REPUBLI C OF THE PHILIPPIN

ES COURT OF TAX APPEALS

QUEZON CITY

SECOND
DIVISION

JG SUMMIT HOLDINGS , INC., CTA CASE NO. 9142

Petitioner,

Members:

- versus - CASTANEDA, JR., Chairpe

rson, MINDARO-GRULLA,
and BACORRO-VILLENA , IL

COMMISSIONER OF
INTERNAL REVENUE , Promulgated:
Respondent MAR 1 2 2020
.
rJ o t"' .
x------------------------------------------------------------------------------------------ x

DECISION

BACORRO-VILLENA, L.:

At bar is a Petition for Review1 filed by JG Summit Holdings, Inc.

2
. (JGSHI/petitioner) pursuant to Rule 8, Section 3(a) of the
Revise<Y'

Filed 1 8 September 2015, Division Docket, Volume I, pp. I 0-39.

SEC. 3. Who may appeal; period tofile petition. - (a) A party adversely affected by a
decision, ruling or the inaction of the Commissioner of Internal Revenue on disputed assessments
or claims for refund of internal revenue taxes, or by a decision or ruling of the Commissioner of
Customs, the Secretary of Finance. the Secretary of Trade and Industry, the Secretary of
Agriculture, or a Regional Trial Court in the exercise of its original ju risdiction may appeal to the
Court by petition for review ti led within thirty days after receipt of a copy of such decision or
ruling, or expiration of the period fixed by law for the Commissioner of Internal Revenue to
act on the disputed assessments. In case of inaction of the Commissioner of Interna l [R]evenue
on claims for refund of internal revenue taxes erroneously or illegally collected, the taxpayer
must file a petition for review within the two-year period prescribed by law from payment or
collection of the taxes.
CTA CASE NO. 9147
JG SUMMIT HOLDINGS, INC. v. CIR
DECISION
Page 2 of 17
x--------------------------------------------------------x

Rules of the Court of Tax Appeals (RRCTA), seeking the reversal of the
Revised Final Decision on Disputed Assessment (RFDDA) dated 20
August 20153 of respondent Commissioner of Internal Revenue
(CIR/respondent). The RFDDA found petitioner liable for deficiency
income tax (IT) in the amount of FIVE HUNDRED EIGHTY-ONE
MILLION NINE HUNDRED ONE THOUSAND FIVE HUNDRED
FIFTY-FIVE PESOS AND NI NETY CENTAVOS (P581,901,s55.90),
deficiency value-added tax (VAT) in the amount of TWO HUNDRED
TWO MILLION SIX HUNDRED TWENTY-TWO THOUSAND ONE
HUNDRED SEVENTY PESOS AND EIGHTY-NINE CENTAVOS
(P202,622,170.89), and deficiency documentary stamp tax ( DST) in the
amount of FIVE HUNDRED FIFTY-FIVE MILLION TH REE HUNDRED
TWENTY-NI NE THOUSAND SIX HUNDRED SIXTY PESOS AND
NINETEE N CENTAVOS (P555,329,660.19).

PARTIES OF THE CASE

Petitioner JGSHI is a corporation duly organized and existing

under the laws of the Republic of the Philippines, with office address at
43rd floor, Robinsons Tower, ADB Avenue corner Poveda Road, Ortigas
Center, Brgy. San Antonio, Pasig City.

Respondent CIR, on the other hand, is the duly appointed

Commissioner of Internal Revenue, vested with authority to administer
and enforce internal revenue laws; including, among others, the power
to issue tax assessments. He holds office at the Bureau of Internal
Revenue (BIR) National Office Building, Diliman, Quezon City.

FACTUAL ANTECEDENTS

On 14 May 2010, respondent issued Letter of Authority 4 (LOA)

No. LOA-127-2010-000000 12, authorizing Revenue Officers (ROs) Ma.
Salud Maddela, Allan Maniego, Myrna Ramirez, Joel Aguila, Zenaida
Paz, Cletofel Parungao, and Group Supery'isor (GS) Glorializa Samoy to
examine petitioner's books and records.,.

Exhibit "R-17", BIR Records, pp. 1361-1372.

Exhibit "R-I", id., p. I.
 CTA CASE NO. 9147

Thereafter, petitioner executed a Waiver of the Defense of

Prescription 5 (WOP/first WDP) on 02 April 2012 extending the
respondent' s right to assess petitioner u ntil 31 December 2012.
Petitioner executed another WDI>6 (second WDP) on 07 December
2012, extending the period of assessment until 31 December 2013.

On 16 January 2013, petitioner received a copy of the Notice of

Informal Conference7 (NIC) with the BIR finding petitioner liable for
deficiency IT, VAT, DST, withholding tax on compensation (WTC),
expanded with holding tax (EWT), final withholding tax (FWT) on
dividends, and improperly accumulated earnings tax (IAET) in the
aggregate amount of FIVE BILLION FORTY-TWO MI LLION
NINETY ONE THOUSAND SEVEN HUNDRED NINETY-SEVEN
PESOS AND NINETEEN CENTAVOS (P5,042,091,797.19).

Still thereafter, on 09 October 2013, petitioner executed yet

8
another WDP (third WDP) extending the respondent's right to assess
until 30 June 2014, which respondent accepted on 12 December 2013. In
the meantime, on 04 November 2013, petitioner received a Preliminary
Assessment Notice9 (PAN) adjusting its tax liabilities to FIVE
BILLION EIGHT HUNDRED FORTY MI LLION ONE
HUNDRED EIGHTY THOUSAND NINE HUNDRED FIFTY-SEVEN
PESOS AND TWENTY THREE CENTAVOS (P5,840,180,957.23).

On 27 February 2014, petitioner received a copy of respondent's

Final Assessment Notice (FAN) and Formal Letter of Demand 10
(FLD) signed by CIR Kim Jacinto-Henares" (CIR Henares), finding
petitioner liable for deficiency taxes, inclusive of increments
amounting to SIX BILLION ONE MILLION SEVENTY-FIVE
THOUSAND FORTY-SIX PESOS AND FOURTEEN CENTAVOS
(P6,001,075,046.14).

On 12 March 2014, petitioner filed its protest" to the FLO with a

·
request for investigation. On 05 December 2014, petitioner receivecy4

'6 Exhibit "R-2", id., p. 767.

Exhibit "R-3", Division Docket, Volume V, p. 2036.
Exhibit "R-5", BIR Records, pp. 823-836.
8
Exhibit "R-4", id., pp. 767H-7671.
• Exhibit "R-7", id., pp. 880-
892. IO Exhibit "R-9'', id., pp. 928
938. 11 Exhibit "R-9-a", id., p. 935.
12
Exhibit "R-12", id., pp. 973-987.
 CTA CASE NO. 9147
JG SUMMIT HOLDINGS, INC. v.
CIR DECISION
Page 4 of 17
x---------------------------x

respondent's Final Decision on Disputed Assessment13 (FDDA),

reiterating the latter's previous findings, and now holding petitioner
liable for tax liabilities including increments in the amount of SIX
BILLION FIVE HUNDRED FORTY-SIX MILLION TWO HUNDRED
SIX THOUSAND SEVEN HUNDRED SIXTY-THREE PESOS AN D
THIRTY-TWO CENTAVOS (P6,54-6,2o6,763.32).

On 22 December 2014, petitioner filed a request for

reconsideration 14 with respondent CIR. On 20 August 2015, respondent
denied petitioner's request through the assailed RFDDA 15 , wherein
petitioner was still held liable for deficiency IT, VAT, DST and IAET.
However, respondent acknowledged petitioner's payment in interim of
its deficiency WTC, EWT and FWf .

Aggrieved by respondent's actions, petitioner appealed its case

before this Court via the present Petition for Review, filed on 18
September 201 5.

PROCEEDINGS BEFORE THE FIRST DIVISION

On 22 October 2015, petitioner filed its Amended Petition

16
for Review. In a Resolution dated 02 November 201517, the Court
admitted petitioner's amended petition and ordered respondent to
file its Answer thereto within fifteen (15) days from receipt of such
order.
On i8 January 2016, respondent filed its Answer18 through registered
mail after the Court granted his motion for an extension of time to file
the same. Thereafter, on 14 March 201619 and n March 201920,
respectively, petitioner and respondent submitted their Pre-Trial
Briefs.

Subsequently or on 06 April 2016, the parties submitted their ·

Joint Stipulation of Facts and Issues (JSFI). During the pre-triaY'l

IJ
Exhibit "R-14", id., pp. 1066-1077.
14
Exhibit "R-16", id., pp. 1292-1302.
"
16
Exhibit "R-17", supra at note 3.
Division Docket, Volume l, pp. 138-170.
17
Id.. p. 260.
"
19
Id., pp. 280-315.
Id., pp. 400-408.
20
Id., pp. 371-377.
CTA CASE NO. 9147
JG SUMMIT HOLDINGS, INC. v. CIR
DECISION
Page 5 of 17
x----------------------------x

conference2 , both parties agreed to adopt the sole issue raised by

1
petitioner in its Pre-Trial Brief, that is - whether petitioner is liable to
2
pay its assessed deficiency IT, VAT, DST, and IAET, plus 50%
surcharge, 20% deficiency and delinquency interest pursuant to
23 24
Sections 248 and 249 of the National Internal Revenue Code (NIRC)
of 1997, as amended.

Trial thereafter ensued where petitioner presented the testimony

of the following witnesses: (1) Atty. Rosalinda F. Rivera (Rivera) j
21
Id., pp. 415-418.
22
See Resolution dated 08 April 2016, id., pp. 440-441 .
23
Sec. 248. Civil Penalties. -
(AJ There shall be imposed, in addition to the tax required to be paid, a penalty equ ivalent to
twenty-five percent (25%) of the amount due, in the followin g cases:
(I J Failure to file any return and pay the tax due thereon as requ ired under the provisions
of this Code or rules and regulations on the date prescribed; or
(2J Unless otherwise authorized by the Commissioner, filing a return with an internal
revenue officer other than those with whom the return is required to be filed; or
(3J Failure to pay the deficiency tax within the time prescribed for its payment in the
notice of assessment; or
(4J Failure to pay the fu ll or part of the amount of tax shown on any return required to be
filed under the provisions of this Code or rules and regulations, or the full amount of tax
due for which no return is required to be filed, on or before the date prescribed for its
payment.
(BJ In case of willful neglect to file the return within the period prescribed by this Code or by ru les
and regulations, or in case a false or fraudulent return is willfully made, the penalty to be imposed
shall be fifty percent (50%J of the tax or of the deficiency tax, in case, any payment has been made
on the basis of such return before the discovery of the falsity or fraud: Provided, That a substantial
underdeclaration of taxable sales, receipts or income, or a substantial overstatement of deductions,
as determined by the Commissioner pursuant to the ru les and regulations to be promulgated by the
Secretary of Finance, shall constitute prima facie evidence of a false or fraudulent return:
Provided, further, That failure to report sales, receipts or income in an amount exceeding thirty
percent (30%J of that declared per return, and a claim of deductions in an amount exceeding
(30%J of actual deductions, shall render the taxpayer liable for substantial underdeclaration of
sales, receipts or income or for overstatement of deductions, as mentioned herein.
24
Sec. 249. Interest. -
(AJ In General. - There shall be assessed and collected on any unpaid amount of tax, interest at the
rate of twenty percent (20%J per annum, or such higher rate as may be prescribed by rules and
regulations, from the date prescribed for payment until the amount is fully paid.
(BJ Deficiency Interest. - Any deficiency in the tax due, as the term is defined in this Code, shall
be subject to the interest prescribed in Subsection (AJ hereof, which interest shall be assessed and
collected from the date prescribed for its payment until the full payment thereof.
(C) Delinquency Interest. - In case of failure to pay:
(I J The amount of the tax due on any return to be filed, or
(2) The amount of the tax due for which no return is required, or
(3J A deficiency tax, or any surcharge or interest thereon on the due date appearing in the
notice and demand of the Commissioner, there shall be assessed and collected on the
unpaid amount, interest at the rate prescribed in Subsection (AJ hereof until the amount is
fully paid, which interest shall form part of the tax.
(DJ Interest on Extended Payment. - If any person required to pay the tax is qualified and elects to
pay the tax on installment under the provisions of this Code, but fails to pay the tax or any
installment hereof, or any part of such amount or installment on or before the date prescribed for
its payment, or where the Commissioner has authorized an extension of time within which to
pay a tax or a deficiency tax or any part thereof, there shall be assessed and collected interest at
the rate hereinabove prescribed on the tax or deficiency tax or any part thereof unpaid from the
date of notice and demand until it is paid.
petitioner's Corporate Secretary; (2) Michelle Abellanosa
(Abellanosa), Vice President-Controller of petitioner; (3) Nicasio Lim
(Lim), Administrative Manager of Gokongwei Brothers Foundation,
Inc. (GBF); and, (4) Ria Anne P. Abanto (Abanto), the court
commissioned Independent Certified Public Accountant (ICPA).

On the witness stand, Rivera testified essentially on petitioner's

status as a publicly-held corporation. 25 Lim testified on GBF's
registration as a non-stock, non-profit corporation 26 ; while,
Abellanosa's testimony revolved around the circumstances regarding
the assailed assessment and filing of the letter request for
reconsideration with respondent. 27 On the other hand, Abanto attested
to her findings and report on petitioner' s tax liabilities. 28

Thereafter, petitioner filed its Formal Offer of Evidence (FOE)

8.
petitioner's FOE and admitted its offered exhibits.3 't
29 30
on 02 February 201 On 05 April 2018, the Court admitted
25
Exhibit "P-56", id., Volume II, pp. 856-864.
26
Id., pp. 822-827.
27
Exhibit "P-55", id., Volume Ill, pp. 932-946.
28
Exhibit "P-58", id., pp. 1398-1406.
29
Id., Volume IV, pp. I 543-1560.
30
Id., pp. 1955-1957.
31

Exhibit "P-1"
Exhibit "P-2" - Amended Articles oflncorporation of JG Summit Holdings, Inc..
Exhibit "P-3" - BIR Certificate of Registration No. OCN-8RC0000019333.
Exhibit "P-4" - Letter of Authority No. LOA-127-2010-00000012 dated May 14, 2010.
- Waiver of the Defense of Prescription Under the Statute of Limitations
Exhibit "P-5" under the National Internal Revenue Code dated April 2, 2012.
- Waiver of the Defense of Prescription Under the Statute of Limitations
Exhibit "P-5-a" under the National Internal Revenue Code dated October 9, 2013.
Exhibit "P-5-b" - The date of acceptance of the Waiver by the BIR.
Exhibit "P-6" - The date of acceptance of the Waiver by the Petitioner.
Exhibit "P-7" - Notice of Informal Conference.
Exhibit "P-8" - Petitioner's letter to the BIR dated January 30, 2013.
Exhibit "P-9" - Preliminary Assessment ("PAN").
Exhibit "P-10" - Petitioner's written protest to the PAN dated November 19, 2013.
Exhibit "P-11" - Formal Letter of Demand ("FLO").
Exhibit "P-12" - Petitioner's written protest to the FLO dated March 12, 2014.
Exhibit "P-13" - Petitioner's supplemental protest to the FLO dated May 6, 2014.
Exhibit "P-14"
- Final Decision on Disputed Assessment ("FDDA").
- Payment Form (BIR Form No. 0605) for payment of withholding tax
Exhibit "P-15"
on compensation in the amount of PhP4,770,654. l 7.
Exhibit "P-16" - Payment Form (BIR Form No. 0605) for payment of final tax in the
amount of PhP25,739, 175.84.
- Payment Form (BIR Form No. 0605) for payment of EWT in the
Exhibit "P-17"
amount of PhP2,259,565.5 l.
Exhibit "P-18"
Exhibit "P-19"
- Petitioner's Request for Reconsideration dated December 22, 2014.
Exhibit "P-20" - Revised FDDA.
- Breakdown of DST Payments.
- Audited Financial Statements of Petitioner for 2008.
Exhibit "P-21"
BIR Form No. 2000 filed through eFPS on December l, 2009 with
Payment Details.
Exhibit "P-22"
Audited Financial Statements of Petitioner for 2009.
Exhibit "P-23"
Philippine Stock Exchange ("PSE") Certification issued on March 8,
2016.
Exhibit "P-24"
- Letter of Petitioner's Corporate Secretary to the PSE with the list of
Petitioner's stockholders or record as of December 31, 2009 attached.
Exhibit "P-24-a"
Signature of Rosalinda F. Rivera, Corporate Secretary of Petitioner.
Exhibit "P-28"
Petitioner's Income Tax Return for 2009.
Exhibit "P-28-a"
Electronically generated date of filing of the Income Tax Return.
Exhibit "P-29"
Petitioner's Quarterly VAT Return for the 1"quarter of 2009.
Exhibit "P-2-a"
Petitioner's Quarterly VAT Return for the 2°' quarter of 2009.
Exhibit "P-29-b"
- Petitioner's Quarterly VAT Return for the 3"' quarter of 2009.
Exhibit "P-29-c"
- Petitioner's Quarterly VAT Return for the 4th quarter of 2009.
Exhibit "P-30"
- Letter of Petitioner' s Corporate Secretary to the PSE with the list of
Petitioner's stockholders of record as of December 31, 2010 attached.
Exhibit "P-30-a"
- Signature of Rosalinda F. Rivera, Corporate Secretary of Petitioner .
Exhibit "P-31"
- Amended Articles of Incorporation of Gokongwei Brothers
Foundation, Inc. ("GBP'),
Exhibit "P-32"
- GBF's General I nformation Sheet for the year 2009.
Exhibit "P-33"
GBF's General Information Sheer for the year 2009.
Exhibit "P-34"
- List of GBF beneficiaries for the year 2009.
Exhibit "P-35"
- List of GBF beneficiaries for the year 2010.
Exhibit "P-55"
- Affidavit in Lieu of Direct Examination of Ms. Michele Abellanosa
dated April I &, 2016.
Exhibit "P-55-a"
- Signature of Ms. Michele Abellanosa.
Exhibit "P-56"
Affidavit in Lieu of Direct Examination of Atty. Rosalinda F. Rivera.
Exhibit "P-56-a"
- Signature of Atty. Rosalinda F. Rivera.
Exhibit "P-57"
- Affidavit in Lieu of Direct Examination of Mr. Nicasio L. Lim.
Exhibit "P-57-a"
- Signature of Mr. Nicasio L. Lim.
Exhibit "P-64"
- Supplemental Affidavit in Lieu of Direct Examination of Ms. Michele
Abellanosa dated January 15, 2018,
Exhibit "P-64-a"
- Signature of Ms. Michele Abellanosa.
Exhibit "P-58"
Affidavit in Lieu of Direct Examination of Ms. Ria Anne P. Abanto
dated November IO, 2016.
Exhibit "P-58-a"
- Signature of Ms. Ria Anne P. Abanto.
Exhibit "P-54"
- Amended and Final Independent Certified Public Accountant (!CPA")
Report dated June 29, 2016 with supporting annexes, summaries, and
sched ules
Exhibit "P-54-a"
Signature of Ms. Ria Anne P. Abanto.
Exhibit "P-61"
Supplemental Affidavit in Lieu of Direct Examination of Ms. Ria Anne
P. Abanto dated January 16, 2018.
Exhibit "P-61-a"
- Signature of Ms. Ria Anne P. Abanto.
Exhibit "P-6r
- Supplemental !CPA Report dated January 12, 2018 with supporting
annexes, summaries, and schedules.
Exhibit "P-62-a"
- Signature of Ms. Ria Anne P. Abanto.
Exhibit "P-40"
- General ledger on interest expense on loan from affiliates and banks.
Exhibit "P-41"
• Schedu le of Bank Promissory Notes on Short-term borrowings.
Exhibit "P-41-01 to
P-41-11" - Bank Promissory Notes on Short-term borrowings and Corresponding
Bank Certifications.
Exhibit "P-42.1 to
- Bank Statements.
P-42.227"
Exhibit "P-43"
Exhibit "P-43-01" Schedule of loan amortization on short-term borrowings.
Exhibit "P-44" Loan amortization on short-term borrowings. I
Exhibit "P-44-01 Schedule of Long-term Debt Loan Agreements.
to P-44-04" Long-term Debt Agreements.
Exhibit "P-45"
Schedules of loan amortization on long-term debt.
Exhibit "P-45-01"
Exhibit "P-46" Loan amortization on long-term debt. '
Schedule of interest amortization on loan from affiliates'
 On 02 October 2018, the present case was transferred to this
Court's Second Division pursuant to CTA Administrative Circular No.
02-2018 which reorganized the three divisions of this Court.

PROCEEDINGS BEFORE THE SECOND DIVISION

When the trial proceedings continued, respondent proferred the

testimony of his sole witness, RO Joel M. Aguila (Aguila) who
essentially testified about the conduct of the assessment and the
issuances
FOE on 28 of January
the CIR 2019.
relating
On thereto.
03 May
Thereafter, respondent filed his
2 the Court also admitted
2019,3

respondent's exhibits. 33 The Court further ordered the parties to f

Exhibit "P-47" - General ledger of interest income on loan to affiliates.
Exhibit "P-48" - Schedule of interest income on loan to affiliates.
Exhibit "P-48-01 to - Amortization of interest income on loan to affiliates.
P-48-04"
Exhibit "P-49" - Related parties' check vouchers, request for payments/advances
manifold and other related documentations.
Exhibit "P-50- - Documentary Stamp Tax Declaration/Return 2000.
01" Exhibit "P- - General ledger of interest expense on preferred shares.
51" Exhibit "P- - Schedule of Secretary Certificate on declaration of cash dividends on
52" common shares.
• Secretary Certificate on declaration of cash dividends on common
Exhibit "P-52-01" shares.
- Schedule of Board Resolutions on Appropriation of Retained Earnings.
Exhibit "P-53" - Board Resolutions on Appropriation of Returned Earnings.
Exhibit "P-53-01" - Supporting documents for statements ofloan obligations.
Exhibit "P-59.0l to
P-59-.239" - Supporting documents for providing support to capital expenditure
Exhibit "P-00.01 commltments.
to P-60. 101"
32
Id., Volume V, pp. 2061-2062.
3J

Exhibit "R-1"
- Letter of Authority LOA-127-2010-00000012 dated May 14, 2010.
Exhibit "R-2"
- "Waiver of Defense of Prescription under the Statute of Limitations of
the National Internal Revenue Code" notarized on April 12, 2012
Exhibit "R-3"
- "Waiver of Defunse of Prescription under the Statute of Limitations of
the National Internal Revenue Code" executed on 7 December 2012.
Exhibit "R-4"
- "Waiver of Defense of Prescription under the Statute of Limitations of
the National Internal Revenue Code" executed on 9 October 2013.
Exhibit "R-5"
- Notice of Informal Conference with attached Briefer and Details of
Discrepancies.
Exhibit "R-6"
- Memorandum dated 26 September 2013.
Exhibit "R-T'
- Preliminary Assessment Notice with attached Details of Discrepancies.
Exhibit "R-8" - Memorandum dated 6 January 2014.
Exhibit "R-9"
- Formal Letter of Demand (FLO} dated 27 February 2014 with attached
Details of Discrepancies.
Exhibit "R-9-a"
- On the last page of the Formal Letter of Demand, signature over the
name KIM S. JACINTQ..HENARES, Commissioner of Internal
Revenue.
Exhibit "R-10" - Audit Result/Assessment Notice (BIR Form No. 0401).
Exhibit "R-11" - Affidavit of Service of Final Letter of Demand executed on 27 February
2014.
 submit their respective memoranda within thirty (30) days from
receipt of such order.

On 17 June 2019, respondent filed a Manifestation 34 adopting the

Answer in lieu of filing a memorandum. After being granted an
extension of time, petitioner filed its Memorandum 35 on 15 July 2019.
On 29 July 201936 , the case was deemed submitted for decision.

ISSUE

As stated previously 37
, the parties agreed for the resolution of
this sole issue -

WHETHER PETITIONER IS LIABLE TO PAY ITS ASSESSED

DEFICIENCY INCOME TAX, VALU E-ADDED TAX,
DOCUMENTARY STAMP TAX, AN D IMPROPERLY
ACCUM ULATED EARNINGS TAX, PLUS 50% SURCHARGE, 20%
DEFICIENCY AND DELINQUENCY INTEREST PURSUANT TO
SECTI ONS 248 AND 249 OF THE NIRC OF i997, AS AMENDED.

ARGUMENTS IN SUPPORT OF THE ISSUE

Firstly, petitioner insists on the timely filing of the present

Petition for Review. It contends that the 30-day reglementary period
for filing an appeal with the Court should begin to run from its receipt
of the RFDDA dated 20 August 2015.;

Exhibit "R-12" - Letter dated 12 March 2014.

Exhibit "R-13" - Memorandum dated 28 October 2014.
Exhibit "R-14" - Final Decision on Disputed Assessment with attached Details of
Discrepancies.
Exhibit "R-14-a" - On the last page of the Final Decision on Disputed Assessment (FDDA),
signature over the name KIM S. JACJ NTO-HENARES, Commissioner
of Internal Revenue.
Exhibit "R-15" - Audit Result/Assessment Notice (BIR Form No. 0401}.
Exhibit "R-16" - Request for Reconsideration of the FDDA.
Exhibit "R-17" - Revised Final Decision on Disputed Assessment with attached Details
of Discrepancies.
34
Id.• p. 2069.
,". ld.. pp. 2073-
2135.
Resolution, id., p. 2139.
37
Supra at p. 5.
CTA CASE NO.
JG SUMMIT HOLDINGS, INC. v. CIR
9147
DECISION
Page 10 of 17
x--------------------------x

Secondly, petitioner challenges the validity of respondent's

assessment on the following grounds, to wit: (t) the assessment should
be declared void due to absence of electronic Letter of Authority
(eLOA); and, (2) the right to assess petitioner has already prescribed
since the third WDP was execu ted after the expiration of the period
agreed upon in a previous WDP.

Lastly, petitioner argues that, at any rate, respondent's findings

are erroneous. It claims that: (1) respondent wrongfully disallowed its
interest expense when the former claimed the same to be without
factual and legal basis; (2) its interest income from loans to its affiliates
are not subject to VAT since, petitioner is not a lending institution;
(3) respondent in the RFDDA disallowed excess tax credits carried
over to succeeding years, not covered by the assessment; (4)
respondent's finding for deficiency DST are without factual and
legal basis; and,
(5) petitioner is not subject to IAET since it is a publicly-held
corporation.

Expectedly, respondent claims the exact opposite. He alleges

that this Court has no jurisdiction over petitioner's Petition for
Review since petitioner's recourse to this Court has already
prescribed. According to respondent, petitioner should have filed its
Petition for Review with this Court within thirty (30) days from its
receipt of the FDDA on 05 December 2014 and not from its receipt
of the RFDDA on
20 August 2015.

Respondent also contends that, assuming this Court has

jurisdiction, the BIR's right to assess petitioner had not yet prescribed
since all the WDPs (entered between petitioner and the BIR) were
validly executed. Respondent further maintains the correctness of the
assessment deeming them to be enjoying the presumption of
regularity.

THE RULING OF THE COURT

After an assiduous review of the case, the Court is

constrail,1ed to dismiss the present Petition for Review for lack of
jurisdiction. /!
JG SUMMIT HOLDINGS, INC. v. CIR
DECISION
Page 11 of 17
x----------------------------x

As the records clearly show, petitioner's present Petition for

Review was filed out of time. Section 228 of the NI RC of 1997,
as amended, provides the manner for protesting assessments, to wit:

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...

Within a period to be prescribed by implementing rules and

regulations, the taxpayer shall be required to respond to said notice.
If the taxpayer fails to respond, the Commissioner or his duly
authorized representative shall issue an assessment based on his
findings.

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.

Ifthe protest is denied in whole or in part, or is not acted upon

within one hundred eighty (18o) days from submission of
documents, the taxpayer adversely affected by the decision or
inaction may appeal to the Court of Tax Appeals within thirty
(30) days from receipt of the said decision, or from the lapse of
one hundred eighty (180)-day period; otherwise, the decision
shall become final, executory and demandable.38

While Revenue Regulation (RR) i2-99, as amended 39,

implementing the aforecited provision, outlines in detail the appeal
process for disputed assessments:

3.1.5. Disputed Assessment. - The taxpayer or his duly authorized •

representative may protest administratively against the aforesaid/'

38
Emphasis supplied.
39
Issued on 14 September 1999 as amended by RR 13-2018 on 15 March 2018.
 CTA CASE NO. 9147
JG SUMMIT HOLDINGS, INC. v. CIR
DECISION
Page 12 of 17
x-----------------------------x

formal letter of demand and assessment notice within thirty (30)

days from date of receipt thereof...

If the taxpayer fails to file a valid protest against the formal letter of
demand and assessment notice within thirty (30) days from date of
receipt thereof, the assessment shall become final, executory and
demandable.

If the protest is denied, in whole or in part, by the

Commissioner, the taxpayer may appeal to the Court of Tax
Appeals within thirty (30) days from the date of receipt of the
said decision, otherwise, the assessment shall become final,
executory and demandable.

In general, if the protest is denied, in whole or in part, by the

Commissioner or his duly authorized representative, the
taxpayer may appeal to the Court of Tax Appeals within thirty
(30) days from date of receipt of the said decision, otherwise,
the assessment shall become final, executory and demandable:
Provided, however, that if the taxpayer elevates his protest to
the Commissioner within thirty (30) days from date of receipt
of the final decision of the Commissioner's duly authorized
representative, the latter's decision shall not be considered
final, executory and demandable, in which case, the protest
shall be decided by the Commissioner.

Ifthe Commissioner or his duly authorized representative fails to act

on the taxpayer's protest within one hundred eighty (180) days from
date of submission, by the taxpayer, of the required documents in
support of his protest, the taxpayer may appeal to the Court of Tax
Appeals within thirty (30) days from the lapse of the said 18o-
day period, otherwise the assessment shall become final, executory
and demandable.40

In applying these rules, the Supreme Court in the case of

Philippine Amusement and Gaming Corporation v. Bureau of Internal
Revenue, et al.41 (PAGCOR) and later on in Commissioner of Internal
Revenue v. V.Y. Domingo jewellers, Inc. 42 explained the three (3) ,_
options by which a taxpayer may appeal the denial of its protest, to w

40
Emphasis supplied.
4l
G.R. No. 208731, 27 January 2016.
42
G.R. No. 221780, 25 March 2019.
 JG SUMMIT HOLDINGS, INC. v. CIR
DECISION
Page 13 of 17
x---------------------------x

Following the verba iegis doctrine, the law must be applied exactly as
worded since it is dear, plain, and unequivocal. A textual reading of
Section 3.1.5 gives a protesting taxpayer like PAGCOR only three
options:

1. If the protest is wholly or partially denied by the CIR or his

authorized representative, then the taxpayer may appeal to the
CTA within 30 days from receipt of the whole or partial
denial of the protest.

2. If the protest is wholly or partially denied by the CIR's authorized

representative, then the taxpayer may appeal to the CIR within 30
days from receipt of the whole or partial denial of the protest.

3. If the CIR or his authorized representative failed to act upon

the protest within 180 days from submission of the required
supporting documents, then the taxpayer may appeal to the CTA
within 30 days from the lapse of the 180-day period. 43

To avoid confusion, the Supreme Court in PAGCOR further

summarized the rules in the following wise:

To further clarify the three options: A whole or partial denial by the

CIR's authorized representative may be appealed to the CIR or the
CTA. A whole or partial denial by the CIR may be appealed to
the CTA. The CIR or the CIR's authorized representative's failure to
act may be appealed to the CTA. There is no mention of an appeal
to the CIR from the failure to act by the CIR's authorized
representative. 44

As culled from the facts, petitioner's protest to the FAN and FLO
was filed with then CIR Henares not before her authorized
representative. The latter herself denied petitioner's protest through
an FDDA which petitioner received on 05 December 2014.45 In line
with the rules set forth in RR i2-99 and the decision in PAGCOR, the
proper remedy for petitioner would have been to file a Petition for •
Review before this Court within thirty (30) days from receipt of th'lf

43
Emphasis supplied.
44
G.R. No. 208731 , supra at note 41 ; Emphasis supplied.
4'
Signature of CIR Kim S. Jacinto-Henares on the final page of the FDDA, Exhibit «R-14-a",
BIR Records, p. 1074.
JG SUMMIT HOLDINGS, INC. v. CIR
DECISION
Page 14 of 17
x--------------------------x

FDDA or until 04 January 2015 (as the FDDA already served

as respondent's denial of its protest). Unfortunately, petitioner opted
to instead file a request for reconsideration with CIR Henares on
22 December 2014. Respondent maintained the denial of its
protest through a RFDDA dated 20 August 2015.

With the procedure of appeal already clearly laid down, a

resort to a request for reconsideration 46 (with the CIR) did not
then toll the running of the reglementary period within which
petitioner's appeal must be elevated to this Court. In Fishwealth
Canning Corporation v. Commissioner of Internal Revenue 47
(Fishwealth), the Supreme Court held:

In the case at bar, petitioner's administrative protest was denied

by Final Decision on Disputed Assessment dated August 2, 2005
issued by respondent and which petitioner received on
August 4. 2005. Under the above-quoted Section 228 of the 1997
Tax Code, petitioner had 30 days to appeal respondent's denial of
its protest to the CTA.

Since petitioner received the denial of its administrative protest on

August 4, 2005, it had until September 3, 2005 to file a petition for
review before the CTA Division. It filed one, however, on October
20, 2005, hence, it was filed out of time. For a motion for
reconsideration of the denial of the administrative
protest does not toll the 30-day period to appeal to the CTA.41'

In Fishwealth, the taxpayer contested the CIR's assessment via a

letter dated 23 September 2003. The CIR, in tum, issued an FDDA
denying the taxpayer's protest which the latter received on 04 August
2005. Instead of elevating its case to the CTA, the taxpayer filed with
the CIR a letter of reconsideration on 01 September 2005 which was
considered denied due to a Preliminary Collection Letter (PCL) issued
by the CIR on 06 September 2005. The taxpayer eventually filed its
Petition for Review with the CTA on 20 October 2005 which was
dismissed for being filed out of the 30-day reglementary period
provided for in the NIRC of 1997, as amended, and RR 12-99.4 9j
46
Supra at note 14.
47
G.R. No. 179343. 21 January 2010.
48
Emphasis supplied and underscoring in the original text.
49
Supra at note 47.
 JG SUMMIT HOLDINGS, INC. v. CIR
DECISION
Page 15 of 17
x----------------------------------------------------x

The Court finds petitioner in a similar position. In relying on

the possibility that respondent CIR might reconsider her previous
decision, petitioner waived its remedy of appeal before this Court.
Whether the same be due to inadvertence or purposely resorted to, the
Court cannot ignore that, since its receipt of the FDDA, more than
nine (9) months have already lapsed from petitioner' s receipt of
the respondent's final decision before it raised its case on appeal
before this Court. Given the amount of time that had passed, this
Court's lack of jurisdiction to entertain the present Petition for
Review becomes indisputable.

In insisting that CIR Henares herself specifically indicated in the

RFDDA that the decision may still be raised on appeal with this Court
hence, petitioner also quotes:

It is requested that your aforesaid deficiency tax/taxes be paid

immediately upon receipt hereof, inclusive of penalties. This is our
final decision. If you disagree, you may appeal this final decision to
the Court of Tax Appeal (sic) or to the Commissioner of Internal
Revenue through request for reconsideration within thirty (30) days
from date of receipt hereof.5°

Basic is the rule that jurisdiction over the subject matter of a

case is conferred by law and determined by the allegations in the
complaint.51 Thus, the limits of this Court's jurisdiction is
unaffected by the parties' erroneous interpretation of the law. If
the Court were to deem that the CIR provided another remedy of
request for reconsideration, this will be inconsistent with the Supreme
Court's declaration in PAGCOR. Likewise, in Fishwealth, where the
Supreme Court held that the same will not toll the running of the
appeal period to the CTA. Such interpretation would also be
inconsistent with the BIR's own RR 12-99.

Moreover, the cited portion of the RFDDA likewise appears in

the FDDA:
52
f-

50
Exhibit "R-17'', supra, p. 1370.
51
Padlan v. Dinglasan, et al., G.R. No. 180321, 20 March 2013.
52
Exhibit "R-14", supra at note 13.
CTA CASE NO. 9147
JG SUMMIT HOLDINGS, INC. v. CIR
DECISION
Page 16 of 17
x----------------------------x

It is requested that your aforesaid deficiency tax/taxes be paid

immediately upon receipt hereof, inclusive of penalties. This is our
final decision. If you disagree, you may appeal this final decision to
the Court of Tax Appeal[s] or to the Commissioner of Internal
Revenue through request for reconsideration within thirty (30) days
from date of receipt hereof.

In other words, the wordings of CIR's denial of petitioner's

request could not amend or alter what is provided in the law.
Therefore, petitioner could only be deemed to have already been
notified (by respondent) as early as 05 December 201453 regarding the
remedies available to it. Petitioner made its choice and could not now
avoid the consequences of such choice.

In Foronda-Crystal v. Son 54 , the Supreme Court aptly stated -

"in law, nothing is as elementary as the concept of jurisdiction,
for the same is the foundation upon which the courts exercise
their power of adjudication, and without which, no rights or
obligation could emanate from any decision or resolution." In
thus losing our authority to review respondent's final decision, the
Court finds it unnecessary to further discuss the parties' other
raised issues.

WHEREFORE, the foregoing considered, petitioner's Amended

Petition for Review dated 22 October 2015 is DISMISSED for lack of
jurisdiction.

SO ORDERED. \

JEAN MARIE . LENA

53
Supra at note l 3.
54
G.R. No. 221815, 29 November 2017.
WE CONCUR:

C2u .,.. ;¢- c. cJ1.. Cl,

Jl'.fANITO C. CASTANEDA, f:.
Associate Justice

N. M,t.w .C
CIELITO N. MINDARO-GRULLA
Associate Justice

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.

't;-C .(J,ifo.?c&.,, )I.. .

JUANITO C. CASTANEDA, 1R.
Associate Justice
2nd Division Chairperson

CE RTI FICATI ON

Pursuant to Section 13, Article VIII of the Constitution, and the

Division Chairperson's Attestation, 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's
Division.

ROMAN G. DEL ROSARIO

Presiding Justice