Inc. (BENECO), as represented by Gerardo P. Verzosa, General Manager v. The Commissioner of Internal Revenue DECISION x--------------------------------------------------------------------------x ARGUMENTS Petitioner argues that a plain reading of Section 39 of PO 269 would conclude that electric cooperatives are exempted from paying income taxes, to wit: SEC. 39� Assistance to Cooperatives; Exemption from Taxes, Imposts, Duties, Fees; Assistance from the National Power Corporation. - Pursuant to the national policy declared in Section 2, the Congress hereby finds and declares that the following assistance to cooperatives is necessary and appropriate: (a) Provided that it operates in conformity with the purposes and provisions of this Decree, a cooperative (�) shall be permanently exempt from paying income taxes, and (2) for a period ending on December 31; of the thirtieth full calendar year after the date of a cooperative's organization or conversion hereunder, or until it shall become completely free of indebtedness incurred by borrowing, whichever event first occurs, shall be exempt from the payment (a) of all National Government, local government and municipal taxes and fees, including franchise, filing, recordation, license or permit fees or taxes and any fees, charges, or costs involved in any court or administrative proceeding in which it may be a party, and (b) of all duties or imposts on foreign goods acquired for its operations, the period of such exemption for a new cooperative formed by consolidation, as provided for in Section 29, to begin from as of the date of the beginning of such period for the constituent consolidating cooperative which was most recently organized or converted under this Decree; Provided, That the Board of Administrators shall, after consultation with the Bureau of Internal Revenue, promulgate rules and regulations for the proper implementation of the tax exemptions provided for in this Decree. According to petitioner, the first statement (granting the income tax exemption) should be read and treated separately from the second statement as the former applies to income taxes; while in the latter statement, the 3o-year prescriptive period relates to other taxes as enumerated above. To bolster its contention, petitioner cites CTA Case No. 93764\ as affirmed in En Bane Case No. 222543, where the Court rule~ 42 Supra at note 32. 43 Commissioner ofInternal Revenue v. Agusan del Norte Electric Cooperative, Inc., 22 March 2022. Penned by Associate Justice Juan ito C. Castaneda, Jr. (Ret.).

CTA Case No. 9967 Benguet Electric Cooperative, Inc. (BENECO), as represented by Gerardo P. Verzosa, General Manager v. The Commissioner of Internal Revenue DECISION x--------------------------------------------------------------------------x that electric cooperatives are exempted from MCIT pursuant to Section 39 of PO 269. Moreover, pet1t10ner claims that RMC No. 74-2013 is not a sufficient legal basis to assess petitioner with income taxes. The case of Davao Oriental Electric Cooperative, Inc. v. The Province of Davao Oriental44 (DORECO) cited in the said RMC pertains to real property taxes and not to income taxes. There is thus no basis for respondent to circularize the import of DORECO vis-a-vis RMC No. 74-2013 since both involve different taxes. Additionally, pet1t10ner explains that PO 1955 and EO No. 93 (which respondent alleges to have effectively withdrawn the tax privileges of electric cooperatives) is directed towards private business entities. According to it, nothing in the said issuances suggest that they also apply to non-stock, non-profit entities, such as petitioner. Thus, contrary to respondent's discussion in the Amended PAN, FLO/FAN, and FOOA, the exemptions granted to electric cooperatives under Section 39 of PO 269 were never revoked nor repealed. Petitioner further refers to Republic Act (RA) No. 1053145 or the National Electrification Administration Reform Act of 2013, to prove that electric cooperatives registered with the NEA are granted additional incentives under the Local Government Code (LGC) of 1991, as amended, apart from the income tax exemption under Section 39 of PO 269. Thus, clear from the import of these laws are the permanent exemption from income taxes and other preferential tax treatment granted to electric cooperatives to assist them in their operations. In addition, petitioner emphasizes that it is a non-stock, non- profit organization that was solely created to operate on a non-profit basis and to provide services for the mutual benefit of its members and patrons. There being no income derived from its operations, there is then nothing to be taxed upon./ 44 G.R. No. 170901,20 January 2009. 45 AN ACT STRENGTHENING THE NATIONAL ELECTRIFICATION ADMINISTRATION, FURTHER AMENDING FOR THE PURPOSE PRESIDENTIAL DECREE NO. 269, AS AMENDED, OTHERWISE KNOWN AS THE "NATIONAL ELECTRIFICATION ADMINISTRATION DECREE".

CTA Case No. 9967 Benguet Electric Cooperative, Inc. (BENECO), as represented by Gerardo P. Verzosa, General Manager v. The Commissioner of Internal Revenue DECISION Page 9 of20 x--------------------------------------------------------------------------x Petitioner also asserts that pursuant to Energy Regulatory Commission (ERC) Resolution No. 20-0946, NEA adopts the Cash Flow methodology in computing the tariff rates that electric cooperatives collect from their consumers such as: (1) debt service - allowable loans obtained from financial institutions; (2) reinvestment fund - allowance used to finance capital expenditure; (3) payroll - updated salaries plus allowable benefits; and, (4) operating and maintenance expenses. It claims that there is no provision for cash collection allotted for any income tax payment. Referring to the conduct of trial, petttwner stresses that respondent did not cross-examine its lone witness nor presented any rebuttal evidence, thus he or she does not contest its income tax exemption. Assuming arguendo that petitioner may be held liable for MCIT, respondent's tax base is deemed flawed because it has been based on the gross revenue. According to petitioner, the Pass Through charges of generation, transmission, universal charges, standard contract costs, and value-added tax (VAT) should have been excluded and the assessment should have been based on the DSM (referred also as "Pass On" charges) only. Petitioner also argues that after collection, the Pass Through charges are remitted to the concerned government agencies and it only retains the Pass On charges. Moreover, petitioner insists that respondent should compute MCIT on gross income after the cost of services are deducted. Contrary to respondent's belief that petitioner is engaged in the sale of goods, it posits that it is a service utility that delivers electricity to end-users; thus, it is engaged in sales of services. Respondent then should also have considered deducting the cost of services to arrive at the proper tax base. RULING OF THE COURT Before going into the merits of the petition, the Court finds it propitious to first determine if We have jurisdiction over the instant case., 46 A RESOLUTION ADOPTING THE RULES FOR SETTING THE ELECTRIC COOPERATIVES' WHEELING RATES.

CTA Case No. 9967 Benguet Electric Cooperative, Inc. (BENECO}, as represented by Gerardo P. Verzosa, General Manager v. The Commissioner of Internal Revenue DECISION x--------------------------------------------------------------------------x THE COURT HAS NO JURISDICTION OVER THE CASE. At the outset, it bears to emphasize that the CTA, being a court of special and limited jurisdiction, can only take cognizance of matters which are clearly within its jurisdiction.47 Section 7(a)(1) of RA 112548, as amended, provides: Sec. 7.]urisdiction.- The CTA shall exercise: (a) Exclusive appellate jurisdiction to review by appeal, as herein provided: (1) Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau of!nternal Revenue[.] 49 It is well-settled that the perfection of an appeal in the manner and within the period pursuant to the relevant provisions of the law is not only mandatory but jurisdictional and non-compliance with the legal requirements is fatal to a party's cause.so On the period to appeal to this Court, if a decision on the protest is denied in whole or in part by the CIR, Section 228 of the NIRC of 1997, as amended, in part, clearly reads as follows: SEC. 228. Protesting of Assessment. - When the Commissioner or his duly authorized representative finds that proper ! taxes should be assessed, he shall first notify the taxpayer of his ~-ndings[.] ... 47 Commissioner of Internal Revenue v. Burmeister and Wain Scandinavian Contractor Mindanao, Inc., G.R. No. 190021, 22 October 2014. 48 AN ACT CREATING THE COURT OF TAX APPEALS. �� Emphasis and underscoring supplied. 50 Team Pacific Corporation v. josephine Daza in her capacity as Municipal Treasurer ofTaguig, G.R. No. 167732, u july 2012.

CTA Case No. 9967 Benguet Electric Cooperative, Inc. (BENECO), as represented by Gerardo P. Verzosa, General Manager v. The Commissioner of Internal Revenue DECISION x--------------------------------------------------------------------------x Within a period to be prescribed by implementing rules and regulations, the taxpayer shall be required to respond to said notice. If the taxpayer fails to respond, the Commissioner or his duly authorized representative shall issue an assessment based on his findings. Such assessment may be protested administratively by filing a request for reconsideration or reinvestigation within thirty (30) days from receipt of the assessment in such form and manner as may be prescribed by implementing rules and regulations. Within sixty (6o) days from filing of the protest, all relevant supporting documents shall have been submitted; otherwise, the assessment shall become final. Ifthe protest is denied in whole or in part, or is not acted upon within one hundred eighty (t8o) days from submission of documents, the taxpayer adversely affected by the decision or inaction may appeal to the Court of Tax Appeals within thirty (30) days from receipt of the said decision, or from the lapse of one hundred eighty (t8o)-day period; otherwise, the decision shall become final, executory and demandable.5' The aforequoted Section 228 is implemented by Revenue Regulations (RR) No. 12-995'. as amended by RR No. 18-201353, issued on 28 November 2013. Relevant portions of Section 3.1.4 ofRR No. 12-99, as amended by RR No. 18-2013, provide the taxpayer's options on disputed assessments, to wit: Sec. 3� Due Process Requirement in the Issuance ofa Deficiency Tax Assessment. - Sec 3.1.4 Disputed Assessment. - The taxpayer or its authorized representative or tax agent may protest administratively against the aforesaid FLD/FAN within thirty (3o) days from date of receipt thereof. The taxpayer protesting an assessment may file a written request for reconsideration or reinvestigation as follows: (i) Request for reconsideration - refers to a plea of re-evaluation ______o_f_a_n_a_s_s_e_ss_m_ent on the basis of existing records without nee1 51 Italics in the original text, emphasis and underscoring supplied. 52 Implementing the Provisions of the National Internal Revenue Code of 1997 Governing the Rules on Assessment of National Internal Revenue Taxes, Civil Penalties and Interest and the Extra- Judicial Settlement ofa Taxpayer's Criminal Violation ofthe Code Through Payment ofa Suggested Compromise Penalty. 53 Amending Certain Sections of Revenue Regulations No. 12-99 Relative to the Due Process Requirement in the Issuance of a Deficiency Tax Assessment.

CTA Case No. 9967 Benguet Electric Cooperative, Inc. (BENECO), as represented by Gerardo P. Verzosa, General Manager v. The Commissioner of Internal Revenue DECISION x--------------------------------------------------------------------------x of additional evidence. It may involve both a question of fact or of law or both. (ii) Requestfor reinvestigation - refers to a plea of re-evaluation of an assessment on the basis of newly discovered or additional evidence that a taxpayer intends to present in the reinvestigation. It may also involve a question of fact or of law or both. For request for reinvestigation, the taxpayer shall submit all relevant supporting documents in support of his protest within sixty (6o) days from date of filing of his letter protest, otherwise, the assessment shall become final. The term "relevant supporting documents" refer to those documents necessary to support the legal and factual bases in disputing a tax assessment as determined by the taxpayer .... If the protest is denied, in whole or in part, by the Commissioner's duly authorized representative, the taxpayer may either: (i) appeal to the Court ofTax Appeals (CTA) within thirty (3o) days from date of receipt of the said decision; or (ii) elevate his protest through request for reconsideration to the Commissioner within thirty C3o) days from date of receipt of the said decision. No request for reinvestigation shall be allowed in administrative appeal and only issues raised in the decision of the Commissioner's duly authorized representative shall be entertained by the Commissioner. If the protest is not acted upon by the Commissioner's duly authorized representative within one hundred eighty (180) days counted from the date of filing of the protest in case of a request reconsideration; or from date of submission by the taxpayer of the required documents within sixty (6o) days from the date of filing of the protest in case of a request for reinvestigation, the taxpayer may either: (i) appeal to the CTA within thirty (3o) days after the expiration of the one hundred eighty (180)-day period; or (ii) await the final decision of the Commissioner's duly authorized representative on the disputed assessment. If the protest or administrative appeal, as the case may be, is denied, in whole or in part, by the Commissioner, the taxpayer may appeal to the CTA within thirty (3o) days from date of receipt of the said decision. Otherwise, the assessment shall become final, executory and demandable. A motion for reconsideration of the Commissioner's CTAI denial ofthe protest or administrative appeal, as the case may be, shall not toll the thirty (3o)-day period to appeal to the

CTA Case No. 9967 Benguet Electric Cooperative, Inc. (BENECO), as represented by Gerardo P. Verzosa, General Manager v. The Commissioner of Internal Revenue DECISION x--------------------------------------------------------------------------x If the protest or administrative appeal is not acted upon by the Commissioner within one hundred eighty (tSo) days counted from the date of filing of the protest, the taxpayer may either: (i) appeal to the CTA within thirty (30) days from after the expiration ofthe one hundred eighty (tSo)-day period; or (ii) await the final decision of the Commissioner on the disputed assessment and appeal such final decision to the CTA within thirty (3o) days after the receipt of a copy of such decision. It must be emphasized, however, that in case of inaction on protested assessment within the 18o-day period, the option of the taxpayer to either: (1) file a petition for review with the CTA within 30 days after the expiration of the 18o-day period; or (2) await the final decision of the Commissioner or his duly authorized representative on the disputed assessment and appeal such final decision to the CTA within 30 days after the receipt ofa copy ofsuch decision, are mutually exclusive and the resort to one bars the application of the other.s4 In applying the foregoing rules, the Supreme Court, in the case of Philippine Amusement and Gaming Corporation v. Bureau of Internal Revenue, et al. 55 (PAGCOR) and, later on, in Commissioner of Internal Revenue v. V. Y. Domingo jewellers, Inc.s6, explained that there are three (3) options by which a taxpayer may appeal the denial of its administrative protest, to wit: Following the verba legis doctrine, the law must be applied exactly as worded since it is clear, plain, and unequivocal. A textual reading of Section 3.1.5 gives a protesting taxpayer like PAGCOR only three options: 1. If the protest is wholly or partially denied by the CIR or his authorized representative, then the taxpayer may appeal to the CTA within 30 days from receipt ofthe whole or partial denial of the protest. 2. If the protest is wholly or partially denied by the CIR's authorized representative, then the taxpayer may appeal to the CIR within 30 days from receipt of the whole or partial denial of the protest"; 54 Italics in the original text, emphasis and underscoring supplied. 55 G.R. No. 208731, 27 January 2016; Citation omitted, italics, emphasis and underscoring in the original text and supplied. 56 G.R. No. 221780, 25 March 2019.

CTA Case No. 9967 Benguet Electric Cooperative, Inc. (BENECO), as represented by Gerardo P. Verzosa, General Manager v. The Commissioner of Internal Revenue DECISION x--------------------------------------------------------------------------x Date Action o6 November 2017s8 05 December 201760 Petitioner received the FLD/FAN dated 25 October 2017, signed by then OIC-RD Lee.s9 15 March 20186' Respondent received petitioner's "Motion for 25 April 201863 Reconsideration (By Way of Protest to the Final Letter of 14]uly 2018 Demand/[Final] Assessment Notice)" dated 04 December 13 August 2018 2017, requesting for reconsideration of the FLD/FAN, filed 30 October 201864 within the 3o-day reglementary period. After 100 days from the receipt of petitioner's protest, respondent issued the FDDA signed by then OIC-ARD Rufino. The same was received by petitioner on 27 March 2018. 62 Petitioner elevated the FDDA to the CIR (through an Appeal on the FDDA) within the 30-day reglementary period. End of the remaining So days of the 18o-day period from the filing of administrative appeal before the ClR. End ofthe 3o-day period to file a judicial appeal before this Court. Petitioner filed a Petition for Review before this Court. In this case, petitioner opted to file an administrative appeal, through an Appeal on the FDDA, before respondent on 25 April 2018. On the belief that it was granted a fresh period of180 days from 25 April 2018, petitioner claimed that the said period lapsed on 22 October 2018. Counting 30 days therefrom, petitioner alleged that the Petition for Review filed on 30 October 2018 was filed within the reglementary period. To be clear, the 18o-day period referred to in Section 228 of the NIRC of 1997, as amended, and in Section 3.1.4 of RR No. 12-99, as amended by RR No. 18-2013, is confined only to the period within which either the CIR or his or her duly authorized representative may act on the initial protest against the FLD/FAN. If the taxpayer opts to appeal to the CIR the final decision of the latter's duly authorized representativy 58 Par. 2, Division Docket, p. II; Exhibit "P-4", id., p. 243. 59 Exhibit "P-3", supra at note II. 60 Exhibit "P-4", supra at note 12. 61 Exhibit "P-5", supra at note 17. 62 Par. 5, Division Docket, p. II. 63 Exhibit"P-5A", supra at note 18. 64 Petition for Review, supra at note I.

CTA Case No. 9967 Benguet Electric Cooperative, Inc. (BENECO), as represented by Gerardo P. Verzosa, General Manager v. The Commissioner of Internal Revenue DECISION x--------------------------------------------------------------------------x the taxpayer's remaining option is to wait for the CIR's decision before elevating its case to the CTA. In other words, when a taxpayer opts to file an administrative appeal, the CIR is not given a fresh or separate 18o-day period within which to decide the administrative appeal. In line with the rules set forth in RR No. 12-99, as amended by RR No. 18-2013, and the ruling in PAGCOR, petitioner could already file its Petition for Review before this Court within 30 days from receipt of the FDDA on 27 March 2018, or until26 April2018 (as the FDDA already served as respondent's denial of its protest). Unfortunately, petitioner opted to file an administrative appeal against the FDDA before respondent. Then, without waiting for any action from respondent, petitioner filed the instant Petition for Review before this Court on 30 October 2018. In a recent case of Nueva Ecija II Electric Cooperative, Inc. Area II (NEECO II Area II) v. Commissioner ofInternal Revenue6s, the Supreme Court declared categorically that there is no new or separate 18o-day period granted to the CIR to act on the administrative appeal, to wit: As correctly ruled by the CTA EB, Section 228 of Republic Act (RA) No. 8424, or the National Internal Revenue Code, as amended (hereafter, Tax Code) unmistakably provides that the one hundred eighty (18o)-day period should be reckoned from the "submission of documents," which in this case was on 19 September 2016. Perforce, the statutory 18o-day period lapsed on 18 March 2017. From such point, petitioner had thirty (3o) days, or until17 April 2017, to elevate the case to the CTA. However, it filed its Petition only on 2 June 2017, which is beyond the reglementary period provided by the law. Notably, Section 3.1.4 of Revenue Regulations (RR) No. 12-99, as amended by RR No. 18-13, which implements Section 228 of the Tax Code, provides for alternative courses of action to the taxpayer upon its receipt ofthe Final Decision on Disputed Assessment issued by the authorized representative of respondent Commissioner on Internal Revenue (respondent), including the option of elevating the protest to the respondent himself through a request for reconsideration. However, nowhere in said provision does it provide that a fresh t8o-day period is granted to the respondent to act on such administrative appeal. As aptly observed by the CTA EB, upholding petitioner's argument would run contrary to the clear language of Section 228 and would unduly expand the period provided by the lawj 65 G.R. No. 25810 I, 19 April 2022 (Resolution); Citations omitted and emphasis supplied.

CTA Case No. 9967 Benguet Electric Cooperative, Inc. (BENECO), as represented by Gerardo P. Verzosa, General Manager v. The Commissioner of Internal Revenue DECISION x--------------------------------------------------------------------------x Necessarily, taxpayers must exercise their rights in the manner and within the periods provided by statute and the pertinent regulations. "It bears to stress that the perfection of an appeal within the statutory period is a jurisdictional requirement and failure to do so renders the questioned decision or decree final and executory and no longer subject to review." The Court En Bane echoed the foregoing declarations in the case of Larry E. Segaya/Les Engineering and Construction v. Commissioner of the Bureau ofInternal Revenue66 where We stated- In determining the timeliness ofan appeal from the inaction of the CIR, a plain reading of Section 228 of the NIRC of 1997, as amended, and Section 3.1.4 of RR No. 12-99, as amended, reveals that there is only one (1) "t8o-day period" of inaction to speak of which shall be counted from the date of filing of the protest (if the protest is a request for reconsideration) or from the submission of the relevant supporting documents (if the protest is a request for reinvestigation) and not from the date when the decision of the CIR's authorized representative was appealed to the CIR. There is nothing in Section 228 ofthe NIRC of1997, as amended and RR No. 12-99, as amended, which provides for a separate 18o-day periodfor the C/R's representative to act on the protest and another 18o- day period for the C/R to decide the appeal on the decision rendered by the CIR's authorized representative for the purpose of computing the 30-day period within which to appeal to the CTA. What is clear is that in case there is inaction on the part of the CIR on an administrative appeal, the options of the taxpayer is to (1) appeal to the CTA within thirty (30) days from the expiration of the 18o-day period (counted from the filing of the protest if the protest is a request for reconsideration or from the submission of supporting documents if the protest is a request for reinvestigation) or (2) await the decision of the CIR (which decision may be issued even after the lapse of the 18o-day period) and then file an appeal with the CTA ~ithin thirty (30) days from receipt of the decisio1 66 CTA EB No. 2526, 13 December 2022; Emphasis and underscoring in the original text and italics supplied.

CTA Case No. 9967 Benguet Electric Cooperative, Inc. (BENECO), as represented by Gerardo P. Verzosa, General Manager v. The Commissioner of Internal Revenue DECISION x--------------------------------------------------------------------------x As can be gleaned from the foregoing pronouncements, there is a singular 1So-day period, i.e., the period counted from the filing of the protest or the submission of the required documents. Accordingly, ifan authorized representative of the CIR denies the protest within the 1So-day period and the taxpayer appeals to the CIR, the CIR has the remainder of the 18o-day period within which to act. And if there is no action, the taxpayer may appeal to this Court within 30 days after the lapse of the said remaining period. It also follows that if the taxpayer waits for the decision ofthe CIR's representative and the same is issued after the lapse of the 18o-day period, the same may be appealed to this Court. In the latter case, the 18o-day period is no longer a consideration and the only remedy for the taxpayer is to wait for the CIR's decision before elevating its case to the CTA, if the same is not favorable. Considering that about 100 days ofthe 1So-day period have already lapsed by the time respondent issued the FDDA on 15 March 201S, respondent CIR only had So days from petitioner's filing of the administrative appeal to act, i.e., until14 July 201S. After the lapse of such period, there is already an inaction on the part of respondent CIR and petitioner should have filed a judicial appeal before this Court within 30 days from the lapse of the remaining So days of the 1So-day period, i.e., from 14 July 2018 to 13 August 2018. However, petitioner only filed a judicial appeal before this Court on 30 October 201S. We are not unaware that the Appeal on the FDDA offered as Exhibit "P-s" was denied admission for failure of petitioner's witness to identify it. Nonetheless, We have observed that an original thereof was included in the BIR records67, thus We deemed it proper to consider the said evidence in the determination of Our jurisdiction. As ruled in Commissioner ofInternal Revenue v. jerry Ocie~8, We have the positive duty as a court of law to consider and give due regard to everything on record that is relevant and competent to Our resolution of the issue presented for adjudication. We cannot turn a blind eye and disregard matters that are relevant for Our disposition simply because they were not formally offered by the parties.7 67 BIR Records, pp. 683-692. 68 G.R. No. 192023, 21 November 2018. 69 !d.

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