Commissioner of Internal Revenue v. Hobbies of Asia, Inc.

EN BANC [C.T.A. EB CASE NO. 2302. March 9, 2022.] (C.T.A. Case No. 9476) COMMISSIONER OF INTERNAL REVENUE , petitioner , vs. HOBBIES OF ASIA, INC. , respondent . DECISION UY , J p : This is a Petition for Review 1 filed on August 20, 2020 by petitioner, Commissioner of Internal Revenue, against respondent, Hobbies of Asia, Inc.,praying that the Decision dated November 12, 2019 2 and the Resolution dated July 7, 2020, 3 both rendered by the First Division of this Court (Court in Division) in CTA Case No. 9476, entitled " Hobbies of Asia, Inc.,Petitioner, versus Commissioner of Internal Revenue, Respondent ," be set aside. The dispositive portions thereof respectively read as follows: Decision dated November 12, 2019 : " WHEREFORE ,the Petition for Review is GRANTED .Accordingly, the Final Decision on Disputed Assessment dated August 18, 2016, assessing petitioner for deficiency Income Tax, Value-Added Tax, Expanded Withholding Tax and Documentary Stamp Tax, including interests and penalties, in the aggregate amount of P20,540,505.43 for the taxable year 2011, is hereby CANCELLED and SET ASIDE . SO ORDERED ." Resolution dated July 7, 2020 : " WHEREFORE ,the Motion for Reconsideration dated December 10, 2019 filed by respondent Commissioner of Internal Revenue is DENIED ,for lack of merit. SO ORDERED. " THE FACTS Petitioner is the Commissioner of the Internal Revenue (CIR), with the power to decide disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties imposed in relation thereto or other matters arising under the National Internal Revenue Code (NIRC)or other laws or portions thereof administered by the Bureau of Internal Revenue (BIR). He holds office at 5th Floor, BIR Building, BIR Road, Diliman, Quezon City. On the other hand, respondent Hobbies of Asia, Inc. is a domestic corporation, with address at No. 8, Diosdado Macapagal, Boulevard, Barangay 76, Pasay City. It is primarily engaged in the business of real estate, including subdivision, partitioning, and developing real properties, the improvements and permanent structures situated or attached thereon; to own, use, improve, develop, subdivide, sell, exchange, lease, and hold for investment or otherwise, real estate of all kinds, including buildings, houses, apartments and other structures. It is registered with the BIR under Certificate of Registration No. OCN 9RC0000875303E with Tax Identification Number (TIN) 240-258-579-00000. On December 5, 2012, respondent received Letter of Authority (LOA) No. LOA-051-2012-00000381 (SN: eLA201100013573) dated November 16, 2012, issued by then Regional Director Nestor S. Valeroso (RD Valeroso) of Revenue Region (RR) No. 8-Makati City, authorizing Revenue Officer (RO) Roberto Taylo and Group Supervisor (GS) Arnaldo Rase of Revenue District Office (RDO) No. 51-Pasay City, to examine respondent's books of accounts and other accounting records for all internal revenue taxes for taxable year (TY) 2011. On May 19, 2014, RD Valeroso issued a Memorandum of Assignment (MOA) No. RR8-051-REA-05-014-00265, authorizing RO Marilyn D. Guerzon (RO Guerzon) and GS Rase to continue the conduct of audit of respondent's books of accounts and other accounting records for all internal revenue taxes for TY 2011. After her tax investigation, RO Guerzon, through a Memorandum sent to BIR RR No. 8-Makati City, recommended the issuance of assessment notices against respondent to collect the deficiency taxes due. On December 22, 2014, respondent received a Preliminary Assessment Notice (PAN) dated December 19, 2014, with attached Details of Discrepancies, assessing it for deficiency income tax (IT),value-added tax (VAT),expanded withholding tax (EWT) and documentary stamp tax (DST) for TY 2011 in the total amount of P16,864,603.95. On January 14, 2015, respondent received a Formal Assessment Notice (FAN) with attached Assessment Notices dated January 13, 2015, reiterating the assessment against it for deficiency IT, VAT, EWT and DST for TY 2011. On February 12, 2015, respondent protested the FAN in a letter dated February 11, 2015 addressed to RD Jonas DP. Amora of RR No. 8-Makati City. On August 24, 2016, respondent received the Final Decision on Disputed Assessment (FDDA) dated August 18, 2016 with attached Details of Discrepancies, denying its protest and finding it liable for deficiency IT, VAT, EWT and DST with penalties and interests for TY 2011, broken down as follows: Tax Type Amount Due Income Tax P14,077,300.33 Value-Added Tax 3,644,801.07 Expanded Withholding Tax 1,575,837.41 Documentary Stamp Tax 1,242,566.62 TOTAL P20,540,505.43 Aggrieved, respondent filed a Petition for Review before the Court in Division on September 23, 2016 entitled, " Hobbies of Asia, Inc.,Petitioner, versus Commissioner of Internal Revenue, Respondent ," and docketed as CTA Case No. 9476. On November 24, 2016, petitioner filed his Answer in CTA Case No. 9476, alleging among others, that: (1) the authority of RO Guerzon and GS Rase to investigate the internal tax liabilities of respondent for TY 2011 was based on an MOA originating from a validly issued LOA; (2) petitioner's right to investigate respondent's IT for TY 2011 has not prescribed; and (3) the prescriptive period to assess respondent's VAT is ten (10) years for it allegedly committed fraud in the filing of its VAT returns in which it claimed an input VAT of P2,912,496.91, when its input tax per summary list of purchases amounted to only P1,297,454.43 for TY 2011. After the pre-trial conference, the parties filed their Joint Stipulation of Facts and Issues 4 on the basis of which a Pre-Trial Order 5 was issued by the Court in Division on July 10, 2017. During the trial, respondent presented its sole witness, Leonardo B. Dela Cruz, its Accountant. On December 1, 2017, respondent filed its Formal Offer of Evidence . 6 In the Resolution 7 dated January 10, 2018, the Court in Division admitted all of respondent's exhibits. For his part, petitioner presented RO Marilyn Guerzon 8 as his sole witness. On June 27, 2018, petitioner filed his Formal Offer of Evidence . 9 In the Resolution 10 dated August 6, 2018, the Court in Division admitted all exhibits presented by petitioner; and directed both parties to file their respective memoranda within thirty (30) days from notice. Respondent filed its Memorandum 11 on October 22, 2018; while petitioner failed to file his memorandum despite due notice. 12 On November 14, 2018, Court in Division submitted CTA Case No. 9476 for decision. On November 20, 2019, the Court in Division rendered the assailed Decision 13 granting the Petition for Review in CTA Case No. 9476. The Court a quo ordered the cancellation of the FDDA dated August 18, 2016 assessing respondent for deficiency taxes for TY 2011. On December 10, 2019, petitioner filed his Motion for Reconsideration ; 14 while respondent filed its Comment/Opposition 15 on February 12, 2020. In the assailed Resolution 16 promulgated on July 7, 2020, the Court in Division denied petitioner's Motion for Reconsideration for lack of merit. On July 22, 2020, petitioner filed a Motion for Extension of Time to File Petition for Review , 17 before the Court En Banc praying for an extension of fifteen (15) days from July 29, 2020 or until August 13, 2020, within which to file his Petition for Review .The same was granted by the Court En Banc on July 28, 2020. 18 The CIR then filed the instant Petition for Review 19 before the Court En Banc on August 20, 2020 20 via registered mail, and received by the Court on September 2, 2020. In the Resolution dated September 23, 2020, 21 the Court En Banc directed petitioner to submit the following: (1) duplicate originals or certified true copies of the Decision and Resolution appealed from; and (2) a compliant Verification provided under Section 4 of Rule 7 of the 1997 Rules of Civil Procedure, as amended by A.M. No. 19-10-20-SC. On October 12, 2020, petitioner filed his Compliance (With Profuse Apologies) , 22 submitting the certified true copies of the assailed Decision dated November 12, 2019 and assailed Resolution dated July 7, 2020; and a compliant Verification and Certification of Non-Forum Shopping .In the Resolution 23 dated November 6, 2020, the Court En Banc noted petitioner's Compliance (With Profuse Apologies) and directed respondent to file its comment on the instant Petition for Review within ten (10) days from notice. On November 26, 2020, respondent filed its Comment/Opposition (To Petitioner's Petition for Review Re Decision dated November 12, 2019 and Resolution dated July 7, 2020) . 24 In the Resolution 25 dated December 14, 2020, the Court En Banc noted respondent's Comment/Opposition ;and referred the case for mediation in the Philippine Mediation Center Unit-Court of Tax Appeals (PMC-CTA) pursuant to Section II of the Interim Guidelines for Implementing Mediation in the CTA approved by the Supreme Court on January 18, 2011. On February 1, 2021, the Court En Banc received PMC-CTA Form 6 or No Agreement to Mediate 26 dated January 28, 2021, signed by Atty. Arlene R. Garcia-Andal, on behalf of the CIR; and Attys. Kara Louisse B. Eramis and Reynaldo B. Quirante, Jr.,on behalf of Hobbies of Asia; and attested to by Avigail B. Sanchez, Mediator Staff, stating that the parties have decided not to have the instant case mediated by the PMC-CTA. On February 17, 2021, the Court En Banc noted the PMC-CTA Form 6 or No Agreement to Mediate dated January 28, 2021; and submitted the instant case for decision. 27 Hence, this Decision. THE ISSUES Petitioner raises the following issue for the resolution of the Court En Banc : "Whether the Honorable Second Division of the CTA erred in denying herein petitioner's Motion for Reconsideration " 28 In the assailed Resolution dated July 7, 2020, the Court in Division denied the CIR's Motion for Reconsideration and reiterated its ruling that the subject deficiency assessment against Hobbies of Asia is void due to lack of authority of the revenue officers. Thus, essentially, the issue for the Court En Banc's consideration is: "Whether or not the Court in Division erred in declaring that the subject assessment is void for lack of authority of the revenue officers to conduct the audit investigation of Hobbies of Asia's books of accounts and other accounting records for taxable year 2011." Petitioner's arguments: Petitioner argues that the Regional Director is authorized to issue and sign the LOAs pursuant to Section 10 of the NIRC of 1997, as amended. Citing Revenue Memorandum Order (RMO) No. 69-2010, petitioner claims that there is no requirement for the issuance of a new LOA for reassignment and transfer of cases to another revenue officer. Moreover, petitioner avers that in case the issued MOA is not in accordance with the specified cases mentioned under RMO No. 69-2010, the remedy of the taxpayer is to invoke Section 11 of the said RMO which allows the taxpayer the right not to entertain the audit investigation; and that such right may be waived when the taxpayer continues to allow the audit investigation. Allegedly, respondent is now estopped from questioning the authority of the revenue officers as respondent was given several opportunities to raise the validity of the MOA during the audit investigation but failed to do so; and that it has actively participated in the audit investigation conducted by the newly-assigned revenue officer under the MOA. Further, it is petitioner's position that the ruling in the case of Medicard Philippines, Inc. vs. Commissioner of Internal Revenue , 29 ("Medicard case"), is not applicable to the instant case since the facts therein are not on all fours with the case at bar. Respondent's counter-arguments: Respondent counter-argues that the allegations in the instant Petition for Review are mere reiterations of the arguments raised by the CIR during trial. According to respondent, the assessment is void due to lack of a valid LOA. Allegedly, the examination of its books of accounts was not authorized under the law considering that the revenue officers who conducted the audit investigation were not duly armed with an LOA. Respondent asserts that a grant of authority is indispensable before a revenue officer conducts an examination or assessment; and that the absence of the said authority results to the nullity of the tax assessment. Finally, contrary to the petitioner's contention, respondent contends that the Medicard case is applicable to the instant case. THE COURT EN BANC'S RULING After thorough evaluation of the factual antecedents of the present case, the arguments of the parties, as well as the relevant laws and jurisprudence on the matter, this Court finds no legal basis to reverse the assailed Decision and Resolution of the Court in Division. The revenue officers were not duly authorized to conduct the audit investigation; hence, the resulting tax assessments are void. In the assailed Decision, the Court in Division ruled that no LOA was issued naming and authorizing the revenue officers to conduct the tax audit against Hobbies of Asia's for TY 2011. Accordingly, the Court a quo held that the subject assessment is void. We affirm the Court in Division's ruling. Sections 6 (A) and 13 of the NIRC of 1997, as amended, lay down the rules relative to the authority of the revenue officers in the examination of any taxpayer and the assessment of the correct amount of tax, to wit: "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. xxx xxx xxx 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." (Emphasis and underscoring supplied.) Based on the foregoing, an authority emanating from the CIR or his duly authorized representative is required before an examination and an assessment may be made. Further, the authority of a revenue officer to examine or to recommend the assessment of any deficiency tax due must be exercised pursuant to an LOA. Evidently, a grant of authority, through an LOA, must be issued assigning a revenue officer to perform tax assessment functions, in order that such officer may examine taxpayers and collect the correct amount of tax, or to recommend the assessment of any deficiency tax due. MOA is not sufficient to grant the revenue officers the authority to conduct the audit investigation. The CIR claims that there is no requirement for the issuance of a new LOA in case of reassignment or transfer of cases to another RO; and that an MOA is sufficient to authorize the revenue officers to continue the audit investigation. We disagree. The failure of the CIR or his duly authorized representative to issue a new LOA runs counter to RMO No. 43-90 dated September 20, 1990, 30 which lays down the guidelines for the audit/investigation and issuance of LOA, to wit: "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." (Emphases and underscoring supplied.) Based on the foregoing, all audit investigations must be conducted by a duly designated RO authorized to perform audit and examination of a taxpayer's books and accounting records, pursuant to an LOA. In case of re-assignment or transfer of cases to another RO, it is mandatory that a new LOA be issued with the corresponding notation thereto. In the case of Commissioner of Internal Revenue v. Composite Materials, Inc. , 31 the Supreme Court affirmed that a new LOA must be issued in case reassignment or transfer of cases to another revenue officer, to wit: "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 ." Likewise, in the recent case of Commissioner of Internal Revenue vs. Mcdonald's Philippines Realty Corp. , 32 the Supreme Court ruled that a MOA or any equivalent document is not a proof of the existence of authority of the substitute or replacement revenue officer; and that the use of such document by an unauthorized revenue officer usurps the functions of the LOA. Further, the Supreme Court admonished the practice of reassigning or transferring revenue officers originally named in the LOA and substituting them with new revenue officers to continue the audit or investigation without a separate or amended LOA as the same: (i) violates the taxpayer's right to due process in tax audit or investigation; (ii) usurps the statutory power of the CIR or his duly authorized representative to grant the power to examine the books of account of a taxpayer; and (iii) does not comply with existing BIR rules and regulations, particularly RMO No. 43-90 dated September 20, 1990. Clearly, an MOA is not sufficient to grant the revenue officers the authority to conduct the audit investigation. In the instant case, records show that pursuant to LOA No. LOA-051-2012-00000381 33 dated November 16, 2012, RO Taylo and GS Rase of Revenue District Office (RDO) No. 51-Pasay City, were authorized to examine respondent's books of accounts and other accounting records for all internal revenue taxes for TY 2011. On May 19, 2014, RD Valeroso issued MOA No. RR8-051-REA-05-014-002658, 34 authorizing RO Guerzon and GS Rase to continue the conduct of audit of respondent's books of accounts and other accounting records for all internal revenue taxes for TY 2011. Notably, it was RO Guerzon and GS Rase who recommended the issuance of the PAN and FAN through Memorandum dated September 1, 2016. 35 Thereafter, Revenue District Officer Shirley O. Calapatia of RDO No. 51-Pasay City issued MOA No. 0512012LOA4358 36 dated March 31, 2015 directing RO Luzviminda G. Sabile (RO Sabile) and GS Liza C. Dimaya (GS Dimaya) to continue the audit investigation of respondent's books of accounts and other records for taxable year 2011. Upon perusal of the records, the Court En Banc finds that RO Sabile and GS Dimaya submitted their Revenue Officer's Audit Reports on Income Tax, 37 VAT, 38 EWT 39 and DST; 40 as well as the Memorandum 41 dated September 1, 2016. The said Audit Reports and Memorandum were then used as basis for the issuance of the FDDA 42 dated August 18, 2016. From the foregoing, it is evident that the supposed authority of ROs Guerzon and Sabile and GS Dimaya to conduct the audit investigation of respondent for taxable year 2011 were based only on an MOA. There is no showing that a new LOA was issued specifically authorizing the said revenue officers to continue the audit investigation of respondent's books of accounts and other records for taxable year 2011, and to replace the previously assigned RO and GS. Thus, there being no new LOA issued, ROs Guerzon and Sabile and GS Dimaya were not duly authorized to continue the audit investigation of respondent for taxable year 2011. Further, it bears noting that the MOA authorizing RO Sabile and GS Dimaya was issued by a BIR officer who is not authorized to issue an LOA. Section D (4) of RMO No. 43-90 enumerates the BIR officers who are authorized to sign and issue LOAs for the conduct of audit investigation of taxpayers, to wit: "D. Preparation and issuance of L/As. xxx xxx xxx 4. For the proper monitoring and coordination of the issuance of Letter of Authority, the only BIR officials authorized to issue and sign Letters of Authority are the Regional Directors ,the Deputy Commissioners and the Commissioner . For the exigencies of the service, other officials may be authorized to issue and sign Letters of Authority but only upon prior authorization by the Commissioner himself." (Emphasis and underscoring supplied.) Based on the foregoing, the LOA shall be issued only by the following officers: 1. Regional Directors; 2. Deputy Commissioners; 3. CIR; and 4. Other officials authorized by the CIR for the exigencies of service. In the instant case, however, the MOA addressed to RO Sabile and GS Dimaya was signed not by the Regional Director/Deputy Commissioner/Commissioner, but by Shirley O. Calapatia, a Revenue District Officer. 43 There is likewise no showing that Shirley O. Calapatia was specifically authorized by the CIR to issue and sign an LOA. Correspondingly, the subject MOA is not sufficient to authorize RO Sabile and GS Dimaya to continue the audit investigation of Hobbies of Asia for taxable year 2011. RMO No. 69-2010 may not be validly invoked to dispense with the issuance of an LOA. As regards petitioner's reliance on RMO No. 69-2010 44 dated August 11, 2010, the same deserves scant consideration. The said issuances run counter to the afore-quoted provisions of Sections 6 (A) and 13 of the NIRC of 1997, as amended, which is the substantive law on the matter. It is well settled that a mere administrative issuance cannot amend the law; the former cannot purport to do any more than implement the latter. 45 Further, it must be remembered that BIR circulars and rulings cannot prevail over the clear and plain language of the Tax Code. 46 In this connection, Sections 6 (A) and 13 of the NIRC of 1997, as amended, is clear that the authority of a revenue officer to conduct an audit investigation must be exercised pursuant to an LOA. Thus, the provisions of RMO No. 69-2010 relied upon by petitioner cannot prevail over the clear import of the Tax Code. Estoppel is not applicable. With regard to the petitioner's argument that respondent is estopped from questioning the authority of the revenue officers, the same deserves no merit. As held in the recent case of Himlayang Pilipino Plans, Inc. vs. Commissioner of Internal Revenue , 47 the failure of the taxpayer to raise the lack of the revenue officer's authority at the earliest opportunity, does not preclude the Court from considering the same as the said issue goes into the intrinsic validity of the assessment itself. Further, jurisprudence dictates that the doctrine of estoppel cannot give validity to an act that is prohibited by law or one that is against public policy. It should be resorted to solely as a means of preventing injustice and should not be permitted to defeat the administration of the law, or to accomplish a wrong or secure an undue advantage, or to extend beyond them requirements of the transactions in which they originate. Simply put, the doctrine of estoppel must be sparingly applied. 48 In the instant case, the lack of authority of the revenue officers to conduct an audit investigation run counter to the provision of the law and will result to a void assessment. As such, petitioner cannot invoke the doctrine of estoppel to give validity to an irregular act or a void assessment. The Medicard case is applicable in the case at bar. Petitioner likewise argues that the Medicard case is not applicable to the case at bar since the facts therein are not on all fours with the case at bar. We disagree. It must be remembered that in the Medicard case ,the Supreme Court elucidated on the importance and significance of an LOA in examining the books of accounts and other accounting records of taxpayers and in assessing internal revenue taxes, to wit: "Contrary to the ruling of the CTA en banc , an LOA cannot be dispensed with just because none of the financial books or records being physically kept by MEDICARD was examined. To begin with, Section 6 of the NIRC requires an authority from the CIR or from his duly authorized representatives before an examination 'of a taxpayer' may be made. The requirement of authorization is therefore not dependent on whether the taxpayer may be required to physically open his books and financial records but only on whether a taxpayer is being subject to examination. xxx xxx xxx 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 . " (Emphases and underscoring supplied.) Relative thereto, it must be emphasized that the CIR himself, through the issuance of Revenue Memorandum Circular (RMC) No. 75-2018, 49 recognizes the ruling in the Medicard case and states the consequences for ROs initiating tax assessments or performing assessment functions without an LOA, to wit : "The judicial ruling, invoking a specific statutory mandate, states that no assessments can be issued or no assessment functions or proceedings can be done without the prior approval and authorization of the Commissioner of Internal Revenue (CIR) or his duly authorized representative, through an LOA .The concept of an LOA is therefore clear and unequivocal. Any tax assessment issued without an LOA is a violation of the taxpayer's right to due process and is therefore 'inescapably void.' xxx xxx xxx To help forestall any unnecessary controversy and to encourage due observance of the judicial pronouncements, any examiner or revenue officer initiating tax assessments or performing assessment functions without an LOA shall be subject to appropriate administrative sanctions." (Emphasis and underscoring supplied.) Correspondingly, We see no reason not to apply the said ruling in the Medicard case to the present case. It bears noting that in the case of Commissioner of Internal Revenue vs. Opulent Landowners Inc. , 50 the Supreme Court in the Resolution dated January 27, 2020, emphasized that only revenue officers actually named under the LOA are authorized to examine the taxpayer. It also reiterated that any reassignment or transfer of cases shall require the issuance of a new LOA, otherwise, the resulting assessments are void. In sum, considering that the revenue officers were not duly authorized through an LOA, the subject assessment notices, which came about as a result of their examination of respondent's books of accounts and accounting records for taxable year 2011, are void. To stress, a void assessment bears no valid fruit. 51 WHEREFORE ,in light of the foregoing considerations, the Petition for Review is DENIED for lack of merit. Accordingly, the assailed Decision dated November 12, 2019 and Resolution dated July 7, 2020, both rendered by the Court in Division in CTA Case No. 9476 are AFFIRMED . Petitioner Commissioner of Internal Revenue or any person acting on his behalf is hereby ENJOINED from proceeding with the collection of the said deficiency taxes against respondent during the pendency of the instant case. SO ORDERED. (SGD.) ERLINDA P. UY Associate Justice Juanito C. Castaeda, Jr.,Catherine T. Manahan and Jean Marie A. Bacorro-Villena, JJ. ,concur. Roman G. del Rosario, P.J. ,with due respect, see dissenting opinion. Ma. Belen M. Ringpis-Liban, J. ,with separate concurring opinion. Maria Rowena Modesto-San Pedro, J. ,with concurring opinion. Marian Ivy F. Reyes-Fajardo, J. ,with due respect, I join Presiding Justice Roman G. del Rosario in his dissenting opinion. Lanee S. Cui-David, J. ,I join the dissenting opinion of Presiding Justice Roman G. del Rosario. Separate Opinions DEL ROSARIO , P.J.,dissenting opinion : With due respect, I am constrained to withhold my assent on the ponencia . I submit that the Formal Assessment Notice (FAN) and Assessment Notices, all dated January 13, 2015, issued against petitioner, assessing it for deficiency income tax (IT) value-added tax (VAT),expanded withholding tax (EWT) and documentary stamp tax (DST) for taxable year (TY) 2011 are valid. Records disclose the following: 1 1. On December 5, 2012, respondent received a Letter of Authority (LOA) No. LOA-051-2012-00000381 (SN: eLA201100013573) dated November 16, 2012, issued by then Regional Director Nestor S. Valeroso of Revenue Region No. 8-Makati City, authorizing Revenue Officer (RO) Roberto Taylo and Group Supervisor Arnaldo Rase of Revenue District Office (RDO) No. 51-Pasay City, to examine respondent's books of accounts and other accounting records for all internal revenue taxes for TY 2011. 2. On May 19, 2014, Regional Director Valeroso issued a Memorandum of Assignment (MOA) No. RR8-051-REA-05-014-00265, authorizing RO Marilyn D. Guerzon and Group Supervisor Rase to continue the conduct of audit of respondent's books of accounts and other accounting records for all internal revenue taxes for TY 2011. 3. On December 22, 2014, respondent received a Preliminary Assessment Notice dated December 19, 2014, with Details of Discrepancies, assessing it for deficiency IT, VAT, EWT and DST for TY 2011. 4. On January 14, 2015, respondent received a FAN and Assessment Notices, all dated January 13, 2015, reiterating the assessment against it for deficiency IT, VAT, EWT and DST for TY 2011. 5. On February 12, 2015, respondent protested the FAN in a Letter dated February 11, 2015 filed with Regional Director Jonas DP. Amora of Revenue Region No. 8-Makati City. 6. On March 31, 2015, Revenue District Officer Shirley O. Calapatia of RDO No. 51-Pasay City issued MOA No. 0512012LOA4358 dated March 31, 2015 in favor of RO Luzviminda G. Sabile and GS Liza C. Dimaya for the purpose of conducting a reinvestigation pursuant to respondent's Protest Letter. 7. On August 24, 2016, respondent received the Final Decision on Disputed Assessment (FDDA) dated August 18, 2016 with attached Details of Discrepancies, denying its protest and finding it liable for deficiency IT, VAT, EWT and DST with penalties and interests for TY 2011. The ponencia in esse declares that the FAN and Assessment Notices subject of the case are null and void as the examination of respondent's books of accounts was made by revenue officers sans a valid LOA. There is no denying that the NIRC of 1997, as amended, requires an authority from the Commissioner of Internal Revenue or from his duly authorized representatives before an examination of a taxpayer may be made. 2 Section 6 thereof 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 and underscoring supplied) Relatedly, Section 13 of the NIRC of 1997, as amended, states: "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) The "authorized representative" contemplated under Section 6 of the NIRC of 1997, as amended, who may authorize the examination of any taxpayer and the assessment of the correct amount of tax is, at the very least, no other than a Revenue Regional Director pursuant to Section 13 thereof. As shown above, MOA No. RR8-051-REA-05-014-00265 authorizing RO Guerzon and GS Rase to continue the conduct of audit of respondent's books of accounts and other accounting records for all internal revenue taxes for TY 2011 was issued by Regional Director Valeroso . The MOA contains all the material details which are specified in an LOA. Thus, other than the disparity in the caption of the document (that is "MOA," instead of "LOA") the authority of the RO and GS to conduct an audit cannot be denied. Otherwise stated, the contents of an official document should be given a construction consistent with the intention of the issuing party, which intention or purpose may not be defeated by a mere disparity in the title or caption from that which the law so states. After all, the spirit of Section 13 of the NIRC of 1997, as amended, which requires that an RO assigned to perform assessment functions should be duly authorized, prevails over the title, caption or form of said authority. As an authorized representative of petitioner, Regional Director Valeroso validly authorized the continuation of the audit of respondent. Thus, I am of the view that RO Guerzon and GS Rase ( who was also the GS named in the LOA previously issued by Regional Director Valeroso ) were duly authorized to conduct the audit of respondent for TY 2011. MOA No. 0512012LOA4358 dated March 31, 2015 issued by Revenue District Officer Calapatia directing RO Sabile and GS Dimaya to conduct a reinvestigation of respondent pursuant to the latter's Protest Letter would not invalidate the FAN and Assessment Notices previously issued against respondent. Needless to say, the requirement for the issuance of an LOA by the CIR or his duly authorized representative, as mandated under Sections 6 and 13 of the NIRC of 1997, as amended, pertains to such stage where the RO and GS would conduct an audit of the books of accounts and other accounting records of the taxpayer after the filing of the latter's tax returns, and recommend the issuance of a Preliminary Assessment Notice, and FAN and Assessment Notices. It does not envision a situation where a reinvestigation will have to be conducted to come up with an FDDA as a consequence of the filing of a Protest Letter to the FAN and/or Assessment Notices previously issued. Moreover, even assuming that an LOA is required for purposes of conducting the reinvestigation, the absence thereof would only invalidate the resulting FDDA after the conduct of reinvestigation. Notwithstanding the nullity of the FDDA, the FAN and Assessment Notices are not ipso facto rendered void. Commissioner of Internal Revenue vs. Liquigaz Philippine Corporation/Liquigaz Philippine Corporation vs. Commissioner of Internal Revenue , 3 declare: " A void FDDA does not ipso facto render the assessment void xxx xxx xxx Clearly, a decision of the CIR on a disputed assessment differs from the assessment itself. Hence, the invalidity of one does not necessarily result to the invalidity of the other unless the law or regulations otherwise provide . xxx xxx xxx The Court, however, finds that the CTA erred in concluding that the assessment on EWT and FBT deficiency was void because the FDDA covering the same was void. The assessment remains valid notwithstanding the nullity of the FDDA because as discussed above, the assessment itself differs from a decision on the disputed assessment. As established, an FDDA that does not inform the taxpayer in writing of the facts and law on which it is based renders the decision void. Therefore, it is as if there was no decision rendered by the CIR. It is tantamount to a denial by inaction by the CIR, which may still be appealed before the CTA and the assessment evaluated on the basis of the available evidence and documents. The merits of the EWT and FBT assessment should have been discussed and not merely brushed aside on account of the void FDDA. " (Boldfacing supplied) Considering that RO Guerzon and GS Rase were imbued with authority to audit respondent, pursuant to the authority validly given by Regional Director Valeroso, I humbly submit that the FAN and Assessment Notices, all dated January 13, 2015, are valid. Hence, the case should be remanded to the Court in Division for the proper determination of the merits of the assessments and the amount of respondent's deficiency tax liabilities for the TY 2011. All told, I VOTE to: (i) GRANT the present Petition for Review; (ii) REVERSE and SET ASIDE the November 12, 2019 Decision and July 7, 2020 Resolution of the Court in Division; and, (iii) REMAND the case to the Court in Division to determine the merits of the assessments as contained in the Final Assessment Notice and Assessment Notices, dated January 13, 2015, and consequently, the amount of respondent Hobbies of Asia, Inc.'s deficiency internal revenue tax liabilities for the taxable year 2011. RINGPIS-LIBAN , J.,separate concurring opinion : I concur in the ponencia in denying the Petition for Review filed by the Commissioner of Internal Revenue ("Petitioner") for lack of authority of the examining Revenue Officers ("ROs"),but for the reasons to be discussed below. In my humble opinion, a new letter of authority ("LOA") is not needed in case of re-assignment as long as the authority even to the new ROs is signed by the Commissioner of Internal Revenue ("CIR") or his duly authorized representative. This is permissible under the laws of agency under the Civil Code. In the case at bar however, the Memorandum of Authority (MOA) was issued by Revenue District Officer Shirley O. Calapatia of RDO No. 51-Pasay City, and not the duly authorized representative of Petitioner, the Revenue Regional Director. Hence, the ROs who audited the books of account of Respondent are without any valid authority to do so. I am also of the firm belief that the ruling of the Supreme Court in Commissioner of Internal Revenue v. McDonald's Philippines Realty Corp. 1 ("Mcdonald's") should not be haphazardly applied in cases regarding the validity or invalidity of an RO's authority. A perusal of the case discloses that Mcdonald's invalidated the practice of reassigning ROs through a Revalidation Notice or Memorandum of Reassignment or any equivalent letter, only because it was presumed that these documents are issued by a subordinate official and not by the CIR or his duly authorized representative, to wit: "It is true that the service of a copy of a memorandum of assignment, referral memorandum, or such other equivalent internal BIR document may notify the taxpayer of the fact of reassignment and transfer of cases of revenue officers. However, notice of the fact of reassignment and transfer of cases is one thing; proof of the existence of authority to conduct an examination and assessment is another thing. The memorandum of assignment, referral memorandum, or any equivalent document is not a proof of the existence of authority of the substitute or replacement revenue officer. The memorandum of assignment, referral memorandum, or any equivalent document is not issued by the CIR or his duly authorized representative for the purpose of vesting upon the revenue officer authority to examine a taxpayer's books of accounts. It is issued by the revenue district officer or other subordinate official for the purpose of reassignment and transfer of cases of revenue officers. The petitioner wants the Court to believe that once an LOA has been issued in the names of certain revenue officers, a subordinate official of the BIR can then, through a mere memorandum of assignment, referral memorandum, or such equivalent document, rotate the work assignments of revenue officers who may then act under the general authority of a validly issued LOA. But an LOA is not a general authority to any revenue officer. It is a special authority granted to a particular revenue officer. The practice of reassigning of transferring revenue officers, who are the original authorized officers named in the LOA, and subsequently substituting them with new revenue officers who do not have a separate LOA issued in their name, is in effect a usurpation of the statutory power of the CIR or his duly authorized representative. The memorandum of assignment, referral memorandum, or such equivalent document of the BIR directing the reassignment or transfer of revenue officers, is typically signed by the revenue district officer or other subordinate official, and not signed or issued by the CIR or his duly authorized representative under Sections 6, 10 (c) and 13 of the NIRC. Hence, the issuance of such memorandum of assignment, and its subsequent use as a proof of authority to continue the audit or investigation, is in effect supplanting the functions of the LOA, since it seeks to exercise a power that belongs exclusively to the CIR himself or his duly authorized representatives. 2 The Supreme Court in the said case did not consider instances where the Revalidation Notice or Memorandum of Reassignment or any equivalent letter is issued by the CIR himself or his duly authorized representative. Thus, it seems that the assumptions from which McDonald's derived the conclusion that there should be issuance of a new LOA if a RO is reassigned or transferred, is incomplete and as such should not be applied. From all the foregoing, I vote to AFFIRM the Decision dated November 12, 2019 and Resolution dated July 07, 2020 of the First Division in CTA Case No. 9476. MODESTO-SAN PEDRO , J.,concurring opinion : I concur with the ponencia 's finding that the assessment is void for lack of authority of the new revenue officers ("ROs") who continued the audit/examination of respondent's books of accounts and other accounting records. With utmost respect, however, I wish to elaborate my view on certain points discussed in the ponencia . Citing Commissioner of Internal Revenue v. McDonald's Philippines Realty Corp. ("McDonald's Case") , 1 the ponencia stated that "a MOA or any equivalent document is not a proof of the existence of authority of the substitute or replacement revenue officer; and that the use of such document by an unauthorized revenue officer usurps the functions of the LOA." While I agree that the McDonald's Case admonished the practice of reassigning ROs through a MOA, referral memorandum, or any other equivalent document, it was admonished only for the reason that these documents, unlike a LOA, are typically issued by subordinate officials and not by the CIR or his/her duly authorized representatives. The McDonald's Case pertinently reads: "It is true that the service of a copy of a memorandum of assignment, referral memorandum, or such other equivalent internal BIR document may notify the taxpayer of the fact of reassignment and transfer of cases of revenue officers. However, notice of the fact of reassignment and transfer of cases is one thing; proof of the existence of authority to conduct an examination and assessment is another thing. The memorandum of assignment, referral memorandum, or any equivalent document is not a proof of the existence of authority of the substitute or replacement revenue officer. The memorandum of assignment, referral memorandum, or any equivalent document is not issued by the CIR or his duly authorized representative for the purpose of vesting upon the revenue officer authority to examine a taxpayer's books of accounts. It is issued by the revenue district officer or other subordinate official for the purpose of reassignment and transfer of cases of revenue officers. The petitioner wants the Court to believe that once an LOA has been issued in the names of certain revenue officers, a subordinate official of the BIR can then, through a mere memorandum of assignment, referral memorandum, or such equivalent document, rotate the work assignments of revenue officers who may then act under the general authority of a validly issued LOA. But an LOA is not a general authority to any revenue officer. It is a special authority granted to a particular revenue officer . The practice of reassigning or transferring revenue officers, who are the original authorized officers named in the LOA, and subsequently substituting them with new revenue officers who do not have a separate LOA issued in their name, is in effect a usurpation of the statutory power of the CIR or his duly authorized representative. The memorandum of assignment, referral memorandum, or such other equivalent internal document of the BIR directing the reassignment or transfer of revenue officers, is typically signed by the revenue district officer or other subordinate official ,and not signed or issued by the CIR or his duly authorized representative under Sections 6, 10 (c) and 13 of the NIRC . Hence, the issuance of such memorandum of assignment, and its subsequent use as a proof of authority to continue the audit or investigation, is in effect supplanting the functions of the LOA, since it seeks to exercise a power that belongs exclusively to the CIR himself or his duly authorized representatives." (Emphasis and underscoring supplied.) It is my humble view that a MOA, referral memorandum, or any equivalent document may still be considered as an equivalent of a new LOA ,provided it contains all the elements necessary to establish a Contract of Agency between the CIR or his/her duly authorized representative and the new RO. Included in these elements is the authority of the person issuing the equivalent document, who must be the CIR or his/her duly authorized representative. The CIR's duly authorized representatives are the Revenue Regional Director 2 and the Assistant Commissioner/Head Revenue Executive Assistants. 3 This view is consistent with the ruling of the Court En Banc in Commissioner of Internal Revenue v. Travellers International Hotel Group, Inc. 4 and Commissioner of Internal Revenue v. Trinity Franchising and Management Corporation , 5 which were affirmed by the Supreme Court in Commissioner of Internal Revenue v. Travellers International Hotel Group, Inc. , 6 and Commissioner of Internal Revenue v. Trinity Franchising and Management Corporation . 7 In the present case, the Court found that the LOA initially authorized RO Taylo and Group Supervisor ("GS") Rase to examine respondent's books of accounts and other accounting records for all internal revenues for taxable year 2011. Subsequently, Regional Director Nestor S. Valeroso issued a MOA authorizing RO Guerzon and GS Rase to continue the conduct of audit of respondent's books of accounts and records. RO Guerzon and GS Rase recommended the issuance of the PAN and FAN. Petitioner protested the FAN on 12 February 2015. On 31 March 2015, Revenue District Officer Shirley O. Calapatia issued another MOA directing RO Sabile and GS Dimaya to continue the audit investigation. RO Sabile and GS Dimaya submitted their Revenue Officer's Audit Reports and Memorandum which became the basis for the issuance of the FDDA. The Court En Banc has ruled in several instances that the Revenue District Officer is not among the duly authorized representatives of the CIR for purposes of granting authority to examine the books of accounts of a taxpayer. 8 A Revenue District Officer is not the CIR, Revenue Regional Director, nor the Assistant Commissioner/Head Revenue Executive Assistants. 9 Following the McDonald's Case ,the second MOA cannot be treated as an equivalent of a new LOA because it was signed by a Revenue District Officer, a subordinate official who is not the CIR nor his/her duly authorized representative. Consequently, the assessment is void for lack of authority of the ROs to perform assessment functions. All told, I concur with the ponencia 's denial of the Petition for Review filed by the Commissioner of Internal Revenue for lack of merit. Footnotes 1. EB Docket, pp. 5 to 14. 2. Penned by Associate Justice Esperanza R. Fabon-Victorino (retired),and concurred by Associate Justice Catherine T. Manahan; Presiding Justice Roman G. del Rosario is on leave. EB Docket, pp. 73 to 88. 3. EB Docket, pp. 89 to 94. 4. Division Docket (CTA Case No. 9476) Vol. I, pp. 336-341. 5. Division Docket (CTA Case No. 9476) Vol. I, pp. 343-349. 6. Division Docket (CTA Case No. 9476) Vol. I, pp. 394 to 404. 7. Division Docket (CTA Case No. 9476) Vol. II, pp. 645 to 646. 8. Exhibits "R-11" and "R-11-a";Division Docket (CTA Case No. 9476) Vol. I, pp. 327 to 334. 9. Division Docket (CTA Case No. 9476) Vol. II, pp. 650 to 653. 10. Division Docket (CTA Case No. 9476) Vol. II, pp. 657 to 658. 11. Division Docket (CTA Case No. 9476) Vol. II, pp. 674 to 710. 12. Records Verification dated September 11, 2018, Division Docket (CTA Case No. 9476) Vol. II, pp. 664. 13. EB Docket, pp. 73 to 88; Division Docket (CTA Case No. 9476) Vol. II, pp. 717 to 732. 14. Division Docket (CTA Case No. 9476) Vol. II, pp. 733 to 750. 15. Division Docket (CTA Case No. 9476) Vol. II, pp. 761 to 771. 16. EB Docket, pp. 89 to 94; Division Docket (CTA Case No. 9476) Vol. II, pp. 775 to 780. 17. EB Docket, pp. 1 to 3. 18. Minute Resolution dated July 28, 2020, EB Docket, p. 4. 19. EB Docket, pp. 5 to 14. 20. In view of the reported surge in COVID-19 cases and the imposition of the Modified Enhanced Community Quarantine in Metro Manila, Cavite, Rizal, Bulacan and Laguna, the Supreme Court issued Administrative Circular No. 43A-2020 dated August 3, 2020, suspending the reglementary periods for the filing of court submissions before the Courts in said areas from August 4 to 18, 2020 and shall resume on August 19, 2020. Further, August 19, 2020 was declared a holiday in Quezon City (Quezon City Day) where this Court holds office. Hence, petitioner had until the next working day, August 20, 2020, to file his Petition for Review . 21. EB Docket, pp. 65 to 68. 22. EB Docket, pp. 70 to 72. 23. EB Docket, pp. 98 to 99. 24. EB Docket, pp. 100 to 109. 25. EB Docket, pp. 111 to 112. 26. EB Docket, pp. 113. 27. EB Docket, pp. 115 to 116. 28. Issue, Petition for Review ,EB Docket, p. 7. 29. G.R. No. 222743, April 5, 2017. 30. SUBJECT: Amendment of Revenue Memorandum Order No. 37-90 Prescribing Revised Policy Guidelines for Examination of Returns and Issuance of Letters of Authority to Audit. 31. G.R. No. 238352, Resolution dated September 12, 2018. 32. G.R. No. 242670, May 10, 2021. 33. Exhibit "P-32";Exhibit "R-2",BIR Records, p. 1. 34. Exhibit "R-1",BIR Records, p. 128. 35. Exhibit "R-6",BIR Records, pp. 211 to 212. 36. BIR Records, p. 254. 37. BIR Records, p. 263. 38. BIR Records, p. 262. 39. BIR Records, p. 261. 40. BIR Records, p. 260. 41. BIR Records, pp. 264 to 265. 42. Exhibit "R-10",p. 272. 43. BIR Records, p. 255. 44. SUBJECT: Guidelines on the Issuance of Electronic Letters of Authority, Tax Verification Notices, and Memoranda of Assignment. 45. Secretary of Finance Cesar V. Purisima, et al. vs. Philippine Tobacco Institute, Inc. ,G.R. No. 210251, April 17, 2017. 46. Security Bank Corporation (formerly Security Bank and Trust Company) vs. The Commissioner of Internal Revenue ,G.R. No. 130838, August 22, 2006. 47. G.R. No. 241848, May 14, 2021. 48. Commissioner of Internal Revenue vs. Kudos Metal Corporation ,G.R. No. 178087, May 5, 2010. 49. SUBJECT: The Mandatory Statutory Requirement and Function of a Letter of Authority . 50. G.R. Nos. 249883-84, January 27, 2020. 51. Commissioner of Internal Revenue vs. Azucena T. Reyes, et seq. ,G.R. Nos. 159694 and 163581, January 27, 2006. DEL ROSARIO, P.J.,dissenting opinion: 1. Assailed Decision dated November 12, 2019; Ponencia ,p. 13. 2. Medicard Philippines, Inc. vs. Commissioner of Internal Revenue , G.R. No. 222743, April 5, 2017. 3. G.R. Nos. 215534 and 215557, April 18, 2016. RINGPIS-LIBAN, J.,separate concurring opinion: 1. G.R. No. 242670, May 10, 2021. 2. Emphasis and underscoring supplied. MODESTO-SAN PEDRO, J.,concurring opinion: 1. G.R. No. 242670, 10 May 2021. 2. Sec. 10, National Internal Revenue Code of 1997, as amended. 3. Revenue Memorandum Order No. 29-07: Prescribing the Audit Policies, Guidelines and Standards at the Large Taxpayers Service. 4. CTA EB Case No. 2047 (CTA Case No. 9168),17 July 2020. 5. CTA EB Case No. 2010 (CTA Case No. 9190),14 July 2020. 6. G.R. No. 255487, 3 May 2021. 7. G.R. No. 255094, 26 April 2021. 8. Commissioner of Internal Revenue v. PGA Sompo Insurance Corporation ,CTA EB Case No. 2203 (CTA Case No. 9394),15 September 2021; Commissioner of Internal Revenue v. Travellers International Hotel Group, Inc. ,CTA EB Case No. 2047 (CTA Case No. 9168),17 July 2020; Commissioner of Internal Revenue v. Trinity Franchising and Management Corporation ,CTA EB Case No. 2010 (CTA Case No. 9190),14 July 2020. 9. Commissioner of Internal Revenue v. Travellers International Hotel Group, Inc. ,G.R. No. 255487, 3 May 2021; Commissioner of Internal Revenue v. Trinity Franchising and Management Corporation ,G.R. No. 255094, 26 April 2021.