Case Digest (G.R. No. 208213) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
In Commissioner of Internal Revenue v. Lancaster Philippines, Inc. (G.R. No. 183408, July 12, 2017), the Commissioner of Internal Revenue (CIR) issued Letter of Authority No. 00012289 on September 30, 1999, authorizing examination of Lancaster’s books for taxable year 1998. Following the audit, the Bureau of Internal Revenue (BIR) issued a Preliminary Assessment Notice disallowing tobacco purchases for February–March 1998 as expenses in the fiscal year ending March 31, 1999, and computed a deficiency of ₱6,466,065.50. Lancaster protested and, after inaction by the CIR, filed a petition before the Court of Tax Appeals (CTA) First Division on August 21, 2003. On September 12, 2007, the CTA Division granted Lancaster’s petition, ordering cancellation of the Formal Letter of Demand/Assessment Notice dated October 11, 2002. The CIR’s motion for reconsideration was denied on December 12, 2007. The CIR elevated the case to the CTA En Banc, which, by Decision of April 30, 2008 and Resol Case Digest (G.R. No. 208213) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Background
- Petitioner: Commissioner of Internal Revenue (CIR), authorized to investigate, examine, and assess deficiency internal revenue taxes.
- Respondent: Lancaster Philippines, Inc., a domestic corporation engaged in tobacco production, processing, and marketing since 1963.
- LOA and Audit
- On September 30, 1999, the BIR issued Letter of Authority (LOA) No. 00012289 authorizing examination of Lancaster’s books and records for “taxable year 1998.”
- The Bureau conducted the audit and issued a Preliminary Assessment Notice (PAN) disallowing purchases of tobacco from farmers covered by Purchase Invoice Vouchers for February–March 1998, totaling ₱11,496,770.18.
- Assessment and Proceedings
- On October 11, 2002, a Final Assessment Notice (FAN) assessed Lancaster with a deficiency income tax of ₱6,466,065.50 for fiscal year April 1, 1998–March 31, 1999, including interest and penalties.
- Lancaster protested the FAN; upon inaction by the CIR, it filed a petition with the CTA First Division, which granted relief. The CTA En Banc denied the CIR’s appeal, leading to this Supreme Court petition under Rule 45.
Issues:
- Whether the revenue officers exceeded their authority under LOA No. 00012289 by examining and assessing transactions outside the specified taxable period.
- Whether the deficiency income tax assessment should be cancelled and withdrawn.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)