Commissioner of Internal Revenue v. G&W Architects, Engineers and Project Consultants Co.

EN BANC [C.T.A. EB CASE NO. 1606. July 25, 2018.] (C.T.A. Case No. 8617) COMMISSIONER OF INTERNAL REVENUE , petitioner , vs . G&W ARCHITECTS, ENGINEERS AND PROJECT CONSULTANTS CO. , respondent . DECISION MINDARO-GRULLA , J p : Submitted for decision of this Court En Banc is a Petition for Review filed by the Commissioner of Internal Revenue (CIR) under Section 3 (b), Rule 8 of the 2005 Revised Rules of the Court of Tax Appeals, 1 as amended , seeking the reversal of the Decision dated November 8, 2016 2 and the Resolution dated February 17, 2017 3 rendered by the Third Division of this Court in the case entitled "G&W Architects, Engineers and Project Consultants Co., vs. Commissioner of Internal Revenue" docketed as CTA Case No. 8617, the dispositive portions of which, respectively, read as follows: Decision dated November 8, 2016: " WHEREFORE , the instant Petition for Review filed by G&W Architects, Engineers and Project Consultants, Co., on March 13, 2013, is hereby GRANTED . Accordingly, the deficiency income tax and value-added tax assessments issued by respondent Commissioner of Internal Revenue against petitioner G&W Architects, Engineers & Project Consultants, Co., in the respective amounts of P257,129,633.53 and P89,941,757.61 for calendar year 2006, as well as the Final Notice Before Seizure dated February 8, 2013, are CANCELLED and deemed WITHDRAWN for being VOID . SO ORDERED. " Resolution dated February 17, 2017: " WHEREFORE , the Motion for Reconsideration (Re: Decision dated 08 November 2016) filed by respondent Commissioner of Internal Revenue on December 15, 2016, is hereby DENIED for lack of merit. SO ORDERED. " The following facts of the case as recited by the Court in Division in its Decision 4 and as established by evidence on record, read as follows: "Petitioner G&W Architects, Engineers & Project Consultants, Co. (now, herein respondents) is a domestic general professional partnership, with principal office at Rm. 727 Downtown Center Building 516 Quintin Paredes Street, Binondo, Manila. On the other hand, respondent CIR (now, herein petitioner) as head of the Bureau of Internal Revenue (BIR) is authorized to collect taxes, grant refunds, issue and abate tax assessments and examine books and returns filed by a taxpayer to determine the correctness of the taxes paid. He holds office at the BIR National Office Building, Agham Road, Diliman, Quezon City. On April 11, 2007, petitioner filed its Annual Income Tax Return (ITR) for taxable year 2006. On October 30, 2007, Letter of Notice No. 030-AS-06-00-00029 with Details of Taxpayer's Supplier's Record was issued by the BIR informing petitioner of its tax discrepancy for taxable year 2006. Subsequently, Letter of Authority No. 2008-00044576 dated August 27, 2009 was issued authorizing Revenue Officer (RO) Ronaldo Martirez and Team Head Cesar S. Sarmiento to examine petitioner's books of accounts and other accounting records for taxable year 2006. After the tax audit investigation, the BIR issued a Final Assessment Notice (FAN) with Details of Discrepancies for tax deficiency assessment of IT and VAT covering petitioner's operations for fiscal year 2006 amounting to P257,129,633.53 and P89,941,757.61, respectively, including increments. This was followed by Assessment Notice Nos. F-030-LNTF-06-IT-033 and Assessment Notice No. F-030-LNTF-06-VT-033, together with Details of Discrepancies. On March 15, 2013, petitioner received a Final Notice Before Seizure dated February 8, 2013, issued by RO Lorna S. Tobias of Revenue District (RDO) No. 30, Revenue Region No. 6, through Elenita P. Nuguid, Chief of the Collection Service. On March 13, 2013, petitioner filed the instant Petition for Review. In his Answer, filed on April 24, 2013, respondent states that contrary to petitioner's claim, it received the Notice of Informal Conference, PAN and FAN, hence, it was not denied the mandatory due process requirements as shown in the record of the case. In fact, petitioner attended several conferences with authorized BIR officials and employees and even protested the subject assessment prior to the issuance of the PAN. Petitioner's assertion that the FAN is void as it did not indicate the factual and legal bases of the assessment as required under Section 222 of the National Internal Revenue Code (NIRC) of 1997, as amended and Revenue Regulations (RR) 12-99, is also erroneous since computations, schedules and applicable laws were included in the FAN. The several correspondences submitted by petitioner questioning the basis of the deficiency tax assessment also strengthen the fact that it was properly informed of the factual and legal bases of the assessment. It is as well flawed for petitioner to state that the subject assessment was based on mere assumptions as audit investigations was conducted pursuant to Letter of Authority No. 030-AS-06-00-00029 which became the basis of the subject assessment. Finally, respondent invokes the tenet that tax assessments are presumed correct and made in good faith and the burden of proof is on the taxpayer contesting the validity of the correctness of an assessment to prove not only that the CIR is wrong but also that the taxpayer is right. After a Pre-Trial Order was issued, petitioner presented its lone witness, Gilbert C. Yu , who testified that as petitioner's Managing Partner, he helps find clients for petitioner, ensures that petitioner's building designs are in accordance with the Building Code and that the contractor follows the building designs in the construction of the building. He also makes sure that the interests of petitioner's clients are protected and that they have access to all the documents relating to the projects. ETHIDa He further testified that petitioner is a partnership registered with the Securities and Exchange Commission (SEC) and with BIR RDO No. 30 of Revenue Region No. 612. It is engaged in providing professional architectural services to clients, such as designing houses, offices and/or buildings. Its principal office is located at Rm. 727 Downtown Center Building, 516 Quintin Paredes Street, Binondo. In 2006, petitioner was engaged as a Project Manager in the construction of several condominium projects, by acting directly as an architect for and in behalf of the individual clients. Petitioner however, did not finance the purchase of the lots upon which the said condominium projects were constructed nor the construction of the condominium projects. As Project Manager, petitioner coordinated between unit owners, the general contractors and other suppliers of goods and services. Basically, it provided guidance to clients with respect to choosing the right contractor and supplier of goods and services for the building of their condominium units and ensured that the construction was in accordance with the architectural design. In connection with the foregoing, the unit owners executed a Contract to Manage and Execute (Contract to Manage) the Construction of Grand Hamptons Tower I Condominium, Grand Hamptons Tower II Condominium and Kensington Place Condominium, while petitioner executed a Trust Agreement embodied in the Contract to Manage. Each unit owner executed a separate Depository and Disbursing Agreement with Banco de Oro-Trust Banking Group (BDO). For the purchase of the lands upon which the condominium units were constructed, Deeds of Absolute Sale were executed between Fort Bonifacio Development Corporation (FBDC) and Grand Hamptons Tower II Condominium (Condominium Corporation), whereby ownership over the lands was transferred directly from FBDC to the Condominium Corporation, as evidenced by the respective Transfer Certificates of Title. From the Condominium Corporation, individual Condominium Certificates of Title were issued to the unit owners. In relation to its role of providing architectural services to its clients for the Condominium Projects, petitioner sought guidance from the BIR disclosing to it the factual background of its responsibilities in such projects. The BIR issued several rulings that it would not be subject to tax as a real estate developer for providing architectural services to its clients. In particular, the BIR ruled that the transactions were not subject to capital gains tax (CGT), creditable withholding tax (CWT), IT or VAT, but petitioner must pay Documentary Stamp Tax (DST) on the certificates in the amount of fifteen pesos. Subsequently however, the said BIR Rulings were revoked in BIR Revenue Memorandum Circular (RMC) No. 55-2010 without according petitioner the opportunity to be heard. Petitioner likewise requested for a confirmation of its exemption from IT and WT as a general professional partnership through BIR Ruling DA-(C-014) 070-10. The witness confirmed that petitioner received a Final Notice Before Seizure dated February 8, 2013 stating that the tax deficiency assessment issued by the BIR against petitioner should be settled within ten (10) days after receipt, otherwise, the BIR would make a collection through summary garnishment and/or simultaneous court action. He added that he was petitioner's Managing Partner since its establishment and was aware of the subject FAN issued by the BIR for petitioner's alleged deficiency tax for 2006. He clarified however that the purchases which respondent claimed under-declared pertained to purchases of petitioner's clients and not on its account. He explained that as Project Manager, petitioner's sole responsibility is to look for a property in behalf of its clients. For service rendered, it received Architectural Fee as compensation. Petitioner executed a disbursement agreement with its clients providing that the latter would deposit money in a trustee account from which all the money needed for payment to the suppliers would be disbursed. Precisely the deed of absolute sale was executed between petitioner's clients and the seller of the property. Petitioner started the projects in 2003, hence, the subject assessments might pertain to petitioner's third project, which started in 2006. The witness admitted that petitioner received the Final Notice Before Seizure but not the FAN for which reason it was not able to file a protest letter. Respondent, for his part, presented Revenue Officers Ronalda DP. Martirez, Reina B. De Guia and Ruth L. Urbi, as witnesses. RO Ronaldo DP. Martirez , assigned at Revenue District No. 32, Revenue Region No. 6-Manila, declared in his Amended Judicial Affidavit that he was tasked to continue the audit of petitioner's 2006 case docket by virtue of a Memorandum dated July 21, 2009 issued by the Letter Notice Task Force of the BIR due to the findings of discrepancies in petitioner's tax returns for taxable year 2006 after the Reconciliation of Listing for Enforcement (RELIEF) and Third Party Matching-Bureau of Customs (TPM-BOC) Data Program, as reflected in the Letter Notice (LN) No. 030-AS-00-00029 dated October 30, 2007, issued by the BIR and received by petitioner. His audit investigation revealed that petitioner failed to submit any document to explain the discrepancies indicated in the LN. On this account, he recommended the issuance of a Letter of Authority (LOA) through a Memorandum dated July 31, 2009 addressed to the Deputy Commissioner Operations Group of the BIR. Consequently, LOA No. 2008-00044576 was issued and served to petitioner together with the Notice of Informal Conference 28 both dated August 27, 2009. After the investigation, audit reports dated October 22, 2009 were issued, reflecting petitioner's deficiency IT and VAT for taxable year 2006 amounting to P239,318,129.07 and P83,834,940.50, respectively, thus, petitioner was informed of its deficiency tax liabilities through the PAN, FAN and Assessment Notice Nos. F-030-LNTF-06-IT-033 and 030-LNTF-06-VT-033 issued by the BIR. Notwithstanding receipt, petitioner failed to file any protest on the tax assessments which became final and demandable. For this reason, 1st Notice dated January 2, 2013 and Final Notice Before Seizure dated February 8, 2013 were sent to petitioner demanding payment of its deficiency tax assessments. Witness Martirez, reiterated that the discrepancies in petitioner's tax returns were discovered after the reconciliation of listing for enforcement and third party matching. To verify the third-party information, he informed petitioner's former counsel of the discrepancy and even had a meeting with Mr. Yu. Petitioner submitted the official receipt issued to it by FBDC, the Contract to Sell between it and FBDC and the check payments for the 3 lots purchased from the latter. He gave petitioner's representative copies of all the assessment notices and letters, including the final notice but he did not have proof of the receipt. Petitioner did not file a protest but it submitted the requirements indicated in the LN. It also did not show the source of its funding nor reveal the owners of the 3 condominium buildings it allegedly purchased from FBDC. Respondent's second witness, Reino B. De Guia testified that as BIR's Administrative Assistant, he personally mailed the PAN issued to petitioner for taxable year 2006 pursuant to the Job Order request of the LN Task Force. He sent the PAN through registered mail under Registry Receipt No. 1070-R by depositing the copies of the PAN at the BIR post Office, in a sealed envelope addressed to petitioner's registered address at Rm. 727 Downtown Center Building, 516 Quintin Paredes St., Binondo, Manila, with instruction to the postmaster to return the mail to the sender after ten days if undelivered, as evidenced by Transmittal Letter dated July 28, 2010. RO I Ruth I. Urbi declared that she is currently assigned at the Secretariat, Letter Notice Task Force of the BIR. She prepared the Job Order for the mailing of the PAN to petitioner, and the one who sent the Assessment Notices and FAN to petitioner for taxable year 2006 through registered mail under Registry Receipt No. 2903. She deposited the copies of the said Assessment Notices at the BIR Post Office, in a sealed envelope, addressed to petitioner's registered address at Rm. 727 Downtown Center Building, 516 Quintin Paredes St., Binondo, Manila with the instruction to the postmaster to return the mail to the sender after ten days if undelivered. Petitioner received the PAN and FAN as shown in the Registry Return Cards which were returned to her office. RO Urbi confirmed that the BIR issued petitioner a PAN, assessment notices and a FAN on different dates. She reiterated that she prepared the Job Order for the mailing of the PAN and she personally deposited to the BIR Post Office the assessment notices and the FAN on September 2, 2010, as evidenced by the registry return receipt. On March 18, 2014, respondent filed a Motion to Dismiss as the Court had no jurisdiction over the subject matter of the case, to which petitioner filed an Opposition on April 2, 2014. However, it was denied for lack of merit on May 20, 2014. After the filing of the Memorandum for the Petitioner 5 on January 5, 2015 and for respondent, 6 on October 9, 2015, the case was deemed submitted for decision on November 13, 2015." The assailed Decision was promulgated on November 8, 2016. Unsatisfied, the CIR filed a Motion for Reconsideration, but the same was denied in a Resolution dated February 17, 2017. Hence, this Petition for Review was filed. In the instant Petition for Review, the CIR insists that respondent was validly served with copies of the Preliminary Assessment Notice (PAN) and Final Assessment Notice (FAN). We rule to DENY the Petition for Review. In the case at bar, the crux of the issue is whether the sending, release, mailing or transmittal of the PAN and FAN determines sufficient compliance with procedural due process as provided for under the law. Central to the resolution of the issue is Section 228 of the National Internal Revenue Code (NIRC), as amended 7 and Revenue Regulations (RR) No. 12-99. These provisions lay out the procedure to be followed in tax assessments. It bears emphasis that under Section 228 of the NIRC, a taxpayer shall be informed in writing of the law and the facts on which the assessment is made, otherwise, the assessment shall be void. In implementing Section 228 of the NIRC, RR No. 12-99 reiterates the requirement that a taxpayer must be informed in writing of the law and the facts on which his tax liability was based, to wit: "SECTION 3. Due Process Requirement in the Issuance of a Deficiency Tax Assessment. xxx xxx xxx 3.1.2 Preliminary Assessment Notice (PAN) . If after review and evaluation by the Assessment Division or 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, at least by registered mail, a Preliminary Assessment Notice (PAN) for the proposed assessment, showing in detail, the facts and law, rules and regulations, or jurisprudence on which the proposed assessment is based x x x 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 assessment notice shall be caused to be issued by the said Office, calling for payment of the taxpayer's deficiency tax liability, inclusive of the applicable penalties. xxx xxx xxx" At the outset, elementary is the rule that a taxpayer must actually receive any assessment issued by the CIR for it to be valid. 8 Guided by the provisions above, the Court in Division ruled that respondent was not accorded due process because of the fact that the assessment was not actually received by the taxpayer despite constructive service done by the BIR. However, the BIR begs to disagree and insists that since RR 12-99 allows service of assessment by registered mail, the essence of constructive receipt is that the taxpayer will not actually receive the assessment and such assessment is valid. 9 We submit that the Rules of Court and RR 12-99 provide that sending of notices by registered mail and failure to respond by the taxpayer shall be considered as actual or constructive receipt by him, to wit: cSEDTC "Sec. 3. Disputable presumptions. The following presumptions are satisfactory if uncontradicted/but may be contradicted and overcome by other evidence: xxx xxx xxx (v) That a letter duly directed and mailed was received in the regular course of the mail;" Relative thereto, Section 3.1.7 of RR No. 12-99 provides as follows: " 3.1.7 Constructive Service. If the notice to the taxpayer herein required is served by registered mail, and no response is received from the taxpayer within the prescribed period from date of the posting thereof in the mail, the same shall be considered actually or constructively received by the taxpayer. If the same is personally served on the taxpayer or his duly authorized representative who, however, refused to acknowledge receipt thereof, the same shall be constructively served on the taxpayer. Constructive service thereof shall be considered effected by leaving the same in the premises of the taxpayer and this fact of constructive service is attested to, witnessed and signed by at least two (2) revenue officers other than the revenue officer who constructively served the same. The revenue officer who constructively served the same shall make a written report of this matter which shall form part of the docket of this case". From the foregoing, it is clear that sending of notices by registered mail is sufficient compliance under the law. However, the rules are also clear that while a mailed letter is deemed received by the addressee in the course of mail, this is merely a disputable presumption subject to controversion, and a direct denial thereof shifts the burden to the party favored by the presumption to prove that the mailed letter was indeed received by the addressee. 10 Jurisprudence is replete with cases holding that if the taxpayer denies ever having received an assessment from the BIR, it is incumbent upon the latter to prove by competent evidence that such notice was indeed received by the addressee. As applied to tax assessments, if the taxpayer categorically disavows receipt of the assessment, the burden is shifted to the BIR to prove that the taxpayer actually received the same. As held by the Supreme Court in Gonzalo P. Nava vs. Commissioner of Internal Revenue : 11 "The facts to be proved to raise this presumption are (a) that the letter was properly addressed with postage prepaid, and (b) that it was mailed. Once these facts are proved, the presumption is that the letter was received by the addressee as soon as it could have been transmitted to him in the ordinary course of the mail. But if one of the said facts fails to appear, the presumption does not lie. (VI, Moran, Comments on the Rules of Court, 1963 ed, 56-57 citing Enriquez vs. Sunlife Assurance of Canada , 41 Phil. 269). xxx xxx xxx x x x. What is essential to prove the fact of mailing is the registry receipt issued by the Bureau of Posts or the Registry return card which would have been signed by the petitioner or its authorized representative. And if said documents cannot be located, respondent at the very least, should have submitted to the Court a certification issued by the Bureau of Posts and any other pertinent document which is executed with the intervention of the Bureau of Posts. This Court does not put much credence to the self-serving documentations made by the BIR personnel especially if they are unsupported by substantial evidence establishing the fact of mailing. Thus: 'While we have held that an assessment is made when sent within the prescribed period, even if received by the taxpayer after its expiration ( Coll. of Int. Rev. vs. Bautista , L-12250 and L-12259, May 27, 1959), this ruling makes it the more imperative that the release, mailing or sending of the notice be clearly and satisfactorily proved. Mere notations made without the taxpayers intervention, notice or control, without adequate supporting evidence cannot suffice; otherwise, the taxpayer would be at the mercy of the revenue offices, without adequate protection or defense.' ( Nava vs. CIR , 13 SCRA 104, January 30, 1965). xxx xxx xxx" Accordingly, in the recent case of Commissioner of Internal Revenue v. GJM Philippines Manufacturing, Inc. , 12 the Supreme Court ruled in this wise: "Thus, the CIR has three (3) years from the date of the actual filing of the return or from the last day prescribed by law for the filing of the return, whichever is later, to assess internal revenue taxes. Here, GJM filed its Annual Income Tax Return for the taxable year 1999 on April 12, 2000. The three (3)-year prescriptive period/therefore, was only until April 15, 2003. The records reveal that the BIR sent the FAN through registered mail on April 14, 2003, well-within the required period. The Court has held that when an assessment is made within the prescriptive period, as in the case at bar, receipt by the taxpayer may or may not be within said period. But it must be clarified that the rule does not dispense with the requirement that the taxpayer should actually receive the assessment notice even beyond the prescriptive period . GJM, however, denies ever having received any FAN. If the taxpayer denies having received an assessment from the BIR, it then becomes incumbent upon the latter to prove by competent evidence that such notice was indeed received by the addressee . Here, the onus probandi has shifted to the BIR to show by contrary evidence that GJM indeed received the assessment in the due course of mail. It has been settled that while a mailed letter is deemed received by the addressee in the course of mail, this is merely a disputable presumption subject to controversion, the direct denial of which shifts the burden to the sender to prove that the mailed letter was, in fact, received by the addressee. (emphases supplied) " Indubitably, in the case of Winebrenner and Inigo Insurance Brokers, Inc. vs. Commissioner of Internal Revenue 13 the Supreme Court emphasized: "It must be emphasized that once the requirements laid down by the NIRC have been met, a claimant should be considered successful in discharging its burden of proving its right to refund. Thereafter, the burden of going forward with the evidence, as distinct from the general burden of proof, shifts to the opposing party, that is, the CIR. (emphasis supplied) xxx xxx xxx" In the case at bar, considering that respondents vehemently deny having received the PAN and FAN, the CIR therefore has an equally important responsibility of contradicting respondent's claim by presenting other proof once the burden of evidence shifts to its side. Regrettably, the CIR did not provide such contrary evidence to show actual receipt of the PAN and FAN by the respondents other than the bare assertion that the PAN and FAN were simply mailed as evidenced by the registry return receipts and the testimony of RO Ubi. Even granting for the sake of argument that such notices were received, the Court in Division correctly held that there is no certainty nor confirmation as to whether the persons whose signatures appear in the registry return card are authorized representatives of the respondents, aside also from the fact that the signatures found thereon are illegible and unreadable. In Del Rosario v. Cedillo , 14 as cited by the Court in Division, the Supreme Court held that an illegible signature on the registry receipts is insufficient proof that the addressee received the mail matter, to wit: "Likewise, for notice by mail, it must appear that the same was served on the addressee or a duly authorized agent of the addressee. In fact, the registry return receipt itself provides that '[a] registered article must not be delivered to anyone but the addressee, or upon the addressee's written order, in which case the authorized agent must write the addressee's name on the proper space and then affix legibly his own signature below it.' In the case at bar, no effort was made to show that the demand letter was received by petitioners or their agent. All that we have on record is an illegible signature on the registry receipt as evidence that someone received the letter. As to whether this signature is that of one of the petitioners or of their authorized agent remains a mystery. From the registry receipt alone, it is possible that petitioners or their authorized agent did receive the demand letter. Possibilities, however, cannot replace proof beyond reasonable doubt. There being insufficient proof that petitioners received notice that their checks had been dishonored, the presumption that they knew of the insufficiency of the funds therefor cannot arise." On these bases, emphasis has always been given on the actual receipt of the PAN and FAN by the taxpayer for purposes of informing them of the facts and the law on which the assessment is made. Hence, the very essence of due process in case of tax assessments. Thus, the failure of petitioner to prove receipt of the assessment by the respondents lead to the conclusion that no assessment was issued. Petitioner cannot say that respondents were accorded due process, because no effective protest can be made. Given the circumstances at bar, it is clear that the law imposes a substantive, not merely a formal, requirement. The Court in Division correctly ruled that the Final Notice Before Seizure dated February 8, 2013 never became final and demandable considering that respondents failed to receive any notices prior to said receipt of the Final Notice Before Seizure dated February 8, 2013. Consequently, an invalid assessment bears no valid fruit, therefore, the assessment issued by the petitioner against the respondent for deficiency IT and VAT in the respective amounts, of P257,129,633.53 and P89,941,757.61 for calendar year 2006, is void for failure to accord petitioner due process in the issuance thereof. Although taxes are the lifeblood of the government, their assessment and collection should be made in accordance with law, rules and regulations as any arbitrariness will defeat the very purpose of the government itself. Hence, the harsh power of taxation must be tempered with evenhandedness. Under the premises, We find no cogent reason to deviate from the rulings of the Court in Division. WHEREFORE , the petition is DENIED . The Decision of the Third Division of this Court in CTA Case No. 8617 dated November 8, 2016, and its Resolution dated February 17, 2017, are AFFIRMED . No pronouncement as to costs. SO ORDERED. (SGD.) CIELITO N. MINDARO-GRULLA Associate Justice Juanito C. Castaeda, Jr., Lovell R. Bautista, Erlinda P. Uy, Caesar A. Casanova, Esperanza R. Fabon-Victorino, Ma. Belen M. Ringpis-Liban and Catherine T. Manahan, JJ. , concur. Roman G. del Rosario, P.J. , with Concurring Opinion. Separate Opinions DEL ROSARIO , P.J., concurring opinion : I concur with the ponencia in denying the Petition for Review filed by the Commissioner of Internal Revenue (CIR) but solely on the ground that the Final Assessment Notice (FAN) is void for failure of the Final Assessment Notice 1 (FAN) and the Assessment Notices 2 enclosed thereto to demand payment of the taxes due within a specific period. A perusal of the FAN 3 and the Assessment Notices 4 enclosed thereto issued against respondent reveals that both failed to demand payment of the taxes due within a specific period. While the FAN incorporates the following statement: "x x x, it is requested that you pay the above deficiency taxes, through the duly authorized agent bank (AAB) which you are enrolled, within the time shown in the accompanying assessment notice." the spaces for the due dates in the Assessment Notices were conspicuously left blank. Since there was no assessment notice which properly indicated the due date when the deficiency taxes must be paid, no proper demand thereof within a specific period was made. In Commissioner of Internal Revenue vs. Pascor Realty and Development Corporation , 5 the Supreme Court emphasized the requirement for an assessment to contain a specific demand for payment within a prescribed period, viz .: "An assessment contains not only a computation of tax liabilities, but also a demand for payment within a prescribed period. It also signals the time when penalties and interests begin to accrue against the taxpayer. To enable the taxpayer to determine his remedies thereon, due process requires that it must be served on and received by the taxpayer. x x x. xxx xxx xxx To start with, an assessment must be sent to and received by a taxpayer, and must demand payment of the taxes described therein within a specific period . Thus, the NIRC imposes a 25 percent penalty, in addition to the tax due, in case the taxpayer fails to pay the deficiency tax within the time prescribed for its payment in the notice of assessment. Likewise, an interest of 20 percent per annum, or such higher rate as may be prescribed by rules and regulations, is to be collected from the date prescribed for its payment until the full payment. SDAaTC x x x. Necessarily, the taxpayer must be certain that a specific document constitutes an assessment. Otherwise, confusion would arise regarding the period within which to make an assessment or to protest the same, or whether interest and penalty may accrue thereon. In the present case, the revenue officers' Affidavit merely contained a computation of respondents' tax liability. It did not state a demand or a period for payment. x x x." (Boldfacing and underscoring supplied) The Supreme Court elucidated in Commissioner of Internal Revenue vs. Fitness By Design 6 that a FAN without a definite due date for payment is not valid because it negates the demand for payment, viz .: "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. 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." In other words, a FAN must not only indicate the legal and factual bases of the assessment but must also state a clear and categorical demand for payment of the computed tax liabilities within a specific period . Absent such demand, as in this case, the FAN and the Assessment Notices are fatally infirm. All told, I vote to: (i) DENY the Petition for Review filed by the Commissioner of Internal Revenue; and, (ii) CANCEL the FAN and the Assessment Notices assessing respondent for deficiency income tax and VAT respectively for taxable year 2006 for being void. Footnotes 1. RULE 8, Sec 3. Who may appeal; period to file petition . xxx xxx xxx (b) A party adversely affected by a decision or resolution of a Division of the Court on a motion for reconsideration or new trial may appeal to the Court by filing before it a petition for review within fifteen days from receipt of a copy of the questioned decision or resolution. Upon proper motion and the payment of the full amount of the docket and other lawful fees and deposit for costs before the expiration of the reglementary period herein fixed, the Court may grant an additional period not exceeding fifteen days from the expiration of the original period within which to file the petition for review. (Rules of Court, Rule 42, sec. 1a) xxx xxx xxx 2. Penned by Associate Esperanza R. Fabon-Victorino, concurred in by Associate Justice Lovell R. Bautista and Associate Justice Ma. Belen M. Ringpis-Liban, En Banc Docket, pp. 22-43. 3. Id. , pp. 45-47. 4. Supra note 2. 5. Division Docket, Volume III, pp. 1251-1282. 6. Ibid. , pp. 1427-1443. 7. "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 preassessment notice shall not be required in the following cases: xxx xxx xxx The taxpayer 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. xxx xxx xxx" 8. CIR vs. Metro Star Superama, Inc. , G.R. No. 185371, December 8, 2010; Barcelon, Roxas Securities, Inc. vs. CIR , G.R. No. 157064, August 7, 2006; Estate of the Late Juliana Diez Vda. De Gabriel vs. CIR , G.R. No. 155541, January 27, 2004; CIR vs. United International Pictures AB , CA-G.R. SP No. 73200, June 22, 2006; Pundanera vs. CIR , CTA Case No. 8333, December 2, 2014; Palaganas vs. CIR , CTA Case No. 8394, September 17, 2014; Coolmate Corporation vs. CIR , CTA Case No. 8264, May 19, 2014. 9. En Banc Docket, p. 12. 10. Republic vs. Court of Appeals , G.R. No. L-38540, April 30, 1987. 11. Gonzalo B. Nava vs. Commissioner of Internal Revenue , G.R. No. L-19470, January 30, 1965. 12. Commissioner of Internal Revenue v. GJM Philippines Manufacturing, Inc ., G.R. No. 202695, February 29, 2016. 13. Winebrenner and Inigo Insurance Brokers, Inc. v. CIR , G.R. No. 206526, January 28, 2015. 14. A.M. No. MTJ-04-1557, October 21, 2004. DEL ROSARIO, P.J., concurring opinion: 1. Exhibit R-19. 2. Exhibits R-17 and R-18. 3. Supra , Note 1. 4. Supra , Note 2. 5. G.R. No. 128315, June 29, 1999. 6. G.R. No. 215947, November 9, 2016.