PPI HOLDINGS, INC. v. COMMISSIONER OF INTERNAL REVENUE and BIR LARGE TAXPAYERS SERVICES - COLLECTION AND ENFORCEMENT DIVISION

CTA Form No.8 (For DCC) lllll lllllllllllll llllllllllllllll llllllllllllll llllllll llllllllllll 21-000 I06-0070 REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY FIRST DIVISION CTA CASE NO. 10476 PPI HOLDINGS, INC., Petitioner, - versus - COMMISSIONER OF INTERNAL NOTICE OF RESOLUTION REVENUE and BIR LARGE TAXPAYERS SERVICES -COLLECTION AND ENFORCEMENT DIVISION, Respondents. To: OFFICE OF THE SOLICITOR GENERAL 134 Amorsolo Street, Legazpi Vi IIage Makati City ATTY. AVESHA RANIA B. GUTLING-MATANOG Bureau of Internal R evenue Room 703, Litigation Division, BTR National Office Building Sen. Miriam P. Defen sor-Santiago Avenue Diliman , Quezon City BIR LARGE TAXPAYERS SERVICES - COLLECTION AND ENFORCEMENT DIVISION Room 208, 2nd Floor, BIR National Office Building Sen. Miriam P. Defensor-Santiago Avenue Diliman, Quezon City ANGARA ABELLO CONCEPCION REGALA & CRUZ 22nd Floor, ACCRALAW Tower Second Avenue comer 30th Street, Cresent Park West, Bonifacio Global City 1630 Taguig, Metro Manila GREETINGS: You are hereby notified by these presents that on July 11, 2025, a Resolution was rendered in the above-entitled case, copy of which is attached hereto. Quezon City, Philippines, July 14, 2025.

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY FIRST DIVISION PPI HOLDINGS, INC. , CTA CASE NO. 10476 Petit io ne r, Members: - versus - DEL ROSARIO, P.J. , Chairperson, BACORRO-VILLENA, and CUI-DAVID, JJ. COMMISSIONER OF INTERNAL REVENUE and BIR LARGE TAXPAYER SERVICES- COLLECTION AND Promulgated: ENFORCEMENT DIVISION, X- - - - - - - - - - - - Respondents. -~-~- ~- -~-~~ ----------- RESOLUTION CUI-DAVID, J.: On February 27, 2025, the Court promulgated a Decision,1 the dispositive portion of which r eads: WHEREFORE, premises considered, the Petition for Review with the Supplement to the Petition for Review, filed by petitioner PPI Holdings, Inc. on March 4, 2021, and July 27, 202 1, respectively, is hereby GRANTED. Accordingly, the Formal Letter of Demand with Final Assessment Notices dated March 19, 2019, Warrant of Distraint an d / or Levy No. 12 1-202 1-022 dated February 01 , 202 1, a n d Warran t of Garnishment No. 121-2021-022-01 dated February 16, 2021, are h ereby CANCELLED a nd SET ASIDE. Respondents Commissioner of Internal Revenue and the BIR Large Taxpayer Service - Collection and Enforcement Division are ORDERED to REFUND in favor of petitioner the amount of P25,580,537 .87, representing the garnished amount based on a void assessment. 1 Docket- Vol. III, pp. 1093- 11 15.

RESOLUTION CTA Case No. 10476 PPI Holdings, Inc. v. Commissioner of Internal Revenue, et al. x------------------------------------------------------------------------------------x SO ORDERED. Aggrieved, respondents filed a Motion for Reconsideration (Re: Decision dated 27 February 2025) on March 20, 2025, anchored on the following grou nds, to wit: I. WITH ALL DUE RESPECT, THE HONORABLE COURT FAILED TO DISTINGUISH THE PROCEDURAL RULES GOVERNING REFUND CLAIMS AND ASSESSMENT CASES WHICH HAVE SEPARATE JURISDICTIONAL AND STATUTORY REQUIREMENTS. II. WITH ALL DUE RESPECT, THE HONORABLE COURT ERRED WHEN IT MISAPPLIED THE CASES OF MCDONALDS) MEDICARD) SONY, AND OPULENT WHICH WERE BASED ON AN OUTDATED REVENUE MEMORANDUM ORDER NO . 43-90, AN ISSUANCE THAT HAS BEEN SUPERSEDED DUE TO SUBSEQUENT AMENDMENTS IN TAX REGULATIONS AND APPLICABLE LAWS. III. THE HONORABLE COURT ERRED WHEN IT CANCELLED AND DECLARED VOID AB INITIO THE FORMAL LETTER OF DEMAND WITH FINAL ASSESSMENT NOTICES, WARRANT OF DISTRAINT AND/OR LEVY, AND WARRANT OF GARNISH}yfENT, ORDERING RESPONDENT TO REFUND IN FAVOR OF PETITIONER THE AMOUNT OF !>25,580,537.87. In its Comment/Opposition (To the Motion for Reconsideration dated 20 March 2025) filed March 3 1, 2025, petitioner urged the Court to deny respondents' Motion for Reconsideration, arguing that: I. RESPONDENTS REITERATE THE SAME ARGUMENTS WHICH HAVE ALREADY BEEN EXTENSIVELY ADDRESSED BY THIS HONORABLE COURT. II. THIS HONORABLE COURT CORRECTLY RULED THAT IT HAS JURISDICTION OVER THE PETITION FOR REVIEW DATED 27 JULY 2021. RESOLVING THE DEFICIENCY TAX ASSESSMENT JOINTLY WITH THE REFUND CLAIM IS BOTH LEGALLY APPROPRIATE AND LOGICALLY NECESSARY TO AVOID MULTIPLICITY OF SUITS . ' III. THIS HONORABLE COURTCORRECTLY APPLIED THE SUPREME COURT CASES AND REVENUE MEMORANDUM ORDER ("RMO") NO. 4 3-90 . THE GROUP SUPERVISOR ("GS") WHO CONTINUED THE

RESOLUTION CTA Case No. 10476 PPI Holdings, Inc. v. Commissioner of Internal Revenue, et al. x------------------------------------------------------------------------------------x AUDIT LACKED A VALID LOA, RENDERING THE DEFICIENCY TAX ASSESSMENTS VOID AB INITIO. IV. THE HONORABLE COURT CORRECTLY RULED THAT IT HAS JURISDICTION OVER THE CASE. THE CANCELLATION OF THE FORMAL LETTER OF DEMAND WITH FINAL ASSESSMENT NOTICES, WARRANT OF DISTRAINT AND / OR LEVY, � AND WARRANT OF GRANISHMENT IS PROPER. Respondents' Motion for Reconsideration must fail. After a careful examination of the records and a meticulous evaluation of the arguments proffered by respondents in their Motion for Reconsideration, the Court finds that, except for respondents' contention regarding the �alleged misapplication of the McDonalds, 2 Medicard, 3 Sony, 4 and Opulent5 cases, which were allegedly based on an outdated Revenue Memorandum Order (RMO) No. 43-90, 6 all other arguments have already been thoroughly discussed and passed upon by the Court in the assailed Decision of February 27, 2025. To restate the discussion is a waste of time and resources of the Court. As to respondents' claim that the Court erred ih applying the aforementioned cases, allegedly relying on an outdated RMO No. 43-90 that had supposedly been superseded by RMO Nos. 8-2006 and 44-2010, suffice it to say that this contention had already been debunked in the McDonalds case, where the Supreme Court aptly stated: The petitioner claims that RMO No. 43-90 dated September 20, 1990, is not th e implem entin g rule for Section 13 of the NIRC. RMO No. 43-90 was promulgated on September 20, 1990, which is seven years prior to the law it supposedly implemented. Because of this, the petitioner implies tha t RMO No. 4 3-90 dated September 2 0, 1990 is not a valid legal basis in the position t h at a reassignment a nd transfer of cases requires t he issu an ce of a new and separate LOA for the substitute revenue officer. Commissioner ofInternal Revenue v. McDonalds Philippines Realty Corp., G.R. No. 242670, May I0, 202 1 [Per J. Lopez, J. , Third Division). 3 Medicard Philippines, Inc. v. Commissioner ofInternal Revenue, G.R. No. 222743, April 5, 20 17 [Per J. Reyes, Third Divi s io n). 4 Commissioner of Internal Revenue v. Sony Philippines, Inc. , G.R. No. 178697, November 17, 201 0 [Per J. Mendoza,Second Divisio n]. 5 Commissioner of Internal Revenue v. Opulent Landowners, Inc., G. R. No. 249883-84, January 27, 2020 [Per Resolution, Second Division). 6 SUBJ ECT: Amendment of Revenue Memorandum Order No. 37-90 Prescribing Revised Policy Guidelines for Examination of Returns and Issuance of Letters of Authority to Audit.

RESOLUTION CTA Case No. 10476 PPI Holdings, Inc. v. Commissioner of Internal Revenue, et al. x------------------------------------------------------------------------------------x The petitioner is mistaken. Section 29 1 of the NIRC s t a te s : SECTION 291. In General. - All laws, decrees, executive orders, rules and regulations or parts thereof which are contrary to or inconsistent with this Code are h ereby repealed, amended or modified accordingly. Section D(5) of RMO No. 43-90 dated September 20, 1990 is not con trary to or inconsistent with the NIRC. In fact, the NIRC codifies the LOA requirement in RMO No. 43-90. While RMO No. 43-90 was issued under the old tax code, nothing in Section D (5) of RMO No. 43-90 is repugnant to Sections 6 (A), 10 and 13 of the NIRC. Hence, pursuant to Section 291 of the NIRC, RMO No. 43-90 remains effective and applicable. � Even the Operations Group of the BIR now recognizes that the practice of reassigning or tr ansferring revenue officer s originally n amed in the LOA and substituting them with new revenue officers to continue the audit or investigation without a separate LOA, is no longer tenable. Thus, in Operations Memorandum No. 2018-02-03 dated February 9, 2018, the Operations Group has decided that "the issuance of a MOA for reassignment of cases in the aforementioned instances [i.e., the original revenue officer's transfer to another ,office, resignation, retirement, etc.] shall be discontinued. " (Emphasis supplied) Clearly, RMO No. 43-90 remains effective under the current Tax Code. Besides, a perusal of the cited cases reveals that the Supreme Court relied on Sections 6,7 10(c),8 and 139 of the 1997 Tax Code, as amended, in holding that an assessment is void when there is no separate or amended Letter of Authority issued for the new revenue officerIs who continue the audit or investigations. WHEREFORE, the Motionfor Reconsideration (Re: Decision dated 27 February 2025) filed by respondents Commissioner of Internal Revenue and the BIR Large Taxpayer Services - Collection and Enforcement Division is DENIED, for lack of merit. 7 Cited in McDonald 's and Sony. 8 Cited in McDonald 's. 9 Cited in McDonald 's.

RESOLUTION CTA Case No. 10476 PPI Holdings, Inc. v. Commissioner of Internal Revenue, et al. X----------------------------- ------ --------------------- ------------ --- -------------X SO ORDERED. LAN~l:!vrn Associate Justice WE CONCUR: Presiding Justice ON LEAVE JEAN MARIE A. BACORRO-VILLENA Associate Justice