Case Digest (G.R. No. 56122)
Facts:
This case involves the Commissioner of Internal Revenue (CIR), petitioner, versus T Shuttle Services, Inc. (respondent), decided on August 24, 2020 (G.R. No. 240729). The CIR initially issued a Letter of Notice (LN) dated July 15, 2009, notifying respondent of discrepancies in their 2007 tax returns based on the Tax Reconciliation System. This LN was received and signed by Malou Bohol on July 24, 2009. A follow-up letter was sent August 24, 2009, received by Amado Ramos. Because of respondent's inaction, the CIR issued a Letter of Authority (LOA) and a Notice of Informal Conference (NIC) on January 12, 2010, permitting the examination of respondent’s books and records. A Preliminary Assessment Notice (PAN) was sent on March 29, 2010, finding deficiency income tax and VAT liability totaling P6,485,579.49, followed by a Final Assessment Notice (FAN) on July 20, 2010, assessing a total deficiency tax of P9,025,975.23. Collection notices were sent in November 2012 and January 2
Case Digest (G.R. No. 56122)
Facts:
- Background and Initial Notices
- On July 15, 2009, the Commissioner of Internal Revenue (CIR) issued Letter of Notice (LN) No. 057-RLF-07-00-00047 to T Shuttle Services, Inc. (respondent), informing it of discrepancies found in its 2007 tax returns based on the Reconciliation of Listings for Enforcement and Third-Party Matching under the Tax Reconciliation System. The LN was received and signed by Malou Bohol on July 24, 2009.
- A follow-up letter was issued on August 24, 2009 by LN Task Force Head Salina B. Marinduque and received by Amado Ramos.
- Issuance of Authority and Assessment Notices
- On January 12, 2010, due to respondent's inaction, the CIR issued:
- Letter of Authority (LOA) No. 200800044533, authorizing examination of respondent's books and accounting records;
- Notice of Informal Conference (NIC).
- On March 29, 2010, the CIR issued Preliminary Assessment Notice (PAN) with attached Details of Discrepancies, assessing a total deficiency of P6,485,579.49 for income tax (IT) and value-added tax (VAT).
- On July 20, 2010, the Final Assessment Notice (FAN) was issued, assessing deficiency VAT of P3,720,488.73 and deficiency IT of P5,305,486.50 (totaling P9,025,975.23).
- Collection Efforts and Respondent’s Reaction
- On November 28, 2012, the Revenue District Officer (RDO) sent a Preliminary Collection Letter asking respondent to pay within 10 days.
- On January 23, 2013, the RDO issued a Final Notice Before Seizure (FNBS), again allowing 10 days to pay.
- Respondent sent a letter on March 20, 2013, denying knowledge of any tax liability, claiming Mr. B. Benitez who signed prior notices was an unauthorized employee who did not forward notices, and requesting a one-month grace period to review documents.
- On April 2, 2013, the RDO denied the requested grace period.
- On April 19, 2013, respondent protested the FNBS, asserting:
- No liability for deficiency IT for CY 2007;
- VAT exemption as a common carrier;
- Invalid service of NIC;
- Non-receipt of PAN and FAN prior to FNBS.
- On April 23, 2013, respondent was constructively served with Warrant of Distraint and/or Levy (WDL) No. 057-03-13-074-R.
- Judicial Proceedings
- On May 2, 2013, respondent filed a Petition for Review with the Court of Tax Appeals (CTA) Division, praying for preliminary injunction and temporary restraining order.
- The CIR answered on August 22, 2013, praying for denial of the petition and contending:
- Due process was observed in the assessments;
- Respondent failed to timely protest the FAN or submit refuting documents;
- Respondent is liable for deficiency IT and VAT;
- Presumption of propriety and exactness of tax assessments favors the CIR.
- CTA Division Ruling
- Decision dated August 30, 2016: CTA Division granted respondent’s petition, canceled the FAN, the attached assessment notices for deficiency IT and VAT, and the WDL.
- Rationale: Respondent was not accorded due process; CIR failed to prove proper and valid service of PAN and FAN.
- Subsequent Proceedings and CTA En Banc Ruling
- CIR’s motion for reconsideration denied by CTA Division on November 16, 2016; CIR filed petition for review with CTA En Banc.
- CTA En Banc Decision dated April 3, 2018: Petition denied; affirmed CTA Division’s ruling noting lack of proof of proper service of the PAN and FAN.
- CTA En Banc further held that even if service was proper, the assessments lacked a definite period for payment, rendering them void.
- CIR’s motion for reconsideration denied by CTA En Banc on July 16, 2018.
- Present Petition to the Supreme Court
- CIR asserts:
- CTA lacks jurisdiction since assessments are final, executory, and demandable;
- CTA erred in declaring assessments void for failure to prove service;
- CTA erred in ruling FAN void for not containing definite due date for payment.
Issues:
- Whether the Court of Tax Appeals (CTA) erred in ruling that the Preliminary Assessment Notice (PAN) and Final Assessment Notice (FAN) were not properly served upon respondent;
- Whether the deficiency assessments for income tax and value-added tax (VAT) for CY 2007 are void for failure to demand payment of assessed taxes within a definite period;
- Whether the assessments have become final, executory, and demandable such that the CTA has no jurisdiction to review them.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)