[A CERTIFICATE OF TAX EXEMPTION OR RULING CANNOT BE A PRE-REQUISITE FOR THE AVAILMENT OF TAX INCENTIVE OR EXEMPTION BY A COOPERATIVE] [RULINGS MERELY OPERATE TO CONFIRM THE EXISTENCE OF THE CONDITIONS FOR EXEMPTION PROVIDED UNDER THE LAW; IF ALL THE REQUIREMENTS FOR EXEMPTION SET FORTH UNDER THE LAW ARE COMPLIED WITH, THE TRANSACTION IS CONSIDERED EXEMPT, WHETHER OR NOT A PRIOR BIR RULING WAS SECURED BY THE TAXPAYER] [NO PRIOR CONFIRMATORY RULING IS REQUIRED FOR TAX EXEMPTION OR REFUND]

Petitioner CCT Multi-Purpose Cooperative filed a Petition for Review praying that judgment be rendered cancelling and setting aside Respondent Commissioner of Internal Revenue’s (CIR) deficiency tax assessments for the Taxable Year (TY) 2016. The Petitioner argued that it is exempt from the said deficiency taxes as it timely filed its application for tax clearance before the expiration of its tax exemption. In addition, the Petitioner averred that the tax exemption of a registered cooperative is granted by law and does not arise from the Certificate of Tax Exemption (CTE), hence, it maintains that the Respondent erred in finding that it is liable for deficiency taxes. Contrarily, the Respondent contended that in the absence of a renewed CTE, and for Petitioner's failure to renew its CTE, it is liable for pro-rata deficiency taxes for the four-month period, starting from the date of expiration on March 28, 2016, to the issuance date of the renewal of tax exemption on August 10, 2016. In ruling, the Court held that under Article 144 of Republic Act (R.A.) No. 6938, as amended by RA No. 9520, otherwise known as the Philippine Cooperative Code of 2008, cooperatives must obtain a CTE from the BIR after registering with the Cooperative Development Authority (CDA), and the validity of the exemptions shall be for a period of five (5) years from the date of issuance. However, the same provision is silent about the tax consequences after the expiration of the said five (5)-year period, in case no renewal of the CTE was made. The flaw in Section 3(e) of the Joint Rules and Regulations, dated February 5, 2010, is that it assumes that it is the BIR which grants tax exemptions to cooperatives. To be clear, it is the law that grants tax incentives or exemptions to cooperatives and not the BIR. Instead, what the BIR issues is a certificate that embodies a confirmatory ruling for the tax incentives or exemptions to be enjoyed by a certain cooperative. On this score, such a certificate is akin to, or is in the nature of, a BIR Ruling. It is well established that a prior BIR or confirmatory ruling is not required to claim tax exemption citing the Supreme Court case of CIR vs. Co, et al., G.R. No. 241424, dated February 26, 2020. Since BIR Rulings, including CTEs, merely operate to confirm tax exemption conditions under the law, the absence of which should not negate the availment of the tax exemption being invoked. As a corollary, the BIR should assess the claim's merits, rather than reject it solely due to lack of a prior confirmatory ruling. On another note, the Independent Certified Public Accountant (ICPA) impliedly admits that he failed to verify completely all the files of the Petitioner, for him to have a finding that the latter transacted only with its members in 2016. However, considering that there is no indication that Petitioner's Certificate of Registration (COR) issued by the CDA has been cancelled or revoked, the same shall be conclusive evidence of such fact of registration, thereby entitling the Petitioner to the income tax exemption granted under Section 61(2)(a) of RA No. 6938, as amended by RA No. 9520. Nevertheless, the Petitioner has not shown that it is exempt from VAT and EWT. Neither is there any showing that the subject VAT and EWT assessments had prescribed. In view of this, the Petition was PARTIALLY GRANTED. The subject deficiency income tax assessment was CANCELLED and SET ASIDE. However, the deficiency assessments for the VAT, EWT, and DST were hereby UPHELD WITH MODIFICATIONS. [CCT MULTI-PURPOSE COOPERATIVE VS. COMMISSIONER OF INTERNAL REVENUE, CTA CASE NO. 10351, JUNE 24, 2025]

[THE PRESCRIPTIVE PERIOD FOR ASSESSING TAXES BENEFITS BOTH THE GOVERNMENT & THE TAXPAYER] [BEFORE SIGNING THE WAIVER, THE CIR, OR THE REVENUE OFFICIAL AUTHORIZED BY HIM, MUST MAKE SURE THAT THE WAIVER IS IN THE PRESCRIBED FORM, DULY NOTARIZED & EXECUTED BY THE TAXPAYER OR HIS DULY AUTHORIZED REPRESENTATIVE] [THE NIRC ALLOWS A TAXPAYER TO FILE A REPLY, OR OTHERWISE TO SUBMIT COMMENTS OR ARGUMENTS, WITH SUPPORTING DOCUMENTS, AT EACH STAGE IN THE ASSESSMENT PROCESS]

Petitioner Square Top, Inc., filed a Petition for Review seeking the cancellation of the assessment issued by the Respondent Commissioner of Internal Revenue (CIR) for the Taxable Year 2009. The Petitioner argues that the Court has jurisdiction and raises several procedural and substantive issues, including the late issuance of the Formal Letter of Demand/Final Assessment Notices (FLD/FANs), the invalidity of the First Waiver, the unauthorized conduct of the audit, the failure to address arguments in its protest, the lack of a fixed tax liability, and the expiration of the period to collect the alleged tax deficiencies. On the other hand, the Respondent contends that the Revenue Officer (RO) had proper authority to assess the Petitioner, the FLD/FANs were validly and timely issued, the BIR's right to collect the deficiency taxes has not prescribed, and the Final Decision on Disputed Assessment (FDDA) is legally justified and correct. In ruling, the Court found that the RO who conducted the audit was properly armed with a valid Letter of Authority (LOA), specifically naming RO Cartagena as authorized to examine the Petitioner’s books of account. However, despite proper authorization, the Court ruled that the assessment was invalid because the prescriptive period for issuing the FLD/FANs had already lapsed. The FLD/FANs were issued beyond the three-year period allowed under the Tax Code, and the First Waiver offered by the Respondent to justify the extension was found defective due to the lack of written authority of the signatory, improper notarization, and non-compliance with BIR procedures. Furthermore, the Court held that the Petitioner’s right to due process was violated when the BIR failed to address the substantial arguments raised in the Petitioner’s reply to the Preliminary Assessment Notice (PAN). The FLD/FANs merely repeated the contents of the PAN without explaining why the protest was rejected, which rendered the assessment void. Consequently, the corresponding FDDA and the Final Decision of the CIR are also void, and the Petitioner cannot be held liable for the alleged deficiency taxes. Thus, the Petition for Review was GRANTED, and the deficiencies in tax for TY 2009 were CANCELLED and SET ASIDE. [SQUARE TOP, INC. VS. COMMISSIONER OF INTERNAL REVENUE, CTA CASE NO. 10571, JUNE 24, 2025]

[TAX CASES ARE PRACTICALLY IMPRESCRIPTIBLE, SO LONG AS THE PERIOD FROM DISCOVERY & INITIATION OF JUDICIAL PROCEEDINGS UP TO THE FILING OF COMPLAINT WITH THE DEPARTMENT OF JUSTICE (DOJ) DOES NOT EXCEED FIVE YEARS] [THE FIVE-YEAR PRESCRIPTIVE PERIOD BEGAN TO RUN FROM THE DISCOVERY OF THE VIOLATION OF SECTION 255 OF THE NIRC OF 1997 OR DELIBERATE FAILURE TO SUPPLY CORRECT & ACCURATE INFORMATION] [INORDINATE DELAY IN THE RESOLUTION & TERMINATION OF A PRELIMINARY INVESTIGATION VIOLATES THE ACCUSED'S RIGHT TO DUE PROCESS & THE SPEEDY DISPOSITION OF CASES]

The Petitioner, People of the Philippines, filed a Motion for Reconsideration (MR) seeking the reversal of the Court of Tax Appeals (CTA) En Banc's decision, declaring that the offense charged against the Respondent Accused Ziegfried Loo Tian has prescribed, denying its Petition for Review, and upholding earlier Resolutions of the First Division. The Petitioner argued that the five-year prescriptive period under Section 281 of the Tax Code should have been tolled by the filing of the Joint Complaint-Affidavit (JCA) before the Department of Justice (DOJ). The Petitioner asserted that filing a complaint for preliminary investigation interrupts prescription even for tax offenses and that delays by the DOJ should not defeat the government's right to prosecute. In contrast, the Respondent claimed that the case has prescribed, citing the Supreme Court ruling and Rule 9 of the Revised Rules of the Court of Tax Appeals (RRCTA), stating that only a Court filing interrupts prescription. He further argued that his constitutional right to speedy disposition of cases was violated, as over ten (10) years had passed between the JCA and the actual filing of the Information with the Court. In ruling, the CTA En Banc held that the five-year prescriptive period is interrupted once a Complaint is filed with the DOJ for preliminary investigation, consistent with jurisprudence under both the Revised Penal Code and other special laws. Therefore, the filing of the JCA with the DOJ on July 5, 2012, interrupted the five-year prescriptive period, and the case had not yet prescribed when the Information was filed on October 26, 2022. However, the Court found that the Prosecution violated the respondent's constitutional right to speedy disposition of cases. From the JCA's filing in 2012, it took over ten (10) years before the Information was filed, with long and unexplained delays at each stage. Applying the Supreme Court's guidelines in Cagang, the Court held that the Prosecution failed to justify the delay. Since this prolonged inaction prejudiced the Respondent and he raised his rights in a timely manner, the Court ruled that the case should be DISMISSED, not due to prescription, but due to an inordinate delay that violated his constitutional rights. [PEOPLE OF THE PHILIPPINES VS. ZIEGFRIED LOO TIAN, CTA EN BANC CRIMINAL CASE NO. 102, MAY 30, 2025]