cta_decision CTA Case No. EB 2966EB 2966 2026-04-10

INTELLIGENT TOUCH CORPORATION, v. COMMISSIONER OF INTERNAL REVENUE

.REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY ENBANC INTELLIGENT TOUCH CTA EB NO. 2966 CORPORATION, Petitioner, (CTA Case No. 10215) -versus- COMMISSIONER OF INTERNAL REVENUE, Respondent. x--------------------------------------x COMMISSIONER OF CTAEBNO.~ INTERNAL REVENUE, (CTA Case No. 10215) Petitioner, Present: -versus- RINGPIS-LIBAN, U, BACORRO-VILLENA, MODESTO-SAN PEDRO, REYES- FAJARDO , CUI-DAVID, FERRER-FLORES, and ANGELES, fl. INTELLIGENT TOUCH CORPORATION, Promulgated: Respondent. AP X-------------------------------------- ------- --X

CTA EB NOS. 2966 and 2969 (CTA Case No. 10215) Intelligent Touch Corporation v. Commissioner of Internal Revenue and Commissioner of Internal Revenue v. Intelligent Touch Corporation DECISION x-------------------------------------------------------------------x DECISION BA CORR 0-VILLENA, J.: Before the Court En Bane are two (2) consolidated Petitions for Review' filed by Intelligent Touch Corporation (lTC) and the Commissioner of Internal Revenue (CIR), assailing the Decision dated 19 October 2023z (assailed Decision) and the subsequent Resolution dated 23 July 20243 (assailed Resolution) of the Special Third Division in CTA Case No. 10215, entitled Intelligent Touch Corporation v. � Commissioner ofInternal Revenue. The assailed Decision cancelled the deficiency income tax assessment against ITC for the taxable year (TY) 2011, but upheld, with modification, the deficiency value-added tax (VAT) assessment, thereby ordering ITC to pay 'P3,772,955�77, representing deficiency VAT for the third and fourth quarters of the TY 2011, inclusive of interest and surcharge. Meanwhile, the assailed Resolution denied, for lack of merit, both ITC's Motion for Partial Reconsideration (of the Decision dated t 19 October 2023)4 and the CIR's Motion for Partial Reconsiderations (collectively, "MPRs"). Filed by Intelligent Touch Corporation on 29 August 2024, rolla (CTA EB No. 2966), pp. 19- I00, with annexes, and by the Commissioner of Internal Revenue on 02 September 2024, rolla (CTA EB No. 2969), pp. 6-69, with annexes. Rule 8- Procedure in Civil Cases, Section 3(b), Revised Rules of the Court of Tax Appeals. Section 3. Who may appeal; period to file petition. - (b) Any party adversely affected by a decision or resolution of a Division 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. Upon proper motion and the payment of the full amount of the docket and other lawful fees and deposit for costs before the expiration of the reglementary period herein fixed, the Court may grant an additional period not exceeding fifteen days from the expiration of the original period within which to file the petition for review. Division Docket, Volume II, pp. 1005-1034. Penned by Presiding Justice (then Associate Justice) Ma. Belen M. Ringpis-Liban with Associate Justice Maria Rowena Modesto-San Pedro and Associate Justice Corazon G. Ferrer-Flores, concurring. !d., Volume III, pp. 1089-1099. !d., pp. 1035-1062. Id., pp. !064-I071.

CTA EB NOS. 2966 and 2969 (CTA Case No. 10215) Intelligent Touch Corporation v. Commissioner of Internal Revenue and Commissioner of Internal Revenue v. Intelligent Touch Corporation DECISION x-------------------------------------------------------------------x PARTIES TO THE CASE lTC is a domestic corporation duly organized and registered under the laws of the Republic of the Philippines, with Company Registration No. 200259725, with principal address at Unit 109, Central Business Park, Pasig City.6 The CIR, on the other hand, is vested with the power to decide disputed assessments pursuant to Section 47 of the National Internal Revenue Code (NIRC) of 1997, as amended, with office address at the 5th Floor, Bureau of Internal Revenue (BIR) National Office Building,' Agham Road (now, Senator Miriam P. Defensor-Santiago Avenue), Diliman, Quezon City and may be served with summons and other legal processes through the its counsels with office address at the Legal Division, Revenue Region SA- Makati City.8 FACTS OF THE CASE On 16 August 2012, the CIR issued Letter of Authority (LOA) No. LOA-047-2012-ooooo383 (SN: eLA2onoo015037), authorizing Revenue Officer (RO) Remedios Arcega (Arcega), under the supervision of Group Supervisor (GS) Elizabeth Arias (Arias), to examine ITC's books and records for all internal revenue taxes for the calendar year (CY) 2on.9 A Checklist of Requirements accompanied the LOA, listing the documents that ITC ought to provide for examination and audit.10 Thereafter, on 22 October 2014, the CIR issued a Preliminary t Assessment Notice11 (PAN) accompanied by Details of Discrepancies, _ finding ITC liable for deficiency income tax, VAT, expanded 6 Paragraph I, I. Summary of Admitted Facts, Joint Stipulation of Facts and Issues (JSFI), id., Volume II, p. 612. SEC. 4. Power of the Commissioner to Interpret Tax Laws and to Decide Tax Cases.- The power to interpret the provisions of this Code and other tax laws shall be under the exclusive and original jurisdiction of the Commissioner, subject to review by the Secretary of Finance. The power to decide disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties imposed in relation thereto, or other matters arising under this Code or other laws or portions thereof administered by the Bureau of Internal Revenue is vested in the Commissioner, subject to the exclusive appellate jurisdiction of the Court of Tax Appeals. Rollo (CTA EB No. 2969), p. 7. 9 BIR Records, Exhibit "R-1", p. 248. >0 Exhibit "R-2", id., p, 247. II Exhibits "R-1 0" and "R-11 ", id., unpaginated.

CTA EB NOS. 2966 and 2969 (CTA Case No. 10215) Intelligent Touch Corporation v. Commissioner of Internal Revenue and Commissioner of Internal Revenue v. Intelligent Touch Corporation DECISION x-------------------------------------------------------------------x withholding tax (EWT), and withholding tax on compensation (WTC), totalling P5oA81,040.77, inclusive of interest, forTY 2011. The PAN was followed by the issuance, on n November 2014, of a Formal Assessment Notice12 (FAN) accompanied by Details of Discrepancies and Assessment Notices, upholding the same amount of basic deficiency tax assessments and differing only as to interest, for an aggregate amount of P51,o36,o95-48, inclusive of interest. On 10 December 2014, ITC filed a letter addressed to the CIR entitled "Request for Reinvestigation/Valid Protest of FAN dated n November 2014"'3 (Request for Reinvestigation). The CIR then issued the Final Decision on Disputed Assessment'4 (FDDA) dated 17 September 2015, accompanied by Details of Discrepancies, reiterating the same amount ofbasic deficiency taxes and differing only as to interest, for an aggregate amount of P56,837>312-49, inclusive of interest, broken down as follows: Tax Type Basic Interest Total Income Tax I'14,4 71,961.71 !'10,340,514-01 !'24,812-475�72 VAT 17,363.430.81 13,177,179-00 30,54o,6og.81 EWT 497.470.63 WTC 65o,812.83 145,540�74 1,148,283-46 Total 190,402.76 335.943�50 I'32,676,6o8.u I'24,r6o,704�38 Ps6,837>312.49 On 19 October 2015, lTC paid in full the deficiency EWT and' WTC.'5 It also paid, albeit under protest, the deficiency income tax and VAT assessments, but only for P161,613.o6 and P2,149,029.29, respectively.'6 On the same day, lTC filed an Administrative Appeal to the CIR contesting the deficiency income tax and VAT assessments.'7 t Following the payments made, on 24 October 2019, ITC received _ ' the Decision of the CIR reducing the total deficiency tax assessment to 12 Exhibits "R-12", '�R-13", "R-14", "R-15", "R-16", and "R-17", id., unpaginated. 13 Exhibit "P-5", Division Docket, Volume II. pp. 804-814. 14 Exhibit "P-6", id., pp. 815-822. 15 Exhibits "P-11" and "P-12", id., pp. 844-849. 16 Exhibits "P-9" and "P-10", id., pp. 837-843. 17 Exhibit "P-7", id., pp. 823-831.

CTA EB NOS. 2966 and 2969 (CTA Case No. 10215) Intelligent Touch Corporation v. Commissioner of Internal Revenue and Commissioner of Internal Revenue v. Intelligent Touch Corporation DECISION x-------------------------------------------------------------------x P28,547,592.19, inclusive of interest, representing only the remammg deficiency income tax and VAT assessments,'8 broken down as follows: Deficiency Deficiency Total Income Tax VAT 1"17,563,619.83 Basic deficiency tax due 1"200,189.02 Pqa63.430.81 13,098,868.44 Add: Interest (04.16.12 to 10.19.15) 140,516.24 12,958.352.20 Less: Payments made on 10.19.15 161,613.06 2,149,029.29 2,310,642�35 Add: Interest (10.19.15 to n.n.15) 1,268.52 195.746.27 Total amount due 194.477�75 PI80,J60.72 P28,367,231.47 P28>547,592.19 PROCEEDINGS BEFORE THE THIRD DIVISION On 21 November 2019 and within thirty (3o) days from receipt of the ClR's Decision, lTC filed its prior Petition for Review'9 before the Court in Division to appeal the denial of its administrative claim. The same was raffled to the Third Division and docketed as CTA Case No. 10215. On 26 December 2019, the Third Division issued SummonS20 ordering the CIR to file an Answer within fifteen (15) days from service. The CIR received the said Summons on 07 January 2020!' After the Third Division granted extension oftime (to file) twice/2 the ClR filed an Answer (with Special and Affirmative Defenses) 23 on 01 July 2020. The CIR transmitted the BIR records on 30 July 202o.24 Later, the case was referred to mediation in the Philippine Mediation Center-Court of Tax Appeals (PMC-CTA)_>s However, the parties agreed not to have their case mediated before the same.>6 On 17 September 2020, the Third Division set the case for Pre-Trial Conference on 09 February 2021!7 In compliance with the Court'st, 18 See Paragraph 3, I. Summary of Admitted Facts, JSFI, id., p. 613. 19 !d., Volume I, pp. 7-157, with annexes. co !d., p. 186. " !d. See Resolution dated 27 January 2020, id., p. 192 and Resolution dated 03 March 2020, id., p. 198. 23 Id .. pp.i99-215. " See Compliance dated 28 July 2020, id., p. 317. 25 See Resolution dated 22 July 2020, id., pp. 315-316. See No Agreement to Mediate dated I0 September 2020 issued by the PMC-CTA, id., p. 319. 27 See Resolution dated 17 September 2020, id., pp. 321-322.

CTA EB NOS. 2966 and 2969 (CTA Case No. 10215) Intelligent Touch Corporation v. Commissioner of Internal Revenue and Commissioner of Internal Revenue v. Intelligent Touch Corporation DECISION X-------------------------------------------------------------------X directive, lTC filed its Pre-Trial Brief on 04 February 2021,zs while the CIR filed its Pre-Trial Brief on 05 February 2021. 29 At the scheduled Pre-Trial Conference, the Third Division granted the parties a twenty (2o)-day period to submit their Joint Stipulation of Facts and Issues (JSFI).30 On 01 March 2021, the parties filed their JSFP The Third Division approved and adopted the same in its Resolution dated 04 March 202132 and, subsequently, in its Pre-Trial Order33dated o8 June 2021. The pre-trial was then declared terminated. Earlier, on n March 2021, lTC filed a "Motion to Commission Independent Certified Public Accountant"34 (Motion to Commission. ICPA), requesting the appointment of Atty. Edward M. Menor (Menor) as the !CPA for this case. In its Order dated 04 May 2021,3s the Third Division commissioned Menor and directed him to submit his report by 18 June 2021. During the trial, lTC presented its testimonial and documentary evidence. It offered the testimonies of the following witnesses, namely: (1) Efren Q. Samson, Jr. (Samson), ITC's Accounting Assistant; and (2) ICPA Menor. During the hearing on 17 June 2021,36 Samson identified his Judicial Affidavit dated 02 February 2o21,37 where he testified on the: (1) administrative proceedings with the BIR, starting from the receipt by lTC of the FAN up to the CIR's Decision on the remaining deficiency income tax and VAT assessments; (2) ITC's admission of liability and� subsequent payment of the deficiency income tax arising from disallowed creditable withholding tax; (3) dates of filing by ITC of the quarterly VAT returns for TY 2on; (4) ITC's admission of liability and . subsequent payment of the deficiency VAT arising from: (a) sales nott ld., pp. 348-360. 29 ld., Volume II, pp. 521-603. 30 See Order dated 09 February 2021, id., pp. 609-611. 31 ld., pp. 612-622. 32 ld., pp. 624-625. 33 !d., pp. 679-688. 34 !d., pp. 626-636, with annexes. )5 See Order dated 04 May 2021, id., pp. 664-665. 36 See Minutes of the Hearing and Order, both dated 17 June 2021, id., pp. 691 and 692-693, respectively. 37 See Judicial Affidavit of Efren Q. Samson, Jr., Exhibit "P-20", id., Volume I, pp. 367-500, with annexes.

CTA EB NOS. 2966 and 2969 (CTA Case No. 10215) Intelligent Touch Corporation v. Commissioner of Internal Revenue and Commissioner of Internal Revenue v. Intelligent Touch Corporation DECISION x-------------------------------------------------------------------x subjected to VAT; and (b) other income not subjected to VAT, except those pertaining to the first and second quarters of TY 2011; (5) ITC's claim for input VAT being duly substantiated with the appropriate supporting invoices and official receipts; and (6) ITC's excess tax credits appearing as excess input VAT over output VAT in its VAT return for the fourth quarter of 2011. The CIR conducted cross-examination. ITC did not conduct a redirect examination.38 On 18 June 2021, !CPA Menor filed his !CPA Report,39 which the Third Division noted on o6 July 2021.4� On 13 July 2021,4, ITC presented !CPA Menor who identified his. Judicial Affidavit dated 29 June 2021.42 He testified essentially that: (1) ITC did not fully utilize its expenses as deduction, but there was no indication that these unclaimed expenses corresponded to unreported income; (2) ITC agreed not to contest and, in fact, paid for the deficiency income tax assessment on disallowed creditable withholding tax; (3) !CPA Menor did not examine the issue on deficiency VAT arising from sales and other income not subject to VAT since ITC already paid the income tax due on these items; and (4) the deficiency VAT assessment ansmg from disallowed input tax credits have: (a) prescribed, as a portion of the assessment pertains to the first and second quarters of 2011; (b) been duly supported by VAT sales invoices; or (c) already been paid by ITC. The CIR conducted cross-examination. ITC did not conduct a redirect examination.43 After completing the presentation of evidence, on 15 October 2021,' t ITC filed its Formal Offer of Evidence44 (FOE), consisting of Exhibits "P-r" to "P-173-A", inclusive of sub-markings. On 25 October 2021, the CIR filed a Comment45 thereto. In its Resolution dated 01 March 2022,46 38 TSN dated 17 June 2021, pp. 6-9. 39 Exhibit "P-172", Division Docket, Volume II, pp. 694-737. 40 See Minute Resolution dated 06 July 2021, id., p. 763. 41 See Minutes of the Hearing and Order, both dated 13 July 2021, id., pp. 766 and 767-768, respectively. See Judicial Affidavit of Atty. Edward M. Menor (On the Report Submitted on 18 June 2021), Exhibit "P-173", id., pp. 743-761. 43 TSN dated 13 July 2021, pp. 8-11. " Division Docket, Volume II, pp. 769-780. 45 !d., pp. 914-920. 46 !d., pp. 924-925.

CTA EB NOS. 2966 and 2969 (CTA Case No. 10215) Intelligent Touch Corporation v. Commissioner of Internal Revenue and Commissioner of Internal Revenue v. Intelligent Touch Corporation DECISION X-------------------------------------------------------------------X the Third Division acted upon ITC's FOE, admitting all the exhibits submitted by the latter. During the 24 May 2022 hearing,47 CIR presented GS Arias, who identified her Judicial Affidavit dated 01 July 2o2o.48 In her affidavit, GS Arias testified that: (1) at the time she executed her Judicial Affidavit, she held the position of Group Supervisor assigned to Revenue District Office (RDO) No. 47-East Makati City; (2) her duties included tax verification and post audit examination of the books of accounts and other accounting records of taxpayers; (3) she was authorized to conduct the examination through the LOA,49 which the BIR served on lTC and which Sylvia D. Gapuz (Gapuz) received on 23 August 2012;so (4) the BIR served two notices on lTC requesting for presentation of accounting records for examination;s' and (s) the BIR served the PAN to� lTC, and Bernadette Estrada (Estrada) received the same on 22 October 2014,52 among other administrative proceedings at the BIR level. lTC conducted cross-examination. The CIR did not conduct a redirect examination. 53 On 16 June 2022, the CIR filed a "Motion to Admit ([FOE])",54 attaching thereto the FOE, consisting of Exhibits "R-1" to "R-28-1". The Third Division granted CIR's Motion and admitted the FOE as part of the records of the case.5s On 28 June 2022, lTC filed a "Comment/ Opposition [On Respondent's Motion to Admit ([FOE]) dated 14 June 2022]".56 In the Resolution dated 02 August 2022,57 the Third Division acted upon the CIR's FOE, admitting all the exhibits submitted by the latter. t In compliance with the Court's directive, on 03 October 2022, . ITC filed its Memorandum.58 The CIR, however, did not file his or her 47 See Minutes of the Hearing and Order. both dated 24 May 2022, id., pp. 926 and 927-928, respectively. See Judicial Affidavit of Elizabeth C. Arias, Exhibit "R-28", id., Volume I, pp. 219-309, with attached exhibits. 49 Supra at note 9. 50 !d. 51 BIR Records, Exhibits "R-3" and "R-4", pp. 245-246. 52 Supra at note 11. 53 TSN dated 24 May 2022, pp. 6-10. Division Docket, Volume II, pp. 929-942. 55 See Resolution dated 21 June 2022, id .. p. 945. 56 ld., pp. 946-959. 57 1d., pp. 966-967. 58 1d., pp. 968-998.

CTA EB NOS. 2966 and 2969 (CTA Case No. 10215) Intelligent Touch Corporation v. Commissioner of Internal Revenue and Commissioner of Internal Revenue v. Intelligent Touch Corporation DECISION X-------------------------------------------<--�--------------------- X Memorandum.59 Thereafter, the Third Division submitted the case for decision through its Resolution dated 26 October 2022.60 In the interim, following the reorganization of the Court's Divisions, the Special Third Division6' promulgated the now assailed Decision of 19 October 2023,6l partially granting ITC's Petition for Review. The dispositive portion thereof reads: WHEREFORE, in light of the foregoing considerations, the present Petition for Review is PARTIALLY GRANTED. The assessment issued by [CIR] against [lTC] for taxable year 2011 covering the deficiency income tax is CANCELLED and SET ASIDE, while the assessment for deficiency VAT is UPHELD, but with modification. Accordingly, [lTC] should be ORDERED TO PAY [CIR] the aggregate amount of Php3,772,955�57, representing deficiency value- added tax for the 3'd and 4'h quarters of the taxable year 2011, the remaining unpaid interest computed until October 19, 2015, twenty- five percent (25%) surcharge imposed under Section 248(A)(3) of the NIRC of 1997, as amended, twenty percent (2o%) deficiency interest imposed under Section 249(B) of the same Code, and twenty percent (zo%) delinquency interest imposed under Section 249(C) of the same Code, respectively, computed until December 31, 2017, as shown below: Basic tax Php 1,137,131.40 Unpaid interest on 10.19.2015 849,940.12 Surcharge (25% x Php1,137,131.4o) 284,282.85 Total amount due- October 19, 2015 Php 2,271>354�37 20% Deficiency interest (10.20.2015 to 12.31.2017) [2o% x Php1,137,131.40 x 8o4 days /365 days] 20% Delinquency interest (10.20.2015 to 12.31.2017) [2o% x Php2,271.354.37 x 8o4/365] 1,000,640.50 Total amount due- December 31, 2017 59 See Records Verification dated 19 October 2022, id., p. 1001. 60 ld.,p.1002. 61 Pursuant to Administrative Circular No. 0 l-2023 (Reorganizing the Divisions of the Court) dated 23 May 2023, which was issued following the retirement of Associate Justice Erlinda P. Uy, the Court underwent a reorganization. The members of the then Third Division were reorganized into the Second Division, but the instant case stayed with and was ruled by the same members, albeit as the Special Third Division. Supra at note 2, pp. l 032-l 033.

CTA EB NOS. 2966 and 2969 (CTA Case No. 10215) Intelligent Touch Corporation v. Commissioner of Internal Revenue and Commissioner of Internal Revenue v. Intelligent Touch Corporation DECISION X-------------------------------------------------------------------X In addition, [lTC] should be ORDERED TO PAY [CIR] delinquency interest at the rate of twelve percent (12%) on the total unpaid deficiency taxes of Php2,27I,J54�37 as of October 19, 2015, as determined above, or equivalent to the amount of Php746.75 per day, computed from January 1, 2018 until full payment thereof, pursuant to Section 249(C) of the NIRC of 1997, as amended by Republic Act No. 10963, also known as Tax Reform for Acceleration and Inclusion Law and as implemented by Revenue Regulations No. 21-2018. On the other hand, since all of [ITC's] payments made on October 19, 2015 in the amounts of Php161,613.o6 and Php2,149,029.29 for deficiency income tax and deficiency VAT, respectively, have been deducted from the tax due in computing the deficiency tax liability, there is no excess left to be refunded. SO ORDERED.63 In granting ITC's Petition for Review, the Special Third Division primarily held that: (1) the totality of the evidence that both parties presented cast doubt on ITC's allegations that it did not receive any LOA and PAN forTY 2on; (2) the CIR's right to assess deficiency taxes for the first and second quarters of TY 2011 is time-barred; (3) the deficiency income tax assessment is cancelled because the imputation of undeclared income cannot be based on a mere presumption that since there are undeclared expenses, there are corresponding undeclared sources of income; (4) the portion of the deficiency VAT assessment arising from disallowed input taxes that was properly substantiated is also cancelled; and (5) the excess input tax carried over to the succeeding period should not be applied against any VAT liability forTY 2011. In sum, ITC is now only liable for the remaining unsubstantiated input tax claims and the input tax carried over to the succeeding period that were not covered by the payments made by ITC on 19 October 2015. � On 15 December 2023, ITC filed an "[MPR] (of the Decision dated 19 October 2023)",64 while the CIR filed an MPR65 on 19 December 2023, t with ITC's "Comment (on the [CIR's MPR] dated 19 December 2023) filed on 29 January 2024.66 63 Citations omitted, emphasis and italics in the original text. 64 Supra at note 4. 65 Supra at note 5. 66 Division Docket, Volume III, pp. 1076-1082.

CTA EB NOS. 2966 and 2969 (CTA Case No. 10215) Intelligent Touch Corporation v. Commissioner of Internal Revenue and Commissioner of Internal Revenue v. Intelligent Touch Corporation DECISION x-------------------------------------------------------------------x In the now, similarly assailed Resolution of 23 July 2024,6? the Special Third Division denied the parties' MPRs. The dispositive portion thereof reads: WHEREFORE, premises considered, [ITC's] Motion for Partial Reconsideration (of the Decision dated 19 October 2023) and [CIR's] Motion for Partial Reconsideration are both DENIED for lack of merit. SO ORDERED. In denying the MPRs, the Special Third Division noted that the arguments raised by ITC were mere reiteration of matters which have already been considered, weighed, and resolved in the assailed Decision. As for the CIR's arguments, it was ruled that: (1) ITC's failure to submit' additional documents in support of its request for reinvestigation did not automatically result in the assessment becoming final, executory, demandable, and unappealable because the immediate consequence of such failure is only the issuance of the FDDA, which may still be appealed either to the CIR by way of request for reconsideration or to this Court by way of petition for review; and (2) the CIR has no right to demand that ITC specifically identify which transactions fall under the months or quarters for which the right to assess has already prescribed because a time-barred assessment is a void act from which no right can anse. PROCEEDINGS BEFORE THE COURT EN BANC Mutually dissatisfied, ITC and the CIR filed their respective Petitions for Review68 before the Court En Bane. In a Minute Resolution dated o6 September 2024,69 the Court En Bane consolidated CTA EB No. 2966, filed by lTC on 29 August 2024, with CTA EB No. 2969, filed by the CIR on 02 September 2024, pur~;uant toSection 1,?0 Rule 31 of the Rules of Court (ROC), as amended.t 67 Supra at note 3. 68 Supra at note I. 69 Rollo (CTA EB No. 2966), p. I 02. 70 Sec. 1. Consolidation. - When actions involving a common question of law or fact are pending before the court, it may order a joint hearing or trial of any or all the matters in issue in the actions; it may order all the actions consolidated; and it may make such orders concerning proceedings therein as may tend to avoid unnecessary costs or delay.

CTA EB NOS. 2966 and 2969 (CTA Case No. 10215) Intelligent Touch Corporation v. Commissioner of Internal Revenue and Commissioner of Internal Revenue v. Intelligent Touch Corporation DECISION x-------------------------------------------------------------------x PERIOD SHOULD BE DEDUCTED FROM ALLOWABLE INPUT TAX FOR TAXABLE YEAR (TY) 2on; AND v. WHETHER THE SPECIAL THIRD DIVISION ERRED IN RULING THAT IT WAS NOT INCUMBENT UPON INTELLIGENT TOUCH CORPORATION (lTC) TO SPECIFICALLY IDENTIFY WHICH TRANSACTIONS FALL WITHIN THE PERIODS FOR WHICH THE COMMISSIONER OF INTERNAL REVENUE'S (CIR's) RIGHT TO ASSESS HAS PRESCRIBED. ARGUMENTS In ITC's Petition for Review in CTA EB No. 2966 and in the CIR's Petition for Review in CTA EB No. 2969. both ask the Court En Bane to reverse and set aside specific portions of the assailed Decision76 and assailed Resolution77 based on the following grounds - � ITC emphasizes that a mere Memorandum ofAssignment (MOA) that the RDO No. 47 issued (on o6 March 2015) assigned the reinvestigation of ITC's assessment to GS Arias and RO Armina Anwar (Anwar). According to it, since there was no LOA authorizing RO Anwar to conduct the reinvestigation, which was a continuation of the original audit and examination of ITC's accounting and financial records, the FDDA, having been issued based on the audit conducted and report submitted by RO Anwar, is null and void. Furthermore, ITC reiterates that: (1) it did not receive the LOA and PAN; (2) Gapuz's authority to receive the PAN was not established during trial; and (3) the LOA and PAN were improperly served. On the merits, ITC restates its argument that the input tax allegedly carried over to the succeeding period in the amount of t'911,842.6o should not have been disallowed in computing the amount of VAT deficiency for TY 2011. t On the other hand, the CIR re-asserts that ITC's failure to submit additional documents to support its Request for Reinvestigation 76 Supra at note 2. 77 Supra at note 3.

CTA EB NOS. 2966 and 2969 (CTA Case No. 10215) Intelligent Touch Corporation v. Commissioner of Internal Revenue and Commissioner of Internal Revenue v. Intelligent Touch Corporation DECISION x-------------------------------------------------------------------x Under Section 2(a)(1),82 Rule 4 in relation to Section 3(b),83 Rule 8 of the RRCTA, both parties had 15 days within which to file their' respective appeals before this Court. Accordingly, lTC had until 15 August 2024, while the CIR had until16 August 2024, to file the said appeals. On 14 August 2024, ITC filed a "Motion for Extension of Time to File Petition for Review (Re: Decision dated 19 October 2023 and Resolution dated 23 July 2024)",84 requesting for an additional period of 15 days from 15 August 2024, or until 30 August 2024, within which to file its Petition for Review. The Court En Bane granted the same in its Minute Resolution dated 15 August 2024.85 On 15 August 2024, the CIR likewise filed a Motion for Extension of Time to File Petition for Review,86 similarly requesting for an additional period of15 days from 16 August 2024, or until31 August 2024,_ within which to file its petition for review. The Court En Bane granted the same in its Minute Resolution dated 20 August 2024.87 Thereafter, ITC filed its Petition for Review on 29 August 2024.88 Meanwhile, the CIR filed its Petition for Review on 02 September 2024,89 being the next working day after the extended deadline of 31 August 2024, which falls on a Saturday. Since both parties filed their respective Petitions for Review on time, the Court En Bane has jurisdiction over these consolidated cases. We now proceed to address their merits.t 82 SEC 2. Cases Within the Jurisdiction of the Court En Bane. -The Court en bane shall exercise'� exclusive appellate jurisdiction to review by appeal the following: (a) Decisions or resolutions on motions for reconsideration or new trial of the Court in Divisions in the exercise of its exclusive appellate jurisdiction over: (l) Cases arising from administrative agencies- Bureau of Internal Revenue, Bureau of Customs, Department of Finance, Department of Trade and Industry, Department of Agriculture[.] (Emphasis supplied) 83 Supra at note l. Rollo (CTA EB No. 2966), pp. 1-4. 85 Id., p. 18. 86 Rollo (CTA EB No. 2969). pp. 1-4. 87 1d. p. 5. 88 Supra at note 1. 89 1d.

CTA EB NOS. 2966 and 2969 (CTA Case No. 10215) Intelligent Touch Corporation v. Commissioner of Internal Revenue and Commissioner of Internal Revenue v. Intelligent Touch Corporation DECISION x-------------------------------------------------------------------x Sec. 13. Authority of a Revenue Officer. - Subject to the rules and regulations to be prescribed by the Secretary of Finance, upon recommendation of the Commissioner, a Revenue Officer assigned to perform assessment functions in any district may, pursuant to a Letter of Authority issued by the Revenue Regional Director, examine taxpayers within the jurisdiction of the district in order to collect the correct amount of tax, or to recommend the assessment of any deficiency tax due in the same manner that the said acts could have been performed by the Revenue Regional Director himself.9' In Commissioner of Internal Revenue v. McDonald's Philippines Realty Corp. 92 (McDonald's), the Supreme Court shed light on the rationale behind the requirement of an LOA in the examination and assessment of a taxpayer: To comply with due process in the audit or investigation by the BIR, the taxpayer needs to be informed that the revenue officer knocking at his or her door has the proper authority to examine his books of accounts. The only way for the taxpayer to verify the existence of that authority is when, upon reading the LOA, there is a link between the said LOA and the revenue officer who will conduct the examination and assessment; and the only way to make that link is by looking at the names of the revenue officers who are authorized in the said LOA. If any revenue officer other than those named in the LOA conducted the examination and assessment, taxpayers would be in a situation where they cannot verify the existence of the authority of the revenue officer to conduct the examination and assessment. Due process requires that taxpayers must have the right to know that the revenue officers are duly authorized to conduct the examination and assessment, and this requires that the LOAs must contain the names of the authorized revenue officers. Based on the foregoing, there is a requirement that the authority' of the RO proceed from an LOA only in relation to the: (1) examination of a taxpayer; and (2) assessment of any deficiency tax due. The t, examination and assessment cover the period after the filing of the taxpayer's returns, followed by the inception of the audit of the books . and accounting records of the taxpayer, up to the issuance of the FAN. 91 Emphasis supplied and italics in the original text. G.R. No. 242670, I0 May 2021; Emphasis supplied.

CTA EB NOS. 2966 and 2969 (CTA Case No. 10215) Intelligent Touch Corporation v. Commissioner of Internal Revenue and Commissioner of Internal Revenue v. Intelligent Touch Corporation DECISION Page 18 of31 x-------------------------------------------------------------------x However, the NIRC ofi997, as amended, did not similarly require that an LOA be issued to support the authority of the RO conducting a reinvestigation, which occurs after a protest to the FAN is filed by the taxpayer, up to the recommendation of a final decision on the disputed assessment. Therefore, the logical interpretation of the NIRC provisions and prevailing jurisprudence is that the LOA is necessary only until the issuance of the FAN because it is upon the latter's issuance that an assessment of any deficiency tax due has already been made and determined. Any reinvestigation that follows after the issuance of the FAN already concerns the decision on the disputed assessment, which is a different matter from an assessment. Given that the NIRC provision did not include reinvestigation and the issuance of a decision on disputed assessment as part of the stages which necessitate an LOA, it follows that the same is not required and the authority of ROs arising from other documents short of an� LOA, such as an MOA, will suffice, provided that such ROs participate only from the reinvestigation stage onwards. In the instant case, the records show that the FAN (which came about pursuant to the authority granted to GS Arias and RO Arcega as indicated in the LOA93) was already issued on n November 201494 when the case was re-assigned for reinvestigation to GS Arias and RO Anwar through the MOA issued on o6 March 2015.95 The re-assignment was brought about by ITC's filing of a Request for Reinvestigation on 10 December 2014-96 In other words, when RO Anwar took part in the case pursuant to a mere MOA, the examination and assessment stages have been completed, and what is left is the reinvestigation and the ensuing final decision on disputed assessment. ITC, in an attempt to support its argument that the assessment is' void due to RO Anwar being armed only with an MOA instead of an LOA, cited the aforementioned case of McDonald's, as well as the . case of Commissioner of Internal Revenue v. Wellington Investmentt Supra at note 9. 94 Supra at note 12. 95 BIR Records, Exhibit ''R-20", p. 309. 96 Supra at note !3.

CTA EB NOS. 2966 and 2969 (CTA Case No. 10215) Intelligent Touch Corporation v. Commissioner of Internal Revenue and Commissioner of Internal Revenue v. Intelligent Touch Corporation DECISION X-------------------------------------------------------------------X Manufacturing Corporation97 (Wellington), to prove that issuance of a mere MOA instead of an LOA will render the assessment void. What ITC fails to realize, however, is that in both cases, the new ROs participated not only in the reinvestigation stage, but also in the' examination and assessment stages. This is starkly different from the instant case wherein RO Anwar took part only when the case was re-assigned to her and GS Arias for reinvestigation. In other words, the cases of McDonald's and Wellington cited by ITC are not on all fours with the instant case. Specifically, in the McDonald's case, the BIR issued an LOA on 31 August 2007 authorizing RO Demadura, among others, to examine the books of accounts and accounting records of McDonald's. On 02 December 2oo8, the BIR transferred the assignment of Demadura and pursuant to a Referral Memorandum, designated RO Marcellano to continue the audit. It was not until more than two (2) years later that the BIR issued the Formal Letter of Demand (FLD). Clearly, the new RO, authorized pursuant only to an MOA instead of an LOA, participated in the examination and assessment stages (i.e., prior to the issuance of the� FLD), and not just during reinvestigation. Meanwhile, in the Wellington case, the BIR issued an LOA on 01 July 2009 authorizing ROs Maniego, Aguila, Hernandez, Ramirez, and Parungao to examine Wellington's books of accounts and other accounting records. However, ROs Bravo and Mendoza, who were clearly not named in the LOA, were the ones presented by the BIR as witnesses. In their testimonies, ROs Bravo and Mendoza admitted to taking part in the conduct of examination and investigation of Wellington's books of accounts and other accounting records, not just at the reinvestigation stage. In contrast, in the instant case, it was not until the re-assignment of the case for reinvestigation that RO Anwar participated in the same. Stated differently, RO Anwar did not participate in the examination and assessment stages armed only with an MOA. She only did so beginning t from the reinvestigation stage. This is evident from the Judicial _Affidavit executed by GS Arias,98 with the pertinent portion as follows: 97 G.R. No. 249795 (Notice), 29 November 2022. 98 Exhibit "R-28", supra at note 48, p. 229.

CTA EB NOS. 2966 and 2969 (CTA Case No. 10215) Intelligent Touch Corporation v. Commissioner of Internal Revenue and Commissioner of Internal Revenue v. Intelligent Touch Corporation DECISION x-------------------------------------------------------------------x Q Thereafter, what happened? A By virtue of the Letter of Authority dated August 16, 2012, a Memorandum of Assignment (RD08-047- PRO-o315-073), marked as Exhibit R-19 was issued by RDO No. 47 on March 6, 2015, assigning the reinvestigation of the Petitioner's assessment to RO Armina Anwar and me. In Commissioner of Internal Revenue v. Rieckermann Philippines, Inc. 99 (Rieckerrnann), this Court had the occasion to rule on a case, the facts of which fall squarely with the case at bar. In Rieckermann, a FAN has already been issued when the case was re-assigned for reinvestigation (per protest letter/request for reinvestigation of the taxpayer) to new ROs through a Tax Verification Notice (TVN) and MOA, instead of an LOA. Similar with the instant case, the new ROs recommended that the findings per FAN be reiterated. Here, this Court ruled that: [T] he requirement for the issuance of an LOA by the Commissioner or his duly authorized representative, as mandated under Sections 6 and 13 of the NIRC of 1997, as amended, pertains to such stage where the RO and GS would conduct an audit of the books of accounts and other accounting records of the taxpayer after the filing of the latter's tax returns, and recommend the issuance of a PAN and FAN. It does not envision a situation where a reinvestigation will have to be conducted to come up with a decision on the Protest to the FAN or Assessment Notice by way of an FDDA. Applying this to the instant case, since RO Anwar, who was authorized pursuant to a mere MOA, participated in the case only after the same was re-assigned to her for reinvestigation, and at which point,. the law and jurisprudence no longer requires that the RO's authority proceed from an LOA, then the FDDA issued upon the recommendation of RO Anwar, notwithstanding the fact that her authority only proceeded from an MOA, is valid.t 99 CTA EB No. 2704 (CTA Case No. 9613), 13 May 2024; Emphasis supplied and italics in the original text.

CTA EB NOS. 2966 and 2969 (CTA Case No. 10215) Intelligent Touch Corporation v. Commissioner of Internal Revenue and Commissioner of Internal Revenue v. Intelligent Touch Corporation DECISION x-------------------------------------------------------------------x This Court notes that on 27 March 2015, after ITC filed its Request for Reinvestigation and in clear recognition of the authority of RO Anwar pursuant to the MOA, ITC submitted a letter to the BIR addressed to the Regional Director (RD) Jonas DP Amora (Amora), RDOr Isabel A. Paulino (Paulino), GS Arias, and RO Anwar.100 This indicates that any possible abuse sought to be prevented by the requirement for an LOA has already dissipated because ITC was already well aware of the identity of RO Anwar as part of the team involved in the reinvestigation ofiTC's case. Even assuming arguendo that an LOA is still required even at the reinvestigation stage (it is not), its absence would, at most, invalidate the decision arrived at after the said reinvestigation, i.e., the FDDA. It will not nullifY the assessment per se, the reason being that a decision is different from an assessment. Citing the Supreme Court case of Commissioner of Internal Revenue v. Liquigaz Philippines Corporation, 10 We explained m ' Rieckermann that: Clearly, a decision of the CIR on a disputed assessment differs from the assessment itself. Hence, the invalidity of one does not necessarily result to the invalidity of the other-unless the law or regulations otherwise provide. The Court, however, finds that the CTA erred in concluding that the assessment on EWT and FBT deficiency was void because the FDDA covering the same was void. The assessment remains valid notwithstanding the nullity of the FDDA because as discussed above, the assessment itself differs from a decision on the disputed assessment. Considering that the examination and the subsequent assessment. in the instant case (culminating in the FAN's issuance) were performed by GS Arias and RO Arcega, who are the very same officers authorized under the LOA, the assessment is already clothed with validity. Anyt 100 BIR Records, Exhibit "R-21 ", pp. 335-336. 101 G.R. Nos. 215534 & 215557, 18 April2016; Emphasis supplied.

CTA EB NOS. 2966 and 2969 (CTA Case No. 10215) Intelligent Touch Corporation v. Commissioner of Internal Revenue and Commissioner of Internal Revenue v. Intelligent Touch Corporation DECISION x-------------------------------------------------------------------x 1. LOA No. LOA-o47-2012-ooooo383 (SN: eLA2ouooo15037) issued on 16 August 2012 and received by Gapuz, as Authorized Representative, on 23 August 2012;103 and 2. PAN issued on 22 October 2014 and received by Estrada, HR. Assistant, on the same date.104 Had it really been the case that Gapuz and Estrada were unauthorized to receive the LOA and PAN, respectively, ITC should have already raised the said issue when it filed its Request for Reinvestigation'05 on 10 December 2014. However, as the records yield clearly, it did not. Interestingly, even when ITC filed its Administrative Appeal106 to the CIR on 19 October 2015, it only stated that the BIR failed to duly serve an LOA or PAN and made no mention of the alleged lack of authority on the part of Gapuz and Estrada. The very first instance when ITC raised this issue was in its prior Petition for Review before the Third Division.107 Further, it is noted that even ITC's own witness, Samson, was unable to shed light on the identity ofGapuz and Estrada as he appeared. to have no personal knowledge of the employees hired before the start of his employment in 2016.108 Thus, and as already clarified in the assailed Decision, ITC cannot rely on its witness to support the contention that Gapuz and Estrada were unauthorized to receive the LOA and PAN, respectively. ITC's plain denial, coupled with the delay in the timing when it raised the issue, as well as the fact that lTC cannot rely on its witness to support its claims, taken together, led the Special Third Division, and this Court as well, to the conclusion that ITC's allegation of lack of authority on the part of the persons who received the LOA and PAN was a mere afterthought. Weighed against the CIR's submission of the actual LOA and PAN that the lTC's representatives received, this Court agrees ITC.t with the findings of the Special Third Divisipn that the LOA and PAN were duly served upon and received by 103 Supra at note 9. 104 Supra at note 11. 1�5 Supra at note 13. 106 Supra at note 17. 107 Supra at note 19. 108 See Question No. 15. Judicial Affidavit of Mr. Efren Q. Samson. Jr.. Exhibit "P-20", supra at note 37, p. 371.

CTA EB NOS. 2966 and 2969 (CTA Case No. 10215) Intelligent Touch Corporation v. Commissioner of Internal Revenue and Commissioner of Internal Revenue v. Intelligent Touch Corporation DECISION X-------------------------------------------------------------------X As to ITC's argument on constructive service, considering that the LOA and PAN were both personally served upon and duly received by lTC, constructive service is irrelevant given that, pursuant to Revenue Regulations (RR) No. 12-99,'09 which was likewise cited by ITC in its Petition for Review, constructive service applies only when the taxpayer or his duly authorized representative refused to acknowledge receipt of the notice. In the instant case, the authorized representatives of lTC did not refuse to acknowledge receipt, as they, in fact, signed the LOA and PAN, as evidenced by the receiving copies of the said documents submitted to this Court as part of the BIR Records. INTELLIGENT TOUCH CORPORATION's (ITC's) FAILURE TO SUBMIT ADDITIONAL DOCUMENTS RENDERED THE ASSESSMENT FINAL. According to the CIR, lTC failed to submit additional documents in support of its Request for Reinvestigation and only submitted invoices and receipts during the course of trial in the Court in Division. This Court holds that there is nothing wrong about ITC's decision� to elevate the case to the Court in Division and submit the additional documents in the course of trial for the evaluation of the latter. To be sure, RR No. 18-2013110 provides that: 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 ort 109 Implementing the Provisions of the National Internal Revenue Code of 1997 Governing the Rules on Assessment of National Internal Revenue Taxes, Civil Penalties and Interest and the Extra- Judicial Settlement of a Taxpayer's Criminal Violation ofthe Code Through Payment of a Suggested Compromise Penalty. Issued on 06 September I 999. 110 Amending Certain Sections of Revenue Regulations No. 12-99 Relative to the Due Process Requirement in the Issuance of a Deficiency Tax Assessment. Issued on 28 November 2013. Emphasis supplied.

CTA EB NOS. 2966 and 2969 (CTA Case No. 10215) Intelligent Touch Corporation v. Commissioner of Internal Revenue and Commissioner of Internal Revenue v. Intelligent Touch Corporation DECISION x-------------------------------------------------------------------x additional evidence, and the FDDA shall consequently be denied."' Clearly, therefore, the finality of the assessment, as a result of the failure of the taxpayer to submit additional documents during. reinvestigation, is finality only at the administrative level in the BIR. At worst, such failure would only result in the denial of the Request for Reinvestigation and the issuance of the FDDA. This notwithstanding, such FDDA may still be elevated to the Court in Division through a petition for review. On the Court in Division's appreciation of the documents submitted by ITC, which the latter failed to present to the CIR, in Commissioner of Internal Revenue v. Univation Motor Philippines, Inc. (Formerly Nissan Motor Philippines, Inc.), 112 the Supreme Court discussed that: The law creating the CTA specifically provides that proceedings before it shall not be governed strictly by the technical rules of evidence. The paramount consideration remains the ascertainment of truth. Thus, the CTA is not limited by the evidence presented in the administrative claim in the Bureau oflnternal Revenue. The claimant may present new and additional evidence to the CTA to support its case for tax refund. Cases filed in the CTA are litigated de novo as such, respondent "should prove every minute aspect of its case by presenting, formally offering and submitting ... to the Court of Tax Appeals all evidence ... required for the successful prosecution of its administrative claim." Consequently, the CTA may give credence to all evidence presented by respondent, including those that may not have been submitted to the CIR as the case is being essentially decided in the first instance. ort Once the case is elevated to the Court in Division, the taxpayer may then present new and additional evidence in support of its case,�. regardless of whether the taxpayer submitted the same to the CIR Ill Emphasis supplied. 112 G.R. No. 231581, 10 April2019; Citations omitted, emphasis supplied and italics in the original text.

CTA EB NOS. 2966 and 2969 (CTA Case No. 10215) Intelligent Touch Corporation v. Commissioner of Internal Revenue and Commissioner of Internal Revenue v. Intelligent Touch Corporation DECISION x-------------------------------------------------------------------x This Court clarifies that the deduction of the !'911,842.60 from the total amount of input taxes is not per se a disallowance pursuant to a tax assessment similar to the "Disallowed input taxes" line item. It is deducted from the amount of input taxes not because it constitutes disallowed input tax but simply because to do otherwise would reduce the deficiency VAT assessment forTY 2011, which is not the purpose of excess input tax carried over to the succeeding period. Input tax carried over to the succeeding period is intended to be a deduction from output tax in the next succeeding period (i.e., TY 2012, in this case). It should not be used to reduce the amount of deficiency VAT for the current period (i.e., TY 2011, in this case). If this Court were to remove the line item on "Input tax carried over to the succeeding period" amounting to P911,842.6o, the ending balance of the VAT deficiency for 2011 will be lower, thereby benefitting lTC for the first time. And then, by 2012, lTC will be entitled to reduce its 2012 output tax by the same amount of !'911,842.60 representing excess input tax carried over from 2011. lTC will then be benefitted for the second time. This is improper for being contrary to the nature of excess input tax. By its very name, it is the excess of input tax over output tax in one period, that is carried over to the next period in order to utilize the excess as deduction from output tax next period. It is not intended to reduce the taxpayer's VAT deficiency. We note that the Special Third Division, in the assailed Decision, already provided a detailed explanation on why the excess input tax carried over to the succeeding period (i.e., TY 2012) amounting to !'911,842.60 should not be applied against the VAT liability for TY 2011. Then again, in the assailed Resolution, the Special Third Division addressed the cases cited by lTC in its MPR, saying that decisions of the CTA divisions do not constitute binding precedents and that ITC's reliance on this alone will not suffice. Taken together with this Court's explanation above, We finally lay this issue to rest by holding that excess input tax should be deducted from allowable input tax, not pursuant to a disallowance, but to stay true to the purpose of carrying over of excess input tax and its intended consequence of benefjtting the taxpayer not in the current, but in the future taxable periods.t

CTA EB NOS. 2966 and 2969 (CTA Case No. 10215) Intelligent Touch Corporation v. Commissioner of Internal Revenue and Commissioner of Internal Revenue v. Intelligent Touch Corporation DECISION x-------------------------------------------------------------------x IT WAS NOT INCUMBENT UPON INTELLIGENT TOUCH CORPORATION (lTC) TO SPECIFICALLY IDENTIFY WHICH TRANSACTIONS FALL WITHIN THE PERIODS FOR WHICH THE RIGHT TO ASSESS HAS PRESCRIBED Lastly, the CIR re-asserts that ITC should have specifically identified which transactions fall under the first and second quarters of the TY 2011. The CIR's argument is untenable. In Commissioner ofInternal Revenue v. BASF Coating+ Inks Phils., Inc.,n4 the Supreme Court explained that: It bears stressing that, in a number of cases, this Court has explained that the statute of limitations on the collection of taxes primarily benefits the taxpayer.... Likewise, in Republic of the Philippines v. Ablaza, this Court elucidated that the prescriptive period for the filing of actions for collection of taxes is justified by the need to protect law-abiding citizens from possible harassment. Also, in Bank of the Philippine Islands v. Commissioner of Internal Revenue, it was held that the statute of limitations on the assessment and collection of taxes is principally intended to afford protection to the taxpayer against unreasonable investigations as the indefinite extension of the period for assessment deprives the taxpayer of the assurance that he will no longer be subjected to further investigation for taxes after the expiration of a reasonable period of time. Thus, in Commissioner of Internal Revenue v. B.F. Goodrich Phils., Inc., this t Court ruled that the legal provisions on prescription should be liberally construed to protect taxpayers and that, as a corollary, th_e ~-~ceptions to the rule on prescription should be strictly construed. 114 G.R. No. 198677, 26 November 2014; Citations omitted, emphasis supplied and italics in the original text.

CTA EB NOS. 2966 and 2969 (CTA Case No. 10215) Intelligent Touch Corporation v. Commissioner of Internal Revenue and Commissioner of Internal Revenue v. Intelligent Touch Corporation DECISION x-------------------------------------------------------------------x The liberal construction of the tax provisions on prescription bolsters the conclusion that it is not incumbent upon the taxpayer to prove to the CIR which transactions should not be covered by an assessment on the ground of prescription. As aptly discussed in the assailed Resolution, a right cannot spring in favor of a person from his own void or illegal act."5 The CIR, in issuing an assessment that is time- barred, violated the explicit provisions of the NIRC on the prescriptive period for assessments. Having done an act contrary to the plain provisions oflaw, it cannot, from a position of illegality, make demands on the part of the taxpayer, the very person that the law desires to protect against such abuses in time-barred tax assessments. In view of all the foregoing, and after a careful review of ITC and the CIR's arguments in their consolidated Petitions for Review, the Court En Bane finds no reason to reverse or modifY the assailed Decision and Resolution of the Special Third Division in CTA Case No. 10215. WHEREFORE, premises considered, the Petition for Review (Re: Decision dated 19 October 2023 and Resolution dated 23 July 2024) filed by Intelligent Touch Corporation on 29 August 2024, docketed as CTA EB No. 2966, and the Petition for Review filed by the Commissioner of Internal Revenue on 02 September 2024, docketed as CTA EB No. 2969, are hereby DENIED for lack of merit. The Special Third Division's Decision dated 19 October 2023 and Resolution dated 23 July 2024 in CTA Case No. 10215 entitled Intelligent Touch Corporation v. Commissioner ofInternal Revenue, are hereby AFFIRMED. SO ORDERED. iate Justice 115 Commissioner ofInternal Revenue v. Team Sua/ Cmporation (Formerly lvfirant Sua/ Corporation), G.R. No. 194105,05 February 2014.

,. REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY ENBANC INTELLIGENT TOUCH CTA EB NO. 2966 CORPORATION, (CTA Case No. 10215) Petitioner, - versus - COMMISSIONER OF INTERNAL REVENUE, Respondent. J( - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - J( COMMISSIONER OF CTA EB NO. 2969 (CTA Case No. 10215) INTERNAL REVENUE, Present: Petitioner, RINGPIS-LIBAN, P.J. , BACORRO-VILLENA, -versus - MODESTO-SAN PEDRO, REYES-FAJARDO, CUI-DAVID, FERRER-FLORES, and ANGELES, JJ. INTELLIGENT TOUCH Promulgated: CORPORATION, Respondent. APR 10 2026 J( - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - SEPARATE CONCURRING AND DISSENTING OPINION ANGELES, J.: While I concur with the majority's pronouncement denying the Petition for Review filed by the Intelligent Touch Corporation, Inc. (lTC) in Court of Tax Appeals (CTA) En Bane (EB) No. 2966 for lack of merit, I am, with due respect, unable to join the ponencia in likewise

SEPARATE CONCURRING AND DISSENTING OPINION CTA EB Nos. 2966 & 2969 (CTA Case No. 10215) Page 2 of19 denying the Commissioner oflnternal Revenue's (CIR) Petition in CTA EBNo. 2969. I thus respectfully register my dissent and set forth hereunder the reasons therefor. The Court in Division was bereft ofjurisdiction over the subject matter ofthe case At the core of my disagreement lies a fundamental jurisdictional infirmity: the Court in Division did not acquire jurisdiction over the subject matter of the case. Jurisdiction over the subject matter, or nature of the action, refers to the power of a court to hear and determine cases of a general class to which the proceedings in question belong.' It is conferred only by law. 2 It cannot be fixed by the will of the parties, nor can it be acquired, enlarged or diminished by any act of the parties.3 It is axiomatic that what determines the nature of an action, as well as which court has jurisdiction over it, are the allegations in the complaint and the character ofthe reliefsought.4 In the present case, lTC, in its Petition for Reviews before the Court in Division, assails the validity of the subject assessments, and assuming their validity, denies liability for the alleged deficiency income tax and value-added tax (VAT). Verily, the jurisdiction invoked by ITC6 is premised on Section 7 (a)(l) of Republic Act (R.A.) No. 1125,7 as amended by R.A. No. 9282,8 which confers in the CTA exclusive appellate jurisdiction to review, by appeal, decisions of the CIR in cases involving disputed assessments, among others, viz.: SEC. 7. Jurisdiction. -The CTA shall exercise: a. Exclusive appellate jurisdiction to review by appeal, as herein provided: ' Heirs of Concha, Sr. v. Spouses Lumocso, G.R. No. 158121, December 12, 2007 [Per C.J. Puno, First Division]. ' City ofLapu-Lapu v. Phil. Economic Zone Authority, G.R. Nos. 184203 & 187583, November 26, 2014 [Per J. Leonen, Second Division]. 3 Municipality of Sogod v. Rosa/, G.R. No. 38204, September 24, 1991 [Per J. Medialdea, First Division]. 4 Cubero v. Laguna West Multi-Purpose Cooperative, Inc., G.R. No. 166833, November 30, 2006 [Per J. Carpio Morales, Third Division]; Heirs ofBautista v. Lindo, G.R. No. 208232, March 19, 2014 [Per J. Velasco, Jr., Third Division]. s Division Docket- Vol. I, pp. 7 to 26. 6 Id. at 8, par. 3. ' An Act Creating the Court of Tax Appeals. s An Act Expanding the Jurisdiction ofthe Court of Tax Appeals, elevating its rank to the level of a Collegiate Court with Special Jurisdiction and enlarging its membership, Amending for the Purpose Certain Sections of Republic Act No. 1125, As Amended, otherwise known as the Law Creating the Court of Tax Appeals, and for other purposes.

SEPARATE CONCURRING AND DISSENTING OPINION CTA EB Nos. 2966 & 2969 (CTA Case No. 10215) 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; (Emphases and underscoring supplied) This jurisdictional mandate is mirrored in Section 3(a)(1), Rule 4 of the RRCTA.9 From the foregoing provisions, it is unequivocal that a taxpayer may elevate its case before the Court in Division only when it stems from a decision of the CIR on a disputed assessment, among others. As the Supreme Court has elucidated in St. Stephen's Association v. Collector of Internal Revenue,w an assessment attains such character only when the taxpayer seasonably contests its validity and formally seeks its reconsideration or cancellation. Upon the filing of such a protest, it becomes the clear duty of the CIR to act thereon, and only upon receipt of the CIR's decision may the taxpayer properly elevate the matter to the CTA for judicial review, to wit: Where a taxpayer questions an assessment and asks the Collector to reconsider or cancel the same because he (the taxpayer) believes he is not liable therefor, the assessment becomes a "disputed assessment" that the Collector must decide, and the taxpayer can appeal to the Court of Tax Appeals only upon receipt of the decision of the Collector on the disputed assessment, in accordance vl'ith paragraph (1) of section 7, Republic Act No. 1125, conferring appellate jurisdiction upon the Court of Tax Appeals to review "decisions of the Collector of Internal Revenue in cases involving disputed assessment ..." (Emphasis supplied). Moreover, Section 228 of the National Internal Revenue Code (NIRC) of 1997, as amended, plainly requires that a taxpayer's protest be filed within thirty (30) days from receipt of the assessment, in the form and manner prescribed by the implementing rules and ' Revised Rules of the Court of Tax Appeals, Rule 4, Section 3(a)(1) provides: SEC. 3� Cases within the jurisdiction of the Court in Division. - The Court in Division shall exercise: (a) Exclusive original over or appellation jurisdiction to review by appeal the following: (1) Decision of the Commissioner of Internal Revenue in cases involving disputed assessments, refund 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; x x x w G.R. No. L-11238, August 21, 1958 [Per J. J.B.L. Reyes, En Bane].

SEPARATE CONCURRING AND DISSENTING OPINION CTA EB Nos. 2966 & 2969 (CTA Case No. 10215) Page 4 of19 regulations. In instances where the protest takes the form of a request for reinvestigation, the law further mandates that all relevant supporting documents be submitted within sixty (6o) days from the date of filing the protest. Failure to comply with this requirement renders the assessment final and executory. It pertinently provides: "SECTION 228. Protesting ofAssessment. - x x x "Such assessment may be protested administratively by filing a request for reconsideration or reinvestigation within thirty (30) days from receipt ofthe 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 (180) days from submission of documents, the taxpayer adversely affected by the decision or inaction may appeal to the Court of Tax Appeals within thirty (30) days from receipt of the said decision, or from the lapse of the one hundred eighty (180)-day period; otherwise, the decision shall become final, executory and demandable. (Emphases and underscoring supplied) To implement the foregoing statutory directive, Revenue Regulations (RR) No. 12-99, 11 as amended by RR No. 18-13,'2 prescribes that a taxpayer may dispute an assessment by filing an administrative protest-either a request for (1) reconsideration or (2) reinvestigation-within thirty (30) days from receipt of the Formal Letter of Demand/Final Assessment Notice (FLD/FAN). Failure to do so renders the assessment final, executory, and demandable. The protest must explicitly state: (1) its nature, whether reconsideration or reinvestigation; (2) the date of the assessment notice; and (3) the factual and legal bases relied upon; otherwise, it shall be considered void and without effect. In case of reinvestigation, the taxpayer must further submit all relevant supporting documents within sixty (6o) days from the filing of the protest, failing which, the assessment likewise attains finality. Once final and executory, the assessment may no longer be reopened, reconsidered, or become the subject of any further protest or reinvestigation. Thus: 3.1.4 Disputed Assessment. - The taxpayer or its authorized representative or tax agent may protest administratively against the "Implementing the Provisions ofthe National Internal Revenue Code of 1997 Governing the Rules on Assessment of National Internal Revenue Taxes, Civil Penalties and Interest and the Extra- Judicial Settlement of a Taxpayer's Criminal Violation of the Code Through Payment of a Suggested Compromise Penalty, September o6, 1999. "Amending Certain Sections of Revenue Regulations No. 12-99, November 28,2013.

SEPARATE CONCURRING AND DISSENTING OPINION CTA EB Nos. 2966 & 2969 (CTA Case No. 10215) aforesaid FLD/FAN within thirty (30) 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 of an assessment on the basis of existing records without need of additional evidence. It may involve both a question of fact or of law or both. (ii) Requestfor reinvestigation - refers to a plea of re-evaluation of an assessment on the basis of newly discovered or additional evidence that a taxpayer intends to present in the reinvestigation. It may also involve a question of fact or of law or both. 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 withoutforce and effect. If there are several issues involved in the FLD/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. 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 of 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

SEPARATE CONCURRING AND DISSENTING OPINION CTA EB )Jos. 2966 & 2969 (CTA Case No. 10215) reconsideration. Furthermore, the term "the assessment shall become final" shall mean the taxpayer is barred from disputing the correctness ofthe issued assessment by introduction of newly discovered or additional evidence, and the FDDA shall consequently be denied. Ifthe taxpayer fails to file a valid protest against the FLD/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. (Emphases and underscoring supplied) Here, the records are replete with overwhelming evidence establishing that lTC failed to submit the relevant supporting documents-whether newly discovered or additional-within the sixty (6o)-day period prescribed by law and implementing regulations. To recapitulate, on December 10, 2014, petitioner filed a protest by way of a request for reinvestigation. In said protest, ITC expressly reserved the right to submit additional documents and arguments, asserting that its undersigned President was still in the process of retrieving old files for the year 2011, which it intended to submit within sixty (6o) days from the filing of the protest.'3 Counting sixty (60) days from December 10, 2014, the deadline for submission fell on February o8, 2015. Notably, however, as admitted by ITC in its Petition'4 before the CTA Division and corroborated by the testimony of the CIR's witness, Ms. Elizabeth C. Arias, Officer-in-Charge (OIC) Assistant Chief of Assessment,'s ITC further sought an extension for the submission of additional documents through its letter to the Bureau of Internal Revenue (BIR) dated March 27, 2015. Accordingly, in the Final Decision on Disputed Assessment (FDDA) dated September 17, 2015, the CIR, through her duly authorized representative, declared that ITC had failed to submit the pertinent records to support its protest, thereby contravening the requirements of Section 228 of the NIRC of 1997, as amended.'6 In the subsequent CIR Decision on appeal dated October 10, 2019, it was further clarified that the copies of the invoices attached to ITC's request for reconsideration, having been submitted beyond the sixty (6o)-day period prescribed under Section 228 of the NIRC of 1997, as amended, could no longer be accorded any consideration.'7 '' Division Docket- Vol. II, Exhibit "P-5,'' p. 813; Exhibit "R-18." '4 Division Docket- Vol. I, p. 10, par. 16; Exhibit "R-21." '' Id., Judicial Affidavit of OIC Assistant Chief- Assessment, Elizabeth C. Arias dated July 01, 2020, pp. 219 to 235. '6 Division Docket- Vol. II, Exhibit "P-6," p. 815; Exhibit "R-25." '' Division Docket- Vol. I, Exhibit "P-1," p. 35.

SEPARATE CONCURRING AND DISSENTING OPINION CTA EB Nos. 2966 & 2969 (CTA Case No. 10215) As there is, therefore, no valid protest on record, it necessarily follows that lTC did not dispute the subject assessments, which have consequently become final and executory. Under the law and applicable regulations, lTC is thereby precluded from disputing the correctness of the assessments, whether at the administrative stage or before the judicial forum. While the ponencia correctly recognizes that ITC's failure to submit the requisite relevant documents rendered the assessment final, it, nevertheless concludes that such finality pertains solely to the administrative level before the BIR, resulting only in the denial of the request for reinvestigation and the issuance of the FDDA, which, according to the ponencia, may still be brought before the CTA Division. With all due respect, I am compelled to disagree. As previously discussed, the NIRC of 1997, as amended, and its implementing rules are explicit and unqualified: the failure to submit relevant supporting documents within sixty (6o) days from the filing of a protest, by way of a request for reinvestigation, renders the assessment final. Such finality is not, and cannot be, limited solely to the administrative level. While it is true that an aggrieved taxpayer may elevate an FDDA to the Court in Division-for instance, to challenge the denial of a reinvestigation request due to the untimely submission of documents-such procedural recourse does not alter the inherent finality of the assessment. The CTADivision cannot, with due deference, simply arrogate or exercise jurisdiction where the record incontrovertibly demonstrates that the taxpayer failed to comply with the statutory and regulatory requirements, thereby rendering the assessment final and executory. This is a threshold matter that directly divests the Court of the jurisdiction granted to it by law. Put differently, the procedural remedy of elevating the FDDA to the Court in Division is distinct and separate from the substantive finality of the assessment. Once the Court determines that the assessment had already attained finality and became executory, there exists neither a disputed assessment nor a decision on a disputed assessment to challenge before the Court. Consequently, the only proper course of action left to the Court is to dismiss the Petition outright.'8 The Supreme Court further shed light on the matter in Commissioner of Internal Revenue v. Court of Tax Appeals-Third <B AT&T Communications Services ?hils., Inc. v. Commissioner of Internal Revenue, G.R. No. 185969, November 19, 2014 [Per J. Perez, First Division].

SEPARATE CONCURRING AND DISSENTING OPINION CTA EB Nos. 2966 & 2969 (CTA Case No. 10215) Division,'9 holding that Section 228 of the NIRC of 1997, as amended, is categorical: a taxpayer's right to protest an assessment is conditioned not only on timely filing, but also on strict compliance with the form and manner prescribed under the implementing rules and regulations, including, in the case of a request for reinvestigation, the submission of all relevant supporting documents within sixty (6o) days. Absent such compliance, the assessment becomes final, executory, and demandable by operation of law-leaving neither a disputed assessment nor a decision that may properly be brought within the CTA's appellate jurisdiction. Thus: Petitioner argues that the Court of Tax Appeals had no jurisdiction over respondent's Petition for Review because the assessment had attained finality before then. Section 228 of the National Internal Revenue Code states the procedure in protesting an assessment: SECTION 228. Protesting ofAssessment. -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: (a) When the finding for any deficiency tax is the result of mathematical error in the computation of the tax as appearing on the face of the return; or (b) When a discrepancy has been determined between the tax withheld and the amount actually remitted by the withholding agent; or (c) When a taxpayer who opted to claim a refund or tax credit of excess creditable withholding tax for a taxable period was determined to have carried over and automatically applied the same amount claimed against the estimated tax liabilities for the taxable quarter or quarters of the succeeding taxable year; or (d) When the excise tax due on excisable articles has not been paid; or (e) When the article locally purchased or imported by an exempt person, such as, but not limited to, vehicles, capital equipment, machineries and spare '9 G.R. No. 239464, May 10, 2021 [Per J. Leonen, Third Division].

SEPARATE CONCURRING AND DISSENTING OPINION CTA EB Nos. 2966 & 2969 (CTA Case No. 10215) parts, has been sold, traded or transferred to non-exempt persons. The taxpayers shall be informed in writing of the law and the facts on which the assessment is made; otherwise, the assessment shall be void. Within a period to be prescribed by implementing rules and regulations, the taxpayer shall be required to respond to said notice. If the taxpayer fails to respond, the Commissioner or his duly authorized representative shall issue an assessment based on his findings. Such assessment may be protested administratively by filing a request for reconsideration or reinvestigation within thirty (30) days from receipt of the assessment in such form and manner as may be prescribed by implementing rules and regulations. Within sixty (60) 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 (180) days from submission of documents, the taxpayer adversely affected by the decision or inaction may appeal to the Court of Tax Appeals within thirty (30) days from receipt of the said decision, or from the lapse of one hundred eighty (180)-day period; otherwise, the decision shall become final, executory and demandable. (Emphasis supplied) Upon receipt of the audit results/assessment notices for Letter of Authority No. 116-2013-00000017, respondent, through Lee, replied with an April 29, 2015 letter which reads: This is to submit copies of our protest to the Audit Result/ Assessment Notices for Audit Result/Assessment Notices for Letter of Authority LOA-116-2013-00000017 for Citysuper, Incorporated TIN No.: 205-412-358 for the taxable year 2011. Please be informed that we are in the process of compiling the necessary documentation to support our protest to said assessments, and will be requiring additional time to accomplish this. Petitioner did not consider the April29, 2015letter as a valid protest, as it said in its July 13, 2015 response to respondent: The requisite information and conditions prescribed under the provisions of Section 6 in relation to Section 228 of the Tax Code, as amended, as implemented by

SEPARATE CONCURRING AND DISSENTING OPINION CTA EB Nos. 2966 & 2969 (CTA Case No. 10215) Revenue Regulations No. 18-2013, for filing a valid protest were not met, as enumerated hereunder, to wit: Your letter dated, April 29, 2015, failed to indicate/state the following: a. Narne and address of the taxpayer; b. The nature of the protest, since the letter merely contained a statement that the subject taxpayer was in the process of compiling documents for eventual presentation to the bureau; c. The assessment number, date of receipt of assessment notice and formal letter of demand; d. The itemized statement of findings to which the taxpayer agrees and schedule of adjustments to which the taxpayer does not agree; e. A statement of the facts, applicable law, rules and regulations or jurisprudence in support of the protest. Premised on the foregoing, a collection letter shall be issued against Citysuper, Inc., calling for payment of the aforesaid deficiency assessments on Income Tax, VAT, Withholding Tax on Compensation, EWT and DST for taxable year 2011. In particular, Arriola, the revenue officer, said that the April29, 2015 letter failed to state the protest's nature, the date of the assessment notice, and the applicable law, rules and regulations, or jurisprudence on which the protest was based. Thus, to petitioner, respondent's failure to properly protest the assessment meant that it had attained finality. Section 3.1.14 of Revenue Regulations No. 18-2013, amending Revenue Regulations No. 12-99, states what constitutes a valid protest: 3.1.4. Disputed Assessment. - The taxpayer or its authorized representative or tax agent may protest administratively against the aforesaid FLD/FAN within thirty (30) 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 of an assessment on the basis of existing ----------------

SEPARATE CONCURRING AND DISSENTING OPINION CTA EB Nos. 2966 & 2969 (CTA Case No. 10215) Page 11 of19 records without need of additional evidence. It may involve both a question of fact or of law 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 the 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, orjurisprudence on which his protest is based, otherwise, his protest shall be considered void and without force and effect. XXX XXX XXX 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 failed to file a valid protest against the FLD/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. (Emphasis supplied) Nowhere in respondent's April 29, 2015 letter did it state the assessment notice's date and the applicable law, rules and regulations, or jurisprudence on which its protest was based. Attaching copies of the audit results/ assessment notices is not

SEPARATE CONCURRING AND DISSENTING OPINION CTA EB Nos. 2966 & 2969 (CTA Case No. 10215) stating the date of the assessment notice, any more than attaching copies of assailed judgments to a petition without stating them in the petition itself complies ~ovith the rule on statements of material dates. While respondent's declaration that it was "in the process of compiling the necessary documentation to support [its] protest to said assessments" could imply that it was requesting a reinvestigation, its failure to explicitly state this means that petitioner had no way of knowing whether it should monitor the 6o-day period stated in Revenue Regulations No. 18-2013. Section 228 ofthe National Internal Revenue Code is clear. The administrative protest must be filed not only within the stated period, but also "in such form and manner as may be prescribed by implementing rules and regulations." Respondent's April 29, 2015 letter did not comply with the three requirements of Revenue Regulations No. 18-2013. The Court of Tax Appeals is a court of special jurisdiction. Section 7 of Republic Act No. 9282 states what matters involving the Commissioner of Internal Revenue are "'~thin its exclusive appellate jurisdiction: SECTION 7. Jurisdiction.- The CTA shall exercise: (a) Exclusive appellate jurisdiction to re\~ew by appeal, as herein pro,~ded: (1) Decisions of the Commissioner of Internal Revenue in cases invoh~ng 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 relations 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 provides a specific period of action, in which case the inaction shall be deemed a denial[.] XXX In Commissioner of Internal Revenue v. Villa, this Court held that the Court of Tax Appeals' jurisdiction was over the Commissioner of Internal Revenue's decision on the protest against an assessment,

SEPARATE CONCURRING AND DISSENTING OPINION CTA EB Nos. 2966 & 2969 (CTA Case No. 10215) and not the assessment itself. Thus, the period to invoke judicial review must be counted from receipt of the Commissioner's decision on the disputed assessment. Here, however, respondent's protest was void for failing to comply with the requirements of Revenue Regulations No. 18-2013, as mandated by Section 228 of the National Internal Revenue Code. Respondent erred in claiming that the July 13, 2015 letter was petitioner's "final decision" on its protest, there being no valid protest to speak of. Notably, the July 13, 2015 letter did not discuss the merits of any communication sent by respondent after its April 29, 2015 letter, but merely stated that no valid protest was filed. XXX When a taxpayer files a petition for review before the Court of Tax Appeals without validly contesting the assessment with the Commissioner of Internal Revenue, the appeal is premature and the Court of Tax Appeals has no jurisdiction: Since in the instant case the taxpayer appealed the assessment of the Commissioner of Internal Revenue vvithout previously contesting the same, the appeal was premature and the Court of Tax Appeals had no jurisdiction to entertain said appeal. For, as stated, the jurisdiction of the Tax Court is to review by appeal decisions of Internal Revenue on disputed assessments. The Tax Court is a court of special jurisdiction. As such, it can take cognizance only of such matters as are clearly within its jurisdiction. (Citation omitted) Section 228 of the National Internal Revenue Code requires that administrative protests against assessments conform to the rules and regulations issued by the Bureau of Internal Revenue. Respondent's April 29, 2015 letter did not comply with the requirements set down in Revenue Regulations No. 18-2013. There was no administrative protest to speak of. and no decision on a disputed assessment to assail. Thus, the Court of Tax Appeals had no jurisdiction over the Petition for Review assailing the July 13, 2015 letter. (Emphases and underscoring supplied; citations omitted) Although the Supreme Court in the above-cited case invalidated the protest under circumstances not identical to the present case- where the taxpayer plainly failed to submit the requisite documents within the prescribed period-it nevertheless made abundantly clear that strict adherence to Section 228 of the NIRC of 1997, as amended, and RR No. 18-201320 is indispensable to effectuate a valid protest. Failure to comply renders the assessment final and undisputed, leaving 20 Supra note 12.

SEPARATE CONCURRING AND DISSENTING OPINION CTA EB Nos. 2966 & 2969 (CTA Case No. 10215) Page 14 of19 no decision on a disputed assessment to elevate before the CTA Division. The High Court further emphasized the critical necessity for taxpayers to diligently monitor the sixty (6o)-day period for the submission of supporting documents in cases where a request for reinvestigation is filed. Indeed, the CTA is a tribunal of special and limited jurisdiction, empowered only to act within the bounds expressly conferred by law. Where, as here, no valid protest exists and the assessment has long attained finality, there is nothing for the Court to review. To assume jurisdiction under these circumstances would be an unwarranted expansion of authority and a clear departure from the statutory mandate. Jurisdiction cannot be presumed where it is plainly withheld. Litigation de novo in tax cases does not confer upon the taxpayer an unfettered right to introduce evidence not previously presented at the administrative level. Fundamental principles of justice and fair play dictate that the Court cannot admit andjor accord weight to evidence not considered in the assailed CIR Decision. Even assuming, arguendo, that the Court in Division acquired jurisdiction over the instant case, it should not have admitted, and/or afforded probative value to, evidence not submitted during the administrative proceedings. It is my considered view that litigation de novo does not empower the Court to try the case anew in disregard of prior proceedings. Rather, it mandates that the taxpayer must formally present, offer, and submit the evidence presented at the administrative level to the CTA for the latter to consider, verify, and accord probative weight thereto. This procedural requirement aligns not only with the CTA's nature as a court of record, but also with its strictly appellate jurisdiction over CIR decisions in cases involving disputed assessments. To hold otherwise would not only run afoul of the settled principles governing the appellate jurisdiction of the CTA, but would also effectively render nugatory any decision rendered by the CIR. Such a stance would reduce the administrative adjudication process to a mere formality, stripping it of its legal consequence. More gravely, it

SEPARATE CONCURRING AND DISSENTING OPINION CTA EB Nos. 2966 & 2969 (CTA Case No. 10215) risks establishing a dangerous precedent: taxpayers might be encouraged to file protests with incomplete documentation merely to meet the prescribed period, anticipating that they may later supplement such documents at the judicial level-pieces of evidence that were either in their possession or could have been reasonably submitted during the administrative proceedings. Such a practice would effectively circumvent the reglementary periods and undermine the finality and integrity of administrative review. The ponencia relied on Commisisoner of Internal Revenue v. Univation Motor Philippines, Inc. (Formerly Nissan Motor Philippines, Inc. 2 ' (Univation) to advance the proposition that, "[o]nce the case is elevated to the Court in Division, the taxpayer may then present new and additional evidence in support of its case, regardless of whether the taxpayer submitted the same to the CIR or not. Nothing prevents the Court in Division to lend weight, evaluate, and rule based on the submission of such new and additional evidence, the proceedings in the [CTA] being conducted de novo."22 While this principle is correctly stated within the context of Univation, it is imperative to note that the case involved a refund claim for overpayment of income tax under Sections 204 and 229 of the NIRC of 1997, as amended, where the CIR had not acted upon the taxpayer-claimant's administrative claim. Beyond being a refund case, the distinction between instances in which the CIR has acted and those in which it has remained silent is crucial. Where the CIR has failed to act, there exists no administrative determination for review. In such circumstances, consonant with the doctrine in Pilipinas Total Gas v. Commissioner ofInternal Revenue23 (Pilipinas Total Gas), the taxpayer, as an exception to the general rule, may present evidence for the first time before the CTA, the case being effectively decided in the first instance. Although I am aware that Pilipinas Total Gas involved a VAT refund claim under Section 112 of the NIRC of 1997, as amended, the underlying rationale for permitting a taxpayer-claimant to submit additional evidence before the CTA where the CIR has not acted-and, conversely, barring such evidence where the CIR has rendered a substantive decision-is firmly rooted in the fundamental principles of justice and fair play. With due respect, it is precisely these principles that I regard as controlling and to which I accord paramount importance in resolving the present case, fully consistent with the CTA's appellate function over CIR decisions and its nature as a Court of record. " G.R. No. 231581, April10, 2019 [Per J. J.C. Reyes, Jr., Second Division]. " Decision, pp. 25 to 26. '' G.R. No. 207112, December o8, 2015 [Per J. Mendoza, En Bane].

SEPARATE CONCURRING AND DISSENTING OPINION CTA EB Nos. 2966 & 2969 (CTA Case No. 10215) In other words, this exception cannot be extended to instances such as the present case, where the CIR has rendered an actual and substantive decision. Once a determination has been made at the administrative level, the taxpayer cannot circumvent the reglementary process by introducing new evidence at the judicial stage. Having established the governing principles as to why the CTA Division, as a court of law, should neither have admitted nor given probative value to evidence not previously submitted to the BIR, I now turn to the specific circumstances in the proceedings that reinforce this conclusion. First, the CIR timely objected, in its comment on the petitioner's Formal Offer of Evidence,24 to the admission of certain exhibits on the ground that they were not submitted during the course of the BIR's audit, as detailed hereunder: Exhibit Description Comment P-22 toP- Petitioner's [BIR] Respondent objects to the 33 Form 1601 for admissibility of Exhibits "P- January to 22" to "P-33," "P-34," "P- December 2011 35," and "P-36" to "P-170[,]" ~P- -3-4----P~e~ tit~ io~ ne~r'~ s =-- 20- 11~ for being not competent. All Alphalist of Payees supporting documents a subjected to taxpayer must be Expanded submitted to the [BIR] Withholding Tax during the course of f-:p:::-_-3-5----+PO"e-'-'tl:ct'.:c'io:.:::n.:.:e:::r,C"s"--'-=:2_0_1---11 investigation/audit. In Summary List of fact, the taxpayer was Purchases given numerous f-:p:::-_-3--:6c-t-o--:Pc-_+:N:..OC~R=J':c~o-r_p_o_r-at:-;io-n---1 opportunity to submit 170 Philippines 2011 these documents to Invoices support their claim. However, the taxpayer failed to submit these documents in reply to the PAN, protest to the FAN, and even during investigation. Submitting these documents only upon the filing of a Petition for Review is not congruent with the Doctrine of Primary Jurisdiction. The purpose for which these exhibits are being offered are '' Division Docket- Vol. II, pp. 917 to 918.

SEPARATE CONCURRING AND DISSENTING OPINION CTA EB Nos. 2966 & 2969 (CTA Case No. 10215) Page 17 of19 also objected for being self- serving and for lack of knowledge sufficient to form a belief as to the truth thereof. The same exhibits do not satisfy the purposes for which they are offered. (Emphases supplied) Second, these same documents were among those examined by the Independent Certified Public Accountant (ICPA) in the preparation of his ICPA Report, as testified in his Judicial Affidavit dated June 29, 2021.25 In the course ofhis testimony, the ICPA candidly acknowledged his inability to determine whether the documents he examined had, in fact, been submitted to the BIR, stating as follows: JUSTICE SAN PEDRO: Would you know how many pieces of documents were presented to the BIR? If 150 were submitted to you, would you know how many were submitted to the BIR during the assessment? Witness: Well, in that case, Your Honor, I did not have any indication that all of these are submitted to the BIR.26 (Emphasis supplied) It bears reiterating that to give credence to documents made available only after the filing of petitioner's administrative protest, assuming there is a valid one to speak of, would not only contravene the CTA's appellate jurisdiction, but would also render the CIR's decision meaningless. Such a result is manifestly contrary to the dictates of our laws, procedural rules, and the fundamental principles of justice and fair play, which plainly do not countenance such an outcome. Indeed, it is high time for this Court, as a court of law, to clearly delineate the bounds of its appellate jurisdiction in cases involving tax assessments-distinguishing those instances where the CIR has issued a decision from those in which no administrative action has been taken. To blur this line would risk emboldening taxpayers to treat the administrative process as a mere perfunctory step-filing protests with incomplete or absent supporting documents, only to litigate them in full for the first time before this Court. Such a result would come at the expense of the BIR, whose efforts to perform its duty to resolve cases '' Division Docket- Vol. II, pp. 743 to 761. '6 Transcript of Stenographic Notes during the hearing held on July 13,2021, pp. 13 to 14.

.. SEPARATE CONCURRING AND DISSENTING OPINION CTA EB Nos. 2966 & 2969 (CTA Case No. 10215) Page 18 ofl9 on the basis of the taxpayer's submissions would be rendered futile. Once the CIR has acted, the decision must stand or fall on the strength of the evidence timely and properly submitted at both the administrative and judicial stages, for judicial review is not a convenient vehicle to circumvent administrative compliance. Service of the Letter of Authority (LOA) and Preliminary Assessment Notice (PAN) on an unauthorized recipient strikes at the core of due process and constitutes a matter necessary for an orderly disposition of the case While I am in accord with the majority that the LOA and PAN were duly served on ITC, in that the CIR was able to substantiate proof of service, I respectfully differ from the view that ITC may not belatedly raise, in its Petition for Review before the Court in Division, the contention that the individuals who received the LOA and PAN lacked authority. 27 For one, it is my considered judgment that the Court is empowered to rule on the question of the lack of authority of the persons who received the LOA and PAN, even if this issue was not raised at the administrative level, by virtue of its authority to decide on matters necessary for an orderly disposition of the case.28 The question of whether the LOA or PAN by an unauthorized representative of the taxpayer goes directly to the intrinsic validity of the assessment. Stated differently, service upon an unauthorized recipient implicates a fundamental due process concern, which, if established, may render the assessment void. For this reason, the issue is essential to the properly resolution of the case. For another, to adopt such a position is inconsistent ponencia's own prior acknowledgment that the CTA Division may consider evidence in support of the taxpayer's case, irrespective of whether such documents were presented at the BIR level. ITC, in fact, sought to substantiate its argument through the testimony of its witness, Mr. Efren Q. Samson, Jr.,2 9 who, however, was accorded no probative 27 Decision, pp. 22 to 24. 2' Revised Rules ofthe Court of Tax Appeals, A.M. No. 05-11-07-CTA, Rule 14, Section 1. 29 Division Docket- Vol. I, Judicial Affidavit of Mr. Efren Q. Samson, Jr. dated February 02, 2021, pp. 367 to 381; Transcript ofthe Stenographic Notes during the hearing held on June 17, 2021.

.. SEPARATE CONCURRING AND DISSENTING OPINION CTA EB Nos. 2966 & 2969 (CTA Case No. 10215) Page 19 of19 weight by the Court, reasoning that the witness had no personal knowledge of the employees in question prior to the commencement of his employment in 2016. All told, I vote to (1) DENY the Petition filed by ITC for lack of merit; and (2) PARTIALLY GRANT the CIR's Petition for Review. Accordingly, the case should be DISMISSED on the ground that the Court in Division lacks jurisdiction over the subject matter. HENRj~GELES Associate Justice

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