MARINA SQUARE PROPERTIES, INC. v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES Court of Tax Appeals QUEZON CITY SPECIAL THIRD DIVISION MARINA SQUARE CTA CASE N0.10349 PROPERTIES, INC., Petitioner Present: RINGPIS-LIBAN, Chairperson, vs . MODESTO-SAN PEDRO, and FERRER-FLORES, JJ COMMISSIONER OF Promulgated: INTERNAL REVENUE, APR j 1 2024' Respondent. t:::.. ~ ~ 2-'fp �- � X--- ------------------- ----- ------- --------- --- --X DECISION FERRER-FLORES, J.: STATEMENT OF THE CASE The Petition for Review prays for the Court to render judgment ordering the cancellation and withdrawal of the assessments against petitioner Marina Square Properties, Inc. for alleged deficiency income tax, expanded withholding tax (EWT), withholding tax on compensation (WTC), value-added tax (VAT), and documentary stamp tax (DST), and compromise penalties, for taxable year (TY) 2014, in the total amount of P801,308,250.45, inclusive of surcharges and interest. 1 THE PARTIES Petitioner is a corporation organized and existing under the laws of the Philippines, with principal office at 17/F New Coast Hotel Manila, 1588 1 1 Statement of the Case, Amended Pre-Trial Order dated September 22, 2022 , Docket - Vol. 4, p. 1543.

CTA Case No. I 0349 Marina Square Properties, Inc. vs. Commissioner ofInternal Revenue Page 2 of25 M.H. del Pilar Street cor. Pedro Gil, Malate, Manila.2 It is registered with the Bureau oflnternal Revenue (BIR).3 Respondent is the duly appointed Commissioner of Internal Revenue (CIR) vested under the appropriate laws with the authority to carry out the functions, duties and responsibilities of said Office, including inter alia, the power to decide disputed assessments and to cancel and abate tax liabilities pursuant to the provisions of the National Internal Revenue Code (NIRC) of 1997, as amended,4 and other tax laws, and rules and regulations. 5 ANTECEDENTS (ADMINISTRATIVE LEVEL) Respondent issued the Letter of Authority (LOA) No. LOA- 201200042292, dated March 3, 2016, authorizing Revenue Officers (ROs) Christina Lati and Ryan Loon, and Group Supervisor (GS) Merly Santiago of Revenue District Office (RDO) No. 126-Regular LT Division III, to examine petitioner's books of accounts and other accounting records for all internal revenue taxes for the period January 1, 2014 to December 31, 2014.6 The said LOA was received by petitioner on March 14,2016.7 Thereafter, respondent issued the Preliminary Assessment Notice (PAN), dated July 11, 2017, against petitioner proposing for deficiency income tax, EWT, WTC, VAT, and DST forTY 2014 in the aggregate amount of !'660,004,224.90, inclusive of surcharge and interest.8 The said PAN was received by petitioner on July 11,2017.9 On July 26, 2017, petitioner filed a written reply to the PAN (letter of even date) in which it prayed for the cancellation and withdrawal of the proposed assessments on the ground that they are devoid of any legal and factual bases. 10 Respondent then issued the Formal Letter of Demand (FLD) dated October 26, 2017, in which respondent requested petitioner to pay \ 2 Exhibits "P-1" and "P-1-a", Docket- Vol. 3, p. 1160to 1191. 3 Exhibit "P-2", !d. at 1192 to 1193. 4 Republic Act (RA) 8424, as amended. 5 Par. 1, Stipulation of Facts, Joint Stipulation ofFacts and Issues (JSFI), Docket- Vol. 3, p. 942. 6 Par. 2, Stipulation of Facts, JSFI, !d. at 943. 7 Par. 4, Petition for Review, vis-a-vis par. 3, Answer, Docket- Vol. 1, pp. 7 and 435, respectively. 8 Par. 3, Stipulation of Facts, .JSFI, Docket- Vol. 3, p. 943. 9 Par. 4, Petition for Review, vis-a-vis par. 5, Answer, Docket- Vol. I, pp. 7 and 435, respectively. 10 Exhibit "P-5", Docket- Vol. 3, p. 1202 to 1217.

CTA Case No. I 0349 Marina Square Properties, Inc. vs. Commissioner ofInternal Revenue Page 3 of25 deficiency income tax, EWT, WTC, VAT, and DST for TY 2014 in the aggregate amount of 1"686,961,529.88, inclusive of surcharge and interest. In addition, respondent imposed a compromise penalty in the amount of 1"160,700.00, for petitioner's alleged failure to pay the correct amount of income tax, EWT, WTC, VAT, and DST for the same TY. 11 The said FLD was received by petitioner on October 26, 2017. 12 On November 23, 2017, petitioner filed with the BIR its Request for Reinvestigation (protest letter of even date), praying for the cancellation of respondent's assessments. 13 Petitioner submitted to the BIR certain documents in support of its administrative protest on January 22, 2018. 14 Subsequently, respondent issued a Final Decision on Disputed Assessment (FDDA), denying petitioner's administrative protest. In this FDDA, respondent requested petitioner to pay the assessments for alleged deficiency income tax, EWT, WTC, VAT, and DST for taxable year 2014, in the aggregate amount of 1"80 1,308,250.45, inclusive of surcharge, interest and compromise penalties. 15 The said FDDA was received by petitioner on August 13, 2020. 16 PROCEEDINGS BEFORE THIS COURT On September 11, 2020, petitioner filed its Petition for Review. 17 Thereafter, on January 29, 2021, respondent filed his Answer, 18 In the Resolution dated February 3, 2021, 19 the Court referred the case to mediation in the Philippine Mediation Center - Court of Tax Appeals (PMC-CTA) and the parties were ordered to immediately proceed and to 1 11 Par. 4, Stipulation of Facts, JSFI, Docket- Vol. 3, p. 943. 12 Par. 4, Petition for Review, vis-a-vis par. 7, Answer, Docket- Vol. I, pp. 7 and 435, respectively. 13 Exhibit "P-7'', Docket- Vol. 3, pp. 1233 to 1251. 14 Exhibit "P-8", !d. at 1252 to 1254. 15 Par. 5, Stipulation of Facts, JSFI, !d. at 943. 16 Par. 4, Petition for Review, vis-a-vis par. 10, Answer, Docket- Vol. I, pp. 7 and 435, respectively. 17 Docket- Vol. I, pp. 6 to 42; Resolution dated September 24, 2020, Docket- Vol. 1, p. 410 to 411; Petitioner's Compliance dated October 26, 2020 with attached (a) Amended Verification and Certification ofNon-Forum Shopping; (b) Final Decision on Disputed Assessment dated July 30, 2020, Docket -- Vol. I, pp. 412 to 424; Resolution dated November 24, 2020, Docket- Vol. I, p. 426. 18 Docket- Vol. I, pp. 435 to 454. 19 !d. at 469 to 470.

CTA Case No. I 0349 Marina Square Properties. Inc. vs. Commissioner ofInternal Revenue Page 4 of25 personally appear or through their authorized representative. The parties, however, decided not to have their case mediated by the PMC-CTA.20 Thereafter, in its Resolution dated June 23, 2021,21 in view of the failure of the parties to enter into mediation, the Court set the Pre-Trial Conference on October 7, 2021, which proceeded as scheduled.22 Prior thereto, the Petitioner's Pre-Trial Briefwas sent to the Court via electronic mail on October 4, 2021,23 while the Respondent's Pre-Trial Brief was submitted on October 5, 2021.24 Respondent transmitted the BIR Records of the present case on October 26, 2021.25 On November 15, 2021, the parties filed their Joint Statement ofFacts and Issues,26 which was admitted and approved in the Resolution dated November 23, 2021,27 deeming the termination of the Pre-Trial. The Pre- Trial Order dated January 5, 2022 was subsequently issued.28 Trial then ensued, with both parties presenting their respective testimonial and documentary evidence. Petitioner offered the testimonies of the following individuals, namely: (1) Ms. Violeta R. Gallardo/9 petitioner's Chief Accountant; and (2) Ms. Anselma P. Maliwat,30 the Court-commissioned Independent Certified Public Accountant (ICPA).31 The Report of the ICPA was submitted on February 3, 2022. 32 ~ 20 No Agreement to Mediate dated June 8, 2021 issued by the PMC-CTA, Docket- Vol. 3, p. 896. 21 Docket- Vol. 3, pp. 899 to 900. 22 Minutes of the hearing held on, and Order dated, October 7, 2021, !d. at 925 and 926 to 928, respectively. 23 Petitioner's Pre-trial Brief attached to printout of email of petitioner's counsel to the Court dated October 4, 2021, !d. at 905 to 917. 24 Docket- Vol. 3, pp. 918 to 922. 25 Respondent's Compliance dated October I, 2021, Docket- Vol. 3, pp. 935 to 937. 26 Docket- Vol. 3, pp. 942 to 953. 27 !d. at 968. 28 !d. at 1004 to 1011. 29 Exhibit "P-17'', Docket- Vol. 2, pp. 513 to 533; Minutes of hearing held on, and Order dated, March 2, 2022, Docket- Vol. 3, pp. 1125 to 1127. 30 Exhibit "P-18", Docket- Vol. 2, pp. 477 to 506; Minutes of hearing held on, and Order dated, March 2, 2022, Docket- Vol. 3, pp. 1125 to 1127. 31 Oath of Commission dated November 23, 2021, Docket- Vol. 3, p. 940: Minutes of hearing held on, and Order dated, November 23, 2021, Docket- Vol. 3, pp. 994 and 995 to 996, respectively. 32 Exhibit "P-19", Docket- Vol. 3, pp. I027 to 1121.

CTACaseNo.10349 Marina Square Properties, Inc. vs. Commissioner ofInternal Revenue Page 5 of25 On February 16, 2022, petitioner filed a Motion to Amend Pre- Trial Order,33 to which respondent failed to file his comment.34 Petitioner filed its Formal Offer ofEvidence with Motion for Leave of Court to Present Additional Evidence on March 17, 2022. 35 Respondent filed his Comment (on Petitioner's Formal Offer ofEvidence with Motion to Recall Witness) on March 21, 2022. 36 In the Resolution dated April 22, 2022,37 the Court admitted petitioner's offered exhibits and granted petitioner's Motion for Leave of Court to Present Additional Evidence. Accordingly, petitioner was allowed to recall Ms. Gallardo as its witness for the presentation of additional evidence. Petitioner then recalled to the witness stand Ms. Gallardo.38 Thereafter, petitioner filed on August 16, 2022 its Supplemental Formal Offer ofEvidence.39 Respondent filed his Comment (on Petitioner's Supplemental Formal Offer of Evidence) on August 17, 2022. 40 In the Resolution dated September 14, 2022,41 the Court partially granted petitioner's Motion to Amend Pre-Trial Order, and admitted petitioner's offered exhibits. Consequently, the Amended Pre-trial Order, incorporating the changes requested in paragraphs (2) and (4) of petitioner's motion, was issued on September 22, 2022.42 For his part, respondent offered the testimony ofRO Christina Lati.43 Respondent's Formal Offer of Evidence was filed on December 1, 2022,44 to which petitioner filed its Comment (Re: Respondent's Formal i 33 Docket- Vol. 3, pp. 1014 to 1017. 34 Records Verification Report dated August 9, 2022 issued by the Judicial Records of this Court, Vol. 4, p. 1516. 35 Docket- Vol. 3, pp. 1128 to 1158. 36 Docket- Vol. 4, pp. 1475 to 1478. 37 Id at 1484 to 1485. 38 Exhibit "P-133", Docket- Vol. 4, pp. 1489 to 1492; Minutes of the hearing held on, and Order dated, July 19, 2022, Docket - Vol. 4, pp. 1509 and 1510 to 1511, respectively. 39 Docket- Vol. 4, pp. 1517 to 1521. 40 Id. at 1534 to 1536. 41 Id. at 1540to 1541. 42 Jd. at 1543 to 1550. 43 Exhibit "R-9", Docket- Vol. 1, pp. 455 to 461; Minutes of the hearing held on, and Order dated, November 23, 2022, Docket - Vol. 4, pp. 1551 and 1554 to 1555, respectively. 44 Docket- Vol. 4, pp. 1558 to 1563.

CTA Case No. 10349 Marina Square Properties. Inc. vs. Commissioner ofInternal Revenue Page 6 of25 Offer of Evidence) on December 12, 2022.45 In the Resolution dated February 2, 2023;6 the Court admitted respondent's offered exhibits. On March 9, 2023, petitioner filed its Memorandum, 47 while respondent submitted his Memorandum on March 16,2023.48 The present case was submitted for decision on Aprilll, 2023.49 THE STIPULATED ISSUES The parties have stipulated the following issues for this Court's resolution, to wit: A. Whether or not respondent's assessments against petitioner for deficiency income tax, EWT, WTC, VAT, and DST for TY 2014 in the aggregate amount of 1'801,308,250.45, inclusive of surcharge, interest, and compromise penalties, is valid; and, B. Whether or not respondent's right to assess petitioner's deficiency EWT, WTC, VAT and DST forTY 2014 had already prescribed. 50 Petitioner's arguments: Petitioner argues that the deficiency tax assessments against it for TY 2014 are null and void for having been issued in violation of its right to due process. It claims respondent's right to assess its alleged deficiency VAT, EWT, WTC, and DST, forTY 2014 had already prescribed. Finally, it contends that respondent's deficiency tax assessments against it forTY 2014 are devoid of legal and factual bases. Respondent's arguments: Respondent, on the other hand, counters that the FLD issued by the BIR is valid. He maintains that the assessment was issued within the prescriptive period. Lastly, he asserts that the deficiency assessment has legal and factual basis. 45 Docket- Vol. 4, pp. 1566 J1571. 46 !d. at 1576. 47 !d. at 1577to 1634. 48 !d. at 1636 to 1654. 49 Minute Resolution dated April II, 2023, Docket- Vol. 4, p. 1635. 50 Issues, JSFI, Docket- Vol. 3, pp. 943 to 944.

~ CTACaseNo.l0349 Marina Square Properties, Inc. vs. Commissioner ofInternal Revenue Page 7 of25 THE COURT'S RULING The Petition for Review has merit. For an orderly disposition of this case, the Court shall first discuss the second issue followed by the first issue in this case. The Court has jurisdiction over the instant case. Section 7(a)(l) ofRA No. 1125, as amended, provides: SEC. 7. Jurisdiction.- The CIA shall exercise: (a) Exclusive appellate jurisdiction to review by appeal, as herein provided: (!) 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 oflnternal Revenue; xxx Pursuant to the last paragraph of Section 228 of the NIRC of 1997, as amended, petitioner had thirty (30) days from the receipt within which to appeal the decision of the CIR to the Court of Tax Appeals (CTA). Considering that petitioner received the FDDA on August 13, 2020, the filing of the instant Petition for Review on September 11, 2020 was timely made. The period to assess and collect deficiency taxes had prescribed in part. Petitioner further contends that the assessments issued by respondent had prescribed in part as it was issued more than three (3) years from the day the specific return was filed. Section 203 of the National Internal Revenue Code (NIRC) of 1997, as amended, provides as follows: SEC. 203. Period of Limitation upon Assessment and Collection. - Except as provided in Section 222, internal revenue taxes shall be assessed within three (3) years after the last day prescribed by law for the filing of the return, and no proceeding in court without assessment for the collection of such taxes shall be begun after the expiration of such period: Provided, That in a case where a return is filed beyond the period \

CTACaseNo.l0349 Marina Square Properties, Inc. vs. Commissioner ofInternal Revenue Page 8 of25 prescribed by law, the three (3)-year period shall be counted from the day the return was filed. For purposes of this Section, a return filed before the last day prescribed by law for the filing thereof shall be considered as filed on such last day. (Emphasis supplied) Accordingly, considering that the reckoning points of the three (3)- year prescriptive period vary depending on the tax type, the Court will delve into the same below in seriatim. Value-Added Tax Respondent's right to assess deficiency VAT for the first three (3) quarters of TY 2014 had prescribed. Section 114(A) of the NIRC of 1997, as amended, mandates the time of filing of quarterly VAT returns: SEC. 114. Return and Payment of Value-Added Tax.- (A)In General.-Every person liable to pay the value-added tax imposed under this Title shall file a quarterly return of the amount of his gross sales or receipts within twenty-five (25) days following the close of each taxable quarter prescribed for each taxpayer: Provided, however, That VAT-registered persons shall pay the value-added tax on a monthly basis. (Emphasis supplied) Petitioner filed its Quarterly VAT Returns for TY 2014 as shown below, vis-a-vis the date when the FAN was received: Quarter Quarterly Quarterly End of 3 ,rears Receipt of Return Return F L D 51 Due Filed 25 Apr 2017 25 Jul2017 27 Oct 2017 25 Apr 2014 24 Apr 25 Oct 2017 201452 25 Jan 2018 27 Oct 2017 1" 24 Jul 27 Oct 2017 25 Jul2014 201453 2"d 23 Oct 27 Oct 2017 201454 25 Oct 2014 25 Jan I 3'd 2015 55 25Jan2015 4th 51 Exhibit "R-5", Docket- Vol. 3, pp. 1218 to 1232 52 Exhibit "P-12-a", Docket- Vol. 4, pp. 1328 to 1329. 53 Exhibit "P-12-b", !d. at 13 30 to 1331. " Exhibit "P-12-c", !d. at 1332 to 1333. 55 Exhibit "P-12-d", !d. at 1334 to 1335.

CTA Case No. 10349 Marina Square Properties, Inc. vs. Commissioner ofInternal Revenue Page 9 of25 Expanded Withholding Tax and Withholding Tax on Compensation Similarly, respondent's right to assess petitioner's EWT from January to September ofTY 2014 had prescribed. Section 58(A) of the 1997 NIRC of 1997, as amended, provides: SEC. 58. Returns and Payment ofTaxes Withheld at Source.- (A) Quarterly Returns and Payments of Taxes Withheld.- Taxes deducted and withheld under Section 57 by withholding agents shall be covered by a return and paid to, except in cases where the Commissioner otherwise permits, an authorized Treasurer of the city or municipality where the withholding agent has his legal residence or principal place of business, or where the withholding agent is a corporation, where the principal office is located. The taxes deducted and withheld by the withholding agent shall be held as a special fund in trust for the government until paid to the collecting officers. The return for final withholding tax shall be filed and the payment made within twenty-five (25) days from the close of each calendar quarter, while the return for creditable withholding taxes shall be filed and the payment made not later than the last day of the month following the close of the quarter during which withholding was made: Provided, That the Commissioner, with the approval of the Secretary of Finance, may require these withholding agents to pay or deposit the taxes deducted or withheld at more frequent intervals when necessary to protect the interest of the government. (Emphasis supplied) Corollary thereto, Section 5 of Revenue Regulations (RR) No. 17- 2003, which amended Section 2.58 ofRR 02-98, provides: SECTION 5. Returns And Payments Of Taxes Withheld at Source.- Section 2.58 of Revenue Regulations No. 2-98, as amended, is hereby further amended to read as follows: Sec. 2.58. RETURNS AND PAYMENT OF TAXES WITHHLED AT SOURCE. (A) Monthly return and payment of taxes withheld at source. XXX XXX XXX (2) WHEN TO FILE- (a) For both large and non-large taxpayers, the withholding tax return, whether creditable or final (including final withholding taxes on interest from any currency bank deposit\

CTA Case No. 10349 Marina Square Properties. Inc. vs. Commissioner ofInternal Revenue Page 10 of25 and yield or any other monetary benefit from deposit substitutes and from trust funds and similar arrangements) shall be filed and payments should be made, within ten (10) days after the end of each month, except for taxes withheld for the month of December of each year, which shall be filed on or before January 15 of the following year; and except for the final capital gains tax on the sale or other onerous disposition of real property considered as capital asset which must be taken/withheld from the seller by the buyer and remitted within thirty (30) days from the date of notarization of the transfer document to the collecting agent of the RDO having jurisdiction over the place where the property is located. Nonetheless. in case of disposition of real property classified as capital asset by an individual to the government. the tax to be imposed shall be determined either under the normal income tax rate imposed in Sec. 24(A) or under a final capital gains tax of six percent (6%) imposed under Sec. 24(D)(J) of the Code, at the option of the taxpayer-seller. Thus, if the seller chooses the first option, the buyer does not have to withhold the six percent (6%) final capital gains tax but no Certificate Authorizing Registration shall be issued for the transaction until the seller or the buyer shows the seller's .filed income tax return reflecting the result ofthe subject real estate transaction. (b) With respect, however, to taxpayers, whether large or non-large, who availed of the electronic filing and payment system (EFPS), the deadline for electronically filing the applicable withholding tax returns and paying the taxes due thereon via the EFPS shall be five (5) days later than the deadlines set above, unless the EFPS regulations provide for different deadline dates and except for the final capital gains tax on the sale, barter or exchange of real property where the law fixes a definite deadline for the payment thereof" (Emphasis supplied) Pursuant to the foregoing, petitioner filed its Monthly Remittance Returns forTY 201456 as shown below, vis-a-vis the date when the FAN was received: Monthly BIRForm Month Return No. 1601-E End of 3 years FLD Due Filed/Paid Received 57 Jan 2014 15 Feb 2014 11 Feb 201458 15 Feb 2017 27 Oct 2017 Feb2014 15Mar2014 13Mar201459 15Mar2017 270ct2017 Mar2014 15Apr2014 10Apr201460 15Apr2017 270ct2017 ~� '""'' ''" m" "" "'' ''" mm�� """""k ''"'"' ""' \ Payment System (eFPS). 57 Exhibit "R-5", Docket- Vol. 3, pp. 1218 to 1232 58 Exhibit"P-10-a",Jd.at 1255to 1257. 59 Exhibit "P-10-b", !d. at 1258 to 1260. 60 Exhibit"P-10-c",Jd.at 1261 to 1263.

CTA Case No. 10349 Marina Square Properties, Inc. vs. Commissioner ofInternal Revenue Page 11 of25 Apr 2014 15 May 2014 10 May 201461 15 May 2017 27 Oct 2017 May 2014 15 Jun 2014 11 Jun 201462 15 Jun 2017 27 Oct 2017 Jun 2014 15 Jul2014 11 Jul201463 15 Jul2017 27 Oct 2017 Jul2014 15Aug2014 12 Aug 201464 15 Aug 2017 27 Oct 2017 Aug 2014 15 Sep 2014 10 Sep 201465 15 Sep 2017 27 Oct 2017 Sep 2014 15 Oct 2014 11 Oct201466 15 Oct 2017 27 Oct 2017 Oct 2014 15 Nov 2014 11 Nov201467 15Nov2017 27 Oct 2017 Nov 2014 15 Dec 204 II Dec 201468 15 Dec 2017 27 Oct 2017 Dec 2014 20Jan2015 1 2 J a n 2 0 1 5 69 20 Jan 2018 27 Oct 2017 In the same manner, respondent's right to assess petitioner of deficiency WTC for the months of January to September 2014 had prescribed as shown below: Month Monthly Return BIRForm No. End of3 FLD Jan 2014 Due Received 70 Feb 2014 1601-C ~ears 27 Oct 2017 Mar 2014 15 Feb 2014 Filed/Paid 27 Oct 2017 Apr 2014 15 Mar 2014 8 Feb 201471 15 Feb 2017 27 Oct 2017 May 2014 15 Apr 2014 10 Mar 201472 15 Mar2017 27 Oct 2017 Jun 2014 15 May 2014 9 Apri\201473 15 April 2017 27 Oct 2017 Jul2014 15 Jun 2014 7 May 201474 15 May 2017 27 Oct2017 Aug 2014 15 Ju\2014 5 Jun 201475 15 Jun 2017 27 Oct 2017 Sep 2014 15Aug2014 9 Ju\201476 15 Jul2017 27 Oct 2017 Oct 2014 15 Sep 2014 8 Aug 201477 15Aug2017 27 Oct 2017 Nov 2014 15 Oct 2014 6 Sep 201478 15 Sep 2017 27 Oct 2017 Dec 2014 15Nov2014 9 Oct 201479 15 Oct 2017 27 Oct 2017 15 Dec 2014 10 Nov 201480 16 Nov 2017 27 Oct 2017 20 Jan 2015 9 Dec 201481 15 Dec 2017 9Jan2015 82 20Jan2018 \ 61 Exhibit "P-10-d", /d. at 1264 to 1266. 62 Exhibit "P-10-e", !d. at 1267 to 1269. 63 Exhibit "P-10-f', !d. at 1270 to 1274. 64 Exhibit "P-10-g", !d. at 1275 to 1277. 65 Exhibit "P-10-h", !d. at 1278 to 1280. 66 Exhibit "P-10-i", !d. at 1281 to 1283. 67 Exhibit "P-10-j'', !d. at 1284 to 1286. 68 Exhibit"P-10-k",/d.at 1287to 1289. 69 Exhibit "P-10-1", !d. at 1290 to 1292. 70 Exhibit "R-5", Docket- Vol. 3, pp. 1218 to 1232 71 Exhibit "P-11-a", !d. at 1293 to 1295. 72 Exhibit "P-11-b", !d. at 1296 to 1298. 73 Exhibit "P-11-c", !d. at 1299 to 1301. 74 Exhibit "P-11-d", !d. at 1302 to 1304. 75 Exhibit "P-11-e", Docket- Vol. 4, pp. 1305 to 1307. 76 Exhibit"P-11-f',/d.at 1308to 1310. 77 Exhibit"P-11-g",!d.at13lltol3l3. 78 Exhibit"P-II-h",ld.atl314tol315. 79 Exhibit"P-11-i",/d.at 13l7to 1318. 80 Exhibit "P-11-j", !d. at 1319 to 1321. 81 Exhibit "P-11-k", !d. at 1322 to 1324. 82 Exhibit "P-Il-l", !d. at 1325 to 1327.

CTA Case No. 10349 Marina Square Properties, Inc. vs. Commissioner ofInternal Revenue Page 12 of25 In sum, respondent's assessment for TY 2014 relative to the following taxes is void on the ground of prescription: 1) First three quarters for VAT; 2) January to September 2014 for EWT; and, 3) January to September 2014 for WTC. The FLD is void for violation of petitioner's right to due process. The Court shall now determine whether petitioner is liable for deficiency taxes for the items that are not time-barred. The Court finds for petitioner. The subject assessments are void for having been issued in violation of petitioner's right to administrative due process. Section 228 of the NIRC of 1997, as amended, provides, in part, as follows: SEC. 228. Protesting of Assessment. - When the Commissioner or his duly authorized representative finds that proper taxes should be assessed, he shall first notify the taxpayer of his findings: xxx XXX XXX XXX The taxpayers shall be informed in writing of the law and the facts on which the assessment is made; otherwise, the assessment shall be void. XXX XXX xxx. (Emphasis added) Under the foregoing provision, it is explicitly required that the taxpayer be informed in writing of the law and of the facts on which the assessment is made; otherwise, the assessment shall be void.83 The requirement that the taxpayer must be informed of the factual and legal bases of the assessment is mandatory. It cannot be presumed. As a requirement of due process, this rule allows the taxpayer to make an effective protest.84 To be sure, the requirement set by law to state in writing the factual and legal bases for the assessment is not a hollow exhortation. \ 83 Commissioner ofIntemal Rc1'cnue 1'S. Avon Products Manufacturing, Inc., ct seq., G.R. Nos. 201398-99 and 201418-19, October 3, 2018. 84 Commissioner of Internal Revenue vs. Spouses Remigio P. Magaan and Leticia L. Magaan, G.R. No. 232663, May 3, 2021.

CTA Case No. 10349 Marina Square Properties, Inc. vs. Commissioner ofInternal Revenue Page 13 of25 The law imposes a substantive, not merely a formal, requirement.85 Furthermore, it must be emphasized that failure to comply with Section 228 does not only render the assessment void, but also finds no validation in any provision in the Tax Code.86 To implement the above-quoted Section 228, Section 3 of Revenue Regulations (RR) No. 12-99,87 as amended by RR No. 18-2013,88 provides, in part, as follows: SECTION 3. Due Process Requirement in the Issuance of a Deficiency Tax Assessment. - 3.I Mode of procedure in the issuance of a deficiency tax assessment: 3.1.1 Preliminary Assessment Notice (PAN). - If after review and evaluation by the Commissioner or his duly authorized representative, as the case may be, it is determined that there exists sufficient basis to assess the taxpayer a Preliminary Assessment Notice (PAN) for the proposed assessment. It shall show in detail the facts and the law, rules and regulations, or jurisprudence on which the proposed assessment is based (see illustration in ANNEX �A' hereof). XXX XXX XXX 3.1.3 Formal Letter of Demand and Final Assessment Notice (FLDIFAN).- The Formal Letter of Demand and Final Assessment Notice (FLD/F AN) shall be issued by the Commissioner or his duly authorized representative. The FLD/FAN calling for payment of the taxpayer's deficiency tax or taxes shall state the facts, the law, rules and regulations, or jurisprudence on which the assessment is based, otherwise, the assessment shall be void (see illustration in ANNEX 'B' hereof). XXX XXX XXX 3.1.5 Final Decision on a Disputed Assessment (FDDA). - The decision of the Commissioner or his duly authorized representative shall state the (i) facts, the applicable Jaw, rules and regulations, or jurisprudence on which such decision is based, otherwise. the decision Commissioner of Internal Revenue vs Unioil Corporation, G.R. No. 204405, A1gust 4, 2021. 86 !d., citing Commissioner ofInternal Revenue vs. Reyes, G.R. No. 159694, January 27. 2006. 87 SUBJECT: 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 Taxpayers Criminal Violation of the Code Through Payment of a Suggested Compromise Penalty 88 SUBJECT: Amending Certain Sections of Revenue Regulations No. 12-99 Relative to the Due Process Requirement in the Issuance of a Deficiency Tax Assessment.

CTA Case No. 10349 Marina Square Properties, Inc. vs. Commissioner ofInternal Revenue Page 14 of25 shall be void (see illustration in ANNEX 'C' hereof), and (ii) that the same is his final decision. (Emphases and underscoring added) The foregoing provision prescribes, as part of due process in the issuance of tax assessments, that the PAN, FLD/FAN and FDDA must, respectively, state, among others, the facts and the law on which the assessment is based; otherwise, the FLD/FAN and/or FDDA shall be void. In Commissioner of Internal Revenue vs. Avon Products Manufacturing, Inc., et seq. (Avon case),89 the Supreme Court said: Tax assessments issued in violation of the due process rights of a taxpayer are null and void. While the government has an interest in the swift collection of taxes, the Bureau of Internal Revenue and its officers and agents cannot be overreaching in their efforts, but must perform their duties in accordance with law, with their own rules of procedure, and alwavs with regard to the basic tenets of due process. The 1997 National Internal Revenue Code, also known as the Tax Code, and revenue regulations allow a taxpayer to file a reply or otherwise to submit comments or arguments with supporting documents at each stage in the assessment process. Due process requires the Bureau of Internal Revenue to consider the defenses and evidence submitted by the taxpaver and to render a decision based on these submissions. Failure to adhere to these requirements constitutes a denial of due process and taints the administrative proceedings with invalidity. XXX XXX XXX The Bureau of Internal Revenue is the primary agency tasked to assess and collect proper taxes, and to administer and enforce the Tax Code. To perform its functions of tax assessment and collection properly, it is given ample powers under the Tax Code, such as the power to examine tax returns and books of accounts, to issue a subpoena, and to assess based on the best evidence obtainable, among others. However, these powers must 'be exercised reasonably and [under] the prescribed procedure.' The Commissioner and revenue officers must strictly comply with the requirements of the law, with the Bureau of Internal Revenue's own rules, and with due regard to taxpayer's constitutional rights. XXX XXX XXX In carrying out these quasi-judicial functions, the Commissioner is required to 'investigate facts or ascertain the existence of facts, hold hearings, weigh evidence, and draw conclusions from them as basis for their official action and exercise of discretion in a judicial nature.' Tax investigation and assessment necessarilv demand the observance of due process because they affect the proprietary rights of specific j_ persons. 89 G.R. Nos. 201398-99\and 201418-19, October 3, 2018.

CTA Case No. 10349 Marina Square Properties, Inc. vs. Commissioner ofInternal Revenue Page 15 of25 XXX XXX XXX In Ang Tibay v. The Court of Industrial Relations, this Court observed that although quasi-judicial agencies 'may be said to be free from the rigidity of certain procedural requirements[, it] does not mean that it can, in justiciable cases coming before it, entirely ignore or disregard the fundamental and essential requirements of due process in trials and investigations of an administrative character.' It then enumerated the fundamental requirements of due process that must be respected in administrative proceedings: (I) The party interested or affected must be able to present his or her own case and submit evidence in support of it. (2)The administrative tribunal or body must consider the evidence presented. (3)There must be evidence supporting the tribunal's decision. (4) The evidence must be substantial or 'such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.' (S)The administrative tribunal's decision must be rendered on the evidence presented, or at least contained in the record and disclosed to the parties affected. (6)The administrative tribunal's decision must be based on the deciding authority's own independent consideration of the law and facts governing the case. The administrative tribunal's decision is rendered in a manner that the parties mav know the various issues involved and the reasons for the decision. XXX XXX XXX The last requirement relating to the form and substance of the decision is the decision-maker's 'duty to give reason' to enable the affected person to understand how the rule of fairness has been administered in his [or her] case, to expose the reason to public scrutiny and criticism, and to ensure that the decision will be thought through bv the decision-maker. XXX XXX XXX Administrative due process is anchored on fairness and equity in procedure. It is satisfied if the partv is properly notified of the charge against it and is given a fair and reasonable opportunity to explain or defend itself. Moreover, it demands that the party's defenses be considered by the administrative body in making its conclusions, and that the party be sufficiently informed of the reasons for its conclusions. XXX XXX XXX The importance of providing taxpayer with adequate written th\ notice of his or her tax liabilitv is undeniable. Under Section 228, it is explicitly required that the taxpayer be informed in writing of the law ��d nf <he '"'" nn whi<h <he '"'"ment fn mnd" nthe~Oe,

CTA Case No. I0349 Marina Square Properties, Inc. vs. Commissioner ofInternal Revenue Page 16 of25 assessment shall be void. Section 3.1.290 of Revenue Regulation No. 12- 99 requires the Preliminary Assessment Notice to show in detail the facts and law, rules and regulations, or jurisprudence on which the proposed assessment is based. Further, Section 3.1.491 requires the Final Letter of Demand must state the facts and law on which it is based; otherwise, the Final Letter of Demand and Final Assessment Notices themselves shall be void. Finally, Section 3.1.692 specifically requires that the decision of the Commissioner or of his or her duly authorized representative on a disputed assessment shall state the facts and law, rules and regulations, or jurisprudence on which the decision is based. Failure to do so would invalidate the Final Decision on Disputed Assessment. 'The use of the word 'shall' in Section 228 of the [National Internal Revenue Code] and in [Revenue Regulations] No. 12-99 indicates that the requirement of informing the taxpayer of the legal and factual bases of the assessment and the decision made against him [or her] is mandatory.' This is an essential requirement of due process and applies to the Preliminary Assessment Notice, Final Letter of Demand with the Final Assessment Notices, and the Final Decision on Disputed Assessment. XXX XXX XXX The facts demonstrate that Avon was deprived of due process. It was not fully apprised of the legal and factual bases of the assessments issued against it. The Details of Discrepancy attached to the Preliminary Assessment Notice, as well as the Formal Letter of Demand with Final Assessment Notices, did not even comment or address the defenses and documents submitted by Avon. Thus, Avon was left unaware on how the Commissioner or her authorized representatives appreciated the explanations or defenses raised in connection with the assessments. There was clear inaction of the Commissioner at every stage of the proceedings. XXX XXX XXX It is true that the Commissioner is not obliged to accept the taxpayer's explanations, as explained by the Court of Tax Appeals. However, when he or she rejects these explanations, he or she must give some reason for doing so. He or she must give the particular facts upon which his or her conclusion are based, and those facts must appear in the record. XXX XXX XXX The Commissioner's total disregard of due process rendered the identical Preliminary Assessment Notice, Final Assessment Notices, md Colloo<ion Lette< nnII �nd .oid, � nd nf no fnree ond eff"'� ~ 90 Now Section 3.1.1 ofRR No. 12-99, as amended by RR No. 18-2013. 91 Now Section 3.1.3 ofRR No. 12-99, as amended by RR No. 18-2013. 92 Now Section 3.1.5 ofRR No. 12-99, as amended by RR No. 18-2013.

CTA Case No. I0349 Marina Square Properties, Inc. vs. Commissioner ofInternal Revenue Page 17 of25 This Court has, in several cases, declared void any assessment that failed to strictly comply with the due process requirements set forth in Section 228 of the Tax Code and Revenue Regulation No. 12-99. XXX XXX XXX In Commissioner of Internal Revenue v. Reyes, this Court ruled as void an assessment for deficiency estate tax issued by the Commissioner for failure to inform the taxpayer of the law and the facts on which the assessment was made, in violation of Section 228 of the Tax Code. XXX XXX XXX Compliance with strict procedural requirements must be followed in the collection of taxes as emphasized in Commissioner of Internal Revenue v. Algue, Inc.: Taxes are the lifeblood of the government and so should be collected without unnecessary hindrance. On the other hand, such collection should be made in accordance with law as any arbitrariness will negate the very reason for government itself. It is therefore necessary to reconcile the apparently conflicting interests of the authorities and the taxpayers so that the real purpose of taxation, which is the promotion of the common good, may be achieved. XXX XXX XXX But even as we concede the inevitability and indispensability of taxation, it is a requirement in all democratic regimes that it be exercised reasonably and in accordance with the prescribed procedure. If it is not, then the taxpayer has a right to complain and the courts will then come to his succor. For all the awesome power of the tax collector, he may still be stopped in his tracks if the taxpayer can demonstrate... that the law has not been observed. (Emphasis supplied) xxx. {The Commissioner of Internal Revenue's! disregard of the standards and rules renders the deficiencv tax assessments null and void. xxx. (Citations omitted; emphases and underscoring added) Based on the foregoing jurisprudential pronouncements, respondent or his duly authorized representative is mandated to perform assessment functions in accordance with, and strict adherence to, law, with their own rules of procedure, and always with regard to the basic tenets of due process. Due process requires respondent and/or BIR to consider the defenses and evidence submitted by the taxpayer and to render a decision based on these submissions. \

CTACaseNo.l0349 Marina Square Properties, Inc. vs. Commissioner ofInternal Revenue Page 18 of25 Furthermore, in case respondent or his duly authorized representative fails to observe due process, it shall have the effect of rendering the deficiency tax assessment void, and of no force and effect. Moreover, a significant part of the due process requirement in the issuance of tax assessments is that the concerned taxpayer must be informed, in writing, of the law and of the facts on which the assessment is made. Such requirement must be embodied in the PAN, FLD/FAN, and FDDA. Specifically, when respondent rejects the taxpayer's explanations, he must give some reason for doing so and the particular facts and law upon which his conclusion are based, and those facts must appear in the record. As a corollary, the concerned taxpayer must not be left unaware on how the respondent or his duly authorized representatives appreciated the explanations or defenses raised in connection with the assessment To stress, in case respondent or his duly authorized representative fails or effectively fails to observe the foregoing due process requirements, it shall have the effect of rendering the assessment and collection of the pertinent deficiency tax void. In this case, as stated in the PAN dated July ll, 2017,93 the BIR ascertained that petitioner has a deficiency income tax, EWT, WTC, VAT, and DST, including interests, surcharge, and compromise penalties, summarized as follows: Tax Type Basic Surcharge Interest Compromise Total Income Tax I' 284 653,891.61 I' 125,715,636.52 Penalty I' 410,419,528.13 EWT - WTC 322,944.44 158,552.45 I' 50,000.00 501,496.89 VAT 1,615.08 - 792.94 20,000.00 3,108.02 DST 700.00 166,096,339.58 - 80,636,359.93 50,000.00 246,782,699.51 Total 1,384,585.00 - 687,361.10 40,000.00 2,458,092.35 1'452,459,375.71 346,146.25 1'207,198,702.94 1'160, 700.00 1'660, 164,924.90 1'346,146.25 The Details of Discrepancies for the said PAN read, in part, as follows: I. INCOME TAX XXX XXX XXX 1. Income classified as exempt XXX XXX XXX Verification of the sources of your income, disclosed that it came from the rental of your commercial units and parking areas which you converted into a casino complex, office space and car park. The ol. 3, pp. 1195<o 1201. \

CTA Case No. I0349 Afarina Square Properties, Inc. vs. Commissioner ofInternal Revenue Page 19 of25 gaming premises and certain areas in the office premises are being leased out to the Philippine Amusement and Gaming Corporation. It is also a fact that you are responsible for the payment of electric bills for all the tenants, after which you billed them according to their consumption/usage. Since your Income from rental of your premises is considered as other related services, then it is subject to corporate income tax pursuant to the Supreme Court decision, G.R. No. 215427 dated December 10, 2014, stating that 'PAGCOR is subject to corporate income tax for 'Other related services', then it is logical that contractees and licensees of PAGCOR shall likewise pay corporate income tax derived from such 'related services'. ' 2. Expenses not subjected to Withholding Tax Investigation disclosed that various income payments were not subjected to the expanded withholding tax in accordance with the provisions of Sections 2.57.2 of Revenue Regulation 2-98. Further investigation also disclosed that the salaries received by employees were not entirely subjected to withholding on compensation. The said payments are disallowed in accordance with the provisions of Section 34(K) of the National Internal Revenue Code. The disallowance of the said amount is also in pursuant to Section 2.58.5 of Revenue Regulations 12-2013 dated July 12, 2013 which states 'No deduction will also be allowed notwithstanding the payments of withholding tax at the time of the audit investigation or reinvestigation/reconsideration in cases where no withholding of tax was made in accordance with Sections 57 and 58 of the Code.' II. EXPANDED WITHHOLDING TAX Investigation disclosed that various income payments amounting to P 9,527,311.38 were not subjected to the requisite expanded withholding tax in accordance with the provisions of Sections 2.57.2 of Revenue Regulation 2-98 which states that 'Except as herein otherwise provided, there shall be withheld a creditable income tax at the rates specified for each class of payee.' See attached computation, Schedule A. III. WITHHOLDING TAX ON COMPENSATION Total salaries subject to withholding tax on compensation per audit amounted to P 31,648,169.00 while the amount of compensation per alphabetical lists submitted amounted only to P 31,642,756.00 a discrepancy ofP 5,413.00. Said discrepancy was subjected to withholding tax on compensation using the composite tax rate pursuant to the decision embodied in CTA Case No. 6195 dated April12, 2004. XXX XXX XXX IV. VALUE ADDED TAX XXX XXX XXX Verification disclosed that only the gross receipts from rental of parking was subjected to value added tax. Further verification showed\

CTA Case No. I0349 Marina Square Properties, Inc. vs. Commissioner ofInternal Revenue Page 20 of25 that you failed to pay the corresponding value added tax of the proceeds derived from the sale of equipment in the amount of P 2,217,780.00 and from the receipts from PAGCOR in the amount ofP 1,381,981,383.20. V. DOCUMENTARYSTAMPTAX On each lease, agreement, contract for hire, use or rent of land is subject to Documentary stamp tax in pursuant to Section 194 of the Code. Computation ofDST is as follows: XXX XXX XXX It is requested that your aforesaid deficiency taxes be paid immediately upon receipt hereof, inclusive of penalties, otherwise the Formal Letter of Demand and Assessment Notice shall be issued. As already established, in response to the PAN on July 26, 2017, petitioner sent the protest letter evenly dated to the BIR.94 In the said letter, petitioner laid out its arguments against the deficiency taxes imposed by the BIR. Specifically, the following are the summary of arguments raised by petitioner in the said protest letter, to wit: 1. Considering that the leased premises are connected with and essential to the gaming operations of PAGCOR, the rental payments to petitioner for the use of such leased premises fall squarely within the operation of Section 13(2)(b), PAGCOR Charter. As such, it is subject to the five percent (5%) franchise tax under Section 13(2)(b), PAGCOR Charter and is, therefore, exempt from the thirty percent (30%) regular corporate income tax. 2. There is a mathematical error in the computation of the alleged deficiency EWT for calendar year 2014. An addition of all the income payments shown in Schedule A of the PAN would show that the sum of all the income payments provided therein should only be '1"261,871,505.02, instead of '1"269,139,893.75. Hence, the total amount of income payments that was allegedly not subjected to EWT is only '1"2,258,922.65, and not '1"9,527,311.38 as stated in the PAN. Consequently, the deficiency EWT assessment ofl"9,527,311.38 is likewise erroneous. 3. The deficiency EWT assessment has no basis because the following income payments are not subject to EWT: (I) payments to PAGCOR; (2) insurance premium; (3) reimbursements payments to New World Manila Bay 94 Exhibit "P-5", Docket- Vol. 3, pp. 1202 to 1217. \

CTA Case No. I 0349 Marina Square Properties, Inc. vs. Commissioner ofInternal Revenue Page 21 of25 Hotel (NCHI); (4) disbursements from petty cash funds; and (5) fringe benefit travelling expenses. 4. The discrepancy in the amount of 1'5,413.00 that was allegedly not subjected to WTC actually pertains to tax- exempt compensation income. 5. Petitioner's export sales of PPE to Cosmic Computer Enterprise and ROB Ltd., both nonresident foreign corporations, are subject to zero percent (0%) VAT pursuant to Section l 06(A)(2), NIRC. 6. Petitioner's rental income is covered by the 5% franchise tax under Section 13(2)(b), PAGCOR Charter, which shall be in lieu of any other taxes, fees, charges or levies of whatever nature, including VAT. Petitioner's rental income is exempt from VAT pursuant to Section l3(2)(b), PAGCOR Charter. 7. Insurance proceeds are not subject to VAT because they were not received in the course of trade or business pursuant to Section l 05, NIRC. 8. As a PAGCOR-Contractor, petitioner is exempt from the payment of DST pursuant to Section 13(2) of the PAGCOR Charter. 9. The deficiency DST on the Lease Agreement with PAGOR had already prescribed pursuant to Section 203, NIRC because the Lease Agreement was executed on March 14, 2003. 10. The BIR cannot assess deficiency DST on the Lease Agreements with NCHI and Harbor View Properties and Holdings, Inc. executed in 2003. 11. There is no legal basis for the unilateral imposition of compromise penalty against petitioner. In the FLD dated October 26, 2017,95 however, petitioner was still assessed for deficiency income tax, EWT, WTC, VAT and DST, with surcharge, interests and compromise penalties, summarized as follows: '\ 95 Exhibits "P-6" and "R-5", Docket- Vol. 3, pp. 1218 to 1221.

CTACaseNo.l0349 Marina Square Properties, Inc. vs. Commissioner ofInternal Revenue Page 22 of25 Tax Type Basic Surcharge Interest Compromise Total Income Tax !' 282,473,375.00 !' 143,635,776.44 Penalty !' 426,159,151.44 EWT - WTC 322,944.44 - 180,141.06 !' 50,000.00 523,085.50 VAT 1,615.08 - 900.90 20,000.00 3,215.98 DST - 700.00 166,096,339.58 91,739,786.47 50,000.00 257,886,126.05 Total 1,384,585.00 346,146.25 779,919.66 40,000.00 2,550,650.91 !'450,278,859.1 0 !'346,146.25 !'236,336,524.53 !'160,700.00 !'687,122,229.88 It can be clearly observed from the above assessments that they are exactly based on the findings as stated in the PAN dated July 11, 2017.96 If at all, in terms of the amounts indicated, the difference between the said PAN and the subject FLD is that the amounts of interest were merely adjusted, and the mathematical error in the computation of the deficiency income tax was corrected. The basic tax dues, save for the said deficiency income tax assessment, practically remained the same. Relative thereto, it is noteworthy that in the said FLD, the BIR did not address any of the explanations made by petitioner in its protest letter to the PAN-a glaring indication that the BIR did not consider the same when it issued the subject FLD. Furthermore, as mentioned earlier, the adjustment in the deficiency income tax assessment was not due to the substantive arguments raised by petitioner, but rather a mere correction of a mathematical error in the PAN. In fact, it is noteworthy that the Details of Discrepancies for the said FLD were merely copied verbatim from the Details of Discrepancies for the same PAN. The only difference is that respondent added this sentence in the VAT portion: "Further verification disclosed that you failed to comply with the provisions of the invoicing requirement pursuant to Sections 113(A)(1) which states that 'A VAT- registered person shall issue a VAT invoice for every sale or exchange of goods or properties' and 113(B)(2)(c) which states that 'If the sale is subject to zero percent (0%) value added tax, the term zero-rated sale' shall be written or printed prominently on the invoice or receipt."' In other words, the BIR merely reiterated the same findings as stated in the PAN, without giving any reason for rejecting the above-stated refutations and explanations made by petitioner in its protest letter dated July 26, 2017. Consequently, petitioner was left unaware on how respondent or the BIR appreciated the explanations or defenses petitioner raised against the subject PAN, in clear violation of petitioner's right to administrative due process. Then, as already noted above, petitioner filed on November 23, 2017 its protest letter of even date by way of a Request for Reinvestigation,97 and 96 Exhibit "P-4", !d. at 1195 to 1201. 1 97 Exhibit "P-7", Docket- Vol. 3, pp. 1233 to 1251.

CTA Case No. 10349 Marina Square Properties, Inc. vs. Commissioner ofInternal Revenue Page 23 of25 submitted to the BIR, on January 22, 2018, certain documents in support of its administrative protest.98 Thereafter, respondent issued the FDDA dated July 30, 2020, which was received by petitioner on August 13, 2020, denying its protest to the FLD.99 The FDDA assessed petitioner for deficiency income tax, EWT, WTC, VAT, and DST, for TY 2014 in the aggregate amount of !'801 ,308,250.45, inclusive of surcharge, interests and compromise penalties, as follows: Tax Type Basic Surcharge Interest Compromise Total Income Penalty !' 282,473,375.00 - !' 497,791,303.74 Tax 322,944.44 !' 215,267,928.74 !' 50,000.00 604,980.67 EWT I ,615.08 - 262,036.23 20,000.00 3,862.0 I WTC I ,546.93 700.00 VAT 166,096,339.58 - 50,000.00 300,006,337.53 DST I ,384,585.00 - 133,859,997.95 40,000.00 2,90 I ,766.50 1,131,035.25 Total 1'450,278,859.1 0 346,146.25 1'160, 700.00 !'80 I ,308,250.45 1'350,522,545.1 0 1'346,146.25 As can be gleaned from the foregoing table, the total amount of taxes being assessed against petitioner still increased. A comparison of the figures stated in the subject FLD and the foregoing figures found in the assailed FDDA would reveal that the respective remaining amounts of basic taxes, and surcharge due remain unchanged. The BIR merely adjusted the interests being imposed. More importantly, it is noteworthy that in the said FDDA, the BIR did not address any of the refutations or explanations made by petitioner in its protest letter dated November 23, 2017, and merely reiterated and/or copied verbatim what was in the assailed FLD and the Details of Discrepancies attached thereto, indicating that the BIR did not consider petitioner's refutation, explanations or defenses when it issued the subject FDDA. To emphasize by way reiteration, pursuant to the Avon case, the concerned taxpayer must be fully apprised of the factual and legal bases of the assessments, and must not be left unaware on how respondent or his authorized representative appreciated the refutations, explanations or defenses raised by petitioner in connection with the assessments. Correspondingly, as part of the due process requirement in the issuance of tax assessments, the BIR or respondent must give reason(s) for 0 1254. \ 99 Par. 10, Petition for Review, vis-a-vis Par. 3, Answer, Docket- Vol. I, pp. 8 and 435, respectively; Par. 5, Stipulation of Facts, JSFI, Docket- Vol. 3, p. 943; Exhibit "P-9", Docket- Vol. I, pp. 415 to 424; Exhibit "R-7", BIR Records, pp. 379 to 377.

CTA Case No. I 0349 Marina Square Properties, Inc. vs. Commissioner ofInternal Revenue Page 24 of25 rejecting petitioner's explanations, and must give the particular facts upon which the conclusions for assessing petitioner are based, and those facts must appear on record. The BIR or respondent had obviously not observed such requirement in the issuance ofthe FLD and FDDA. Thus, the inevitable conclusion then is that petitioner's right to due process, as recognized under Section 228 of the NIRC of 1997, as amended, vis-a-vis Section 3.1.5 ofRR No. 12-99, as amended by RR No. 18-13, was violated by respondent. As a consequence of such violation, the said deficiency tax assessments are rendered void. To stress, tax assessments issued in violation of the due process rights � of a taxpayer are null and void. 10 Furthermore, a void assessment bears no valid fruit. 101 Such being the case, the subject tax assessments cannot be enforced against petitioner, and the BIR has no right to collect the same. In fine, in view of the finding that the subject tax assessments are void for having been issued in violation of petitioner's right to administrative due process, it is no longer necessary to address the other matters raised by the parties herein. WHEREFORE, in light of the foregoing considerations, the present Petition for Review is GRANTED. Accordingly, the subject deficiency income tax, expanded withholding tax, withholding tax on compensation, value-added tax and documentary stamp tax assessments, including the imposed surcharge, interests, and compromise penalties, in the aggregate amount ofP801,308,250.45, for taxable year 2014, are CANCELLED and WITHDRAWN. Moreover, the Formal Letter of Demand dated October 26, 2017 and the Final Decision on Disputed Assessment dated July 30, 2020 issued by the Bureau oflntemal Revenue against petitioner are REVERSED and SET ASIDE. SO ORDERED. ~ ~~�� .. s co G\..Y'ERitE iate Justice �10 Commissioner of Inrernal Rerenue rs. Aron Products Manufacturing, Inc., et seq., supra. 101 Samar-! Electric Cooperative vs. Commissioner of Internal Revenue, G.R. No. 193100, December 10,2014.

CTA Case No. I 0349 Marina Square Properties, Inc. vs. Commissioner ofInternal Revenue Page 25 of25 WE CONCUR: ~. ~ '-7- \...____ MA. BELEN M. RINGPIS-LIBAN Associate Justice ATTESTATION I attest that the conclusions in the above Decision were reached in consultation before the consolidated cases were assigned to the writer of the opinion of the Court's Division. ~-~ ). '-....____ MA. BELEN M. RINGPIS-LIBAN Associate Justice 2"d Division Chairperson CERTIFICATION Pursuant to Article VIII, Section 13 of the Constitution and the Division Chairperson's Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer ofthe opinion of the Court. Presiding Justice