COMMISSIONER OF INTERNAL REVENUE v. WIPRO PHILIPPINES, INC.

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY ENBANC COMMISSIONER OF CTA EB NO. 3040 INTERNAL REVENUE, (CT.A Case No. 10814) Petitioner, Present: -versus- Ringpis-Liban, P.J, Bacorro-Villena, Modesto-San Pedro, Reyes-Fajardo, Cui-D avid, Ferrer-Flores and Angeles,Jl ' WIPRO PHILIPPINES, INC., Promulgated: Respondent. fMAR 13 20 X------------------------------------------------------------------------------ -----------------X DECISION RINGPIS-LIBAN , P.l : Before the Court En Bane is a Petition for Review1 flied by petitioner Commissioner of Internal Revenue (CIR) on D ecember 18, 2024. The Petition for Review seeks the reversal of the D ecision dated June 24, 20242 (Assailed Decision) as well as the Resolution dated November 13, 20243 (Assailed Resolution) o f the First Division (Court in Division)~ of this Court in CTA Case No. 10814. The respective dispositive poruons of the Assailed D ecision and Resolution are quoted hereunder: I Court E11 Ba11c's Docket. pp. 9-35. 2 Id. , PP� ~3-66. 3 /d. , pp. 69-72. ~ C:ompo ~cJ of Prc~iJing J u~ticc Roman C. Del Ro~ario, ,\ ~~ociatc Ju~ticc Jean l\ !aric ,\. Bacorro-Villcna, a nd ,\~~ociatc J u~ticc J.ancc S. Cui-David (pollmle).

DECISION ITA EB No. 3040 (ITA Case No. 10814) Assailed Decision: 'WHEREFORE, in light of the foregoing considerations, the present Petilion .for Rn-iov is GRANTED. .\ccordingly, the subject deficiency Income Tax assessment in the total amount of 1"6,315,375.47, inclusiYe of interests, for the fiscal year ending :\larch 31, 2016, is CANCELLED and WITHDRAWN and the l�'DD"\ dated February 4, 2022, issued by respondent against petitioner is REVERSED and SET ASIDE. Respondent is ENJOINED from proceeding with the collection of the said deficienc1� Income Tax assessment. SO ORDERED.' Assailed Resolution: 'WHEREFORE, premises considered, respondent's lv1olionfor Re,YJ!Hideration (Re: De,i,�ion du!ed 2.f. [11ne 202-1) is DENIED for lack of ment. SO ORDERED.' THE FACTS The facts of the present case were laid down by the Court in Division in the "\ssailed Decision as follows 5 "On .-\pril 21, 2017, the .\ssistant Commissioner for the Large Taxpayers Sen�ice, ;\Is. Teresita ;'11. .\ngcles, issued a Letter of c\uthority (LO"�\) '-Jo. eL\201500034443, authori/.ing Re\�enue Officers (ROs) Bianca Bess Lindugan, Roben Saguin, Jissa :\Iandin, and Group Supen�isor (GS) Jane Tumagan to examine petitioner's books of accounts and other accounting records for all internal reyenue taxes for the period from "\pril1, 2015 to :\larch 31, 2016. On Nm�ember 27, 2019, petitioner recei\�ed a Preliminu!J .�l.r.re.r.rmml ,\'ofi,~ (P.\:\1) of e,�en date, assessing it of deficiency IT, expanded withholding tax (E\\T), withholding tax on compensation (\\'TC), documentary stamp tax (DS"l), and miscellaneous taxes (compromise penalties) for FY ended l\larch 31, 2016, in the aggregate amount off'94,551,239.34, inclusiYc of surcharges and interests, broken down as follows: '>Court lin B11n, :. Docker. pp. -1--1---1-B ::Cit.ltion~ omitrl�d).

DECISION CIA EB No. 3040 (CIA Case No. 10814) Tax Type Total 49,552,317.72 Income Tax p 14,496,911.82 EWT 29,870,024.54 \'V'TC p DST 441,985.26 Compromise penalties 190,000.00 Total 94,551,239.34 On December 12, 2019, petitioner filed a l'rote.rt Letter refuting the deficiency tax assessments and requesting that the same be re,�isited, reim-cstigatcd, and consequently, cancelled. On June 22, 2020, petitioner recei,-cd the Formul Letter of Demdlld/�1.r.re.r.rmmt ;\'ot/,�e.. (FLD/F.\N) dated June 15, 2020, allegedly reflecting the ,�ery same findings per P.\1\i, with adjusted interest only as difference, to wit: Tax Type Total 53,346,848.34 Income Tax 15,607,030.9 5 EWT p 32,15 7,358. 97 WTC DST p 476,040.11 Compromise penalties 190,000.00 Total 101,777,278.37 On July 22, 2020, pcouoner filed with the BIR a Motion for Re!m�e.rtL:gation/ Pmte.rt to the FLD /F. \'\j, contesting the deficienc1� tax assessments and rec1uesting that the same be re,�isited, reim�estigated, and consequentlY, cancelled. In support of its position/explanation, petitioner allegedly submitted additional documents on September 21, 2020. On Februan� 22, 2022, pennoner recei,-cd the letter dated Februan� 4, 2022 (Final Decision on Disputed .\ssessment and/ or !�DD.\) signed D\' then Commissioner Caesar R. Dulay, informing petitioner that after considering the latter's protest, it has been found still liable for deficiency IT, E\'CT, WTC, DST, and miscellaneous taxes (compromise penalties), inclusiH of surcharges and interests, in the aggregate amount of 1'14,485,240.26, broken down as follows: Tax Type Total 6,315,3 75.4 7 Income Tax I' 6,532,503.42 1 '184,452.91 E\X'T p WTC 322,908.46 DST 130,000.00 Compromise penalties 14,485,240.26 Total

DECISION ITA EB No. 3040 (CTA Case No. 10814) On .\larch 18, 2022, petitioner partially paid the assessments for deficiency E\'</T, \'\'TC, DST, and miscellaneous taxes, in the aggregate amount off'8,167,873.74, broken down as follows: Tax Type Total E\'VT 6,581,834.46 WTC 1,216,144.79 DST 369,894.49 TOTAL PAID DEFICIENCY TAXES (including interests l" 8,167,873.74 and miscellaneous taxes) "\nent the deficiency IT assessment, petitioner questioned it n'u the present Petition ojTZm'e!V filed on .\larch 23, 2022, and initially raffled to this Court's Second Di,�ision. On .\lay 30, 2022, within the extension period gi,�en by the Court, respondent filed his .�1nnver contending that the instant Petition o/ Reriew should be denied for lack of merit. Respondent alleged that petitioner is liable to pay the assessed deficiency IT for the l'Y ended ;\larch 31, 2016, as its Income Tax Holiday (ITH) entitlement for the acti,�ities at its 1 Cyber Pod Centris, Eton Centris, already expired on Pebruary 28, 2(]14. Respondent added that petitioner failed to present any proof that its ITH incenti,�e was extended and admits that the extension of its ITH incentiYe was onh� confirmed by PEZ.\ on September 23, 2019. Hence, for respondent, there was no existing ITH incenti,�e for petitioner to apply such an exemption for l'Y 2016. The 1'!7-Tria/ G!llJi-mhc' was set and held on .\ugust 15, 2022. During the said ConjcmJc"e, the Court, among other things, directed the parties to appear before the Philippine Mediation Center-Court of Tax c\ppeals (Pi>.IC-CL\) for mediation proceedings. Howe\-cr, the parties decided not to hm�e their case mediated. On September 13, 2022, the parties filed their Join! Stipulution ol 1-'ud.r und J.,�.we.r, based on which a P1~-Tn'ul OJY!er was issued on September 29, 2022. The trial ensued, Juring which petitioner presented its witnesses: (1) "\tty. Harold S. Ocampo, petitioner's Corporate Secretary; (2) .'v!r. John Paul \' argas and ,\tty. Lawrence C. Biscocho, petitioner's External Tax Consultants; and (3) ;\Is. Susan c;. Batistis, petitioner's Deputy i\lanager for Finance. On February 15, 2023, petitioner filed its Fom;u/ Ojjer o/ b�ido~c' m't/1 Motion to .�1dopt t/1e Com:d J:..,:/Jlbl! Rejen'lh~ illurkilW, to which respondent failed to file his comment despite the opportunity giYen. On "\pril 12, 2023, the Court resoh�ed to admit petitioner's offered exhibits, ex,-ept Exhibits 'P-4,' 'P-8,' and 'P-20,' for failure to present the originals for comparison.

DECISION CTA EB No. 3040 (CTA Case No. 10814) For his part, respondent offered the tesnmony of RO Lyn Dy Octot Gamalo. On .-\pril 25, 2023, respondent filed his l'ormu! Offer of f!!'ldmee, to which petitioner filed its Commml on the Re.cpondw(r Formul Offer of E:-.:/Jibit_.� on .\pril 27, 2023. In the Resolution dated i\Iay 26, 2023, the Court admitted all respondent's offered exhibits, e.wept Exhibit 'R-1', for failure to present the original for comparison. On ,\lay 29, 2023, this case was transferred to this Court's First Di,�ision pursuant to .\dministrati,-e Circular No. 01-2023 (Reorganizing the Di,-isions of the Court) dated ,\lay 23, 2023. On July 26, 2023, this case was submitted for decision considering the Alemomndum (ofPetltioller IVipro P/!ilippille_,�_ !11,:) filed on J ulv 10, 2023, and respondent's i\lemrmmdzm; filed l'iu electronic mail on July 10, 2023. .\fter due proceedings and trial, the Court in Division rendered the _-\ssailcd Decision on June 24, 2024, granting the Petition for Review. ,\ggrieved, petitioner filed a :\lotion for Reconsideration (Re: Decision dated 24 June 2024) onjuly 12, 2024 which the Court in Division denied in the ,\ssailed Resolution. On December 18, 2024/' petitioner filed the present Petition for Review, within the extended period granted by the Court E11 Bam: In a :\linute Resolution- dated February 17, 2025, the Court ordered the respondent to file its comment to the Petition for ReYiew within ten (1 0) days from notice. On ,\larch 3, 2025, respondent filed its Comment/Opposition (Re: Petitioner's Petition for Review dated 16 December 2024).8 In a :\linute Rcsolution9 dated J\larch 17, 2025, the Court referred the case to the Philippine ,\lediation Center-Court of Tax .\ppeals (PJ\lC-CTA) for mediation. On .\pril 21, 2025, the P:\lC-C:T\ submitted to this Court E11 Bam� a No .\greement to :\lediate 111 wherein it stated that the parties have decided not to have their case mediated. l h :-;l'l' '\otl' -Court EH Rail('..- DockL�t. p. -.\. �'Court F.11 Bill/(:, DockL�r. pp. -_l-89. '' ( :, !llrT Lu Bt~ll,-'..- [)( !ckct. p. 91. 1'' ( :oun l:.nl3!1!!(:,� Docket. PP- 92.

DECISION CTA EB No. 3040 (CTA Case No. 10814) In a i\linute Resolution dated :\lay 21, 2025, 11 the present case was submitted for decision. THE ISSUES Petitioner submitted the following assignment of errors for this Court's resolution: "ASSIGNMENT OF ERRORS I. THE HONORABLE COURT ERRED I~ C\~C:ELLING .\~D \'<?JTHDIL\\VING THE Flk\L DECISION ON THE DISPUTTm .\SSJ~SS:\IE:\JT .\FTim RESPONDENT PAY:\IENT ON OTHER T.\XES '\JOT SUBJECT OF ITS "\PPEAJ". II. WITH 1\LL DUE RESPECT, THE HO~ORABLE COURT ERRED \X'HE~ IT ST.\TED I~ ITS DECISION THAT PETITIONER YIOL\TED RESPO~DENT'S IUGHT TO DUE PROCESS. III. WITH ALL DUE RESPECT, THE HONOlL\BLE COURT ERRED WHEN IT DECL\RED I:\1 ITS DECISION THAT RESPOl'iDENT IS NOT LL\BLE H)R DEHCIENCY INCO:\IE T.\X IN THE TOT.\L .\i\IOU~T OF PHP6,315,375.47, INCLUSIVE OF INTERESTS, FOR THE FISC\L YK\R ENDING :\L\RC:H 31, 2016." ARGUMENTS OF THE PARTIES Petitioner asserts that the Court in Division erred in considering the due process issue when neither party raised it. Petitioner adds that respondent should be deemed estopped from raising new challenges to the validity of the undisputed portions of the assessment, having paid these items without objection. Petitioner also contends that respondent's right to due process was not violated because respondent was properh� notified of the charges and given fair and reasonable opportunity to explain or defend itself. Petitioner posits that respondent was duly notified through set"Yice of the assessment notices, enabling respondent to file its protest and submit additional documents to II ( ~ourt Ln Bill!!:.- Docket. p. 93

DECISION CTA EB No. 3040 (CTA Case No. 10814) support Its posltlon. Petitioner postulates that respondent cannot expect a different response when no new supporting documents were provided for consideration. Petitioner finally argues that respondent is liable to pay the assessed deficiency income taxes for fiscal year ending :\larch 31, 2016. Respondent, on the other hand, argues that this Court has the authority to rule on issues expressly raised by the parties, in the pleadings or otherwise, including related issues necessary for the proper and orderly disposition of a case. Citing Section 1, Rule 14 of the Revised Rules of the Court of Tax ,\ppeals (RRCL \) as basis, respondent claims that this Court properly ruled on the due process issue. Respondent also asserts that it is not estopped from qucsuomng the propriety of the issuance of the assessment notices. Respondent finally maintains that its right to due process was violated, making the assessment 'wid. THE COURT EN BANC'S RULING The Petition for Review lacks merit. Timeliness of the Petition The Court En Bane shall first determine whether the present Petition for Review was timely filed. Section 3(b), Rule 8 of the RRCL\ provides: XXX SEC. 3. lf//m JJJO)' appeal:pmod !ojlle pelilion. - XXX XXX XXX (b) A party adverseh� affected by a decision or resolution of a Di,�ision of the Court on a motion for reconsideration or new trial may appeal to the Court by filing before it a petition for review within fifteen days from receipt of a copy of the questioned decision or resolution. ""''' (Emphasis supplied)

DECISION CTA EB No. 3040 (CTA Case No. 10814) The records show that petinoncr received the .\ssailed Resolution on ~ovembcr 19, 2024. Counting fifteen (15) days therefrom, petitioner had until December 3, 2024 to file its Petition for Review before the Court E11 Bmu: On December 3, 2024, however, petitioner filed a :\lotion for Extension of Time to File Petition for Review,'o which was granted in the J\Iinute Resolution dated December 9, 2024. The Court En Bant granted petitioner an additional period of fifteen (15) days from December 4, 2024, or until December 19, 2024, to file its Petition for Review. Thm, petitioner timely filed the present Petition for Review on December 18, 2024, well within the extended period. The Court in Division did not err in taking cognizance of the due process Issue even when not raised by the parties. In Pnlm S tee! AILil. Im: 11. CommiJJioner of Intema! Revwue, 11 the Supreme Court held that the CL\ ma\� rule on issues not raised by the parties either in the pleadings or during trial, provided two (2) conditions concur: 1. The arguments arc related to the principal issue to be resolved by the court and arc necessary to achie\T an orderly disposition of the case; and 2. The resolution of these new arguments would not require the presentation of additional evidence and must rely solely on factual bases that arc alrcad\� matters of record in the case. Both conditions arc satisfied in this case. f<lnt, the due process issue is inextricably linked to the principal issue of whether respondent may be held liable for the assessed deficiency income tax. "\s the Supreme Court aptly held in Prime Steel Mill, the issue of violation of the right to due process is inextricably linked to the validity of the assessment. This logically follows from the settled principle that the right to collect deficiency taxes must flow from a valid assessment, for a void assessment bears no fruit. 14 "\n assessment issued in violation of clue process is a legal nullity that cannot serve as basis for tax collection. 1~ Court En Ba11,-:,- i)()ckct, pp. 1-�1 1' (;.I( ".o. 2-1-91 S3, :-:cptcmbcr 12. 2012 ' �Pmlli' Skc'l _\I/If'.', o/ o/ 11 Co!lm!iuioner lnkmi!l I\i'l'i'/1/lc' r..\ldn1 Star \'rtpr'llllllil, 1!1,., (; .1\. :'\.o. 1853-1. Dl'Cl'lllhn 8. 201 0; CoJJJJJJ!.f.fiollfr flll<'rllill 1\.n'l'llll<' !'. 13.�1.\T Crlilfi;z~- l!!k_,- P/Ji/.r.. ll!(.. ( ;_R '\o. 1986--. "'\()n�mhcr 2(J� .:WI-+.

DECISION CTA EB No. 3040 (CTA Case No. 10814) Sero11d, the resolution of the due proceso; io;sue requires no additional evidence. The determination may be made through examination of the records already before the Court, which contain the necessary factual bases to resolve whether the assessment complied v,;-ith the due process requirernents. The Court in Division therefore acted within its authority in addressing the due process io;sue. Far from constituting error, doing o;o is consistent \Veith the Court':; duty to ensure that tax ao;o;essments conform to substantive and procedural safeguard:; before taxpayers mav be compelled to satio;fy tax liabilities. Estoppel does not lie against respondent. Petitioner asserts that respondent io; eo;topped from assailing the validity of the assessment by virtue of ito; payment of the undisputed portion thereof. The Court En Bath' io; uncorwinced. In Ka!a!o ''� L11::::_, 15 the Supreme Court outlined the eo;sential elements of estoppel as follows: "The essential clements of estoppel i11 paic may be considered in relation to the party sought to be estopped, and in relation to the party im�oking the estoppel in his fm�or. .\s related to the parry to be estopped, the essential clements arc: (1) conduct amounting to false representation or concealment of material facts or at least calculated to convey the impression that the facts are otherwise than, and inconsistent with, those which the party subsequently attempts to assert; (2) intent, or at least expectation that this conduct shall be acted upon bY, or at least influence, the other party; and (3) knowledge, actual or constructive, of the real facts..\s related to the party claiming the estoppel, the essential clements are (1) lack of knowledge and of the means of knowledge of the truth as the facts in question; (2), reliance, in good faith, upon the conduct or statements of the party to be estopped; (3) action or inaction based thereon of such character as to change the position or status of the party claiming the estoppel, to his 1!1Jury, detriment or prejudice." (Emp!"uir .r11pplied) "\.pplying these clements, the Court E11 Bath' finds petitioner's estoppel argument untenable.

DECISION CTA EB No. 3040 (CTA Case No. 10814) Fii'Jt, respondent's partial payment cannot be equated with conduct amounting to false representation or concealment of material facts. The payment of undisputed amounts, while contesting other portions of the assessment, merely reflects an acknowledgment of liability for items not in dispute-not an admission that the entire assessment is valid. Such conduct does not convey an impression inconsistent with respondent's subsequent challenge to the assessment's validity. S ewnd, the case records are de\�oid of any showing that petitioner relied on respondent's partial payment. Reliance is a critical clement of estoppel, yet petitioner has failed to demonstrate how the payment altered its position or caused it injury or prejudice. Third, and more fundamentalh�, the validity of a tax assessment cannot be' ~ established or negated by estoppel. The intrinsic validity of an assessment does not depend upon the will or conduct of the taxpayer but must be determined from the factual circumstances surrounding its issuance as measured against the requirements laid down by law and jurispmdence..\n assessment that fails to comply \vith legal requisites remains invalid regardless of any subsequent action by the taxpayer. To rule otherwise would undermine the mandatory safeguards that the law imposes on the taxing authority. Petitioner violated respondent's right to due process. The Court En Bane concurs with the Court in Division's finding that the assessment is void due to violation of respondent's right to due process. The Court En Ball( thus quotes with approval the Court in Division's relevant discussion on this matter, as follows: ",\ side-bv-side comparison of the figures and findings in both the P.-\"i and the FLD/F.\N, along with the Detuif,� o/ [)i.,mpun,ie.r, shmvs that they arc identi,,J!. Notably, the BIR did not address any of the explanations made by petitioner in its protest to the P.\N - an indication that the BIR did not consider them when it issued the subject FLD /P,\N without gi\�ing am� reason for rejecting petitioner's refutations and explanations in its thirteen-paged l'mte.rl Letkr dated December 12, 2019. .\s established in the .�1mn cu.re, the CIR is not obliged to accept the taxpayer's explanation, like that of petitioner. Nonetheless, it is imperati\-c that he give the pu11i,'lilarfudJ� upon which his conclusion is based, and these facts must appear in the record. The right to be heard, including the right to present evidence, is meaningless if the Commissioner can ignore the e\�idence without

DECISION CTA EB No. 3040 (CTA Case No. 10814) reason. Respondent's failure to giYes due consideration to petitioner's defenses, explanations, and supporting documents when he concluded in the FLD /F.-\1\: that petitioner had deficiency tax liabilities could hardly be comidered substantial compliance with the due ptoccss reqmrement. In the more recent case of Cim;mir.rioner oj'[n!emul Rei'Cill!e !'. Next Mobile. 111<'. (l\'e:-.:1 Mobile ,'U..�e), the Supreme Court J~ilem!ed its ruling in the .�11'011 and .�11(~ Tibuy cases that 'not only must the party be gi,�en an opportunity to present his case and to adduce e\�idence tending to establish the rights which he asserts, but the tribunal must consider the evidence presented.' Respondent's failure to uphold petitioner's fundamental right to due process under Section 22R of the 1\:IRC: of 1997, as amended and implemented by RR '\io. 12-1999 and RR 1\:o. 18-2013, renders the FLD /F.-\1\:, more particularly the deficiency IT assessment of 1"6,315,375.47, which is subject of the instant case, null and Yoid." \X'hilc it is true that petitioner is not obligated to give credence to respondent's arguments when they lack merit, petitioner must state so on record and explain wb)' they lack merit. A bare assertion of rejection is insufficient; the basis for such rejection must be clearly communicated to the taxpayer. Petitioner cannot claim that no due process violation occurred simply because respondent was given the opportunity to file a protest, when respondent was never informed 1vby its defenses were rejected. \'1/hether respondent's arguments hm�e merit is precisely what petitioner must determine and explain on record. Otherwise, the protest stage is effectively reduced to a tncrc formality-an appearance of a hearing '\Vithout its substance. Considering the nullity of the assessment due to the violation of respondent's right to due process, there is no longer any need to discuss the other issues raised in the Petition for Review. FOR THESE REASONS, the Petition for Review is DENIED, for lack of merit..\ccordingly, the Decision dated June 24, 2024 and the Resolution dated November 13, 2024, respectively, of the CL\ First Division, are AFFIRMED.

DECISION CTA EB No. 3040 (CTA Case No. 10814) SO ORDERED. MA. BELEN M. RINGPIS-LIBAN Presiding Justice U/'E CONCUR� JEAN MARl~~-VlLLENA ~bF.~-F~ lW MARIAN F. REYES-FAJARDO ,\ssociatc Justice 1!4#uant LANEE S. CUI~rfAVID ,\ssociatc Justice ~'-#�~~ ES CORAZSTN G. Associate Justice HENRJ.~GELES "\ssociatc J usticc

DECISION CTA EB No. 3040 (CTA Case No. 10814) CERTIFICATION Pursuant to Article \'III, Section 13 of the Constitution, it is hereby certified that the conclusions in the above decision were reached in consultation before the case was assit,rned to the writer of the opinion of the Court. ~- ~ '7- MA. BELEN M. RINGPIS-LIBAN Presiding Justiee