Mendoza v. Commissioner of Internal Revenue

FIRST DIVISION [C.T.A. CASE NO. 9698. March 2, 2020.] RAMON Y. MENDOZA , petitioner , vs . COMMISSIONER OF INTERNAL REVENUE , respondent . DECISION DEL ROSARIO , P.J p : This is a Petition for Review filed on October 13, 2017 by petitioner Ramon Y. Mendoza praying that judgment be rendered ordering the Commissioner of Internal Revenue to cancel and set aside the Formal Letter of Demand dated August 16, 2016 and the Final Decision on Disputed Assessment dated September 12, 2017 assessing petitioner for deficiency income tax and value-added tax in the aggregate amount of P8,257,363.07, inclusive of surcharge and interest for taxable year ended December 31, 2012. HTcADC THE PARTIES Petitioner Ramon Y. Mendoza is of legal age, married, Filipino, with residence at No. 31 Nova Scotia Street, Loyola Grand Villas, Marikina City. 1 Respondent is the duly appointed Commissioner of Internal Revenue (CIR), vested by law with the power to implement and enforce the provisions of the National Internal Revenue Code and other tax laws. He may be served with summons and other court processes at the 5th Floor (Roof Deck) Fisher Mall, Quezon Avenue cor. Roosevelt Junction, Quezon City. 2 THE FACTS On June 9, 2014, respondent issued Letter Notice (LN) No. 040-RLFTRS-12-00-00671 signed by then CIR Kim S. Jacinto-Henares inviting petitioner to present documentary evidence in order to reconcile the discrepancies found by the Bureau of Internal Revenue (BIR) after a computerized matching was conducted on information/data provided by third party sources as oppose to his declarations per VAT returns for the taxable year 2012. 3 On October 2014, petitioner received Letter of Authority (LOA) No. 040-2014-00001022/SN:eLA201100092734 dated October 2, 2014 authorizing Revenue Officer (RO) Arlene Manangan, under the supervision of Group Supervisor (GS) Judith Arcinue of Revenue District No. 040 to examine/audit petitioner's internal revenue taxes including Documentary Stamp Tax, other taxes (Miscellaneous Tax) (OTH) for the period from January 1, 2012 to December 31, 2012. 4 An undated Memorandum was submitted by RO Manangan and GS Nenita L. Crespo with the recommending approval of the Revenue District Officer (RDO) Rosemarie V. Ramos-Ragasa to the Regional Director of Revenue Region No. 7, recommending the issuance of the Preliminary Assessment Notice (PAN) against petitioner for deficiency income tax and VAT for the taxable year 2012. 5 On June 20, 2016, a Memorandum was issued by Analyn S. Chu, the OIC-Chief of the Assessment Division of Revenue Region No. 7, to RO Manangan and GS Crespo returning the entire tax docket of petitioner in order for them to send a confirmation request to obtain third party information to attest to the veracity of the data provided in the Letter Notice. 6 On June 22, 2016, RO Belen S. Occea and GS Corazon C. San Pedro received a Memorandum of Assignment dated June 21, 2016 signed by RDO Lorna H. Sun-Tobias, referring the audit/verification of Ramon Y. Mendoza's (Harmonics Electrical Service/Nobu Trading) case to them for review/reporting requirements of the Assessment Division, replacing the previously assigned Revenue Officer who was transferred to another district office. 7 On June 23, 2016, RDO Sun-Tobias issued Letters to Electromark Multisales, Inc. 8 and Georos Construction Development & Trading, Inc. 9 notifying them that they are conducting an LN investigation of petitioner's income tax and VAT liabilities for the taxable year ending 2012, requesting for advice whether the figures contained therein are correct, and to send their reply to Revenue District Office No. 40 BIR Cubao, Quezon, with the corresponding notification to RO Occea. CAIHTE On June 28, 2016, RO Occea submitted a Memorandum dated June 24, 2016 to the RDO of Revenue District Office No. 40 attaching thereto the confirmation requests mailed to various customers (as evidenced by Registry Receipt No. 637605752 and 636605746 ZZ), and recommending that the case docket be returned to the Assessment Division for the preparation of the PAN. 10 On July 19, 2016, petitioner received from the BIR a PAN dated July 12, 2016, assessing petitioner for deficiency income tax and value-added tax in the total amount of P8,195,796.32 inclusive of surcharge and interest for taxable year ending December 31, 2012, broken down as follows: 11 Tax Type Basic Tax 50% Surcharge Interest Total Income Tax P2,709,952.92 1,354,976.46 1,832,373.64 P5,897,303.02 VAT P1,035,357.34 517,678.67 745,457.29 P2,298,493.30 Total P3,745,310.26 P1,872,655.13 P2,577,830.93 P8,195,796.32 In reply to the PAN, petitioner sent his Letter dated August 1, 2016 addressed to Alfredo V. Misajon, the Regional Director of Revenue Region No. 7-Quezon City. The aforesaid Letter was received by the BIR, Director's Office, Revenue Region No. 7, Quezon City on August 3, 2016. 12 On August 25, 2016, petitioner received from the BIR, a Formal Letter of Demand (FLD) dated August 16, 2016, with their accompanying Assessment Notices and Details of Discrepancies assessing petitioner for deficiency income tax in the amount of P5,941,850.20 and for VAT in the amount of P2,315,512.87, inclusive of surcharge and interest for taxable year 2012, viz. : 13 Tax Assessment Notice Nos. Amount Income Tax 040-B058-12-50%SC P5,941,850.20 14 Value-Added Tax 040-B058-12-50%SC P2,315,512.87 15 Total : P8,257,363.07 On September 21, 2016, petitioner filed with the BIR his "Protest to Formal Letter of Demand dated August 16, 2016" dated September 20, 2016. 16 On November 8, 2016, RO Occea and GS San Pedro received from RDO Albino M. Galanza, a Memorandum of Assignment dated November 7, 2016, assigning them to reinvestigate the Protest filed by petitioner. 17 On September 13, 2017, petitioner received from the BIR the Final Decision on Disputed Assessment (FDDA) dated September 12, 2017 signed by Marina C. De Guzman, OIC-Regional Director of Revenue Region No. 7 (Quezon City), denying petitioner's Protest dated September 20, 2016. 18 Due to the denial of petitioner's Protest, the present Petition for Review was filed on October 13, 2017. On December 12, 2017, respondent filed his Answer 19 with the following special and affirmative defenses: (i) the deficiency assessments for Income Tax in the amount of P5,941,850.20 and VAT in the amount of P2,315,512.87 for taxable year 2012, were issued in accordance with applicable laws and regulations; (ii) petitioner's Protest Letter failed to state the facts, the applicable laws, rules and regulations or jurisprudence on which his protest was based; and, (iii) the Court of Tax Appeals (CTA) has no jurisdiction over the Petition for Review since it has been filed without a cause of action; thus, warranting a dismissal thereof. Respondent filed his Pre-Trial Brief on January 24, 2018; 20 while petitioner filed his Pre-Trial Brief on January 26, 2018. 21 The Pre-Trial Conference was held on February 1, 2018. 22 The parties filed their Joint Stipulation of Facts and Issues 23 on February 21, 2018. The Pre-Trial Order 24 was issued on February 27, 2018 where the Court also terminated the Pre-Trial. aScITE During trial, petitioner presented testimonial and documentary evidence. Petitioner's formally offered exhibits, as contained in his Formal Offer of Evidence filed on April 10, 2018, 25 were admitted in the Resolutions dated July 6, 2018 26 and October 4, 2018, 27 except for Exhibits "P-12", "P-12-b", "P-13", "P-13-a", "P-13-b", and "P-13-c". In turn, respondent presented his testimonial and documentary evidence. Respondent's formally offered exhibits, as contained in his Formal Offer of Evidence filed on November 29, 2018, 28 were admitted in the Resolution dated July 22, 2019, 29 except for Exhibits "R-3-a", "R-18", and "R-27". Considering the filing of petitioner's Memorandum 30 on August 27, 2019, and respondent's failure to submit his memorandum despite the period granted for him to do so, 31 the case was submitted for decision on September 16, 2019. 32 ISSUES The parties submitted the following issues for resolution of the Court: 1. Whether or not the Formal Letter of Demand dated August 16, 2016 and Final Decision on Disputed Assessment dated September 12, 2017 are void due to lack of authority of the investigating revenue officers to conduct the investigation, prescription of the period to assess, violation of petitioner's right to due process and/or failure to state the factual and legal basis thereof; 2. Whether or not petitioner is liable for deficiency income tax and VAT on the undeclared income/undeclared revenues in the amount of P8,627,977.87; 3. Whether or not the assessments on income tax and VAT have already become final, executory and demandable; and, 4. Whether or not petitioner is liable for deficiency interest on the assessed deficiency internal revenue taxes. 33 THE COURT'S RULING The Court has jurisdiction over the case since the Petition for Review was timely filed Before delving into the merits of the case, it is imperative for the Court to determine whether the present Petition for Review was filed within the reglementary period as provided for in Section 228 of the National Internal Revenue Code (NIRC) of 1997, as amended, and its implementing regulations. Section 228 of the NIRC of 1997, as amended, and Section 3.1.4 of Revenue Regulations (RR) No. 12-99, as amended by RR No. 18-2013, provide for the manner in which an assessment, which is otherwise presumed correct, may be assailed, viz. : DETACa "SECTION 228. Protesting of Assessment . When the Commissioner or his duly authorized representative finds that proper taxes should be assessed, he shall first notify the taxpayer of his findings: Provided, however , That a preassessment notice shall not be required in the following cases: xxx xxx xxx. The taxpayers shall be informed in writing of the law and the facts on which the assessment is made; otherwise, the assessment shall be void. Within a period to be prescribed by implementing rules and regulations, the taxpayer shall be required to respond to said notice. If the taxpayer fails to respond, the Commissioner or his duly authorized representative shall issue an assessment based on his findings. Such assessment may be protested administratively by filing a request for reconsideration or reinvestigation within (30) days from receipt of the assessment in such form and manner as may be prescribed by implementing rules and regulations. Within sixty (60) days from filing of the protest, all relevant supporting documents shall have been submitted; otherwise, the assessment shall become final. If the protest is denied in whole or in part, or is not acted upon within one hundred eighty (180) days from submission of documents, the taxpayer adversely affected by the decision or inaction may appeal to the Court of Tax Appeals within thirty (30) days from receipt of the said decision, or from the lapse of the one hundred eighty (180)-day period; otherwise, the decision shall become final, executory and demandable." RR No. 12-99, as amended by RR No. 18-13, implements Section 228 of the NIRC of 1997, as amended. Section 3.1.4 thereof provides: "3.1.4 Disputed Assessment . The taxpayer or its authorized representative or tax agent may protest administratively against the aforesaid FLD/FAN within thirty (30) days from date of receipt thereof. The taxpayer protesting an assessment may file a written request for reconsideration or reinvestigation defined as follows: (i) Request for reconsideration refers to a plea of re-evaluation of an assessment on the basis of existing records without need of additional evidence. It may involve both a question of fact or of law or both. (ii) Request for reinvestigation refers to a plea of re-evaluation of an assessment on the basis of newly discovered or additional evidence that a taxpayer intends to present in the reinvestigation. It may also involve a question of fact or of law or both. xxx xxx xxx For requests for reinvestigation, the taxpayer shall submit all relevant supporting documents in support of his protest within sixty (60) days from date of filing of his letter of protest, otherwise, the assessment shall become final . The term 'relevant supporting documents' refer to those documents necessary to support the legal and factual bases in disputing a tax assessment as determined by the taxpayer. x x x. xxx xxx xxx If the protest is denied, in whole or in part, by the Commissioner's duly authorized representative, the taxpayer may either: (i) appeal to the Court of Tax Appeals (CTA) within thirty (30) days from date of receipt of the said decision; or (ii) elevate his protest through request for reconsideration to the Commissioner within thirty (30) days from date of receipt of the said decision . No request for reinvestigation shall be allowed in administrative appeal and only issues raised in the decision of the Commissioner's duly authorized representative shall be entertained by the Commissioner." (Boldfacing supplied) It is clear from the foregoing that if the CIR's authorized representative wholly or partially denies the protest, the taxpayer may either appeal to the CTA or elevate his protest through a request for reconsideration to the CIR himself within thirty (30) days from receipt of the whole or partial denial of the protest. HEITAD In this case, upon receiving the denial of his Protest by the CIR's authorized representative, petitioner opted to file an appeal with the CTA. Records show that petitioner received the FDDA, signed by OIC-Regional Director De Guzman, on September 13, 2017. Counting thirty (30) days from September 13, 2017, petitioner had until October 13, 2017 within which to appeal to the CTA. The Petition for Review was timely filed on October 13, 2017. Hence, the Court has acquired jurisdiction to resolve the present controversy. RO and GS who continued the audit of petitioner were not authorized by a valid LOA; hence, the assessment issued pursuant to said audit is void ab initio Petitioner argues that the absence of a validly issued LOA to conduct the audit renders the present assessment void. Allegedly, the Court has the power to resolve the issue on the validity of the authority of revenue examiners to conduct the audit that lead to the issuance of the subject Assessment Notices. As aforementioned, on October 2014, petitioner received LOA No. 040-2014-00001022/SN:eLA201100092734 dated October 2, 2014 authorizing RO Manangan and GS Arcinue to examine petitioner's books of accounts and other accounting records for all internal revenue taxes for the period of January 1, 2012 to December 31, 2012. 34 Subsequently and before the issuance of the PAN, RDO Sun-Tobias of Revenue District Office No. 40 issued MOA-40-0202 35 dated June 21, 2016 authorizing RO Occea and GS San Pedro to continue the audit/investigation of petitioner. Undeniably, there was no LOA signed by the Revenue Regional Director authorizing RO Occea and GS San Pedro to continue the audit of petitioner's books of accounts and other accounting records for the taxable year 2012. To be sure, the NIRC of 1997, as amended, is clear and categorical in requiring an authority from the CIR or from his duly authorized representatives before an examination of a taxpayer may be made. 36 Section 6 of the NIRC provides: "SEC. 6. Power of the Commissioner to Make Assessments and Prescribe Additional Requirements for Tax Administration and 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" (Boldfacing supplied) In addition, Section 13 of the NIRC of 1997, as amended, mandates that an RO assigned to audit a taxpayer's books of accounts and other accounting records must be authorized by an LOA issued no less than by the Revenue Regional Director , viz. : " 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." (Boldfacing and underscoring supplied) An RO cannot simply subject a taxpayer to audit without a valid LOA issued for that purpose, at the very least, by the Revenue Regional Director. aDSIHc Revenue Memorandum Order (RMO) No. 43-90 specifies the policy guidelines in the issuance of LOAs to audit. It is explicit that the continuation of audit by a revenue officer other than the officer named in a previous LOA, requires the issuance of a new LOA : "C. Other policies for issuance of L/As. 1. All audits/investigations, whether field or office audit, should be conducted under a Letter of Authority. xxx xxx xxx 5. Any re-assignment/transfer of cases to another RO(s) , and revalidation of L/As which have already expired, shall require the issuance of a new L/A , with the corresponding notation thereto, including the previous L/A number and date of issue of said L/As ." (Boldfacing and underscoring supplied) Anent the MOA, the same cannot be accorded the same legal effect as an LOA. It is clear in the language used that "Any reassignment/transfer of cases to another RO(s) . . . shall require the issuance of a new L/A." The phrase emphasizes the mandatory nature of the said requirement. Needless to say, the BIR has the duty of exacting compliance therewith as it has the burden of ensuring that the right of the government to assess and collect tax deficiencies would not be defeated by its failure to comply with its own rules. The Supreme Court's pronouncement in Medicard Philippines, Inc. vs. Commissioner of Internal Revenue 37 on the significance of a valid authority of ROs to conduct an audit and examination of the taxpayer is very instructive, viz. : " The absence of an LOA violated MEDICARD's right to due process An 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. 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 . Section 6 of the NIRC clearly provides as follows: xxx xxx xxx Based on the afore-quoted provision, it is clear that unless authorized by the CIR himself or by his duly authorized representative, through an LOA, an examination of the taxpayer cannot ordinarily be undertaken . The circumstances contemplated under Section 6 where the taxpayer may be assessed through best-evidence obtainable, inventory taking, or surveillance among others has nothing to do with the LOA. These are simply methods of examining the taxpayer in order to arrive at the correct amount of taxes. Hence, unless undertaken by the CIR himself or his duly authorized representatives, other tax agents may not validly conduct any of these kinds of examinations without prior authority . xxx xxx xxx In the case of Commissioner of Internal Revenue vs. Sony Philippines, Inc. , the Court said that: ATICcS "Clearly, there must be a grant of authority before any revenue officer can conduct an examination or assessment. x x x. In the absence of such an authority, the assessment or examination is a nullity ." (Emphasis and underlining ours) xxx xxx xxx x x x In fact, apart from being a statutory requirement, an LOA is equally needed even under the BIR's RELIEF System because the rationale of requirement is the same whether or not the CIR conducts a physical examination of the taxpayer's records: 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 prosecute its business while at the same time responding to the BIR exercise of its statutory powers. The balance between these is achieved by ensuring that any examination of the 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 the statute . That the BIR officials herein were not shown to have acted unreasonably is beside the point because the issue of their lack of authority was only brought up during the trial of the case . What is crucial is whether the proceedings that led to the issuance of VAT deficiency assessment against MEDICARD had the prior approval and authorization from the CIR or her duly authorized representatives. Not having authority to examine MEDICARD in the first place, the assessment issued by the CIR is inescapably void . " (Boldfacing and additional underscoring supplied) In Commissioner of Internal Revenue vs. Composite Materials, Inc. , 38 the Supreme Court was likewise categorical in saying that an RO may only examine the taxpayer's books pursuant to an LOA issued by the Revenue Regional Director and emphasized that the Referral Memorandum issued by the RDO directing another RO to continue with the examination of Composite Materials, Inc.'s records is not equivalent to an LOA nor does it cure the RO's lack of authority, viz. : "As regards the issue on Revenue Officer Mary Anne P. Cruz's (RO Cruz) authority to examine CMI's records, the provisions of the National Internal Revenue Code of 1997, as amended, are clear that a Revenue Officer may only examine the taxpayer's books pursuant to a Letter of Authority (LOA) issued by the Regional Director . This was reiterated by the Court in Medicard Philippines, Inc. v. Commissioner of Internal Revenue , ruling that in the absence of an LOA, the assessment or examination is a nullity. Here, the CTA en banc found that the LOA issued in relation to the examination of CMI's book of accounts does not specifically mention the name of RO Cruz. Thus, the examination conducted by RO Cruz and the assessment issued against CMI was correctly declared null and void . Moreover, the Court agrees with the CTA en banc that the Referral Memorandum issued by a Revenue District Officer directing RO Cruz to continue with the examination of CMI's records is not equivalent to an LOA nor does it cure RO Cruz's lack of authority . To be sure, Revenue Memorandum Order No. 43-90, which specified the guidelines in the issuance of LOAs states that any reassignment or transfer of cases to another RO or revalidation of an expired LOA shall require the issuance of a new LOA ." (Boldfacing and underscoring supplied) The issuance of an LOA is not just a plain ministerial act but calls for the exercise of discretion by the Revenue Regional Director. The authority to issue LOAs, which was delegated to the Revenue Regional Director under Section 13 of the NIRC of 1997, as amended, cannot be further delegated to the Revenue District Officer. On this point, the pronouncement in NPC Drivers and Mechanics Association, (NPC DAMA) vs. The National Power Corporation 39 is instructive, viz. : ETHIDa "We agree with petitioners. In enumerating under Section 48 those who shall compose the National Power Board of Directors, the legislature has vested upon these persons the power to exercise their judgment and discretion in running the affairs of the NPC. x x x. It is to be presumed that in naming the respective department heads as members of the board of directors, the legislature chose these secretaries of the various executive departments on the basis of their personal qualifications and acumen which made them eligible to occupy their present positions as department heads. Thus, the department secretaries cannot delegate their duties as members of the NPB, much less their power to vote and approve board resolutions, because it is their personal judgment that must be exercised in the fulfillment of such responsibility . x x x, the rule enunciated in the case of Binamira v. Garrucho is relevant in the present controversy, to wit: An officer to whom a discretion is entrusted cannot delegate it to another, the presumption being that he was chosen because he was deemed fit and competent to exercise that judgment and discretion, and unless the power to substitute another in his place has been given to him, he cannot delegate his duties to another. xxx xxx xxx." (Citations omitted; Boldfacing supplied) There is no denying that no new LOA was ever issued to RO Occea and GS San Pedro in relation to the audit of petitioner's tax liability. While MOA-40-0202 40 dated June 21, 2016 was issued by RDO Sun-Tobias , the same cannot be regarded as a valid LOA within the context of the law. Notably, the Memorandum issued by Chu, the OIC-Chief, Assessment Division, returning the case docket to RO Manangan and GS Crespo for verification reveals that their recommendation to issue a PAN was premature and unjustified in the absence of any confirmatory response from petitioner's customers. Thereafter, RDO Sun-Tobias issued the questionable MOA-40-0202 which gave RO Occea and GS San Pedro their authority to continue the audit and examination of petitioner's tax liabilities by obtaining information from petitioner's customers vis--vis the Letters 41 sent by RDO Sun-Tobias to Electromark Multisales, Inc. and Georos Construction Development & Trading, Inc. After sending the Letters and without waiting for the response of the recipients, RO Occea sent a Memorandum dated June 24, 2016 42 to the RDO recommending that the case docket be returned to the Assessment Division for the preparation of the PAN . Thus, it was not RO Manangan and GS Crespo who ultimately recommended the issuance of the PAN. Verily, RO Occea and GS San Pedro's authority to continue the audit and examination of petitioner's tax liabilities for taxable year 2012 cannot be given any legal effect. The MOA-40-0202 issued by RDO Sun-Tobias in lieu of the LOA is invalid. This procedural lapse, or the absence of a new LOA, rendered the Assessment Notices issued pursuant thereto void. The Formal Letter of Demand and the Assessment Notices are void Section 228 of the NIRC of 1997, as amended, provides the procedure in issuing and protesting an assessment: " SEC. 228 . Protesting of Assessment . xxx xxx xxx The taxpayers shall be informed in writing of the law and the facts on which the assessment is made ; otherwise, the assessment shall be void. Within a period to be prescribed by implementing rules and regulations, the taxpayer shall be required to respond to said notice. If the taxpayer fails to respond, the Commissioner or his duly authorized representative shall issue an assessment based on his findings ." (Boldfacing and underscoring supplied) TIADCc To implement the provisions of Section 228, supra , Section 3.1.3 of RR No. 12-99, as amended by RR No. 18-2013, states: " 3.1.3 Formal Letter of Demand and Final Assessment Notice (FLD/FAN) . The Formal Letter of Demand and Final Assessment Notice (FLD/FAN) shall be issued by the Commissioner or his duly authorized representative. The FLD/FAN calling for payment of the taxpayer's deficiency tax or taxes shall state the facts, the law, rules and regulations, or jurisprudence on which the assessment is based; otherwise, the assessment shall be void (see illustration in ANNEX "B" hereof)." (Boldfacing supplied) A formal letter of demand AND an assessment notice are indispensable in the assessment of a taxpayer. The use of the word "shall" in Section 3.1.3 of RR No. 12-99, as amended by RR No. 18-2013, indicates the mandatory nature of the requirement . 43 A close perusal of the FLD and Assessment Notices reveals that both failed to demand payment of the basic deficiency income tax and VAT. The FLD specifically states that petitioner is requested to pay his aforesaid deficiency tax liabilities through EFPS within the time shown in the enclosed Assessment Notice, viz. : Formal Letter of Demand The enclosed Assessment Notices, however, conspicuously left blank the space provided for that would have indicated the due date within which the tax deficiency should be paid , viz. : cSEDTC Assessment Notice for Income Tax Assessment Notice for VAT In Commissioner of Internal Revenue vs. Fitness by Design, Inc. , 44 the Supreme Court invalidated an assessment after noting its failure to state the due date for the payment of the tax liabilities: xxx xxx xxx " The disputed Final Assessment Notice is not a valid assessment . xxx xxx xxx Second, there are no due dates in the Final Assessment Notice. This negates petitioner's demand for payment. Petitioner's contention that April 15, 2004 should be regarded as the actual due date cannot be accepted. The last paragraph of the Final Assessment Notice states that the due dates for payment were supposedly reflected in the attached assessment : In view thereof, you are requested to pay your aforesaid deficiency internal revenue tax liabilities through the duly authorized agent bank in which you are enrolled within the time shown in the enclosed assessment notice . (Emphasis in the original) However, based on the findings of the Court of Tax Appeals First Division, the enclosed assessment pertained to remained unaccomplished . Contrary to petitioner's view, April 15, 2004 was the reckoning date of accrual of penalties and surcharges and not the due date for payment of tax liabilities. The total amount depended upon when respondent decides to pay. The notice, therefore, did not contain a definite and actual demand to pay . Compliance with Section 228 of the National Internal Revenue Code is a substantative requirement. It is not a mere formality. Providing the taxpayer with the factual and legal bases for the assessment is crucial before proceeding with tax collection. Tax collection should be premised on a valid assessment, which would allow the taxpayer to present his or her case and produce evidence for substantiation." (Boldfacing and underscoring supplied) The requirement to indicate a fixed and definite period or a date certain within which a taxpayer must pay the assessed deficiency tax liabilities is indispensable to the validity of the assessment . Otherwise stated, an assessment sans a categorical demand for payment within a specific date or period is, in legal contemplation, void. AIDSTE Incidentally, while the following entry appears on the upper right hand corner of the FLD "Due Date: September 15, 2016," said information appears too equivocal sans any statement that it is the due date for payment. Truth to tell, such entry may even refer to the due date when the FLD and Assessment Notice should be released to the taxpayer. Besides, a close scrutiny of the FLD reveals that the interest was computed until September 30, 2016. It is certainly incongruous for the BIR to compute the interest until September 30, 2016 if September 15, 2016 refers to the due date for payment. In fine, the FLD and Assessment Notices in this case, being void, bear no fruit 45 and may be slain at sight. In light of the foregoing, the Court need not belabor the other issues raised by the parties. WHEREFORE , premises considered, the Petition for Review filed on October 13, 2017 by petitioner Ramon Y. Mendoza is hereby GRANTED . Accordingly, the Final Decision on Disputed Assessment dated September 12, 2017 is hereby SET ASIDE . The Formal Letter of Demand, with the following Assessment Notices, all dated August 16, 2016, covering taxable year 2012, assessing petitioner for deficiency Income Tax and Value Added Tax, in the aggregate amount of EIGHT MILLION TWO HUNDRED FIFTY SEVEN THOUSAND THREE HUNDRED SIXTY THREE PESOS and SEVEN CENTAVOS (P8,257,363.07) , viz. : Tax Assessment Notice Nos. Amount Income Tax 040-B058-12-50%SC P5,941,850.20 46 Value-Added Tax 040-B058-12-50%SC P2,315,512.87 47 Total: P8,257,363.07 are hereby CANCELLED and WITHDRAWN . SO ORDERED. (SGD.) ROMAN G. DEL ROSARIO Presiding Justice Esperanza R. Fabon-Victorino and Catherine T. Manahan, JJ. , concur. Footnotes 1. Par. 1, Joint Stipulation of Facts and Issues, CTA Docket, Vol. I, p. 404. 2. Par. 2, Joint Stipulation of Facts and Issues, CTA Docket, Vol. I, p. 404. 3. Exhibit R-1, BIR Records, p. 2. 4. Par. 10, Petition for Review, CTA Docket, Vol. I, p. 13; Exhibit P-5, CTA Docket, Vol. I, p. 461; Exhibit R-3, BIR Records, p. 9. 5. Exhibit P-17, CTA Docket, Vol. II, pp. 486-487; Exhibit R-4, BIR Records, pp. 48-49. 6. Exhibit P-18, CTA Docket, Vol. II, p. 488. 7. Exhibit P-16, CTA Docket, Vol. II, p. 485; Exhibit R-20, BIR Records, p. 214. 8. Exhibit R-31, BIR Records, p. 84. 9. Exhibit R-32, BIR Records, p. 85. 10. BIR Records, p. 86. 11. Par. 11, Petition for Review, CTA Docket, Vol. I, p. 13; Exhibit P-7, CTA Docket, Vol. II, pp. 463-466; Exhibit R-7, BIR Records, pp. 62-63. 12. Par. 13, Petition for Review, CTA Docket, Vol. I, p. 14; Exhibit P-8, CTA Docket, Vol. II, pp. 467-469. 13. Par. 14, Petition for Review, CTA Docket, Vol. I, p. 14; Exhibit P-9, CTA Docket, Vol. II, pp. 470-475; Exhibits R-14, R-15, R-16, and R-17, BIR Records, pp. 100-105. 14. Exhibit P-9, CTA Docket, Vol. II, p. 470. 15. Id. 16. Par. 16, Petition for Review, CTA Docket, Vol. I, p. 14; Exhibit P-10, CTA Docket, Vol. II, pp. 476-480. 17. Exhibit R-20, BIR Records, p. 214. 18. Par. 17, Petition for Review, CTA Docket, Vol. I, p. 14; Exhibit P-11, CTA Docket, Vol. II, pp. 481-484. 19. CTA Docket, Vol. I, pp. 161-168. 20. CTA Docket, Vol. I, pp. 188-193. 21. CTA Docket, Vol. I, pp. 367-376. 22. Minutes of the Hearing dated February 1, 2018, CTA Docket, Vol. I, p. 379; Order dated February 1, 2018, CTA Docket, Vol. I, p. 380. 23. CTA Docket, Vol. I, pp. 404-409. 24. CTA Docket, Vol. I, pp. 418-423. 25. CTA Docket, Vol. II, pp. 497-540. 26. CTA Docket, Vol. II, pp. 561-562. 27. CTA Docket, Vol. II, pp. 589-590. 28. CTA Docket, Vol. II, pp. 595-601. 29. CTA Docket, Vol. II, pp. 686-688. 30. CTA Docket, Vol. II, pp. 700-720. 31. Records Verification dated September 5, 2019, CTA Docket, Vol. II, p. 721. 32. CTA Docket, Vol. II, p. 723. 33. Joint Stipulation of Facts and Issues, CTA Docket, Vol. I, pp. 404-405. 34. Supra Note 3. 35. Supra Note 4. 36. Medicard Philippines, Inc. vs. Commissioner of Internal Revenue , G.R. No. 222743, April 5, 2017. 37. G.R. No. 222743, April 5, 2017. 38. G.R. No. 238352, September 12, 2018. 39. G.R. No. 156208, September 26, 2006. 40. Supra Note 4. 41. Supra Notes 8 and 9. 42. Supra Note 11. 43. Commissioner of Internal Revenue vs. Enron Subic Power Corporation , G.R. No. 166387, January 19, 2009. 44. G.R. No. 215957, November 9, 2016. 45. Metro Star Superama, Inc. vs. Commissioner of Internal Revenue , G.R. No. 185371, December 8, 2010. 46. Exhibit P-9, CTA Docket, Vol. II, p. 470. 47. Id.