COMMISSIONER OF INTERNAL REVENUE v. UNITED GRAPHIC PRINTING CORPORATION

REPUBLIC OF THE PHILIPPINES COU RT OF TAX APPEALS QUEZON CITY En Bane COMMISSIONER OF CTAEB No. 3142 INTERNAL REVENUE, (CfA Case No. 10610) Petitioner, Present: -versus- RINGPIS-LIBAN, P.J., BACORRO-VILLENA, MODESTO-SAN PEDRO, REYES-FAJARDO, CU I-DAVID, FERRER-FLORES, and, ANGELES, fl_ P r o m u lgated : MAY 2 6 2026 ~ UNITED GRAPHIC PRINTING CORPORATION, Respo11det1t. X- - - --- -- ---- -- -- ---- ------------ ---------------------X DECISION RINGPIS-LIBAN, J.: Before the Court En Bane is a Petition for Review1 flied by petitioner Commissioner o f Internal Revenue (CIR) against respondent United Graphic Printing Corporation (UGPC) within an extended period2 granted by the Court,3 seeking to set aside the Decision4 dated October 31, 2024 (Assailed Division D ecision) and the Resolution5 dated April 24, 2025 (Assailed Division Resolution) of the Court's Third Division in CTA Case o. 10610. The dispositive portion o f the Assailed Division D ecision reads: "WHEREFORE, in light of the foregoing considerations, FDDV the present Petitionfor Review is GRANTED. Accordingly, the PAN dated February 12,2015, FLD/FAN dated March 31,2015, 1 Rollo, pp. 9-39. 2 /d., pp. 1-6. 3 /d., p. 8. 4 ld., pp. 41-62. 5 /d., pp. 64-67.

DECISION CTA EB No. 3142 (CTA Case No. 10610) dated February 14, 2017, and Decision dated June 14, 2021 are CANCELLED and SET ASIDE. SO ORDERED."6 Respondent C:IH. thereafter filed a Motion for Reconsideration, which the Third Division denied in the Assailed Division Resolution. The dispositive portion thereof reads: "WHEREFORE, respondent's 1vfotionfor Reconsideration (Re: De,isioll promulgated on 31 October 2024) is hereby DENIED for lack of merit. SO ORDERED."7 The Parties Petitioner is the Commissioner of Internal Revenue (CIR), the duly appointed head of the Bureau of Internal Revenue (BIR) with authority, among others, to assess and collect all national internal revenue taxes, fees, and charges, and to enforce all forfeitures, penalties, and fines connected therewith, with principal office address at the BIR National Office Building, Senator Miriam P. Defensor-Santiago :\venue (formerly Agham Road), Diliman, Quezon City8 Respondent United Graphic Printing Corporation (UGPC) is a domestic corporation duly organized and existing under and by virtue of the laws of the Republic of the Philippines, with principal office address at UGEC Corp. Center, Dasmariiias Technopark, Governor's Drive, Dasmarinas, Cavite.9 The Facts The facts, as found by the Third Division and as culled from the records, are as follows: On 1\Iarch 27, 2012, Regional Director Jose N. Tan (RD Tan) issued Letter of :\uthority (LO"\) (SN: eL\201000080829 / LOA-54A-2012- 541?' 00000052), authorizing Revenue Officer (RO) Alfred .r\matorio and Group Supervisor Nena Joyce Geston of Revenue District Office (RDO) No. 6 Jd. at p. 55. 7 !d. at p. 66. 8 ld. at p. 10. 9 Docket, CTA Case No. 10610, Par. l.a., Facts, Joint Stipulation of Facts and Issues (JSFI), p. 358.

DECISION CTA EB No. 3142 (CTA Case No. 10610) Trece :\Iartires City, South Cavite, to examine UGPC's books of accounts and other accounting records for all internal revenue taxes for the period January 1, 2010 to December 31, 2010_~~1 On ,\pril 3, 2015, 11 UGPC received Ill Tan's Preliminary Assessment Notice (P,\N) dated February 12, 2015, with attached Details of Discrepancies, containing the proposed deficiency Income Tax (n), Value-Added Tax (VAT), and Expanded \X/ithholding Tax (E\'\1T) assessments against it for Taxable Year (T'(I 2010, in the total sum of !'23,792,025.44. 12 On ,\pril10, 2015,13 UGPC received I l l Tan's Formal Letter of Demand (FLD) dated i\Iarch 31, 2015, 1�' with .Assessment Notices (FLD/F,\N), 15 assessing it for deficiency IT, VAT, and EWT, in the total amount of !'24,030,385.36. 16 On i\Iay 11, 2015, UGPC filed its administrative protest on RD Tan's FLD /FAN through a letter dated May 8, 2015. 17 On ,\pril 6, 2017, UGPC received 18 Regional Director Romulo L. Aguila, Jr. (RD c\guila Jr.)'s Final Decision on Disputed 1\ssessment (FDD1\) dated February 14, 2017, denying its administrative protest on the FLD/F1\N. Accordingly, the deficiency IT, V1\T, and E\VT assessments issued agamst UGPC forTY 2010, in the total sum ofi"24,030,385.36, were uphcld. 19 Onl\Iay 4, 2017, UGPC filed a Letter dated May 2, 2017, impugning RD },guilaJr.'s FDDA before the CIR.20 On July 9, 2021, UGPC: received the CIR's Decision dated june 14,2021, sustaining the deficiency taxes embodied in RD ,\guila Jr.'s FDDA. Additionally, the ClH. demanded UGPC to pay said taxes, plus increments that have accrued thereon until the actual date of payment21 On c\ugust 9, 2021, UGPC: filed through electronic mail its Petition for ' ' y Review docketed as CL\ Case No. 10610, followed bv a hard copv thereof ftled 10 BIR Records (Exhibit "R-13"), Folder 1, Exhibit "R-1," p. 7. 11 /d. at Note 9, Exhibit "P-1" (Q&A No. 40), p. 227. 12 /d. at Note 10, Exhibit "R-13", Folder 1, Exhibits "P-32," "R-6," and "R-6-1," pp. 118-121. 13 /d. at Note 9, Exhibit "P-1" (Q&A Nos. 42 and 54), pp. 228 and 231, respectively. 14 /d. at Note 10, (Exhibit "R-13"), Folder 1, Exhibits "P-36" and "P-36-1," and "R-7" and "R-7-1," pp. 122- 125. 15 /d. at Note 9, Exhibits "P-33," "P-34," and "P-35," pp. 458-460; BIR Records (Exhibit "R-13"), Folder 1, Exhibits "R-8," "R-8-1," and "R-8-2," pp. 126-127 and unpaginated, respectively. 16 Jd. 17 /d. at Note 10, (Exhibit "R-13"), Exhibits "P-37" and "P-37-1," Folder 1, pp. 133-140. 18 Jd., per UGPC's Letter dated May 2, 2017, addressed to the CIR, pp. 440-447. 19 /d., Exhibit "R-9," Folder 1, p. 400 (consisting of 3 pages). 20 Supra note 18. 21 /d. at Note 9, Exhibit "P-45," pp. 47-51.

DECISION CTA EB No. 3142 (CTA Case No. 10610) on October 21, 2021. Said case was initially raffled before the Court's First Division."" On I\lay 6, 2022, the C:IH. filed his Ans,verD On September 8, 2022, pre- trial conference was held. There, the parties were directed to submit their Joint Stipulation of Facts and Issues QSFI), embodying the following issues: (1) whether the Court has jurisdiction over the case; and (2) whether UGPC: is liable for deficiency IT, VAT, and E\'VT covering TY 2010. Their respective schedule for the marking of documents and presentation of evidence were likewise set24 On October 10, 2022, the parties filed their JSFI,"5 which was approved via Resolution"" dated October 18, 2022. This led to the issuance"7 of the Pre- Trial Order on December 16, 2022. Trial followed. On September 26,2023, CL\ Case No. 10610 was submitted for decision, considering: (1) UGPC's I\.Iemorandum filed on August 22, 2023;"8 and (2) the CUZ's I\.Ianifestation, stating that he is adopting his Answer as Memorandum, filed on September 14, 2023. 29 On October 31, 2024, the Third Division rendered the 1\ssailed Division Decision granting UGPC's Petition for Revie1v, and cancelling and setting aside the P,\N dated February 12,2015, the FLD/E\~ dated March 31, 2015, the FDn\ dated February 14, 2017, and the CIR Decision dated June 14, 2021.10 On November 25, 2024, the CIR filed his lviotion for Reconsideration." The Third Division denied the same through the Assailed Division Resolution dated 1\pril 24, 2025~ 22 /d. at pp. 6-41. 23 !d. at pp. 257-279. "!d. at pp. 341-343, Order dated September 8, 2022. 25 /d. at pp. 358-360. 26 !d. at p. 365. 27 !d. at pp. 471-489. 28 !d. at pp. 564-582. 29 td. at pp. 584-586. 30 fd. at Note 4. 31 !d. at Note 7. 32 !d. at NoteS.

DECISION CTA EB No. 3142 (CTA Case No. 10610) Proceedings Before the Court En Bane 1\ggrieved by the Assailed Division Decision and Assailed Division Resolution, the CIR ftled a Motion for Extension of Time to File Petition for Revicw33 on ;\Jay 8, 2025. The Court granted the same through a Minute Resolution dated !'day 9, 2025, giving the em. a non-extendible period of fifteen (15) days from i\lay 10, 2025, or until May 25, 2025, within which to ftle his Petition for Rcview3 �1 On May 23, 2025, the em. filed the instant Petition for Review35 before the Court E11 J3allt, docketed as C:TA EB No. 3142. Through a Minute Resolution dated June 13, 2025, the Court directed UGPC to file its Comment on the Petition for Review, not a motion to dismiss, within ten (1 0) days from notice36 On July 7, 2025, UGPC filed its Comment (to CIR Petition for Review). 37 Through a l\Iinute Resolution dated August 27, 2025, the Court noted UCPC's Comment and referred the case to the Philippine Iviediation Center- Court of Tax "\ppeals (Pi\IC:-CL\) for mediation, directing the parties to personally appear before the l\Icdiation Staff 1\ssistant on September 17, 2025 38 On September 18,2025, the PMC-C:TA filed a PMC-CL\ Form 6- No "-\greement to Mediate, stating that the parties decided not to have their case mediated 39 Through a Minute Resolution dated October 14, 2025, the Court noted the No Agreement to i\Icdiate and submitted the instant Petition for Review for decision.�'" Assignment of Errors Petitioner C:IH. claims that the Third Division erred in ruling that it has jurisdiction over the instant case. The C:IR maintains that the assessment ~ 33 id. at Note 2. 34 /d. at Note 3. 35 /d. at Note 1. 36 /d., p. 69. 37 Jd., pp. 71-86, Comment (to CIR Petition for Review) dated July 4, 2025, filed via LBC on July 7, 2025. 38 /d., p. 89, Minute Resolution dated August 27, 2025. 39 /d., p. 90, PMC-CTA Form 6- No Agreement to Mediate dated September 17, 2025, filed September 18, 2025. 40 /d., p. 91, Minute Resolution dated October 14, 2025.

DECISION CTA EB No. 3142 (CTA Case No. 10610) deficiency taxes against UGPC is already final, executory, and demandable, since UGPC allegedly failed to file a valid administrative protest on the FLD/E-\N in accordance with the requirements of Revenue Regulations (RR) No. 18-2013, particularly its failure to specify the newly discovered or additional evidence it intended to present, as required for a request for reinvestigation. Petitioner CIR further claims that the Third Division erred in ruling that the C:IR's right to assess LJGPC for deficiency IT, VXf, and EWT for 1Y 2010 has already prescribed. The C:IR insists that the applicable prescriptive period is the ten (1 0)-vear extraordinary period under Section 222(a) of the 1997 National Internal Revenue Code ('\iiRC), as amended, in view of UGPC's alleged substantial underdeclaration of taxable sales amounting to 48.34% of its declared sales in its vxr returns, which constitutes a false return within the meaning of the law and renders the ordinary three (3)-year prescriptive period inapplicable. Finally, petitioner C:IR claims that the Third Division erred in ruling that UGPC's right to due process was violated by the issuance of the FLD/FAN within the fifteen (15)-day period within which UGPC could have responded to the Pc\N. The C:IR argues that a reply to the PAN is merely optional and not mandatory under Revenue l\Iemorandum Order (RMO) No. 26-2016, and that any overlap in the issuance of the PAN and FLD/F1\N does not amount to a denial of due process that would warrant the voiding of the subject deficiency tax assessments, UGPC: having been accorded ample opportunity to be heard throughout the entire audit and assessment proceedings. The Arguments of the Parties Petitioner CIR's Arguments On the question of jurisdiction, the em. argues that UGPC failed to file a valid administrative protest against the FLD/Fc\N in accordance with the form and manner prescribed by Section 228 of the 1997 NIRC, as amended, in relation to Section 3.1.4 of RR No. 18-2013. The CIR contends that UGPC's protest letter dated l\Iay 8, 2015, which merely reserved its right to submit additional documents within sixty (60) days, failed to specify the newly discovered or additional evidence it intended to present, as expressly required for a request for reinvestigation. Invoking Conmzissioner of Inter11a! Revenm v. Court of Tax Appeals- Third Division and CitymjJeJ; Imwporated11 (Citysupet), the CIR submits that without a valid protest, the FLD /F;\0! never ripened into a disputed assessment, rendering the assessment final, executory, and demandable, and depriving the Court of jurisdictioy 41 G.R. No. 239464, May 10, 2021.

DECISION CTA EB No. 3142 (CTA Case No. 10610) On the issue of prescription, the CIR maintains that the ordinaty three (3)-year prescriptive period under Section 203 of the 1997 NIRC, as amended, does not apply. The C:IR insists that UGPC flied false returns within the meaning of Section 222(a) of the same Code, pointing to a discrepancy of 48.34% between UGPC's declared sales in its VAT returns and the sales as determined through computerized matching of data from third-party sources, constituting primafacie evidence of a false return under Section 248(B), which triggers the ten (10)-year extraordinary prescriptive period:1c On the matter of due process, the C:IR argues that UGPC: was never deprived of its right to be heard. The CIR points out that under RiviO No. 26- 2016, a protest against the PAN is merely optional, and that the PLD/FAN may be issued fifteen (15) days from the taxpayer's receipt of the PAN, whether or not the P~'\.N was protested. The C:IR further contends that even assuming there was an overlap in the issuance of the PAN and the FLD /F,\N, the same did not result in prejudice to UGPC:, which was still able to file a protest against the FLD/FAN and avail of all administrative and judicial remedies.43 Respondent UGPC's Arguments UGPC: counters that the Third Division correcdy ruled that it has jurisdiction over C:TA Case No. 10610. UGPC: maintains that its protest letter dated May 8, 2015, timely filed on ;\Iay 11, 2015, constituted a valid administrative protest. Unlike the protest letter in CityJI!pet~ UGPC's protest letter expressly referred to the date of issuance and receipt of the FLD /FAN, cited the legal and factual grounds for its protest, and was followed by the actual submission of supporting documents. UGPC: also points out that the BIR itself treated the protest as valid by issuing an FDD.c\ thereon."" On prescription, UGPC: submits that the Third Division corrccdy ruled that the em.\ right to assess had already prescribed under the ordinary three (3)- year period. UCPC: argues that the C:TR's reliance on Section 222(a) is misplaced, as the em. failed to establish with clear and convincing proof the existence of a false or fraudulent return, as required by iV!cdonald's Philippine Realty C01poration v. Commissioner of Intema! Revenm.~5 The discrepancy was sourced from unsubstantiated computerized matching of third-party data.46 Finally, on due process, UGPC: maintains that the Third Division correctly ruled that the CIR grossly violated its right to due process. The FLD/FAN dated March 31, 2015 was issued three (3) days before UGPC: received the PAN on ~\pril 3, 2015, and was served on UGPC: on c\pril 10, 2015 -within the fifteen (15)-day period for UGPC: to respond to the P,\N, in clear violation of RR N~ "!d. at Note 1. 43 !d. at Note 1, pp. 25-30. "!d. at Note 37, pp. 72-76. 45 G.R. No. 247737, August 8, 2023. 46 /d.at Note 37, pp. 77-80.

DECISION CTA EB No. 3142 (CTA Case No. 10610) 12-99, as amended. UGPC invokes Commissioner ofIntenzal Revenue v. Avon Products kfan!!faduring, l!u:." Commi.r.riomr of Internal Revenue !J. Yumex Philippines� C01poration, 18 and Prime Steel ;Hi!!, lm'Olporated v. CommiJSioller oflnternal Revenm. 19 The Ruling of the Court The Third Division correctly ruled that it has jurisdiction over CTA Case No. 10610; the CIR's arguments before this Court En Bane are a mere rehash of the same grounds already thoroughly considered and correctly rejected by the Court in Division. The Petition for Review must be DENIED. "\t the threshold, the Court En Bant addresses the CIR's argument that the Third Division lacked jurisdiction over CTA Case No. 10610 on the ground that UGPC: allegedly failed to file a valid administrative protest, thereby preventing the fLD/E\N from ripening into a disputed assessment cognizable by this Court. The C:IR's arguments before this Court En Bant arc a mere rehash of the same grounds already thoroughly considered and correctly rejected by the Court in Division. The Third Division exhaustively passed upon the validity ofUGPC's administrative protest and correctly found the same to be a vahd request for reinvestigation, sufficient to constitute a disputed assessment within the jurisdiction of this Court. \'V'ell-settled is the rule that for the CL\ to acquire jurisdiction over a case involving a disputed assessment, there must be: (1) a decision of the CIR or his duly authorized representative; and (2) the decision must involve a disputed assessment, meaning the taxpayer must have validly protested the assessment in accordance with the requirements of Section 228 of the 1997 NIRC, as amended, and its implementing regulations. 5� Section 228 of the 1997 NIRC, as amended, provides that an assessment may be protested administratively by filing a request for reconsideration or reinvestigation within thirty (30) days from receipt of the assessment, in such form and manner as may be prescribed by implementing rules and regulations. Section 3.1.4 ofRR No. 18-2013 further requires that the taxpayer's protest s t a r 47 G.R. Nos. 201398-99 and 201418-19, October 3, 2018. 48 G.R. No. 222476, May 5, 2021 49 G.R. No. 249153, September 12, 2022. �5 Commissioner of Internal Revenue v. Liquigaz Philippines Corporation, G.R. No. 215534, April18, 2016.

DECISION CTA EB No. 3142 (CTA Case No. 10610) (i) the nature of the protest, whether reconsideration or reinvestigation, specif},ing newly discovered or additional evidence he intends to present if it is a request for reinvestigation; (ii) the date of the assessment notice; and (iii) the applicable law, rules and regulations, or jurisprudence on which his protest is based. 51 The CIR's reliance on Citympet52 is misplaced. The protest therein was void because it utterly failed to state the assessment notice's date, the applicable law, rules and regulations, or jurisprudence on which the protest was based53 The protest letter ofUGPC dated May 8, 2015 stands in stark contrast to the deficient protest in Citympet: UGPC's protest letter expressly referred to the date of issuance and receipt of the FLD/F,\N, raised specific legal and factual grounds - including the prescription of the assessments and the lack of legal and factual basis for the 50% surcharge - and undertook to submit additional supporting documents within sixty (60) days. Said documents were indeed subsequently submitted under letters dated c\ugust 6, 2015, September 22, 2015, October 12,2015, November 6, 2015,January 27,2016, and june 9, 2016 5 " Critically, the BIR itself treated UGPC's protest as valid. RD Tan directed UGPC: to submit all relevant documents in support thereof. RD ,\.guilajr. issued an FDD1\ addressing the merits of UGPC's protest The C:Il~'s own Decision dated June 14, 2021 likewise resolved the case on the merits. It would be the height of incongruity to allow the C:IR to now claim, after having entertained and decided the protest on its merits throughout the administrative proceedings, that no valid protest was ever filed 5 5 Basic is the rule that the nature of a pleading is determined not by the label given to it, but by the allegations therein and the relief prayed for. As the Supreme Court held in Comminiomr ofl11tema! RetJetl!te v. WJeth Suaco Laborat01ies, ]m: attd tbe Co11rl of Ta.'.' Appea!J/6 protest letters need not categorically use the words "reinvestigation" and "reconsideration" to be treated as such; what matters is the substance of the protest and the conduct of the parties subsequent thereto. It bears stressing that jurisdiction over the subject matter is determined by the allegations of the complaint or petition and the character of the relief sought. 5 The jurisdictional requirements under Sections 7(a)(1) and 11 ~ c 51 Section 3.1.4, Revenue Regulations No. 18-2013. 52 Supra. 53/d. 5' td. at Note 9, Vol. 1, Exhibit "AS," p. 156; BIR Records (Exhibit "R-13"), Exhibits "P-39" to "P-44-1," Folder 1, pp. 367-372. 55 !d., Exhibit "P-45," pp. 47-51. 56 G.R. No. 76281, September 30, 1991. 57 Commissioner of Internal Revenue v. Uquigaz Philippines Corporation, supra note 50.

DECISION CTA EB No. 3142 (CTA Case No. 10610) Republic ,\ct (RA) No. 1125,58 as amended by RA No. 9282,59 are clearly satisfied. The Third Division therefore correctly took cognizance of CT.-\ Case No. 10610. The Third Division correctly ruled that the CIR's right to assess UGPC for deficiency IT, VAT, and EWT for TY 2010 has already prescribed. Having upheld the Third Division's ruling on jurisdiction, the Court En Bane now resolves the second assigned error- whether the CIR's right to assess CGPC for deficiency IT, VXf, and EWT covering TY 2010 has prescribed. The Court rules in the affirmative. The CIR's right to assess had already prescribed when the PAN and FLD/FAN were issued in 2015. \'Yell-settled is the rule that internal revenue taxes must be assessed within three (3) years from the last day prescribed by law for the filing of the return, or from the actual date of filing, whichever is later, pursuant to Section 203 of the 1997 NIRC, as amendedY' .�\pplying the foregoing to the instant case, the Annual IT Return forTY 2010 was due on .\pril15, 2011, placing the last day to assess on April15, 2014. The Quarterlv V.-\T Returns for 'lY 2010 were due on ,\pril26, 2010,July 26, 2010, October 26, 2010, and January 25, 2011, placing the corresponding last days to assess on ,\pril 26, 2013, July 26, 2013, October 26, 2013, and January 25, 2014, respectively. The EWT Returns forTY 2010 were due on various dates from February 10, 2010 to January 15, 2011, placing the last days to assess from February 10, 2013 to January 17, 2014.61 Yet the P.-\N dated February 12, 2015 and the FLD/FAN dated C\Iarch 31, 2015 were not received bv UGPC until .-\pril 3, 2015 and April 10, 2015, respectively- well beyond the three (3)-year prescriptive period for all three tax types. The C:IH. seeks refuge in Section 222(a) of the 1997 NIRC:, as amended, arguing that UGPC: filed false returns evidenced by a 48.34% discrepancy between its declared VAT sales and sales derived from computerized matchiy 58 An Act Creating the Court of Tax Appeals. 59 An Act Expanding the Jurisdiction of the Court ofTax 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. 60 Section 203, National Internal Revenue Code of 1997, as amended. 51 /d. at Note 4, pp. 51-52.

DECISION CTA EB No. 3142 (CTA Case No. 10610) of third-party data, constitutingpnittafade evidence of a false return under Section 248(B) of the same Code.62 The Court is not persuaded. It bears stressing that the invocation of the ten (1 0)-year extraordinary prescriptive period is the exception, not the rule. As the Supreme Court categorically held in Mcdonald'J Philippine Realty Cotporation v. Comminiomr of Internal Reve1111e/3 the tax authorities bear the burden of establishing, with clear and convincing proof, the existence of grounds warranting the application of the 10-year period.6" The C:IR failed to discharge this burden. The alleged discrepancy was derived solely from "computerized matching on information/data provided by third party sources,"6' without any corroborating evidence to establish the accuracy or completeness of the third-party data. The CIR did not adduce independent evidence to substantiate the alleged underdeclaration, nor identify which specific transactions were omitted or misreported. In the absence of clear and convincing proof of falsit:v or fraud, the discrepancy alone docs not suffice to activate the ten (1 0)-year extraordinary prescriptive period. The mere imposition of a 50% surcharge in the FLD/FAN likewise docs not establish fraud or falsity. The CIR failed to identify which of the three (3) instances under Section 248(B) - willful neglect to file, filing of a false return, or filing of a fraudulent return- was being applied against UGPC:. 66 Tax returns arc presumed to have been prepared and filed in good faith, in the ordinary course of business, and in compliance with applicable rules and regulations. FalsitY and fraud cannot be presumed; they must be proven with clear and convincing cvidencc67 This the CIR has failed to do. Consequently, the ordinary three (3)-year prescriptive period under Section 203 of the 1997 NIRC, as amended, applies. Since the PAN and FLD/F_\N were received by UGPC only in 1\pril 2015, long after the prescriptive periods for deficiency IT, V1\T, and EWT forTY 2010 had expired, the subject assessments arc void for having been issued beyond the period allowed by law. 1\ void assessment bears no valid fruit. 68 rigy The Third Division correctly ruled that the CIR violated UGPC's 52 /d. at Note 60, Section 222(a), National Internal Revenue Code of 1997, as amended; Section 248(B). 53 G.R. No. 247737, August 8, 2023. 64/d. 55 ld. at Note 1, p. 20, citing the Details of Discrepancy appended to the FLD. 65 /d. at Note 4, p. 52. 57 Mcdonald's Philippine Realty Corporation v. Commissioner of Internal Revenue, supra note 63. 68 Commissioner of Internal Revenue v. Avon Products Manufacturing, Inc., G.R. Nos. 201398-99 and 201418-19, October 3, 2018.

DECISION CTA EB No. 3142 (CTA Case No. 10610) to due process in the issuance of the FLD/FAN. The Court En Bandikewise affirms the Third Division's ruling on the third assigned error. Independently of the finding on prescription, the FLD /PAN is also void for having been issued in violation of UGPC's right to due process. It is not disputed that the PAN dated February. 12,2015 was received bv ' UGPC only on ,\pril3, 2015. The FLD/FAN dated March 31, 2015 was served upon UGPC on ,\pril 10, 2015- a mere seven (7) days after UGPC received the PAN, and squarely \vithin the fifteen (15)-day period within which UGPC was entitled to respond to the PAN under Paragraph 3.1.1 ofRR No. 12-99, as amended bv RR No. 18-2013 69 Paragraph 3.1.1 of RR No. 12-99, as amended, is unequivocal: the FLD /E-\N shall be issued only after the taxpayer fails to respond within fifteen (15) days from receipt of the P,\N. The FLD/E-\N in this case was issued on March 31, 2015- three (3) days before UGPC even received the PAN- meaning the CIR had no intention of considering any explanation or response from UGPC: before issuing the FLD/FAN.70 The CIR's reliance on Ri\10 1\'o. 26-2016 to argue that a reply to the PAN is merely optional is unavailing. \'Vhilc the taxpayer's response to the PAN is not compulsory, this does not license the CIH. to issue the FLD/FAN before the taxpayer has even had the opportunity to respond. ,\s the Supreme Court held in CommiJJiomr ofIntemal Revenm v. Avon Produd.r 1V1amrfadming, Inc71 "'fax asscssrncnts issued in violation of the due process rights of a taxpayer arc null and void. \'Vlule the government has an interest in the S\v:ift collection of taxes, the Bureau of Internal Revenue and its officers and agents cannot be overreaching in their efforts, but must perform their duties in accordance with law, with their own rules of procedure, and always with regard to the basic tenets of due process." This doctrine was reiterated and amplified in Commi.r.riomr ofInternal Revemte v. Yumex Philippine.r Cotporation, "l where the Supreme Court ruled that the BIIZ's failure to afford the taxpayer the opportututy to respond to the P,\N before issuing the FLD /E\N constitutes a violation of due process that voids the assessment, even where the taxpayer was later able to file a protest against the FJ,D/F,\N~ 69 Revenue Regulations No. 12-99, as amended by Revenue Regulations No. 18-2013, paragraph 3.1.1. 70 !d. at Note 4, pp. 53-55. "G.R. Nos. 201398-99 and 201418-19, October 3, 2018. 72 G.R. No. 222476, May 5, 2021. 73/d.

DECISION CTA EB No. 3142 (CTA Case No. 10610) The same principle was applied in Pn!m Steel ALiff, Inrorporated v. CommiSJiofler of Intema! Revenue,-+ where the Supreme Court held that "[w]ell- settled is the rule that an assessment that fails to strictly comply with the due process requirements set forth in Section 228 of the Tax Code and Revenue Regulations No. 12-99 is void and produces no effect."75 The CIR's argument that UGPC was accorded due process because it was ultimately able to ftle a protest and elevate the matter to this Court misses the point entirely. The question is not whether UGPC was ultimately heard, but whether the CIH. complied with the prescribed procedure. The CIR's failure to observe the prescribed sequence rendered the FLD/FAN, and all proceedings premised thereon, null and void76 In fine, the Court En Bane finds no reversible error in the Assailed Division Decision and ,\ssailed Division Resolution. The subject assessments for deficiency IT, VXf, and EWT forTY 2010 arc void on two independent grounds: (1) they were issued beyond the ordinary three (3)-year prescriptive period under Section 203 of the 1997 NIRC, as amended, the CIR having failed to establish with clear and convincing proof the existence of a false or fraudulent return warranting the application of the extraordinary ten (1 0)-year period; and (2) the FLD/FAN was issued in patent violation ofUGPC's right to due process, the CIH. having issued the PLD/F1\N before UGPC even received the PAN, depriving it of the opportunity to respond thereto. A void assessment bears no valid fruit. The Petition for Review must be denied for lack of merit. WHEREFORE, premises considered, the Petition for Review filed by petitioner Commissioner of Internal Revenue is hereby DENIED for lack of merit. The Decision dated October 31,2024 and the Resolution dated April24, 2025 of the Court's Third Division in CL\ Case No. 10610 are herebv AFFIRMED in toto. SO ORDERED. L.~'- MA. BELEN M. RINGPIS-LIBAN Presiding ]ustire WE CONCUR: JEAN MARI~~O-VILLENA {:!jod~te Justice 74 G.R. No. 249153, September 12, 2022. 75 ld. 76 Commissioner of Internal Revenue v. Avon Products Manufacturing, Inc., supra note 72.

DECISION CTA EB No. 3142 (CTA Case No. 10610) MARIA ~bF.~-F~ MARIAN IvY'F. REYES-FAJARDO Anociate Justire /mM;t{/;nfJ LANEE S. CU1-D~D Assodate Justice co~!.�~~~s Anoriate Justire HENRY~!GELES AJJwiate Justire CERTIFICATION Pursuant to "\rticle YIII, Section 13 of the Constitution, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court. Ill..,. -t-__ h. ._/ I - - - MA. BELEN M. RINGPIS-LIBAN Presiding Justire