QUAKER OATS ASIA, INC.-PHILIPPINE BR. v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES caun at Tax Appeals QUEZON CITY FIRST DIVISION QUAKER OATS ASIA, INC. - CTA Case No. 7934 PHILIPPINE BRANCH, Members: Petitioner, ACOSTA, Chairperson - versus - UY, and FASON-VICTORINO, JJ. COMMISSIONER OF INTERNAL Promulgated : REVENUE, D�~ Respondent. -~- X- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -----X DECISION UY, J.: Before this Court is a Petition for Review filed on June 22 , 2009 by petitioner, Quaker Oats Asia , Inc.-Philippine Branch , aga inst respondent, the Commissioner of Internal Revenue , seeking the cancellation and withdrawal of the assessments for alleged deficiency income tax and expanded withholding tax (EWT) for calendar year 2001 , including interest, surcharges and compromise penalty imposed thereon , in the total amount of 12 4,878 ,659 .72 . THE FACTS t Petitioner is the Philippine branch of a foreign corporation , duly licensed to do business in the Philippines by the Securities and Exchange

DECISIO CTA CASE 0 . 7934 Commission . It holds office in the Philippines at the 21 st Floor LKG Tower, 6801 Ayala Avenue , Makati City.1 On the other hand , respondent is the duly appointed Commissioner of Internal Revenue , vested under appropriate laws with the authority to carry out the functions , duties and responsibilities of said Office, including , inter alia , the power to decide disputed assessments, cancel and abate tax liabilities pursuant to the provisions of the National Internal Revenue Code (NIRC) of 1997, other tax laws , rules and regulations . She holds office at the BIR National Office Building , BIR Road , Diliman , Quezon City.2 On October 2, 2003 , petitioner received Letter of Authority No. 2000- 00069158 dated September 8, 2003 issued by Regional Director Nestor S. Valeroso, authorizing Revenue Officer Wilfreda L. Timan under the supervision of Group Supervisor Milagros C. Gatchalian of Revenue District Office (ROO) No. 43 - Pasig City, to examine the books of accounts and other accounting records of petitioner for income and withholding taxes for the period from January 1, 2001 to December 31 , 2001 .3 Subsequently, petitioner executed a "WAIVER OF THE DEFENSE OF PRESCRIPTION UNDER THE STATUTE OF LIMITATIONS OF THE NATIONAL INTERNAL REVENUE CODE", whereby petitioner consented to the assessment and/or collection of tax or taxes for the year 2001 which may be found due after the investigation at any time before or after the lapse of the period of limitations fixed by Sections 203 and 222 of the NIRC , but not later than September 30, 2005. The said Waiver was notarized on January~ 1 Par. I, Admitted Facts, Joi nt Stipu lation of Facts and Iss ues (JSFl), Docket, p. 129. Ex hibit " A". 2 Par. 2, Admitted Facts, JSFI , Docket, p. 130. 3 Exhibit " !", Docket, p. 390.

DECISION .. CTA CASE NO. 7934 14, 2005 and was accepted by the Revenue District Officer, Mr. Raul Vicente L. Recto .4 After investigation , petitioner received , on September 26 , 2005 , a Preliminary Assessment Notice (PAN) from the Assessment Division of the BIR's Revenue Region No. 7, assessing petitioner for deficiency income tax in the amount of 12 4 ,797 ,015 .58 and EWT in the amount of 12 7,942 .01 , inclusive of interest, surcharges , and penalties.5 Before petitioner could respond to the said PAN , it received the Formal Letter of Demand (FLO) No. 43725 dated September 30 , 2005 and the corresponding assessment notices on October 7, 2005 . The FLO increased the deficiency income tax assessment to 12 4,870 ,611.49 and the deficiency expanded withholding tax assessment to 12 8,048 .23. The details are as follows :6 DEFICIENCY INCOME TAX Taxable income per return ~ 0.00 Add : Adjustments/Disallowances per investigation Prior year's expense ~ 44 ,397 .91 Expense of employees 3,102.96 Expense of other companies 3,946.68 Non-deductible expense 66 ,088.75 Income payments not subjected to EWT 390 349.80 507 886.10 Taxable income per investigation ~ 507, 886.10 Income tax due thereon (32 %) ~ 162,523 .55 Add : Unsupported tax credits forwarded next year Prior year's excess tax cred its ~ 2,236 ,782 .00 Tax credits claimed for the year 3 868 826 .00 Total tax credits available 6,105 ,608 .00 Less: Unsupported tax credits claimed ~ 2,689 ,122.52 Excess MCIT over income tax due 1,061 ,242 .00 8,794 ,730.52 t 2,689,122.52 Excess tax credits carry-over 5,044 ,366 .00 4 Exhibit "2", Docket, p. 391 . Exhi bit "U". 5 Par. 3, Admitted Facts, JSF I, Docket, p. 130 . Exhib it "4", Docket, pp. 374 to 376. Exhib it "B". 6 Par. 4, Ad mitted Facts, JSFl, Docket, pp. 130 to 131. Exhi bits " 5", "6", and "7", Docket, pp. 377 to 381. Exhibit "C" .

DECISION CTA CASE 0 . 7934 Deficiency income tax I ta 2,851 ,646 .07 ta 2 018 965.42 Add : 20% interest p.a. from 4.16.02 to 10.31 .05 Iii 4 870_,_611.49 TOTAL AMOUNT DUE I DEFICIENCY EXPANDED WITHHOLDING TAX Income Payments Amount Rate EWT due Brokerage fees January-September ta 264 ,040 .30 5% ta 13,302 .02 October-December 67,831 .01 10% 6,783 .10 457 .69 Wharfage January-September 45 ,768.52 1% 171 .39 October-December 8 ,569 .55 2% 2,769 .05 1 174.91 Arrastre January-September 276 ,905.00 1% ta 24,558 .16 October-December 58 ,745.42 2% 19,967 .04 Total ta 4,591 .12 Less: Payments 3,457 .11 Deficiency EWT Add : 20% Interest p.a. from 01 .26 .02 to 10.31 .05 TOTAL AMOUNT DUE Iii 8,048.23 On November 3, 2005 , petitioner filed a letter dated October 21 , 2005 to formally protest the income tax and EWT assessments. Petitioner's protest is based on the following grounds: a) The BIR erred in computing the income tax liability of petitioner based on the regular income tax rate of 32% . Assuming that the adjustments/disallowances were proper, petitioner should be liable for the Minimum Corporate Income Tax (MCIT) as reported in its Annual Income Tax Return (ITR) for 2001 ; b) The BIR erred in adding back petitioner's tax credits of Ji"1 2,689,122 .52 to the 2001 ITR because the said tax credits are duly supported ; c) The assessment for deficiency EWT of Ji"1 8,042.23 , which arose from payments of arrastre , brokerage and wharfage fees , is without legal basis because such payments are not subject to EWT; t d) The FLO and assessment notices were issued before the lapse of the fifteen-day period within which petitioner is allowed to respond to the

DECISION .. CTA CASE NO. 7934 PAN . Hence, petitioner was denied due process guaranteed by Section 228 of the NIRC of 1997 and Section 3 of Revenue Regulations No. (RR) 12-99; and e) The FLO and assessment notices were issued after the lapse of the three (3)-year period to assess petitioner deficiency taxes for the yea r 2001 , pu rsuant to Section 203 of the NIRC of 1997.7 But on May 22 , 2009 , petitioner received a Preliminary Collection Letter (PCL) dated May 19, 2009 , demanding payment in the amount of 12 4,878 ,659 .72 covered by FLO No. 43725 within ten (1 0) days from receipt thereof. Otherwise , the BIR stated that it will avail of administrative summary remedies provided by law without further notice.8 While the said PCL does not state that it is respondent's Final Decision on the assessment, the parties stipulated that there is legal basis (i.e., the case of Commissioner of Internal Revenue vs. Ayala Securities Corporation9) to consider the PCL as a decision on the disputed assessment. 10 Thus, petitioner filed the instant Petition for Review on June 22 , 2009 . In the Answer11 filed on August 25 , 2009 , respondent prays for the dismissal of the petition for lack of merit and that judgment be rendered ordering petitioner to pay the total amount of 12 4,878 ,659 .72 as deficiency income and expanded withholding tax for the calendar year 2001 plus 25% surcharge and 20% annual interest from 31 October 2005 until fully paid , pursuant to Sections 248 (A) and 249 (B) of the 1997 NIRC , as amended . ~ 7 Par. 5, Adm itted Facts, JSFl, Docket, pp. 131 to 132. Exhibit " D". 8 Par. 6, Admitted Facts, JSFI, Docket, p. 132. Exhibit " F". 9 G.R. No. L-29485, March 3 1, 1976. 10 Pars. 7 to 9, Admitted Facts, JSFl, Docket, p. 132. 11 Docket, pp. 88 to 93 .

D EC ISI O N CTA CASE N O . 7934 During trial , the parties presented their respective documentary and testimonial evidence . Thereafter, the case was submitted for decision on September 6, 2011 , taking into consideration petitioner's filing of its Memorandum on August 9, 2011 and respondent's Memorandum filed on August 22 , 2011 .12 Hence, this Decision. THE ISSUES The parties submitted the following issues13 for this Court's resolution , to wit: "A. Whether the right of respondent to make an assessment for income tax and creditable withholding tax for taxable year 2001 has prescribed ; B. Whether petitioner was denied due process of law when the FLO was issued even before the petitioner could respond to the PAN ; C. Whether the PAN and FLO contain the facts and law upon which the assessment were made as required by law, regulations , and jurisprudence; D. Whether petitioner in taxable year 2001 derived a net taxable income sufficient enough to be subjected to the regular corporate income tax rate of 32%; E. Whether petitioner has sufficient tax credits in taxable year 2001 to offset against any income tax liabilities it might have in the said taxable year; F. Assuming that the assessment on deficiency creditable withholding tax pertains to the payment to Philippine Ports Authority (PPA) , whether the brokerage fees , wharfage dues, and arrastre paid to PPA are subject to creditable withholding tax; and 12 Docket, p. 533 . 13 Docket, pp . 139 to 140.

DECISION CTA CASE NO. 7934 G. Assuming that payments to PPA are subject to creditable withholding tax, whether respondent used the appropriate creditable withholding tax rates . H. Whether or not, under the facts and the law, petitioner is liable to pay deficiency income tax and expanded withholding tax for calendar year 2001 in the total amount of P4 ,878 ,659 .72 ." The issue defined under Section H seems to encompass all other issues because a resolution thereof, necessarily entails looking into all the other issues mentioned under Sections A to G. At any rate , We shall first resolve the issue on prescription . Petitioner's arguments Petitioner primarily contends that respondent's right to issue the subject assessments for income tax and expanded withholding tax involving the year 2001 had already prescribed . According to petitioner, Section 203 of the NIRC of 1997 gives respondent only three (3) years to assess taxes , counted from the filing of the returns or the date prescribed by law for their filing , whichever comes later. Petitioner submits that it filed its 2001 Annual ITR on April 4 , 2002 and its EWT returns on the following dates: Month Covered Date Filed Exhibit January February 12, 2001 CC-1 February CC-2 March March 12, 2001 CC-3 April April 10, 2001 CC -4 May May 10, 2001 CC-5 June June 11 , 2001 CC-6 July July 10, 2001 CC-7 August Auqust 9, 2001 CC -8 September 10, 2001 CC -9 September October 9, 2001 CC-10 October November 12, 2001 CC -11 December 10, 2001 CC - 12 November January 10, 2002 December

DECISION CTA CASE NO. 7934 Considering that respondent issued the FLO for both income tax and expanded withholding tax only on September 30 , 2005 which it (petitioner) received on October 7, 2005 , apparently, more than three (3) years had passed from the time it filed its returns . Consequently, the assessments were allegedly barred by prescription . Petitioner also points out that respondent, in order to justify the issuance of assessment beyond the three-year prescriptive period , presented a "Waiver of the Defense of Prescription under the Statute of Limitations of the NIRC", allegedly executed on January 14, 2005 , to prove that the period to assess petitioner was extended until September 30 , 2005 . However, according to petitioner, respondent cannot take refuge under the said Waiver to justify the belated issuance of the assessment beyond the three-year prescriptive period because of the following alleged deficiencies of the Waiver: 1. It was signed only by a Revenue District Officer and not by the Commissioner of Internal Revenue ; 2. It does not state the date of execution by the taxpayer and the date of acceptance by the BIR ; and 3. It does not state the amount of taxes due. Respondent's counter-arguments Respondent counter-argues that her right to issue the subject assessments for calendar year 2001 has not prescribed because petitioner executed a waiver on January 14, 2005 , which legally and effectively extended respondent's right to assess petitioner. Section 203 of the NIRC of 1997, as amended, limits the right of respondent to assess taxes within a three-year period , counted from the date ~

D EC ISI O N CTA CASE N O . 7934 Page 9 of1 7 of actual filing of the return or from the last date prescribed by law for the filing of such return , whichever comes later, to wit: "SEC . 203 . Period of Limitation Upon Assessment and Collection . - Except as provided in Section 222 , internal revenue taxes shall be assessed within three (3) years after the last day prescribed by law for the filing of the return , and no proceeding in court without assessment for the collection of such taxes shall be begun after the expiration of such period : Provided , That in a case where a return is filed beyond the period prescribed by law, the three (3)-year period shall be counted from the day the return was filed. For purposes of this Section , a return filed before the last day prescribed by law for the filing thereof shall be considered as filed on such last day." (Emphasis supplied) However, exceptions are allegedly provided to the "three-year" rule . Sections 222 and 223 of the same Code enumerate the instances where respondent is allowed to assess and collect taxes even beyond the three-year period . One instance is when "before the expiration of the time prescribed in Section 203 for the assessment of the tax, both the Commissioner and the taxpayer have agreed in writing to its assessment after such time , the tax may be assessed within the period agreed upon . The period so agreed upon may be extended by subsequent written agreement made before the expiration of the period previously agreed upon .14" THE COURT'S RULING Period of limitation upon the assessment of taxes. As above-quoted , Section 203 of the NIRC of 1997 speaks of the period of limitation upon assessment and collection of taxes . Based on the said provision , internal revenue taxes must be assessed within three (3) years counted from the period fixed by law for the filing of the tax return or the actual Ly\ 14 Section 222(b), N IRC of 1997, as amended . (f

DECISIO CTA CASE NO. 7934 date of filing , whichever is later. This mandate governs the question of prescription of the government's right to assess internal revenue taxes primarily to safeguard the interests of taxpayers from unreasonable investigation . Necessarily therefore, the government must assess internal revenue taxes on time so as not to extend indefinitely the period of assessment and deprive the taxpayer of the assurance that it will no longer be subjected to further investigation for taxes after the expiration of reasonable period of time .15 Indeed , one of the exceptions to the three-year prescriptive period on the assessment of taxes is provided in Section 222(b) of the NIRC of 1997, to wit: "SEC. 222. Exceptions as to Period of Limitation of Assessment and Collection of Taxes. - XXX XXX XXX (b) If before the expiration of the time prescribed in Section 203 for the assessment of the tax, both the Commissioner and the taxpayer have agreed in writing to its assessment after such time , the tax may be assessed within the period agreed upon . The period so agreed upon may be extended by subsequent written agreement made before the expiration of the period previously agreed upon ." Section 222(b) authorizes the extension of the original three-year period by the execution of a valid waiver, where the taxpayer and the BIR agrees in writing that the period to issue an assessment and collect the taxes due is extended to an agreed upon date.16 The rationale of a waiver is that the period agreed upon shall constitute the time within which to effect the 15 Commissioner ofInternal Revenue vs. FMF Development Corporation, G.R. No. 167765 , June 30, 2008 . 16 Supra.

D E C I SI O N CTA CASE N O . 7934 assessment/collection of the tax in addition to the ordinary prescriptive period .17 In this case , petitioner filed its Annual ITR for taxable year 2001 on April 4, 2002 .18 The date prescribed by law for the filing of said Annual ITR was on April 15, 2002 .19 Thus, following Section 203 , the BIR has until Ap ril 15, 2005 to assess petitioner of its income tax liabilities for the said year. With respect to the EWT, Section 2.58(A)(2)(a) of Revenue Regulations No. 2-98 ,20 as amended , requires the filing of the withholding tax return within ten (1 0) days after the end of each month for the months of January until November, while the withholding tax return for the month of December must be filed on or before January 15 of the following year. Detailed below are the dates pertinent to petitioner's filing of the EWT returns : Period Exhibit Date of actual Date of filing as Last day to Covered filing required by law assess petitioner January CC-1 February 12, 2001 February 12, 2004 February CC -2 February 12, 2001 March 12, 2001 March 12, 2001 March 12, 2004 March cc -3 April 10, 2001 April 10, 2001 April 10, 2004 April May 10, 200 1 May 10, 200 1 May 10, 2004 Ma y CC -4 June 11 , 200 1 Ju ne 11 , 2001 June 11 , 2004 June CC-5 July 10, 200 1 Ju ly 10, 2001 July 10, 2004 July CC -6 August 9, 2001 August 10, 200 1 August10 , 2004 August CC -7 September 10, September 10, September 10, CC-8 2001 Septem ber October 10, 2001 2001 2004 CC -9 October 10, 200 1 October 10, 2004 17 Philippine Journalists, l nc. vs. Commissioner ofInternal Revenue, G.R. No. I6285 2, December I6, 2004. 18 Exhibit " G" . 19 Section 77(B), N IRC of I997. It provides: " SEC. 77. Place and Time of Filing and Payment of Quarterly Corporate Income Tax. - XXX XX X XXX (B) Tim e of Filing the Income Tax Return. - The corporate quarterly declaration shall be fi led within sixty (60) days fo llow ing the c lose of each of the first three (3 ) quarters of the taxable year. The fin al adjustment return sha ll be fil ed on or before the fiftee nth (15th) day of April , or on or before the fifteenth ( I 5th) day ofthe fourth (4th) month followin g the c lose of the fi sca l year, as the case may be." 20 SU BJ ECT : Imp lementing Repub lic Act No. 8424, " An Act Amending The Nationa l Interna l Revenue Code, as Amended" Relati ve to the Withh o lding on Income Subj ect to the Expanded Withho lding Tax and Fina l Withho ldin g Tax, Withh o lding on Inco me Tax on Compensati on, Withho lding of Cred itabl e Va lue-Added Tax and Other Percentage Taxes.

DECISION CTA CASE NO. 7934 Page 12 of17 Octob er CC -10 November 12, 2001 November 12, November 12, November CC -11 December 10, 2001 2001 2004 December CC-12 January 10, 2002 December 10, December 10, 2001 2004 Jan uary 15, 2002 January 15, 2005 Records show that respondent issued the FLO and assessment notices on September 30 , 2005 and was received by petitioner only on October 7, 200521 . However, respondent claims that the period to assess the subject income tax and withholding tax liabilities was extended by the Waiver executed by petitioner. We do not agree. The Waiver is defective and thus, did not extend the three-year prescriptive period under Section 203 of the NIRC of 1997. In Commissioner of Internal Revenue vs. Kudos Metal Corporation ,22 the Supreme Court said : "Section 222(b) of the NIRC provides that the period to assess and collect taxes may only be extended upon a written agreement between the CIR and the taxpayer executed before the expiration of the three- year period . RMO 20-90 issued on April 4, 199023 and RDAO 05-01 issued on August 2, 200 f 4 lay down the procedure for the proper execution of the waiver, to wit: 1. The waiver must be in the proper form prescribed by RMO 20- 90 . The phrase 'but not after 19__', which indicates the expiry date of the period agreed upon to assess/collect the tax after the regular three-year period of prescription , should be filled up. 2. The waiver must be signed by the taxpayer himself or his du ly authorized representative . In the case of a corporation , the waiver must be signed by any of its responsible officials. In case the authority is delegated by the taxpayer to a "E,h;bit "C". ~ 22 G.R. No . 178087, May 5, 20 I0. 23 Revenue Memorandum Order No. 20-90, SUBJECT: Proper Execution of the Waiver of the Statute of Limitations under the National Internal Revenue Code. 24 Revenue Delegation Authority Order No. 05-0 I, SUBJECT: De legation of Authority to Sign and Accept the Waiver of the Defense ofPrescription Under the Statute of Limitations.

DECISION CTA CASE NO. 7934 representative , such delegation should be in writing and duly notarized . 3. The waiver should be duly notarized . 4. The CIR or the revenue official authorized by him must sign the waiver indicating that the BIR has accepted and agreed to the waiver. The date of such acceptance by the BIR should be indicated . However, before signing the waiver, the CIR or the revenue official authorized by him must make sure that the waiver is in the prescribed form , duly notarized , and executed by the taxpayer or his duly the authorized representative. 5. Both the date of execution by the taxpayer and date of acceptance by the Bureau should be before the expiration of the period of prescription or before the lapse of the period agreed upon in case a subsequent agreement is executed . 6. The waiver must be executed in three copies , the original copy to be attached to the docket of the case , the second copy for the taxpayer and the third copy for the Office accepting the waiver. The fact of receipt by the taxpayer of his/her file copy must be indicated in the original copy to show that the taxpayer was notified of the acceptance of the BIR and the perfection of the agreement. " It is mandated that the foregoing procedures should be strictly followed ;25 otherwise , the waiver shall be rendered defective and shall not extend the period to assess the tax. Thus , the mere execution of a waiver does not automatically extend the three-year prescriptive period . The first and third infirmities imputed by petitioner on the subject Waiver (i.e., that the same should have been signed by the Commissioner of Internal Revenue , not merely by a Revenue District Officer, and that it fails to state the amount of taxes due) have no basis in law. 25 Philippine Journalists, Inc. vs. Com missioner ofinternal Revenue, G.R. No. 162852, December 16, 2004; Revenue Memorandum Order No. 20-90.

DECISION CTA CASE NO. 7934 Anent the proper revenue official who is authorized to sign and accept the subject Waiver, Revenue Delegation Authority Order No. (RDAO) 05-01 26 states in part: "The following revenue officials are authorized to sign and accept the Waiver of the Defense of Prescription Under the Statute of Limitations (Annex A) prescribed in Sections 203 , 222 and other related provisions of the National Internal Revenue Code of 1997: XXX XXX XXX C. For Regional cases 1. Revenue District Officer Cases pending investigation/ verification/reinvestigation in the Revenue District Offices 2. Regional Director Cases pending in the Divisions in the Regional Office , including cases pending approval by the Regional Director XXX XXX xxx. (Emphasis supplied) At the time the subject Waiver was notarized , i. e., on January 14, 2005 , the case was still pending before ROO No. 43. This is manifested by subsequent letters dated February 7, 200527 and April 20 , 200528 of petitioner, submitting certain documents relative to the investigation being conducted by the said ROO . Another indication of the pendency of the case before the same Office is that the Notice of Informal Conference dated February 28 , 200529 was issued by Mr. Recto , Revenue District Officer of ROO No. 43, f against petitioner. Accordingly, Mr. Recto , in his capacity as Revenue District Officer, was authorized to sign and accept the subject Waiver. 26 See footnote no . 23 . 27 BIR Records, p. 186. 28 BIR Records, p. 184. 29 BIR Records, p. 190.

DECISION CTA CASE NO. 7934 Page 15 of17 As regards the ground relied upon by petitioner that the Waiver must state the amount of taxes due, said information is not required under RMO 20- 90 , as amended by RDAO 05-01 . Furthermore , it must be pointed out that the investigation has not reached its appropriate conclusion and thus , the amount of tax liabilities has yet to be determined . This is precisely the reason why the said Waiver was executed . As can be gleaned from the said Waiver, the representative of petitioner requested for approval "more time to submit the document required in connection with the investigation of [petitioner's] income and withholding .. .tax liabilities for the year 2001 ", and that "the intent and purpose of the waiver is to afford the Commissioner of Internal Revenue ample time to carefully consider the legal and/or actual questions involved in the determination of the aforesaid tax liabilities."30 Be that as it may, as correctly argued by petitioner, the subject Waiver fails to state the date of execution by the taxpayer and the date of acceptance by the BIR. It must be emphasized that the date of acceptance by the BIR is necessary to determine whether the Waiver was validly accepted before the expiration of the original three-year period .31 Moreover, it was never established that the Office accepting the Waiver has been furnished with the third copy thereof. Lastly, there is no ind ication in the original copy of the said Waiver of the fact of receipt by petitioner. This information is likewise 30 Emphasis supp lied . Docket, p. 391. 31 Commissioner of Internal Revenue vs. FMF Development Corporation, G.R. No . 167765 , June 30, 2008.

DECISION CTA CASE NO. 7934 important "to show that the taxpayer was notified of the acceptance of the BIR and the perfection of the agreement". 32 Such being the case, the period to assess petitioner's income tax and withholding tax liabilities was not extended due to the defects in the subject Waiver. Consequently, the subject assessments were issued by the BIR beyond the three-year prescriptive period and are void . In view of the foregoing , it becomes unnecessary to resolve the other issues raised in this case . WHEREFORE , the instant Petition for Review is hereby GRANTED . Accordingly, the assessments for deficiency income tax and deficiency expanded withholding tax in the aggregate amount of 12 4,878 ,659 .72 for taxable year 2001 are hereby CANCELLED and SET ASIDE for being issued beyond the three-year prescriptive period under Section 203 of the NIRC of 1997. SO ORDERED . WE CONCUR: t~ v� o_,.L- ERNESTO D. OSTA 32 Revenue Memorand um Order No. 20-90.

DECISION CTA CASE NO. 7934 CERT/FICA TION hereby certify that the decision was reached after due consultation with the members of the division of the Court of Tax Appeals in accordance with Section 13, Article VIII of the Constitution . E[) ~T:-~O.D.CA\_C.4O,_STA Presiding Justice