HEALTH PLAN PHILIPPINES, INC., v. COMMISSIONER OF INTERNAL REVENUE

CTA Fonn No.8 llllllllllllllllllllll llllllllllllllllllllllllllllllllllllllllllllll 20-000076-0056 REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY FIRST DIVISION CTA CASE N0.10262 HEALTH PLAN PHILIPPINES, NOTICE OF DECISION INC., Petitioner, -versus- COMMISSIONER OF INTERNAL REVENUE, Respondent. To: OFFICE OF THE SOLICITOR GENERAL 134 Amorsolo Streert, Legazpi Village Makati City ATTY. LEONARDO B. USITA Bureau of Internal Revenue - Revenue Region No. 7B 25th Floor, The Podium West Tower, ADB Avenue Ortigas Center, Mandaluyong City ARANAS CRUZ ARANETA PARKER & PARKER FAUSTINO LAW OFFICES Unit 203 Le Metropole Building !55 H.V. Dela Costa corner Tordesillas Streets Salcedo Village, Makati City GREETINGS: You are hereby notified by these presents that on December 4, 2024, a Decision was rendered in the above-entitled case, copy of which is attached hereto. Quezon City, Philippines, December 6, 2024. AttyE. MxeacuritiavJe~ .Crenzof Co. uCrht aIIn-Te

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY FIRST DIVISION HEALTH PLAN CTA CASE NO. 10262 PHILIPPINES, INC., Members: Petitioner, DEL ROSARIO, �L Chairperson, -versus- BACORRO-VILLENA, and CUI-DAVID,fl. C.OMMISSIONER OF INTERNAL REVENUE, Promulgated: Respondent. DEC 04 2024 : ~:{!JAM z S---------- X - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - _.. X DECISION BACORRO-VILLENA, L: At bar is a Petition for Review1 filed by petitioner Health Plan Philippines, Inc. (petitioner), pursuant to Rule 8, Section 3(a)2 in . relation to Rule 4, Section 3(a)(1)3 of the Revised Rules of the Court o f t Filed on 26 February 2020, Division Docket, pp . 7-28. 2 SEC. 3. Who may appeal; period to file petition. - (a) A party adversely affected by a dec is ion, ruling or the inaction ofthe Comm issio ner of Internal Revenue on disputed assessments o r clai ms for refund of internal revenue taxes, o r by a dec is ion or ruling of the Commiss ioner of Customs, the Secretary of Finance, the Secretary of T rade and Industry, the Secretary of Agricu lture, or a Regional Trial Court in the exerc ise of its original jurisd iction may appeal to the Court by petition for review filed with in thirty days after receipt of a copy of such dec ision or ru ling, o r expiration of th e period fi xed by law for the Com m iss ioner of Internal Revenue to act on the di sputed assessments. In case of inaction of the Commissioner of Interna l Revenue on claims fo r refund of internal revenue taxes erroneous ly or illega lly collected, the taxpayer must fi le a petitio n for rev iew within th e two-year period prescribed by law from payment or collection of the taxes. SEC. 3. Cases Within the J urisdiction of the Court in Division . T he Court in Division s hall exercise: (a) Exc lus ive orig ina l over or appellate jurisd iction to rev iew by appeal the following:

CTA Case No. 10262 Health Plan Philippines, Inc. v. Commissioner of Internal Revenue DECISION X----------------------------------------------X Ta:x Appeals (RRCTA). It seeks to cancel and set aside the Final Assessment Notice and Formal Letter of Demand4 (FAN/FLD) that respondent Commissioner of Internal Revenue (respondent/CIR) issued to petitioner for its alleged tax deficiency assessment in the aggregate amount of P16,043.592.51 for the fiscal year (FY) ending 30 June 2011. PARTIES OF THE CASE Petitioner is a corporation duly organized and existing under the laws of the Philippines, with principal office address at Unit 1410 Prestige Tower Condo F. Ortigas Jr. Ave., Brgy. San Antonio, Ortigas Center, Pasig City.5 Petitioner is primarily engaged in the business of providing medical and health maintenance services with Tax Identification Number (TIN) ooo-182-496-ooo. Respondent, on the other hand, is the duly appointed CIR vested with the authority to carry out the functions, duties, and responsibilities of the said office including, inter alia, the power to decide disputed assessments, refunds of internal revenue taxes, fees, other charges, and . penalties imposed in relation thereto, or other matters arising under the National Internal Revenue Code (NIRC) of 1997, as amended, or other laws or portions thereof administered by the Bureau of Internal Revenue (BIR). FACTS OF THE CASE On 04 November 2011, respondent issued a Letter of Authority (LOA) No. 43A-2o11-ooooo732/eLA2moooo648536, authorizing Revenue Officer (RO) Rhea Argoso (Argoso) and Group Supervisor (GS) Maricar Favis (Favis) of Revenue District No. 43-A, East-Pasig, to examine petitioner's books of accounts for all internal revenue taxes for the _ period of3o July 2010 to 30 June 2011, or FY 2011. Petitioner's authorizedt (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[.] Dated IS January 20 14; Exhibits "P-I I" and series, Division Docket, pp. 42I-43l. See Paragraph 7, Parties, Petition for Review, supra at note I, pp. 8-9. 6 BIR Records, p. 2.

CTA Case No. 10262 Health Plan Philippines, Inc. v. Commissioner of Internal Revenue DECISION x----------------------------------------------x representative, Rose G. Perino (Perino), received the LOA on 18November 2011. Later, or on 09 August 2012, petitioner received a Notice for Informal Conference7 (NIC) informing it of the assessment for deficiency taxes in the aggregate amount off'12,n6,776.26. On 07 January 2014, petitioner also received the Preliminary Assessment Notice8 (PAN), with Details of Discrepancies, stating that it had deficiency income tax (IT), value-added tax (VAT), expanded withholding tax (EWT), fringe benefit tax (FBT) and compromise penalties in the total amount off'15,692,256.25.9 On 15 January 2014, while petitioner was preparing its reply to the PAN, petitioner again received the FAN/FL010 with Details of Dfscrepancies and Assessment Notices (ANs). There, it was indicated that petitioner should pay the said liabilities on or before 10 February 2014.11 On 21 January 2014, disagreeing with respondent's findings, petitioner filed a Protest'2 to the PAN and the FAN/FLO (Protest) before the Regional Director's (RD's) Office and requested that its case docket be transferred to Revenue District Office (RDO) No. 43-A, Pasig City. Still later, or on 24 June 2014, petitioner received a Preliminary Collection Letter (PCL) dated 18 June 2014. The PCL informed petitioner that respondent had already sent several notices demanding payment of its supposed tax liabilities in the total amount off'16,o~2.51, and pay the same within ten (w) days from the PCL's receipt.'3 {) Dated 09 August 2012, id., pp. 269-271. .8 Exhibits "P-10", Division Docket, pp. 418-420 . 9 See Par. 7, Petition for Review, supra at note 1, p. 10. BIR Records, pp. 367-375, see also the stamp receiving copy. II 1d' pp. 371-375. 12 Exhibit "P-12", Division Docket, pp. 432-433; B1R Records, pp. 355-356. 13 See Exhibit "P-13", id., p. 434; id., p. 384.

CTA Case No. 10262 Health Plan Philippines, Inc. v. Commissioner of Internal Revenue DECISION x----------------------------------------------x Subsequently, petitioner sent a letter-reply to the PCL, informing the BIR of its pending administrative protest with the RD's Office filed on 21 January 2014.'4 On 10 February 2015, pet1t10ner received a Letter dated 30 January 2015'5 from RD Alfredo V. Misajon (RD Misajon) of Revenue . Region No.7, informing it that its Protest has been granted, and that the case will be forwarded to ROO No. 43-A.'6 On 23 March 2015, petitioner received another Letter dated n March 2015'7, stating that petitioner's tax docket was forwarded to ROO No. 43-A for evaluation.'8 The same letter indicated that petitioner's case was assigned to RO Joel Luces (Luces) and GS Favis for evaluation.'9 On 20 August 2015, petitioner received a Letter dated 24 July 201520 from ROO No. 43-A, indicating that it failed to submit additional evidence in support of its Protest. As a result, the case docket was forwarded to Revenue Region No.7 for the issuance of the Final Decision on Disputed Assessmene' (FDDA). Thereafter, or on 19 October 2015, pet1t10ner, through its Vice President Natasha Alana Reyes (VP Reyes), executed a Waiver of the Defense of Prescription under Statute of Limitations of the NIR(22 (Waiver), extending thus the period of investigation, collection and enforcement until 30 June 2016. RD Misajon appeared to not have accepted the Waiver as his signature did not appear thereon.23 Later, on 27 January 2020, petitioner received the Letter dated 14 January 2o2o24 (14 January 2020 Letter) that Revenue Region No. 7 _ and RD Romulo Aguila (Aguila) signed. This letter apprised petitionert 14 BIR Records, p. 425. 15 !d., p. 436. 16 See Par. 18, Petitioner's Memorandum, Statement of the Facts and of the Case, Division Docket, p. 513. 17 BIR Records, p. 439. 1s See Par. 19, Petitioner's Memorandum, Statement of the Facts and of the Case, Division Docket, p. 513. Supra at note 17. 20 Exhibit "P-16", Division Docket, p. 437; BIR Records, p. 451. 21 See Par. 20, Petitioner's Memorandum, Statement of the Facts and of the Case, Division Docket, p. 513. 22 BIR Records, p. 461. 23 See the signatory portion of the acceptance section on the Waiver, which was left unsigned, id. Exhibit "P-17'', Division Docket, p. 438; BIR Records, p. 468.

CTA Case No. 10262 Health Plan Philippines, Inc. v. Commissioner of Internal Revenue DECISION X----------------------------------------------X that its Protest filed on 21 January 2014 was deemed not valid due to its. supposed failure to submit supporting documents. As a result, the assessment allegedly had thus become final, executory, and demandable. 2s PROCEEDINGS BEFORE THE COURT On 26 February 2020, petitioner filed a "Petition for Review"26 before this Court. The case was raffled to the Second Division and was docketed as CTA Case No.10262. The Second Division thereafter ordered respondent to file his or her Answer to the petition.27 After being allowed an extension of time to file an Answer28, respondent filed the same on m September 202o.29 In his or her Answer, respondent interposed a singular special and affirmative defense, i.e., the Court has no jurisdiction to entertain the present petition after petitioner failed to submit additional supporting documents within sixty (6o) days from the filing of petitioner's Protest to the PAN and the FAN/FLD. According to respondent, the assessment has already become final. 30 In the interim, respondent submitted the BIR Records3', which the Second Division noted in a Resolution dated 15 September 202o.J2 On 25 September 2020, petitioner filed a "Reply (Re: Answer dated 1 September 2020)"33where it argued that: (1) the assessment is void for violating its right to due process; (2) the FAN/FLD was issued prior to the expiration of the fifteen (15)-day period to reply to the PAN; (3) respondent's right to collect on the basis of the assessment had already prescribed; and, (4) the Waiver is ineffective since respondent, orhis Qr er duly authorized representative, failed to sign and accept the saine. 25 See Par. 22, Petitioner's Memorandum. Statement of the Facts and of the Case. Division Docket, p. 513. 26 Supra at note I. See Summons dated 2 March 2020, Division Docket, p. 111. 28 See Order dated 20 August 2020. id., p. 119. 29 !d., pp. 120-125. 30 See Pars. II and 14, Respondent's Answer. id .. pp. 120-124. 31 See Compliance, id .� p. 127. " !d.� p. 128. )J See Reply, id., pp. 134-142.

CTA Case No. 10262 Health Plan Philippines, Inc. v. Commissioner of Internal Revenue DECISION x----------------------------------------------x Thereafter, both parties filed their respective Pre-Trial Briefs34 on 16 November 2020. On even date, the Second Division also ordered them to�appear before the Philippine Mediation Center-Court of Tax Appeals (PMC-CTA) for conciliation proceedings on 07 December 202o.3s Later, the PMC-CTA, through a Report, informed the Second Division that the parties decided not to proceed with the mediation . proceedings.36 Thus, the pre-trial proper proceeded on 22 February 2021.37 There, the Second Division: (1) granted the parties a period of thirty (3o) days to file their Joint Stipulation of Facts and Issues (JSFI); (2) granted petitioner a period of 30 days to file a Motion for the Commissioning of an Independent Certified Public Accountant (ICPA); and, (3) set both the Commissioner's Hearing on 10 March 2021 and the presentation of petitioner's evidence on 28 June 2021. On 17 May 2021, petitioner filed its "Motion for Commissioning of [ICPA]"38 together with its "[JSFI] (in Compliance with the Order dated 22. February 2021)" .39 On 07 June 2021, the Second Division issued the Pre-Trial Order.40 On 28 June 2021, the Second Division: (1) appointed Ms. Myra Celeste 0. Dabalos (ICPA Dabalos) as the Court-commissioned ICPA; � (2) directed ICPA Dabalos to submit her report within forty-five (45) days or until12 August 2021; and, (3) set the presentation of petitioner's witnesses on 18 August 2021Y In the trial that ensued4\ petitioner presented its witness, Ms. Fely Vale (Vale), who testified by way of a Judicial Affidavit43 dated 11 November 2020, wherein she declared that: (1) petitioner timely filed t its Annual Income Tax Return (ITR), VAT Return and EWT Return for _ the FY ending 30 June 2011; (2) petitioner received the PAN dated 34 See Petitioner's Pre Trial-Brief and Respondent's Pre Trial-Brief, id., pp. 151-159 and 147-150, respectively. 35 See Order dated 16 November 2020, id., p. 146. 36 !d., p. 261. 37 See Minutes of the Hearing and Order, both dated 22 February 2021, id., pp. 267 and 268, respectively. 38 1d., pp. 273-277. 39 1d., pp. 292-297. 1d., pp. 302-306. " See Order dated 28 June 2021, id., p. 309. 42 See Order dated 13 December 2021, id., p. 329. 43 Exhibit "P-72", id., pp. 162-176.

CTA Case No. 10262 Health Plan Philippines, Inc. v. Commissioner of Internal Revenue DECISION x----------------------------------------------x 27 December 2013 on 07 January 2014; (3) petitioner received the FAN/FLO dated 15 January 2014 on even date; (4) on 21 January 2014, petitioner was constrained to file the same protest to the PAN and the FAN/FLO, due to the FAN/FLO's premature issuance; (s) on 24 June 2014, petitioner received a PCL dated 18 June 2014; (6) petitioner received a Letter dated 30 January 201544, stating the grant of its Protest and that the docket will be transferred to ROO No. 43-A; (7) petitioner received another Letter dated n March 201545, notifying it that the docket was . already with ROO No. 43-A for evaluation; (8) on 20 August 2015, petitioner received another Letter dated 24 July 201546, indicating that it failed to submit the supporting documents for the Protest and that the docket was to be transferred to the Assessment Division of Revenue Region No.7; and, (9) on 27 January 2020, the BIR, in its 14 January 2020 Letter47, advised petitioner that its Protest was considered invalid for its failure to submit the supporting documents; thus, the assessment had become final, executory and demandable. No cross-examination was conducted.48 On 07 February 2022, petitioner also presented ICPA Dabalos49 who similarly testified through her Judicial Affidavit dated 07 December 2021.50 There, she stated that: (1) the Second Division commissioned her as an ICPA on 28 June 2021; (2) she was tasked to verify the accuracy of IT, VAT, EWT and FBT assessments that . respondent made for FY ending 30 June 2011, as well as the verification and examination of original documents; (3) she submitted an amended ICPA Report with one (1) USB; (4) the amendments were due to clerical corrections in the Report; (s) Vale called her attention to Journal Voucher #20IO-l2-0015s\ where she initially marked the transaction as unsupported but changed her comment in the amended ICPA Report and indicated that the transaction was actually supported and pertained to a correcting entry for Official Receipt (OR) No. 5454; and, (s) based on her findings, petitioner's deficiency IT, VAT, EWT and FBT liabilities amounted to P1,467,095-15, including interest compllted up to 31 December 2021. No cross-examination was conducted.s>t 44 Supra at note 15. 45 Supra at note 17. 46 Supra at note 20. 47 Supra at note 24. 48 Supra at note 42. 49 See Order dated 07 February 2022, Division Docket, p. 355. . 50 Exhibit "P-20", id., pp. 330-353. 5I Exhibit "P-35". id., p. 328-T. 52 Supra at note 49.

CTA Case No. 10262 Health Plan Philippines, Inc. v. Commissioner of Internal Revenue DECISION X----------------------------------------------X During the hearing held on 21 February 202253' the Second Division granted petitioner a period of 15 days within which to file its Formal Offer of Evidence (FOE). Respondent was likewise given the same period to file his or her Comment thereto. The Second Division also set the initial presentation of respondent's evidence for 02 May 2022. On o8 March 2022, petitioner filed its "[FOE] with Omnibus Motion"54 and offered Exhibits "P-1" to "P-72-A", inclusive of the sub-markings. In the Omnibus Motion, petitioner prayed that: (1) the BIR's copy of the Protest to the PAN and the FAN/FLO be permanently marked as Exhibit "P-12''55; and, (2) a Commissioner's Hearing be scheduled and conducted for the permanent and re-marking of its documentary exhibits. Per Records Verification Report dated 31 March 2022, it appears that respondent failed to file a Comment on petitioner's FOE.56 Thus, in a Resolution dated 17 October 202257, the Second Division admitted all the offered exhibits. In another Resolution dated 29 May 2023, the Second Division transferred the case to the First Division pursuant to Administrative Circular No. 01-2023 dated 23 May 2023.58 During the hearing on w October 2023, the First Division noted respondent's manifestation that he or she will no longer be presenting � any evidence and that he or she is waiving the presentation of the same.59 The First Division then ordered the parties to file their memoranda within 15 days. t On 26 October 2023, pet1t10ner filed its Memorandum.60 As respondent failed to file a Memorandum6\ the First Division submitted the case for decision on 05 December 2023.62 53 See Minutes of Hearing, dated 21 February 2022, id., p. 357. 54 Filed through courier, id., pp. 360-379. 55 Protest on Preliminary Assessment Notice for Final Period June 2010 to June 2011 dated 18 January 2014. 56 Division Docket, p. 468. 57 !d., pp. 497-499. 58 Reorganizing the Divisions of the Court following the retirement of Associate Justice Erlinda P. Uy, id., p. 501. 59 See Order dated I 0 October 2023, id., p. 507. 60 See Petitioner's Memorandum, id., pp. 508-536. 61 See Records Verification dated 07 November 2023, id., p. 540. 62 See Resolution dated 05 December 2023, id., p. 541.

CTA Case No. 10262 Health Plan Philippines, Inc. v. Commissioner of Internal Revenue DECISION X----------------------------------------------X ISSUE The parties put forward this sole issue for this Court's resolution- WHETHER PETITIONER HEALTH PLAN PHILIPPINES, INC. IS LIABLE TO PAY DEFICIENCY INCOME TAX (IT), VALUE-ADDDED TAX (VAT), EXPANDED WITHHOLDING TAX (EWT), FRINGE BENEFIT TAX (FBT), AND COMPROMISE PENALTY IN THE TOTAL AMOUNT OF l"r6,o43,592.51, INCLUSIVE OF INTEREST FOR THE FISCAL YEAR (FY) 2011. ARGUMENTS In support of the pet1t10n, petltwner claims that respondent's right to collect its supposed tax deficiencies had already prescribed. According to petitioner, under Section 222(c)63 of the NIRC of 1997, as amended, respondent only had five (5) years from the issuance of the FAN/FLO to collect. Since the FLO was issued on 15 January 2014, respondent only had until14 January 2019 within which to collect against it. As the records bear, respondent's demand for payment was only received on 27 January 2020; thus, the tax assessment subject of the case should be cancelled due to prescription.54 Petitioner adds that respondent violated its right to due process as the FAN/FLO was issued before the lapse of the 15-day period to reply to the PAN. As a result, respondent's issuance of the FAN/FLO prior to the lapse of such period to file and before it could actually file its reply to the PAN should invalidate the FAN/FLO and the entire assessment.6S Petitioner contends further that it could not be held liable for the deficiency taxes for FY 2011 because of respondent's faulty analysis in its manner of recording transactions in its books. Finally, petitioner explains that whenever it secures a contract with a client, it registers the entire contract price in its books as revenue.. Thereafter, petitioner determines the portion of the revenue that coverst 63 SEC. 222. Exceptions as to Period of Limitation ofAssessment and Collection of Taxes. . 64 See Petitioner's Memorandum, Division Docket, p. 520 . 65 Id., p. 525.

� CTA Case No. 10262 Health Plan Philippines, Inc. v. Commissioner of Internal Revenue DECISION x----------------------------------------------x the period after June 30 of each year and proceeds to prepare an adjusting entry to deduct the same from the revenue recorded in the books. Unfortunately, as for FY 2011, respondent still found these debit entries to be unsubstantiated.66 Responding to petitioner's arguments, respondent prays for the Court not to grant relief considering that it is actually devoid of jurisdiction over the case. Quoting Section 22867 of the NIRC of 1997, as amended, respondent argues that petitioner filed its Protest on � 21 January 2014 and only had 6o days, or until 23 March 2014 (since March 22 was a Sunday), to submit all relevant supporting documents, otherwise the assessment would become final. Considering that petitioner failed to submit the said documents within the period required by law, the assessment had already become final, executory and demandable as early as 24 March 2014. Thus, this Court has no jurisdiction over the present case.68 RULING OF THE COURT Before the Court proceeds to discuss the merits of the case, it deems propitious to first decide on the timeliness of petitioner's judicial appeal as this is determinative of this Court's valid exercise of jurisdiction. THE COURT HAS JURISDICTION OVER THE PRESENT PETITION FOR REVIEW. Respondent contends that the questioned assessment has become final, executory and demandable due to petitioner's failure to submit supporting documents within 6o days from the filing of its Protest. According to respondent, petitioner's Protest to the FAN/FLD is a request for reinvestigation, citing Section 22869 of the NIRC of 1997, as amended. When it failed to submit supporting documents to support its t request, the period to question the ?-Ssessment lapsed and, in turn, deprived the Court of its jurisdiction. !d., p. 528. 67 SEC. 228. Protesting ofAssessment. 68 See Respondent's Answer, Division Docket, pp. 120-125, supra at note 29. . 69 Supra at note 67 .

CTA Case No. 10262 � Health Plan Philippines, Inc. v. Commissioner of Internal Revenue DECISION x----------------------------------------------x In this case, a reading of petitioner's Protest immediately shows that it did not state clearly if it is a request for reconsideration or reinvestigation. The relevant parts read: We would like to inform you in writing that we disagree on the findings of your Assessment for the following:7� TAXES ISSUES SUPPORTING RR NO. AND TAX DEFICIENCIES CODE -Unsupported I. Income Tax debits to revenue - these debit transactions on the per books revenue account are merely adjustment to [book] the unearned Income for the fiscal period. As medical and health maintenance services, we primarily enter into a contract or agreement with medical clinics, hospitals and other medical establishment on installment plan. The company recognized their revenue when cash payment has been received or instalment payments actually received m that taxable year. - Refer to NIRC Outline, Chapter VIII - Accounting Periods and Methods of Accounting, Sec. 49 Installment Basis (Annex A); Revenue Recognition Principle under lAS 18 Revenue. (Annex-B) - Income payments - these income payments are not subjected to withholding tax exempted from withholding tax because these are payments made to General Professional Partnership (GPP). - Refer to RR No. 14-2002 Amending portions of RR 12-2001 under Sec. 4 Exemption from 70 Italics and emphasis in the original text and supplied.

CTA Case No. 10262 Health Plan Philippines, Inc. v. Commissioner of Internal Revenue . DECISION x----------------------------------------------x - Unsupported Withholding, "Sec. 2.57.5 (B) expenses (4). (Annex-C) - no breakdown of expenses indicated on the details of discrepancy and considered these as allowable deductions from Income Tax. - Refer to NIRC Outline - Chapter VII - Allowable Deductions -A Sec. 34 (A) (1). (Annex-D) II. Value Added - Receipts not - these receipts are mainly due to Tax the adjustment made on subjected to VAT unearned income for the fiscal period. - Refer to NIRC Outline, Chapter VIII - Accounting Periods and Methods of Accounting, Sec. 49 Installment Basis (Annex-A); Revenue Recognition Principle under lAS 18 Revenue. (Annex-B) III. Expanded - Income payments - these income payments are Withholding not subjected to exempted from withholding tax Tax withholding tax because these are payments made to General Professional Partnership (GPP). - Refer to RR No. 14-2002 Amending portions of RR 12-2001 under Sec. 4 Exemption from Withholding, "Sec. 2.57.5 (B) (4) (Annex-C) IV. Fringe - Non remittance of - these benefits are merely Benefits fringe benefits tax company uniforms issued to Officers Not subject to FBT. U - Refer to RR No. 3-98 Fringe ~ Benefits Tax, (Annex-E)

CTA Case No. 10262 Health Plan Philippines, Inc. v. Commissioner of Internal Revenue . DECISION x----------------------------------------------x Revenue Regulations (RR) No. 18-20137\ amending RR No. 12-9972, restated the previous definitions laid down in RR No. 12-8573, as follows: 3.1.4 Disputed Assessment. -The taxpayer or its authorized representative or tax agent may protest administratively against the aforesaid FLO /FAN within thirty (3o) days from date of receipt thereof. The taxpayer protesting an assessment may file a written request for reconsideration or reinvestigation defined as follows: (i) Request for reconsideration - refers to a plea of re-evaluation ofan assessment on the basis ofexisting records without need of additional evidence. It may involve both a question offact or oflaw or both. (ii) Request for 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 oflaw or both. The taxpayer shall state in his protest (i) the nature of protest whether reconsideration or reinvestigation, specifYing newly discovered or additional evidence he intends to present if it is a request for reinvestigation, (ii) date of the assessment notice, and (iii) the applicable law, rules and regulations, or jurisprudence on which his protest is based, otherwise, his protest shall be considered void and without force and effect. If there are several issues involved in the FLO /FAN but the taxpayer only disputes or protests against the validity of some of the issues raised, the assessment attributable to the undisputed issue or issues shall become final, executory and demandable; and the taxpayer shall be required to pay the deficiency tax or taxes attributable thereto, in which case, a collection letter shall be issued to the taxpayer calling for payment of the said deficiency tax or taxes, inclusive of the applicable surcharge and/or interest. oft If there are several issues involved in the disputed assessment and the taxpayer fails to state the facts, the applicable law, rules and _ regulations, or jurisprudence in support of his protest against some 71 Amending Certain Sections of Revenue Regulations No. I2-99 Relative to the Due Process Requirement in the Issuance of a Deficiency Tax Assessment. 72 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 Extrajudicial Settlement of a Taxpayer's Criminal Violation of the Code Through Payment of a Suggested Compromise Penalty. 73 Procedure covering administrative protests on assessments of the Bureau of Internal Revenue.

CTA Case No. 10262 Health Plan Philippines, Inc. v. Commissioner of Internal Revenue DECISION � Page 14 of 27 X----------------------------------------------X the several issues on which the assessment is based, the same shall be considered undisputed issue or issues, in which case, the assessment attributable thereto shall become final, executory and demandable; and the taxpayer shall be required to pay the deficiency tax or taxes attributable thereto and a collection letter shall be issued to the taxpayer calling for payment of the said deficiency tax, inclusive of the applicable surcharge and/or interest. For requests 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 of 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. The sixty (6o)-day period for the submission of all relevant supporting documents shall not apply to requests for reconsideration. Furthermore, the term "the assessment shall become final" shall mean the taxpayer is barred from disputing the correctness of the issued assessment by introduction of newly discovered or additional evidence, and the FDDA shall consequently be denied. If the taxpayer fails to file a valid protest against the FLO /FAN within thirty (30) days from date of receipt thereof, the assessment shall become final, executory and demandable. No request for reconsideration or reinvestigation shall be granted on tax assessments that have already become final, executory and demandable. 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 of Tax 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 (30) days from date ofreceipt ofthe 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 (r8o) 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 (r8o)-day period; or (ii) await the final D decision of the Comm~ner's duly authorized representative on the disputed assessment.

CTA Case No. 10262 Health Plan Philippines, Inc. v. Commissioner of Internal Revenue DECISION x----------------------------------------------x Ifthe protest or administrative appeal, as the case maybe, 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 denial of the protest or administrative appeal, as the case may be, shall not toll the thirty (3o)-day period to appeal to the CTA. If the protest or administrative appeal is not acted upon by the Commissioner within one hundred eighty (18o) days counted from the date of filing of the protest, the taxpayer may either: (i) appeal to the CTA within thirty (3o) days from after the expiration of the one hundred eighty (180)-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 ofthe 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.74 From the foregoing, a request for reconsideration is simply a plea for the re-evaluation of an assessment on the basis of existing records, without need of additional evidence. In contrast, a request for �reinvestigation is a similar plea but involves newly discovered or additional evidence (that a taxpayer intends to present in the reinvestigation). Reading from petitioner's Protest, while indeed it did not state whether the same is a request for reconsideration or request for reinvestigation, it is nevertheless clear that petitioner did not express any intention to submit additional evidence. In fact, what can be plainly inferred therefrom is that petitioner merely disagreed with the BIR findings. As it is, the Protest cannot be considered _a request for reinvestigation but rather a request for reconsideration.t 74 Italics in the original text, emphasis and underscoring supplied.

CTA Case No. 10262 Health Plan Philippines, Inc. v. Commissioner of Internal Revenue DECISION .x----------------------------------------------x Considering that respondent's Protest is in the nature of a request for reconsideration, its failure to submit the supporting documents within 6o days from the filing of the same should not have rendered the assessment final, executory, and demandable. Section 3.1.4 ofRR No. 18-201375 distinguishes when an assessment or: parts thereof are to be considered "final" as opposed to "final, executory and demandable". The word "final" in the phrase "the assessment shall become final" means that the taxpayer is barred from disputing the correctness of the issued assessment by introducing newly discovered or additional evidence. It cannot be taken to mean as a bar to avail the remedy of appeal because the rules also say that if the �taxpayer opts to await the final decision of the CIR on the disputed assessment, the taxpayer can appeal such final decision to the CTA within 30 days after the receipt of a copy of such decision.76 In Commissioner ofInternal Revenue v. Max's Sta. Mesa, Inc.77, the Supreme Court affirmed the CTA En Bane, where the latter had the opportunity to define the word "final", as used in RR No. 18-2013.?8 We quote79: RR 18-2013 became effective on 15 December 2013 or during the pendency of respondent's Protest to the FLO and prior to the issuance ofFDDA. As stated, such provision clarifying that the term "final" only means that taxpayer is barred from disputing the correctness of the issued assessment by introduction of newly discovered or additional evidence is applicable in respondent's case. Here, petitioner filed its Protest on 21 January 2014. Although it could have appealed the FAN/FLD to the CTA within 30 days after the expiration of the 18o-day period which ended on 19 August 2014. . petitioner opted to await respondent's final decision, which it eventuallyt 75 Supra at note 71. 76 See Commissioner ofinternal Revenue v. 8/96 Convenience Corporation, CTA EB No. 2648 (CTA Case No. 9818), 05 January 2024. 77 G.R. No. 257128, 17 October 2022. 78 Supra at note 71. 79 Commissioner of Internal Revenue v. Max's Sta. Mesa, Inc., CTA EB No. 2036 (CTA Case No. 8786), 18 November 2020; Emphasis supplied.

CTA Case No. 10262 Health Plan Philippines, Inc. v. Commissioner of Internal Revenue DECISION x----------------------------------------------x received on 27 lanuary 2020. The rules state that petitioner had 30 days therefrom within which to appeal to the CTA. Therefore, petitioner had until 26 February 2020 within which to file its appeal. Since the Petition for Review was filed on 26 February 2020, the appeal was timely, and thus, perfected. This Court then successfully acquired jurisdiction over this case. In Lascona Land Co., Inc. v. Commissioner of Internal Revenue80, the Supreme Court emphasized that the taxpayer has the option to wait for the CIR's final decision, to wit: In RCBC v. CIR, the Court has held that in case the Commissioner failed to act on the disputed assessment within the r8o- day period from date of submission of documents, a taxpayer can either: (r) file a petition for review with the Court of Tax Appeals within 30 days after the expiration of the r8o-day period; or (2) await the final decision of the Commissioner on the disputed assessments and appeal such final decision to the Court of Tax Appeals within 30 days after receipt of a copy of such decision. This is consistent with Section 3 A (2), Rule 4 of the Revised Rules of the Court of Tax Appeals, to wit: SEC. 3� Cases within the jurisdiction ofthe Court in Divisions. - The Court in Divisions shall exercise: (a) Exclusive original or appellate jurisdiction to review by appeal the following: (r) 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; (2) Inaction by 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, where the National Internal Revenue Code or other applicable law provides a specific period for~ U action: Provided, that in case of disputed assessments, the so G.R. No. 171251, 05 March 2012; Citations omitted, italics and emphasis in the original text and supplied.

CTA Case No. 10262 Health Plan Philippines, Inc. v. Commissioner of Internal Revenue DECISION x----------------------------------------------x inaction of the Commissioner of Internal Revenue within the one hundred eighty day-period under Section 228 ofthe National Internal revenue Code shall be deemed a denial for purposes of allowing the taxpayer to appeal his case to the Court and does not necessarily constitute a formal decision of the Commissioner of Internal Revenue on the tax case; Provided, further, that should the taxpayer opt to await the final decision of the Commissioner of Internal Revenue on the disputed assessments beyond the one hundred eighty day-period abovementioned, the taxpayer may appeal such final decision to the Court under Section 3(a), Rule 8 of these Rules; and Provided, still further, that in the case of claims for refund of taxes erroneously or illegally collected, the taxpayer must file a petition for review with the Court prior to the expiration of the two-year period under Section 229 of the National Internal Revenue Code[.] The next pivotal query is whether the CIR's 14 January 2020 Letter8', received on 27 January 2020, is the latter's decision that is appealable to this Court. Petitioner insists on the affirmative and We agree with it. A review of the case records reveals that petitioner received a Letter dated 24 July 201582 from the BIR, informing it that an FDDA will be issued. We quote below the pertinent portion of the said letter: In view of this, please be informed that the docket of the case will be forwarded to the Assessment Division, this Region, for [the] issuance of[a] Final Decision on Disputed Assessment.83 It is noted that although an FDDA appears in the BIR Records84, there is no indication that RD Misajon signed the same. Moreover, there is no proof that petitioner received the FDDA. Instead, petitioner t received the 14 January 2020 Letter85, informing it that the assessment _ had already become final, executory, and demandable. The said letter 81 Supra at note 24. 82 Supra at note 20. 8) Emphasis supplied. 84 BIR Records, pp. 452-460. 8) Supra at note 24.

CTA Case No. 10262 Health Plan Philippines, Inc. v Commissioner of Internal Revenue DECISION x----------------------------------------------x also mentioned that the BIR considered the said deficiency taxes as delinquency taxes which could be settled if petitioner avails the Tax Amnesty Program (Republic Act [RAJ No. 11213).86 The 14 January 2020 Letter reads: In this connection, please be informed that our records show that you failed to submit relevant supporting documents in support of your protest within the prescribed period. Thus, the protest cannot be considered a valid protest and the assessment becomes final, executory and demandable despite the absence of the issuance of Final Decision on Disputed Assessment (FDDA) in pursuance to Q37 ofRMC 057-19. In view of the foregoing, we would like to inform you of your opportunity to settle the abovementioned delinquency taxes thru availment the Tax Amnesty Program 1019 (Republic Act No. 11213), as implemented by Revenue Regulations No. 4-2019, with the following tax amnesty rates[.]B7 In the unrebutted testimony of Vale, petitiOner deemed the 14 January 2020 Letter as the CIR's final decision. Vale's Judicial Affidavit88 dated n November 2020 reads: What happened after you receive the Letter dated n March 2015, if any? We received another Letter dated 24 July 2015 from RDO No. 43-A on 20 August 2015, informing us that HPPI failed to submit evidence needed to overthrow the validity of the findings of the BIR stated in the FLO, and in view thereof, the tax docket would be forwarded to the Assessment Division of the RR [No.]7 for the issuance of [the FDDA]. What,ened next after you received the Letter dated 24 July D 2015? 86 AN ACT ENHANCING REVENUE ADMINISTRATION AND COLLECTION BY GRANTING AN AMNESTY ON ALL UNPAID INTERJo.:AL REVENUE TAXES IMPOSED RY THE NATIONAL GOVERNMENT FOR TAXABLE YEAR 20I7 AND PRIOR YEARS WITH RESPECT TO ESTATE TAX. OTHER INTERNAL REVENUE TAXES, AND TAX ON DELINQUENCIES. 87 Emphasis and underscoring supplied. 88 Supra at note 43.

CTA Case No. 10262 Health Plan Philippines, Inc. v. Commissioner of Internal Revenue DECISION x----------------------------------------------x A46: We did not receive any other communication from the BIR until we received a Letter dated 14 January 2020 on 27 January 2020, informing us that the protest dated 18 January 2024 was not valid due to HPPI's failure to submit supporting documents and that, as a result, the assessment had become final, executory and demandable. Q49: You mentioned that an FDDA was supposed to be issued by the BIR as mentioned in its Letter dated 24 July 2015. Did HPPI receive any such FDDA? A49: No, HPPI did not receive any such FDDA.89 We agree that the 14 January 2020 Letter is the CIR's final decision for the following reasons: (1) it expressly mentioned that the assessment had become final, executory and demandable, and considered the deficiency taxes as delinquent taxes; (2) it also mentioned that, since petitioner's Protest was not valid, the BIR did not have to issue the FDDA as the assessment had already become final; (3) Vale's unrebutted testimony confirmed that the BIR already informed petitioner that it will issue an FDDA and that petitioner eventually received the said 14 January 2020 Letter; and, (4) the BIR demonstrated no intention of issuing the FDDA, as it remained unsigned and unserved. For these reasons, the Court has validly acquired jurisdiction over the present petition. We now proceed to resolve the merits of the case. � THE SUBJECT ASSESSMENT AGAINST PETITIONER IS VOID FOR FAILURE TO OBSERVE DUE PROCESS. Is the assessment against petitioner valid? A review of the parties' evidence shows that at the time the D FAN /FLD was issued, the period to file a ~ to the PAN had yet to lapse. On the witness stand, Vale declared: 89 Emphasis supplied.

CTA Case No. 10262 Health Plan Philippines, Inc. v. Commissioner of Internal Revenue DECISION x----------------------------------------------x Qr8: What happened in the assessment subject of this case? Ar8: We received the PAN dated 27 December 2013 on 7 January 2014. Upon perusal of the PAN, I saw that it referred to alleged Income Tax, VAT, EWT and Frine Benefit Tax ("FBT") deficiencies ofHPPI amounting to Php15,692,256.25 Qz4: What happened next if any? A24: While we were preparing the supporting documents and our auditor the reply to the PAN, we were surprised to receive the FLD on 15 January 2014[,] despite the fact that our deadline to file a reply was still on 22 January 2014 and thus, had not yet lapsed,9� Vale's unrebutted declaration reveals that petitioner received the PAN on 07 January 2014. Counting 15 days therefrom, petitioner had until 22 [anuary 2014 within which to file its Protest to the PAN. However, petitioner received the FAN/FLD on 15 January 2014. This clearly shows that respondent did not wait for the period allotted for petitioner to file its Protest/Reply to the PAN to expire before issuing and serving the subject FAN/FLD. Section 228 of the NIRC of 1997, as amended, is clear, to wit: 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 findings: Provided, however, That a preassessment notice shall not be required in the following cases: ... 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. t 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 90 See Judicial Affidavit dated II November 2020; supra at note 43.

CTA Case No. 10262 Health Plan Philippines, Inc. v. Commissioner of Internal Revenue DECISION x----------------------------------------------x 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 (3o) 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. If the protest is denied in whole or in part, or is not acted upon within one hundred eighty (18o) days from submission of documents, the taxpayer adversely affected by the decision or inaction may appeal to the Court of Tax Appeals within thirty (3o) days from receipt of the said decision, or from the lapse of the one hundred eighty (180)-day period; otherwise, the decision shall become final, executory and demandable.91 Indubitably, a taxpayer shall be required to respond to the BIR's notice. It is only when the latter fails to respond that the CIR or his or her duly authorized representative could proceed to issue an assessment based on his or her findings. Section 3.1.1 ofRR No. 12-9992, as amended by RR No. 18-201393, reads: 3.1.1 Preliminary Assessment Notice (PAN). - If after review and evaluation by the Commissioner or his duly authorized representative, as the case may be, it is determined that there exists sufficient basis to assess the taxpayer for any deficiency tax or taxes, the said Office shall issue to the taxpayer a Preliminary Assessment Notice (PAN) for the proposed assessment, It shall show in detail the facts and the law, rules and regulations, or jurisprudence on which the proposed assessment is based (see illustration in ANNEX A hereof). If the taxpayer fails to respond within fifteen (15) days from date of receipt of the PAN, he shall be considered in default, in which case, a Formal Letter of Demand and Final Assessment Notice (FAN/FLD) shall be issued calling for t payment of the taxpayer's deficiency tax liability, inclusive of ~.~e applicable penalties.94 Emphasis supplied and italics in the original text. 92 Supra at note 72. 93 Supra at note 71. 94 Emphasis supplied and italics in the original text.

CTA Case No. 10262 Health Plan Philippines, Inc. v. Commissioner of Internal Revenue DECISION x----------------------------------------------x By failing to allow the full1s-day period (to reply to the PAN) to expire, respondent denied petitioner due process. In Commissioner of Internal Revenue v. Nippo Metal Tech Phils., Inc. (formerly Global Metal Tech Corporation)95, the Supreme Court held: In this case, the records show that respondent received the PAN on February 5, 2009. However, without waiting for the lapse of the Is-day period, the CIR already issued the FLD/FAN. By disregarding the Is-day period provided by law, the CIR utterly deprived respondent of the opportunity to contest the PAN and present evidence in support thereto before an FLD/FAN was issued. In CIR v. Metro Star Superama, Inc., the Court emphasized that the PAN is part of due process. The persuasiveness of the right to due process reaches both substantial and procedural rights and the failure of the CIR to strictly comply with the requirements laid down by law and its own rules, as in this case, is a denial of the taxpayer's right to due process. Similarly in, Commissioner of Internal Revenue v. Avon Products Manufacturing, Inc. 96 (Avon), the Supreme Court, citing Ang Tibay v. Court of Industrial Relations97, ruled that "[n]ot only must the party be given an opportunity to present his case and to adduce evidence tending to establish the rights which he asserts but the tribunal must consider the evidence presented". The Supreme Court further explained in Avon that: However, within just two (2) weeks from receipt ofAvon's protest letter, the Commissioner issued the Final Letter of Demand and Final Assessment Notices, reiterating the findings stated in the Preliminary Assessment Notice. The Bureau of t Internal Revenue chose to ignore Avon's explanations and refused to cancel the assessments unless Avon would agree to pay the ~~her deficiency assessments. G.R. No. 227616 (Notice), 19 June 2019; Citations omitted, underscoring and emphasis in the original text and supplied. 96 G.R. Nos. 201398-99, 03 October 2018. 97 G.R. No. L-46496, 27 February 1940.

CTA Case No. 10262 Health Plan Philippines, Inc. v. Commissioner of Internal Revenue DECISION x----------------------------------------------x It is true that the Commissioner is not obliged to accept the taxpayer's explanations, as explained by the Court of Tax Appeals. However, when he or she rejects these explanations, he or she must give some reason for doing so. He or she must give the particular facts upon which his or her conclusions are based, and those facts must appear in the record. Indeed, the Commissioner's inaction and omission to give due consideration to the arguments and evidence submitted before her by Avon are deplorable transgressions of Avon's right to due process. The right to be heard, which includes the right to present evidence, is meaningless if the Commissioner can simply ignore the evidence without reason. In Edwards v. McCoy; The object of a hearing is as much to have evidence considered as it is to present it. The right to adduce evidence, without the corresponding duty on the part of the board to consider it, is vain. Such right is conspicuously futile if the person or persons to whom the evidence is presented can thrust it aside without notice or consideration. In Ang Tibay, this Court similarly ruled that "[n]ot only must the party be given an opportunity to present his case and to adduce evidence tending to establish the rights which he asserts but the tribunal must consider the evidence presented." The Commissioner's total disregard of due process rendered the identical Preliminary Assessment Notice, Final Assessment Notices, and Collection Letter null and void, and of no force and effect. This Court has, in several cases, declared void any assessment that failed to strictly comply with the due process requirements set forth in Section 228 of the Tax Code and Revenue Regulations No. 12-99.98 Furthermore, in a plethora of cases99 decided by the CTA En Bane, it was ruled consistently that the taxpayer's right to due process wast 98 Supra at note 96; Citations omitted, italics and emphasis in the original text and supplied. 99 Commissioner of Internal Revenue v. Merial Philippines, Inc., CTA EB No. 1398 (CTA Case No. 8370), 09 May 20 17; Commissioner of Internal Revenue v. Apex Chemical Cotporation, CTA EB

CTA Case No. 10262 Health Plan Philippines, Inc. v. Commissioner of Internal Revenue DECISION x----------------------------------------------x violated when the FAN/FLD was issued prior to the lapse of the IS-day period given to it to respond to the PAN. Particularly, in Commissioner of Internal Revenue v. Hermano (San) Miguel Febres Cordero Medical Education Foundation (De La Salle - Health Science Institute), InC. 100, the CTA En Bane held: Here, respondent received a copy of the PAN dated December 12, 2oo8 on January 5� 2009. Pursuant to RR No. 12-99, respondent has fifteen (15) days or until January 20, 2009 within which to file a reply or protest against the PAN. Respondent filed its protest to the PAN on January 20, 2009. Barely a day after it filed its protest to the PAN or on January 21, 2009, respondent received the Formal Letter of Demand and Assessment Notice No. 54-2005 which are both dated January 9� 2009. Evidently, petitioner did not wait for respondent to reply to the PAN nor considered the arguments raised in respondent's protest thereto. The Formal Letter of Demand and Assessment Notice No. 54- 2005 were already prepared by petitioner as early as January 9, 2009 or way before the lapse of the fifteen-day period within which petitioner could file a reply or protest to the PAN. By prematurely issuing the FLD/FAN before the Is-day period to file a reply lapsed, respondent breached the due process requirements. Lastly, Section 228'01 of the NIRC of 1997, as amended, provides that the right to respond to a "preassessment notice" or PAN is given to the taxpayer. Furthermore, under RR No. I2-99102, as amended by RR No. I8-I3103, the Is-day period to file said response is also the taxpayer's right and cannot be waived by the CIR. Consequently, petitioner's right to due . process was violated, rendering the FAN/FLD null and void.t Nos. 1382 and 1387 (CTA Case No. 8698), 14 October 2016; Commissioner of Internal Revenue v. Yumex Philippines Corporation, CTA EB No. 1139 (CTA Case No. 8331), II August 2015; Commissioner of Internal Revenue v. Hermano (San) Miguel Febres Cordero .Medical Education Foundation (De La Salle- Health Science Institute). Inc., CTA EB No. 1151 (CTA Case No. 8095), 17 February 2015. 100 CTA EB No. 1151, 17 February 2015; Emphasis and underscoring in the original text. 101 Supra at pp. 21-22. 102 Supra at note 72. 103 Supra at note 71.

CTA Case No. 10262 Health Plan Philippines, Inc. v. Commissioner of Internal Revenue DECISION x----------------------------------------------x WHEREFORE, with the foregoing premises, the Petition for Review filed by petitioner Health Plan Philippines, Inc. on 26 February 2020 is hereby GRANTED. Accordingly, the deficiency Income Tax, Value-Added Tax, Expanded Withholding Tax, Fringe Benefit Tax and Compromise Penalty for the fiscal year 2011, in the aggregate amount of P16,o43.592.51, as found in the Final Assessment Notice/Formal Letter of Demand, are hereby CANCELLED and SET ASIDE. Consequently, respondent Commissioner of Internal Revenue or any person duly acting on his behalf is hereby ENJOINED and PROHIBITED from collecting the said amount against petitioner. SO ORDERED. - WE CONCUR: ROMAN G. DEL ROSARIO Presiding Justice lt4iA4t LANEE s. nrrI!:YDIIAIf~l.ID Associate Justice

CTA Case No. 10262 Health Plan Philippines, Inc. v. Commissioner of Internal Revenue DECISION X----------------------------------------------X CERTIFICATION Pursuant to Article VIII, Section 13 of the Constitution, 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's Division. Presiding Justice