FIRST TELECOM PHILIPPINES, INC. v. COMMISSIONER OF INTERNAL REVENUE

CTA Form No.8 ll llllllllllllll ll l llllllllllllllllllllll llllllllllllllllllll 21-000464-0085 REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY FIRST DIVISION CTA CASE N0. 10688 FIRST TELECOM PHILIPPINES, NOTICE OF DECISION INC., Petitioner, - versus- COMMISSIONER OF INTERNAL REVENUE, Respondent. To: OFFICE OF THE SOLICITOR GENERAL 134 Amorsolo Street, Legazpi Village, Makati City ATTY. AYESHA HANIA B. GUTLING-MATANOG ATTY. MARVEEN B. DE LA PAZ Bureau of Internal Revenue Room 703, Litigation Division, BIR National Office Building Sen. Miriam P. Defensor-Santiago Avenue Diliman, Quezon City DU-BALADAD AND ASSOCIATES 20th Floor, Chatham House Rufino comer Valero Streets Salcedo Village, Makati City GREETINGS: You are hereby notified by these presents that on December 17, 2024, a Decision was rendered in the above-entitled case, copy of which is attached hereto. Quezon City, Philippines, December 18, 202 .

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY FIRST DIVISION FIRST TELECOM CTA CASE NO. 10688 PHILIPPINES, INC., Members: Petitioner, DEL ROSARIO, P.J., Chairperson, -versus- BACORRO-VILLENA, and CUI-DAVID, JJ. COMMISSIONER OF Promulgated: INTERNAL REVENUE, Respondent. ){- - - - - - - - - - - - - - - - - - - - - - - - - DECISION CUI-DAVID, J.: Before the Court is a Petition for Review ("Petition") filed on November 29, 2021, by petitioner First Telecom Philippines, Inc. ("Petitioner") against respondent Commissioner of Internal Revenue ("CIR" or "Respondent"). The Petition challen ges the Final Decision on Disputed Assessment (FDDA) dated November 29, 2021 , which assessed petitioner for deficiency Income Ta){ (IT), Value-Added Ta){ (VAT) , E){panded Withholding Ta){ (EWT), Improperly Accumulated Earnings Ta){ (IAET) and compromise penalties amounting to P1 ,261,778,003.74, inclusive of penalties and inter ests, for ta){able year (TY) 2012 . THE PARTIES Petitioner is a domestic corporation duly organized and e}Qsting under Philippine laws, with principal office located at 2-D Ison Building, 1 MC Ison Street corner Rizal Avenue, Dolores, Taytay, Rizal. 1 It is registered with the Bureau of 1 Docket- Vol. I, pp. 7-80, Petition for Review, par. I; Exhibit "P- 1", Docket- Vol. I, p. 190. "

DECISION CTA Case No. 10688 First Telecom Philippines, Inc. v. Commissioner of Internal Revenue Page 2 of26 x------------------------------------------------------------------------------------------x Internal Revenue (BIR) and holds Tax Identification Number (TIN) 005-694-880-000.2 Respondent is the chief of the BIR, the government agency vested with the authority to administer and enforce national internal revenue taxes, including, among others, the assessment and collection of all internal revenue taxes, fees, and charges.3 THE FACTS On February 9, 2015, respondent issued Letter of Authority (LOA) No. AUDM50/005009/2015/ SN: eLA201200042160 authorizing Revenue Officers (ROs) Arnalda Ancheta and Tito Monforte, as well as Group Supervisor (GS) Allan Maniego, to examine petitioner's books of accounts and other accounting records covering TY 2012. 4 Subsequently, on June 13, 2016, petitioner rec~ived from respondent a Reassignment Notice signed by Cesar D. Escalada (Escalada), Chief of the Regular Large Taxpayers Audit Division (RLTAD)-I. The notice authorized ROs Jennifer L. Almedilla, Vivien C. Guillermo, and Ferly Ann P. Montalban, along with GS Marivic P. Bautista, to continue the examination of petitioner's books of accounts and other accounting records for all internal revenue tax liabilities for TY 2012.s During the examination, petitioner executed three (3) Waivers of the Defense of Prescription Under the Statute of Limitations ofthe National Internal Revenue Code (Waivers):6 Waiver Date executed Period of extension Until December 31, 2016 First Waiver7 October 22, 2015 Until June 30, 2017 Until December 31, 2017 Second Waivers August 22, 20 16 Third Waiver9 May 22, 2017 Docket- Vol. VIII, pp. 4092-4169, Petitioner's Memorandum, par. 7; Exhibit �'P-3'', Docket- Vol. I, p. 209. Docket- Vol. VII. pp. 3247-3280, Joint Stipulation of Facts and Issues (JSFI), Summary of Admitted Facts, par. 2: Exhibit "P-4'', Docket- Vol. I, p. 2!0. Docket- Vol. VII. pp. 3247-3280, JSFI. Summary of Admitted Facts, par. 3: Exhibit �'P-4", Docket- Vol. I, p. 210. Docket- Vol. VII, pp. 3247-3280, JSFI, Summary of Admitted Facts. par. 4; Exhibit "P-5", Docket- Vol. I. p. 211. The Court notes that par. 5, Summary of Admitted Facts, Joint Stipulation of Facts and Issues, Docket- Vol. VIL pp. 3247-3280, is inconsistent with par. 52. Petitioner's Memorandum, Docket- Vol. VIII, pp. 4092-4169. The JSFI only mentions the first Waiver and the Third Wah�cr. Ifo\\'Cvcr, respondent's evidence sho\VS'that a Second Waiver was executed. Exhibit "P-6", Docket- Vol. I, p. 212. Exhibit ''R-8'', BIR Records, p. 297. Exhibit''P-7", Docket- Vol. I, p. 213.

DECISION CTA Case No. 10688 First Telecom Philippines, Inc. v. Commissioner of Internal Revenue X------------------------------------------------------------------------------------------X On December 7, 20 17, petitioner received a Preliminary Assessment Notice (PAN) of even date, assessing petitioner for alleged deficiency taxes, penalties, and interest for TY 2012 in the total amount of !'1,152,202,270.70 with the following breakdown: 10 Income tax p 140,152,726.45 VAT 1,011,269,167.30 EWT 32,061.90 IAET 598,315.05 Compromise Penalties 150,000.00 Total P1,152,202,270.70 Petitioner filed a Reply to the PAN on December 22, 2017 11 , with the following breakdown: On December 28, 2017, petitioner received a Formal Letter of Demand with attached Details of Discrepancies and Assessment Notice (FAN /FLD), also dated December 28, 2017, signed by Teresita M. Angeles, the Assistant Commissioner and Officer-in-Charge (OIC) of the Large Taxpayers Service of the BIR. The FAN /FLD assessed petitioner for alleged deficiency taxes, penalties, and interest forTY 2012 in the total amount of P1,152,202,270.70, with the following breakdown: 12 Income tax p 140,152,726.45 VAT 1,011,269,167.30 EWT 32,06i.90 IAET 598,315.05 Compromise Penalties 150,000.00 Total P1,152,202,270.70 In response, petitioner filed a Protest to the FAN/FLD on January 26, 2018.13 On October 29, 2021, petitioner received the FDDA, also dated October 29, 2021. The FDDA assessed petitioner for alleged deficiency taxes, penalties, and interest for TY 2012 in 10 Docket- Vol. VII. pp. 3247-3280. JSFI. Summary of Admitted Facts. par. 6; Exhibit �'P-8"". Docket- Vol. I. pp. 214-224. 11 Exhibit �'P-9", Docket- Vol. I, pp. 225-233, with annexes. 12 Docket- Vol. VII, pp. 3247-3280. JSFJ, Summary of Admitted Facts. par. 7; Exhibit "'P-10"", Docket- Vol. I, pp. 274-289. 13 Exhibit''P-11", Docket- Vol. I, pp. 290-298, with annexes.

DECISION CTA Case No. 10688 First Telecom Philippines, Inc. v. Commissioner of Internal Revenue Page 4 of26 X------------------------------------------------------------------------------------------X the total amount of f'1,261,778,003.74, with the following breakdown: 14 Income tax f' 76,985,201.01 VAT EWT 1 '183,872,609.93 IAET Compromise penalties 38,491.92 Total 731,700.88 150,000.00 P1,261,778,003.74 Petitioner filed a Motion for Reconsideration against the FDDA on November 12, 2021.15 On January 5, 2022, petitioner received a Letter Reply from respondent denying its Motion for Reconsideration.16 PROCEEDINGS BEFORE THE COURT On November 29, 2021, petitioner filed a Petition for Review (with Urgent Motion to Suspend the Collection of Tax and Dispense with Payment ofBond).l7 Summons was issued to respondent on December 6, 2021, 18 and the hearing for petitioner's Urgent Motion to Suspend the Collection of Tax and Dispense with Payment of Bond (Urgent Motion) was set for March 2, 2022. 19 On March 2, 2022, petitioner's Urgent Motion was heard where petitioner's witness, Mr. Ulysses Lao (Mr. Lao), completed his testimony. 20 Meanwhile, on March 15, 2022, respondent filed his Answer.21 In relation to the Urgent Motion, petitioner filed its Formal Offer ofEvidence on March 28, 2022,22 which the Court resolved on April 21, 2022. 23 Subsequently, petitioner 24 and respondent 25 submitted their respective Memoranda on the i Urgent Motion on May 19, 2022, and May 20, 2022, re,spectively. 04 Docket- Vol. VII, pp. 3247-3280, JSFI. Summary of Admitted Facts, par. 8; Exhibit �'P-12". Docket- Vol. I, pp. 339-353, \Vith annexes. " Exhibit ''P-13", Docket- Vol.!, pp. 359-382. 16 BIR Records, p. 1119-B. 17 Docket- Vol. I, pp. 7-80. with annexes. '" Docket- Vol. VI. p. 2563. 19 !d. at 2565. 20 !d. at 2568. " Id at 2607-2637. 22 /d. at 2659-2680, with annexes. 23 Docket- Vol. VII, pp. 3001-3004, Resolution dated April21, 2022. 24 !d. at 3099-3!41. 25 !d. at3142-3!51.

DECISION CTA Case No. 10688 First Telecom Philippines, Inc. v. Commissioner of Internal Revenue X------------------------------------------------------------------------------------------X On July 25, 2022, petitioner's Urgent Motion was partially granted. 26 The Court ordered the suspension of tax collection by respondent, provided that petitioner post a cash or surety bond equivalent to the basic deficiency tax claimed, amounting to P529,448,623.23. In response, petitioner filed a Motion for Partial Reconsideration on August 10, 2022,27 which the Court granted on September 20, 2022. 28 Accordingly, the Court's order requiring petitioner to post a cash or surety bond was recalled and set aside. Respondent filed a Motion for Reconsideration on October 11, 2022,29 which the Court denied on February 10, 2023.30 On October 26, 2022,31 respondent filed his Compliance, submitting to the Court the entire BIR Records, consisting of one thousand one hundred twenty-seven (1, 127) pages in one (1) folder. As the parties failed to mediate, 32 pre-trial proceeded. The parties filed their Joint Stipulation ofFacts and Issues (JSFI) on November 17, 2022.33 The pre-trial was terminated on January 10, 2023,34 and the Pre-Trial Order was issued on January 31, 2023. 35 The trial proceeded. During the trial, petitioner presented the following witnesses: Mr. Lao, its Treasurer;36 Ms. Gina Hernandez (Ms. Hernandez), its External Accounting Consultant; 37 :1\):s. Ma. Jaimita P. Sabido (Ms. Sabido), Vice President for Channel Development Capabilities Support of Smart Communications Inc., petitioner's supplier; 38 Mr. Clark Vincent M. Zara (Mr. Zara), the Assistant Vice President and Center Head of Tax Compliance and Reporting at Smart Communications, Inc., 39 and Mr. Raymund J. Manaig (Mr. Manaig), the Court-appointed Independent Certified Public Accountant (ICPA). 40 26 !d. at 3154-3163. 27 /d. at3!64-3l78. 28 !d. at 3!90-3195, Resolution dated September 20, 2022. 29 /d. at 3!96-3202. :lO /d. at 3352-3355, Resolution dated February 10.2023. 30 /d. at 3224-3226. 32 /d. at 3181, No Agreement to Mediate. 33 !d. at 3247-3280. 34 /d. at 3323. 35 !d. at 3332-3346. -16 !d. at 3348-3349, Order dated February 8, 2023. H /d. at 3366-3367, Order dated March 8. 2023. 38 Docket- Vol. Vlll, p. 4066. 39 Docket- Vol. I. pp. 142-160. 40 Docket- Vol. VII. pp. 3450-3483.

DECISION CTA Case No. 10688 First Telecom Philippines, Inc. v. Commissioner of Internal Revenue Page 6 of26 x------------------------------------------------------------------------------------------x On May 9, 2023, petitioner filed its Fonnal Offer of Evidence (with Motion to Correct Description of Documentary Exhibits), 41 which the Court resolved on June 29, 2023.42 Subsequently, on July 26, 2023, petitioner filed an Omnibus Motion for Reconsideration (Re: Resolution dated June 29, 2023) (with Motion to Correct Description of Documentary Exhibits and Motion to Recall Petitioner's Witness and Independent Certified Public Accountant). 43 which the Court partially granted on October 13, 2023. 44 However, petitioner's Motion to Recall Petitioner's Witness and Independent CPA was denied for lack of merit. On November 6, 2023, petitioner filed its Tender of Excluded Evidence, 45 which the Court noted in a �Minute Resolution dated November 23, 2023. 46 On January 17, 2024, 47 respondent's counsel presented RO Jennifer A. Potot (RO Potot), who testified by way of her judicial affidavit. Respondent submitted his Fonnal Offer of Evidence on January 26,2024,48 which the Court resolved on May 6, 2024. 49 Petitioner filed its Memorandum on June 10, 2024,so while respondent failed to file a memorandum.sl On July 1, 2024, the case was submitted for decision. 52 THE ISSUE The parties stipulated the following issue for this Court's resolution, viz.:S3 Whether or not petitioner is liable for the alleged deficiency income tax, VAT, EWT, IAET, and compromise penalties for taxable year 2012 in the total amount of One Billion Two Hundred Sixty-One Million, Seven Hundred Seventy-Eight Thousand Three Pesos and 74/100 41 Docket~ Vol. VIII, pp. 3506--3548, \vith annexes. 42 !d. at 4009-4013. " !d. at 4017-4033. " !d. at 4049-4056. " Jd at 4057-4065. 46 !d. at 4066. " !d. at 4071-4072. '" !d. at 4074-4079. 4() !d. at 4090-4091, Resolution dated May 6, 2024. 50 !d. at 4092-4169. 51 !d. at 4171, Records Verification dated June 20,2024. 52 Jd.at4172. " Docket- Vol. VII, pp. 3247-3280, JSFI, Statement of the Issue to be Resolved.

DECISION CTA Case No. 10688 First Telecom Philippines, Inc. v. Commissioner of Internal Revenue X------------------------------------------------------------------------------------------X Pl,261,778,003.74 inclusive of interest and penalties; and Whether or not respondent's right to assess petitioner for internal revenue taxes for taxable year 2012 has prescribed. PETITIONER'S ARGUMENTS In its Petition for Review and Memorandum, petitioner argues that the assessment is void due to respondent's alleged violation of petitioner's right to due process. 54 Petitioner states that respondent's right to assess has already prescribed, asserting that the PAN and FAN/FLD were issued beyond the three-year prescriptive period. 55 Petitioner further claims that the issuance of three (3) Waivers of the Statute of Limitations "did not validly extend the right of the BIR to assess petitioner" as the waivers were issued after the lapse of the prescriptive period and they did not expressly provide for the kind and amount of tax due. 56 Petitioner also challenges the authority of the BIR officers who conducted the audit. It asserts that ROs Almedilla, Guillermo, and Montalban, as well as GS Bautista, acted solely under a Reassignment Notice issued by the Chief of the RLTAD, which is not equivalent to a valid LOA.57 Petitioner argues that respondent failed to fulfill his duty to provide reasons for upholding the assessment,' citing Commissioner of Internal Revenue v. Avon Products Manufacturing, Inc. (Avon). 58 Petitioner particularly points out that the amounts of the EWT and IAET assessment remained unchanged in the PAN, FAN/FLD, and FDDA. It also states that the IT and VAT assessments in the PAN and FAN/FLD were identical, despite petitioner filing a Reply to the PAN and a Protest to the FAN/FLD. According to petitioner, there is no showing that respondent considered petitioner's Reply to the PAN.59 54 Docket- Vol. VIII, pp. 4092--4169, Petitioner's Memorandum, pars. 43-44. ~ 5 !d. at 4092-4169, Petitioner"s Memorandum, pars. 45-51. 56 /d. at pars. 52-68. 57 !d. at pars. 69-93. 58 G.R. No. 201398-99 & 201418-19, October 3, 2018 [Per J. Leonen, Third Division]. 59 Docket- Vol. VIII, pp. 4092-4169, Petitioner's Memorandum, pars. 94--106.

DECISION CTA Case No. 10688 First Telecom Philippines, Inc. v. Commissioner of Internal Revenue Page 8 of26 X------------------------------------------------------------------------------------------X Petitioner also argues that (1) there is no valid demand to pay the alleged deficiency tax in the FDDA, as the due date provided in the FDDA was dated before the issuance of the said FDDA;60 (2) the FDDA was improperly served as it was received by a certain Ms. Yehlen Oracion, who is not an employee of petitioner; 61 and (3) the investigation did not follow BIR's General Audit Procedures and Documentation (GAPD).62 On substantive matters, petitioner argues as follows: (1) It has reconciled the unrecorded sales based on the comparison of Summary Alphalist of Withholding Tax (SAWT) and sales invoices;63 (2) The assessment based on the comparison of Audit Information, Tax Exemption and Incentives Division (AITEID) data, and sales invoices issued should be cancelled because unverified third-party information has no probative value;64 (3) It properly substantiated its alleged unsubstantiated purchases;65 (4) It fully complied with withholding requirements;66 ' (5) The disallowance of excess tax credit is improper as it is beyond the scope of the audit;67 (6) Its invoices and official receipts supporting its claim for VAT input are compliant with SIR invoicing requirements; 68 (7) The imposition of output VAT and the disallowai).ce of input VAT on disallowed purchases constitutes prohibited double taxation;69 and (8) It is not liable for deficiency IAET as respondent failed to take into account petitioner's appropriations for the v reasonable needs of its business. 70 60 ld at pars. 107-118. 61 Id at pars. I I9-I28. 62 Id at pars. I29-I37. 63 Id at pars. I42-I6I, 200-203. " !d. at pars. 162-181, 204-206. 65 !d. at pars. I82-189, 207-210. M !d. at pars. 190-192; 224-227. 67 !d. at pars. 192-197. 68 /d. at pars. 211-216. 69 I d. at pars. 2 I 7-223. 70 !d. at pars. 228-237.

DECISION CTA Case No. 10688 First Telecom Philippines, Inc. v. Commissioner of Internal Revenue x------------------------------------------------------------------------------------------x RESPONDENT'S ARGUMENTS In his Answer, respondent contends that the issues regarding the RO's authority and the alleged non-revalidation of the LOA were not raised by petitioner at the administr.ative level. Thus, petitioner could no longer raise the issues due to laches. 71 Respondent further contends that an LOA is not required when an audit investigation is conducted by the Office of the CIR. 72 He also maintains that even assuming an LOA is necessary, the audit investigation was done pursuant to a valid LOA as "the non-issuance of new LOA in case the Revenue Officers named therein are transferred or reassigned does not invalidate the assessment. "73 Respondent also states that (1) the issuance of the FAN/FLD was not premature, as there is no 60-day period granted by regulations for petitioner to submit relevant supporting documents in relation to the filing of its Reply to the PAN;74 (2) the assessment notices attached to the FDDA have stated and definitely set the due date for the payment of the deficiency tax liabilities;75 and (3) even if the FDDA was invalid, such does not invalidate the assessment. 76 On the issue of prescription, respondent argues that petitioner executed valid waivers. 77 Regarding the substantive matters, respondent reiterates his findings in the FDDA, which identified unrecorded sales, unsubstantiated purchases, non-withholding of taxes, and improperly accumulated taxable income.78 THE COURT'S RULING The instant Petition for Review is impressed with merit. 71 Docket- Vol. VI, pp. 2607-2637. Answer, pars. 7-14. 72 /d. at pars. 15-18. 73 ld. at pars. 19-36. 71 !d. at pars. 37-44. 75 !d. at pars. 45-57. 76 /d. at pars. 58-62. 77 !d. at pars. 63-70. 78 !d. at pars. 71-81.

DECISION CTA Case No. 10688 First Telecom Philippines, Inc. v. Commissioner of Internal Revenue Page 10 of26 X------------------------------------------------------------------------------------------X The Court hasjurisdiction over the instant case. Before delving into the merits of the case, the Court must first determine whether it has jurisdiction to take cognizance of this case. Section 7(a)(1) and (2) of Republic Act (RA) No. 1125,79 as amended by RA No. 9282,80 grants this Court jurisdiction over decisions and inactions of respondent, to wit: SEC. 7. Jurisdiction.- The CTA shall exercise: (a) Exclusive appellate jurisdiction to review by appeal, as herein provided: (1) Decisions of the [CIR] in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue; (2) Inaction by the (CIR] in cases involving disputed assessments, refunds of internal revenue taxes, fees on other charges, penalties in relation thereto, or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue, where the National Internal Revenue Code provides a specific period of action, in which case the inaction shall be deemed a denial; [Emphasis supplied.] Moreover, Section 11 of RA No. 1125, as amended by RA No. 9282, prescribes the period for filing an appeal with this Court, as follows: SEC. 11. Who May Appeal; Mode of Appeal; Effect of Appeal. - Any party adversely affected by a decision, ruling, or inaction of the (CIR]... may file an appeal with the CTA within thirty (30) days after the receipt of such decision or ruling or after the expiration of the period fixed by law for action as referred to in Section 7(a)(2) herein.... [Emphasis supplied] 79 An Act Creating the Court ofTa'\ Appeals. June 16. 1954. 80 An Act Expanding the Jurisdiction of the Court of Tax Appeals (CTA), 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 ofTa"X Appeals, and for Other Purposes, March 30, 2004. �

DECISION CTA Case No. 10688 First Telecom Philippines, Inc. v. Commissioner of Internal Revenue Page 11 of26 x------------------------------------------------------------------------------------------x The above provisions are likewise provided under Section 3(a)(1)(2), Rule 4, 81 and Section 3(a), Rule 882 of the Revised Rules of the Court ofTax Appeals (RRCTA). Based on the foregoing, this Court has exclusive jurisdiction to review, by appeal, any decision, ruling, or inaction of respondent. The appeal must be filed by the affected taxpayer or, as described in RA No. 9282, the party adversely affected within thirty (30) days from receipt of the decision or ruling or after the expiration of the period prescribed by law for action. In this case, the FDDA dated October 29, 2021, was received by petitioner on the same date. 83 Consequently, petitioner had 30 days from October 29, 2021, or until November 28, 2021, to file a Petition for Review. As the said date fell on a Sunday, petitioner timely filed its Petition for Review on the next working day, November 29, 2021.84 The Court, therefore, holds that it has jurisdiction over this case. The assessment is void for violating petitioner's right to administrative due process. After thoroughly reviewing the parties' arguments, evidence, and applicable laws, rules, and jurisprudence, the Court finds the assessment void for violating petitioner's right to administrative due process. First, the audit was conducted by ROs who lacked the proper authority to continue the audit Divisions.~ ~ investigation of petitioner. Second, respondent issued the "' Section 3. Cases Within the Jurisdiction ofthe Court in The Court in Divisions shall exercise: (a) Exclusive original or appellate jurisdiction to review by appeal the following: (1) Decisions of the Commissioner ofintemal 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 Jaws administered by the Bureau of Internal Revenue: (2) Inaction by the Commissioner of internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau oflnternal Revenue, where the National Internal Revenue Code or other applicable law provides a specific period for action: ... 82 Sec. 3. Who may appeal; period to file petition.- (a) A party adversely affected by a decision, ruling, or the inaction of the Commissioner of Internal Revenue on disputed assessments or claims for refund of internal revenue taxes, or by a decision or ruling of the Commissioner of Customs, the Secretary of Finance, the Secretary of Trade and Industry, the Secretary of Agriculture, or a Regional Trial Court in the exercise of its original jurisdiction may appeal to the Court by petition for review filed within thirty days after receipt of a copy of such decision or ruling, or expiration of the period fixed by law for the Commissioner of Internal Revenue to act on the disputed assessments. In case of inaction of the Commissioner of Internal Revenue on claims for refund of internal revenue taxes erroneously or illegally collected, the taxpayer must file a petition for review within the two~year period prescribed by law from payment or collection of the taxes. 83 Docket, p. 417, JSFI, Admitted Facts, par. 21; Exhibit �'P~T', Docket, pp. 143-146. 84 Supra note 17.

DECISION CTA Case No. 10688 First Telecom Philippines, Inc. v. Commissioner of Internal Revenue X------------------------------------------------------------------------------------------X FAN/FLD without considering petitioner's arguments and evidence submitted in response to the PAN. 1. The audit was conducted by unauthorized revenue officers. The power to assess necessarily includes the authority to examine taxpayers to determine the correct amount of tax due. 85 Verily, the law vests the BIR with general powers in relation to the assessment and collection of all internal revenue taxes. 86 However, only the CIR or his duly authorized representative may authorize the examination of a taxpayer and issue an assessment. Section 6(A) of the NIRC of 1997, as amended, provides as follows: SEC. 6. Power ofthe Commissioner to Make Assessments and Prescribe Additional Requirements for Tax Administration and Enforcement. - (A) Examination of Returns and Determination of Tax Due. - After a return has been filed as required under the provisions of this Code, the Commissioner or his duly authorized representative may authorize the examination of any taxpayer and the assessment of the correct amount of tax: Provided, however, That failure to file a return shall not prevent the Commissioner from authorizing the examination of any taxpayer. [Emphasis supplied] Section 10 (c) of the NIRC of 1997, as amended, provides: SEC. 10. Revenue Regional Director.- Under rules and regulations, policies and standards formulated by the Commissioner, with the approval of the Secretary of Finance, the Revenue Regional Director shall, within the region and district offices under his jurisdiction, among others: (c) Issue Letters of Authority for the examination of taxpayers within the region. (Emphasis supplied) An LOA is the authority given to the appropriate RO i assigned to perform assessment functions. It empowers or enables said RO to examine the books of account and other accounting records of a taxpayer for the purpose of collecting 85 AFP General Insurance Corporation v. Commissioner of Internal Revenue, G.R. No. 222133. November 4, 2020 [Per J. Inting, Third Division]. 86 /d.

DECISION CTA Case No. 10688 First Telecom Philippines, Inc. v. Commissioner of Internal Revenue x------------------------------------------------------------------------------------------x the correct amount of tax. 87 The issuance of an LOA is premised on the fact that the examination of a taxpayer who has already filed his tax returns is a power that statutorily belongs only to the CIR himself or his duly authorized representatives. 88 Section 13 of the NIRC of 1997, as amended, emphasizes this requirement, stating that only ROs with an LOA issued by the appropriate official may conduct such examinations:� 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. [Emphasis and underscoring supplied.] The Supreme Court, in Commissioner of Internal Revenue v. McDonald's Philippines Realty Corp. (McDonald's case), 89 elucidates that the issuance and receipt of an LOA by the taxpayer are vital to ensure compliance with due process, as they inform the taxpayer of the identity and authoritY'of the ROs conducting the audit to examine the former's books of accounts, VlZ.: 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 j officers are duly authorized to conduct the examination and � _ lfi' assessment, and this requires that the LOAs must contain the n Commissioner of!ntemal Rerenue \'.Sony Philippines, Inc., G.R. No. 178697, November 17,2010 [Per J. Mendoza, Second Division]. 88 Commissioner of Internal Revenue v. McDonald's Philippines Realty Corp., G.R. No. 242670, May I0, 2021 [Per J. Lopez, J., Third Division]. 89 !d.

DECISION CTA Case No. 10688 First Telecom Philippines, Inc. v. Commissioner of Internal Revenue X------------------------------------------------------------------------------------------X names of the authorized revenue officers. In other words, identifying the authorized revenue officers in the LOA is a jurisdictional requirement of a valid audit or investigation by the BIR, and therefore of a valid assessment. [Emphasis and underscoring supplied.] In the present case, respondent issued LOA No. AUDMS0/005009/2015/ SN: eLA201200042160, authorizing ROs Ancheta, Monforte, and GS Maniego to examine petitioner's books of accounts and other accounting records for all internal revenue taxes covering TY 20 12.90 However, BIR Records reveal that the actual audit and investigation of petitioner's books of accounts were conducted by ROs Potot, Montalban, Guillermo, and GS Bautista -none of whom were named in the LOA. The participation of these unauthorized ROs is evident in their signing of documents, such as the Memorandum dated May 5, 2017, recommending the issuance of a subpoena duces tecum; 91 the Memorandum dated November 22, 2017, recommending the issuance of the PAN; 92 and the Memorandum dated December 27, 2017, recommending the issuance of the FAN/ FLD. 93 Petitioner also highlighted this irregularity in its Memorandum, 94 citing the explicit involvement of ROs Potot, Montalban, Guillermo, and GS Bautista in the audit despite not being named in the LOA, viz.: 82. The above-mentioned GS and ROs prepared and signed the memoranda and audit reports recommending the issuance of assessment notices to Petitioner, to wit: Document Officers who Officers named in signed the LOA Memorandum GS Marivic P. GS Allan Maniego recommending the Bautista RO Arnalda Ancheta issuance of RO Jennifer A. RO Tito Monforte Subpoena Duces Potot Tecum RO Vivien C. Memorandum Guillermo pv recommending the RO Ferly Ann P. issuance of PAN Manta! ban 90 Docket- Vol. VII, pp. 3247-3280, JSFI, Summary of Admitted Facts, par.3; Exhibit ��P-5", Docket- Vol. I, 211. 91 BIR Records. pp. 321-323. 92 !d. at412-419. 9' !d. at 490-491. " Docket- Vol. VIII, pp. 4092-4169.

DECISION CTA Case No. 10688 First Telecom Philippines, Inc. v. Commissioner of Internal Revenue X------------------------------------------------------------------------------------------X BIR Forms 0500 GS Ferly Ann P. (Revenue Officer's Montalban Reports) RO Jennifer A. Memorandum Po tot recommending the issuance of FLD BIR Forms 0500 (Revenue Officer's Reports) Memorandum recommending the issuance of FDDA BIR Forms 0500 (Revenue Officer's Reports] 83. Based on the above table, none of the revenue officers and group supervisors who signed the memoranda and reports were authorized in the LOA issued to Petitioner. [Citations omitted. J The above was further corroborated by RO Potot herself in her Judicial Affidavit,95 where she confirmed her involvement in the audit without a valid LOA bearing her name, viz.: 7. Q: As a Revenue Officer, what are your functions and duties? A: My duties, among others, include, the investigation/examination of all internal revenue tax cases and I perform other duties and functions that may be assigned by higher authorities from time to time. 8. Q: Are you familiar with the present case? A: Yes. 9. Q: Why are you familiar with the case? A: I was assigned to continue the conduct of audit and investigation of First Telecom Philippines, Inc., under a previously issued Letter of Authority (LOA) against the petitioner in this case, for taxable year 2012. 10. Q: You mentioned of a previously issued Letter of Authority, I am now showing this document entitled Letter of Authority No. LOA-116-2015-00000009 / SN: eLA201100087020 dated 04 February 2015, found in page 173, of the BIR Records marked as Exhibit "R-1", for the respondent. What relation does this document have to the Letter of Authority that you mentioned? 95 Exhibit ''R-13'', Docket- Vol. VII, pp. 3217-3223.

DECISION CTA Case No. 10688 First Telecom Philippines, Inc. v. Commissioner of Internal Revenue X------------------------------------------------------------------------------------------X A: This is the same LOA I mentioned. 11. Q: After the issuance of the LOA, what happened next, if any? A: Request letters for submission of documents pertinent to the subject audit examination were sent to petitioner. 14. Q: You also mentioned that you were assigned to continue the audit and investigation of petitioner. What is your authority to continue the conduct of audit and investigation on petitioner, if any? A: My authority is vested bv the Memorandum of Assignment IMOA) which was made known to petitioner through a Reassignment Notice. 15. Q: I am now showing documents entitled Memorandum of Assignment No. LOA-116-2016-1235 dated 2 May 2016 and Reassignment Notice dated 13 June 2016, found in pages 300 and 301, respectively of the BIR Records marked as Exhibits "R-2" and "R-3", respectively for the respondent. What relation do these documents have to the Memorandum of Assignment and Reassignment Notice that you mentioned? A: These are the same MOA and Reassignment Notice �that I mentioned. 16. Q: After being authorized to conduct the audit examination of petitioner for taxable year 2012, what happened next if any? A: I prepared a Memorandum stating the factual antecedents that transpired prior to the reassignment of the case and a recommendation for issuance of a subpoena duces tecu�m. [Emphasis and underscoring supplied.] Respondent claims that the issuance of the Reassignment Notice sufficiently confers authority to ROs Potot, Montalban, Guillermo, and GS Bautista to conduct the audit. The Court disagrees. The issue is not novel. Part C, Item V of Revenue Memorandum Order (RMO) No. 43-1990 96 explicitly requires the issuance of a new LOA whenever a case is reassigned or transferred to different ROs. The provision states: ~ 96 Amendment of Revenue Memorandum Order No. 37-90 Prescribing Revised Policy Guidelines for Examination of Returns and Issuance of Letters of Authority to Audit. September 20, 1990.

DECISION CTA Case No. 10688 First Telecom Philippines, Inc. v. Commissioner of Internal Revenue Page 17 of26 x------------------------------------------------------------------------------------------x Any re-assignment/transfer of cases to another RO(s), and revalidation of L/ As which have already expired, shall require the issuance of a new L/A, with the corresponding notation thereto, including the previous L/ A number and date of issue of said L/ As. (Emphasis supplied) The above requirement aims to protect taxpayers' right to due process by ensuring they are informed of any changes m the officers conducting the audit. Moreover, the Reassignment Notice dated June 13, 2016, was signed by Cesar D. Escalada, the Chief of the Regular Large Taxpayers Audit Division. However, Sections 6, 10, and 13 of the NIRC of 1997, as amended, provide that only the CIR or his duly authorized representatives - such as Regional Directors or other high-ranking officials - may issue the authority to examine a taxpayer. Sections D(4) of RMO No. 43-90 dated September 20, 199097 and Item II (2) of RMO No. 29-07 dated September 26, 200798 further clarify: RMO No. 43-1990 D. Preparation and issuance of L/ As. 4. For the proper monitoring and coordination of the issuance of Letter of Authority, the only BIR officials authorized to issue and sign Letters of Authority are the Regional Directors, the Deputy Commissioners and the Commissioner. For the exigencies of the service, other officials may be authorized to issue and sign Letters.of Authority but only upon prior authorization by the Commissioner himself. (Emphasis supplied) RMO No. 29-07 II. AUDIT POLICIES AND GUIDELINES. 2. All Letters of Authority (LOAs) shall be issued and approved by the Assistant Commissioner/Head Revenue' Executive v Assistants. (Emphasis supplied) 97 SUBJECT: Amendment of Revenue Memorandum Order No. 37-90 Prescribing Revised Policy Guidelines for Examination of Returns and Issuance of Letters of Authority to Audit. 98 SUBJECT: Prescribing the Audit Policies, Guidelines and Standards at the Large Taxpayers Service.

DECISION CTA Case No. 10688 First Telecom Philippines, Inc. v. Commissioner of Internal Revenue X------------------------------------------------------------------------------------------X Based on the foregoing, a Division Chief at the Large Taxpayers Service, such as Cesar D. Escalada, is not among the officials authorized to sign an LOA or any equivalent document (i.e., Deputy Commissioners, the Regional Directors, Assistant Commissioner/Head Revenue Executive Assistants at the Large Taxpayer Service, and such other officials as may be authorized by the CIR). Thus, the reassignment notice signed by Escalada cannot serve as a substitute for the required LOA. Respondent also asserts that an LOA is unnecessary when the audit is conducted by the Office of the CIR. 99 This argument is untenable. Section 6(A) of the NIRC of 1997, as amended, and pertinent jurisprudence100 make no distinction between audits conducted by the CIR's office and those by other BIR offices. Unless the CIR himself performs the audit, a valid LOA is indispensable. In the absence of a valid LOA authorizing ROs Potot, Montalban, Guillermo, and GS Bautista to conduct the audit, the assessment is fatally flawed. This procedural defect violates the statutory and due process requirements under the NIRC of 1997, as amended, and renders the assessment null and void. �' The issuance of an LOA is not a mere procedural formality but a substantive requirement to safeguard taxpayers' rights to due process. In this case, the failure to issue a new LOA following the reassignment of ROs undermines the legitimacy of the audit and invalidates the resulting assessment. Accordingly, the Court holds that the assessment� is void and cannot be enforced. 2. Respondent issued the FAN/FLD without considering petitioner's arguments and evidence against the PAN. Petitioner argues that respondent failed to comply with the duty to provide the reason for upholding the assessment, citing the Avon case. 101 Specifically, petitioner highlights that the 99 Docket- Vol. VI, pp. 2607-2637, Answer, pars. 15-18. 100 Supra note 87. 101 Supra note 58.

DECISION CTA Case No. 10688 First Telecom Philippines, Inc. v. Commissioner of Internal Revenue Page 19 of26 X------------------------------------------------------------------------------------------X amounts for EWT and IAET assessments remained unchanged in the PAN, FAN/FLD, and FDDA. It also states that the IT and VAT assessments remained the same in the PAN and FAN/FLD, despite petitioner's submission of a Reply and Protest. According to petitioner, there is no showing that its Reply to the PAN was given due consideration.1o2 The Court agrees with petitioner's contention. Section 228 of the NIRC of 1997, as amended, reads, m 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: 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. [Emphasis supplied] To implement Section 228 of the NIRC of 1997, as amended, Section 3 of Revenue Regulations (RR) No. 12- 1999,103 as amended by RR No. 18-2013, 104 specifies the due process requirement in the Issuance of a deficiency tax assessment as follows: SECTION 3. Due Process Requirement in the Issuance of a Deficiency Tax Assessment. - 3.1 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 for any deficiency tax or taxes, the said Office shall issue to the taxpayer a Preliminary Assessment Notice (PAN) for the proposed assessment. It shall show in detail the facts and the law, rules, and regulations, or jurisprudence on which the proposed assessment is based (see illustration in ANNEX 'A' hereof). 1o2 Docket- Vol. VIII, pp. 4092-4169, Petitioner's Memorandum, pars. 94-106. 10~ 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. 1o4 SUBJECT: Amending Certain Sections of Revenue Regulations No. 12-99 Relative to the Due Process Requirement in the Issuance of a Deficiency Tax Assessment.

DECISION CTA Case No. 10688 First Telecom Philippines, Inc. v. Commissioner of Internal Revenue Page 20 of26 X------------------------------------------------------------------------------------------X 3.1.3 Fonnal Letter of Demand and Final Assessm~nt Notice (FLD/ FAN). - The Formal Letter of Demand and Final Assessment Notice (FLD /FAN) shall be issued by the Commissioner or his duly authorized representative. The FLO/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). 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 law, rules and regulations, or jurisprudence on which such decision is based, otherwise, the decision shall be void (see illustration in ANNEX 'C' hereof), and (ii) that the same is his final decision. (Emphasis supplied) Based on the foregoing, it is explicitly required that the taxpayer be informed in writing of the law and the facts on which the assessment is made. RR No. 12-1999, as amended by RR No. 18-2013, prescribes that the FAN/FLD and FDDA must state, among other things, the facts and the law on which the assessment is based as part of due process in the issuance of tax assessments; otherwise, the FAN /FLD and/ or FDDA shall be void. The requirement to inform the taxpayer of the factual and legal bases of the assessment is mandatory and cannot be presumed. The law imposes a substantive, not merely a formal requirement. 1os As a requirement of due process, this rule allows the taxpayer to make an effective protest. 106 In the Avon case,107 the Supreme Court emphasized that a taxpayer must not only be afforded the opportunity to present their defenses and evidence but that the Commissioner and his subordinates must also give due consideration to these, viz.: 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 10~ Commissioner of Internal Revenue v_ Unioi! Corporation. G. R. No. 204405. August 4. 2021 [Per J. Hernando. Second Division]. 106 Commissioner of Internal Revenue v. Spouses ;\1agaan, G.R. No. 232663. May 3, 2021 [Per J. Leonen, Third Division]. 107 Supra note 58.

DECISION CTA Case No. 10688 First Telecom Philippines, lnc. v. Commissioner of Internal Revenue x------------------------------------------------------------------------------------------x own rules of procedure, and always 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 ftle 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 taxpayer 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. The Bureau of Internal Revenue is the primary agency tasked to assess and collect proper taxes, and to administer and enforce the Tax Code. ... 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. 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: (1) 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.' (5) 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 owh independent consideration of the law and facts governing the case.

DECISION CTA Case No. 10688 First Telecom Philippines, Inc. v. Commissioner of Internal Revenue Page 22 of26 x------------------------------------------------------------------------------------------x (7) The administrative tribunal's decision is rendered in a manner that the parties may know the various issues involved and the reasons for the decision. The second to the sixth requirements refer to the party's "inviolable rights applicable at the deliberative stage." The decision-maker must consider the totality of the evidence presented as he or she decides the case. Administrative due process is anchored on fairness and equity in procedure. It is satisfied if the party 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. 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. 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. The Commissioner's total disregard of due process rendered the identical Preliminary Assessment Notice, Final Assessment Notices, and Collection Letter null and void, and of no force and effect. [Emphasis supplied; citations omitted]

DECISION CTA Case No. 10688 First Telecom Philippines, Inc. v. Commissioner of Internal Revenue Page 23 of26 X------------------------------------------------------------------------------------------X In the instant case, respondent issued a PAN dated December 7, 2017, which petitioner received on the same day, assessing it for deficiency taxes, penalties, and interest for TY 2012 in the total amount ofP1,152,202,270.70.I08 In its Reply to the PAN dated December 22, 2017, 109 petitioner raised legal and factual arguments, citing pertinent provisions of the law, jurisprudence, and revenue regulations, and even submitted supporting documents. However, just six days later, 11o on December 28, 2017, 111 it received a copy of the FAN/FLD with Details of Discrepancies, which merely reiterated th,e findings and deficiency tax assessments stated in the PAN with Details of Discrepancies without addressing petitioner's arguments or evidence. A side-by-side comparison of the PAN and FAN/FLD, alongside their respective Details of Discrepancies, shows that they are identical. Further, the FAN1FLD does not acknowledge the existence of petitioner's Reply to the PAN, let alone indicate that its arguments and evidence were considered. This lack of acknowledgment undermines petitioner's right to due process, as it was denied a fair opportunity to explain or defend itself effectively. As established in the Avon case, 112 while the CIR is not obliged to accept the taxpayer's explanation, it is imperative that the former provide the particular facts upon which his conclusion is based, and these facts must appear on record. 113 The right to be heard, which includes the right to present evidence, is meaningless if the CIR can simply ignore the evidence without reason. 114 Respondent's failure to give due consideration to petitioner's defenses, explanations, and supporting documents when he concluded in the FAN/FLD that petitioner had deficiency tax liabilities could hardly be considered substantial compliance with the due process requirement. 108 Docket- Vol. VII. pp. 3247-3280, JSFI, Summary of Admitted Facts, par. 6; Exhibit "P-8". Docket- Vol. I, pp. 2 I4-224. ,,>09 Exhibit "P-9'', Docket- Vol. I, pp. 225-233, with annexes. December 23 and 24 fel! on weekends, and December 25 is a regular holiday. "' Docket- Vol. VII, pp. 3247-3280, JSFI, Summary of Admitted Facts, par. 7; Exhibit "P-1 0", Docket- Vol. I, pp. 274-289. '" Supra note 58. >ll Commissioner of Internal Revenue v. Unioi! Corporation, G.R. No. 204405. August 4, 2021 [Per J. Hernando. Second Division], citing Commissioner of Internal Revenue v. Avon Products Manufacturing, Inc., G.R. Nos. 201398-99 & 201418-19, October 3. 2018 [Per J. Leonen. Third Division]. '" !d.

DECISION CTA Case No. 10688 First Telecom Philippines, Inc. v. Commissioner of Internal Revenue Page 24 of26 x------------------------------------------------------------------------------------------x In the more recent case of Commissioner of Internal Revenue v. Next Mobile, Inc. (Next Mobile case),11s the Supreme Court reiterated its ruling in the Avon and Ang Tibay cases that "not only must the party be given an opportunity to present his case and to adduce evidence tending to establish the rights which he asserts, but the tribunal must consider the evidence presented." Indeed, the right to protest a PAN carries with it the BIR's corresponding duty to consider the taxpayer's respon:;;e, and the issuance of a FAN/FLD without even hearing the side of the taxpayer is anathema to the cardinal principles of due process. Although the FDDA later partially granted petitioner's Protest to the FAN/FLD by reducing the IT assessment from !'140,152,726.45 to !'76,985,201.01, it does not remedy the procedural and substantive defects that occurred during the earlier stages. As ruled by the Supreme Court in the NeXt Mobile case, such "does not denigrate the fact that it was deprived of statutory and procedural due process," viz.:11 6 ... , that Next Mobile was able to timely file a protest to the FAN is of no moment. 'Such does not denigrate the fact that it was deprived of statutory and procedural due process to contest the assessment before it was issued.' It is a settled rule that tax assessment issued in violation of the right of the taxpayer to due process are null and void and bears no fruit. [Emphasis supplied] ' Respondent's failure to uphold petitioner's fundamental right to due process under Section 228 of the NIRC of 1997, as amended and implemented by RR No. 12-1999 and RR No. 18- 2013, renders the FAN/FLD null and void. As the assessment has already been declared n:ull and void, the Court finds it unnecessary to address the other issues raised by the parties. WHEREFORE, in light of the foregoing considerations, the instant Petition for Review is GRANTED. Accordingly, the Formal Letter of Demand with Final Assessment Notices dated December 28, 2017, are CANCELLED and SET ASIDE. The Final Decision on Disputed Assessment dated October 29, 2021, assessing petitioner First Telecom Philippines, Inc. for 115 G. R. No. 232055 (Notice), April27, 2022 [Per Resolution, Third Division}. 116 /d.

DECISION CTA Case No. 10688 First Telecom Philippines, Inc. v. Commissioner of Internal Revenue Page 25 of26 X------------------------------------------------------------------------------------------X deficiency income tax, value-added tax, expanded withholding tax, improperly accumulated earnings tax, penalties, and interest for taxable year 2012, is REVERSED and SET ASIDE. Furthermore, respondent is ENJOINED and PROHIBITED from enforcing the collection of the subject deficiency taxes against petitioner. SO ORDERED. t 1Jut/;t]jf LANkW.6m-DAVID Associate Justice WE CONCUR: ROMAN G. DEL ROSARIO Presiding Justice ON LEAVE JEAN MARIE A. BACORRO-VILLENA Associate Justice

DECISION CTA Case No. 10688 First Telecom Philippines, Inc. v. Commissioner of Internal Revenue Page 26 of26 x------------------------------------------------------------------------------------------x CERTIFICATION Pursuant to Article VIII, Section 13 of the Constitution, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. ROMAN G. DEL ROSARIO Presiding Justice