Powernet Systems Corp. vs. Commissioner of Internal Revenue

DECISION

RINGPIS-LIBAN, J.

THE CASE

This Petition for Review flied on October 23, 2020 prays for the cancellation of the Final Decision on Disputed Assessment (FDDA) No. 040-2018-B07 4-15.¹

THE PARTIES

Petitioner Powernet Systems Corp. is a domestic corporation duly organized under and by virtue of Philippine law, with principal office address at 88 New York Street comer Cambridge Street, Cubao, Quezon City. 2 Respondent Commissioner of Internal Revenue is the duly mandated person authorized to implement the National Internal Revenue Code (NIRC), including, among others, the power to decide disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties imposed in relation thereto, or other matters arising under the NIRC or other laws administered by the Bureau of Internal Revenue (BIR). He may be served with summons, .

/V

1 Summary of rhe Case, Pre-Trial O rder dared December 2, 2021, Docker, p. 307. 2 Par. 1, Facts Stipulated by Both Parries, Joint Stip11lation f!{Fad.r and lsmu QSFI), Docker, p. 299.

Page 2 of 23

DECISIO';

CT.-\ Case :\o. 10383 -------------------------------------------- pleadings, and other processes at his office at the Litigation Division, Room 703 of the BIR National Office Building, BIR Road, Diliman, Quezon City. 3

THE FACTS OF THE CASE

The BIR issued the LO_\ No. LOA-040-2017-00000134 I SN: eLA201500077042 dated i\Iay 23, 2017," authorizing Revenue Officer (RO) Helenita Villablanca I Group Supervisor Judith Arcinue of Revenue District No. 040 - Cubao, to examine petitioner's books of accounts and other accounting records for all internal revenue taxes, for the period from January 1, 2015 to December 31,2015.

Respondent issued the Preliminary Assmment Notia (PAN) on November 26, 2018, 5 informing petitioner that after investigation, there has been found due from the latter deficiency income tax, value-added tax (VXf), expanded withholding tax (E\Vl), and withholding tax on compensation (WTC), including interests, in the aggregate amount of l"15, 150,907.50, for taxable year 2015. Subsequently, respondent issued the Fonnai Letter of Demand (FLD) dated December 14, 2018, with Detai!.r of Discrepamies and Assessment Notices,6 assessing petitioner of deficiency income tax, V _-\ T, E\\'/T, and \v'TC, including interests, for the same taxable year, in the aggregate amount of 1"15,245,957.55, summarized as follows:

Basic Tax

Interest

Total

Income tax

I"

6,849 ,450. 76 I" 3,160,880.78 f' 10,010,331.54

\'AT

3,228,287.05 1,633,071.01 4,861,358.06

EWT

171,306.16 87,596.11 258,902.27

WTC

76,333.25 39,032.43 115,365.68

Total

1'10,325,377 .22 P4,920,580.33 P15,245,957.55 In the FLD dated December 14, 2018, with attached Details ofDiscrepanaeJ and Assessment Notias, and received by petitioner on even date,7 respondent assessed petitioner with deficiency income tax, value-added tax (VAT), expanded withholding tax (EWT), and withholding tax on compensation (WTC) in the aggregate amount of 1"15,245,957 -;y 5 Par. 3, Facts Stipulated by Both Parties, JSFI, Docket, pp. 299 to 300. ~Exhibit "R-2" [BIR Records (Exhiblt ''R-1", p. 1)], ns-;\-\·is par 5, Facts Sripulated by Both Parties, JSFI, Docket, p- 300.

5 Exhibit "P-2" (Docker, pp. 352 ro 35"7) and Exhibit "R-5" fBIR Records (Exhibit "R-1'', pp. 312 to 311)], \·is- ;l-\'is par. 6, Facts Stipulared b~· Borh Parrics,JSFI, Docker, p. 3UU. r, Exhibits "P-3", "P-3-:\", "P-3-B", "P-3-C", and "P-3-D" (Docket, pp. 358 to 367) and Exhibits "R-6", "R-6- _-\", "R-6-B", "R-6-C", "R-6-D", [BIR Records (Exhibir "R-1 ", pp. 335 to 344)], vis-<1-vis par. 7, Facts Stipulated by Both Parties,JSFI, Docker, p . .300. ~ Exhibit "P-3" and "P-3-_-\" ro "P-.3-D" for petitioner and Exhibits "R-6" and ''R-6-.-\" ro "R-6-D" for respondent, Docket, pp. 358 to 36~ and -J.~~ to -l-86, respectively

Page 3 of 23

DEC!SI00:

CT~-\ Case No. 10383 Petitioner then filed a request for reconsideration with the BIR on December 27, 2018.8 The BIR issued the assailed FDD.-\, which is dated September 4, 2020 and was received by petitioner of September 23,2020 9 In said FDDA, with attached Details of DiHrepamies and Assessment i'\otices, 10 the assessments against petitioner were upheld, with adjustments on the interest, which then aggregated to P17,439,858.29, summarized as follows:

Basic Tax

Interest

Total

Incmne tax !"

6,849,450.76 !" 4,617,843.40 !" 11,467,294.16

Vi\T

3,228,287.05 2,319,767.47 5,548,054.52

EWT

171,306.16 124,035.04 295,341.20

WTC

76,33325 52,835.16 129,168.41

Total

1"10,325,377 .22 1"7 ,114,481.07 1"17 ,439,858.29 Petitioner filed the present Petitio!lfor Review on October 23, 2020. 11 \X'ithin the extended time granted by the Court, 1' respondent posted his Amwer on January 11, 2021, 13 interposing the following special and affirmative defenses, to wit:

1.

The P"\N, FLD, and FDD.\ sufficiently provided the factual and legal basis for the assessments;

2.

The FDD_\ provided a definite tax liability due, and clearly specified the total amount due for every assessment item and the due date for payment on October 5, 2020. Hence, there is no violation of petitioner's right to due process; 3.

No supporting documents were submitted by petiuoner to prove its allegations in the protest. Thus, the assessment was reiterated in the FDDA.; and 4.

Assessments are prima facie presumed correct and made in good faith. The taxpayer has the duty of proving othetwise. In the absence of proof of any irregularities in the performance of official duties, and assessment will not be disturb/ H Exhibit "P-4", Docket, pp. 368 to 37 1; and par. 3, Facts Stipulated by Borh Parties, JSFI, Docktt, pp. 299 to 300.

~ Pars. -1- and 8, Facts Stipulated by Both Parties, .JSFI, Docker, p. 3Ul 1. 111 Exhibit "P-5", Docker, pp. 3'2 ro _rs.

ll Docket, pp. 6 to 34.

12 Mo!ion fOr E.\."lf!lJion ~/Time /o File All.fll'tr ftled on December 10, 2020, and Order dared December 14, 2020, Docket, pp. 152 to 154 and 156, respecti\·ely. 11 Docket, pp. 209 to 21-J..

Page 4 of 23

DECISIO:\

CT~' Case :\o. 10383 -------------------------------------------- On January 19, 2021, respondent transmitted the BIR Records for the present case,'" consisting of four hundred thirty (430) pages in one (1) folder. The Pre-Trial Conference was initially set on .\larch 8, 2021. 15 Prior to said date, Respondent's Pre~ Trial Briefwas flied on .\larch 3, 2021; 16 while petitioner flied its Pre~ Tria! Briif on March 4, 2021. 17 However, during the scheduled Pre-Trial Conference, upon agreement of both parties, the case was referred to mediation and the Court thereby ordered the parties to immediately proceed and to personally appear, or through their authorized representative, before the Philippine Mediation Center-Court of Tax

Appeals (PMC-CTA) 18

Thereafter, on September 27, 2021, the Pi\lC-CT_\ returned the case to Court on the ground that mediation was refused by petitioner. 19 Thus, the Court set and held the case anew for pre-trial on October 20, 2021."11 On November 8, 2021, the parties flied their Joint Stipulation ofi<cu'fs and Issues, 21 which was approved and adopted by the Court in the Pre-Trial Order dated December 2, 2021. 22 Trial thereafter ensued.

Petitioner offered the testimony of its President, i\lr. Antonio Ramon T.

Ongsiakon

Thereafter, on i\Iarch 25,2022, petitioner flied its Forma!OfferofEvidence. 2" Respondent filed his Comment/ Opposition (Re: Petitioner's Forma! Offer of Evidence dated March 25, 2022) on April4, 2022. 25 In the Resolution dated April20, 2022,26 the Court admitted all of petitioner's offered exhibits, except for Exhibit "P-8" for failure to present the original for comparisoy I-t Docket, pp. 157 to 158.

15 Notice of Pre-Trial Conference dated January 21,2021, Docker, pp. 258 to 259. lr, Docket, pp. 264 to 271.

1 ~ Docket, pp. 272 ro 281.

II\ :\1inures of hearing held on, and Order dared, :-larch 8, 2021, Docker, pp. 282 to 28-1-; Resolution dared .\!arch 12, 2021, Docket, p. 286.

1 '; PMC-CT-\ Back to Court Submission dated September 27, 2021 and .\1amfeJialion and 1Hotion of petitioner dated "\ugust 23,2021, Docket, pp. 292 to 295.

211 Resolution dated Ocrober 6, 2021, and Order dated October 20,2021, Docket, pp. 29 7 to 298. 21 Docket, pp. 299 to 304.

" Docket, pp. 3[]7 to 311.

2 ·' Exhibit "P-11 ", Docker, pp. 66 to 82; :\1inutes of hearing held on, and Order dared, :\larch 23, 2022, Docket, PP· 3~3 ro 32+.

1~ Docket, pp. 32.5 to 331.

25 Docket, pp. 430 to 432.

2(• Docket, pp. 434 to -1-3.5.

Page 5 of 23

DECISIO:\

CT.-\ Case ~ o. 10383 For his part, respondent offered the testimony of RO "\yesha Hajar A. Magalin. 27 Respondent'J Fonnal Offer of EtJidente was filed on October 27, 2022,28 to which petitioner posted its Comme11t (to ReJpo11dent'J Formal Offer of Evidence) on November 4, 2022. 29 In the Resolution dated January 16, 2023,30 the Court admitted all of respondent's offered exhibits. ReJpondent'J J\1emorand!lm was filed on February 27, 2023;31 while petitioner submitted its ;\1emoralldtrm on i\Iarch 20, 2023 32 The case was deemed submitted for decision on April 11, 2023.

THE ISSUES

The parties submit the following issues for this Court's resolution, to wit: "1.

\V'hether or not the assessments for deficiency Income Tax, Value Added Tax, Expanded \\ 7ithholding Tax, and Withholding Tax on Compensation for taxable year 2015 are valid. 2.

Whether or not the Petitioner is liable for payment of deficiency Income Tax, Value Added Tax, Expanded Withholding Tax, and Withholding Tax on Compensation for taxable year 201 5"33

THE ARGUMENTS OF THE PARTIES

Petitioner argues that the FDD.-\ issued by respondent is not valid assessment as the latter violates its right to due process of law; that assuming without admitting that the FDDA is valid, petitioner is not liable for deficiency income tax, VAT, E\\'T, and WTC; and that respondent's witness was incompetent to testify on the documents she identified in her testimony. Respondent counter-argues that the P.·\N, FLD, and FDD,\ sufficiently provided the factual and legal basis for the assessments; that the FDDA provides a definite tax liability due, that it clearly specified the total amount due for every assessment item and the due date for payment on October 5, 2020, hence, thery 27 Exhibit "R-7", Docket, pp. 218 to 225; },Iinures of the hearing held on, and Order dated, October 26,2022, Docket, pp. 442 ro 444.

23 Docket, pp. 451 to 456.

00 Docket, pp. 488 to 491.

' 11 Docket, pp. -1-97 ro 498.

" 1 Docket, pp. 503 to 508.

" Docket, pp. 513 to 548.

'-'Issues to be Resolved, JSFI, Docker, p. 300.

Page 6 of 23

DECISIO~

CT.\ Case l"o. 10383 -------------------------------------------- is no violation of petitioner's right to due process; that no supporting documents were submitted by petitioner to prove its allegations in the protest, thus, the assessment was reiterated in the FDD,\; and that assessments are prima facie presumed correct and made in good faith and that petitioner has the duty of proving otherwise.

THE COURT'S RULING

The present Petition for Review is partially meritorious. When the assessment is comprised of several issues, only the particular issues vaHdly protested are considered disputed;

while the particular issues undisputed become fina4 executory and demandable.

The FLD dated December 14, 2018 presents the computation of deficiency tax assessments against petitioner for taxable year 2015, as follows:

INCOME TAX

Taxable Income/ (Loss) per Income Tax Rerum (ITR)

~-\dd:

.-\djustmenrs per lm·csrigation:

C ndeclared Income Cndeclared Income from Lndeclared Purchases

Unaccounted Related PartY Transactions

Disallowed Expenses due to ~on-\\'nhholding Salaries, \\'ages and Benefits not subjected to \\'irhholding Tax on Compensation (\\'C) Taxable Income per Im·est.igat.ion .-\dd:

Net Operating Loss Carry-OYer

.-\djusted Taxable Income Income Tax Due (30°/o)

Less:

.-\llowed Tax Credits/Payments

Prior Year's Excess Tax Credits

Less: Excess Tax Credits Credited Forward to the Succeeding Period

Excess ;.I CIT o\·er :\CIT Carried

Forward to the Succeeding Period

Deficiency Income Tax

.-\dd:

20% interest (.-\pril16, 2016 to December 31, 2017) 12 11/o interest Qanuary l, 2018 to December 28, 2018)

TOTAL AMOUNT DUE

VALUE-ADDED TAX

\·;Hable sales per \ · .-\ T Returns .-\dd:

.-\djustments per lnYestigation 1'1,331,836.19 ~17.967.18 18."'98,903.00 2,231,259.16 51,537.00 874,664.00 8"'~.664.00 2,345,702.31 815,178.47 1'(58","r.IH1) 22,831,502.53 22,243,"765.53 587,73 7 .(JU 22,831 ,50?.53 6.8~9.~511.'6 3,160,880. "78 P10,010,331.54 1'22,881 ,581 ~

Page 7 of 23

DECISIO'\

CT.\ Case '<o. 10383

Undeclared Sales

Undeclared Sales from Undeclared Purchases

Cnaccounted Related Party Transactiom

Sales not subject to \·_\T .\djusred \·arable Sales Outpm tax Due (12°'o)

Less:

.\Bowed Tax CredHs/Payn1enrs In pur Tax on Current Purchases \':\T Pa~·menrs Deficiency \ ·.-\ T .-\dd:

20°/o interest (January 26,2016 to December 31, 2017) l2°'o interest (January 1, 2018 ro December 28, 2018)

TOTAL AMOUNT DUE

EXPANDED WITHHOLDING TAX

Basic Tax Due

.\dd:

20°'o interest (January 16,2016 to December 31, 201"'"") 12°'n interest (Januar~· 1, 2fl18 to December 28, 2018)

TOTAL AMOUNT DUE

WITHHOLDING TAX ON COMPENSATION

Basic Tax Due

.-\dd:

2()%, interest (l anuary 16, 2016 to December 31, 20 1-) 12% interest (January 1, 2018 to December 28, 2018) 1'6, 165,908.29 1,935,()33.23 18,'798,903.00 2,547.48 2,24',030.5-1- 498,~59.23 I ,248,860.63 384,210.38 1'6 7,208.33 20,38 7 .~8 P29,94-.-3 9,084.7(1 26,902,392.00 3,228,287.05 1 ,633,071.01 1'4,861,358.06 1'171,306.16 s~,59CJ.II 1'258,902.27 P76,333.2S 39,032.43

TOTAL AMOUNT DUE

1'115,365.68 Based on the foregoing, the following summarizes the assessment findings /items for deficiency income tax and V "'\ T:

Description

Amount

Income tax C ndeclared Income 1' I ,331,836.19 Cndeclared Income from Cndeclared Purchases 4!7,967.18 C naccounted Related Party ·r ransactions 18,7 98,903.00 DisallO\ved Expenses due to ::\on-\\'irhholding 2,231,2S9.16 Salaries, \\iages and Benefits not subjected to \\'ithholding Tax on Compensation

(WC)

51,537.00 '\et Operatmg_ Loss CarrY-OYer ("OLCO) 587,737.00 Excess Tax Credits Credited Forward to the Succeeding Period 775,785.00 Excess ~I CIT o\·er :\'CIT Carried Forward to the Succeedin,g Period 98,879.00

VAT

C ndeclared Sales 1' 6,165,908.29 l'ndeclared Sales from L'ndeclared Pttrchases 1,935,033.23 L' naccounted Rela red Parn· Transactions 18,798,903.00 Sales not :subjecr to \'.\T 2,5-1--.-1-8

Page 8 of 23

DECIS!Ol\:

CT\ Case No. 10383 Section 228 of the NIRC of 1997, as amended, provides that the 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. \Vi thin sixty (60) days from filing of the protest, all relevant supporting documents shall have been submitted; otherwise, the assessment shall become final.

Relevant thereto, Section 3.1.4 of Revenue Regulations (RR) No. 12-9934, as amended by RR No. 18-20133;, provides as follows: "3.1.4 Disp11ted AJJessment. - The taxpayer or its authorized representative or tax agent may protest administratively against the aforesaid FLD /E-'1.~ within thirtv (30) da\'s from date of receipt thereof. The taxpaver protesting an assessment mav file a written request for reconsideration or reinvestigation defined as follows: (i) Request for reconsideration - refers to a plea of re- evaluation of an assessment on the basis of existing records without need of additional evidence. It mav involve both a question of fact or of law or both. (ii) Request for reinvestigation - refers to a plea of re- evaluation of an assessment on the basis of newly discovered or additional e\·idence that a taxpayer intends to present in the reinvestigation. It may also involve a question of fact or of law or both. The taxpayer shall state in his protest (i) the nature of protest whether reconsideration or reinvestigation, spccifpng newly discovered or additional evidence he intends to present if it is a request for reinvestigation, (ii) date of the assessment notice, and (iii) the applicable law, rules and regulations, or jurisprudence on which his protest is based, otherwise, his protest shall be considered void and without force and effect. If there are several issues involved in the FLD /FAN but the taxpayer only disputes or protests against the validity of some of the issues raised, the assessment attributable to the undisputed issue or issues shall become final, executory and demandable; and the taxpa1·er :dull be required to pay the deficiency tax or taxes attributable thereto, in which case, a collection letter shall be issued to the taxpayer calling for paymeny "SCBJECT

15 SCBJECT

lmplementmg the Prmisions of the :\ariorul Internal Re\·cnue Code of 199- Gon•rning the Rules on :\ssessment of\:ational Internal Re\·enue Taxes, Ci\·il Penaltres and Interest and the Extra-Judicial Senlement of a Taxparers Criminal \ ·iolarion of rhe Code Through Papnenr of

a Suggested Compromise Penalty

:\mending Certain Sections of Rc\·enue Regulations \:o. 12-99 Relative to the Due Process Requirement in the Issuance of a Deficiency Tax .--\ssessment

Page 9 of 23

DECIS!Ol" CT.\ Case l"o. 10383 -------------------------------------------- of the said deficiency tax or taxes, inclusive of the applicable surcharge and/ or interest.

If there are several Issues involved in the disputed assessment and the taxpayer fails to state the facts, the applicable law, rules and regulations, or jurisprudence in support of his protest against some of the several issues on which the assessment is based, the same shall be considered undisputed issue or issues, in which case, the assessment attributable thereto shall become final, executory and demandable; and the taxpayer shall be rec.1uired to pay the deficiency tax or taxes attributable thereto and a collection letter shall be issued to the taxpayer calling for payment of the said deficiency tax, inclusive of the applicable surcharge and/ or interest.

XXX

XXX

XXX

If the taxpayer fails to file a valid protest against the FLD /FAN within thirty (30) days from date of receipt thereof, the assessment shall become final, executory and demandable. No request for reconsideration or reinvestigation shall be granted on tax assessments that have already become final, executory and demandable." (Empbases a11d undersroring added) Based on the foregoing provisions, what constitutes as a valid protest must have the following details:

(i) the nature of protest whether reconsideration or reinvestigation, specifying newly discovered or additional evidence he intends to present if it is a request for .

.

.

remvesnganon, (ii) date of the assessment notice, and (iii) the applicable law, rules and regulations, or jurisprudence on which his protest is based.

"\ccordingly, failure to complY with foregoing renders the protest without force and effect and, consequently, void.

Furthermore, when the assessment is comprised of several issues, RR No. 12-99, as amended by RR No. 18-2013, gives the taxpayer the discretion which particular issue/ s in the assessment to protest. Thus, if a particular issue is not protested, the same is considered undisputed and as such, the assessment attributable thereto, becomes final, executory and demandable. The said RR also provides that in protesting a particular issue, the same is likewise bound by the requirement of stating the facts, the applicable law, rules /

Page I 0 of 23

DECISIO"'

CT-\ Case ~o. 10383 and regulations, or jurisprudence in support thereof. Such being the case, failure to provide the same renders it undisputed and thus becomes final, executory and demandable.

A perusal of the undated request for reconsideration on the FLD filed on December 27, 201836 shows that it indeed indicates that it is a request for reconsideration, and the date of the assessment notice, in compliance with the form and manner of a valid protest as prescribed by the above-quoted provisions ofRR No. 12-99, as amended by RR No. 18-2013, viz. "This has in reference to the assessment notice dated December 14, 2018 relative to the deficiency Income Tax, Value- },dded Tax, Expanded Withholding Tax and Withholding Tax on Compensation of Powernet Systems Corp. for the Taxable Year 2015.

Relative

thereto, we are filing a request for reconsideration disputing the following assessments:

XXX

XXX

xxx." (EmpbmeJ added) However, as can be recalled, the assessment against petitioner is comprised of several issues or assessment items/ findings. /\. further reading of the said request for reconsideration shows that, among the several issues raised, petitioner protests only the following assessment items/ findings under deficiency income tax and VAT:

Description

Amount

Income tax l'ndeclared Income f' 1,331,836.19 l' ndeclared Income from L ndeclarcd Purchases 417,967.18

L'naccounted Related Party Transactions

18,798,903.00 1 Net Operating Loss CanT-0\·er 587,737.00 Excess Tax Credits Credited Forward to the Succeeding Period 775,785.00 Excess i\ICIT m·er NCIT Carried Forward to the Succeeding Period 98,879.0(1

VAT

l' ndeclared Sales f' 6,165,908.29 l:ndeclared Sales from l'ndeclared Purchases 1'1,935,033.23 l'naccounted Related Party Transactions 18,798,903.00 while the rest of the assessment items under deficiency income tax and V_\ T, as shown below, as well as the deficiency EWT and WTC, were no longer protested, towy ;r, Exhibir "P-..J.", Docker, pp. :'>M~ tor I; tllld par. 3, Facrs Stlpul;ned b~· Both Parties, JSFI, Docket, pp. 299 to 300.

Page 11 of 23

DECISIO~

CT.\ Case ?-<o. 10383 Income tax

Description

Disallowed Expenses due to Non-Withholding Salaries, W:>ges and Benefits not subjected to \VTC

VAT

Sales not subject to \'AT

Amount

1'2,231 ,259.16 51,537.00 7,547.48 Thus, with respect to the foregoing undisputed items, the same are already final, executory and demandable. \' erily, a tax assessment that has become final, executory and enforceable for failure of the taxpayer to assail the same as provided in Section 228 of the NIRC of 1997 can no longer be contested. 37 As for the following assessment items/ findings under deficiency income tax and YAT which were protested bY petitioner, the Court shall determine their propriety in succession:

Descri.IJtion

Income Tax

Undeclared Income

Undeclared Income from Undeclared Purchases

Unaccounted Related Party Transactions

Net Operating Carry Q,·er Excess Tax Credits Credited Forward to Succeeding Period Excess I\ I CIT o,·er NCIT Carried Forward to the Succeeding Period

VAT

Undeclared Sales

Undeclared Sales from Undeclared Purchases

Unaccounted Related Party Transactions

INCOME TAX

I.

Undeclared

PJ,331,836.19.

Income

Amount

P1 ,331 ,836.19 417,967.18 18,798,903.00 587,737.00 775,785.00 98,879.00 P6, 165,908.29 1,935,033.23 18,7 98,903. (I (I Lpon comparison of the respondent of the amount of gross sales computed based on Third-Pam· Information (TPI) against that declared per Summary List of Sales (SLS) showed that there are undeclared sales amounting to !'6,165,908.29 which was multiplied by the gross profit rate (GPR) to arrive at the amount of undeclared income that should be subjected to mcome tax pursuant to provision of Section 32 of the NIRC, as amende~ ,- O(etlllir.· Wi'relr.o_o .\"1'/JJiork, l11c. ,,_,._ Commi.•·.-·io11r:r ~/ ln!.:mtd Rrt'e'lllft, d ,,/., G .R. :\ o. l...J.8380, December 9, 2005.

Page 12 of23

DECIS!Oc.;

CT~\ Case c.;o. 10383

Schedule 1:

Name of Customer

~\ WC (Philippines), Inc.

BSFIL Technologies, Inc.

CIS Bavad Center, Inc.

Cohingyan And Peralta La\V Offices

Focus Global, Inc.

Linde Gas :\s1a Pte, Ltd. ROHQ

Petron Corporation

Phil. Transmarine Carries, Inc.

San i\Ii~el BrewerY, Inc.

SL-\ Prime Ventures Corp.

Txanton Torre \\"ine & OliYe Oil Co.

L' ndeclared Sales ~lultiplv bv GPR' l;ndeclared Income

Gross Sales

Cost of Sales

Gross Profit

Sales per SLS

P~6,"8S. 2 93,9~5.92 2,955,646 08 26,250.00 9,685,053.94 -95,r6. 0 809,614.92 -os,3:> .17 1,724,339.31 2,066,287.1-J Inc.

564,105.99

Sales per TPI

Discrepancy

1'22,321.43 PJ4,464.29 93,975.89 0.03 2,949,970.90 5,67518 ~ 26,250 00 9,3%,96".62 288,086.37 - -95,376.75 486,666.6 322,9--1-8.25 /05,357.17 386,982.1-1 1,337,357.17 - 2,066,287.1-1 ~ 56-1 105.99

CT.-\ Case i:\'o. 10383 -------------------------------------------- taxpayers' Sutntnary Lists of Sales and Purchases prescribed to be submitted on a quartcrh· basis pursuant to Re,·enue Regulations Nos. 7-95, as amended b1· RR 13-97, RR 7-99 and RR 8-2002. The RELIEF Svstem shall cover all \'_.\T taxpayers abm·e threshold limits set lw RR 8-2002 to submit Summary Lists of Sales and Purchases in tnagnetic fonn based on a prescribed electronic format. The consolidation and matching of information with other externally sourced data will detect underdeclaration of revenues/ overdeclaration of cost and expenses, thus resulting to greater tax potential.'" Corollarih·, R;\JO No. 46-2004" 1 has laid down the procedures to be followed for TPI discrepancy, as follows:

XXX

III.

PROCEDURES

XXX

c\ction on Protested LNs due to TPI discrepancv The Rennue Officer assigned to handle the Letter ~otice shall:

XXX

XXX

XXX

2. Require the taxpa1·er to execute a Sworn Statement (.A.nnex .-\) attesting to the 1·eracity of the schedules and authenticity of the documents presented/ submitted.

3· Obtain Sworn Statements from TPI sources (Annexes "B" and "C") attesting to the veracity of the data provided. 3.1

If

the

TPI

RDO/LTDO/LL\!0 taxpavcr, the RO shall:

source 1s registered 111 the ha-·ing jurisdiction over the subject 3.1.l Prepare "Confirmation Requests" (using tht: format prescribed in .\nnex "C'' of Rl\!0 No. 30-2003 to be signed bl' the heads of the concerned RDO/LTDO/LT.A.ID) for purposes of 1·erifying the accurac1· of the figures appearing in the DTCS[ .] 3.1.2 If the TPI source agrees with the figures in the

"Confirmation Requests"

(CR), secure a Sworn Staten1ent from the TPI source to allow the RO to build a case against the taxpay~ -Ill Emphasts and underscoring supplied.

11 _\ddit.ional Supplemenr and Guidelines m Handling Letter :\onces \\lth Dtscrepancies :\nsmg from Data ..\Latching Processes as defined in Re\·enue ..\Iemorandum Order (R..\IO) :\os. 3.+-200-J. and 30- 2003, as amended by R:\IO :-.."os. -1-2-2003 and 2+-200.-J-, \VI11ch remain t'nserYed, h;n·e been Served but are \\,.ithout Response, or are L'nder Protest by Taxpayers.

Page 14 of 23

DECISIO:-;

CT~\ Case -:\'o. 10383 -------------------------------------------- 3.2 If the TPI source is outside the jurisdiction of the RDO/LTDO/LTAID where the taxpa\'er is registered, the RO shall:

3.2.1

Coordinate with the RDO/LTDO/LTAJD

where the TPI source is registered, in order to:

a. Prepare a CR to be transmitted and signed by the RDO /LTDO /LT AID having jurisdiction over TPI source (CRs should be coursed thru the

RDO/LTDO/LL\10

where the taxpaver ts registered);

b. Secure a sworn statement from the TPI source thru the RDO/LTDO/LT·\ID ha,·ing jurisdiction o\·er the s~une; and, c.

.\ssist the heads of the concerned RDO/LTDO/LL\ID in the preparation of Monthly

Status Report on Confttmation Requests Transmitted

("-\nnex "D") outside the RDO/LTDO/LT:\ID of the TPJ source and submit the same to the SCG, for .

.

-~~ 1nomtonng purposes. - Based on the foregoing guidelines, in assessment proceedings, if there arises TPI discrepancies, the taxpayer is required to submit schedules and reconciliations to substantiate its claim. In addition, the taxpayer is required to execute a sworn statement to attest the veracity and authenticity of the schedules and documents presented or submitted. On the other hand, the BIR is mandated to obtain sworn statements from TPI sources to attest the veracity of the data provided. To obtain the sworn statements, the BIR must first send confirmation requests to the third-party sources or coordinate with the RDO having jurisdiction over the third-parn· sources, to course through the confirmation requests to the latter.

Upon examination of the records of the case, respondent did not send confirmation requests to TPI sources in relation to undeclared sales amounting to !'6,165,908.29, thus, no sworn statements were executed by the said third party sources.

\'Vhile it is axiomatic that all presumptions are in favor of the correctness of tax assessments, the assessment itself should not be based on presumptions no matter how logical the presumption might be. In order to stand the test of judicial scrutiny, the assessment must be based on actual facts. The presumption of the correctness of an assessment, being a mere presumption, cannot be made to rest on another presumptio?

-C! Emphasis and underscoring supplied.

41 Colledorqlln!emal Rrl'i?Jllfe (11011' Commi.-·.-ionl!t) ''·Alberto D. Benip{f)'O. G.R. :-.::o. L-13656, 31 January 1962.

Page IS of23

DECIS!O'( CT\ Case "io. 10383 -------------------------------------------- For lack of factual and legal bases, respondent's findings on undeclared income amounting to f>1 ,331,836.19 corresponding to the alleged undeclared sales of f>6, 165,908.29 due to TPI matching should then be cancelled. II.

Undeclared Income from undeclared ?417,967.18.

Purchases

Respondent's verification disclosed that the amount of purchases per TPI and that declared per Summary List of Purchases (SLP) showed that there are undeclared purchases amounting to f>1 ,517,066.05 which was divided by the Cost of Sales (COS) ratio and multiplied by the GPR to arrive at the amount of undeclared income that should be subjected to income tax pursuant to Section 32 of the NIRC of 1997, as amended.

Schedule 2·

Name of Supplier

Purchases per

Purchases per

Discrepancy

SLP

TPI

.-\rdem Nct\\·ork, Inc.

l'r,5o2.96 1'37,552.96 Donpin Land Development Corp.

106,9!9.72 1'58,482.15 48,437.5,

MBPS Cabling Co'}'Oration

1,355,59H;

1,355,594.65 002 MSI ECS Philippines, Inc.

2,114,081.99 1,258,648 22 855,433.77

Westcon Group Philippines

1,084,868.463 509,226.73 575 64173 Undeclared Purcha:;es 1'1,517,066 05 Di1·idcd b,· COS Ratio '8.40" 0 l' ndeclared

Sales

from C ndcclared 1'1 ,935,033.23

Purchases

~lulup~ed b1· GPR 21.60°-'o

Undeclared

Income

from

Undeclared

1'417 96'.18

Purchases

Amount

Percentage

Gross Sales

1'22,884, 129.00 1 OO.OO''c

Cosr of Sales

17 940 161.00 78.40%

Gross Profit

1'4,943,968.00 21.60°o As discussed earlier, in case ofTPI discrepancy, under ~\10 No. 46-2004, the BIR is mandated to obtain sworn statements from TPI sources to attest the veracity of the data provided. To obtain the sworn statements, the BIR must first send confirmation requests to the third-part\· sources or coordinate with the RDO having jurisdiction over the third-party sources, to course through the confirmation requests to the latter.

In this case, confirmation letters were sent customer in relation to undeclared purchases of f>1 ,517,066.05 to validate and verify the TPI amount. l'vioreover, the confirmation letters contain a statement that "If tbis Office does not rereive any response from yo11 witbin five (5) days from rerezpt of tbis letter, we will comider tbe above sales amount to be true and mnwt'/ -+-+Confirmation Letters, BIR Records, pp. 258 ro T3.

CT.\ Case "o. 10383 -------------------------------------------- RMO No. 13-2012,"5 which lays down the guidelines and procedures tn handling Letter ~otices (LNs) generated through TPI data matching programs such as the RELIEF System for SLS and SLP under RMO No. 30-200387, as amended, states:

XXX

XXX

XXX

1\'. GL'IDELINES .\ND PROCEDL'RES

XXX

XXX

D. !twestigating Offices

XXX

XXX

XXX

9· Send a Confirmation Request from TPI sources attesting to the \'eracitv of the data included in the LN package (.\nnexes "!" and "1-1. ") If no response from the TPI source after the lapse of fi,-e (s) days from setTice of Confrrmation Request, the RO mav consider the data in the LN package to be true and correct. However, if there is/ are TPI source/ s located outside of the jurisdiction of the investigating office, the RO shall send the Confirmation Request to the taxpayer through registered mail with Registered Return Card and wait for the lapse of ten (10) days, after mailing thereof before proceeding to the next step. The RO shall recommend the issuance of an eL\ and the filing of a perjury case against the TPI source for declaring m·erstated purchases/understated sales. In case the TPI source/s is/are located outside of the jurisdiction of the im·estigating office, the RO shall reconunend to the concerned RD/.1.CIR-LTS the issuance of eL\ and the filing of a perjurv case against the TPI source for declaring m·erstated purchases/understated sales.

If the TPI source did not agree with the discrepancy reflected in the Ll'\ (DTCSR/DIRIM/DW.\PR), he/she/it must be required to execute a Sworn Statement to that effect and state his/her/its true and correct sales/purchases (.\nnexes "_]" and ".J-1 ").The RO shall recommend the issuance of an eL\ and the filing of a perjun· case against the TPI source for the erroneous declaration in the subnlitted SLS/SLP /inforn1acion return or supplying incorrect information. In case the TPI source/sis/are located outside of the jurisdiction of the im·estigating office, the RO shall reconm1end to the concerned RD/.\CIR-LTS the issuance of eL-\ and the filing of a perjury case against the TPI source for declaring OYerstated purchases/ understated sales.¥· As can be gleaned from the foregoing, if the TPI source/s is/ are located outside of the jurisdiction of the investigating or sending office, the BIR Confirmation Letters must be duly supported by registered return cards. Here, although there are confirmation letters attached to the BIR Records, no registered return cards can be found. Under RMO No. 13-2012, Registerey -Li Re\·ised Guidelines and Procedures in l·landling Lerrcr :"orice:; Generated Through "l"hird-Pany Information Data .:\!arching \\"ith Tax Returns.

lt, Emphasis and underscoring supplied.

Page 17 of 23

DECISIO"C

CT-\ Case );o. 10383 Return Cards are required for TPI sources located outside the jurisdiction of the investigating office, in this case, Revenue Region No.7-RIR, Quezon City, RDO 40, Cubao, Quezon City. The following are the addresses of the TPI sources in relation to the alleged undeclared income of P417,967.18 from undeclared purchases of P1 ,517,066.05, to wit:

Customer

Address per Confirmation Letter

Discrepancy

Lnit 808 & 809 8/F East Tower

Ardent Networks Inc. 47

PSEC Exchange Rd Ortigas Center

f'37,552.96 Brg_~· San c\ntonio Pasig CitY 1605 Donpin Land Development Corp:1g 68 i\Ianuel L. Quezon .-\ ,·enue Parang -18,437.57 ~larikina CitY 1820 ~!BS Cabling''!

21 56-D P. Florentino St. Zone OS 1 om Brg1· S 13 Sampaloc :\lanila 1008 li!SI-ECS Philippines lnc5 " .25-J. Benito Soliven Ave.

855,433.77 l\L:mggaban, Pas.ig CitY l'nit (J & 7. \\'ilcon IT Hub 1251 \\ ... estcon Group Philippines51 Chino Roccs .-\,·e. Bangkal !\CR 575,6-11.73 Fourth District CitY of ~lakati 1233

Undeclared Purchases

Pl,517 ,066.05 In addition, although confirmation letters were sent to TPI sources via registered mail thru Quezon City Central Post Office on "'\pril 26, 2018 as evidenced by Registry Receipts,'c no proof that the said letters were actually received by the TPI sources.

Based on the foregoing, the Court can only conclude that respondent failed to comply with its own regulations, thus resulting in an assessment arising from or based on unverified information.

For lack of factual and legal bases, respondent's findings on undeclared income amounting to P417 ,96 7.18 corresponding to the alleged undeclared purchases of P1 ,517,066.05 due to TPI matching should then be cancelled. III.

Unaccounted Related Party

Transactions -P18,798,903.00.

Respondent's audit disclosed the petitioner's related party transactions amounting to P18,798,903.00 are not commensurate to amount declared in petitioner's "'\udited Financial Statements (AFS). Moreover, respondent believed that these transactions were not properly supported by relevant documen~ "' BIR Records. p. 263.

" BIR Records. p. 260.

l\1 BIR Records, p. 272.

5P BIR Records, p. 269.

51 BIR Records, p. 265.

s~ ~-\ttached to the Confirmation Letters, BIR Records, pp. 263, 260, 2J2, 269 anU 265.

Page 18 of23

DECISIO'-:

CT\ Case !' o. 10383 requested during the conduct of the audit investigation; hence, assessed pursuant to Section 32 of the NIRC of 1997, as amended. On the contrary, petitioner argued that the amount of P18,798,903.00 as disclosed in the 2015 AFS are advances from its stockholders as follows:

Shareholders

2015 2014

Inc/(Dec)

Mary Christine G. Tiongco 1"7,870,376.00 r 7,870,376.00 - Edmundo T. Ongsiako 7 ,4 7 6,858.00 7,476,858.00 - i\fargarita 0. Tan Climaco 3,451,669.00 3,451,669.00 -

TOL\L

f'18, 798, 903.01) f'18,798,91J3.1JIJ - Petitioner asserts that the above shareholders are well within the scope of a related party as defined in the Phllippine Accounting Standards. Petitioner further asserts that Documentan· Stamp Tax (DST) on "'l.dvances from Shareholders should only be assessed to the amount increased for the year as the Letter of Authoritv covers taxable vear 2015. ~ ' In reply to petitioner's allegation that the DST should only be assessed to the amount of increase in a given taxable vcar, respondent answered that it was not the DST on liabilities which it was assessed for. Rather, it was the petitioner's failure to present relevant documents to support the transactions 53 As stated bv the peotioner 111 its "Statement of Management Responsibility for Financial Statements"'" addressed to Securities and Exchange Commission signed by its President/ Chairman of the Board, .-\ntonio Ramon T. Ongsiako and its Treasurer, Edmundo T. Ongsiako, to wit: "The cotnpany had been incurring losses since prior ~·ears which resulted to deficit position and capital deficiency. These conditions indicate that the company tnaybe unable to continue as a going concern. Though these conditions may pose questions about the company's ability as a going concern, the stockholders are conunitted to infuse capital as needed, as supported by the increasing balance in related party transactions." "" study of the .\udited Statement of Income (Loss) for the years ended December 31, 2014 and 2015 35 reveals that petitioner indeed incurred losses amounting to (P2,065,856.00) and (P587,736.00), respectively, thus, petitioner made advances from its stockholders.

Further scrutiny of the Notes to Financial Statemcnts56 indicates the assailed unaccounted related party transactions amounting to P18,798,903.? 5' I3IR Records, pp. 38-+, 385 and 389.

:.-1 Docket, p. 385.

;;s Docket, p. 387.

J(, Note 12, Docket, p. -1-02.

Page 19 of23

DECISIO>.;

CT\ Case l\io. 10383 was already declared in taxable year 2014 and reflected again in taxable year 2015, thus, the AFS for the comparative years 2014 and 2015 were enough to support these transactions, to wit:

2015 2014 Mary Christine G. Tiongco r 7,870,376.00 r 7,870,376.00 Edmundo T. Ongsiako 7,476,858.00 7,476,858.00 Margarita 0. Tan Climaco 3,451,669.00 3,451,669.00

Total

P18,798,903.00 P18,798,903.00 Accounl repremJ!J' mtere.ot beam;g loanjmm ~·to~-·k/lo/den·to.Jtwd the opera!u~g reqmremeu/J qj t/;e .-ompai!J'· lntere.o! mngwgjrom 10.62 5~o to 1 3.5~·v.

Tllis was also corroborated by the testimony of Antonio Ramon T. Ongsiako, President of Powernet Systems Corp.: "Q44: In the FDDi\, the BIR said that these transactions were not properly supported b1· relennt documents. Do rou agree or disagree with this statetnent?

.\44:

I disagree because the 2015 i\FS alreadr reflects the adnnces from stockholders. As shown br the "-\FS, there was no change in the adnnees made by the stockholders fllarr Christine G. Tiongco, Edmundo T. Ongsiako, and :\largarita 0. Tan Climaco. This has been constant in the records since 2014. Since no additional ad,·ances were made, it also follows that no other documentation would support these better than the 2015 .-\FS."

Clearly, the alleged unaccounted related party transactiom amounting to P18,798,903.00 do not pertain to taxable year 2015. For being outside the scope of the present assessment, the assessment thereon must be cancelled. IV.

Net Operating Loss Carry-

Over - ?578,737.00, Excess Tax

Credits Credited Forward to the

Succeeding Period- ?775,785.00, and Excess MCIT over NCIT

Carried Forward to the Succeeding

Period-?98,879.00.

A perusal of the subject FLD and FDD.-\ shows that the foregoing assessment items were found only in the computation of the deficiency income tax liability of petitioner. A reading of the Details of Disrrepancies respectively attached to the FLD and FDD~-\ shows no discussion at all on the said findings. Therefore, the glaring absence of a discussion as to the factual and legal basis on the foregoing assessment items boils down on the validity of the :1ssessment itself. In the unec]uivoc:ct! m:ctnd:ctte of Section 228 of the NIRC of 1997, as amended, and its implementing rules and regulations, the taxpayers sh~

Page 20 of 23

DEC!S!Ol' CT-\ Case ~o. 10383 -------------------------------------------- be informed in writing of the law and the facts on which the assessment is made; otherwise, the assessment shall be void.

Well-settled is the rule that a void assessment bears no fmit. 57 There being no valid assessment rendered with respect to the NOLCO, excess tax credits carried forward to the succeeding period, and excess l\ICIT over NCIT carried forward to the succeeding period, the same must rightfully be cancelled.

VALUE-ADDED TAX

L

Undeclared

Sales

?6,16~908.29.

Respondent reiterated that the amount of undeclared sales (Schedule 1) under the deficiency income tax assessment is also subject to VA. T under Title IV, Sections 105 and 106 of the NIRC of 1997, as amended. It was also settled that upon exanunation of the records of the case, respondent did not send confirmation requests to TPI sources in relation to undeclared sales amounting to P6,165,908.29, thus, no sworn statements were executed by the said third party sources to attest the veracity of the data provided, thus, this assessment must be cancelled.

II.

Undeclared Sales from

Undeclared Purchases

?1,93~033.23.

Respondent reiterated that the amount of undeclared sales arising from undeclared purchases (Schedule 2) under the deficiency income tax assessment is also subject to V.\ T under Title IV, Sections 105 and 108 of the NIRC of 1997, as amended.

It was already settled that respondent failed to comply with its own regulations resulting in an assessment based on unverified information, thus, assessment on undeclared purchases of P1 ,935,033.23 should be cancelled.

IlL

Unaccounted

Related

Party

Transactions

?18,798,903.00/ :.~ Commi.o·.rioner ~/lHtenwl &t'l'llltt' ,._,· . • \ldm S!w Snpenm;a. illr"., G .R. ~ o. 1 t\53 7 1, December 8, 201 0.

CTA Case No. 19383 “As already discussed under the deficiency income tax assessment, the alleged unaccounted related party transactions amounting to P18,798,903.00 are outside the scope of the present assessment, thus, must be cancelled.

In sum, considering the foregoing findings, the deficiency EWT and WTC in the amounts of P171,306.16, and P76,333.25, as basic tax dues, respectively, are upheld; deficiency VAT is upheld but with modification in the amount of P305.71 as basic tax dues; while deficiency income tax is cancelled, computed as follows:

INCOME TAX

‘Taxable Income/(Loss} per TER -P 587,737.00

Add: Adjustments per Investigation

Undeclared Income (Schedule 1}

Undeclared Income from Undeclared Purchases (Schedule 2) -

Unaccounted Related Party Transactions -

Disallowed [Expenses Due to Non-Withholding(Schedule 3} 2,231,259.16 Salaries, Wages and Benefits not subjected ro Withholding ‘Lax on Compensation WC) sSchedule 43 31,537.00 2,282.796.16 Taxable Income per Investigation 1,695,059.16

Add: NOLCO -

Adjusted ‘laxable Income 1,695,059. 16 Income ‘Fax Due (30%) 508,517.75

Less: Mlowed ‘Vax Credits /Payments

Prioy Year's Excess ‘Uax Credits 874,664.00 Less: [excess Vax Credits Carried Forward to the succeeding period I:xeess MCTY over NCIU Carricd Forward to the succeeding period - 874,664.00 Deficiency Income ‘l'ax -P366,1 46.25 | . oOo

VALUE-ADDED TAX

Vatable Sales per V.VP Returns P22,881,581.52 Add: Adjustment pec Investigation

Undeclared Sales -

Undeclared Sales from Undeclared Purchases Unaccounted Related Party ‘lransactions - Sales Not Subjected to VV (Schedule 5} 2,547.48 P2,547.48 Adjusted VV able Sales P22,884,129.00 Ourpur Vax Due {12%} P2,746,095.48

Less: Allowed ‘Vax Credits/Payments

Input ‘lax on Current Purchases 2,247 ,030.54 VAT Payments 498,759.23 2,745,789.77 Deficiency Value-Added ‘Vax P305.71

EXPANDED WITHOLDING TAX

Basic ‘lax Due P171,306.16

WITHHOLDING TAX ON COMPENSATION

Basic Vax Due P76,333.25 SeES=—_—ql————OOOOO ~

WHEREFORE, light of the foregoing considerations, the present Petition for Review is PARTIALLY GRANTED.

Accordingly, petitioner is ORDERED TO PAY the amount of P438,100.37 representing deficiency taxes for the taxable year 2015, inclusive of 25% surcharge and 20%/12%% deficiency interest imposed under Section 248(A)

(3) and Section 249(B) of the NIRC of 1997, as amended by Republic Act No. 10963, also known as Tax Reform for Acceleration and Inclusion (TRAIN), as implemented by Revenue Regulations (RR) No. 21-2018, computed until January 14, 2019, as follows:

| VAT EWT WTC TOTAL

Basic ‘lax Due P305.71 | PIL71306.16 PF 76,333.25 P 247,945.12 Ada: 25° 5 Surcharge F643 42,826.54 19.083.3] 61,986.28

| 2» Detioency Interest —_

fan. 26, 2016 to Dee. 31, 2017 } | P B53 x 2a FG f 363) 118,26 | WAR. 26

206 Defeney Interest

fan. 16, 2016 ta Dee. 31. 2017 (PFT BUG 16 X 20a x PNG £3635) | 67,208.33 iZ 67,208.33 4

20" Defieasney Interest

Jan. 16. 2016 to Dee. 31, 2017 (POE ARRDE N20 wT PHY 29 947.73 29.947,73 |_“Vorat Amount Due. Dee. 31, 217 4 P5an40 | Po AkT 341.35 P i2.ieb Po 407 205.73 = J tr

Add: 12" Defiaeney Interest

Jan. 1, 2018 to Jan. 14, OD | (PHBL N12 x U9 IGS) 38.019 38.09 (PETE BHGIG SID 3797 G5) L 21,345.22 21,345.22 | (P76,333.25 x 120» 379) 363) __| 9511.33 951133 | Toul Amount Due, Jan. 14, 2019 P538.49 P302,686.25 P 134,875.62 P 438,100.37 a In addition, petitioner is ORDERED TO PAY delinquency interest at the rate of twelve percent (12%) per annum, on the total unpaid deficiency taxes due as of January 14, 2019, in the amount of P438,100.37, as determined above, or equivalent to P144.03° per day, computed from January 15, 2019 until full payment thereof pursuant to Section 249(C) of the NIRC of 1997, as amended by RA No. 10963 and implemented by RR No, 21-2018.

Associate Justice

38 P438,100.37 x 12°% + 365 days.

Page 23 of 23

DEC!SIO'-!

CT.\ Case No. I 0383 --------------------------------------------

WE CONCUR:

MARIA

ATTESTATION

I attest that the conclusions in the above decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division.

~- ~ _--z.. "--· MA. BELEN M. RINGPIS-LIBAN ,·\ssociate Justice

Chairperson

CERTIFICATION

Pursuant to "·\rticle \'III, Section 13 of the Constitution, and the Division Chairperson's /\.ttestation, is it 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.

Presiding Justice