Case Summary (G.R. No. 260261)
Petitioner and Respondent
Petitioner: Republic of the Philippines (represented by the CIR and the BIR)
Respondent: Robiegie Corporation
Key Dates
• July 27, 2009 – Original Letter of Authority (LOA) issued to RO David for 2008 audit.
• January 28, 2010 – Memorandum Referral reassigning the 2008 audit to RO Dy without a new LOA.
• August 18, 2011 – Preliminary Assessment Notice issued.
• September 19, 2011 – Final Assessment Notices assessing P10,804,991.21 in deficiencies.
• June 23, 2017 – Complaint for collection filed with Court of Tax Appeals (CTA).
• December 2, 2021 – CTA Second Division Decision voiding assessments.
• April 8, 2022 – CTA en banc Resolution upholding voidness of assessments.
• October 3, 2022 – Supreme Court decision affirming CTA rulings.
Applicable Law
• 1987 Constitution (granting CIR power to delegate investigatory functions).
• NIRC Sections 5, 6(A), 13 (authority to examine and assess via LOA).
• NIRC Section 17 (CIR’s power to assign/reassign officers to other duties).
• Revenue Memorandum Order (RMO) No. 43-90 C(5) (requiring new LOA upon reassignment).
• RMO No. 8-2006 and 62-2010, 69-2010 (BIR internal guidelines on LOAs and reassignments).
• Judicial precedents: Commissioner v. Sony Philippines, Inc.; Medicard Philippines, Inc.; Himlayang Filipino Plans, Inc.; McDonald’s Philippines Realty Corp.
Facts
The BIR issued LOA No. 00037842 for Robiegie’s 2008 books to RO David. Before audit completion, the Revenue District Officer issued a memorandum referring the case to RO Dy without a new LOA. RO Dy conducted the examination, RO Leonardo reviewed findings, and the BIR issued notices assessing over P10.8 million in tax deficiencies. Collection efforts against Robiegie failed for lack of collectible assets, prompting suit before the CTA.
CTA Second Division Ruling
The Second Division held the assessments void for lack of authority: RO Dy and subsequent personnel were never named in a valid LOA. A reassignment via mere memorandum by a Revenue District Officer cannot substitute for a new LOA issued by a properly empowered official under NIRC Section 6(A) and RMO 43-90.
CTA En Banc Ruling
Affirming the Division, the CTA en banc ruled that:
- Only a valid LOA—issued or revalidated by the Commissioner, Deputy Commissioners, or Regional Directors (or their delegates)—can confer investigatory authority.
- RMO 8-2006 and related issuances do not abrogate statutory LOA requirements.
- Section 17’s general reassignment power does not dispense with LOA issuance.
- Sony Philippines doctrine applies to all LOA defects, including unauthorized reassignments.
Positions of the Parties
Petitioner argued that BIR regulations permit case reassignments via memoranda under a single yearly LOA, that LOAs merely notify taxpayers, and that Section 17 authorizes officer rotation without new LOAs. Respondent countered that investigatory powers flow exclusively from a valid LOA, and that neither RMO nor statute allows substitution of revenue officers without issuing a new LOA.
Supreme Court Ruling
LOA as Delegation of CIR’s Powers
• Sections 6(A) and 13 vest examination and assessment powers in the CIR, delegable only through LOAs.
• Jurisprudence (Medicard, McDonald’s, Himlayang Filipino) establishes that any examination by an unauthorized RO is null and void.New LOA Required for Reassignment
• RMO 43-90 C(5) mandates issuance of a new LOA upon transfer of cases to other ROs.
• Failure to issue a new LOA to RO Dy rendered the investigation invalid.Reassignment Power under Section 17
• Section 17 conce
Case Syllabus (G.R. No. 260261)
Facts of the Case
- Robiegie Corporation, a Philippine drugstore operator in Sta. Cruz, Manila, was selected for audit under LOA No. 00037842 dated July 27, 2009, issued to Revenue Officer (RO) Jose Francisco David, Jr.
- On January 28, 2010, Memorandum Referral No. 031-0006-10 reassigned the July 2009 LOA to RO Cecille D. Dy under Group Supervisor Jessica O. Bernales, and Robiegie received notice.
- On August 18, 2011, a Preliminary Assessment Notice (PAN) was issued by Regional Director Misajon based on RO Dy’s findings.
- On September 19, 2011, a Formal Letter of Demand and Final Assessment Notices assessed Robiegie with P10,804,991.21 in deficiency taxes for 2008 (income tax, VAT, EWT, and compromise penalty).
- After unsuccessful collection efforts, on June 23, 2017, the Republic filed a complaint for tax deficiency collection before the Court of Tax Appeals (CTA).
CTA Second Division Ruling and Rationale
- On June 8, 2020, the CTA Second Division dismissed the complaint, holding that RO Dy had no authority under the original LOA issued to RO David.
- The Court found that RO David took no part in the audit and that BIR personnel without a valid LOA conducted the investigation.
- In its motion for reconsideration, the Republic argued that BIR regulations permit reassignments by memorandum referral when the original RO is separated, and that only one LOA per taxable year is allowed.
- By Resolution of August 26, 2020, the CTA Second Division rejected the motion, emphasizing that any reassignment must comply with Section 6(A) of the NIRC and RMO 43-90, which require a new LOA issued or authorized by the Commissioner, Deputy Commissioners, or Regional Directors. The referral signed by the Revenue District Officer was invalid.
CTA En Banc Ruling
- The CTA en banc affirmed the Second Division’s dismissal of the complaint for lack of a valid LOA in favor of RO Dy.
- It held that RMO Nos. 8-2006, 62-2010, and 69-2010 cannot override the clear mandate of Sections 6(A) and 13 of the NIRC.
- Section 17’s general reassignment power does not excuse the LOA requirement.
- The en banc court stressed that the reassignment of audit cases must be effected via LOA signed by an authorized official.
- Associate Justice Ringpis-Liban concurred, noting that a referral signed by an authorized LOA-issuing official would have sufficed.
Parties’ Contentions on Appeal
- The Republic urged that:
• Reassignments under LOAs can be made by memorandum as per RMO 8-2006, 62-2010, 69-2010 and that s