Artdepot, Inc. v. Commissioner of Internal Revenue

THIRD DIVISION [C.T.A. CASE NO. 8548. March 23, 2016.] ARTDEPOT, INC. , petitioner , vs. COMMISSIONER OF INTERNAL REVENUE , respondent . RESOLUTION FABON-VICTORINO , J p : In her Motion for Reconsideration dated January 26, 2016, respondent assails the Decision dated January 6, 2016 which granted the Petition for Review filed by petitioner Artdepot, Inc. and declared null and void the Preliminary Assessment Notice (PAN),the Formal Letter of Demand (FLD) and the Assessment Notices for deficiency Income Tax (IT),Value-added Tax (VAT),and Expanded Withholding Tax (EWT),all dated October 29, 2010. Accordingly, the Warrant of Distraint and/or Levy (WDL) issued by respondent in connection with the assailed assessment was cancelled. Respondent avers that there was no confusion on the year covered by the assessment as to deprive petitioner of its right to due process. Allegedly, the assessment she issued was clearly for the taxable year 2008 and not for 2007. Petitioner was apprised of this fact as testified to by Revenue Officers (ROs) Danilo Rodrigo and Leilani Daguno. Besides, the Docket Information Sheet and Action Slip testified to by witness Daguno were both for the year 2008. The same is true with the FLD and Assessment Notices, despite the erasures observed in the Demand Number and body of both the FLD and Assessment Notices. In any event, petitioner should be aware that the assessment was for the year 2008 and not 2007 given that the Letter of Authority (LOA) and the audit conducted pursuant thereto were for the year 2008. Moreover, the errors in the PAN, FAN or FLD pertaining to the taxable year were merely typographical in nature. Further, petitioner was able to protest the PAN for the year 2008. Still on the issue of denial of due process on the ground of non-receipt of the assessment notice, respondent attached to her Motion a Certification dated November 22, 2012 from the Mandaluyong Central Post Office indicating that Registered Letter No. 1835 addressed to Artdepot, Inc. of No. 80 Apo Street, Mandaluyong City was delivered to petitioner and received by its Security Guard H. Pacelo on November 4, 2012. In view thereof, the Court should deem the FLD, the subject of Registered Letter No. 1835, to have been properly received by petitioner. Moreover, the PAN and the FAN, respectively marked as Exhibits R-8 and R-9, showed receipt by petitioner negating the alleged denial of due process. In rejecting the plea for reconsideration, petitioner avers that the Court was correct that there was denial of due process due to respondent's failure to serve a copy of the Notice of Informal Conference, FAN, and FLD upon petitioner effectively depriving it of its right to file a protest. More importantly, the material discrepancy in the taxable year subject of the assessment prevented petitioner from intelligently filing a protest. Specifically, the PAN was for the taxable year 2007 and not for taxable year 2008. The body of the PAN consistently indicated the year 2007 as taxable year subject of the assessment. Even respondent's own witness Rodrigo testified that the PAN was for the taxable year 2007. On the other hand, the LOA was for the taxable year 2008. These discrepancies effectively deprived petitioner of its right to be informed of the facts in connection with the subject of the assessment. ATICcS As to the Certification attached to respondent's Motion for Reconsideration, the same is simply inadmissible in evidence on the ground that a motion for reconsideration cannot be used as a vehicle to introduce new evidence, otherwise the opposing party will be deprived of the right to examine it and object to its admissibility. Further, the said certification has not been authenticated. It is also at best a forgotten evidence as respondent was unable to explain its belated presentation, that is after the unfavorable judgment. Further, there is no indication in the Certification of what was received or that the Security Guard who received the Registered Letter No. 1835 was authorized to do so by petitioner. As to the lists of names of taxpayers prepared by the Chief of the Billing Section of the Bureau of Internal Revenue which respondent also attached to her motion, suffice it to say that they do not prove receipt by petitioner of the subject PAN or FAN/FLD from respondent. More importantly, the alleged new evidence attached to the Motion for Reconsideration cannot be given evidentiary value for they were not marked, identified and formally offered in evidence. Finally, even assuming that petitioner was served with the FAN and FLD on July 7, 2011, the right of respondent to assess for the year 2007 has prescribed pursuant to Section 203 of the National Internal Revenue Code (NIRC), as amended, since the assessment for deficiency IT was only valid until April 15, 2011, for VAT, only until January 25, 2011, and for EWT, only until January 14, 2011. A review of the arguments raised by respondent in her Motion for Reconsideration shows that they have already been seriously passed upon and sufficiently addressed in the assailed Decision dated January 6, 2016. Petitioner failed to raise any new argument that would merit a modification, much less reversal of the Court's ruling. For easy reference, the non-receipt by petitioner of the Notice for Informal Conference, FAN, and FLD was discussed in pages 9-11 of the assailed Decision, and the Court sees no reason to restate its ruling. The discrepancy in the taxable year subject of the assessment resulting in deprivation of the right to due process of petitioner was discussed in pages 11-14 of the same Decision. As to the Certification dated November 22, 2012 from the Mandaluyong Central Post Office attached to the Motion for Reconsideration, the same will not save the day for respondent. It was neither identified by a competent witness nor was it formally offered in evidence and admitted for the appreciation of the Court. Basic is the rule that no evidence shall be admitted unless formally offered. 1 And the Court shall consider no evidence which has not been formally offered. 2 The said Certification is also insufficient proof of receipt by petitioner of the FLD. It reads, thus: "This is to certify that registered letter no. 1835 addressed Artdepot, Inc. of #80 Apo St.,Mandaluyong City was delivered to and received by Security Guard H. Pacelo on November 4, 2012 per advise of Letter Carrier Jovito N. Palacio." Note that what was received was a "registered letter no. 1835." There was nothing in the said certification saying that "registered letter no. 1835" was the FLD issued against petitioner. Beyond this disturbing fact, there was no proof that Security Guard H. Pacelo was duly authorized to receive such important communication from the BIR as the assessment notices which could adversely affect petitioner's operation and financial condition. The same defect is observed on the other documents attached to the Motion. They are but internal records of respondent showing that the PAN and the FAN were to be sent to the taxpayers listed therein. These documents do not prove that the Notices were actually sent and duly received by the taxpayer concerned, including herein petitioner. WHEREFORE ,the Motion for Reconsideration dated January 26, 2016 filed by respondent is hereby DENIED ,for lack of merit. SO ORDERED. TIADCc (SGD.) ESPERANZA R. FABON-VICTORINO Associate Justice Lovell R. Bautista, J., concurs. Ma. Belen M. Ringpis-Liban, J., is on leave. Footnotes 1. People of the Philippines vs. Ramon Logmao Y Nuez ,G.R. Nos. 134831-32, July 31, 2001. 2. Robert F. Mallilin vs. Luz G. Jamesolamin and the Republic of the Philippines ,G.R. No. 192718, February 18, 2015.