First Philec, Inc. v. Commissioner of Internal Revenue

THIRD DIVISION [C.T.A. CASE NO. 9064. March 8, 2020.] FIRST PHILEC, INC. (FORMERLY: FIRST ELECTRO DYNAMICS CORPORATION) , petitioner , vs. COMMISSIONER OF INTERNAL REVENUE , respondent . DECISION RINGPIS-LIBAN , J p : This case involves a Petition for Review filed by petitioner First Philec, Inc. against the respondent Commissioner of Internal Revenue on June 5, 2015 and later amended on May 6, 2016, praying to declare as null and void the Final Decision on Disputed Assessment (FDDA) for taxable year 2009 issued by Respondent against Petitioner in the aggregate amount of P128,181,133.03. 1 THE PARTIES Petitioner First Philec, Inc. is a corporation duly organized and existing under and by virtue of the laws of the Republic of the Philippines, with office address at Barangay Anastacia, Sto. Tomas, Batangas. 2 Its former corporate name was "First Electro Dynamic Corporation." 3 Respondent Commissioner of Internal Revenue is the head of the Bureau of Internal Revenue (BIR) with the power to decide disputed assessments, refund of internal revenue taxes, fees or other charges, penalties imposed in relation thereto or other matters arising under the Tax Code or other laws or portions thereof administered by the BIR. 4 He holds office at the BIR National Office Building located at Agham Road, Diliman, Quezon City. 5 The BIR is the government agency, tasked to, among others, correctly assess and/or collect all national internal revenue taxes. 6 THE FACTS Petitioner received a copy of the Letter of Authority (LOA) No. LOA-116-2010-00000032 dated May 14, 2010 issued by the BIR, authorizing the conduct of an audit of its books of its taxable records for taxable year 2009. 7 During the conduct of audit, Ms. Alejandra D. Marquez, Petitioner's Assistant Vice-President for Finance Controller, and Mr. Ariel C. Ong, Petitioner's President, executed a series of Waivers of the Defense of Prescription Under the Statute of Limitations of the National Internal Revenue Code as follows: 8 1. On January 3, 2013, Ms. Marquez executed a Waiver to suspend the operation of the Statute of Limitations until June 30, 2013; and the same was accepted by then Officer-in-Charge Assistant Commissioner for Large Taxpayer Services Alfredo V. Misajon (OIC-ACIR Misajon) on January 4, 2013. 9 2. On April 12, 2013, Ms. Marquez executed another Waiver to extend the original period of suspension until December 31, 2013. OIC-ACIR Misajon accepted the same on April 17, 2013. 10 3. On September 19, 2013, Mr. Ong executed a subsequent Waiver that further extended the period until June 30, 2014 that OIC-ACIR Misajon accepted on September 23, 2013. 11 Petitioner received the Notice of Informal Conference (NIC) dated December 6, 2012. 12 As a result, Petitioner requested for an extension of deadline to submit its objection to the results of the tax investigation for TY 2009. 13 Mr. Cesar D. Escalada, Chief of the Regular LT Audit Division 1 of the BIR, issued the Memorandum of Assignment MOA No. LOA-116-2013-0417 dated February 25, 2013, 14 referring to Revenue Officer (RO) Felina B. Guimbao the continuation of the audit/investigation of Petitioner to replace the previously assigned Revenue Officer(s) who resigned/retired/transferred to another district office. Mr. Escalada then informed Petitioner that RO Guimbao will be conducting the investigation of Petitioner's internal revenue taxes covering the taxable period ending December 31, 2009. 15 Petitioner responded to the NIC on March 12, 2014. 16 Subsequently, Petitioner filed a letter on March 14, 2014, 17 submitting additional schedules/documents in relation to the NIC. On May 19, 2014, Petitioner received a copy of a Preliminary Assessment Notice (PAN) of even date signed by Respondent. The said PAN stated that after investigation, Petitioner has been found liable for deficiency income tax, value-added tax (VAT), withholding tax on compensation (WTC), expanded withholding tax (EWT), and documentary stamp tax (DST) for taxable year 2009. 18 Petitioner replied to the PAN through a letter dated June 3, 2014. 19 On June 16, 2014, Petitioner received a copy of the Formal Letter of Demand with Final Assessment Notices (FLD-FAN) of even date. 20 The FLD-FAN contained deficiency tax assessments for income tax, VAT, WTC, EWT, and DST for taxable year 2009 in the total amount of P188,739,566.00, inclusive of interests and penalties. 21 Petitioner disputed the said FLD-FAN through a letter dated July 15, 2014, 22 and requested for a reinvestigation. Subsequently, on May 7, 2015, Petitioner received a copy of the assailed FDDA. 23 On June 5, 2015, Petitioner filed the instant Petition for Review. 24 This case was initially raffled to this Court's First Division. Respondent filed an Answer on October 8, 2015, 25 interposing the following special and affirmative defenses: " SPECIAL AND AFFIRMATIVE DEFENSES 4. Respondent hereby reiterates and re-pleads the preceding paragraphs of this answer as part of her Special and Affirmative Defenses. THE ASSESSMENT WAS MADE WITHIN THE PRESCRIPTIVE PERIOD TO ASSESS DEFICIENCY TAXES 5. The [P]etition claims that the waivers executed by [P]etitioner were defective and did not toll the running of the prescriptive period to assess deficiency taxes. 6. Petitioner posits that [R]espondent's right to assess it for certain portions of VAT, EWT and WC has prescribed even before the first waiver was executed. However, [P]etitioner failed to attach the returns from where its claim is based in the [P]etition. 7. Under Section 7, Rule 8 of the Rules of court, whenever an action is based upon a written document, the substance of such instrument or document shall set forth in the pleading, and the original or a copy thereof shall be attached to the pleading as an exhibit. Thus, there exists no reason to dignify such postulation presented by [P]etitioner. 8. Secondly, [P]etitioner argues that its corporate officers were not authorized to sign the waivers in its behalf. 9. However, [R]espondent submits that the position assumed by [P]etitioner is more of convenience rather than merit. It can be readily observed that both the Asst. VP for Finance/Controller and President, who signed the waivers, set their hands as the duly authorized representatives for [P]etitioner a representation relied upon by [R]espondent. 10. Therefore, [P]etitioner is precluded from denying its own acts, admissions or representations to the prejudice of [R]espondent in order to prevent fraud and falsehood. To hold otherwise and allow a party to gainsay its own act or deny rights which it had previously recognized would run counter to the principle of equity which this institution holds dear. 11. Under Section 222 of the 1997 NIRC, as amended, 'if both the Commissioner and the taxpayer have agreed in writing to its assessment after such time, the tax may be assessed within the period agreed upon.' Thus, notwithstanding the provisions of RMO 20-90, the waivers remain valid and enforceable between the parties. On this account, [R]espondent respectfully submits that no amount of interpretation can ever revoke, repeal or modify what the law says. 12. Further, [P]etitioner argues that former OIC Assistant Commissioner Alfredo V. Misajon was equally not authorized to sign the waivers. Petitioner recognizes RDAO 5-2001 which authorizes an Assistant commissioner to sign a waiver in behalf of [R]espondent. The designation of an Officer-in-Charge does not divest ACIR Misajon of his powers, more important[ly] his functions, to act as Assistant Commissioner for the Large Taxpayers Service. As stated in RDAO 5-2001, one of ACIR Misajon's functions is to sign waivers in behalf of the CIR. Also, there was no distinction under RDAO 5-2001 whether revenue officer who will sign a waiver is an OIC or not. 13. From the allegations of [P]etitioner, it seems that it executed the waivers with the ultimate intent of deliberately setting them to fail in order to nullify the assessments made against it. Respondent submits that the waivers were executed to request the approval of [R]espondent for more time to submit the documents required in connection with the audit of [P]etitioner's deficiency taxes: to which respondent agreed and extended the period of assessment, for the benefit of [P]etitioner. 14. Time and again, the BIR has been made to assume the consequences of the stern application of the above-mentioned RMO. Repeatedly, the government is held at the behest and mercy of a taxpayer, relying on the due execution of the waiver presented to it. 15. The doctrine enunciated in the case of Commissioner of Internal Revenue vs. Wyeth Suaco Laboratories, Inc. is applicable in this case. In the cited case, the taxpayer raised the defense of prescription against efforts of the Commissioner of Internal Revenue to assess and collect taxes. The Supreme Court ruled against the taxpayer as it found that there was a valid request for reinvestigation. To wit: 'In another case, this Court stated that the statutory period of limitation for collection may be interrupted if by the taxpayer's repeated request or positive acts, the Government has been, for good reasons, persuaded to postpone collection to make him feel that the demand was not unreasonable or that no harassment or injustice is meant by the Government .' (citing Commissioner of Internal Revenue vs. Consolidated Mining Co. , G.R. No. 11527, November 29, 1968) 16. Given the foregoing considerations, [R]espondent respectfully submits that the waivers that were executed were validly executed and in accord with existing rules and regulations. Further, the case of 'Rizal Commercial Banking Corporation vs. Commissioner of Internal Revenue' likewise tells us that strict adherence to RMO 20-90 is not absolute and a taxpayer may be estopped from questioning the validity of waivers. 17. A party shall not, after its opportunity to enjoy the benefits of an agreement, be allowed later to dispute the same, when the terms thereof ultimately would prove to operate against its hopeful expectations. 18. Clearly, estoppel has set-in in this case. Petitioner cannot adopt an inconsistent position, attitude, or action that will result in injury to [R]espondent. One who, by his acts, representations or admissions, or by his own silence when he ought to speak out , intentionally or through culpable negligence, induces another to believe certain facts to exist and such other rightfully relies and acts on such belief, can no longer deny the existence of such fact as it will prejudice the latter. PETITIONER IS LIABLE FOR THE ASSESSED DEFICIENCY TAXES FOR 2009 19. Respondent maintains that [P]etitioner has been afforded due process during the assessment period as [P]etitioner has been fully apprised of the facts, the law, rules and regulations, of jurisprudence on which the assessment was based. These were stated in the various assessment notices from the initial findings attached in the Notice for Informal Conference and finally upon the issuance of the Formal Letter of Demand with Final Assessment Notices. So long as the parties are given the opportunity to explain their side, the requirements of due process are satisfactorily complied with. ( Calma vs. Court of Appeals ; G.R. No. 122787; February 9, 1999) 20. Per revenue examiner's memorandum dated December 4, 2014, it was found that [P]etitioner is liable for deficiency income tax, VAT, WC, EWT and DST in the total amount of P133,016,487.72, inclusive of increments. Said memorandum is attached as Annex '1' and made an integral part hereof to show that [P]etitioner's protest was given consideration and to dismiss the arguments raised by [P]etitioner in its discussions pertaining to the items of assessment. 21. Respondent emphasizes that all presumptions are in favor of the correctness of tax assessments. The good faith of tax assessors and the validity of their actions are presumed. They will be presumed to have taken into consideration all the facts to which their attention was called (CIR vs. Construction Resources of Asia, Inc., 145 SCRA 671) . It is incumbent upon the taxpayer to prove the contrary (Mindanao Bus Company vs. CIR, 1 SCRA 538; CIR vs. Tuazon, Inc., 173 SCRA 397) and failure to do so shall vest legality on respondent's actions and assessments. 22. At this juncture, it must be stressed that when assessments are assailed, the burden of proof is upon the complaining party. It is incumbent upon the complaining party to show that the assessment was erroneous, in order to relieve himself from it. 23. Failure to present proof of error in the assessment will justify judicial affirmation of said assessment (Delta Motors Co. vs. Commissioner, CTA Case No. 3782, 21 May 1986; Commissioner of Internal Revenue vs. Court of Appeals, et al., G.R. Nos. 104151 and 105563, 10 March 1995) ." This case was scheduled for pre-trial conference on January 21, 2016. 26 However, both parties filed their separate motions to postpone pre-trial conference, 27 thus, the same was reset to April 21, 2016. 28 The pre-trial conference was again reset to July 14, 2016, 29 and was further reset to, and held on, September 27, 2016. 30 On October 15, 2015, the Court directed Respondent to forward the BIR Records of this case. 31 Respondent complied on November 5, 2015. 32 Nevertheless, due to some pages that did not have the corresponding page number, Respondent's counsel was ordered to withdraw and re-submit the BIR Records for proper pagination. 33 Respondent's counsel then complied with the said directive on December 11, 2019. 34 Respondent's Pre-Trial Brief was filed on January 15, 2016, 35 while Petitioner's Pre-Trial Brief was submitted on April 19, 2016. 36 Petitioner filed a Motion for Leave to File and to Admit Attached Amended Petition for Review on May 6, 2016. 37 This was granted by the Court who also gave leave for Respondent to file his Amended Answer. 38 As a result, the Amended Petition for Review 39 attached to the said Motion for Leave was admitted. 40 Respondent failed to file an Amended Answer. 41 Petitioner then filed a Motion to Cancel Pre-Trial Conference with Motion for Final Deferment of Submission the Judicial Affidavits of Witnesses on July 12, 2016, 42 as well as Motion to Reset Hearing with Motion for Extension of Time on July 13, 2016. 43 The Court granted the motions, and gave Petitioner additional time to file a Motion to Commission an Independent CPA. 44 On July 28, 2016, Petitioner sent through registered mail a Motion for Extension of Time (Re: Motion to Commission an Independent Certified Public Accountant). 45 The Court likewise granted the same. 46 Subsequently, a Motion for Commissioning of Independent Certified Public Accountant was filed by Petitioner on August 30, 2016. 47 The Court granted the said motion and commissioned Mr. Adan T. Delamide as an Independent Certified Public Accountant (ICPA). 48 In the Order dated September 27, 2016, 49 the ICPA was directed, among others, to submit his Judicial Affidavit and necessary accreditation with the Board of Accountancy (BOA). The parties submitted their Joint Stipulation of Facts and Issues on November 7, 2016. 50 Thereafter, the Court approved the same and deemed the pre-trial terminated. 51 Consequently, Pre-Trial Order was issued on December 7, 2016. 52 Trial of the case ensued. Due to failure of the ICPA to comply with the Court's Order dated September 27, 2016, 53 Petitioner's right to present the ICPA and to submit the ICPA Report was deemed waived. 54 Petitioner presented its testimonial and documentary evidence. For its testimonial evidence, Petitioner offered the testimony of: (1) Atty. Martin Antonio A. Lacdao, 55 Petitioner's Corporate Secretary; and (2) Mr. Elmer T. Cortes, Jr., 56 Petitioner's Tax Consultant. Petitioner filed its Formal Offer of Evidence on February 5, 2018. 57 Respondent submitted his Comment (Re: Petitioner's Formal Offer of Evidence) on February 19, 2018. 58 In the Resolution dated April 5, 2018, 59 the Court admitted Petitioner's evidence, except Exhibits "P-9", "P-9-A", "P-10", "P-10-A", "P-11", "P-11-A", "P-16", and "P-16-A", for failure to identify the same. Respondent likewise presented his testimonial and documentary evidence. The sole testimony of Ms. Felina B. Guimbao, 60 Revenue Officer III, formed part of Respondent's testimonial evidence. On February 4, 2018, Respondent filed his Formal Offer of Evidence; 61 and on June 20, 2018, Petitioner submitted its Comment and/or Opposition (To Respondent's Formal Offer of Evidence). 62 In the Resolution dated August 9, 2018, 63 Respondent's evidence were admitted, except for Exhibit "R-14", for failure of the description of the document to correspond with the document actually marked. As a consequence, Respondent filed a Motion for Reconsideration (With Leave to Admit Attached Amended Formal Offer of Evidence) on August 22, 2018, 64 averring that through inadvertence, the entire BIR Records were identified as Exhibit "R-14" in Respondent's Formal Offer of Evidence, instead of Exhibit "R-15". Petitioner then manifested that it had no objection thereto. 65 In the Resolution dated December 4, 2018, 66 the Court admitted Exhibit "R-15". In the meantime, the instant case was transferred to this Court's Third Division on September 25, 2018. 67 On January 8, 2019, Respondent filed his Memorandum; 68 while Petitioner sent its Memorandum through registered mail on February 26, 2019. 69 Consequently, this case was considered submitted for decision as of March 7, 2019. 70 THE ISSUES The sole issue stipulated by the parties is, as follows: ". . . Whether or not Petitioner is liable to pay the assessed amount of P128,181,133.03 as deficiency taxes for taxable year 2009." 71 THE ARGUMENTS OF THE PARTIES Petitioner contends that Respondent did not have a valid LOA to conduct the tax examination, making the FLD-FAN and FDDA void; that the revenue officer who conducted the tax assessments is not an authorized officer named under the LOA; that the LOA is null and void because Respondent failed to revalidate it as required by Revenue Audit Memorandum Order No. 1-00; that the LOA is void for failure to comply with the requirements set out under the Revenue Memorandum Order No. 69-2010. Petitioner also argues that Respondent violated its right to due process when he merely reiterated their findings when he issued the FLD-FAN and FDDA without considering its submitted evidence. Furthermore, Petitioner avers that prescription has already set in against Respondent's right to assess the former for taxable year 2009. Relative to this argument, Petitioner contends that the Waivers of the Statute of Limitations executed by Petitioner are invalid, and therefore, did not stall the running of the prescriptive period; that there was no Board Resolution authorizing the signatory to sign the Waivers on its behalf; that the Revenue Officer who accepted the Waivers is equally not authorized to do so; and that the Waivers are full of formal defects. Lastly, Petitioner claims that it is not liable for the deficiency taxes assessed. On the other hand, Respondent avers that the assessment was validly issued within the period of assessment; and that Petitioner is liable for the assessed deficiency taxes for 2009. THE RULING OF THE COURT This Court finds merit in the instant Petition for Review. The Subject Waivers are Invalid and Could not Have Extended the Period to Assess Petitioner. Section 203 of the NIRC of 1997 states the period of limitation upon the assessment taxes, to wit: "SEC. 203. Period of Limitation upon Assessment and Collection . Except as provided in Section 222 , internal revenue taxes shall be assessed within three (3) years after the last day prescribed by law for the filing of the return , and no proceeding in court without assessment for the collection of such taxes shall be begun after the expiration of such period: Provided , That in a case where a return is filed beyond the period prescribed by law, the three-year period shall be counted from the day the return was filed. For purposes of this Section, a return filed before the last day prescribed by law for the filing thereof shall be considered as filed on such last day." (Emphases and underscoring supplied) The foregoing provision mandates the government to assess internal revenue taxes within three (3) years from the last day prescribed by law for the filing of the tax return or the actual date of filing of such return, whichever comes later. 72 Hence, an assessment notice issued after the three (3)-year prescriptive period is not valid and effective. 73 Nevertheless, the above-quoted Section 203 expressly recognizes that the rule therein does not cover those provided under Section 222 of the NIRC of 1997. Relative thereto, subparagraph (b) of the latter provision states an instance when the government may assess pertinent taxes against a taxpayer even beyond the above-stated three-year prescriptive period. Said subparagraph (b) reads as follows: "SEC. 222. Exceptions as to Period of Limitation of Assessment and Collection of Taxes . xxx xxx xxx (b) If before the expiration of the time prescribed in Section 203 for the assessment of the tax, both the Commissioner and the taxpayer have agreed in writing to its assessment after such time, the tax may be assessed within the period agreed upon. The period so agreed upon may be extended by subsequent written agreement made before the expiration of the period previously agreed upon. xxx xxx xxx." (Emphasis ours) Thus, under Section 222 (b) of the NIRC of 1997, the same three-year prescriptive period under Section 203 of the same Code, may be extended, if before the expiration thereof, both Respondent and the taxpayer agreed in writing to a continued assessment, but only within the period agreed upon. Nevertheless, the original period so agreed upon may be extended by a subsequent written agreement made before the expiration of such period. Indeed, a Waiver is a bilateral agreement between a taxpayer and the BIR to extend the period of assessment and collection to a certain date. 74 However, it is likewise a derogation of the taxpayer's right to security against prolonged and unscrupulous investigations and thus, must be carefully and strictly construed . 75 The Waiver must faithfully comply with the provisions of Revenue Memorandum Order (RMO) No. 20-90 and Revenue Delegation Authority Order (RDAO) No. 05-01 in order to be valid and binding. 76 In Commissioner of Internal Revenue vs. La Flor Dela Isabela, Inc. ( "La Flor case"), 77 the Supreme Court held: "In Commissioner of Internal Revenue v. Systems Technology Institute, Inc. , 78 the Court had ruled that waivers extending the prescriptive period of tax assessments must be compliant with RMO No. 20-90 and must indicate the nature and amount of the tax due , to wit: These requirements are mandatory and must strictly be followed . To be sure, in a number of cases, this Court did not hesitate to strike down waivers which failed to strictly comply with the provisions of RMO 20-90 and RDAO 05-01. xxx xxx xxx The Court also invalidated the waivers executed by the taxpayer in the case of Commissioner of Internal Revenue v. Standard Chartered Bank , because: (1) they were signed by Assistant Commissioner-Large Taxpayers Service and not by the CIR; (2) the date of acceptance was not shown; (3) they did not specify the kind and amount of the tax due ; and (4) the waivers speak of a request for extension of time within which to present additional documents and not for reinvestigation and/or reconsideration of the pending internal revenue case as requited under RMO No. 20-90. Tested against the requirements of RMO 20-90 and relevant jurisprudence, the Court cannot but agree with the CTA's finding that the waivers subject of this case suffer from the following defects: xxx xxx xxx 3. Similar to Standard Chartered Bank , the waivers in this case did not specify the kind of tax and the amount of tax due. It is established that a waiver of the statute of limitations is a bilateral agreement between the taxpayer and the BIR to extend the period to assess or collect deficiency taxes on a certain date. Logically, there can be no agreement if the kind and amount of the taxes to be assessed or collected were not indicated . Hence, specific information in the waiver is necessary for its validity. (Emphasis supplied) In the present case, the September 3, 2008, February 16, 2009 and December 2, 2009 Waivers failed to indicate the specific tax involved and the exact amount of the tax to be assessed or collected . As above-mentioned, these details are material as there can be no true and valid agreement between the taxpayer and the CIR absent these information . Clearly, the Waivers did not effectively extend the prescriptive period under Section 203 on account of their invalidity . The issue on whether the CTA was correct in not admitting them as evidence becomes immaterial since even if they were properly offered or considered by the CTA, the same conclusion would be reached the assessments had prescribed as there was no valid waiver ." (Emphases and underscoring ours) Based on the foregoing jurisprudential pronouncements, it is required, inter alia , that the Waiver, to be valid, must indicate the nature and the amount of the tax due. These details are material as there can be no true and valid agreement between the taxpayer and Respondent absent these information. In this case, a cursory reading of the subject Waivers 79 would reveal that they do not indicate the kind and exact amount of the taxes to be assessed or collected . Thus, on the basis of the aforequoted jurisprudence, the said Waivers are invalid. Correspondingly, the same did not effectively extend the three-year prescriptive period under Section 203 of the NIRC of 1997 on account of their invalidity. Nevertheless, even granting that the said Waivers are valid, the same is of no moment, since all the subject tax assessments are inescapably void. The Subject Tax Assessments are Void for Want of Valid Authority It is axiomatic that, at the heart of every assessment conducted by the BIR, there must be a valid grant of authority. This doctrine still prevails to this day almost a decade after it was embodied in Commissioner of Internal Revenue v. Sony Philippines, Inc. 80 where the Supreme Court pronounced that, "Clearly, there must be a grant of authority before any revenue officer can conduct an examination of assessment. Equally important is that the revenue officer so authorized must not go beyond the authority given. In the absence of such an authority, the assessment or examination is a nullity." 81 A Letter of Authority (LOA) is the authority given to the appropriate revenue officer assigned to perform assessment functions. It empowers or enables said revenue officer to examine the books of account and other accounting records of a taxpayer for the purpose of collecting the correct amount of tax. 82 An LOA is premised on the fact that the examination of a taxpayer who has already filed his tax returns is a power that statutorily belongs only to the CIR himself or his duly authorized representatives. 83 Under Section 6 (A) of the NIRC of 1997, as amended, the power to authorize examination of a taxpayer and issue assessments is primarily lodged with respondent CIR, thus: SECTION 6. Power of Make Assessments and Requirements for Tax Enforcement . (A) Examination of Returns and Determination of Tax Due . After a return has been filed as required under the provisions of this Code, the Commissioner or his duly authorized representative may authorize the examination of any taxpayer and the assessment of the correct amount of tax: Provided, however , That failure to file a return shall not prevent the Commissioner from authorizing the examination of any taxpayer. x x x. Section 7 of the 1997 NIRC likewise sets limits on which powers of the CIR may be delegated by him and which powers are to be exercised exclusively by him. The issuance of an LOA is not one of the non-delegable powers of the CIR, viz. : SECTION 7. Authority of the Commissioner to Delegate Power . The Commissioner may delegate the powers vested in him under the pertinent provisions of this Code to any or such subordinate officials with the rank equivalent to a division chief or higher, subject to such limitations and restrictions as may be imposed under rules and regulations to be promulgated by the Secretary of Finance, upon recommendation of the Commissioner: Provided, however, That the following powers of the Commissioner shall not be delegated: (a) The power to recommend the promulgation of rules and regulations by the Secretary of Finance; (b) The power to issue rulings of first impression or to reverse, revoke or modify any existing ruling of the Bureau; (c) The power to compromise or abate, under Sec. 204 (A) and (B) of this Code, any tax liability: Provided, however, That assessments issued by the regional offices involving basic deficiency taxes of Five hundred thousand pesos (P500,000) or less, and minor criminal violations, as may be determined by rules and regulations to be promulgated by the Secretary of finance, upon recommendation of the Commissioner, discovered by regional and district officials, may be compromised by a regional evaluation board which shall be composed of the Regional Director as Chairman, the Assistant Regional Director, the heads of the Legal, Assessment and Collection Divisions and the Revenue District Officer having jurisdiction over the taxpayer, as members; and (d) The power to assign or reassign internal revenue officers to establishments where articles subject to excise tax are produced or kept." On the contrary, issuing LOAs is a delegable power which the CIR may devolve to Revenue Regional Directors, as expounded on in Sections 10 and 13 of the 1997 NIRC, thus: SEC. 10. Revenue Regional Director . Under rules and regulations, policies and standards formulated by the Commissioner, with the approval of the Secretary of Finance, the Revenue Regional Director shall, within the region and district offices under his jurisdiction, among others: xxx xxx xxx (c) Issue Letters of authority for the examination of taxpayers within the region ; xxx xxx xxx (h) Perform such other functions as may be provided by law and as may be delegated by the Commissioner ." 84 SEC. 13. Authority of a Revenue Officer . Subject to the rules and regulations to be prescribed by the Secretary of Finance, upon recommendation of the Commissioner, a Revenue Officer assigned to perform assessment functions in any district may, pursuant to a Letter of Authority issued by the Revenue Regional Director, examine taxpayers within the jurisdiction of the district in order to collect the correct amount of tax, or to recommend the assessment of any deficiency tax due in the same manner that the said acts could have been performed by the Revenue Regional Director himself. An LOA is, in essence, a contract of agency. Article 1868 of the Civil Code defines agency as a contract where "a person binds himself to render some service or to do something in representation or on behalf of another, with the consent or authority of the latter." In the case of Spouses Fernando and Lourdes Viloria v. Continental Airlines, Inc. , 85 the Supreme Court had the occasion to expound on the elements of agency, to wit: "The elements of agency are: (1) consent, express or implied, of the parties to establish the relationship; (2) the object is the execution of a juridical act in relation to a third person; (3) the agent acts as a representative and not for him/herself; and (4) the agent acts within the scope of his/her authority. As the basis of agency is representation, there must be, on the part of the principal, an actual intention to appoint, an intention naturally inferable from the principal's words or actions. In the same manner, there must be an intention on the part of the agent to accept the appointment and act upon it . Absent such mutual intent, there is generally no agency. It is likewise a settled rule that persons dealing with an assumed agent are bound at their peril, if they would hold the principal liable, to ascertain not only the fact of agency but also the nature and extent of authority, and in case either is controverted, the burden of proof is upon them to establish it." 86 In an LOA, the CIR is the principal as he is the one mandated by the law to make assessments and the Revenue Regional Director (RRD), his agent. Apparently, while the power to make assessments is primarily lodged with Respondent, the power to issue LOA in relation thereto may be expressly delegated to the Revenue Regional Director. 87 Now, may the RRD, the CIR's agent, appoint a sub-agent, in this case, the RO named in the LOA? Article 1892 of the Civil Code says that he can. The said provision states: "Art. 1892. The agent may appoint a substitute if the principal has not prohibited him from doing so ; but he shall be responsible for the acts of the substitute: (1) When he was not given the power to appoint one; (2) When he was given such power, but without designating the person, and the person appointed was notoriously incompetent or insolvent. All acts of the substitute appointed against the prohibition of the principal shall be void. (1721)" 88 This power to appoint a sub-agent necessarily includes the power to revoke the same. Thus, the authority given to those who were originally named in the LOA, may be revoked, transferred and reassigned to RO Guimbao in the Memorandum of Assignment (MOA) for continuance of audit. The MOA where such authority is transferred may be equivalent to an LOA. Several reasons support this. First , the only directive under Section 13 of the NIRC of 1997, as amended, 89 which requires that an assessment be done by ROs pursuant to an LOA, is that the grant of authority be done in writing . In fact, an "[a]gency may be oral, unless the law requires a specific form." 90 Second , although the document may not be entitled "Letter of Authority", it contains all the elements necessary to establish a contract of agency between the CIR and the new RO. The primary consideration in determining the true nature of a contract is the intention of the parties. If the words of a contract appear to contravene the evident intention of the parties, the latter shall prevail. Such intention is determined not only from the express terms of their agreement, but also from the contemporaneous and subsequent acts of the parties. 91 The title of the contract does not necessarily determine its true nature. 92 In fact, this Court has, time and again, declared certain documents emanating from the CIR as his "Final Decision" on a Disputed Assessment based on the tenor of the words therein despite the absence of the words "Final Decision" in the title of the document. In interpreting what a "Letter of Authority" is, as mentioned in Section 13 of the NIRC of 1997, as amended, the laws on contracts and agency embodied in the Civil Code simply cannot be ignored. Every effort must be exerted to avoid a conflict between statutes; so that if reasonable construction is possible, the laws must be reconciled in that manner. 93 Similarly, every new statute should be construed in connection with those already existing and all should be made to harmonize and stand together, if they can be done by any fair and reasonable interpretation. Interpretare et concordare leges legibus, est optimus interpretandi modus . This means that the best method of interpretation is that which makes laws consistent with other laws. Tax laws do not exist in a vacuum, and must be appreciated and applied with other laws such as the Civil Code. 94 Records show that RO Guimbao who continued the examination of Petitioner's books of accounts and other accounting records for taxable year 2009 and recommended the issuance of the subject tax assessments, was authorized by way of a MOA. RO Guimbao's testimony during trial confirms as much, to wit: JUDICIAL AFFIDAVIT OF FELINA B. GUIMBAO : "Q2. Why do you know [Petitioner]? A: I am one of the revenue officers assigned to continue the 2009 audit of all internal revenue tax of [Petitioner]. Q3. When did you start your audit of [Petitioner]? A: I started the audit of [Petitioner] immediately after notifying them of the Notice of Continuation of Audit dated February 28, 2013 per Memorandum of Assignment No. LOA-116-2013-0417 dated February 25, 2013 ." 95 (Emphasis ours) AT THE HEARING HELD ON MAY 22, 2018 : "ATTY. MAGBUHOS Q. In Question No. 2 of your JA you stated that you were assigned to continue the 2009 audit of all internal revenue taxes for the [Petitioner], do you confirm that? MS. GUIMBAO: A. Yes. ATTY. MAGBUHOS: Q. This 2009 audit according to you, you stated your audit of [Petitioner] after notifying the corporation through a Notice of Continuation of Audit dated February 28, 2013, is that correct? MS. GUIMBAO: A. Pardon, Ma'am. ATTY. MAGBUHOS: Q. The 2009 audit was through a Continuation of Audit dated February 28, 2013? MS. GUIMBAO: A. Yes, Ma'am. ATTY. MAGBUHOS: Q. You also mentioned that the Notice of Continuation of Audit was per Memorandum of Assignment dated February 25, 2013. Do you agree that this Memorandum is an internal document and that the [P]etitioner was not furnished of the same, the Memorandum of Assignment? MS. GUIMBAO: A. Can I elaborate my answer? Yes, but after the issuance of the Memorandum of Assignment a notice was given to the taxpayer informing of them of the continuation of the audit. ATTY. MAGBUHOS: Okay. Q. So, did the BIR issue a new Letter of Authority authorizing you to conduct the audit? MS. GUIMBAO: A. No. It is the practice of the bureau that after, during the continuation of the audit the Memorandum of assignment was only the one prepared by the bureau ." 96 Clearly, as per the LOA-116-2010-00000032 dated May 14, 2010, 97 RO Guimbao who recommended the issuance of the PAN dated May 19, 2014, FLD-FAN dated June 16, 2014, and FDDA dated May 7, 2015, 98 was not among those originally authorized to audit/examine Petitioner's books of account and other accounting records for TY 2009. In fact, the records reveal that the authority of RO Guimbao to examine Petitioner for possible deficiency taxes pertaining to TY 2009 only emanated from a Memorandum of Assignment MOA No. LOA-116-2013-0417 signed by Mr. Cesar D. Escalada, Chief of the Regular LT Audit Division 1 of the BIR. 99 RO Guimbao who conducted the examination of Petitioner's records may be deemed authorized to do so without need for a new LOA, only if the MOAs were signed by the Revenue Regional Director . In the instant case however, the said MOAs were only signed by Mr. Cesar D. Escalada, Chief of the Regular LT Audit Division 1 of the BIR. Considering that RO Guimbao who conducted the examination of Petitioner's books of accounts and other accounting records for taxable year 2009, and who recommended the issuance of the PAN, FLD-PAN, and FDDA against Petitioner for the same taxable year, acted without authority when she performed the audit of Petitioner and, subsequently, recommended the issuance of the assailed assessment, the subject tax assessments issued by the Respondent against Petitioner are inescapably void. It must be emphasized that a void assessment bears no valid fruit. 100 Such being the case, the subject tax assessments cannot be enforced against Petitioner. The rationale for requiring a valid LOA as a prerequisite to a valid assessment is not that difficult to perceive it is to prevent undue harassment of a taxpayer and level the playing field between the government's vast resources for tax assessment, collection and enforcement, on one hand, and the solitary taxpayer's dual need to preserve its business while at the same time responding to the BIR's exercise of its statutory powers. The balance between the two is achieved by ensuring that any examination of a taxpayer by the BIR's revenue officers is properly authorized in the first place by those to whom the discretion to exercise the power of examination is given by statute. 101 In view of the foregoing discussions, the Court deems it unnecessary to discuss the other issues raised by Petitioner. WHEREFORE , premises considered, the instant Petition for Review is GRANTED . Accordingly, the FDDA dated May 7, 2015 demanding that Petitioner pay the assessed deficiency income tax, VAT, WTC, EWT, and DST in the aggregate amount of P128,181,133.03, covering taxable year 2009, is WITHDRAWN and SET ASIDE . SO ORDERED. (SGD.) MA. BELEN M. RINGPIS-LIBAN Associate Justice Erlinda P. Uy and Maria Rowena Modesto-San Pedro, JJ. , concur. Footnotes 1. Docket Vol. 2, p. 793, Pre-Trial Order dated December 7, 2016, Statement of the Case. 2. Id. , p. 782, Joint Stipulation of Facts & Issues (JSFI), Facts Stipulated by the Parties, par. 1. 3. Id. , par. 2. 4. Id. , par. 3. 5. Id. , p. 780, JFSI, Summary of Admitted Facts, par. 1. 6. Id. at Note 2, par. 4. 7. Id. at Note 5, par. 2. 8. Id. , p. 781, JFSI, Summary of Admitted Facts, par. 3. 9. Id. , p. 900, Exhibit "P-6"; BIR Records, p. 445, Exhibit "R-4". 10. Id. , p. 901, Exhibit "P-7"; BIR Records, p. 446, Exhibit "R-3". 11. Id. , p. 902, Exhibit "P-8"; BIR Records, p. 466, Exhibit "R-3-1". 12. Id. at Note 8, Summary of Admitted Facts, JSFI, par. 4. 13. BIR Records, p. 444, Exhibit "R-5". 14. Id. , p. 447, Exhibit "R-2". 15. Id. , p. 460, Exhibit "R-1". 16. Id. , pp. 525 to 534, Exhibit "R-6". 17. Id. , pp. 552 to 553, Exhibit "R-7". 18. Id. , pp. 634 to 637, Exhibits "P-12" and "R-9"; id. at Note 8, par. 5. 19. Id. at Note 1, pp. 915 to 927, Exhibit "P-13". 20. Id. at Note 8, par. 6. 21. Id. , par. 7. 22. Id. at Note 1, pp. 928 to 951, Exhibit "P-15". 23. Id. at Note 8, par. 8. 24. Docket Vol. 1, pp. 10 to 63. 25. Id. , pp. 234 to 240. 26. Id. , pp. 248 to 249, Notice of Pre-Trial Conference dated October 13, 2015. 27. Id. , pp. 260 to 263, Petitioner's Motion to Defer Submission of the Judicial Affidavits of Witnesses and Resetting of Pre-Trial Conference; pp. 264 to 267, Respondent's Motion to Defer Pre-Trial Conference. 28. Id. , p. 274, Order dated January 18, 2016. 29. Id. , pp. 320 to 322, Minutes of the hearing held on April 21, 2016; pp. 328 to 329, Resolution dated May 2, 2016. 30. Id. at Note 2, p. 554, Order dated July 13, 2016; pp. 592 to 597, and 599 to 601, Minutes of the hearing, and Order dated September 27, 2016. 31. Id. at Note 24, p. 252, Order dated October 15, 2015. 32. Id. , pp. 253 to 254, Compliance. 33. Id. , p. 255, Order dated November 9, 2015. 34. Id. , pp. 257 to 258, Compliance; p. 259, Order dated December 18, 2015. 35. Id. , pp. 269 to 272. 36. Id. , pp. 310 to 317. 37. Id. , pp. 330 to 333. 38. Id. , p. 544, Resolution dated May 13, 2016. 39. Id. , pp. 334 to 388. 40. Id. 41. Id. at Note 1, p. 545, Records Verification dated June 8, 2016 issued by the Judicial Records Division of this Court. 42. Id. , pp. 546 to 549. 43. Id. , pp. 550 to 553. 44. Id. , p. 554, Order dated July 13, 2016. 45. Id. , pp. 563 to 566. 46. Id. , p. 568, Order dated August 4, 2016. 47. Id. , pp. 586 to 589. 48. Id. , p. 598, Oath of Commission dated September 27, 2016; pp. 592 to 597, and 599 to 601, Minutes of the hearing and Order dated, September 27, 2016. 49. Id. , pp. 599 to 601. 50. Id. , pp. 780 to 787. 51. Id. , pp. 790 to 791, Resolution dated November 25, 2016. 52. Id. , pp. 793 to 804, Pre-Trial Order dated December 7, 2016. 53. Id. , p. 812, Records Verification dated January 9, 2017 issued by the Judicial Records Division of this Court. 54. Id. , p. 820, Resolution dated January 24, 2017. 55. Id. at Note 24, pp. 290 to 296, Exhibit "P-39"; id. at Note 1, pp. 805 to 810, Minutes of the hearing and Order dated, December 8, 2016. 56. Id. , pp. 627 to 651, Exhibit "P-40"; id. at Note 2, pp. 851 to 856, Minutes of the hearing and Order dated, July 11, 2017. 57. Id. , pp. 876 to 884. 58. Id. at Note 1, pp. 1020 to 1021. 59. Id. , pp. 1027 to 1028, Resolution dated April 5, 2018. 60. Id. at Note 24, pp. 279 to 284, Exhibit "R-14"; id. at Note 1, pp. 1029 to 1032, Minutes of the hearing and Order dated, May 22, 2018. 61. Id. at Note 1, pp. 1033 to 1040. 62. Id. , pp. 1043 to 1046. 63. Id. , pp. 1051 to 1052. 64. Id. , pp. 1053 to 1055. 65. Docket Vol. 3, pp. 1071 to 1073, Manifestation (Re: Respondent's Motion for Reconsideration with Leave to Admit Attached Amended Formal Offer of Evidence dated August 22, 2018.) 66. Id. , pp. 1078 to 1079. 67. Id. , p. 1074, Order dated September 25, 2018. 68. Id. , pp. 1080 to 1090. 69. Id. , pp. 1105 to 1158. 70. Id. , p. 1161, Resolution dated March 7, 2019. 71. Id. at Note 1, p. 782, JSFI. 72. Commissioner of Internal Revenue vs. Kudos Metal Corporation , G.R. No. 178087, May 5, 2010. 73. Commissioner of Internal Revenue vs. Next Mobile, Inc. , G.R. No. 212825, December 7, 2015. 74. Commissioner of Internal Revenue vs. Avon Products Manufacturing, Inc., et seq. , G.R. Nos. 201398-99 and 201418-19, October 3, 2018. 75. Id. at Note 72. 76. Id. at Note 73. 77. G.R. No. 211289, January 14, 2019. 78. G.R. No. 220835, July 26, 2017. 79. Id. at Note 1, pp. 900-902, Exhibits "P-6", "P-7", "P-8"; BIR Records, pp. 445-466, Exhibits "R-4", "R-3", and "R-3-1". 80. G.R. No. 178797, November 17, 2010. 81. Id. 82. Id. 83. Medicard Philippines vs. Commissioner of Internal Revenue , G.R. No. 222743, April 5, 2017. 84. Emphasis and underscoring supplied . 85. G.R. No. 188288, January 15, 2012. 86. Emphasis supplied . 87. Central Luzon Drug Corporation vs. Commissioner of Internal Revenue , CTA Case No. 8952, November 14, 2018. 88. Emphasis supplied . 89. SEC. 13. Authority of a Revenue Officers. subject to the rules and regulations to be prescribed by the Secretary of Finance, upon recommendation of the Commissioner, a Revenue Officer assigned to perform assessment functions in any district may, pursuant to a Letter of Authority issued by the Revenue Regional Director , examine taxpayers within the jurisdiction of the district in order to collect the correct amount of tax, or to recommend the assessment of any deficiency tax due in the same manner that the said acts could have been performed by the Revenue Regional Director himself." (Emphasis supplied). 90. Civil Code of the Philippines, Article 1869. 91. Heirs of Dr. Mario S. Intac and Angelina Mendoza Intac v. Court of Appeals and Spouses Marcelo Roy, Jr. and Josefina Mendoza-Roy and Spouses Dominador Lozada and Martina Mendoza-Lozada , G.R. No. 173211, October 11, 2012 citing Spouses Villaceran v. De Guzman , G.R. No. 169055, February 22, 2012; Ramos v. Heirs of Honorio Ramos, Sr. , G.R. No. 140848, April 25, 2002, 381 SCRA 594, 601; Heirs of Policronio M. Ureta, Sr. vs. Heirs of Liberato M. Ureta , G.R. Nos. 165748 & 165930, September 14, 2011 citing Lopez v. Lopez , G.R. No. 161925, November 25, 2009, 605 SCRA 358, 36. 92. Adelfa Properties, Inc. v. Court of Appeals , G.R. No. 111238, January 25, 1995. 93. Philippine Amusement and Gaming Corporation (PAGCOR) v. The Bureau of Internal Revenue, represented by Jose Mario Bunag, in his capacity as Commissioner of the Bureau of Internal Revenue, and John Doe and Jane Doe, who are persons acting for, in behalf or under the authority of Respondent , G.R. No. 215427, December 10, 2014, citing Lopez v. The Civil Service Commission , 273 Phil. 147, 152 (1991). 94. Philippine International Trading Corporation v. Commission on Audit , G.R. No. 183517, June 22, 2010. 95. Exhibit "R-14", Docket Vol. 2, p. 280. 96. Transcript of Stenographic Notes dated May 22, 2018, pp. 9 to 10. 97. Id. at Note 7. 98. Id. at Note 13, pp. 612 to 617, 658 to 661, and 1276 to 1281, Exhibits "R-8", "R-10", "R-12", respectively. 99. Id. , p. 447, Exhibit "R-2". 100. Commissioner of Internal Revenue vs. Azucena T. Reyes, et seq. , G.R. Nos. 159694 and 163581, January 27, 2006. 101. Central Luz on Drug Corporation vs. Commissioner of Int ernal Revenue , CTA Case No. 8952, March 6, 2019.