cta_decision CTA Case No. EB 2997EB 2997 2026-07-07

COMMISSIONER OF INTERNAL REVENUE v. BUKIDNON II ELECTRIC COOPERATIVE, INC. (BUSECO)

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY ENBANC COMMISSIONER OF INTERNAL CTA EB NO. 2997 REVENUE, (CTA Case Nos. 9761 & 9819) Petitioner, -versus- BUKIDNONIIELECTRIC CTA EB NO. 3013 (CTA Case Nos. 9761 & 9819) COOPERATIVE, INC. (BUSECO), Respondent. X==============================X BUKIDNON SECOND ELECTRIC COOPERATIVE, INC. (BUSECO), Petitioner, Members: -versus- RINGPIS-LIBAN, P.J., BACORRO-VILLENA, MODESTO-SAN PEDRO, REYES-FAJARDO, CUI-DAVID , FERRER-FLORES, ANGELES, JJ. COMMISSIONER OF INTERNAL Promulgated: REVENUE (CIR), Respondent. )(- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - DECISION CUI-DAVID, J.: Before this Court are two Petitions for Review: one filed by the Commissioner of Internal Revenue on October 4, 2024,1 and another filed by Bukidnon Second Electric Cooperative, Inc. 1 Docket (CTA �8 No. 2997), pp. I0-18.

DECISION CTA EB Nos. 2997 & 3013 (CTA Case Nos. 9761 & 9819) Commissioner of Internal Revenue v. Bukidnon II Electric Cooperative, Inc. (BUSECO) 1 Bukidnon II Electric Cooperative, Inc. (BUSECO) v. Commissioner of Internal Revenue X------------------------------------------------------------------------------------------X (BUSECO) on October 28, 2024.2 Both petitions assail the Decision3 and Resolution4 of the Special Third Division of the Court of Tax Appeals (Court in Division), dated November 28, 2023 and August 29, 2024, respectively. THE PARTIES BUSECO is a non-stock, non-profit electric cooperative with principal office in Manalo Fortich, Bukidnon. It was issued a Certificate of Registration by the National Electrification Administration (NEA), 5 pursuant to Presidential Decree (PD) No. 269.6 The CIR is empowered, among others, to decide disputed assessments, refunds of internal revenue taxes, fees, and other charges, penalties in relation thereto, and other matters arising from the implementation of the National Internal Revenue Code (NIRC) of 1997, as amended, and other laws administered by the Bureau of Internal Revenue (BIR). 7 THE FACTS The facts, as found by the Court in Division, are as follows: ANTECEDENTS (ADMINISTRATIVE LEVEL) For CTA Case No. 9761: On August 18, 2014, [BUSECO] was furnished with a copy of Letter Notice (LN) No. 099-RLFTRS-12-00-00024 of even date, signed by Revenue District Officer (RDO) Merlyn DV. Vicente of Revenue District Office No. 99 Malaybalay City, with VAT discrepancies noted, covering calendar year (CY) ending December 31, 2012. Docket (CTA EB No. 3013). pp. I� 7. Docket (CTA EB No. 2997). pp. 26-46: Docket ICTA EB No. 3013 ). pp. 11-31. Docket (CTA EB No. 2997). pp. 48-55: Docket (CTA EB No. 30\3). pp. 33-40. Division Docket (CTA Case No. 9761)- Vol. I. p. 10, Petition for Review, The Parties, par. 1 vis-il-vis Division Docket (CTA Case No. 9761)- Vol. I, p. 277. Joint Stipulation of Facts and Issues (JSFI). Summary of Admitted Facts, par. 1: Division Docket (CTA Case No. 9819), p. 10, Petition for Review. The Parties. par. 1vis-21-vis Division Docket (CTA Case No. 9761)- Vol. I. p. 359, JSFI, Summary of Admitted Facts. par.\. Creating the "National Electrification Administration" as a Corporation. Prescribing its Powers and Activities, Appropriating the Necessm�y Funds Therefor and Declaring a National Policy Objective for the Total Electrification of the Philippines on an Area Coverage Basis, the Organization, Promotion and Development of Electric Cooperatives to Attain the Said Objective. Prescribing the Tenns and Conditions for their Operations, the Repeal of Republic Act No. 6038, and for Other Purposes, August 6, 1973. Division Docket (CTA Case No. 976 I)- Vol. \, p. 277, JSFI. Summary of Admitted Facts, par.3.

DECISION CTA EB Nos. 2997 & 3013 (CTA Case Nos. 9761 & 9819) Commissioner of Internal Revenue v. Bukidnon II Electric Cooperative, lnc. (BUSECO) I Bukidnon II Electric Cooperative, Inc. (BUSECO) v. Commissioner of Internal Revenue x------------------------------------------------------------------------------------------x Canso lidated Cases On January 10, 2025, the Court En Bane resolved to consolidate CTA EB No. 3013, filed on October 28, 2024, with CTA EB NO. 2997, filed on October 4, 2024, pursuant to Section 1, Rule 31 of the Rules of Court, as amended. 20 On March 13, 2025, BUSECO filed its Comment. Thereafter, on March 31, 2025, the CIR filed his Comment (Re: Petition for Review dated 28 October 2024).21 In a Resolution dated April 25, 2025, the consolidated cases were referred to the Philippine Mediation Center - Court of Tax Appeals (PMC-CTA) for mediation pursuant to Section II of the Interim Guidelines for Implementing Mediation in the Court of Tax Appeals.22 However, on June 5, 2025, the PMC- CTA issued a No Agreement to Mediate, stating that the parties decided not to have their case mediated.23 Thus, on July 9, 2025, the consolidated cases were deemed submitted for decision. THE ISSUES In CTA EB No. 2997, the CIR assigns the following error for the Court's resolution: WITH ALL DUE RESPECT, THE HONORABLE COURT ERRED WHEN IT GRANTED RESPONDENT'S PETITION FOR REVIEW FOR CTA CASE NO. 9761, CANCELLING AND SETTING ASIDE THE DEFICIENCY TAX ASSESSMENT FORTY 2012 IN THE TOTAL AMOUNT SEVENTY-SIX MILLION THREE HUNDRED NINETY-TWO THOUSAND SEVENTY-FIVE PESOS AND NINETY-TWO CENTAVOS (1"76,392,075.92). In CTA EB No. 3013, BUSECO assigns the following error for the Court's resolution: THE HONORABLE SPECIAL THIRD (3RD) DIVISION OF THIS COURT ERRED IN DISMISSING THE PETITION FOR ALLEGEDLY BEING FILED PREMATURELY WITHOUT AWAITING FOR THE FDDA SO THAT THE ASSESSMENT HAS ' 0 Docket (CTA EB ?>io. 2997), p. ;s. " /d. at 66-73. 22 Id at 76. ' 3 !d. at 77.

DECISION CTA EB Nos. 2997 & 3013 (CTA Case Nos. 9761 & 9819) Commissioner of Internal Revenue v. Bukidnon li Electric Cooperative, Inc. (BUSECO) j Bukidnon li Electric Cooperative, Inc. (BUSECO) v. Commissioner of Internal Revenue X------------------------------------------------------------------------------------------X formal final decisions to "other matters arising under the National Internal Revenue Code." According to BUSECO, the BIR letter communicating a definitive, enforceable action satisfies this legal definition, giving the CTA full authority to rule on the appeal. Based on its computation, BUSECO claims that, upon the lapse of the five-day period on March 28, 20 18, it had until April 27, 2018, within which to file its appeal. Since it filed its Petition for Review on April20, 2018, it insists that the filing was timely. Citing Revenue Regulation (RR) No. 8-2013, BUSECO notes that once an assessment "becomes final," the taxpayer is legally barred from presenting newly discovered evidence or challenging its correctness. Thus, it claims that awaiting the issuance of a Final Decision on Disputed Assessment (FDDA) would serve no practical purpose, as the matter had already attained finality, rendering any subsequent FDDA moot and academic. BUSECO also contends that, even if an FDDA is strictly required under normal conditions, the instant case is a clear exception to the doctrine of exhaustion of administrative remedies because the core dispute is purely legal. The central issue is whether BUSECO is permanently exempt from income tax under PD No. 269. Because the BIR has consistently maintained a rigid interpretation that limits the cooperative's exemption, BUSECO alleges that waiting for an FDDA would be an exercise in futility, as the BIR would never alter its long- standing position. In his Comment, the CIR emphasizes that the letter dated February 20, 2018, issued by RD Palamine, was merely a compliance communication. It informed BUSECO of the legal and factual bases for the taxability of its electric service operations and outlined the requirements to move forward. The CIR further asserts that the letter contains no clear, absolute, or unequivocal language indicating a final determination or conclusive denial of BUSECO's tax protest. Accordingly, the CIR states that the letter simply notified BUSECO that a Waiver of the Defense of Prescription was necessary for the BIR to formally act upon and evaluate its request for reconsideration. ~

DECISION CTA EB Nos. 2997 & 3013 (CTA Case Nos. 9761 & 9819) Commissioner of Internal Revenue v. Bukidnon II Electric Cooperative, Inc. (BUSECO) I Bukidnon II Electric Cooperative, Inc. (BUSECO) v. Commissioner of Internal Revenue X------------------------------------------------------------------------------------------X The CIR highlights that, under Section 228 of the NIRC of 1997, as amended, and Section 3.1.5 of RR No. 12-1999, a taxpayer must wait for an official final decision on a disputed assessment or allow the designated 180-day administrative review window to expire before appealing to the courts. The CIR echoes the long-standing doctrine that the right to appeal is a statutory privilege that can only be exercised strictly within the manner prescribed by law. According to the CIR, because BUSECO filed its original Petition for Review prematurely without waiting for an FDDA, it failed to perfect its appeal in the manner required by the rules, and the CTA failed to obtain jurisdiction over CTA Case No. 9819. THE COURT EB BANC'S RULING The Court En Bane has jurisdiction over the instant Petitions for Review. Before delving into the merits of the case, the Court En Bane must first determine whether it properly acquired jurisdiction over the present Petitions. On August 29, 2024, the Court in Division denied, for lack of merit, the CIR's Motion for Partial Reconsideration (Re: Decision dated 28 November 2023}, and BUSECO's Motion for Reconsideration. Based on the records, the Resolution denying these motions was received by the CIR, through the Office of the Solicitor General, on September 9, 2025, and by BUSECO on October 16, 2024.25 Under Section 3(b), Rule 8 26 of the RRCTA, both parties had fifteen (15) days from receipt of the assailed Resolution to file their respective Petitions for Review. Accordingly, the CIR had until September 24, 2024, while BUSECO had until October 31, 2024, to file their Petitions. 25 Docket (CTA EBNo. 2997), pp. 48-55: Docket (CTA EB No. 3013). pp. 33-40. 26 Section 3. Who May Appeal: Period to File Petition.- ... (b) A party adversely affected by a decision or resolution of a Division of the Court on a motion for reconsideration or new trial may appeal to the Court hy filing hefore it a petition for review \Vithin fifteen days from receipt of a copy of the questioned decision or resolution. Upon proper motion and the payment of the full amount of the docket and other lawful fees and deposit for costs before the expiration of the reglemcntary period herein fixed, the Court may grant an additional period not exceeding tifteen days from the expiration of the original period within which to file the petition for review.

DECISION CTA EB Nos. 2997 & 3013 (CTA Case Nos. 9761 & 9819) Commissioner of Internal Revenue v. Bukidnon II Electric Cooperative, Inc. (BUSECO) j Bukidnon II Electric Cooperative, Inc. (BUSECO) v. Commissioner of Internal Revenue X------------------------------------------------------------------------------------------X The CIR argues that the requirement of an LOA does not apply in this case because there was no actual physical examination of BUSECO's books of accounts. According to the CIR, the assessment was conducted through a "no-contact- audit-approach" under RMO No. 30-2003, for which an LN suffices. The CIR further argues that the LN establishes the necessary agency relationship between the CIR, as principal, and the Revenue Officer, as agent, and that the Revenue Regional Director, acting as the CIR's agent, may validly appoint ROs as sub-agents. In its Comment, BUSECO asserts that the issuance of a valid LOA by the Commissioner or a duly authorized representative is a mandatory statutory requirement before any revenue officer may conduct an audit or examination. Citing Medicard, it argues that an LN cannot substitute for an LOA. Absent such authority, BUSECO argues, the revenue officers had no legal basis to examine its records, thereby rendering the assessment void. The Court En Bane finds in favor of BUSECO. The power to assess necessarily includes the authority to examine taxpayers to determine the correct amount of tax due.32 Verily, the law vests the BIR with general powers in relation to the assessment and collection of all internal revenue taxes.33 However, only the CIR or a duly authorized representative may authorize the examination of a taxpayer and the issuance of an assessment. An LOA is the authority given to the appropriate RO 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 the correct amount of tax. 34 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 v the CIR himself or his duly authorized representatives. 35 32 AFP General Insurance Corporation v. Commissioner of Internal Revenue, G.R. No. 222133, November 4, 2020 [Per J. lnting. Third Division]. 3:" !d. 34 Commissioner ofInternal Revenue v. Son_v Philippines, Inc.. G.R. No. 178697. November 17, 2010 [Per 1. Mendoza, Second Division]. 35 Commissioner of Internal Revenue v. kfcDonald's Philippines Realty Corp .. G.R. No. 242670. May 10. 2021 [Per J. Lopez. J.. Third Division].

DECISION CTA EB Nos. 2997 & 3013 (CTA Case Nos. 9761 & 9819) Commissioner of Internal Revenue v. Bukidnon II Electric Cooperative, Inc. (BUSECO) ( Bukidnon II Electric Cooperative, Inc. (BUSECO) v. Commissioner of Internal Revenue }(------------------------------------------------------------------------------------------}( Sections 6(A), 10(c), and 13 of the NIRC of 1997, as amended, collectively establish that only ROs acting pursuant to a duly issued LOA may validly conduct examinations and recommend assessments, viz.: 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: SEC. 10. Revenue Regional Director. - ... , 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[.] SEC. 13. Authority of a Revenue Officer. - Subject to the rules and regulations to be prescribed by the Secretary of Finance, ... , 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 supplied) In Commissioner of Internal Revenue v. McDonald's Philippines Realty Corp. (McDonald's),36 , the Supreme Court emphasized that the issuance and proper service of an LOA upon the taxpayer are indispensable requirement of due process. The LOA apprises the taxpayer of the identity and authority of the ROs tasked to conduct the audit, thereby enabling the taxpayer to verify that such officers are duly 36 /d.

DECISION CTA EB Nos. 2997 & 3013 (CTA Case Nos. 9761 & 9819) Commissioner of Internal Revenue v. Bukidnon II Electric Cooperative, Inc. (BUSECO) / Bukidnon II Electric Cooperative, Inc. (BUSECO) v. Commissioner of Internal Revenue X------------------------------------------------------------------------------------------X before the BIR can act on and evaluate its request for reconsideration. The CIR further contends that, under the governing rules, a taxpayer must either await the issuance of an FDDA or allow the lapse of the 180-day administrative period before seeking judicial recourse. Emphasizing that the right to appeal is a statutory privilege that must be strictly complied with, the CIR argues that BUSECO's premature recourse to the courts circumvented mandatory procedural requirements. Thus, the CIR posits that the appeal was not properly perfected and that the CTA did not acquire jurisdiction over the case. The Court En Bane rules in favor of BUSECO. Jurisdiction is defined as the power and authority of a court to hear, try, and decide a case. In order for the court or an adjudicative body to have authority to dispose of the case on the merits, it must acquire, among others, jurisdiction over the subject matter. It is axiomatic that jurisdiction over the subject matter is the power to hear and determine the general class to which the proceedings in question belong; it is conferred by law and not by the consent or acquiescence of any or all of the parties or by erroneous belief of the court that it exists. Thus, when a court has no jurisdiction over the subject matter, the only power it has is to dismiss the action.40 Section 7(a)(l) and (2) ofRA No. 1125,41 as amended by RA No. 9282,42 vests the Court of Tax Appeals (CTA) with exclusive appellate jurisdiction to review decisions or inactions of the CIR involving disputed assessments and other matters arising under the NIRC.43 Corollarily, Section 11 of the same law provides that an appeal may be filed within thirty (30) days from receipt of the v decision or ruling, or from the expiration of the period fixed by 40 Mitsubishi c\!otors Philippines Corporation v. Bureau of Customs, G.R. No. 209830, June 17,2015 [Per J. Perlas Bernabe. First Division]. 41 An Act Creating the Court of Tax Appeals. June 16. 1954. 42 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 ofTax Appeals. and for Other Purposes. March 30. 2004. 43 SEC. 7. Jurisdiction.- The CTA shall exercise: (a) Exclusive appellate jurisdiction to review by appeal, as herein provided: (I) Decisions of the [CIR[ in cases involving disputed assessments, ... or other matters arising under the National Internal Revenue Code or other la\',:s administered by the Bureau of Internal Revenue; (2) Inaction by the [CIR[ in cases involving disputed assessments..... or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue, ...

DECISION CTA EB Nos. 2997 & 3013 (CTA Case Nos. 9761 & 9819) Commissioner of Internal Revenue v. Bukidnon II Electric Cooperative, Inc. (BUSECO) / Bukidnon II Electric Cooperative, Inc. (BUSECO) v. Commissioner of Internal Revenue X------------------------------------------------------------------------------------------X law for the CIR to act. 44 These provisions are echoed in Section 3(a)(l) and (2), Rule 4, 45 and Section 3(a), Rule 8 46 of the RRCTA. Likewise relevant is Section 3.1.4 of RR No. 12-1999,47 as amended by RR No. 18-2013,48 which governs administrative protests against a FAN/FLD. Under the regulation, if the protest is denied, in whole or in part, by the CIR or the latter's duly authorized representative, the taxpayer may appeal to the CTA within thirty (30) days from receipt of the decision. In case of inaction within the 180-day period, the taxpayer may either appeal to the CTA within thirty (30) days after the lapse of the 180-day period or await the final decision and appeal therefrom. The taxpayer's choice between these remedies is mutually exclusive. Sections 3. 1.4 and 3. 1.5 provide: 3.1.4 Disputed Assessment. The taxpayer or its authorized representative or tax agent may protest administratively against the aforesaid FLO /FAN within thirty (30) days from date of receipt thereof. The taxpayer protesting an assessment may file a written request for reconsideration or reinvestigation v If the taxpayer fails to file a valid protest against the FLO /FAN within thirty (30) days from date of receipt thereof, the assessment shall become final, executory and demandable. No request for reconsideration or reinvestigation SEC. 11. Who May Appeal; Mode of Appeal: Effect of Appeal. -Any partv adversely affected by a decision, ruling, or inaction of the !CIRJ ... 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.... Section 3. Cases Within the Jurisdiction of the Court in Divisions.- The Court in Divisions shall exercise: (a) Exelusivt': original or appellate jurisdiction to review by appeal the follO\ving: (I) Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue ta'\es, fees or other charges, penalties in relation thereto. or other matters arising under the Nationallntemal Revenue Code or other laws administered by the Bureau of Internal Revenue; (2) Inaction by the Commissioner of Internal Revenue in cases involving disputed assessments. refunds of internal revenue ta'\es, tees 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, where the National Internal Revenue Code or other applicable law provides a specific period for action: . Sec. 3. \\lho may appeal; period to file petition.- (a) A party adversely affected by a decision. ruling, or the inaction of the Commissioner oflnternal 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 ta'\es erroneously or illegally collected. the taxpayer must file a petition for revievv within the two-year period prescribed by law from payment or collection of the taxes. Sl!R.TECT: Implementing the Provisions of the National Internal Revenue Code of 1997 Governing the Rules on Assessment of National Internal Revenue Taxes, Civil Penalties and Interest and the Extra-Judicial Settlement of a Taxpayer's Criminal Violation of the Code Through Payment of a Suggested Compromise Penalty. SUBJECT: Amending Certain Sections of Revenue Regulations No. 12-99 Relative to the Due Process Requirement in the Issuance of a Deficiency Ta'< Assessment.

DECISION CTA EB Nos. 2997 & 3013 (CTA Case Nos. 9761 & 9819) Commissioner of Internal Revenue v. Bukidnon II Electric Cooperative, Inc. (BUSECO) I Bukidnon II Electric Cooperative, Inc. (BUSECO) v. Commissioner of Internal Revenue X------------------------------------------------------------------------------------------X Indeed, RD Palamine's demand for the execution of a waiver was highly improper. First, the resolution of a protest against a FAN/ FLD should not be conditioned upon the execution of a waiver. Section 3.1.4 of RR No. 12-1999,49 as amended, mandates the CIR or the latter's duly authorized representative to act on the protest within the prescribed 180-day period. Nothing in the NIRC or the implementing regulations authorizes the BIR to suspend or withhold action on a protest pending the taxpayer's execution of a waiver. Second, a waiver, by its nature, must be voluntary. As held in People v. Donato,so a waiver is the voluntary and intentional relinquishment of a known right, vrz.: Waiver is defined as "a voluntary and intentional relinquishment or abandonment of a known existing legal right, advantage, benefit, claim or privilege, which except for such waiver the party would have enjoyed; the voluntary abandonment or surrender, by a capable person, of a right known by him to exist, with the intent that such right shall be surrendered and such person forever deprived of its benefit; or such conduct as warrants an inference of the relinquishment of such right; or the intentional doing of an act inconsistent with claiming it." (Emphasis supplied) Here, however, the "advice" to execute a waiver was accompanied by the threat that failure to do so would render the assessment "final, executory, and demandable." Such ultimatum negates the voluntary character essential to a valid wruver. Third, the waiver was being demanded only after the issuance of the FAN/FLD. At that stage, the waiver had already become inutile for purposes of extending the prescriptive period for assessment. The issuance of the FAN/FLD51 already interrupts the running of the period to assess taxes. If the FAN/FLD had already been issued beyond the prescriptive period, a subsequently executed waiver could not revive an assessment that had already prescribed. 49 SUBJECT: Implementing the Provisions of the National Internal Revenue Code of 1997 Governing the Rules on Assessment ofNntionallntcrn<ll Revenue Taxes. Civil Penalties and Interest and the Extra-Judicial Settlement of a Ta'<payer's Criminal Violation of the Code Through Payment of a Suggested Compromise Penalty. 50 G.R. No. 79269, June 5, 1991 lPer J. Davide. Jr .. En Bane). cited in Ca!furn Mfg. Philippines, Inc. v. Quinsaat, CTA EB Case No. 2953 (CTA AC No. 253). January 15. 2026 [Per J. Reyes- Fajardo, En Bane]. 51 See Section 203, NIRC.

DECISION CTA EB Nos. 2997 & 3013 (CTA Case Nos. 9761 & 9819) Commissioner of Internal Revenue v. Bukidnon II Electric Cooperative, Inc. (BUSECO) ( Bukidnon II Electric Cooperative, Inc. (BUSECO) v. Commissioner of Internal Revenue X------------------------------------------------------------------------------------------X (a) Provided that it operates in conformity with the purposes and provisions of this Decree, a cooperative (1) shall be permanently exempt from paying income taxes, and (2) for a period ending on December 31; of the thirtieth full calendar year after the date of a cooperative's organization or conversion hereunder, or until it shall become completely free of indebtedness incurred by borrowing, whichever event first occurs, shall be exempt from the payment (a) of all National Government, local government and municipal taxes and fees, including franchise, filing, recordation, license or permit fees or taxes and any fees, charges, or costs involved in any court or administrative proceeding in which it may be a party, and (b) of all duties or imposts on foreign goods acquired for its operations, the period of such exemption for a new cooperative formed by consolidation, as provided for in Section 29, to begin from as of the date of the beginning of such period for the constituent consolidating cooperative which was most recently organized or converted under this Decree: Provided, That the Board of Administrators shall, after consultation with the Bureau of Internal Revenue, promulgate rules and regulations for the proper implementation of the tax exemptions provided for in this Decree. (Emphasis supplied) In Commissioner of Internal Revenue v. Samar-! Electric Cooperative, Inc., 61 the Court En Bane clarified that PD No. 269 was not repealed by the Cooperative Code: Article 127 of the Cooperative Code reads: ARTICLE 127. Repeals. - Except as expressly provided by this Code, Presidential Decree No. 175 and all other laws, or parts thereof, inconsistent with any provisions of this Code shall be deemed repealed: Provided, however, That nothing in this Code shall be interpreted to mean the amendment or repeal of any provision of Presidential Decree No. 269: Provided, further, That the electric cooperatives which qualify as such under this Code shall fall under the coverage thereof. A plain reading of the above provision shows that PD 269 is not amended nor repealed by the enactment of the Cooperative Code. Thus, the exemption from paying taxes of electric cooperatives under Section 39 of PD 269 still applies, which reads: ... 61 CTA EB Case No. 460 & 462. March II. 2010 [Per J. Castaneda, Jr., En Bane].

DECISION CTA EB Nos. 2997 & 3013 (CTA Case Nos. 9761 & 9819) Commissioner of Internal Revenue v. Bukidnon 11 Electric Cooperative, Inc. (BUSECO) j Bukidnon II Electric Cooperative, Inc. (BUSECO) v. Commissioner of Internal Revenue X------------------------------------------------------------------------------------------X Under Section 39 of P.D. No. 269, a law issued on August 6, 1973, cooperatives registered with the National Electrification Administration ("NEA") are permanently exempted from paying income taxes: This was later withdrawn by Executive Order ("E.O.") No. 93 on December 17, 1986: SECTION 1. The provisions of any general or special law to the contrary notwithstanding, all tax and duty incentives granted to government and private entities are hereby withdrawn... Then, Fiscal Incentive Review Board ("FIRB") Resolution No. 24-87, effective July 1, 1987, restored all tax exemptions granted by P.D. No. 269 except that on income tax: BE IT RESOLVED, as it is hereby resolved, That the tax and duty exemption privileges of electric cooperatives granted under the terms and conditions of Presidential Decree No. 269 (creating the National Electrification Administration as a corporation, ... ), as amended, are restored effective July 1, 1987: Provided, however, That income from their electric service operations and other sources including the interest income from bank deposits and yield or any other monetary benefit from bank deposits and yield or any other similar arrangements shall remain taxable: .... Finally, R.A. No. 6938 ("Cooperative Code") reinstated tax exemptions for cooperatives registered with the Cooperative Development Authority ("CDA"). The controversy arises mainly from the laws discussed. For petitioner, the permanent exemption granted to it by P.D. No. 269 persists to the present. For respondent, said exemption was withdrawn by E.O. No. 93 and not reinstated by FIRB Resolution No. 24-87, which left the income of cooperatives taxable. Further, tax exemptions under the Cooperative Code are granted only to cooperatives registered with the CDA, which petitioner is not. Unfortunately for respondent, this Court has previously and consistently favored cooperatives when ruling on this issue. The case of Samar-! Electric Cooperative, Inc. v. Commissioner of Internal Revenue ("Samar-!') is informative here. There, the Court found an electric cooperative exempt from Minimum Corporate Income Tax under P.D. No. 269,

DECISION CTA EB Nos. 2997 & 3013 (CTA Case Nos. 9761 & 9819) Commissioner of Internal Revenue v. Bukidnon II Electric Cooperative, Inc. (BUSECO) / Bukidnon II Electric Cooperative, Inc. (BUSECO) v. Commissioner of Internal Revenue X------------------------------------------------------------------------------------------X P.D. No. 269. By extension, the Cooperative Code also repeals FIRE Resolution No. 24-87, insofar as said Resolution reiterates E.O. No. 93's withdrawal of income tax exemptions for cooperatives. As such, the Code effectively reinstates the tax exemptions granted by P.D. No. 269 to electric cooperatives that had registered with the NEA, without further requiring them to register with the CDA. From the above, none of the jurisprudence invoked by respondent is fully applicable here. We thus follow the past rulings of the Court of Tax Appeals and find petitioner exempt from income tax. Considering petitioner's exemption from income tax, the assessment against it for alleged deficiency income tax has no basis in law. An entity that is not required to pay any income tax in the first place obviously cannot accrue any deficiency income tax. The assessment must consequently be nullified. In the instant case, BUSECO has sufficiently established its entitlement to the income tax exemption under PD No. 269. Both the BIR and BUSECO admitted that the latter is registered with and is a franchise grantee of the NEA,63 granting BUSECO the authority to operate an electric light and power service for a period of fifty (50) years from June 10, 1981. Accordingly, BUSECO's status as a non-stock, non-profit electric cooperative duly franchised by the NEA entitles BUSECO to the income tax exemption provided under Section 39 of PD No. 269. The CIR's right to assess BUSECO has partially prescribed. The BIR's power to assess taxes provided under Section 2 v of the NIRC of 1997, as amended, 64 is limited by Section 203,65 63 Division Docket (CTA Case No. 9761)- Vol. I, p. I0. Petition for Review. The Parties. par. I vis-a-vis Division Docket (CTA Case No. 9761)- Vol. I, p. 277. Joint Stipulation of Facts and Issues (JSFI), Summary of Admitted Facts, par. I: Division Docket (CTA Case No. 9819). p. 10. Petition for Review. The Parties, par. 1 vis-Q-vis Division Docket (CTA Case No. 9761)- Vol. L p. 359. JSFI. Summary of Admitted Facts. par. 1. 64 SEC. 2. Powers and Duties of the Bureau of Internal Revenue.- The Bureau of Internal Revenue shall be under the supervision and control of the Department of Finance. and its powers and duties shall comprehend the assessment and collection of all national internal revenue taxes, fees, and charges. and the enforcement of all forfeitures. pen<~ hies. and fines ennncctcd therewith. including the e-xecution of judgments in all cases decided in its favor hy the Court of Tax Appeals and the ordinary cou11s. (Emphasis supplied) 65 SEC. 203. Period of Limitation l"pon 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 Jaw for the filing of the return. and no proceeding in cou11 without assessment for the collection of such taxes shall be begun after the expiration of

DECISION CTA EB Nos. 2997 & 3013 (CTA Case Nos. 9761 & 9819) Commissioner of Internal Revenue v. Bukidnon II Electric Cooperative, Inc. (BUSECO) / Bukidnon II Electric Cooperative, Inc. (BUSECO) v. Commissioner of Internal Revenue x------------------------------------------------------------------------------------------x which provides for three (3) years, counted from the due date or date of actual filing of the returns, whichever is earlier. Hence, any assessments made after the expiration of such period is no longer valid and effective. As an exception, Section 222 of the NIRC of 1997, as amended, allows the extension of the assessment period beyond the original3-year prescriptive period.66 Section 222(a) provides for a 10-year prescriptive period for the CIR to assess in cases of a false or fraudulent return with intent to evade tax or failure to file a return, while Section 222(b) authorizes the extension of 3 years upon executing a valid waiver. Accordingly, the Court En Bane makes its determination as to whether the CIR's right to assess has already prescribed. First, the Court En Bane determines which prescriptive period is applicable. To resolve this, the Court En Bane finds the case of McDonald's highly instructive, vzz.: F. Summary: Conditions for a Valid Extension ofAssessment Period in Case of a False Return L Requisites under Section 222 (a) of the 1997 Tax Code � General Rule -Proof of False or Fraudulent Return Pursuant to Section 222 (a) of the 1997 Tax Code, the extraordinary 10-year assessment period may apply in case the taxpayer: (1) filed a false return, (2) filed a fraudulent return, or (3) failed to file a return. such period: Provided. That in a case where a return is filed beyond the period prescribed by lmv, the three (3)-year period shall be counted from the day the return \Vas filed. For purposes of this Section, a return tiled before the last day prescribed by law for the filing thereof shall be considered as filed on such last day. (Emphasis supplied) SEC. 222. Exceptions as to Period of Limitation of Assessment and Collection ofTa'\es.- (a) In the case of a false or fraudulent return with intent to evade tax or of failure to file a return. the tax may be assessed. or a proceeding in court for the collection of such ta\: may be filed without assessment, at any time within ten (1 0) years after the discovery of the falsity, fraud or omission: Provided, That in a fraud assessment \vhich has become final and executory, the fact of fraud shall be judicially taken cognizance of in the civil or criminal action for the collection thereof. (b) If before the expiration of the time prescribed in Section 203 for the assessment of the ta'<, both the Commissioner nnd the taxpayer hnve ngrced in writing to its assessment nftcr Sttch time, the tax may be assessed within the period agreed upon. (c) Any internal revenue tax which has been assessed within the period of limitation as prescribed in paragraph (a) hereof may be collected by distraint or levy or by a proceeding in court within five (5) years following the assessment of the tax.

DECISION CTA EB Nos. 2997 & 3013 (CTA Case Nos. 9761 & 9819) Commissioner of Internal Revenue v. Bukidnon II Electric Cooperative, Inc. (BUSECO) I Bukidnon II Electric Cooperative, Inc. (BUSECO) v. Commissioner of Internal Revenue ~------------------------------------------------------------------------------------------)C A fraudulent return "implies intentional or deceitful entry with intent to evade the taxes due," while a false return simply "implies deviation from the truth, whether intentional or not." It must be stressed, however, that a false return within the meaning of Section 222 (a) does not refer to false returns in general. To be sure, the extraordinary 10-year assessment period applies to a false return when: (1) the return contains an error or misstatement, and (2) such error or misstatement was deliberate or willful. It shall be the CIR's burden to establish the existence of the above-enumerated statutory requisites with clear and convincing evidence. � Exception - Prima Facie Evidence of a False or Fraudulent Return (30% Threshold) The CIR may be relieved from the above-mentioned burden of proof when there is prima facie evidence of falsity or fraud, as defined under Section 248 (B) of the 1997 Tax Code. (1) The CIR ascertains that there 1s a misstatement/ misdeclaration 1n the return, ln particular, (a) an understatement/under declaration of sales, receipts, or income or (b) an overstatement/ over declaration of expenses or other deductions, and (2) the misstatement is substantial, such that exceeds the corresponding amount declared in the return by 30%. 30% threshold satisfied. There is prima facie evidence of falsity or fraud, and the burden of proof shifts to the taxpayer. If the taxpayer fails to overcome the presumption, the prima facie evidence shall be sufficient to justify the application of the 10-year period. Taxpayer refutes presumption. If the taxpayer is successful in overturning the presumption (e.g., demonstrating that the misstatement as ascertained by the

DECISION CTA EB Nos. 2997 & 3013 (CTA Case Nos. 9761 & 9819) Commissioner of Internal Revenue v. Bukidnon II Electric Cooperative, Inc. (BUSECO) I Bukidnon II Electric Cooperative, Inc. (BUSECO) v. Commissioner of Internal Revenue x------------------------------------------------------------------------------------------x The subject FAN/FLD was issued only on December 27, 2017. Accordingly, prescription has already set in for the deficiency VAT assessment covering the first to third quarters of TY 2014 and the deficiency EWT assessment for January to November 2014. Considering the nullification of the deficiency income tax assessment due to BUSECO's statutory exemption, the Court En Bane will only further examine the deficiency VAT assessment for the fourth quarter of TY 2014 and the deficiency EWT assessment for December 2014. Deficiency VAT for the 4th quarter of taxable year 2014 The CIR assessed BUSECO for deficiency VAT forTY 2014 in the total amount of !'8,482,830.31, inclusive of interest and compromise penalty, computed as follows:74 Gross Sales per Return !' 234,060,266.17 Add: Undeclared VATable Sales per AIETID 3,186,008.25 Total Adjusted Sales 1'237,246,274.42 Output Tax Due !' 28,469,552.93 Less: Creditable Input Tax Allowed 1'2,499,527.45 Input Tax on Goods per SLP Input Tax on Services per SLP 1,227,066.11 Input Tax on Capital Goods VAT Due 15,890,463.56 19,617,057.12 Less: Allowable Payments Monthly and Quarterly VAT Payments !' 8,852,495.81 Tax Credits per BIR Form 2306 VAT Deficiency 1'3,303,115.04 3,520,072.56 Add: Interest@20%p.a. (1/26/2015 to 12/31/2017) 216,957.52 I' 5,332,423.25 Compromise Penalty for Non-submission of SLP Total VAT Due and Payable 1'3, 126,407.06 3,150,407.06 24,000.00 1' 8,482,830.31 a) Undeclared VA Table Sales per AIETID- P3, 186,008.25 As shown in the foregoing computation, the CIR assessed BUSECO for undeclared VATable sales per AIETID amounting to P3, 186,008.25. As stated in the Details of Discrepancies attached to the FLD,75 the assessment stemmed from the VAT ~ 7-1 Details of Computation, Exhibit ��R-1 T. BIR Records (Exhibit ��R-26.. ), p. 721. " Exhibit ��R-12'". BIR Records (Exhibit ��R-26). p. 719.

DECISION CTA EB Nos. 2997 & 3013 (CTA Case Nos. 9761 & 9819) Commissioner of Internal Revenue v. Bukidnon 11 Electric Cooperative, Inc. (BUSECO) / Bukidnon 11 Electric Cooperative, Inc. (BUSECO) v. Commissioner of Internal Revenue x------------------------------------------------------------------------------------------>: taxpayer.ss Absent a showing that BUSECO consented to the compromise penalty, its imposition should be deleted. The imposition of the same without the conformity of the taxpayer is illegal and unauthorized. 86 In sum, BUSECO is liable for basic deficiency VAT for the fourth quarter of taxable year 2014 m the amount of P119,969.82, computed as follows: VATable Sales/Receipts Per VAT Return- 4th Qtr 201487 !' 64,348,851.42 Add: Undeclared VATable Sales/Receipts 999,748.49 Adjusted VATable Sales/Receipts !'65,348,599.91 Output Tax Due I' 7,841,831.99 Less: Creditable Input Tax per VAT Return- 4th Qtr 201488 I' 592,516.16 Input Tax on Goods Input Tax on Services 411,393.20 Input Tax on Capital Goods Total Creditable Input Tax 4,327,516.10 Net VAT Payable Less: Tax Credits/Payments per VAT Return- 4"' Qtr 201489 I' 5,331,425.46 Monthlv VAT Pavments Tax Credits per BIR Form 2306 I' 2,510,406.53 Total Tax Credits/Payments Basic Deficiency VAT I' 842,479.99 1,547,956.72 I' 2,390,436. 71 I' 119,969.82 Deficiency EWT for December 2014 The CIR found that BUSECO's claimed rental expense m the amount ofP851,344.00 and professional fees in the amount of P2,100,375.60.00 were not subjected to 5% and 15% EWT, respectively. Invoking RR No. 2-98,90 the CIR assessed BUSECO for deficiency EWT for taxable year 20 14 in the total amount of P336,636.78, inclusive of interest, as shown below:91 ,, /d. 86 Commissioner of Internal Revenue v. Lianga Bay Logging Co.. Inc.. G.R. No. L-35266. January 21. 1991 [Per 1. Narvasa, First Division]. 87 Annex P-14 VAT Returns, USB (Exhibit ��P-19''). 88 Annex P-14 VAT Returns. USB (Exhibit -P-19"). 89 Annex P-14 VAT Returns. USB (Exhibit''P-19''). 90 SUBJECT: Implementing Repuhlic Act No. ~424. "An Act Amending the National Internal Revenue Code. as Amended" Relative to the Withholding on Income Subject to the Expanded Withholding Tax and Final \\lithholding Tax. Withholding of Income Tax on Compensation, \\lithholding of Creditable Value-Added Tax and Other Percentage Taxes. 91 Details of Computation. Exhibit "R-12". BlR Records (Exhibit "R-26"). p. 720.

DECISION CTA EB Nos. 2997 & 3013 (CTA Case Nos. 9761 & 9819) Commissioner of Internal Revenue v. Bukidnon II Electric Cooperative, Inc. (BUSECO) j Bukidnon II Electric Cooperative, Inc. (BUSECO) v. Commissioner of Internal Revenue X------------------------------------------------------------------------------------------X Transaction Reference Comments Amount Remarks Date GOLDSTAR OFFICE p 1,268.97 MACHINE A RENTAL-PHOTOCOPIER- 12/29/2014 APV#0016448 GOLDSTAR OFFICE 1,605.13 NOV-DE MACHINE A RENTAL- PHOTOCOP-DEC- APV#0016452 JAN APV#0016486 MORESCO-! 70,000.00 SMVA-RENTAL-DECEMBER PREPAID EXP- 12/31/2014 JV#0008872 1,000.00 DEC14LABORES JV#0008969 HOUSE RENTAL- 7,500.00 LUMICTIN,H Total claimed rental expense for December 2014 P81,374.10 Basic deficiency 5% EWT p 4,068.71 Accordingly, the assessment for basic deficiency 5% EWT on rental expenses is reduced to !>4,068.71, representing the 5% withholding tax due on the rental expenses attributable to December 2014. b) Professional Fees- ?2, 100,375.60 Under Section 2.57.2(A) and (B) ofRR No. 2-98, as amended by RR Nos. 30-200398 and 10-2013,99 professional fees are subject to either 10% or 15% EWT, depending on the amount of gross income earned by the payee during the taxable year, thus: Sec. 2.57.2. Income payments subject to creditable withholding tax and rates prescribed thereon.- ... (A) Professional fees, talent fees, etc., for services rendered by individuals. On the gross professional, promotional and talent fees or any other form of remuneration for the services of the following individuals - Fifteen percent (15%), if the gross income for the current year exceeds P720,000; and Ten percent (10%), if otherwise; (1) Those individually engaged in the practice of professions or callings; lawyers; certified public accountants; doctors of medicine; architects; civil, electrical, chemical, mechanical, structural, industrial, mmmg, sanitary, metallurgical and geodetic engineers; marine surveyors; doctors of veterinary science; dentists; professional apprmsers; 98 SUBJECT: Amending Further Pertinent Provisions of Revenue Regulations No. 2-98, as Last Amended by Revenue Regulations No. 17-2003. and Revenue Regulations 'No. 8-98. as Amended, Providing for the Imposition of Final Withholding Tax on the Sale. Exchange or Other Disposition of Real Property Classified as Capital Assets by Non- resident Aliens, Increasing the \Vithholding Ta'X Rates on Certain Income Payments. Inclusion of Certain Income Payments. Sanctions to be Imposed on Payees Who Refuse the Withholding of Tax on Their Income/Receipts, and for Other Purposes. SUBJECT: Amending Further Pertinent Provisions of Revenue Regulations (RR) No. 2-98, as Last Amended by Revenue Regulations No. 30-20m. Providing for the Inclusion of Real Estate Service Practitioners (i. e. Real Estate consultant Appraiser and Broker) \\-'ho Passed the Licensure Examination given by the Real Estate Service under the Professional Regulations Commission as defined in Republic Act No. 9646. "The Real Estate Service Act of the Philippines" as Among Those Professionals Falling Under Section 2.57.2(A)(l) ofRR 2-98. as Amended. and RR 14-2002 as Regards Income Payments to Certain Brokers and Agents.

DECISION CTA EB Nos. 2997 & 3013 (CTA Case Nos. 9761 & 9819) Commissioner of Internal Revenue v. Bukidnon II Electric Cooperative, Inc. (BUSECO) I Bukidnon II Electric Cooperative, Inc. (BUSECO) v. Commissioner of Internal Revenue X------------------------------------------------------------------------------------------X Accordingly, the Decision dated November 28, 2023 and the Resolution dated August 29, 2024 of the Court's Special Third Division in CTA Case No. 9761 are hereby AFFIRMED. However, insofar as CTA Case No. 9819 is concerned, the dismissal of the Petition for Review on jurisdictional grounds is hereby REVERSED and SET ASIDE. Consequently, the Court En Bane rules as follows: 1. The deficiency Income Tax (IT) assessment issued against Bukidnon II Electric Cooperative, Inc. for taxable year 20 14 is CANCELLED and SET ASIDE, petitioner being exempt therefrom pursuant to Section 39 of Presidential Decree No. 269, as amended; 2. The deficiency Value-Added Tax (VAT) assessments for the first (1st) to third (3rd) quarters of taxable year 2014, and the deficiency Expanded Withholding Tax (EWT) assessments for the period January 2014 to November 2014, are CANCELLED and SET ASIDE on the ground of prescription; and 3. BUSECO is ORDERED TO PAY the CIR the aggregate amount of P438,436.86, inclusive of the 25% surcharge, deficiency and delinquency interests imposed under Sections 248(A)(3), 249(B) and (C) of the NIRC of 1997, as amended by Republic Act (RA) No. 10963, also known as Tax Reform for Acceleration and Inclusion (TRAIN), as implemented by RR No. 21-2018, computed as follows: Basic Tax VAT EWT Total Surcharge (25%) I' 119,969.82 !'116,929.34 !'236,899.16 Deficiency Interest (20%) 29,992.46 29,232.34 59,224.80 from Jan. 26, 2015 to Dec. 31, 2017 (P 119,969.82 X 20% X 1, 071/365 dal}s) 70,404.21 70,404.21 from Jan. 16, 2015 to Dec. 31, 2017 69,260.61 (1'116, 929.34 x 20% x 1, 081/365 days) 69,260.61 Deficiency Interest (12%) 1,341.03 1,341.03 1,307.05 from Jan. 1, 2018 to Feb. 4, 2018 1,307.05 (!'119,969.82 X 12% X 34/365 days) 1'221,707.52 1'216,729.34 1'438,436.86 (!' 116,929.34 X 12% X 34/365 days) Total Amount Due as of February 4, 2018

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY ENBANC COMMISSIONER OF CTA EB Nos. 2997 & 3013 INTERNAL REVENUE, (CTA Case Nos. 976 1 & 9819) Petitioner, - versus - BUKIDNON II ELECTRIC COOPERATIVE, INC. (BUSECO), Respondent. x- -------------------- x Members: BUKIDNON SECOND ELECTRIC COOPERATIVE, RINGPIS-LIBAN, PJ. , INC. (BUSECO), BACORRO-VILLENA, Petitioner MODESTO-SAN PEDRO, REYES-FAJARDO, CUI-DAVID, vs. FERRER-FLORES, and ANGELES,JJ COMMISSIONER OF Promulgated: INTERNAL REVENUE, JUL 0 7 2026 R espo ndent. X- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - X CONCURRING and DISSENTING OPINION FERRER-FLORES, J.: I concur with the ponencia that the Petition for Review filed by the Commissioner of Internal Revenue (CIR), docketed as CTA EB No. 2997, ~

CONCURRING AND DISSENTING OPINION Commissioner ofInternal Revenue vs. Bukidnon !I Electric Cooperative, Inc. (BUSECO; Bukidnon Second Electric Cooperative, Inc. (BUSECO) vs. Commissioner ofInternal Revenue CTA EB Nos. 2997 & 30 I9 (CTA Case Nos. 9761 & 9819) Page 2 of9 must be dismissed for lack of authority from the Office of the Solicitor General (OSG). I also agree that, as aptly found by the Court in Division, in CTA Case No. 976lthe absence of a Letter of Authority renders the assessment void. With due respect, however, I am unable to agree with the holding of the ponencia in CTA EB No. 3013, that the Letter dated February 20, 2018 (Letter) constituted a decision appealable to the Court of Tax Appeals (CTA), thereby vesting this Court with jurisdiction over the Petition for Review filed by Bukidnon Second Electric Cooperative, Inc. (BUSECO). It is my stance that the "other matters" jurisdiction of this Court, pursuant to the Revised Rules of the Court of Tax Appeals (RRCTA), cannot be applied in the instant case, particularly in CTA Case No. 9819 and the present appeal, CTA EB No. 3013. In my view, the CTA never acquired jurisdiction over the case because there was no appealable decision on the disputed assessment. The Letter cannot be considered a Final Decision on a Disputed Assessment (FDDA) nor a final denial ofBUSECO's protest. Consequently, the Petition for Review was prematurely filed and was correctly dismissed outright. Section 7(a)(l) of Republic Act (R.A.) No. 1125, 1 as amended by R.A. No. 9282,2 provides: SEC. 7. Jurisdiction.- The CIA shall exercise: (a) Exclusive appellate jurisdiction to review by appeal, as herein provided: (1) Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau oflnternal Revenue. Jurisprudence has consistently construed the term "decision" as referring to the Commissioner's determination on the taxpayer's protest against an assessment, and not the assessment itself. Thus, what is appealable to the CTA is the Commissioner's final action resolving the protest. ~ AN CREATING THE COURT OF TAX APPEALS. 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 OF TAX APPEALS, AND FOR OTHER PURPOSES.

CONCURRING AND DISSENTING OPINION Commissioner of Internal Revenue vs. Bukidnon II Electric Cooperative, Inc. (BUSECO; Bukidnon Second Electric Cooperative, Inc. (BUSECO) vs. Commissioner oflnternal Revenue CTA EB Nos. 2997 & 30 I9 (CTA Case Nos. 9761 & 9819) Page 3 of9 Corollarily, Revenue Regulations (RR) No. 12-99,3 as amended by RR No. 18-2013,4 expressly prescribes the requisites of an FDDA: 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, and (ii) that the same is his \(or her] final decision. (Emphasis supplied) The requirement is not a mere formality as it embodies the long-settled rule that the taxpayer must be informed in clear, categorical, and unequivocal language that the Commissioner has already reached a final determination on the protest. Absent such finality, the taxpayer cannot be expected to know that the administrative process has ended and that recourse to the CTA has become necessary. A careful perusal of the Letter reveals that the Bureau of Internal Revenue (BIR) informed BUSECO that it cannot grant the request for reconsideration unless a Waiver of the Defense of Prescription under the Statute of Limitations of the National Internal Revenue Code (Waiver) is executed and submitted within five days from receipt thereof. Failure to do so, the assessment shall become final, executory and demandable. A plain reading of the Letter reveals that it was not a final resolution of BUSECO's protest. First, the Letter did not categorically deny the protest. Instead, it expressly stated that the request for reconsideration "cannot be granted unless" a waiver is executed. Such language indicates that the BIR was still conditioning further action on the protest upon submission of the required documents. Second, nowhere in the Letter did it state that it was the Commissioner's final decision. It lacked the unequivocal declaration contemplated under RR No. 12-99, as amended, that the same constituted the BIR's final determination of the disputed assessment. Third, the Letter itself contemplated further administrative proceedings. By directing BUSECO to submit a duly executed Waiver and \ Implementing the Provisions of the National Internal Revenue Code of 1997 Governing the Rules on Assessment of National Internal Revenue Taxes, Civil Penalties and Interest and the Extra-Judicial Settlement of a Taxpayer's Criminal Violation of the Code Through Payment of a Suggested Compromise Penalty. September 6, 1999. 4 A mending Certain Sections of Revenue Regulations No. 12-99 Relative to the Due Process Requirement in the Issuance of a Deficiency Tax Assessment, November 28,2013.

CONCURRING AND DISSENTING OPINION Commissioner ofInternal Revenue vs. Bukidnon II Electric Cooperative, Inc. (BUSECO; Bukidnon Second Electric Cooperative, Inc. (BUSECO) vs. Commissioner of Internal Revenue CTA EB Nos. 2997 & 30 I9 (CTA Case Nos. 976 I & 98 I9) Page 4 of9 Special Power of Attorney, the BIR was effectively leaving the matter open for further consideration. A communication which still invites compliance and contemplates subsequent action cannot simultaneously be treated as a final disposition of the protest. Clearly, the Letter cannot be reasonably characterized as an FDDA or its equivalent. The ponencia concludes that the Letter effectively operated as a denial because BUSECO opted not to submit the requested waiver, thereby ending the administrative process. I respectfully disagree. While I submit that the FDDA is not the only issuance of the CIR or his duly authorized representative, which may be considered to be the final decision on a disputed assessment, the receipt of which would, in tum, trigger the 30-day period for taxpayer to file his protest, I respectfully maintain that, irrespective of nomenclature, the issuance must be intended to and must, in fact, operate as an FDDA by unequivocally conveying respondent's final determination on the taxpayer's protest. In Commissioner ofInternal Revenue vs. Isabela Cultural Corporation (Isabela), 5 the Supreme Court considered the Final Notice Before Seizure (FNBS) issued by the CIR to be his decision disposing of the taxpayer's request for consideration because its content and tenor revealed that it was indeed his final act regarding the said request. The Supreme Court also emphasized the significance of the language used in the letter, particularly the presence of a "threat" of collection, in detennining whether the letter constituted a final decision. In Oceanic Wireless Network Inc. vs. Commissioner of Internal Revenue,6 the Supreme Court likewise held that the determination on whether or not a demand letter is final is conditioned upon the language used or the tenor of the letter being sent to the taxpayer, viz: We laid down the rule that the Commissioner of Internal Revenue should always indicate to the taxpayer in clear and unequivocal language what constitutes his final determination of the disputed assessment, thus: ... we deem it appropriate to state that the Commissioner oflnternal Revenue should always indicate to the taxpayer in clear and unequivocal ~ G.R. No. 135210,July 11,2001. 6 G.R. No. 148380, December 9, 2005.

CONCURRING AND DISSENTING OPINION Commissioner ofInternal Revenue vs. Bukidnon If Electric Cooperative, Inc. (BUSECO; Bukidnon Second Electric Cooperative, Inc. (BUSECO) vs. Commissioner ofInternal Revenue CTA EB Nos. 2997 & 30 I9 (CTA Case Nos. 976 I & 98 I9) Page 5 of9 language whenever his action on an assessment questioned by a taxpayer constitutes his final determination on the disputed assessment, as contemplated by Sections 7 and 11 of Republic Act No. 1125, as amended. On the basis of his statement indubitably showing that the Commissioner's communicated action is his final decision on the contested assessment, the aggrieved taxpayer would then be able to take recourse to the tax court at the opportune time. Without needless difficulty, the taxpayer would be able to determine when his right to appeal to the tax court accrues. The rule of conduct would also obviate all desire and opportunity on the part of the taxpayer to continually delay the finality of the assessment -and, consequently, the collection of the amount demanded as taxes- by repeated requests for recomputation and reconsideration. On the part of the Commissioner, this would encourage his office to conduct a careful and thorough study of every questioned assessment and render a correct and definite decision thereon in the first instance. This would also deter the Commissioner from unfairly making the taxpayer grope in the dark and speculate as to which action constitutes the decision appealable to the tax court. Of greater import, this rule of conduct would meet a pressing need for fair play, regularity, and orderliness in administrative action. In this case, the letter of demand dated January 24, 1991, unquestionably constitutes the final action taken by the Bureau of Internal Revenue on petitioner's request for reconsideration when it reiterated the tax deficiency assessments due from petitioner, and requested its payment. Failure to do so would result in the "issuance of a warrant of distraint and levy to enforce its collection without further notice." In addition, the letter contained a notation indicating that petitioner's request for reconsideration had been denied for lack of supporting documents. The above conclusion finds support in Commissioner of Internal Revenue v. Ayala Securities Corporation, where we held: The letter of February 18, 1963 (Exh. G),in the view of the Court, is tantamount to a denial of the reconsideration or [respondent corporation's] ...protest o[f] the assessment made by the petitioner, considering that the said letter [was] in itself a reiteration of the demand by the Bureau of Internal Revenue for the settlement of the assessment already made, and for the immediate payment of the sum of P758,687.04 in spite of the vehement protest of the respondent corporation on April 21, 1961. This certainly is a clear indication of the firm stand of petitioner against the reconsideration of the disputed assessment ... This being so, the said letter amount[ed] to a decision on a disputed or protested assessment, and, there, the court a quo did not err in taking cognizance of this case. Similarly, in Surigao Electric Co., Inc. v. Court ofTax Appeals, and in CJR v. Union Shipping Corporation, we held: ...In this letter, the commissioner not only in effect demanded that the petitioner pay the amount of P11,533.53 but also gave warning that in the event it failed to pay, the said commissioner would be constrained to enforce the ,

CONCURRING AND DISSENTING OPINION Commissioner of Internal Revenue vs. Bukidnon If Electric Cooperative, Inc. (BUSECO; Bukidnon Second Electric Cooperative, Inc. (BUSECO) vs. Commissioner ofInternal Revenue CTA EB Nos. 2997 & 3019 (CTA Case Nos. 9761 & 9819) Page 6 of9 collection thereof by means of the remedies provided by law. The tenor of the letter, specifically the statement regarding the resort to legal remedies, unmistakably indicate[dl the final nature of the determination made by the commissioner of the petitioner's deficiency franchise tax liability. (Emphases supplied) In Commissioner ofInternal Revenue vs. South Entertainment Gallery, Inc. 7, the Supreme Court reiterated its ruling in Surigao Electric Co., Inc. vs. Court of Tax Appeals8, to wit: It was under the factual backdrop of Surigao Electric Co., Inc. that this Court admonished Commissioner to indicate in clear and unequivocal language what constitutes final action on a disputed assessment to avoid repeated requests for reconsideration by the taxpayer. This is also to avoid the taxpayer grope in the dark as to which communication or action from the Bureau of Internal Revenue may be the decision appealable to the tax court. In Allied Banking Corporation vs. Commissioner ofInternal Revenue,9 moreover, the Supreme Court held: The Commissioner of Internal Revenue (CIR) as well as his duly authorized representative must indicate clearly and unequivocally to the taxpayer whether an action constitutes a final determination on a disputed assessment. Words must be carefully chosen in order to avoid any confusion that could adversely affect the rights and interest of the taxpayer. XXX XXX XXX xxx We have time and again reminded the CIR to indicate, in a clear and unequivocal language, whether his action on a disputed assessment constitutes his final determination thereon in order for the taxpayer concerned to determine when his or her right to appeal to the tax court accrues. xxx (Emphases supplied) In Commissioner of Internal Revenue vs. Liquigaz Philippines Corporation, 10 the Supreme Court held that the FDDA, like the Formal Letter of Demand and Final Assessment Notice (FLD/FAN), must also state the law and facts on which it is based, viz: Nevertheless, the requirement of providing the taxpayer with written notice of the facts and law used as basis for the assessment is not to be mechanically applied. Emphasis on the purpose of the written notice is important. The requirement should be in place so that the taxpayer could~ G.R. No. 225809, March 17,2021. G.R. No. L-25289, June 28, 1974. G.R. No. 175097, February 5, 2010. 10 G.R. Nos. 215534 & 215557, April 18, 2016.

CONCURRJNG AND DISSENTING OPINION Commissioner ofInternal Revenue vs. Bukidnon!! Electric Cooperative, Inc. (BUSECO; Bukidnon Second Electric Cooperative, Inc. (BUSECO) vs. Commissioner ofInternal Revenue CTA EB Nos. 2997 & 3019 (CTA Case Nos. 9761 & 9819) Page 7 of9 be adequately informed of the basis of the assessment enabling him to prepare an intelligent protest or appeal of the assessment or decision. xxx XXX XXX XXX Thus, substantial compliance with the requirement under Section 228 of the NIRC is permissible, provided that the taxpayer would be eventually apprised in writing of the factual and legal bases of the assessment to allow him to file an effective protest against. The above-cited cases refer to the compliance of the FAN/FLD of the due process requirement embodied in Section 228 of the NIRC and RR No. 12-99. These may likewise [be] applied to the FDDA, which is similarly required to include a written notice of the factual and legal bases thereof. Without sounding repetitious, it is important to note that Section 228 of the NIRC did not limit the requirement of stating the facts and law only to the FAN/FLD. On the other hand, RR No. 12-99 detailed the process of assessment and required that both the FAN/FLD and the FDDA state the law and facts on which it is based. (Emphases supplied) Considering the foregoing, the Letter, which informed BUSECO of the BIR's position regarding the taxability of its income and required the submission of a Waiver before the protest could be acted upon, neither contained a categorical denial of the protest, nor did it state that it constituted the BIR's final determination, and unmistakably contemplated further administrative proceedings. It is my humble view that if a letter of the same tenor is to be considered the final decision on the disputed assessment, it would create uncertainty for the taxpayer as to which ruling is properly appealable to this Court and the reckoning period within which such an appeal must be filed. This situation is problematic because it may effectively deprive the taxpayer of judicial remedy. To my mind, the character of a communication as a final decision is determined by the contents ofthe communication itself and by the action taken by the tax authorities-not by the taxpayer's subsequent decision to comply or not comply with a directive contained therein. I still hold that a letter that is not final when issued does not become a final decision merely because the taxpayer declines to satisfy a condition imposed by the BIR. To hold otherwise would permit taxpayers to unilaterally convert interlocutory or preliminary administrative communications into appealable decisions simply by refusing to comply with BIR directives. The jurisdiction of the CTA cannot depend on the taxpayer's subjective intecp<etation of ' lotte< m on '"b"q"'nt event. umdotod to tho "'"'' ~

CONCURRINQ AND DISSENTING OPINION Commissioner ofInternal Revenue vs. Bukidnon II Electric Cooperative, Inc. (BUSECO; Bukidnon Second Electric Cooperative, Inc. (BUSECO) vs. Commissioner ofInternal Revenue CTA EB Nos. 2997 & 30 I9 (CTA Case Nos. 9761 & 9819) Page 8 of9 issuance of a final determination by the Commissioner or his authorized representative. Simply stated, the BIR never issued a final decision. The taxpayer's refusal to execute the waiver cannot supply what was never issued in the first place. The ponencia further reasons that the requested waiver had become inutile because it was demanded only after the issuance of the Final Assessment Notice/Formal Letter of Demand (FAN/FLD), such that it could no longer serve the purpose of extending the period for assessment. With all due respect, however, I find that this reasoning overlooks the fact that a waiver under the National Internal Revenue Code (NIRC) of 1997, as amended, is not relevant solely to the period for assessment. Even assuming that the prescriptive period for assessment was no longer at issue, a waiver may likewise have significance with respect to the government's authority to collect taxes and the preservation of the government's remedies under the NIRC of 1997, as amended. Accordingly, it cannot be categorically stated that the requested waiver had already become inutile. More importantly, whether the BIR correctly required the waiver is beside the point. Even if the BIR's insistence on the execution of a waiver were legally erroneous, such circumstance would not convert the Letter into a final denial of the protest. The controversy before us originated from a disputed assessment. Consequently, the applicable jurisdictional provision remains Section 7(a)( I) regarding decisions of the Commissioner in disputed assessments. The "other matters" clause cannot be invoked to avoid the statutory requirement of an appealable decision where the dispute directly involves tax assessments and a pending protest thereof To rule otherwise would effectively render meaningless the requirement that there first be a reviewable decision by the Commissioner. f Absent such decision, there is nothing for the CTA to review in the exercise of its appellate jurisdiction.

CONCURRJNG AND DISSENTING OPINION Commissioner of Internal Revenue vs. Bukidnon !/Electric Cooperative, Inc. (BUSECO; Bukidnon Second Electric Cooperative, Inc. (BUSECO) vs. Commissioner ofInternal Revenue CTA EB Nos. 2997 & 30 I9 (CTA Case Nos. 9761 & 98I9) Page 9 of9 Since no appealable decision existed, the CTA never acquired jurisdiction over the Petition for Review. BUSECO's mistaken characterization of the Letter as a final denial cannot confer jurisdiction upon the Court. ALL TOLD, I vote to DENY the Petitions for Review and AFFIRM the assailed Decision and assailed Resolution. ~A..-. Y. ~~ r-:,l]!!'...,.r.A;) CORA~N G. ERR ES Associate Justice

REPUBLIC OF THE PHILIPPINES COURTOFTAXAPPlliUB QUEZON CITY ENBANC COMMISSIONER OF CTA EB Case Nos. 2997 & INTERNAL REVENUE, 3013 Petitioner, CTA Case Nos. 9761 & 9819 -versus- BUKIDNON II ELECTRIC Members: COOPERATIVE, INC. RINGPIS-LIBAN, P.J., BACORRO-VILLENA, (BUSECO), MODESTO-SAN PEDRO, REYES-FAJARDO, Respondent. CUI-DAVID, FERRER-FLORES, and BUKIDNON SECOND ANGELES, JJ. ELECTRIC COOPERATIVE, Promulgated: INC. (BUSECO), 'dUL 0 7 2026 Petitioner. -versus- COMMISSIONER OF INTERNAL REVENUE (CIR), Respondent, x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x SEPARATE CONCURRING AND DISSENTING OPINION ANGELES, J.: I register my concurrence in the ruling of my esteemed colleague, Associate Justice Lanee S. Cui-David, granting the present appeal in CTA EB No. 3013, and thereby ruling that the Court in Division has jurisdiction over CTA Case No. 9819. Indeed, the Court a quo erred in concluding that the Letter dated February 20, 2018 is not appealable to the Court of Tax Appeals (CTA). Careful examination of such Letter reveals a tenor of finality in the sense that the BIR has already made up its mind with regard to the disputed assessment and will only reconsider if herein petitioner executes a Waiver of the Defense of Prescription under the Statute of Limitations of the National Internal Revenue Code. In Allied Banking

SEPARATE CONCURRING AND DISSENTING OPINION CTA EB Case Nos. 2997 & 3013 (CTA Case Nos. 9761 & 9819) Page 2 of9 Corporation v. Commissioner of Internal Revenue,' the Supreme Court emphasized that the taxpayer cannot be faulted for resorting to judicial remedy when it relied on the language and tenor used by the BIR. It was pronounced therein that the latter is estopped from claiming that he did not intend the Formal Letter of Demand with Assessment Notices to be a final decision, when it led petitioner to believe that it was in fact the final decision on its protest and the only available remedy left was for the taxpayer to appeal to the CTA, viz.: Nevertheless, we cannot blame petitioner for not filing a protest against the Formal Letter of Demand with Assessment Notices since the language used and the tenor of the demand letter indicate that it is the final decision ofthe respondent on the matter. We have time and again reminded the CIR to indicate, in a clear and unequivocal language, whether his action on a disputed assessment constitutes his final determination thereon in order for the taxpayer concerned to determine when his or her right to appeal to the tax court accrues. Viewed in the light of the foregoing, respondent is now estopped from claiming that he did not intend the Formal Letter of Demand v.1th Assessment Notices to be a final decision. XXX XXX XXX As we see it then, petitioner in appealing the Formal Letter of Demand with Assessment Notices to the CTA merely took the cue from respondent. XXX XXX XXX What we are saying in this particular case is that, the Formal Letter of Demand \~1th Assessment Notices which was not administratively protested by the petitioner can be considered a final decision of the CIR appealable to the CTA because the words used, specifically the words "final decision" and "appeal", taken together led petitioner to believe that the Formal Letter of Demand with Assessment Notices was in fact the final decision of the CIR on the letter-protest it filed and that the available remedy was to appeal the same to the CTA. Applying the foregoing, by the tenor and language of the subject Letter, the fact that it contains a statement which provides that the failure to execute a Waiver would render the assessment as final, executory, and demandable, leaves herein petitioner no other recourse but to seek judicial remedy before this Court. Hence, I agree that petitioner timely filed the same, or within twenty-eight (28) days from its receipt thereof. 'G.R. No. 175097, February 5, 2010.

SEPARATE CONCURRING AND DISSENTING OPINION CTA EB Case Nos. 2997 & 3013 (CTA Case Nos. 9761 & 9819) Page 3 of9 Nevertheless, with due respect, I am constrained to submit my reservations as regards the pronouncements of the ponencia, which provide that the issue of whether electric cooperatives remain exempt from income tax is no longer novel. It may be noted that the cases cited therein are mere En Bane cases of this Court that have not ripened into jurisprudence. Respectfully, I submit hereunder the considerations that impel the reasons for my dissent by first enumerating, the relevant legal issuances on this matter, to wit: (1) PD No. 269 decreed by former president Ferdinand E. Marcos in 1973, granting unto NEA cooperatives permanent exemption from paying income taxes. Section 39(a) thereof provides: Section 39� Assistance to Cooperatives; Exemption ji'Om Taxes, Imposts, Duties, Fees; Assistance from the National Power Corporation. Pursuant to the national policy declared in Section 2, the Congress hereby finds and declares that the follov.~ng assistance to cooperative is necessary and appropriate: (a) Prov~ded that it operates in conformity with the purposes and provisions of this Decree, cooperative (t) shall be permanently exempt from paying income taxes, and (2) for a period ending on December 31; of the thirtieth full calendar year after the date of a cooperative's organization or conversion hereunder, or until it shall become completely free of indebtedness incurred by borromng, whichever event first occurs, shall be exempt from the payment (a) of all National Government, local government and municipal taxes and fees, including franchise, filing, recordation, license or permit fees or taxes and any fees, charges, or costs involved in any court or administrative proceeding in which it may be a party, and (b) of all duties or imposts on foreign goods acquired for its operations, the period of such exemption for a new cooperative formed by consolidation, as provided for in Section 29, to begin from as of the date of the beginning of such period for the constituent consolidating cooperative which was most recently organized or converted under this Decree: Provided, That the Board of Administrators shall, after consultation with the Bureau of Internal Revenue, promulgate rules and regulations for the proper implementation of the tax exemptions pro\ided for in this Decree. (Emphasis supplied) (2) PD No. 7762 decreed by former president Marcos in 1975, creating the FIRE for the purpose of determining what subsidies and tax exemptions should be modified, withdrawn, revoked or suspended. Sections 1and 2 thereof read: 'Modifying all laws, acts, decrees, orders and ordinances granting subsidies, exemptions from taxes, duties, fees, imposts and other charges under certain exceptions, and creating a Fiscal Incentives Board, August 24, 1975.

SEPARATE CONCURRING AND DISSENTING OPINION CTA EB Case Nos. 2997 & 3013 (CTA Case Nos. 9761 & 9819) Page 4 of9 SECTION 1. Any and all tax exemption benefits and privileges validly acquired, exercised and granted to individuals, associations, corporations and entities, and all laws, decrees, orders or ordinances giving rise thereto, may now be modified by the Fiscal Incentives Review Board except those embraced and expressly provided hereunder, to wit: 1. Constitutional provisions 2. International comity or treaty 3. National Internal Revenue Code as of its amendment by PD 69 4. Tariff and Customs Code as of its amendment by PD 34 5� Local Tax Code as of its amendment by PD 426 6. Statutory prescription bearing on - a. Export Processing Zone Authority b. BOI-Registered industries c. Multi-national corporations d. Service contracts on oil explorations SECTION 2. A Fiscal Incentives Review Board is hereby created for the purpose of determining what subsidies and tax exemptions should be modified, withdrawn, revoked or suspended, which shall be composed of the following officials: xxx XXX XX (Emphasis supplied) (3) PD No. 19553 decreed by former president Marcos in 1984, withdrawing all exemptions from or any preferential treatment in the payment of duties, taxes, fees, imposts and other charges granted to private business enterprises and/or persons engaged in any economic activity, subject to exceptions; (4) PD No. 20084 decreed by former president Marcos in 1986, restoring certain privileges to cooperatives which are in good standing, subject to conditions; (5) EO No. 93 decreed by former president Corazon C. Aquino in 1986, withdrawing all tax and duty incentives granted to government and private entities, subject to exceptions; and granting unto the FIRB the authority to, among others, restore tax exemptions withdrawn under the said Order, revise the scope and coverage of tax exemptions 3 Withdrawing Duty and Tax Privileges ofPrivate Business Enterprises and/or Persons Engaged in Any Economic Activity, October 10, 1984. 4 Amendments to PD No. 175, as amended by PD No. 1955, January 8, 1986.

SEPARATE CONCURRING AND DISSENTING OPINION CTA EB Case Nos. 2997 & 3013 (CTA Case Nos. 9761 & 9819) Page 5 of9 that may be restored, and impose conditions for the restoration of such tax exemptions. Sections 1, 2 and 5 of the said Order state: SECTION 1. The provisions of any general or special law to the contrary notwithstanding, all tax and duty incentives granted to government and private entities are hereby withdrawn, except: a) those covered by the non-impairment clause of the Constitution; b) those conferred by effective international agreements to which the Government of the Republic of the Philippines is a signatory; c) those enjoyed by enterprises registered with: (i) the Board of Investments pursuant to Presidential Decree No. 1789, as amended; (ii) the Export Processing Zone Authority, pursuant to Presidential Decree No. 66, as amended; (iii) the Philippine Veterans Investment Development Corporation Industrial Authority pursuant to Presidential Decree No. 538, as amended; d) those enjoyed by the copper mining industry pursuant to the provisions of Letter of Instruction No. 1416; e) those conferred under the four basic codes namely: (i) the Tariff and Customs Code, as amended; (ii) the National Internal Revenue Code, as amended; (iii) the Local Tax Code, as amended; (iv) the Real Property Tax Code, as amended; f) those approved by the President upon the recommendation of the Fiscal Incentives Review Board. SECTION 2. The Fiscal Incentives Review Board created under Presidential Decree No. 776, as amended, is hereby authorized to: a) restore tax and/or duty exemptions withdrawn hereunder in whole or in part; b) revise the scope and coverage of tax and/or duty exemption that may be restored: c) impose conditions for the restoration oftax and/or duty exemption; d) prescribe the date or period of effectivity of the restoration of tax and/or duty exemption; e) formulate and submit to the President for approval, a complete system for the grant of subsidies to deserving beneficiaries, in lieu of or in combination with the restoration r

SEPARATE CONCURRING AND DISSENTING OPINION CTA EB Case Nos. 2997 & 3013 (CTA Case Nos. 9761 & 9819) Page 6 of9 of tax and duty exemptions or preferential treatment in taxation, indicating the source of funding therefor, eligible beneficiaries and the terms and conditions for the grant thereof taking into consideration the international commitments of the Philippines and the necessary precautions such that the grant of subsidies does not become the basis for countervailing action. XXX XXX XXX SECTION s. All laws, orders, issuances, rules and regulations or parts thereof inconsistent with this Executive Order are hereby repealed or modified accordingly. (Emphasis supplied) (6) FIRE Resolution No. 24-87 issued by the FIRE in 1987, restoring the tax exemption privileges of electric cooperatives under PD No. 269 effective July 1, 1987, except for income from their electric service operations and other sources which shall remain taxable. The said Resolution is reproduced, to wit: BE IT RESOLVED, AS IT IS HEREBY RESOLVED, That the tax and duty exemption privileges of electric cooperatives granted under the terms and conditions of Presidential Decree No. 269 (Creating the National Electrification Administration as a corporation, prescribing its powers and activities, appropriating the necessary funds therefor and declaring a national policy objective for the total electrification of the Philippines on an area coverage basis; the organization, promotion and development of electric cooperatives to attain the said objective, prescribing terms and conditions for their operations, the repeal of Republic Act No. 6038, and for other purposes), as amended, are restored effective July 1, 1987: Provided, however, That, income from their electric service operations and other sources including the interest income from bank deposits and yield or any other monetary benefit from bank deposits and yield or any other similar arrangements shall remain taxable; Provided, ji.lrther, That the electric cooperatives shall furnish the FIRE on an annual basis or as often as the FIRE may require them to do so, statistical and financial statements of their operations and other information as may be required, for purposes of effective and efficient tax and duty exemption availment. (Emphasis supplied) (7) RA No. 6938 (Cooperative Code of the Philippines)s signed into law by former president Aquino in 1990, as amended by RA No. 9520 (Philippine Cooperative Code of 2008)6 signed into law by former president Gloria Macapagal Arroyo in 2009; and, (8) RA No. 10531 signed into law by former president Benigno S. Aquino III in 2013, amending certain provisions of PD No. 269, and s March 10, 1990. 'February 17, 2009.

SEPARATE CONCURRING AND DISSENTING OPINION CTA EB Case Nos. 2997 & 3013 (CTA Case Nos. 9761 & 9819) Page 70f9 inserting new provisions thereto. Notably, RA No. 10531 is silent as to Section 39(a) of PD No. 269. Sections 13 and 18 of RA No. 10531, however, provide: SECTION 13. A new section, to be designated as Section 32-A, of Presidential Decree No. 269, as amended, is hereby inserted to read as follows: "SEC. 32-A. Incentives of Electric Cooperatives. - Consistent with the declared policy of this Act, electric cooperatives which comply with the financial and operational standards set by the NEA shall enjoy the following incentives: "(a) To be entitled to congressional allocations, grants, subsidies and other financial assistance for rural electrification; "(b) To receive all subsidies, grants and other assistance which shall form part of the donated capital and funds of the electric cooperatives, and as such, it shall not be sold, traded nor divided into share holdings at any time. These donated capital and funds shall be appraised and valued for the sole purpose of determining the equity participation of the members: Provided, That in case of dissolution or conversion of the electric cooperative, said donated capital and funds shall be subject to escheat; and "(c) To avail of the preferential rights granted to cooperatives under Republic Act No. 7160, otherwise known as the 'Local Government Code of 1991', and other related laws. "As a further incentive, the NEA may prioritize the grant of incentives in favor of electric cooperatives that are managed effectively and efficiently and comply consistently with its mandates and directives." XXX XXX XXX SECTION 18. Repealing Clause. -Article 132 (3) of Republic Act No. 9520 and Section 30 of Republic Act No. 9136 (EPIRA) on NEA's authorized capital stock are hereby repealed. Any other provision of law, presidential decree, executive order, or rules and regulations inconsistent v.ith the provisions of this Act or \\ith the rules and regulations issued pursuant thereto are hereby repealed or modified accordingly. A thorough review of the foregoing ultimately reveals that while Section 39(a) ofPD No. 269 indeed granted unto NEA cooperatives tax and duty exemption privileges, EO No. 93 eventually withdrew all such privileges, subject to exceptions, and vested in the FIRE the authority to restore such privileges, to revise the scope and coverage of the

SEPARATE CONCURRING AND DISSENTING OPINION CTA EB Case Nos. 2997 & 3013 (CTA Case Nos. 9761 & 9819) Page 8 of9 privileges to be restored, and to impose conditions for the restoration. Clearly, then, Section 39(a) of PD No. 269 was effectively repealed by EO No. 93. Although Memorandum Order No. 657 suspended the implementation of EO No. 93 on electric cooperatives, such suspension ended on June 30, 1987. Thereafter, the FIRB, by virtue of the authority vested in it by EO No. 93, issued FIRB Resolution No. 24-87 which restored the tax and duty incentives of NEA cooperatives under Section 39(a) of PD No. 269, but revised the scope and coverage of such incentives by excluding income tax exemption on electric service operations and other sources. It bears stressing that the Supreme Court in Maceda v. Macaraig, 8 Jr., categorically declared EO No. 93 as complete in itself and constitutive of a valid delegation of legislative power to the FIRB. Further, in Davao Oriental Electric Cooperative, Inc. v. Province of Davao Oriental,9 the Supreme Court, in resolving the issue of retroactivity ofFIRB Resolution No. 24-87, necessarily recognized the validity of the same. It is true that the above-mentioned cases were promulgated before the enactment of RANo. 10531, or the "National Electrification Administration Reform Act of 2013"; regardless, scrutiny ofthe said law shows that none of the provisions therein either expressly or impliedly amends EO No. 93 in relation to FIRB Resolution No. 24-87, which, in turn, amended Section 39(a) ofPD No. 269. Thus, there is really nothing in Section 32-A of RA No. 10531, nor in any other provision thereof, nor in its Implementing Rules and Regulations,10 which states that the permanent income tax exemption of electric cooperatives under Section 39(a)(1) of PD No. 269, as amended, is retained or restored. Furthermore, there is no irreconcilable inconsistency existing between or among any of the amended and additional provisions incorporated by RA No. 10531 to PD No. 269, and EO No. 93 in relation to FIRB Resolution No. 24-87, so as to warrant the construction of an implied repeal of the latter by the former. In fact, RA No. 10531 makes 'Suspended Implementation ofE.O. No. 93/or Certain Cooperatives, January 21, 1987. s G.R. No. 88291, May 31, 1991. 'G.R. No. 170901, January 20, 2009. w DOE Department Circular No. DC2013-07-0015, July 26, 2013.

SEPARATE CONCURRING AND DISSENTING OPINION CTA EB Case Nos. 2997 & 3013 (CTA Case Nos. 9761 & 9819) Page9of9 no modification whatsoever on Section 39(a) of PD No. 269 relative to income tax exemption on electric service operations and other sources. Section 39(a) of PD No. 269 has already been amended by EO No. 93 and validly qualified by FIRB Resolution No. 24-87, as discussed above. Thus, per Section 39(a) of PD No. 269 as it currently stands, income of electric cooperatives governed by PD No. 269 from electric service operations and other sources including the interest income from bank deposits and yield or any other monetary benefit from bank deposits and yield or any other similar arrangements, are subject to income tax. There being no modification on Section 39(a) of PD No. 269 upon the enactment of RA No. 10531, Section 39(a) of PD No. 269, as amended by EO No. 93 and further qualified by FIRB Resolution No. 24-87, remains in full force and effect. More so, it is a fundamental principle in taxation that tax exemptions must be expressed in the statute in clear language that leaves no doubt as to the intention of the legislature to grant such exemption." Stated differently, tax exemptions should be granted only by clear and unequivocal provision of law on the basis of language too plain to be mistaken.12 Even if it is granted, the exemption must be interpreted in strictissimi juris against the taxpayer and liberally in favor ofthe taxing authority. 13 As the right of taxation is inherent in the State and a prerogative essential to the perpetuity of the government, he who claims an exemption from the common burden must justify his claim by the clearest grant of organic or statute law. 14 In light of the foregoing, while I concur with the result of GRANTING the Petition for Review in CTA EB No. 3013 before this Court, upholding the jurisdiction of the Court a quo over the case, I dissent and maintain my position that electric cooperatives are not exempt from income tax. HENRY~GELES Associate Justice u PLDT v. City of Davao, G.R. Na. 143867, August 22, 2001. "Philippine Long Distance Telephone Co. v. City ofDavao, G.R. No. 143867 (Resolution), March 25,2003. '3 Id. '4 Asiatic Petroleum Co., Ltd. v. Llanes, G.R. No. 25386, October 20, 1926.

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