REPUBLIC OF THE PHILIPPINES

COURT OF TAX APPEALS

QUEZON CITY

ENBANC

COMMISSIONER OF CTA EB No. 2543

INTERNAL REVENUE AND (CTA Case No. 9787)
BIR REGIONAL DIRECTOR,
REGION 12, BACOLOD Present:
CITY,
Petitioners, DEL ROSARIO, PI,
UY,
RINGPIS-LIBAN,
MANAHAN,
-versus- BACORRO-VILLENA,
MODESTO-SAN PEDRO,
REYES-FAJARDO,
CUI-DAVID, and
FERRER-FLORES, J].

ANAPI MULTI-PURPOSE Promulgated:

COOPERATIVE,
Respondent. MAY 11 2023
X- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

DECISION

REYES-FAJARDO I J.:

Under consideration is the Petition for Review, filed on

November 25, 2021,1 impugning the Decision dated November 16,
2020,2 and Resolution dated September 27, 2021,3 in CTA Case No.
9787. The impugned Decision, and Resolution cancelled the Warrant
of Distraint and/ or Levy (WDL) dated March 8, 2018, and Warrants
of Garnishment (WOG) dated March 16, 2018, issued against ANAPI
Multi-Purpose Cooperative, on the ground of prescription of
collection of tax.

Rollo, pp. 1-12.

2 Id. at pp. 20-33.
3 Id. at pp. 34-38.
c(
DECISION
CTA EB No. 2543
Page 2 of 11

The antecedents follow.

Petitioner Commissioner of Internal Revenue (CIR) is the Chief

of the Bureau of Internal Revenue (BIR), the government agency
officially responsible for the assessment and collection of all national
internal revenue taxes, fees and charges and the enforcements of all
forfeitures, penalties and fines connected with such taxes. He may be
served with summons, notices and other legal processes at Room 703,
BIR National Office Building, Agham Road, Diliman, Quezon City.

Petitioner BIR Regional Director (RD), Region 12, Bacolod City,

is holding office at the BIR Regional Office, Hernaez St., Brgy.
Taculing, Bacolod City.

Respondent is a multi-purpose agricultural cooperative duly

organized in accordance with Philippine laws, more particularly
Republic Act (R.A.) No. 6938 (Cooperative Code), with license to
transact business and sue in the Philippines in accordance with the
Cooperative Code, having its principal office address at No. 22, 13th
St., Bacolod City. It is represented by Freddie W. Zayco, of legal age,
married, resident of Bacolod City and Chairperson of the Board of
ANAPI Multi-Purpose Cooperative and authorized through a Board
Resolution.

On February 28, 2008, respondent received Letter of Authority

(LOA) No. 00024477 dated February 6, 2008, authorizing Revenue
Officer Amor Leilani M. Tayo (RO Tayo) and Group Supervisor
Richard R. Oquendo to examine respondent's books of accounts and
other accounting records for income and all other internal revenue
taxes for the period from January 1, 2006 to December 31, 2006. 4

On July 16, 2009, a Preliminary Assessment Notice (PAN) was

issued against respondent for taxable year (TY) 2006.5

On October 26, 2009, respondent received a Formal Letter of

Demand, with Assessment Notices (FLD/FAN), all dated October 12,
2009, assessing it for deficiency Value-Added Tax (VAT), expanded

4 Exhibit "R-1." BIR Records, p. 53.

5 Exhibit "R-12." Id. at pp. 95-100.

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DECISION
CTA EB No. 2543
Page 3 of 11

withholding tax (EWT), and compromise penalties, covering TY

2006.6

In a Letter of Protest dated November 16, 2009, respondent

assailed the findings in the FLD/FAN, based on the following
grounds: one, it is exempt from the payment of all internal revenue
taxes, including VAT on the sale of its refined sugar; two, the
National Internal Revenue Code of 1997, as amended (NIRC, as
amended), does not contain any provision imposing tax, before sale
of its refined sugar occurs; three, the FLD/FAN was issued beyond
the three (3)-year prescriptive period to assess internal revenue taxes;
and Jour, it had remitted the amounts withheld from payments to
management and other professional fees to various recipients to the
BIR.7

On December 9, 2010, an Amended FLD/FAN8 were issued

against respondent, demanding payment of the amount of
P48,075,359.69, representing deficiency VAT and compromise penalty
for TY 2006. The assessment for EWT was no longer included therein.
The assessment was computed as follows:

VALUE-ADDED TAX
No. of LKG per BIR data 232,533.36
Rate per LKG 850.00
Gross Value-Sugar Sales 197,653,356.00

Output Tax
january 16,471,113.00 10% 1,647,111.30
February to December 181,182,243.00 12% 21,741,869.16
23,388,980.46
Less: Input Tax
VAT Payable 23,388,980.46
Less: Payments made
Deficiency VAT 23,388,980.46
Add: Surcharge 5,847,245.12
Interest (1/25/07 to 1/31/11) 0.80 18,788,134.11 24,635,379.23
TOTAL AMOUNT DUE 48,024,359.69

On March 6, 2013,9 respondent received petitioner RD's Final

Decision dated February 27, 2013, stating that it was liable to pay
advance VAT covering TY 2006 since: one, BIR Ruling No. 12-08-2001,
granting petitioner tax-exempt status, is null and void, because it
committed misrepresenta tion in obtaining said BIR Ruling; two, it
6 Docket (CTA Case No. 9787), p. 12. Existence was admitted in par. 8, Stipulation of Facts
in the Pre-Trial Order, id. at p. 362.
7 BIR Records, pp. 119-122.
8 Exhibits "R-15," "R-15-a" to "R-15-b." Id. at pp. 239-248. See also par. 5, Stipulation of
Facts in the Pre-Trial Order, docket (CTA Case No. 9787), p. 362.
9 Par. 14, Motion for Reconsideration dated April2, 2013. BIR Records, p. 295.

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DECISION
CTA EB No. 2543
Page 4 of 11

n from
was not the own er/p rodu cer of the refin ed suga r with draw
to subm it
the suga r mill as show n in the suga r qued ans; three, it failed
antin g
its book s of accounts and othe r acco untin g records, warr
rules and
appl icati on of best evid ence obtainable; and four, the
to the
regu latio ns (RR) issue d by adm inist rativ e auth oriti es purs uant
and are
pow ers dele gate d to them have the force and effect of law,
bind ing to all pers ons subject to them .

On Apri l 2, 2013, resp onde nt assa iled before petit ione r CIR,
regis tered
petit ione r RD's Final Decision. It claimed: one, it is a duly
inter nal
mult i-pu rpos e coop erati ve whic h was exem pt from payi ng
e was
reve nue taxes, inclu ding VAT; and two, the asse ssme nt mad
cript ive
null and void, havi ng been issue d beyo nd the three -yea r 1pres
This was
perio d unde r Section 203 of the NIRC, as ame nded . 0
on May
follo wed by a Supp leme nt there to, filed with petit ione r CIR
Receipt
3, 2013, toge ther with attac hed Official Suga r War ehou se
47, and d.
(Que dan) , with serial num bers a. 004025, b. 005187, c. 0067
008855.11

12
On Janu ary 30, 2018, petit ione r CIR issue d a Decision,
upho lding petit ione r RD's Final Decision, as follows:

IN VIEW OF ALL THE FOREGOING, the decision dated

Form al
Febru ary 26,2013 deny ing the prote st of AN API again st the
ssme nt
Letter of Dem and and Asse ssme nt Notice with Asse
9, 2010
Num bers 00198-2010 and 00199-2010 both dated December
as
dema nding paym ent of the total amou nt of Php48,075,359.69
taxable
deficiency value -adde d tax and comp romis e penalties for
13
year 2006 is hereb y affirmed in all respe cts ....

ew
On Marc h 22, 2018, resp onde nt filed a Petit ion for Revi
befo re the Cou rt in Division.

the
On Nov emb er 16, 2020, the Cou rt in Divi sion rend ered
impu gned Decision,14 the fallo of whic h reads:

10 BIR Records, pp. 275-298.

Case No. 9787), p. 362.
11 Par. 6, Stipul ation of Facts in the Pre-Trial Order , docke t (CTA
y 30, 2018, on Febru ary 22,
12 Respo ndent received petitio ner CIR's Decision dated januar
2018. See Docket (CTA Case No. 9787), p. 10.
Case No. 9787), p. 362.
13 Par. 7, Stipulation of Facts in the Pre-Trial Order , docke t (CTA
14 Supra note 2.

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DECISION
CTA EB No. 2543
Page 5 of 11

WHEREFORE, the instant Petition for Review is

GRANTED. (Petitioners') right to collect the subject deficiency
VAT has prescribed. Accordingly, the Warrant of Distraint and/ or
Levy issued on March 8, 2018, and Warrants of Garnishment issued
on March 16, 2018 are CANCELLED.

SO ORDERED.

Petitioners moved,15 but failed 16 to secure affirmative relief with

the Court in Division. Hence, the present recourse.

Petitioners argue that under Section 7(a)(1) of RA No. 1125, as

amended by RA No. 9282, the Court has jurisdiction over petitioner
CIR's decision on disputed assessments. Given that respondent failed
to file an administrative protest to the FLD/FAN, said assessment
attained immutability; hence, the Court in Division lacks jurisdiction
over this case.

Petitioners, too, claim that for sale of refined sugar to be

absolved from payment of advance VAT, said refined sugar must be
under the name of the cooperative, duly registered with the
Cooperative Development Authority (CDA). The quedans pertaining
to such refined sugar were either: one, not named to respondent; or
two, were named to respondent, but have different plantation audit
number, or tax identification number; thus, respondent is not the
owner of the refined sugar. Consequently , respondent must pay the
advance VAT thereon.

Petitioners as well assert that the deficiency tax assessments

issued against respondent for TY 2010 is not barred by prescription.
Specifically, among the instances in Section 222(a) of the NIRC, as
amended, where the ten (10)-year prescriptive period to assess
internal revenue taxes may be applied, is when there was omission to
file a tax return. As respondent failed to file its VAT Returns for TY
2006, they have ten (10) years from discovery of such omission on
April 16, 2009, or until April 16, 2019, to assess taxes against
respondent. Therefore, the Amended FLD/FAN dated December 9,
2010 was timely issued against respondent.

15 Motion for Reconsideration Re: Decision dated 16 November 2020. Docket (CTA Case
No. 9787), pp. 484-493.
16 Impugned Resolution dated September 27, 2021. Supra note 3.

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DECISION
CTA EB No. 2543
Page 6 ofll

In refutation,U respondent adopts the Court in Division's

observation that the BIR's WDL and WOG, both issued in 2018, are
barred by prescription on collection of taxes under the NIRC, as
amended.

Respondent states that it presented the quedans under its

name, pertaining to the refined sugar for 2006 before the BIR. As a
result, it was able to obtain Authorization Allowing Release of
Refined Sugar (AARRS) from the BIR, prior to withdrawal thereof
from the sugar mill. This demonstrates its ownership of said refined
sugar.

Being a tax-exempt agricultural cooperative, and the owner of

said refined sugar, respondent declares that it is exempt from the
advance VAT thereon. Thus, the deficiency VAT assessment issued
against it, forTY 2006, must be invalidated.

RULING

We deny the Petition.

To be clear, the amended FLD/FAN dated December 9, 2010,

superseded the original FLD/FAN dated October 12, 2009. 18 Said
amended FLD/FAN attained immutability because respondent failed
to prove that it validly filed an administrative protest thereto, as
ordained in Section 22819 of the NIRC, as amended. This means that
the validity or correctness of the assessment may no longer be
questioned on appeal.2° Precisely, matters advanced by petitioners
and respondent involving the propriety of the deficiency VAT

17 Respondent's Comment to the Petition for Review dated March 28, 2022. Rollo, pp. 51-53.
18 Exhibit "R-15." BIR Records, p. 245.
19 SEC. 228. Protesting of Assessment.- When the Commissioner or his duly authorized
representative finds that proper taxes should be assessed, he shall first notify the
taxpayer of his findings: Provided, however, That a pre-assessment notice shall not be
required in the following cases:

Such 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.
Within sixty (60) days from filing of the protest, all relevant supporting documents shall
have been submitted; otherwise, the assessment shall become final.
20 Commissioner of Internal Revenue v. Hambrecht & Quist Philippines, Inc. Infra note 21.

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DECISION
CTA EB No. 2543
Page 7 ofll

assessment, and compromise penalty covering TY 2006, as embodied

in such amended FLD/FAN must entirely be ignored.

Yet, Commissioner of Internal Revenue v. Hambrecht & Quist

Philippines, Inc.21 (Hambrecht) clarified that the validity of the final
assessment is a distinct matter from the issue of prescription of
collection of taxes. For this reason, prescription of collection of taxes
may be addressed separately, despite the incontestability of the final
assessment:

To be sure, the fact that an assessment has become final for

failure of the taxpayer to file a protest within the time allowed only
means that the validity or correctness of the assessment may no
longer be questioned on appeal. However, the validity of the
assessment itself is a separate and distinct issue from the issue of
whether the right of the CIR to collect the validly assessed tax has
prescribed. This issue of prescription, being a matter provided for
by the NIRC, is well within the jurisdiction of the CT A to decide.

A similar conclusion was reached in the recent case of

Commissioner of Internal Revenue v. Court ofTax Appeals Second Division
and QL Development, Inc. (QLDI). 22 There, it was found that QL
Development, Inc. failed to file a valid administrative protest, despite
its receipt of the FLD/FAN, resulting in the finality thereof. This
notwithstanding, the Supreme Court held that the Court of Tax
Appeals may independently address the issue involving prescription
of collection of taxes.

Consistent with Hambrecht and QLDI, we have the authority to

adjudicate the matter of prescription of collection of taxes in this case,
despite the finality of the amended FLD/FAN dated December 9,
2010.

Can petitioners collect from respondent the deficiency VAT and

compromise penalty embodied in the amended FLD/FAN dated
December 9, 2010?

No.

" G.R. No. 169225, November 17,2010.

22 G.R. No. 258947, March 29, 2022.

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DECISION
CfA EB No. 2543
Page 8 of11

Revenue 23
Bank of the Philippine Islands v. Commissioner of Internal
ection of inte rnal
(BPI) eluc idat ed the pres crip tive peri od for the coll
sans pres enc e of
reve nue taxes, in the eve nt a final asse ssm ent,
rns, or omi ssio n to
inte ntio nal falsity, or frau d in the filing of tax retu
the taxpayer, in the
file a tax retu rns, was mad e by the BIR aga inst
following fashion:

three (3)-
Whe n it validly issues an asse ssme nt with in the
whic h to collect
year period, it has anot her thre e (3) year s with in
The asse ssme nt
the tax due by distraint, levy, or cour t proceeding.
ear peri od for
of the tax is deem ed mad e and the three (3)-y
on the date the
collection of the assessed tax begins to run
to the taxpayer.
asse ssme nt notice had been released, mail ed or sent

t to collect
Tak ing our cue from BPI, peti tion ers lost thei r righ
ise pen altie s for
from resp ond ent, the deficiency VAT and com prom
emb er 9, 2010. To
TY 2006, und er the ame nde d FLD /FA N date d Dec 4 to resp ond ent on
be precise, the ame nde d FLD /FA N wer e mailed2
Dec emb er 22, 2010,
Dec emb er 22, 2010. Cou ntin g thre e (3) yea rs from
ect the VAT and
peti tion ers had unti l Dec emb er 22, 2013 to coll
/FA N. Thus, the
com prom ise pen alty due und er said ame nde d FLD
8 and 16, 2018, are
WDL, 25 and WOG, 26 resp ecti vely issu ed on Mar ch
barr ed by prescription.

/FA N date d
Ass umi ng arguendo that the ame nde d FLD
sup pos ed failure to
Dec emb er 9, 2010 was mad e due to resp ond ent' s
ld ensu e.
file its VAT Ret urns forT Y 2006, the sam e resu lt wou

the NIRC, as
Section 222(a), in rela tion to Section 222(c) of
to collect inte rnal
ame nde d, prov ides for the pres crip tive peri od
mad e, whi ch was
reve nue taxes in case ther e was an asse ssm ent
rn:
atte nde d by, amo ng others, omi ssio n to file a tax retu

23 G.R. No. 179942, Marc h 7, 2008. This princ iple

was likewise discu ssed in Commissioner of
197515, july 2, 2014,
Internal Revenuev. United Salvage and Towage (Phils.), Inc., G.R. No.
Tax Appeals Second Division and QL
and Commissioner of Internal Revenue v. Court of
Development, Inc., supra note 22.
rds, pp. 239-248.
24 Exhibits "R-15," "R-15-a," and "R-15-b." BIR Reco
25 Docket (CfA Case No. 9787), p. 82.
26 /d. at pp. 83-84.

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DECISION
CTA EB No. 2543
Page 9 ofll

SEC. 222. Exceptions as to Period of Limitation of

Assessment and Collection of Taxes.-

(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 tax may be filed
without assessment, at any time within ten (10) years after the
discovery of the falsity, fraud or omission: Provided, That in a
fraud assessment which 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.

(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. 27

Indeed, when a final assessment was made within ten (10)

years after discovery of intentional falsity, fraud with intent to evade
tax, or omission to file a tax return, the BIR has another five (5) years
from such assessment to collect the assessed internal revenue taxes.

Petitioners aver that respondent's omission to file VAT Returns

was discovered on April 16, 2009, or the date when RO Tayo
unearthed respondent's advance VAT liability.2s The amended
FLD/FAN dated December 9, 2010 were mailed to respondent on
December 22, 2010. 29 Counting five (5) years from December 22, 2010,
petitioners and their agents may collect the assessed VAT and
compromise penalty for TY 2006 until December 22, 2015. Ergo, the
WDL, 30 and WOG, 31 respectively issued on March 8 and 16, 2018,
may not be enforced against respondent.

In closing, the Court in Division found that petitioners forfeited

their right to collect the assessed deficiency VAT and compromise
penalty against respondent forTY 2006 by reason of prescription.

Rightfully so.

27 Boldfacing supplied.
28 Petition for Review dated November 22, 2021, pp. 8-9. Rollo, pp. 8-9.
29 Supra note 24.
30 Supra note 25.
31 Supra note 26.

i
DECISION
CTA EB No. 2543
Page 10 of 11

WHEREFORE, the Petition for Review, filed on November 25,

2021, in CTA EB No. 2543, is DENIED. The Decision dated
November 16, 2020, and Resolution dated September 27, 2021, in
CTA Case No. 9787, are AFFIRMED.

SO ORDERED.
· ~ r~ n-
~N I~ F..REY~S:;:~O
Associate Justice

We Concur:

Presiding Justice

ERL~.UY
Associate Justice

OfJ LEA'JE
MA. BELEN M. RINGPIS-LIBAN
Associate Justice

c~·r-
CATHERINE T. MANAHA N
Associate Justice
t"

JEAN !VJ.rtJur::.

MARIA U-i:)rt!.... PEDRO

DECISION
CTA EB No. 2543
Page 11 of11

-(JMA_
LANEE s. CUI-DAVID
Associate Justice

CO~~~RES
Associate Justice

CERTIFICATION

Pursuant to Article VIII, Section 13 of the Constitution, it is

hereby certified that the conclusions in the above Decision were
reached in consultation before the case was assigned to the writer of
the opinion of the Court.

Presiding Justice