KONICA MINOLTA MARKETING SERVICES (PHILIPPINES), INC., v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS Q uezon City StJecial Third Division ~ KONICA MINOLTA MARKETING CTA CASE NO. 10255 SERVICES (PHILIPPINES), INC., Members: P etitioner, - versus- RINGPIS-LIBAN, Chairperson MODESTO-SAN PEDRO, and FERRER-FLORES, ]].. COMMISSIONER OF INTERNAL REVENUE, Respondent. PMroAmRulU.za1ted~ : x--- - ------- ---- ----- --- ---- --- --------------------- -- - ------ -- ~ - ~C'- _ : ~~--ft~ ~ ~ - - x DECISION RINGPIS-LIBAN, J: THE CASE The Petition for Review @ed on February 6, 2020 prays for the cancellation and withdrawal of the assessments iss ued by respondent against petitioner for its alleged deficiency tax liabilities in the total amount of P98,447,592.01.1 THE PARTIES Petitioner is a corporation duly organized and existing under the laws of the Republic o f the Philippines with office address at the zgrh Floor Tower 2, T he E nterprise Center, 6766 Ayala Avenue corner Paseo de Roxas Avenue, Makati City, P hilippiney 1 Summary of the Case, Pre-T rial O rder dated December 10, 2021, Docket - Vol. II, p. 715. 2 Par. 1, Summary of .-\dmitted Facts, .Joint Stipulation r!fFat"fs and Issues OSFI), Docke t - Vol. II, p. 706.

CTA Case No. 10255 DECJS!OI\' On the other hand, respondent is the duly appointed Commissioner of Internal Revenue and is the head of the Bureau of Internal Revenue (BIR) 3 It was formerly registered as E. \'Vork Flow Solutions Inc. as evidenced by the SEC Certificate of Incorporation dated November 28, 2017 4 and BIR Certificate of Registration dated February 22, 20225 THE FACTS Respondent issued the Letter of Authority (LOA) No. eLOA 201200033077 dated October 19, 2016," authorizing Revenue Officer (RO) i\Ielissa Baes and Group Supervisor (GS) Rebecca Pandapatan of Revenue District Office (RDO) No. 047- East 1\lakati, to examine petitioner's books of accounts and other accounting records for all internal revenue taxes for the period from January 1 to December 31, 2015. Pursuant thereto, respondent issued the First Notice for Presentation of Retords dated November 15, 2016, 7 which was received by petitioner on December 12, 20168 Petitioner submitted the requested documents through the letters dated November 18,2016 and November 22,20169 Thereafter, the Se&"ond and Final 1\Joti&"e for Presentation of Re&"ords dated January 9, 2017 was issued by respondent10 Petitioner received the same on i\Iay 15, 2017. 11 On July 11, 2018, petitioner received the Notic-e ofInformal Co!iference dated July 9, 2018, 1 with attached Preliminary S!immary of Tax Dif.ciemieJ� on income " tax, value-added tax (VA'l), expanded '.vithholding tax (EWT), withholding tax on compensation (\VTC), final withholding tax (FW1), and improperly accumulated earnings tax (Ir\ET). In response, petitioner sent the letter dated August 10, 2018, addressed to Mr..\Iahinardo G. i\Iailig, Revenue District Officer, Ms. Melissa Carla R. Baes, RO, and 1\ls. Rebecca P. Pandapatan, GS, all from RDO No. 47, 13 confirming receipt of the Notice ofInformal Co!iferen(e, and submitting therein its objections against the proposed assessment of responden/ ) Par. 2, Summary of ,-\dmitted Facts, JSFI, Docket- \~ol. II, p. '706. "Exhibit "1'2", Docket- \'ol. I, pp. 98 to 1U4. ~.B.: Please see parties' Joint :\Ianifestation on petitioner's exhibits, Docket- \'oL II, p. 748 to 753) 5 Exhibit "P-3", Docket- \�ol. I, pp. 105 to 107. r, Exhibit "R-1 ", BIR Records, p. 3. 7 Exhibit "R-2", BIR Records, p. 240. t\ Exhibit "R-2-b", BIR Records, p. 240. <J Exhibits "P-9" and "P-10", Docket- \~ol. I, pp. 115 to 116 111 Exhibit "R-3", BIR Records, p. 287. II Exhibit "R-3-b", BIR Records, p. 287. 12 Exhibit "R--J." (BIR Records, pp. 3-J.O to 3-1-:2), ,-is-:1-,�is par. 3.1, Summary of .-\dmitted Facts, JSFI (Docker- \'ol. II, p. 706). n Exhibit "P13'', Docket- \"ol. I, pp. 12"1 to 1-W.

CTA Case No. 10255 DECJSJOJ\' On November 16, 2018, respondent issued the Preliminary ASJmment Notice (PAN) Pmt I and II "vith Details of Discrepamies,1� assessing petitioner for deficiency income tax, V/iT, EWT, WTC, FWT, and IAET, in the aggregate amount of 1'97,501 ,658.19, inclusive of surcharge and interest, and compromise penalty off'40,000.00. The PAN was received by the petitioner on November 26, 2018. 15 Petitioner then flied its Reply to the PAN on December 11,2018.16 Thereafter, respondent issued the Fomzal AssesJJ2zent Notice (FAN) Pmt I and II with Details of Distrepamies and AssemJJent 1\!otices, all dated December 14, 2018. 17 However, petitioner denies receipt of the said FAN. 18 Respondent then issued an undated Wam111t of Distraint and/ or LelJ)i (\VDL), which was served to petitioner on January 7, 202019 Subsequently, respondent issued the WatTant of Gamishment (\VG) dated January 23, 2020 against petitioner's account in the Bank of Tokyo- l\fitsubishi."0 Petitioner was notified of such warrant through the letter dated January 24, 2020," 1 signed by l\Is. Liza Ortiz, Managing Director & Deputy Country Head of MUFG Bank. Petitioner flied a Reply to Warrant of Distraint & LelJ)i on January 27, 2020."" JOn February 6, 2020, petitioner filed the present PetitioN for Review [lJYit/; Extremely Uz:gent Omnibzts M.otion 1. To S11spend Collection ofTax; 2. To Lift Wanmzt ofDistraint and/ or LelJ)i; & 3. To Lift Warrant ofGarnisbmmt. "3 1\t the hearing held for the Extremely Uz:gent Omnib11s Motion 1. To Suspend Collettion ofTax; 2. To Lift Wan�ant of Distraint and/ or Lev}; & 3. To Lift Warrant of Gamisbment on February 27, 2020, petitioner presented the testimony o f / II Exhibit "P14" (Docket-� \'ol. I, pp. 1-!1 to 146), and Exhibit "R-6" (BIR Records, pp. 504 to 509), ns-a-,�is par. 3.2, Summary of ~-\dmitted Facts,JSFI, Docket- \TaL II, p. 706. IS Exhibit "R-6-b", BIR Records, p. 508. 16 Exhibit "P-15", Docket- \~ol. I, pp. 1-P to 167. 1:-Exhibits "R-7", "R-~-;1", "R-7-b", "R-7-c", "R-7-d", "R-7-e", "R-7-f', and "R-7-g", BIR Records, pp. 736 to 7'-17. ~~Par. 30, Discussion, Petition for Rcvie\\�, Docket- \'ol. l, p. 1-t. l'J Exhibit "P-16" (Docket- \-ol. I, p. 168), \�is-a-\�is par. 3.3, Summary of _-\dmitted Facts,JSFJ (Docket- \~ol. II, P� 707). 211 Exhibit "P-17'' (Docket- \Tol. I, p. 169), \�is-:1-vis par. 3."1, Summary of ~-\.dmitted Facts,JSFI, Docket- \Tol. II, P� 707. 21 Exhibit "P-18", Docket- Yol. I, p. 170. n Exhibit "P-19", Docket- I, pp. 171 to 177. 2.> Docket - \ �ol. I, pp. 6 to 22.

CTA Case No. 10255 DEC!S!Oi\' Page �I of 21 Marites V. Corona,24 its Head Accountant. In the same hearing, petitioner also presented and orally offered Exhibits "P-1" to "P-19", and there being no objection from respondent's counsel, the said exhibits were admitted by the Court. 25 Petitioner's NlemoranduJ77 was filed on March 3, 2020,26 while Respondent's i\1.emorandum (To the Petitioner's Extreme!J Urgent Omnibus 1\1.otion to S!ispend Colledion of Taxes, to Lift Warrant of Distraint and/ or Lery, and to Lift Warrant of Garnis1JI7Jeiltj was posted on 1\Iarch 3, 2020n In the Resolution dated July 2, 2020,28 the Court denied for lack of merit the petitioner's Extreme!J U1:gwt Omnib11s iVlotion 1. To S11spend Collection ofTax; 2. To Lift Wanmlf ofDistraint and/ or Levy; & 3. To Lift Wa!Tal!t of Garnishment. On June 29, 2020, respondent posted his Answer (lf/itb Spetial and Affirmative Defenm), 29 raising the following arguments, to wit: (1) that the allegations made by petitioner pertaining to the date of receipts of the LOA, First Notice for Presentation of Records dated November 15, 2016, and Second and Final Notice for Presentation ofRecords dated January 9, 2017, are different from the date of receipts reflected on respondent's records; (2) that the assessments made against the petitioner for taxable year 2015 were made and issued in accordance with laws, rules and regulations; (3) that no error or irregularity can be ascribed on its assessment of petitioner's deficiency tax liability for having obse1ved due process in the se1vice of the FAN; (4) that the Court has no jurisdiction over the present case for failure of petitioner to file protest against the F1\N, hence, the assessment became final, executory and demandable; (5) that the deficiency tax assessments made against the petitioner for taxable year 2015 were issued within the prescriptive period of three (3) years as provided in Section 203 of the NIRC, as amended; (6) that since the assessment against petitioner became final, executory and demandable, the same became delinquent account where summaty remedies under Sections 205(a) and 207 of the Tax Code, as amended, can be availed of; and (7) that assessments are prima jmie presumed correct and made in good faith and that the taxpayer has the duty of proving othenvise. The Pre-Trial Conference was initially set on September 2, 202030 On July 9, 2020, the BJR Records for this case were transmitted to the Courtf 2-+ Exhibit "P-65", Docket-\.oL I, pp. 86 to 9.5. 25 .).finutes of the hearing held on, and Order dated, February 27,2020, Docket- \To!. I, pp. 178 to 179. 2(�Docket-\Tol.I,pp.184to 199. 27 Docket- \Tol. I, pp. 233 to 239. ~H Docket- \Tal. r, PP� 2-1-1 to 251. 20 Docket- Vol. I, pp. 252 to 26i. -111 ::\otice of Pre-Trial Conference dated July 10,2020, Docket- \'ol. I, pp. 35+ to 355. -' 1 Complimhe dated July 9, 2020, Docket-- \Tol. I, p. 356.

CTA Case No. 10255 DEC!SIOI\ Subsequently, on August 18, 2020, petitioner filed, via electronic mail, a Motion for Retomideration [fo the Re.rol11tion dated 02 ]11/y 2020],32 praying for the Court to reconsider its Resolution dated 02 July 2020, and grant its Extremely Urgent Omnib11s M.otion 1. To Swpend Collection if Tax; 2. To Lift Warrant rfDzstraint and/or Lery; & 3. To Lift Wammt if Gamis!Jment. Respondent's Pre-Trial Brief was ftled on August 27, 2020' 33 while petitioner's Pre-Tzia! Briefwas submitted on August 28, 20203 "' Considering petitioner's filing of the lv1otion for Remi1Jideration [fo tbe Resolution dated 02 July 2020}, the Court cancelled the pre-trial conference previously set on September 2, 2020, and directed respondent to file its comment to the k1otion. 35 In compliance thereto, respondent posted its Comment/ Opposition (To Petitioner's i.V1otion for Remnsideration) on October 2, 2020.36 In the Resolution dated November 10, 2020, 37 the Court denied petitioner's J\!Iotion for Recomideration (fo the Resolution dated 02 }lfb' 2020], for lack of merit. In the same Resolution, the Pre-Trial Conference was set anew on January 25, 2021. However, the same was reset to l'vJarch 10, 2021 38 1\Ieanwhile, petitioner filed an A;mnded Pre-Trial Briefon March 5, 2021 39 During the hearing held on March 10, 2021,"'" the Pre-Trial Conference was cancelled and the parties were ordered to appear before the Philippine Mediation Center-Court of Tax i\ppeals (PMC-CT1\). However, the parties eventually decided not to have their case mediated by the PMC-CTA41 Thus, in the Resolution dated June 22, 2021 ,"'2 the Court scheduled the Pre-Trial Conference on c-\ugust 9, 2021. However, it was further moved to/3 and proceeded on, October 27, 2021/ 1 ~ Docket- \'ol. I, pp. 359 to 367. �'-'Docket- \'ol. I, pp. 369 to 379. -'~Docket- \'ol. I, pp. 516 to 527. >5 Resolution dated September 1, 2020, Docket- Yol. I, p. 530. '''Docket- \-ol. II, pp. 536 to 542. ' 7 Docket- \Tol. II, pp. 5-16 to 551. '~ ~ot.ice of Resetting dated Janu<uy 20, 2021, Docket- \'ol. II, p. S56. 10 Docket- \'ol. II, pp. 578 to 594. !II l\r.inutes of the hearing held on, and Order dated, :.\larch 10, 2021, Docket- \�ol. II, pp. 648 to 649 . .tl .\"! o .-\greement to :\Ied.iate t.bted June 1�~. 2021, Docket- \' ol. II, p. 6!3. 12 Docket- Yol. II, p. 673. ~' .!'..;or.ice of Resetting dated September 29, 2021 and October 13, 2021, Docket- \�ol. II, p. 676 and 678, respecti\'ely . .t.t Order dated October 27, 2021, Docket-�\.ol. II, p. 696.

CTA Case No. 10255 DECISJOJ\! On November 16, 2021, the parties subrnitted their Joint Stipulation of Fads and Iss!les,45 which was approved and adopted by the Court in its Pre-Trial Order dated December 10, 2021,46 thereby deerning the termination of the pre- trial. As trial ensued, the parties presented their respective testimonial and documentary evidence. Petitioner agam offered the testimony of its Head Accountant, Ms. Marites V. Corona.47 On April 25, 2022, the Court received the Fotmal Offer of Evidettre for Petitiotter Konica Afitto!ta ivlarketing S en1ites (Phi!ippineJ), I11t. 48 On May 16, 2022, respondent filed his Commwt a11d Opposition (To Petitioner's Formal Offer ofEz1Ldwre dated April 25, 2022). 49 In the Resolution dated July 20, 2022, 50 the Court admitted petitioner's offered exhibits. The case was transferred from the Second Division to the Third Division pursuant to CTA Administrative Circular No. 01-2022 dated June 21, 2022, which reorganized the Second and Third Division of this Court. 51 During the presentation of respondent's evidence, respondent presented Revenue Officer (RO) Melissa Carla R. Baes as his witness 52 On November 23, 2022, respondent filed his Fomtal Offer ofEvide11te,53 to which petitioner filed its Comment/ OppoJitiott to Respondent's Fomta! Offer of Evidence on December 2, 2022-'4 In the Resolution dated February 2, 2023,5'' the Court admitted all of respondent's exhibits. The Nlemora11d11m for Petitiomr Konica j\Jinolta lllarketing S ervi,~s (Phi!ippineJ), Inc. was submitted on March 10, 2023,56 while respondent's Aiemorandt!nt was posted on i\Iarch 17, 2023./ "Docket- \'ol. II, pp. 7()6 to 713. ~r, Docket- \'ol. II, pp. ?15 to 722. 47 Exhibits "P-65" and "P-66", Docket \�ol. T, pp. 8(J to 95, and -l-15 to 423, respecti\�ely; Exhibits "P-67" and "P-68", Docket- \'ol. II, pp. 596 ro 606, and 759 to 76i, rcspccti,�ely; i\Iinntes of the hearing held on, and Order dated, ~-\pril 6, 2022, Docket-\'ol. II, pp. 891 to 892. " Docket - \'ol. II, pp. 897 to 912. '"Docket- \'ol. II, pp. 1008 to 101!. "'Docket- \'ol. II, pp. 1017 to 1018. "Order dated june 29,2022, Docket- \'ol. II, p. 1014. 51 Exhibit "R-9.", Docket- \'ol. I, pp. 306 to 318; 01inntes of the hearing held on, and Order dated, ?\oYember 8, 2022, Docket- \'ol. II, pp. 1023 to 1025. 5-' Docket- \-ol. II, pp. 1036 to 10,15. s-1 Docket- \'ol. II, PP� 1050 to 1053. iS Docket - \'ol. II, pp. 1060 to I 061. ;r, Docket- \'ol. II, pp. 1066 to 1098. "Docket- \'ol. II, pp. 1103 to 1112.

CfA Case No. 10255 DECJS!OJ\' In the Resolution dated April 11, 2023, the present case was deemed submitted for decision58 THE STIPULATED ISSUES The 1ssues stipulated by the parties for this Court's resolution arc the following: "1. \Vhether or not the deficiency tax assessments, \Varrant of Distraint and/or Levy, and Warrant of Garnishment issued by Respondent against Petitioner for taxable year 2015 are void and/or invalid due to Respondent's failure to duly setve Petitioner with Formal Assessment Notice or Final Letter of Demand in violation of Petitioner's constitutional right to due process. 2. \1(/hether or not Respondent's right to assess Petitioner for deficiency taxes for taxable year 2015 has already prescribed. 3. Whether or not Petitioner is liable for deficiency Income tax, value-added tax (VAT), withholding tax on compensation (WTC), fmal withholding tax (FWT), improperly accumulated earnings tax (L\ET), and compromise penalties for taxable year 2015 in the aggregate amount of Php98,447,592.01, inclusive of interest and increments. 4. \Vhether or not the issuance of the subject Warrant of Distraint and/ or Levy and Warrant of Garnishment by Respondent against Petitioner for taxable year 2015 is void and/or invalid. 5. \Vhether this Honorable Court has jurisdiction over this case. " 59 Petitioner's arguments: Petitioner argues that the Court has jurisdiction over the case; that the assessments, the FAN dated 14 December 2018 and AHessment Notim for deficiency mcome tax, V},T, WTC, FWT, IAET, and compromise penalty/miscellaneous charges, undated WDL and WG should be declared null and void due to respondent's failure to duly setve petitioner with a copy of the FAN /FLD in violation of petitioner's constitutional right to due process; that respondent's right to assess petitioner for the alleged deficiency income tax/ SH i-,linute Resolution dated .-\pril 11, 2023, Docket- \-ol. II, p. 1115. S'.! Stiplllation of Issucs,JSFI, Docket�- \To!. II, p. 707.

CTA Ca>e No. 10255 DECIS!OJ\' VAT, WTC, and EWT, for taxable year 2015, has already prescribed; that the FAN dated 14 December 2018 was issued in violation of petitioner's right to due process, since it merely reiterated the findings previously stated in the P"\N without providing any reason for rejecting the arguments raised by petitioner in its PAN Protest; that the FAN dated 14 December 2018 failed to indicate the definite amount of tax liability; that the WG should be declared void and/ or invalid and accordingly, cancelled and set aside due to respondent's failure to senre petitioner with a copy of the \.VG; and that the deficiency EWT of P3,311 ,034. 66 mentioned in the WDL and \.'(!G is not based on any Assessmwt Notice and should be declared null and void and accordingly, stricken off the WDLandWG. Respondent's counter-arguments: Respondent contends that the instant petition was filed out of time as the assessment against petitioner have already become final, executory and demandable which may no longer be disputed; that petitioner failed to file a protest against the assessment, by filing a request for reconsideration or reinvestigation within thirty (30) days from receipt of the FA'\! provided in Section 228 of the 1997 Tax Code, as amended; that the assessment has not prescribed, since the FAN was issued on December 14, 2018 which is within the period of three (3) or ten (1 0) years, whichever is applicable, from the filing of the annual return for taxable year 2015 or April 2016; and that the assessment became delinquent so that summary remedies to enforce the collection thereof can be enforced pursuant to Sections 205(a) and 207 of the Tax Code, as amended. THE COURT'S RULING The present Petitio11 for RevieJJJ is meritorious. This Court has jurisdiction over the present case. Respondent is of the view that this Court has no jurisdiction to entertain the present Petition for Ret;iezv since the subject assessment has already become final, executory and demandable. The Court disagrees. Sections 7(a)(1) and 11 of Republic Act (H.i\) No. 1125611, as amended by Ri\ No. 928261 , state as follows/ (,, .\N .\CT CRE.\TI'iG TJ-!E COCRT OFT\:-; .-\PPE.\LS.

CT}, Case No. 10255 DE.CJS!Oi\' "SEC. 7. }misdiction. -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 Internal Revenue;" (Empbmes added) "SEC. 11. Wbo Ma)l Appeal,� Niode ofAppeal,� Efftct ofAppeal. - Any party adversely affected by a decision, ruling or inaction of the Commissioner of Internal Revenue ... may file an appeal with the CTA within thirty (30) days after the receipt of such decision or ruling or after the expiration of the period fixed by law for action as referred to in Section 7(a)(2) herein." (Empbczses added) The Supreme Court, in CommisJioner of Internal Revenue vs. Hambrel"bt & QuiJt Pbi!ippines, Im:,61 interpreted the above-quoted provisions in this wise, to wit: "Anent the first issue, petitioner argues that the CT1\ had no jurisdiction over the case since the CTA itself had mled that the assessment had become final and unappealable. Citing Protector'J ServiceJ, Im: VJ. Comt of Appea!J,63 the CIR argued that, after the lapse of the 30-day period to protest, respondent may no longer dispute the correctness of the assessment and its appeal to the CT1\ should be dismissed. The CIR took issue with the Cl'A's pronouncement that it had jurisdiction to decide 'other matters' related to the tax assessment such as the issue on the right to collect the same since the CIR maintains that when the law says that the CTA has jurisdiction over 'other matters,' it presupposes that the tax assessment has not become final and unappealable. \'Ve cannot countenance the CIR's assertion with regard to this point. The jurisdiction of the CL\ is governed by Section 7 of Republic Act J\o. 1125, as amended, and the term 'other~ 1�1 .\:\ .\CT EXP.\1\iDhG THE JURISDIC:TI00 OF THE COURT OF T.-IX .WPE.\LS (CT.\), ELE\'.\TI'-:C ITS R.\NI-;: TO THE LE\'EL OF .\ COLLEGI.\TE COURT WITH SPECI.\L )CRISDICTIO:\ .IND ENL.\RGI:\G ITS 7\!E'\!BERSHIP, .\:I!ENDING FOR THE PURPOSE .CERT.IIN SECTIONS OF REPCBLIC .\CT NO. 1125, .\S .\:IIENDED, OTHERWISE E..t'-iOWN .IS THE Ll \V CRE.ITI'iG THE COURT OF LIX .IPPL.\LS. .-IND FOR OTHER PURPOSES. ''' G.R No. 169225, Nm�ember 17,2010. r.; 386 Phil. 661 (2000).

CTA Case No. 10255 DECJS!OJ'! matters' referred to by the CIR in its argument can be found in number (1) of the aforementioned provision, to wit: XXX XXX XXX Plainly, the assailed CTA En Ban( Decision, was correct in declaring that there was nothing in the foregoing provision upon which petitioner's theory with regard to the parameters of the term 'other matters' can be supported or even deduced. \'\!hat is rather clearly apparent, however, is that the term 'other matters' is limited only by the qualifying phrase that follows it. Thus, on the strength of such observation, we have previously ruled that the appellate jurisdiction of the CTA is not limited to cases which involve decisions of the CIR on matters relating to assessments or refunds. The second part of the provision covers other cases that arise out of the National Internal Revenue Code (NIRC) or related laws administered by the Bureau of Internal Revenue (BIR). XXX XXX XXX Furthermore, the phraseology of Section 7, number (1), denotes an intent to view the CTA's jurisdiction over disputed assessments and over 'other matters' arising under the NIRC or other laws administered by the BIR as separate and independent of each other. This runs counter to petitioner's theory that the latter is qualified by the status of the former, z~e., an 'other matter' must not by a final and unappealable tax assessment or, alternatively, must be a disputed assessment. Likewise, the first paragraph of Section 11 of Republic Act No. 1125, as amended by Republic Act No. 9282, belies petitioner's assertion as the provision is explicit that, for as long as a party is adversely affected by any decision, ruling or inaction of petitioner, said party may file an appeal with the CTA within 30 days from receipt of such decision or ruling. The wording of the provision docs not take into account the CIR's restrictive interpretation as it clearly provides that the mere existence of an adverse decision, ruling or inaction along with the timely filing of an appeal operates to validate the exercise of jurisdiction by the CTA." (Emphases and 1111ders({)ring added) Based on the afore-quoted prov1s1ons and jurisprudential pronouncements, the appellate jurisdiction of this Court is not limited to cases which involve decisions of respondent on matters relating to assessments or refunds. The second part of the provision covers other cases that arise out of the National Internal Revenue Code (NIRC) or related laws administered by #'

CTA Case No. 10255 DECISION the BIR.64 In addition, any party adversely affected by the said decisions or ruling, may file an appeal to this Court within thirty (30) days from receipt thereof. In the present case, apart from the subject tax assessments, pet!tloner assails the validit)' of the undated \XIDL and the WG dated January 23, 2020 issued by respondent. It should be noted that the \'<IDL constitute an act of respondent on "other matters" arising under the NIRC, which, pursuant to Commissioner of Intemai Revenue vs. A1aniia A1edimi Servio~s, Im: (J'VIaniia Dodon Hospita/),65 may be the subject of an appropriate appeal before this Court.66 Correspondingly, the reckoning of the 30-day reglementary period under Section 11 of R.A, No. 1125, as amended by RA No. 9282, is based on petitioner's receipt of the WDL on January 7, 2020.67 Therefore, the Petition for Review was timely ftled on February 6, 2020, 68 and this Court can take cognizance of this case. \'<lhile respondent claims that the assailed assessment has attained finality due to petitioner's failure to file an administrative protest to the FAN, it should be pointed out that petitioner denies having ever received any FAN. Thus, if the taxpayer denies having received an assessment from the BIR, it then becomes incumbent upon the latter to prove by competent evidence that such notice was indeed received by the addressee. 69 However, respondent offered no proof of such service, as will be discussed below. Such being the case, the failure of respondent to prove receipt of the assessment by petitioner would necessarily lead to the conclusion that no assessment was issued7 " Thus, the subject tax assessments could not have attained finality so as to deprive tllis Court of jurisdiction to entertain the present appeal. Respondent failed to prove thatpetitionerreceived the FAN and Assessments Notices Section 228 of the NIRC of 1997 mandates the following, vi::;:;: "SEC. 228. Protesting of Assessment. When the Commissioner or his duly authorized representative find~ r,-t CoiJJNii.I�Jioner~/]ntemal &!lel/llf' ,.,~�. J-lt.i!!Jrec/11 C-:-o_QifiJt Philippine.>, Im:, G.R. :::\"o. 16922.5, -::\'o\-embcr 17,2010. r.'i G.R ::\'o. :2:)5-J-73, Februm-~- 13, 2023. r.r, Refer to Com;;;/y_~�ioner q( Internal ReJ!fH!te .~-. A1'011 Prodnd.l" ,\Janl((adNring, In(._. e/ .req., G.R ::-Jos. 201398-99 and 201�118-19, October 3, 2018. r;; Exhibit "P-16", Docket ~ '\'ol. l, p. 168. M, Docket~ \Tol. I, pp. 6 to 22. m Commi.l:�iomrq/In!ema/ RetJeJ?IIe !Jl. C,Pl Pbilippi11e.l�.1lamlbdllril!g, /!1(., G.R. ~o. 202695, February 29,2016. 711 Cw;mJiYxioner q/ln/t'nwl R�1m!lle ''-'� Bank q/tbe Philippiw Ldand, G.R. No. 22-1327, Junc 11, 2018.

CTA Case No. 10255 DEC!S!Oi\' that proper taxes should be assessed, he shall first notify the taxpayer of his findings: xxx XXX XXX XXX The taxpayers shall be informed in writing of the law and the facts on which the assessment is made; otherwise, the assessment shall be void. 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. XXX XXX xxx." (Empbases added) Based on the said provisions, part of the due process requirements in the issuance of tax assessments is that the concerned taxpayer be informed in writing of the law and the facts upon which the assessment was made, and that the same taxpayer be given the opportunity to respond and contest the said assesstnent. The above law is implemented under Section 3.1.3 of Revenue Regulations (RR) No. 12-99, 71 as amended by RR No. 18-2013, 72 which requires that a FI\.N should be issued to a taxpayer: "SECTION 3. Due Process Requirement m the Issuance ofa Deficiency Tax Assessment. - 3.1 J\Iode of procedure in the issuance of a deficiency tax assessment: XXX XXX XXX 3.1.3 Fomzal Letter of Demand and Final AssesJJJteilf 1\fotice (.FLD/FAj\J). - The Formal Letter of Demand and Final Assessment Notice (FLD/FAN) shall be issued by the Commissioner or his duly authorized representative. The FLD/E\N calling for payment of the taxpayer's deficiency tax or taxes shall state the facts, the law, rules and regulations, or / 71 SCBJECT: Implementing the Provisions of the :t'iational Internal Re\'Cnue Code of 1997 Governing the 71 SUBJECT: Rules on ~-\ssessmcnt of National Internal Revenue Taxes, Ci\'il Penalties and Interest and rhe Extra-Judicial Settlement of a Taxpayer's Criminal \'iolarjon of the Code Through Papnent of a Suggested Compromise Penalty Amending Certain Sections of Re\'enue Regularions ::\"o. 12-99 Relative to the Due Process Requirement in the Issuance of a Deficiency Tax _-\ssessment

CTA Case No. 10255 DEC!SIW\1 jurisprudence on which the assessment IS based; otherwise, the assessment shall be void." According to respondent, the FAN was sent to petitioner through registered mail which is a valid mode of service. Relative thereto, Section 3.1.6 of the same RR reads, in part, as follows: 3.1.6 Modes of Service. The notice (PAN/FLD/FAN/FDDA) to the taxpayer herein required may be served by the Commissioner or his duly authorized representative through the following modes: XXX XXX XXX (iii) Service by mail is done by sending a copy of the notice by registered mail to the registered or known address of the party with instruction to the Postmaster to return the mail to the sender after ten (10) days, if undelivered. A copy of the notice may also be sent through reputable professional couner service. If no registry or reputable professional courier service is available in the locality of the addressee, service may be done by ordinary mail. The server shall accomplish the bottom portion of the notice. He shall also make a written report under oath before a Notary Public or any person authorized to administer oath under Section 14 of the NIRC, as amended, setting forth the manner, place and date of service, the name of the person/barangay official/ professional courier service company who received the same and such other relevant information. The registry receipt issued by the post office or the official receipt issued by the professional courier company containing sufficiently identifiable details of the transaction shall constitute sufficient proof of mailing and shall be attached to the case docket. XXX XXX xxx." (Empha.re.r .rupp!ied) /

CTA Case No. 10253 DECISION As a corollary, in CommiJJiomr of Internal Re!Jemte VJ. Gfl'vi Phi!ippineJ� l'viamifactming, Im~,73 the Supreme Court ruled as follows: "If the taxpayer denies having received an assessment from the BIR, it then becomes incumbent upon the latter to prove by competent evidence that such notice was indeed received by the addressee. Here, the Olll/Jprobandi has shifted to the BIR to show by contrary evidence that Gj.l\1 indeed received the assessment in the due course of mail. It has been settled that while a mailed letter is deemed received by the addressee in the course of mail, this is merely a disputable presumption subject to controversion, the direct denial of which shifts the burden to the sender to prove that the mailed letter was, m fact, received by the addressee. To prove the fact of mailing, it is essential to present the registry receipt issued by the Bureau of Posts or the Registry return card which would have been signed by the taxpayer or its authorized representative. And if said documents could not be located, the CIR should have, at the very least, submitted to the Court a certification issued by the Bureau of Posts and any other pertinent document executed with its intervention. The Court does not put much credence to the self-serving documentations made by the BIR personnel, especially if they are unsupported by substantial evidence establishing the fact of mailing. While it is true that an assessment is made when the notice is sent within the prescribed period, the release, mailing, or sending of the same must still be clearly and satisfactorily proved. Mere notations made without the taxpayer's intervention, notice of control, and without adequate supporting evidence cannot suffice. Otherwise, the defenseless taxpayer would be unreasonably placed at the mercy of the revenue offices." (EmphasiJ and zmdemming added) Based on the foregoing, it is clear that while a mailed letter is deemed received by the addressee in the course of the mail, this is merely a disputable presumption subject to rebuttal. Consequently, the direct denial thereof shifts the burden to the sender to prove that the said letter was adtlaf!y received by the addressee. In addition, to prove the fact of mailing, respondent must present the Registry Receipt issued by the Bureau of Posts or the Registry Return card which would have been signed by the taxpayer or its authorized representative. In the absence of the said documents, a Certification issued by the said Bure/ '�' G.R. ::,_;o. 202695, February 29, 2016.

CTA Case No. 10255 DEC!S!OJ\' Pagc15of21 of Posts, and any other pertinent document executed with Its intervention, must be presented to establish the fact of mailing. In this case, petitioner directly denies receipt of the FAN, hence, the burden of proving the m!Hai receipt of the same lies with respondent. To prove that the F},N with the assessment notices were served to petitioner, through registered mail, respondent offered the following exhibits,74 to wit: Exhibit No. DescriJ:ltion I Purpose "R-7"75 FA.N with De/m/r o/DiJmpamie.r dated : To pron the legal and factual basis of "R-7-a"76 December 14, 2018 tax assesstnent for all internal revenue "R-7-b"77 " R - 7 - c " 78 taxes covenng taxable year 2015 of "R-7-d"79 "R-7-e"80 Petitioner " R - 7 - f ' 81 "R-7-g,s2 Name and signature of then Regional To prove due execution of the FAN "R-8"83 Director of Revenue Region No. 8 \Vith Delclil.r of Di.rt'l-epa;z{'ieJ dated "R-8-a"8+ :\lakati, Glen A. Geraldina Dece1nber 14, 2018 and the authenticity of the signature of Regional Director Glen /L Geraldina AJJe.umen/ ]\lotice dated Decen1ber 14, To prove the demand of payment of 2018 co,~enng deftciency Income deficiency Income Tax of Petitioner Tax off'46,120,289.59 for taxable year 2015. /lJJe.LwJelll j\'otice dated Decen1ber 14, To prove the demand of payment of 2018 co,~cnng YI\T of deficiency YAT of petitioner for .1"45,455,993.84 f-t=axable y. ear 2015 . - A.>e~�e.r.rtttml J\'otice dated December 14, To prm�c the demand of pa)lnent of 2018 cm�cring \\;'TC ofP198,963.76 deficiency WTC of Petitioner for --------� taxable y_eat 2015. /1J:re.umel!! .I\'otire dated Dccen1ber 14, To pro,-c the dernand of payment of 2018 covcnng deficiency FWT of deficiency FWT of Petitioner for P3,311 ,034.66 taxable year 2015. A..~:re.umen/ Notice dated December 14, To pron the demand of payment of 2018 coYenng deficiency BET of deficiency IAET of Petitioner for 1"3,321,310.16 taxable year 2015. A.~:rcJ.>IJICI!!]\}otia: dated Decetnber 14, To prove the demand of payme!11 of 2018 co,-enng deficiency deftciency Compromise Penalty of Compromise Penal!\' of 1"40,000.00 Petitioner for taxable year 2015. Print-out Copy of Integrated Tax To prove the propriety and basis of System (ITS) of the BIR servmg notices to the registered address of Petitioner as reflected 111 the ITS of the B!R. Registered address of Petitioner pet To pto\'C the registered address of 1�1 Respondent's f'Om;a/ OjJ'er ofEw'den~."e. Docket- \-ol. II, pp. 1O..J.l to 10-D. 75 BIR Records, pp. 736 to 7~1. ~r, BIR Records, p. 740. n BIR Records, p. i-1-7. "BIR Records, p. 746. 79 BIR Records, p. 745. l\IJ BIR Records, p. 7-t4. l\J BlR Records, p. 7-1-3. K? BIR Records, p. 7-1-2. ll> I3IR Records, p. 832. H4 Ibid.

CTA Case No. 10255 DECJSJ01\' ,-------,-,c-:ccc----~---c=�-------~ Petitioner as reflected in the ITS of the BIR. ITS of the B!R Relative to the foregoing documents, RO lVIelissa Carla R. Baes testified in her Judicial .r\ffidavit, 85 as follows: "47. Q: For the record, at what address did the F"-\N was mailed~ A: The FAN was mailed to Petitioner's registered address located at 28'" Floor, Tower 2, The Enterprise Center, 6766 Ayala .A,�enue Cor. Pasco de Roxas, San Lorenzo, i\lakati City. 48. Q: What is the proof of mailing the F:\N to the Petitioner~ A: The Registry Receipt of the F1\N is attached to the record of the docket of the case. 49. Q: For the record, what is the registered address of the E Work Flow Solutions) A �\s per the Integrated Tax System (ITS) of the BIR, E Work Flow Solutions, Inc.'s registered address is at 28'" Floor, Tower 2, The Enterprise Center, 6766 Ayala A,�enue Cor. Pasco de Roxas, San Lorenzo, :\lakati City. The said address is also the present registered address of Petitioner. 50. Q: You mentioned of the Integrated Tax System of the BIR, if shown to you a copy thereof will you be able to identify the same? A.: Yes. This is the print-out I got from the Integrated Tax System (ITS) of the BIR, marked as Exhibit 'R-8'. It stated that Petitioner and E \'{fork Flow Solutions, Inc. ha\�e the satne registered address at 28'" Floor, Tower 2, The Enterprise Center, 6766 Ayala Avenue Cor. Paseo de Roxas, San Lorenzo, Makati City sub marked as Exhibit 'R-S~a'." Unfortunately, respondent's documcntaq and tcstitnonial evidence hardly suffice to prove that said notices were indeed served and received by petitioner or any of its authori7-ed representative. It is well to point out that respondent's witness made mention of registry receipt as proof of the fact of mailing the FAN but the same was never adduced as evidence by respondent. Ivioreover, it was not found in the records of the case. In Allied Banking Cmporation vs. Eduardo De Guzman, Sr.,86 which was later cited in CommisJioner of Intemal Revenue vs. So11th Etifettainment Gallery, Im:, 87 the Supreme Court considered the original regis try receipts, properly identified and authenticated, as the best evidence to prove the fact of receipt: / 115 Exhibit "R-9", Docket, p. 315. "'' G.R. i\io. 225199,Jrliy 9, 2018. "G.R. :c-;o. 225809, ~larch 17, 21121.

CTA Case No. 10255 DEC!S!Oi\ Page17of21 "Similarly in l\Iangaha, v. C-\, the Court has given importance to the presentation of the original registry receipt to prove the fact mailing, even ruling that the same have constituted the best evidence thereof. In the instant case, the Court finds that De Guzman sufficiently established the presence of the foregoing requisites necessary to give rise to the presumption that the mail matter he sent by registered mail was received in the regular course of mail. First, it is undisputed that his letter of revocation was properly addressed to PNB. Sec-ond, in order to prove the fact of mailing, De Guzman presented original copy of the September 4, 1991 letter of revocation, its corresponding registry receipt, as well as a Certification from the Postmaster of Muntinlupa City that the letter was posted in the post office for mailing. Undeniably, said registry receipt constitutes the piece of evidence required by the pronouncements above. The presumption, therefore, arises that the De Guzman's letter of revocation was received by PNB in the regular course of mail. (Ert;phasis added) The foregoing pronouncement is also in consonance with the guidelines on service by mail as laid down in the above-quoted Section 3.1.6 of RR No. 12-99, as amended by RR No. 18-13, which identified registry receipts as sufficient proof of mailing. Furthermore, the registry return card which would bear petitioner's signature or that of his authorized representative was likewise not offered as evidence. This was confirmed by respondent's witness, Ms. Carla Baes, on clarificatory questions posed by the Court:88 "JUSTICE LIBAN I hm�c just one question regarding the Formal Assessment Notice or FAN, this is in question no. 48, you said it was tnailed. \X!as there a return card, there is a registry receipt but is there a return card, because I did not find any in the records. XfTY. )AVIER Your Honors, if I may, I think the return card is in the BIR records. JUSTICE LIBAN I atn asking because there is a registry receipt, no\v I \vant to know if there is a return card because the registry receipt is different from a return card. Registry receipt is a proof that it was tnailed, registry return card is proof that it was recci,"ed, the 111ailing tnatter was receiYed. Actually, this is in your fm~or, the question is in your fayor. MS.MES/ xx Transcript of Stenographic ~otes (fS~) dated Nm�c:mber 8, 2022, pp. 5 to 6.

CTA Case No. 10255 DEC!SJOJ\' A Your Honor, the one that I saw in the docket during the time that I executed the judicial affidavit was a registry receipt. JUSTICE LIB:\N So, there is no return card? I cannot find any in the BIR record." Thus, the glaring fact remains that nowhere can it be seen from respondent's evidence that there was actual service and receipt of the subject FAN since the registry receipt or the return card were not presented. Neither did respondent offer any other form of evidence (z:e., at the very least, certification from the Bureau of Posts or other pertinent document executed with its intervention) to prove that the FAN was served to, or received by, petitioner. On this score alone, there is clear indication of respondent's violation of petitioner's right to due process. In view of respondent's failure to prove that the F"\N was properly and duly served upon or received by petitioner, the assessments made against petitioner for deficiency income tax, \TI\T, EWT, WTC, FWT, and IAET, for taxable year 2015, are void, for failure to accord petitioner due process in the Issuance thereof. Accordingly, there being no final and valid assessment to begin with, petitioner cannot be considered a delinquent taxpayer. The FAN and Assessment Notices issued to petitioner are void. To reiterate, Section 228 of the NIRC of 117, as amended, requires d1at a taxpayer be informed of the assessment against it. If this requirement is not met, the assessment is void. Any given taxpayer with an assessment issued against it must be afforded the opportunity to present its case and protest said assessment. Otherwise, the tax assessments are null and void, pursuant to the ruling of the Supreme Court in Com!71iJSZoner ofllltema! Revenue vs. Avon Products Afamtfacturing, Inc., etseq.,89 to wit: "Tax assessments issued in violation of the due process rights of a taxpayer are null and void. While the government has an interest in the swift collection of taxes, the Bureau of Internal Revenue and is officers and agents cannot ~ 1\'.! G.R. ::.\'os. 201398-99 and 20H18-19, October 3, 2018.

CTA Case No. 10255 DECISION overreaching in their efforts, but must perform their duties in accordance with law, with their own rules of procedure, and always with regard to the basic tenets of due process. The 1997 National Internal Revenue Code, also known as the Tax Code, and revenue regulations allow a taxpayer to file a reply or otherwise submit comments or arguments with supporting documents at each stage in the assessment process. Due process requires the Bureau of Internal Revenue to consider defenses and evidence submitted by the taxpayer and to render a decision based on these submissions. Failure to adhere to these requirements constitutes a denial of due process and taints the administrative proceedings with invalidity." (Empbases and underscoring added) As discussed, there was improper service of the subject FAN to petitioner, and thus, the same is not binding on the latter. Consequently, in view of the violation of petitioner's right to due process pursuant to the above- quoted Section 228 of the NIRC of 1997, as amended, and RR No. 12-99, as amended by RR No. 18-13, the F"-\N with Details of Discrepancies and Assmmmt Notices, all elated December 14, 2018, are considered void. The subject deficiency tax assessments issued against petitioner bear no valid fruit. 9" Consequently, respondent's undated WDL and WG dated January 23, 2020 cannot be validly enforced against petitioner. In fine, it is an elementary rule enshrined in the 1987 Constitution that no person shall be deprived of property without due process of law. In balancing the scales between the power of the State to tax and its inherent right to prosecute perceived transgressors of the law on one side, and the constitutional rights of a citizen on the other, the scales must tilt in favor of the individual, for a citizen's right is amply protected by the Bill of Rights under the ConstitutionY' Finding the subject tax assessments invalid, it becomes unnecessary to address the other issues and matters raised by the parties. WHEREFORE, in light of the foregoing considerations, the instant Petition for Review is GRANTED. For being void, the FAN with Details of Discrepamies and Assess/17eflt Notices, all dated December 14, 2018, assessing petitioner for deficiency income tax, VAT, EWT, WTC, FWT, IAET, and compromise penalty, for taxable year 2015, in the aggregate amount of '1"98,447,592.01, inclusive of surcharge and legal interest, as well as the undated ~ '!II Refer to Collllllioxiollt:rufln!enw/ RetJi!l!!te PJ. Uqlf<ga:::_Philipj>il!e.~" C01poratioll. etJ�eq., G.R. l\ios. 215534 and 215557, -'pril18. 2016. 91 CommiJ:~t'oner q/lnlernal Re!Ji!II!fe r.1�. BAJF Coaling+ Ink.! Phil>.. Inc:, G.R. :::\o. 198677, :::\io,�ember 26, 2014, citing Com;m~uioner ~/lntemal Rer�ef/111} /!.1: J1clro Star Supl}rama, flu:, G.R no. 185371, December 8, 2010.

CTA Case No. 10255 DECJSJO"\! WDL and WG dated January 23, 2020, directed agamst petitioner, are CANCELLED and SET ASIDE. I\ccordingly, respondent is ENJOINED and PROHIBITED from collecting the amount sought by the void assessment. SO ORDERED. av.~~~ MA. BELEN M. RINGPIS-LIBAN Assmiate jttJtice I CONCUR: RES ATTESTATION I attest that the conclusions in the above decision were reached in consultation before the case was assigned to the writer of the opinion of the Court. MA. BELEN M. RINGPIS-LIBAN Associate Justice Cbailpenon

CTA Case No. 1mss D E CIS!OJ\' CERTIFICATION Pursuant to /uticle VIII, Section 13 of the Constitution, and the Division Chairperson's "-\ttestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court. Presiding .fustia