Case Summary (G.R. No. 263811)
Background of the Case
The events leading to the controversy began with the issuance of a Preliminary Assessment Notice (PAN) by the BIR on January 24, 2012, for the taxable year 2009, which was followed by a Final Assessment Notice (FAN) and a Final Decision on Disputed Assessment (FDDA) indicating significant deficiency tax liabilities. Similar assessment notices were issued for the year 2012. FGCCI contested these assessments, claiming they were invalid due to improper service of the notices, which were not sent to its correct registered address.
Procedural History
FGCCI contested the assessments through petitions for review to the Court of Tax Appeals (CTA). The CTA Division ruled in favor of FGCCI, stating that the BIR failed to properly serve the relevant notices according to established regulations. The CTA En Banc upheld this ruling, affirming the prior decisions of the CTA Division regarding the improper service of assessment notices.
Arguments Presented
The CIR contended that the notices had been validly served to FGCCI’s registered address as per BIR records; FGCCI, on the other hand, maintained that the notifications had been delivered to incorrect locations and to unauthorized individuals, thus violating its due process rights. FGCCI emphasized that it had not received the notices as required by the BIR regulations.
Rulings of the Court of Tax Appeals
The CTA Division highlighted that under Revenue Regulation No. 12-99, notices must be served either by personal delivery or registered mail, and that the recipient must show proper identification and authority. The court found that in this case, the service of notice did not adhere to these requirements, leading to a violation of FGCCI's due process rights.
Subsequently, the CTA En Banc maintained that FGCCI’s right to due process was not violated solely because it had filed protests against the assessments. Moreover, it underlined that the assessments were still voided due to improper notification procedures.
Supreme Court Decision
Upon appeal, the Supreme Court addressed both the procedural and substantive aspects of the case. It emphasized that while the CIR justified the service based on the address in BIR records, FGCCI was not bound by that address as it had not formally notified the BIR of a change in address. The failure to properly serve the notices rendered the assessments invalid.
The court additionally discussed the significance of adhering to due process in tax assessments,
...continue readingCase Syllabus (G.R. No. 263811)
Background and Procedural History
- The Commissioner of Internal Revenue (CIR) filed a petition challenging the Court of Tax Appeals (CTA) En Banc Decision and Resolution that cancelled deficiency tax assessments against Fort 1 Global City Center, Inc. (FGCCI) for taxable years 2009 and 2012.
- The deficiency tax assessments were initially issued by the Bureau of Internal Revenue (BIR), comprising various taxes including income tax, VAT, withholding tax, and documentary stamp tax.
- FGCCI contested the assessments, filing protests which led to Final Decisions on Disputed Assessments (FDDA).
- FGCCI claimed that the assessments were void due to improper service, specifically the notices being served at incorrect addresses and to unauthorized persons.
- The CTA Division ruled in favor of FGCCI, cancelling the assessments due to violation of due process in the service of notices.
- The BIR's Motion for Reconsideration was denied, and the CTA En Banc affirmed the decision for lack of the required number of votes to reverse.
- Both parties filed motions for reconsideration, which the CTA En Banc also denied.
Facts Regarding Service of Notices
- For 2009, the LOA, Preliminary Assessment Notice (PAN), Formal Assessment Notice (FAN), and FDDA were served to addresses at 30th Street, Bonifacio Blvd., Global City, Taguig.
- For 2012, the LOA, PAN, and FAN were served at 32nd Street, corner Boni Avenue.
- FGCCI's principal business address as per its 2016 General Information Sheet (GIS) was Unit 2C-B, FPS Building, 1st Avenue, corner 30th Street, Global City, Taguig.
- BIR's evidence of service included "stamped received" annotations, but failed to show that the notices were served on authorized representatives or that the addresses served were those registered with the BIR.
- Revenue officers could not identify the designations or authority of the persons receiving the notices.
Issues Presented
- Whether FGCCI’s right to due process was violated because the LOA, PAN, and FAN were served at the wrong address.
- Whether the Revenue Officers complied with procedural requirements under Revenue Regulation (RR) No. 12-99 in ascertaining the authority of the persons receiving notices on behalf of FGCCI.
- Whether the cancellation of assessments by the CTA was proper based on improper service.
Relevant Legal Provisions and Rules
- Section 228 of the 1997 National Internal Revenue Code (Tax Code) mandates written notice of assessment with factual and legal bases, failing which the assessment is void.
- RR No. 12-99 requires that assessment notices via personal delivery be acknowledged by the taxpayer or duly authorized representatives indicating name, signature, designation, authority, and date.
- RR No. 18-13 amends RR No. 12-99, detailing modes of service including personal, substituted, and service with witnesses if necessary.
- Revenue Regulations require that taxpayers update the BIR on changes of address via proper notification; otherwise, communications sent to the last known registered address are valid and binding.
- Section 2 of Rep