G.R. No. 242670 - Commissioner of Internal Revenue vs. McDonald's Philippines Realty Corp.

Commissioner of Internal Revenue (Petitioner) – Duly appointed head of the Bureau of Internal Revenue (BIR) under the National Internal Revenue Code (NIRC) of 1997, with office at BIR National Office Building, Diliman, Quezon City.
McDonald’s Philippines Realty Corporation (Respondent) – Delaware-organized corporation licensed in the Philippines, branch office at 17th Floor Citibank Center, Makati City; acquires and leases back McDonald’s restaurant sites and develops new sites for lease to McGeorge Foods, Inc.

On August 31, 2007, BIR Large Taxpayers Service issued LOA No. 00006717 authorizing revenue officers Eulema Demadura, Lover Loveres, Josa Gomez, and Emalyn dela Cruz to examine Respondent’s books for all internal revenue taxes covering January 1 to December 31, 2006.
On December 2, 2008, Demadura was transferred; by Referral Memorandum No. 122-LOA-1208-00039, Revenue Officer Rona Marcellano was directed to continue the audit without issuance or amendment of the LOA to include her name.
On January 25, 2011, the CIR issued a Formal Letter of Demand for P17,486,224.38 covering deficiency income tax and VAT for C.Y. 2006.
Respondent protested (February 23, 2011); on April 18, 2013, the CIR’s Final Decision on Disputed Assessment (FDDA) cancelled income tax deficiencies but maintained a VAT deficiency of P16,229,506.83.
Respondent filed a petition with the Court of Tax Appeals (CTA) Division (May 20, 2013), which declared the VAT assessment void for lack of authority of Marcellano. A motion for reconsideration was denied.
The CIR elevated the case to the CTA En Banc (November 7, 2016), which affirmed the Division’s decision on January 4, 2018, and denied reconsideration on September 27, 2018.

Whether the substitution or replacement of a revenue officer originally named in an LOA, without issuance of a separate or amended LOA in the name of the substitute officer, (1) violates the taxpayer’s right to due process; (2) usurps the statutory power of the CIR or his duly authorized representative; and (3) contravenes BIR rules—thus rendering the subsequent assessment void.