Copyright © 2019 by Du-Baladad and Associates (BDB Law). All rights reserved. No part of this issue covered by this copyright may be produced and/or used in any form or by any means – graphic, electronic and mechanical without the written permission of the publisher.
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- Tax Case Digest
- Court Issuances
- CTA
- Court Issuances
Although a municipality may not hire a private lawyer to represent it in litigations, in the interest of substantial justice however, we hold that a municipality may adopt the work already performed in good faith by such private lawyer.
The taxpayer argues that there was grave abuse of discretion, amounting to lack or excess of jurisdiction when the court a quo denied its Motion to Declare Respondents in Default. Petitioner/ Taxpayer claims that the disqualification of the counsel of Municipality of San Simon is the consequence of arbitrarily hiring a private counsel to appear in behalf of a city or municipality. As such, it contends that the pleadings filed or actions conducted by the counsel should be expunged from the records since it was signed without authority.
The Court held that although a municipality may not hire a private lawyer to represent it in litigations, in the interest of substantial justice however, we hold that a municipality may adopt the work already performed in good faith by such private lawyer, which work is beneficial to it (1) provided that no injustice is thereby heaped on the adverse party and (2) provided further that no compensation in any guise is paid therefor by said municipality to the private lawyer. Unless so expressly adopted, the private lawyer’s work cannot bind the municipality. (San Miguel Foods, Inc. vs. Hon. Lucina Alpaez-Dayaoan, CTA AC No. 203, December 3, 2019)
To be considered as non-resident foreign corporation doing business outside the Philippines, each entity must be supported, at the very least, by both SEC Certificate of Non-Registration of corporation/ partnership and certificate/ articles of foreign incorporation/ association.
The taxpayer claimed for the issuance of a Tax Credit Certificate representing its alleged excess and unutilized input value-added tax (VAT) attributable to its zero-rated sales for taxable year 2012. The taxpayer posits that its sales to Kerson Investment Limited qualify as zero-rated sales.
The CTA held that the taxpayer failed to meet the third requisite in order to qualify the sale of service to zero percent (0%) VAT rate. While it had proven that the services must be other than processing, manufacturing or repacking of goods and that payment for such services is made in acceptable foreign currency accounted for in accordance with the BSP rules and regulations, however, the taxpayer did not present the SEC Certification of Non-Registration of Kerson Investment Limited. Hence, the taxpayer failed to prove that its client is a non-resident foreign corporation doing business outside the Philippines. (M.E.T.R.O. vs. Commissioner of Internal Revenue, CTA EB No. 1820, December 2, 2019)
For erroneously paid DST be refunded, it must be shown to have been paid or collected, and such payment or collection is erroneous or illegal. There is no provision stating that the fact of payment can only be established through the presentation of the DST Declaration/ Return.
The taxpayer established its fact of payment of DST in the amount of P 2,500,000.00 through the Bank’s Deposit Slip which was marked as evidence and was not objected to by the BIR.
The Court held that the taxpayer has clearly established the fact of overpayment of the DST for the subject transaction. To be refunded, it must be shown to have been paid or collected, and such payment or collection is erroneous or illegal. Nothing in law that states or even implies that the fact of payment can only be established through the presentation of DST Declaration/Return. The taxpayer paid and remitted DST of P 2,500,000.00 to the BIR, which was clearly beyond what was actually due for the transaction. The DST due is only P 25,000.00. All said, the Court finds that the taxpayer is entitled to the claim for refund in the amount of P 2,475,000.00 representing erroneously overpaid DST. (Commissioner of Internal Revenue vs. Nube Storage Systems, Inc., CTA EB No. 1924, December 4, 2019)The BIR Commissioner’s authority to compromise can only be exercised under certain circumstances specifically identified by the statutes and is not absolute.
The taxpayer alleges that its payment of P 43,773.71 serves as full settlement of its tax liabilities and a settlement pursuant to a compromise between petitioner and respondent.
The Court held that the compromise agreement is not valid. The discretionary authority to compromise granted to the BIR Commissioner is never meant to be absolute, uncontrolled and unrestrained. A valid compromise requires that: (1) except for financial incapacity, the compromise rate must be equivalent to a minimum of 40% of the basic tax assessed; and (2) in case of a settlement lower than the prescribed minimum, the compromise must be subject to the Evaluation Board’s approval. It was found out that given the taxpayer’s basic tax liability, the minimum compromise amount should have been capped at P 69,255.54.
Thus, without a valid compromise agreement between the taxpayer and the BIR, the grant of the taxpayer’s withdrawal of its petition for review had the effect of rendering BIR’s assessment of deficiency for EWT final and executory. (ESCA International, Inc. vs. CIR, CTA EB No. 1980, December 4, 2019)
A revenue officer must be authorized, through an LOA, in order that the said officer may validly examine the books of accounts and other accounting records of a taxpayer. In the absence of an LOA, the tax assessments issued by the BIR against such taxpayer shall be void.
The taxpayer contends that the assessment is void for the revenue officers who examined the books of account and other accounting records of the taxpayer were not vested with proper authority to do so.
The Court held that Section 6 of the Tax Code requires an authority from the Commissioner of Internal Revenue or from his duly authorized representatives before an examination “of a taxpayer” may be made. In the present case, a Memorandum of Assignment was issued for purposes of conducting the reinvestigation filed by the taxpayer. However, the MOA cannot clothe the revenue officers with the requisite authority to examine or conduct a reinvestigation of taxpayer’s liability, as the same was merely issued by an OIC- Assistant RDO, who has no power or authority to issue an LOA. (Erlinda Abacan. vs. Bureau of Internal Revenue, CTA Case No. 8814, December 3, 2019)
The Lack of Authority of the concerned RO to make an examination, pursuant to a valid LOA goes into the issue of the validity of the assessment itself. In the absence of such authority, the assessment or examination is a nullity.
The taxpayer questions the authority of the RO to conduct audit investigation. The BIR asserts that a referral memorandum is sufficient in vesting the concerned ROs with authority to continue an audit investigation of a taxpayer.
The CTA held that pursuant to Revenue Memorandum Order (RMO) No. 29-07, there must be a valid grant of authority, through an LOA, issued by the Regional Director or by the Assistant Commissioner/ Head Revenue Executive Assistants, before any RO can conduct a tax audit or examination. However, in case of re-assignment or transfer of cases to another RO at the Large Taxpayers Service, the said RO may be authorized to continue the audit without need for a new LOA, provided, the letter or notice or memorandum re-assigning the case to the said RO was signed by the Assistant Commissioner/ Head Revenue Executive Assistants of the Large Taxpayers Service. In the present case, the referral memorandum was only signed by the Chief of the LT Audit and Investigation Division I. Accordingly, the same is not sufficient to grant an RO the authority to continue the conduct of the audit investigation. (Metro Rail Transit Corp. vs. Commissioner of Internal Revenue, CTA Case No. 9016, December 4, 2019)
The only BIR officials authorized to issue and sign Letters of Authority are the Regional Directors, the Deputy Commissioners and the Commissioner. For the exigencies of the service, other officials may be authorized to issue and sign Letters of Authority but only upon prior authorization by the Commissioner himself.
The taxpayer claims that the revenue officer who continued the examination of its book of accounts and other accounting records and who recommended the issuance of the subject deficiency tax assessments does not have the authority to do so under the LOA. Thus, the taxpayer asserts that the subject tax assessments issued against it should be declared null and void.
The CTA held that the position of Chief of Regular LT Audit Division is not among those duly authorized representatives of the CIR who have been granted with the power to authorize the audit/ examination of taxpayer’s books of accounts and other accounting records or to effect any modification or amendment to a previously issued LOA. The subject Memorandum of Assignment cannot validly grant the ROs with the requisite authority to continue the audit commenced by the previous authorized RO. (First Life Financial Co. vs. Commissioner of Internal Revenue, CTA Case No. 9029, December 4, 2019)
Fraud is a question of fact that should be alleged and duly proven. The willful neglect to file the required tax return or the fraudulent intent to evade the payment of taxes, considering that the same is accompanied by legal consequences, cannot be presumed.
During the course of the audit investigation, the taxpayer successively executed three (3) Waivers of the Defense of Prescription under the Statute of Limitations of the NIRC. It was later on contested whether or not the waivers were valid in relation to the running of the prescriptive period
The CIR contends that the three waivers executed are all valid. According to it, assuming without admitting that the waivers are not valid, the assessments are still valid because the 10-year prescriptive period will apply pursuant to Section 222 (A) of the Tax Code. The CTA, however, held that BIR’s right to assess the taxpayer was already barred by prescription as the waivers executed were marred by defects, and therefore null and void. As a necessary result, the period within which respondent can assess the taxpayer was not validly extended. (Loyola Plans Consolidated, Inc. vs. Commissioner of Internal Revenue, CTA Case No. 9216, December 3, 2019)
Note: The Court’s decision in this case, runs in contrary to the Decision of the Supreme Court in the Next Mobile (G.R. 212825, 2015) case, wherein the SC ruled finding the waiver executed by the parties binding though it was executed by the person without authority. The SC decided finding both parties, the taxpayer and BIR, in pari delicto, hence, it ruled that the subject waiver is valid. However, comparing the same in the instant case, here the Court take notice more of the fault of the BIR, in accepting the waiver without asking for the authority of the person executing the same. Thus, leading the Court to decide invalidating the waiver. The Court in this case, did not rule similar to that of the Next Mobile case, finding both parties at fault.
Failure of the BIR to strictly observe the requirements of RMO No. 19-2007, the amount of compromise penalties paid by the taxpayer is deemed to have been collected without authority.
A mission order was issued directing the officers of BIR to verify the registration and bookkeeping requirements of petitioner/ taxpayer. It was established that after conducting the verification and validation of the BIR, the taxpayer was made to pay compromise penalties in the aggregate amount of P 7,800,000.00, without an assessment notice or demand letter being issued.
The CTA held that in imposing the subject compromise penalties, the BIR did not follow the strict mandate that all amounts of compromise penalties shall be itemized in a separate assessment notice/ demand letter. For the BIR to strictly observe the requirements of RMO No. 19-2007, the amount of compromise penalties paid by petitioner/ taxpayer is deemed to have been collected without authority. Relative thereto, since the pertinent provisions of RMO No. 19-2007 were not strictly observed by the BIR, the payment of compromise penalties by the taxpayer is invalid. Hence, entitling the taxpayer for refund or issuance of a tax credit certificate. (Dunlevy Food Corporation vs. Commissioner of Internal Revenue, CTA Case No. 9361, December 11, 2019)
It is well settled that perfection of an appeal in the manner and within the period laid down by law is not only mandatory but also jurisdictional.
Taxpayer has been issued FLD, FAN and WDL respectively. However, the taxpayer failed to protest the same within the reglementary period. The 30-day period should be reckoned from the date of receipt of the FDDA or WDL or FAN as the case may be. Even on the assumption that the 30-day period should be reckoned from the date of receipt of the FDDA by the taxpayer, which was on June 29, 2016, the filing of the Petition for Review on June 5, 2017 is clearly made beyond the jurisdictional 30-day period. As consequence, this Court is deprived of its jurisdiction to act on the Petition for Review.
The CTA dismissed the case considering the FAN, WDL and FDDA have all attained finality and in view thereof, the Court has no jurisdiction anymore to act upon the Petition for Review. (Alphaland SouthgateTower, Inc. vs. Commissioner of Internal Revenue, CTA Case No. 9610, December 13, 2019)
A lawyer’s heavy workload is insufficient reason to justify the relaxation of procedural rules.
For resolution is BIR’s Motion for Reconsideration on the Resolution promulgated on September 16, 2019. In the Motion for Reconsideration, BIR alleges that when it filed its Formal Offer of Evidence, it was on the assumption that a comparison of its documentary exhibits had already been done at a Commissioner’s Hearing scheduled for that purpose; that it only learned the non-marking of Exhibits “R-1” to "R-9” when he received the Court’s Resolution dated September 16, 2019; that the failure of BIR’s counsel to mark and compare its evidence is solely due to heavy pressure of work; and that the counsel had no intention to delay the proceedings.
The Court in its decision cited the Supreme Court in saying that a lawyer’s heavy workload is insufficient reason to justify the relaxation of procedural rules. After all, heavy workload is relative and often self-serving. While the Court recognized the heavy workload of BIR’s counsels, the same cannot be constantly and conveniently used as an excuse for failure to comply with court procedure. (Casas + Architects vs. Commissioner of Internal Revenue, CTA Case No. 9705, December 5, 2019)
Assessments must be based on actual facts and not on mere assumptions or presumptions.
The taxpayer was charged before the Court in Division for alleged wilful failure to file his Income Tax Return (ITR) for taxable year (TY) 2009 and non-payment of the corresponding tax thereon in the amount of P18,667,975.34, exclusive of charges and penalties, in violation of Sections 255, in relation to Sections 24(A)(l)(a), 5l(A)(1)(a) and 74(A) of the National Internal Revenue Code (NIRC) of 1997, as amended.
The Court ruled that the assessment must be based on actual facts. The presumption of correctness of assessment being a mere presumption cannot be made to rest on another presumption. The Court found that the BIR merely assumes that the increase in the net worth of the taxpayer from 2008 to 2009 in the amount of Php58,496,797.94 indicated receipt of unreported income. In fine, BIR merely assumed that income was paid to taxpayer which resulted in a significant increase in his assets. However, presumptions cannot by all measures or standards approximate direct evidence. Obviously, BIR failed to consider that this is a criminal case, in which proof beyond reasonable doubt is required to sustain the indictment. Hence, the Petition filed against the taxpayer is denied. (People of the Philippines vs. Prospero A. Pichay, Jr., CTA Crim. Case EB No. 059, December 6, 2019)
Bare allegations, unsubstantiated by evidence, are not equivalent to proof.
The BIR argues in its Motion for Reconsideration that it found out that there was a carryover of the excess 2012 input tax to the succeeding year 2013 and its utilization as input tax for purchases of goods exceeding one million pesos for the 2nd and 3rd quarters of the same year. The BIR also states that Petitioner/ Taxpayer did not submit complete documents in support of its administrative claim for refund/ tax credit.
On the other hand, in its Comment to BIR’s MR, Petitioner argued that it had no output taxes for 2012, as such, there is no way that the input taxes carried over were utilized; that the amount claimed for refund was deducted from the VAT return for the 3rd quarter of taxable year 2013; and that the input vat being claimed is attributable to zero-related sales.
The Court ruled that the BIR did not present any evidence to support the allegations that the input VAT carried over were utilized in 2013, or that the said input VAT was not attributable to effectively zero-rated sales. It is basic in the rule of evidence that bare allegations, unsubstantiated by evidence, are not equivalent to proof. In short, mere allegations are not evidence. Thus, absent proof to the contrary, the findings of the Court in Division will not be disturbed. (Commissioner of Internal Revenue vs. Sony Mobile Communications International AB, CTA EB No. 1785, December 5, 2019).
A Letter of Authority must be issued to a Revenue Officer in order to validly examine the books of the taxpayer. Otherwise, the tax investigation is invalid for lack of authoritys.
BIR filed its Motion for Reconsideration on the decision of the CTA Division nullifying its tax investigation made to the Taxpayer. It argued that a Memorandum of Assignment is sufficient to give authority to the Revenue Officers in case the audit investigation is reassigned.
CTA En Banc resolves to deny the motion, in relation to Section 13 of the NIRC, as amended. Accordingly, the Regional Director has the power to examine taxpayer’s books. In order to delegate such task, there should be issued a valid Letter of Authority. A referral memorandum subsequently issued by the Revenue District Officer is not sufficient to cure such defect.
Here, the motion is denied by the CTA because BIR issued a Memorandum of Assignment issued by the Chief of LTS-RLTAD II is not included under the authorized signatories of an LOA, and therefore invalid for lack of authority. Only the CIR and his duly authorized representatives may issue a new LOA in case of reassignments for investigation and audit. (Commissioner of Internal Revenue vs. Orient Overseas Container Line, LTD. CTA EB No. 1956, December 4, 2019)
Petition for Certiorari is not the proper remedy to an order of the CTA denying a Petition for Relief of Judgment.
BIR assails the dismissal of its Petition for Certiorari by the CTA En Banc pursuant to Rule 41 of the Revised Rules on Civil Procedure. It ratiocinated that no appeal may be taken from an order of denial of Petition for Relief from Judgment. Hence, a Petition for Certiorari must be filed.
CTA En Banc has held that the above-cited Rule is not the proper remedy considering the fact that there is a valid remedy of appeal available from CTA Division to CTA En Banc. The existence and availability of the right to appeal from a decision of CTA Division to the CTA En Banc prohibits the resort to a Petition for Certiorari under Rule 65 of the Rules of Court. (Commissioner of Internal Revenue vs. Court of Tax Appeals and Yi Wine Club, Inc. CTA EB No. 2127, December 2, 2019)
Prescription period for violations of tax laws commences either from the day of its commission, or from the discovery thereof.
The Prosecution filed a Motion for Reconsideration on the decision made by CTA Division insisting that the latter erred in dismissing the former’s filed Information on the ground of prescription.
CTA Division resolved the motion, pursuant to Section 281 of the NIRC, as amended. Prescriptive period of tax law violations commences from the time of commission of the violation or, if unknown at the time, from its discovery and initiation of judicial proceedings. It further resolves that the reckoning period of commencement for violations where the commission were unknown be from the discovery thereof. Otherwise, the Taxpayer will always be at the mercy of the Government if the commencement of the prescriptive period should be simultaneous with the institution of judicial proceedings.
Here, the discovery of the violation was made on 22 September 2010 and the Complaint-Affidavit was filed on 23 September 2010. However, the Information was only filed on 18 June 2019. Accordingly, if the tax violation was discovered on 22 September 2010, the prosecution has only until 22 September 2015 to initiate the judicial proceeding. Notably, the Information was only filed on 18 June 2019, or almost four years beyond the prescriptive period. Therefore, the action has already prescribed. (People of the Philippines vs. Juanchito D. Bernardo, Praxedes P. Bernardo and JDBEC, Incorporated CTA Crim Case Nos. O-728, O-730, O-732 and O-734, December 2, 2019)
The authority to conduct tax investigation must be from the CIR and its duly authorized representatives. Otherwise, the tax investigation shall be null and void.
The prosecution filed a Complaint-Affidavit against a taxpayer who defied its order of submission of documents and subpoena duces tecum. The issue in this case is whether the taxpayer is liable for deficiency tax liabilities based on the tax investigation made.
The CTA dismissed the case because of lack of authority from the Revenue Officer to examine the taxpayer’s books. Under the NIRC, as amended, the CIR and its duly authorized representatives may authorize the examination of a taxpayer and the assessment of the correct amount of tax. Duly authorized representatives therein pertain to Regional Directors and other tax officials with a rank equivalent to division chief or higher. Hence, the authority must be pursuant to a Letter of Authority from the Regional Director, in order for such examination by the Revenue Officer to be valid.
Here, the LOA issued by the Regional Director refers to Revenue Officer Daytec, But the tax investigation was made by Revenue Officer Estacio. There was no issuance of another LOA to authorize the latter to conduct the tax investigation. Hence, the audit was null and void. (Commissioner of Internal Revenue vs. George A. Talamayan, Jr. CTA OC No. O-21, December 3, 2019)
Dissenting Opinion (J. Bacorro-Villena): The issue of the LOA’s validity had already been long foreclosed from judicial review. To entertain the issue of the LOA’s absence in a collection case is to reopen and disturb a decision that had long become final and executory. To do such would further reward the inaction of taxpayer and go against the time-honored principle that, “equity aids the vigilant, not those who slumber on their rights.” To likewise nullify the final assessment which validity the taxpayer did not attempt to question is putting a premium for his disregard of the administrative processes and rewarding him, in effect, for his delinquency. (Commissioner of Internal Revenue vs. George A. Talamayan, Jr. CTA OC No. O-21, December 3, 2019)
A criminal case can be instituted independent of a tax assessment. Both remedies are independent from each other.
BIR, through the DOJ, instituted a criminal case against the taxpayer for allegedly filing a false or fraudulent return and from failure to file return. The taxpayer assailed the case stating that tax assessment must precede a criminal case.
The Court held that in cases where a false or fraudulent return is submitted or in cases of failure to file a return, proceedings in court may be commenced without an assessment. Furthermore, the civil and criminal aspects of the case may be pursued simultaneously. Moreover, the criminal charge need only be supported by a prima facie showing of failure to file a required return. This fact need not be proven in assessment.
Here, the remedy of institution of criminal action is proper. Therefore, the taxpayer’s contention that he was denied procedural due process since there was no assessment prior to the filing of the criminal charges is clearly without merit. The filing of the criminal charges should not be confused with the subsequent assessment issued against taxpayer, as the former is for the purpose for prosecution for violation of tax laws and not a demand for payment. (People of the Philippines vs. Rommel Ynion y Salva et. al. CTA Crim Case No. O-313 to 320, December 4, 2019)
The taxpayer cannot be faulted for relying on the ICPA’s representation as to the completeness of the evidence the ICPA submitted to the Court.
Both the BIR and taxpayer filed a Motion for Reconsideration on the Decision of the CTA En Banc. The BIR reiterated the arguments it raised in its Petition for Review; while the taxpayer argued that it cannot be faulted for the errors of the ICPA.
The CTA ruled that the arguments raised by the BIR has already been considered and passed upon by the court and there is no cogent reason to deviate from its Decision. With respect to the taxpayer, it cannot be faulted for relying on the ICPA’s representation as to the completeness of the evidence the ICPA submitted to the Court. However, the taxpayer has already been given several opportunities to support its claim for refund. Litigation must end at some point. (Commissioner of Internal Revenue vs. Toledo Power Co. CTA EB 1778 & 1780 (CTA Case No. 8671), December 17, 2019)
The taxpayer must not only prove that the payment is made in acceptable foreign currency but also accounted for in accordance with BSP rules and regulations to qualify for 0% VAT rate under Section 108(B)(2).
The taxpayer filed a claim for refund of its unutilized creditable input VAT. The taxpayer argues that its gross receipts were zero-rated considering that it was for general IT services rendered to a person engaged in business conducted outside the Philippines.
The CTA ruled that the taxpayer presented its schedule of sales and the corresponding VAT zero-rated OR proving that it was paid in foreign currency. However, the taxpayer was unable to establish that the foreign currency sales proceeds were duly accounted for in accordance with the BSP rules and regulations. Simply put, the taxpayer failed to fully satisfy the essential element that payments for its services must be in acceptable foreign currency and accounted for in accordance with the BSP rules and regulations. Further, the taxpayer was not able to established that the subject services were performed in the Philippines. (Vestas Services Philippines, Inc. vs. Commissioner of Internal Revenue CTA Case No. 9672, December 17, 2019)
Tax assessments issued in violation of the due process rights of a taxpayer are null and void, thus when the BIR fails to observe due process, it shall have the effect of rendering the deficiency tax assessment as void, and of no force and effect.
Taxpayer argues that the FDDA was issued in violation of the petitioner’s right to due process, considering that it was issued prematurely before the lapse of the 60-day period for the submission of supporting documents. Accordingly, such FDDA is null and void for want of any factual and legal basis. CIR maintains that the taxpayer was not deprived of its constitutionally protected right to due process and that it still is liable for the taxes assessed.
The Court found that the FDDA is indeed null and void. The law is clear that the tax assessment issued by the BIR may be administratively protested by filing a request for reconsideration or reinvestigation, within 30 days from receipt thereof. The said taxpayer is then given a period of sixty (60) days from the filing of the protest to submit “all relevant supporting documents”. In this case, the FDDA was issued only after forty-three (43) days from filing of the protest letter. Thus, the subject tax assessment is null and void. (Philsaga Mining Corporation v. Commissioner of Internal Revenue, CTA Case No. 9402, December 17, 2019)
Without third-party certifications as to the amounts reflected per the BIR RELIEF System, the assessment must be cancelled for having doubts as to the reliability and correctness of the assessment.
The taxpayer is being assessed for deficiency income tax due to undeclared sales. The undeclared sales were derived by the BIR based on the difference between Service Income per books against that RELIEF. The taxpayer contends that the BIR should have secured certifications from concerned parties to authenticate the declarations and present such certifications to the taxpayer in order that it can have fair chance to validate the same.
The CTA ruled that the records does not show that the amount per taxpayer’s SLS that was received by the BIR was verified by externally sourced data to check its correctness. The BIR did not secure the required certifications or confirmation from the alleged third-party sources to support the integrity of the amounts per RELIEF. Without the confirmation from third parties, the finding casts doubts as to the reliability and correctness of the assessment on the alleged undeclared sales. Accordingly, the assessment cannot be sustained since it was based merely on unverified amounts extracted from BIR’s own database. Thus, the imposition of income tax on any discrepancy is not factual but merely a conclusion. Hence, the Court cancelled the assessment. (First Philippine Holdings Corporation vs. Commissioner of Internal Revenue CTA Case No. 8991, December 17, 2019)
Failure on the part of the CIR to establish that the FAN/FLD was actually received by the taxpayer is fatal and amounts to no assessment at all. As such, it cannot bind the taxpayer and may not be utilized as a foundation of a valid collection against it.
CIR alleges that no protest was filed by the taxpayer within the 30 days from receipt of the FLD/FAN. CIR argues that the assessment became undisputed and has now become final and unappealable and is beyond the jurisdiction of the CTA. On the other hand, the taxpayer pointed out that it never received the alleged FAN/FLD.
Per registry return receipt, the name “S/G Javier S.” was written with signature. The Certification of the Postmaster also states that the said mail (FLD/FAN) was delivered and received by the security guard S. Jadiel. No proof, however, was presented by CIR to show that the receipt by the security guard can be considered as receipt by the taxpayer. Thus, CIR’s failure to prove the actual receipt of the FLD/FAN by the taxpayer or by its authorized representative is fatal as to render the assailed assessment void.
For failure of CIR to prove receipt of the FAN, due process was not complied with. Tax assessments issued in violation of the due process rights of a taxpayer are null and void. (Commissioner of Internal Revenue vs. Yusen Logistics Center, Inc., CTA EB No. 1953 (CTA Case No. 9109) December 9, 2019)
The authority of the RTC to exercise either original and/or appellate jurisdiction over local tax under Section 195 of the LGC cases depends not only on the amount of the claim but also in their respective territorial jurisdiction.
The taxpayer argued that the Court seriously erred in holding that the Regional Trial Court (RTC) of Makati City had no jurisdiction over the case filed by the taxpayer. Petitioner asserts that the relief prayed before the RTC was to issue a decision nullifying the notice of assessment and declaring that it is not liable to pay the business tax under the City Ordinance of Cagayan De Oro City.
In the present case, the taxpayer filed its petition before the RTC of Makati.
The CTA held that, appeal with the “Court of competent jurisdiction” under Sec. 195 of the LGC, in light of the passage of RA No. 9282, is construed that RTC, MTC and MCTC have original jurisdiction to take cognizance if actions assailing the decision or inaction of the local treasurer on local tax protests, depending on the amount and appeal be brought and taken cognizance by the RTC, MTC and MCTC, whose territorial jurisdiction encompasses the place where the facts thereof have originated and which has jurisdiction over the parties sought to be enjoined. Thus, the appeal on the decision or inaction of the City Treasurer of Cagayan de Oro City over Protest be brought to the RTC of Cagayan de Oro City and to the City of Makati. (UCPB Leasing and Finance Corp vs. Cagayan De Oro City, CTA EB No. 1933 (CTA AC No. 170) December 9, 2019)
Copyright © 2019 by Du-Baladad and Associates (BDB Law). All rights reserved. No part of this issue covered by this copyright may be produced and/or used in any form or by any means – graphic, electronic and mechanical without the written permission of the publisher.
