Nippo Metal Tech Phils., Inc. v. Commissioner of Internal Revenue

EN BANC [C.T.A. EB CASE NO. 1273. May 17, 2016.] (C.T.A. Case No. 8329) NIPPO METAL TECH PHILS.,INC. (formerly GLOBAL METAL TECH CORPORATION) , petitioner , vs. COMMISSIONER OF INTERNAL REVENUE , respondent . DECISION CASANOVA , J p : This Petition for Review, filed by petitioner-Nippo Metal Tech Phils.,Inc. (formerly Global Metal Tech Corporation),seeks the review and reversal of the Decision dated September 23, 2014 (the "Assailed Decision"),rendered by the Court of Tax Appeals (CTA)-First Division, denying petitioner's Petition for Review (in CTA Case No. 8329) for lack of jurisdiction and Resolution dated January 30, 2015 (the "Assailed Resolution") denying petitioner's Motion for Reconsideration. The facts of the case, as found by the CTA-First Division and narrated in the Assailed Decision, are as follows: "Petitioner is a corporation duly organized and existing under the laws of the Republic of the Philippines, with principal office at Blk. 4, Lot 4, Filinvest Technology Park, Calamba City, Laguna. Respondent is the Commissioner of the Bureau of Internal Revenue (BIR),duly appointed to perform the duties of her office, including, inter alia ,the power to decide disputed assessments, subject to the exclusive appellate jurisdiction of this Court. She holds office at the BIR National Office Building, BIR Road, Diliman, Quezon City. Petitioner entered into a service agreement with Japan Overseas Development Corporation (JODC) on July 27, 2006. JODC is a non-registered corporation in the Philippines, and described as a non-profit organization established to support the business activities of Japanese-affiliated companies, develop human resources, and contribute to the industrial development of developing countries through the JODC Expert Service Abroad (JESA) Program. Respondent issued Letter of Authority No. LOA 2007 00011390 on October 15, 2007 to examine petitioner's books of accounts and other accounting records for all internal revenue taxes for the period covering October 1, 2005 to September 30, 2006. Respondent likewise issued the following: (1) Letter dated October 16, 2007, requesting the submission of the aforesaid books of accounts and related records; (2) Second Request for Presentation of Records dated November 5, 2007; and (3) Final Request for Presentation of Records dated December 4, 2007. DcHSEa Petitioner was eventually found to be liable for deficiency tax; thus, respondent sent to petitioner a Notice of Informal Conference dated July 16, 2008. On September 12, 2008, Revenue Officer Nimfa Z. Nadal recommended to the Regional Director of Revenue District Office (RDO) No. 56-Calamba City the issuance of Assessment Notice against petitioner. On February 5, 2009, petitioner received the Preliminary Assessment Notice (PAN) with Details of Discrepancies dated January 22, 2009, assessing it for deficiency taxes and penalties as follows: Assessment Notice Tax Due Interest and Total Amount for Deficiency Compromise Due Taxes/Penalties Penalty Expanded Withholding Tax P14,113.29 P9,468.59 P23,581.87 Final Withholding Tax P442,216.56 P218,682.59 660,899.59 Total Amount Payable P684,481.46 ========= Petitioner did not dispute the assessed deficiency expanded withholding tax amounting to P23,581.87; hence, it paid the said amount with the Batino Branch of Rizal Commercial Banking Corporation, an authorized agent bank of RDO No. 56 on February 18, 2009. Petitioner was likewise assessed of deficiency final withholding tax for its alleged failure to withhold taxes on payment of professional fees made to JODC pursuant to the provisions of Revenue Regulations (RR) No. 2-98, as amended. The deficiency FWT assessment in the amount of P660,899.15 pertains to the payments made by petitioner to JODC during fiscal year ended September 30, 2006. On February 20, 2009, petitioner protested the PAN by filing a letter dated February 19, 2009 with respondent, disputing the deficiency FWT assessment in the amount of P660,899.15. Respondent issued the Formal Letter of Demand with attached Audit Results/Assessment Notices, all dated February 17, 2009, which petitioner received on February 25, 2009, assessing the latter as follows: II. FINAL WITHHOLDING TAX FOH-Professional Fees Japanese overseas Devt. Corp. P1,263,475.88 35% P442,216.56 Less: Payments - Deficiency tax P442,216.56 Add: Interest (10/11/06- P202,682.59 02/17/09) Compromise penalty 16,000.00 218,682.59 TOTAL AMOUNT PAYABLE P660,899.15 ========== Respondent through Regional Director Nestor S. Valeroso of Revenue Region No. 9 also issued letter dated April 13, 2009, informing petitioner that the case would be forwarded to RDO No. 56-Calamba City for further evaluation, and requesting petitioner to submit all relevant documents supporting the protest within sixty (60) days. The letter was received by petitioner on May 6, 2009. On May 15, 2009, petitioner filed its protest letter dated May 12, 2009 against the Formal Letter of Demand. Respondent replied through a letter dated June 24, 2009, informing petitioner that the protest letter would be forwarded to RDO No. 56-Calamba City and requesting petitioner to submit all relevant documents for evaluation. Petitioner received it on July 2, 2009. Respondent denied petitioner's protest through a letter dated July 12, 2011, which was received by the latter on August 2, 2011. Thus, petitioner filed the instant Petition for Review on September 1, 2011. Respondent filed her Answer on October 25, 2011, interposing the following special and affirmative defenses: '4. The assessment for fiscal year 2006 deficiency Final Withholding Tax (FWT) is valid and was issued in accordance with law. 5. Contrary to the claims of petitioner, the subject Assessment Notices are valid. The complete details as required by law were attached as Annex 'A' as Details of Discrepancy of the FAN and such is repleaded herein. 5. n The statements contained in Annex 'A' are the factual verifications which resulted in the assessment. It also contains the legal basis for such assessments. 6. The Details of Discrepancy is adequate enough to inform petitioner of the legal and factual bases of the assessments. Petitioner was properly informed of the findings of the Revenue Officers. The belief of inadequate information on the legal basis and facts gives petitioner an option to file an administrative protest. SCaITA 7. Contrary to petitioner's claim that they are exempt from VAT by citing BIR Ruling No. 02-09, it should be noted that the aforementioned ruling was issued to HRD Korea and not petitioner. Petitioner is not exempted from FWT as the BIR Ruling is only for the applicant who has submitted the proper documents for the BIR to fully thresh out the details whether the applicant is truly deserving of such exemption. 8. The statements comparing petitioner with HRD Korea is merely self-serving and should not be given any weight. 9. Finally, it is a well-settled rule in taxation that assessments are prima facie presumed correct and made in good faith. The taxpayer has the duty of proving otherwise, and in the absence of proof of any irregularities in the performance of official duties, an assessment will not be disturbed.' On November 22, 2011, petitioner filed its Pre-Trial Brief; while respondent submitted through registered mail her Pre-Trial Brief on November 23, 2011 and received by this Court on November 29, 2011. Respondent also filed a Supplemental Pre-Trial Brief on December 1, 2011. On January 13, 2012, the pre-trial conference was held and both counsels of the parties entered into admissions, stipulations of facts, identification of issues, enumeration of the witnesses and documents to be presented during trial. Consequently, the pre-trial was terminated on February 6, 2012 and a Pre-Trial Order was issued. The parties submitted their Joint Stipulation of Facts and Issues on January 26, 2012. During trial, both parties presented and formally offered their respective documentary and testimonial evidence. On July 20, 2012, petitioner filed its Formal Offer of Evidence. Petitioner's documentary exhibits are as follows: Exhibits: Description: xxx xxx xxx (Enumeration omitted) B-1 Original stamp of 'RECEIVED' 25 February 2009. C Bureau of Internal Revenue (BIR) Form No. 0605 indicating the payment of deficiency expanded withholding tax (EWT) amounting to Php23,581.87 with stamp of receipt dated 18 February 2009 of the Batino Branch of Rizal Commercial Bank Corporation (RCBC). C-1 Signature above the name Cristina Dao of Exhibit 'C'. D RCBC indicating payment of deficiency tax of Php23,581.57 on 18 February 2009. E Letter dated 19 February 2009 with subject '2006 Preliminary Assessment Notice' and received by the BIR on 20 February 2009. E-1 Signature above the name of Rachel P. Follosco of Exhibit 'E'. E-3 BIR original stamp 'RECEIVED' 20 February 2009. F Agreement on JODC Expert Service Abroad Program (JESA-I) dated 27 July 2006. F-1 Signature above the name 'Shinichi Kishida' of Exhibit 'F'. H Certification of Non-Registration of Company issued by the Securities and Exchange Commission (SEC) dated 12 September 2011. J Letter dated 12 May 2009 with subject '2006 Assessment' and received by the BIR 15 May 2009. J-1 BIR original stamp 'RECEIVED' 15 May 2009. J-3 Signature above the name of Rachel P. Follosco of Exhibit 'J'. K Letter dated 13 April 2009 from Mr. Nestor S. Valeroso and addressed to Atty. Rachel P. Follosco at Suite 2500, 88 Corporate Center, 141 Valero St. corner Valero Street, Salcedo Village, Makati City with stamp of receipt dated 06 May 2009. K-1 Signature below the stamp 'Received' dated 06 May 2009 of Ms. Ma. Richelle Aritala of Exhibit 'K'. L Letter dated 24 June 2009 from Mr. Nestor S. Valeroso and addressed to Ms. Rachel P. Follosco at Suite 2500, 88 Corporate Center, 141 Valero St. corner Sedeno Street, Salcedo Village, Makati City with stamp of receipt dated 02 July 2009. L-1 Signature below the stamp 'Received' dated 02 July 2009 of Ms. Ma. Richelle Aritalla of Exhibit 'L'. M Letter dated 12 July 2011 from Mr. Carlos S. Salazar and addressed to Global Metal Tech Corporation at Filinvest Technology Park, Calamba City with stamp of receipt dated 02 August 2011. M-1 Original stamp of 'RECEIVED' dated 02 August 2011 of Exhibit 'M'. N Judicial Affidavit of Ms. Ma. Richello O. Aritalla executed on 24 February 2012. N-1 Signature above the name of Ma. Richello O. Aritalla in page 5 of Exhibit 'N'. O Letter of Certification dated 16 March 2012 addressed to Cristina Dao from Iwao Oshima. O-1 Signature above the name Iwao Oshima of Exhibit 'O'. P Check Voucher No. 00420 for the amount of Php216,562.50 representing Petitioner's share of expenses for December 2005 and January 2006. P-1 Signature above the name Cristina Dao of Exhibit 'P'. P-2 Signature below the printed words 'Received the above amount' of Mr. Yosuke Takahashi of Exhibit 'P'. Q Check Voucher No. 0514 for the amount of Php213,592.50 representing Petitioner's share of expenses for February to March 2006. Q-1 Signature above the name Cristina Dao of Exhibit 'Q'. Q-2 Signature below the printed words 'Received the above amount' of Mr. Yosuke Takahashi of Exhibit 'Q'. R Check Voucher No. 622 for the amount of Php169,537.62 representing Petitioner's share of expenses for April to May 2006. R-1 Signature above the name Cristina Dao of Exhibit 'R'. R-2 Signature below the printed words 'Received the above amount' of Mr. Yosuke Takahashi of Exhibit 'R'. S Check Voucher No. 668 for the amount of Php172,776.00 representing Petitioner's share of expenses for June to July 2006. S-1 Signature above the name Cristina Dao of Exhibit 'S'. S-2 Signature below the printed words 'Received the above amount' of Mr. Yosuke Takahashi of Exhibit 'S'. T Check Voucher No. 910 for the amount of Php195,105.94 representing Petitioner's share for August to September 2006. T-1 Signature above the name Cristina Dao of Exhibit 'T'. T-2 Signature below the printed words 'Received the above amount' of Mr. Tomoaki Sugiura of Exhibit 'T'. U Check Voucher No. 266 for the amount of Php224,189.32 representing Petitioner's share of expenses for July to September 2005. U-1 Signature above the name Cristina Dao of Exhibit 'U'. U-2 Signature below the printed words 'Received the above amount' of Mr. Yosuke Takahashi of Exhibit 'U'. V Check Voucher No. 174 for the amount of Php226,710.00 representing Petitioner's share of expenses for October to November 2005. V-1 Signature above the name Cristina Dao of Exhibit 'V'. V-2 Signature below the printed words 'Received the above amount' of Mr. Yosuke Takahashi of Exhibit 'V'. W Request for Payment with 'Receipt' dated 27 July 2006. W-1 Signature above the name Iwao Oshima of Exhibit 'W'. X Request for Payment with 'Receipt' dated 20 January 2006. X-1 Signature above the name Iwao Oshima of Exhibit 'X'. Y Request for Payment with 'Receipt' dated 17 March 2006. Y-1 Signature above the name Iwao Oshima of Exhibit 'Y'. Z Request for Payment with 'Receipt' dated 24 May 2006. Z-1 Signature above the name Iwao Oshima of Exhibit 'Z'. AA Request for Payment with 'Receipt' dated 22 June 2005. AA-1 Signature above the name Iwao Oshima of Exhibit 'AA'. BB Request for Payment with 'Receipt' dated 22 September 2005. BB-1 Signature above the name Iwao Oshima of Exhibit 'BB'. CC RCBC Bank Deposit Slip dated 15 May 2006 with machine-validation indicating the amount of Php169,537.61 deposited to the account of Mr. Yosuke Takahashi. DD JODC Brochure. MM Judicial Affidavit of Ms. Cristina Dao executed on 20 April 2012. MM-1 Signature above the name Cristina Dao in page 15 of Exhibit 'MM'. NN Judicial Affidavit of Ms. Cristina Dao executed on 18 June 2012. NN-1 Signature above the name Cristina Dao in page 7 of Exhibit 'NN'. Respondent filed its Formal Offer of Documentary Evidence on May 20, 2013. cHECAS The documentary exhibits formally offered by respondent are as follows: Exhibit Description 1 Letter of Authority No. 00011390 dated October 15, 2007, issued by Ms. Araceli L. Francisco 2 Notice of Informal Conference dated July 16, 2008 3 Memorandum dated September 12, 2008, recommending that the case be forwarded to Assessment Division for issuance of Assessment Notice. 4 Preliminary Assessment Notice dated January 22, 2009. 5 Memorandum dated February 4, 2011, finding that Japan Overseas Development Corporation (JODC) is not an international organization, but a non-government organization subject to final withholding tax. 6 Formal Letter of Demand with Details of Discrepancies dated February 17, 2009. 6-A Assessment Notice. 7 Memorandum of Assignment dated March 14, 2011, for the continuation of Audit Investigation. 8 Memorandum dated April 13, 2009, instructing the Revenue Officer to inform the taxpayer on the conduct of the reinvestigation. 9 Memorandum Report dated September 21, 2011, recommending that the case be forwarded to Assessment Division for the issuance of Assessment Notice. 10 Letter dated October 16, 2007, requesting for the submission of book of accounts and related records for all internal revenue taxes covering the period October 1, 2005 to September 30, 2006. 11 Second Request for Presentation of Records dated November 5, 2007. 12 Final Request for Presentation of Records dated December 4, 2007. 13 Letter dated April 13, 2009, informing the petitioner that the case will be forwarded to the District Office, in order to give them time to submit documents in support of their protest. 14 Judicial Affidavit of Ms. Nimfa Z. Nadal 14-A Signature of Ms. Nimfa Z. Nadal 15 Judicial Affidavit of Ms. Maria Rona J. Uychutin 15-A Signature of Ms. Maria Rona J. Uychutin 16 Judicial Affidavit of Ms. Mayeth C. Rada 16-A Signature of Ms. Mayeth C. Rada Both parties were given a period of thirty (30) days to file their respective memoranda. After the Court considered petitioner's Memorandum filed on January 10, 2014 and respondent's Memorandum filed on December 19, 2013, the case was deemed submitted for decision on January 16, 2014." (Citations Omitted) On September 23, 2014, the CTA-First Division promulgated the Assailed Decision 1 denying petitioner's Petition for Review for lack of jurisdiction. On October 16, 2014, petitioner filed a Motion for Reconsideration (Re: Decision dated 23 September 2014) 2 with respondent's Comment (To Petitioner's Motion for Reconsideration) 3 filed on November 26, 2014. In a Resolution 4 promulgated on January 30, 2015, petitioner's Motion for Reconsideration (Re: Decision dated 23 September 2014) was denied for lack of merit. On March 6, 2015, petitioner filed its Petition for Review with the Court En Banc after its Motion for Extension of Time to File Petition for Review (Re: Decision dated 23 September 2014 and Resolution dated 30 January 2015 of the First Division, Court of Tax Appeals) has been granted per Minute Resolution 5 dated February 25, 2015. Respondent failed to file her Comment to the Petition for Review per Records Verification Report 6 dated July 20, 2015. On May 4, 2015, petitioner filed a Motion to Amend Caption with Manifestation of Change of Address. 7 The Court En Banc subsequently granted petitioner's Motion per Minute Resolution 8 dated May 6, 2015. In a Resolution 9 promulgated on August 17, 2015, the Court resolved to give due course to petitioner's Petition for Review. In the same resolution, the parties were required to submit their respective memoranda within thirty (30) days from receipt of the said resolution. After the submission of the parties' respective memoranda or the expiration of the period for filing the same, the Petition for Review shall be deemed submitted for resolution. AHDacC On September 28, 2015, petitioner filed its Memorandum 10 while respondent failed to file her Memorandum per Records Verification Report 11 dated October 15, 2015. The case was deemed submitted for decision per Resolution 12 dated November 11, 2015. Hence, this Decision. In its Petition for Review, petitioner presented the following grounds/assignment of errors in support of its Petition, to wit: A. The CTA-Division erred when it failed to consider that the Supreme Court in the case of Pilipinas Shell Petroleum Corporation vs. Commissioner of Internal Revenue ("Shell Case") previously declared that the due process right of a taxpayer is violated if the procedures outlined in Revenue Regulations ("RR") No. 12-99 are not followed. B. The CTA-Division erred when it ruled that it cannot exercise jurisdiction over the case on the basis of its position that the assessment being questioned is already final and executory. C. The CTA-Division erred when it denied the Petition for Review for lack of jurisdiction without considering the substantial issues involved. Petitioner contends that, in arriving at the Assailed Decision, the CTA-Division failed to consider the Shell Case 13 decided by the Supreme Court and discussed by petitioner in its Motion for Reconsideration; that the CTA-Division has no valid basis to deviate from the jurisprudence established by the Supreme Court in the Shell Case; that, pursuant to the doctrine of stare decisis et non quieta movere , the doctrine established by the Supreme Court in the Shell Case should be applied in the instant case; that, without doubt, the issuance of the FAN before the lapse of the 15-day mandatory period for petitioner to reply is a clear violation of its right to due process. Thus, the FAN should be considered null and void and, as such, cannot give rise to any final deficiency tax assessment. Petitioner, likewise, contends that the Assailed Decision and Assailed Resolution are devoid of any discussion on whether or not there is legal basis to assess petitioner for deficiency FWT in the amount of Php660,889.15. The CTA Division failed to consider that respondent's assessment of deficiency FWT of Php660,889.15 is without legal or factual basis. After a careful and thorough evaluation and consideration of the records of the case, the Court En Banc finds merit in the Petition for Review. In the Assailed Decision, the CTA-First Division denied petitioner's Petition for Review for lack of jurisdiction since petitioner's protest letter to the Formal Letter of Demand was filed beyond the 30-day prescriptive period to file the same. Thus, the FAN assessing petitioner for final withholding tax had already become final and executory and, therefore, there is no disputed assessment to speak of. Relevant to the determination of whether or not the FAN/FLD had been validly issued, thus rendering petitioner's protest letter as having been filed beyond the 30-day prescriptive period, are Section 228 of the National Internal Revenue Code of 1997, as amended, and Revenue Regulations No. 12-99, as amended by RR 18-2013, which provide for the procedure to be followed in order for an assessment to valid. Section 228 of the NIRC of 1997, reads, thus: "Sec. 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 pre-assessment 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 thirty (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." (Underscoring supplied) Section 3 of RR No. 12-99, as amended by RR 18-2013, on the other hand, provides: " SECTION 3. Due Process Requirement in the Issuance of a Deficiency Tax Assessment. 3.1 Mode of procedures in the issuance of a deficiency tax assessment: 3.1.1 Preliminary Assessment Notice (PAN). If after review and evaluation by the Commissioner or his duly authorized representative, as the case may be, it is determined that there exists sufficient basis to assess the taxpayer for any deficiency tax or taxes, the said Office shall issue to the taxpayer a Preliminary Assessment Notice (PAN) for the proposed assessment. It shall show in detail the facts and the law, rules and regulations, or jurisprudence on which the proposed assessment is based .... If the taxpayer fails to respond within fifteen (15) days from date of receipt of the PAN, he shall be considered in default, in which case, a Formal Letter of Demand and Final Assessment Notice (FLD/FAN) shall be issued calling for payment of the taxpayer's deficiency tax liability, inclusive of the applicable penalties. IDSEAH If the taxpayer, within fifteen (15) days from date of receipt of the PAN, responds that he/it disagrees with the findings of deficiency tax or taxes, an FLD/FAN shall be issued within fifteen (15) days from filing/submission of the taxpayer's response, calling for payment of the taxpayer's deficiency tax liability, inclusive of the applicable penalties." Clearly, from the afore-quoted provisions, a taxpayer is given fifteen (15) days from receipt of the Preliminary Assessment Notice (PAN) to respond thereto. If the taxpayer fails to respond to the PAN upon the lapse of the fifteen (15) day period, the taxpayer shall be considered in default and the BIR shall then issue a Formal Letter of Demand/Formal Assessment Notice calling for the payment of the taxpayer's tax liability, inclusive of the applicable penalties. In the case at bench, the records show that, on February 5, 2009, petitioner received the PAN dated January 22, 2009, assessing petitioner for deficiency expanded withholding and final withholding taxes and penalties. Petitioner did not dispute the assessed deficiency expanded withholding tax assessment of Php23,581.87 and, thus, paid the same on February 18, 2009 with the Batino Branch of Rizal Commercial Banking Corporation, an authorized agent bank of RDO No. 56. What remained, therefore, is the assessment for deficiency final withholding tax for petitioner's alleged failure to withhold taxes on payment of professional fees made to Japan Oversees Development Corporation (JODC) for fiscal year ended September 30, 2006 in the amount of Php660,899.15. From receipt of the PAN dated January 22, 2009, petitioner had fifteen days or until February 20, 2009 within which to file its reply to or protest the PAN. Respondent, however, without waiting for petitioner to reply/protest the PAN, issued FLD/FAN on February 17, 2009, which petitioner received on February 25, 2009. In the case of Commissioner of Internal Revenue vs. Metro Star Superama, Inc. , 14 the Supreme Court explained the importance of the sending of PAN to taxpayer in this wise: "From the provision quoted above, it is clear that the sending of a PAN to taxpayer to inform him of the assessment made is but part of the 'due process requirement in the issuance of a deficiency tax assessment',the absence of which renders nugatory any assessment made by the tax authorities. The use of the word 'shall' in subsection 3.1.2 describes the mandatory nature of the service of a PAN. The persuasiveness of the right to due process reaches both substantial and procedural rights and the failure of the CIR to strictly comply with the requirements laid down by law and its own rules is a denial of Metro Star's right to due process. . . . . " (Underscoring ours) Clearly, therefore, pursuant to the ruling in the Metro Star case, petitioner's right to due process was violated by respondent when she issued the FLD/FAN on February 17, 2009 or prior to the lapse of the fifteen (15) day period given to petitioner to respond/protest the PAN mandated under Section 228 of the NIRC of 1997, as amended, and RR 12-99, as amended by RR 18-2013. While petitioner had timely filed its response/protest to the PAN on February 20, 2009, its protest to the FLD/FAN, filed on May 15, 2009, was filed beyond the thirty (30) day period prescribed for protesting the FLD/FAN. Nonetheless, the fact remains that, since the FLD/FAN was issued prior to the lapse of the 15-day period given to reply/protest the PAN, petitioner was clearly denied of its right to due process. Thus, the FLD/FAN, being formally defective, is void. This stand is in accordance with the ruling of the Supreme Court in the case of Pilipinas Shell Petroleum Corporation vs. Commissioner of Internal Revenue , 15 where it was held that: "While this has likewise been mooted by our discussions above, it would not be amiss to state that PSPC's right to substantive and procedural due process have indeed been violated. The facts show that PSPC was not accorded due process before the assessment was levied on it. The Center required PSPC to submit certain sales documents relative to supposed delivery of IFOs by PSPC to the TCC transferors. ... What is applicable is RR 12-99, which superseded RR 12-85, pursuant to Sec. 244 in relation to Sec. 245 of the NIRC implementing Secs. 6, 7, 204, 228, 247, 248 and 249 on the assessment of national internal revenue taxes, fees and charges. The procedures delineated in the said statutory provisos and RR 12-99 were not followed by respondent, depriving PSPC of due process in contesting the formal assessment levied against it. Respondent ignored RR 12-99 and did not issue PSPC a notice for informal conference and a preliminary assessment notice, as required. xxx xxx xxx." It may not be amiss to state that, in the recent case of Commissioner of Internal Revenue vs. Yumex Philippines Corporation , 16 this Court has upheld the ruling that a taxpayer is deprived of its right to due process if the FAN is issued prior to the lapse of the 15-day period given to the taxpayer to reply/protest the PAN. All told, having established that the FLD/FAN dated February 17, 2009 being formally defective is void, the same could not have become final and executory as found by the Court in Division and the Court in Division had jurisdiction over the case. WHEREFORE ,premises considered, the Assailed Decision and Assailed Resolution are hereby REVERSED and SET ASIDE .Accordingly, the Formal Letter of Demand/Final Assessment Notice with attached Audit Results/Assessment Notices dated February 17, 2009 is cancelled and declared WITHDRAWN. SO ORDERED. (SGD.) CAESAR A. CASANOVA Associate Justice Juanito C. Castaeda, Jr.,Lovell R. Bautista, Erlinda P. Uy, Esperanza R. Fabon-Victorino, Amelia R. Cotangco-Manalastas and Ma. Belen M. Ringpis-Liban, JJ., concur. Roman G. del Rosario, P.J., with dissenting opinion. Cielito N. Mindaro-Grulla, J., concurs with Presiding Justice Roman G. del Rosario's dissenting opinion. Separate Opinions DEL ROSARIO , P.J.,dissenting opinion : With due respect to my esteemed colleagues in the majority opinion, I register my dissent insofar as it effectively assumed jurisdiction in reviewing the validity or correctness of the Final Assessment Notice (FAN) dated February 17, 2009 which was not timely protested by petitioner before the Commissioner of Internal Revenue (CIR).The failure to file a timely protest rendered afore-stated assessment "final, executory and demandable" which may no longer be questioned on appeal. In the language of Commissioner of Internal Revenue v. Hambrecht & Quist Philippines, Inc. : 1 aCIHcD To be sure, the fact that an assessment has become final for failure of the taxpayer to file a protest within the time allowed only means that the validity or correctness of the assessment may no longer be questioned on appeal. (Boldfacing supplied) Indubitably, the Court of Tax Appeals is without jurisdiction to review on appeal an assessment that has not been properly "disputed".On this point, I reiterate my Separate Concurring Opinion in the resolution on the Motion for Reconsideration filed by petitioner in connection with the assailed Decision, viz. : xxx xxx xxx Section 3(a)(I) of Rule 4 of the Revised Rules of the Court of Tax Appeals provides: "SEC. 3. Cases within the jurisdiction of the Court in Division. The Court in Division shall exercise: (a) Exclusive original or appellate jurisdiction to review by appeal the following: (1) Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments , refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue;" Plainly, the Court in Division has jurisdiction to review on appeal decision of the Commissioner of Internal Revenue involving disputed assessments. The Court's jurisdiction does not cover cases involving assessments which remain undisputed and have long become final, executory and demandable. An assessment becomes "disputed assessment" when a taxpayer questions the same and asks for its reconsideration or cancellation as he believes he is not liable therefor. Section 228 of the National Internal Revenue Code (NIRC) of 1997 provides the manner of disputing/protesting an assessment and the consequence if not duly protested on time, viz. : "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: ... 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 thirty (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. " Implementing the foregoing provisions of the NIRC of 1997 is Revenue Regulations (RR) No. 12-99. Section 3 subparagraph 3.1.5 thereof provides: "3.1.5 Disputed Assessment. The taxpayer or his duly authorized representative may protest administratively against the aforesaid formal letter of demand and assessment notice within thirty (30) days from date of receipt thereof. If there are several issues involved in the formal letter of demand and assessment notice but the taxpayer only disputes or protests against the validity of some of the issues raised, the taxpayer shall be required to pay the deficiency tax or taxes attributable to the undisputed issues, in which case, a collection letter shall be issued to the taxpayer calling for payment of the said deficiency tax, inclusive of the applicable surcharge and/or interest. No action shall be taken on the taxpayer's disputed issues until the taxpayer has paid the deficiency tax or taxes attributable to the said undisputed issues. The prescriptive period for assessment or collection of the tax or taxes attributable to the disputed issues shall be suspended. The taxpayer shall state the facts, the applicable law, rules and regulations, or jurisprudence on which his protest is based, otherwise, his protest shall be considered void and without force and effect. If there are several issues involved in the disputed assessment and the taxpayer fails to state the facts, the applicable law, rules and regulations, or jurisprudence in support of his protest against some of the several issues on which the assessment is based, the same shall be considered undisputed issue or issues, in which case, the taxpayer shall be required to pay the corresponding deficiency tax or taxes attributable thereto. The taxpayer shall submit the required 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, executory and demandable. The phrase 'submit the required documents' includes submission or presentation of the pertinent documents for scrutiny and evaluation by the Revenue Officer conducting the audit. The said Revenue Officer shall state this fact in his report of investigation. If the taxpayer fails to file a valid protest against the formal letter of demand and assessment notice within thirty (30) days from date of receipt thereof, the assessment shall become final, executory and demandable. " Clearly, once an assessment is validly protested within 30 days from the date of its receipt, the same becomes a disputed assessment. Otherwise, if there is no protest filed within the reglementary period, the assessment becomes final, executory and demandable. Records disclose that petitioner received the Formal Letter of Demand with attached Audit Results/Assessment Notices all dated February 17, 2009 on February 25, 2009. Counting from February 25, 2009, the date of receipt of the assessment, petitioner has 30 days or until March 27, 2009 within which to file a valid protest. Considering that petitioner filed its letter protest only on May 15, 2009, which is clearly beyond the prescriptive period, the assessment [became] final, executory and demandable by operation of law. The Court therefore has no jurisdiction to make a determination as to whether or not the assessment is void for respondent's alleged failure to observe due process in issuing the same. ScHADI Moreover, petitioner's claim anent the alleged invalidity of the assessment, i.e.,issuance of the Final Assessment Notice before the lapse of the 15-day period for petitioner to reply to the Preliminary Assessment Notice ,is a matter which should be the proper subject of a timely filed protest, which unfortunately petitioner failed to do. Petitioner could not simply disregard the procedure outlined in Section 228 of the NIRC of 1997, as implemented by RR 12-99 as regards the manner of disputing an assessment. (Citations omitted; boldfacing in the original) xxx xxx xxx I am not unaware of the CTA En Banc decision in Commissioner of Internal Revenue v. Yumex Philippines Corporation (Yumex case) , 2 which ruled that a taxpayer is deprived of its right to due process if the FAN is issued prior to the lapse of the fifteen (15)-day period given to taxpayer to reply to the PAN and accordingly cancelled and set aside the tax assessment for taxable year 2007 issued by the CIR: It is a settled doctrine that the essence of due process in administrative proceedings is the opportunity to explain one's side or seek a reconsideration of the action or ruling complained of. As long as the parties are given the opportunity to be heard before judgement is rendered, the demands of due process are sufficiently met. The standard of due process that must be met in administrative tribunals allows a certain degree of latitude as long as fairness is not ignored. In this case, fairness was ignored by petitioner [CIR] when she did not provide an opportunity on the part of respondent to contest the issued PAN. For lack of said opportunity, there was a violation of respondent's [Yumex Philippines Corporation] right to due process .(Citations omitted; boldfacing supplied) In the Yumex case ,however, Yumex Philippines Corporation received the FAN on January 18, 2011 and filed its protest thereto on January 20, 2011 .Having received the denial of its protest on August 18, 2011, 3 it filed a Petition for Review before the Court in Division on September 7, 2011. Significantly, the protest to the FAN was timely filed; thus, making the assessment a disputed one. Equally important to note is that the Petition for Review in that case was timely filed, thus, the CTA aptly made a determination on the propriety of the issuance of the disputed assessment. On the other hand, in Pilipinas Shell Petroleum Corporation vs. Commissioner of Internal Revenue 4 (also cited in the ponencia) ,the Supreme Court declared the assessment therein as void for having been issued in violation of the taxpayer's right to due process. Nonetheless, there is nothing in the cited case which suggests, even remotely, that the assessment itself was not timely protested. As oft-repeated, the failure to contest an assessment within the reglementary period would result in its finality by operation of law. In fine, petitioner's failure in this case to timely protest the CIR's assessment is fatal to its cause. All told, I vote to DENY the petition for review for lack of merit. Footnotes 1. Division Docket, pp. 587-606. 2. Ibid ,pp. 607-631. 3. Id. ,pp. 640-649. 4. Id. ,pp. 650-654. 5. En Banc Rollo ,p. 38. 6. Ibid. ,p. 132. 7. Ibid. ,pp. 111-115. 8. Id. ,p. 131. 9. Id. ,p. 135. 10. Id. ,pp. 137-170. 11. Id. ,p. 174. 12. Id. ,pp. 172-173. 13. G.R. No. 172598, December 21, 2007. 14. G.R. No. 185371, December 8, 2010. 15. G.R. No. 172598, December 21, 2007. 16. CTA EB No. 1139 (CTA Case No. 8331),August 11, 2015. DEL ROSARIO, P.J.,dissenting opinion: 1. G.R. No. 169225, dated November 17, 2010. 2. CTA EB No. 1139 (CTA Case No. 8331) ,August 11, 2015. 3. Exhibit "X" The letter dated 25 July 2011 issued by Revenue District Officer Honorata S. Aguilar which was offered to prove the issuance thereof by the BIR and receipt by Yumex Philippines Corporation on August 18, 2011. Said exhibit was admitted in evidence in the Resolution of the Court in Division on May 22, 2012. (CTA Case No. 8331 Docket, pp. 442-445, 444). 4. G.R. No. 172598, December 21, 2007. n Note from the Publisher: Copied verbatim from the official copy. Irregular numerical sequence.