Commissioner of Internal Revenue v. Sumitomo Corp.-Philippine Branch

EN BANC [C.T.A. EB CASE NO. 2429. April 5, 2022.] (C.T.A. Case No. 9422) COMMISSIONER OF INTERNAL REVENUE , petitioner , vs .SUMITOMO CORPORATION-PHILIPPINE BRANCH , respondent . DECISION DEL ROSARIO , P.J p : Before this Court is a Petition for Review filed on February 22, 2021 by the Commissioner of Internal Revenue pursuant to Section 3 (b), Rule 8 of the Revised Rules of the Court of Tax Appeals, praying that the Court En Banc reverse and set aside the Decision dated June 30, 2020 and the Resolution dated January 15, 2021 promulgated by the Court of Tax Appeals (CTA) Third Division 1 in CTA Case No. 9422, entitled Sumitomo Corporation-Philippine Branch v. Commissioner of Internal Revenue ,which granted respondent's Petition for Review, and cancelled the deficiency Value-Added Tax assessment against respondent for taxable year ended March 31, 2011 and declared the same withdrawn. The dispositive portions of the assailed Decision and assailed Resolution of the Court in Division are as follows: June 30, 2020 Decision: " WHEREFORE ,in light of the foregoing considerations, the instant Petition for Review is GRANTED .Accordingly, the subject deficiency VAT assessment for taxable year ended March 31, 2011 is CANCELLED and WITHDRAWN . SO ORDERED. " January 15, 2021 Resolution: WHEREFORE ,premises considered, respondent's Motion for Reconsideration [re: Decision dated 09 July 2020] is DENIED ,for having been filed out of time. SO ORDERED. " THE PARTIES Petitioner is the duly appointed Commissioner of Internal Revenue (CIR) with office address at the Bureau of Internal Revenue (BIR) National Building Office, Diliman, Quezon City. 2 Respondent Sumitomo Corporation-Philippine Branch is a corporation duly organized and existing under and by virtue of the laws of Japan, which is licensed to operate a branch office in the Philippines. Its Philippine office is located at the 35th Floor, Philamlife Tower, Paseo de Roxas, Makati City. 3 THE FACTS 4 The facts of the case as found by the Court in Division are as follows: "On October 11, 2011, respondent issued the Letter of Authority (LOA) No. LOA-116-2011 00000155 (eLA201100003057),authorizing the examination of the books of accounts of petitioner for taxable year ended March 31, 2011. Subsequently, on July 22, 2014, petitioner received from respondent a copy of the Preliminary Assessment Notice (PAN) dated July 21, 2014 x x x. Petitioner filed its protest letter against the PAN on August 4, 2014. On August 27, 2014, petitioner received a copy of the Formal Letter of Demand (FLD) dated August 27, 2014 which reduced the assessments for deficiency income tax, VAT and EWT to P172,210,569.12, inclusive of increments, for taxable year ended March 31, 2011. Petitioner filed its protest letter against the findings of respondent in the FLD on September 26, 2014. Thereafter, petitioner submitted additional supporting documents in support of its protest on November 25, 2014. On March 14, 2016, petitioner received a copy of the Final Decision on Disputed Assessment (FDDA) signed by Mr. Nestor S. Valeroso, Assistant Commissioner of the BIR Large Taxpayers (LT) Service, who partially granted petitioner's protest x x x. Petitioner subsequently received, on July 12, 2016, a copy of the Amended Final Decision on Disputed Assessment (Amended FDDA) dated June 30, 2016, signed by then Commissioner Kim S. Jacinto-Henares, who found all petitioner's arguments in its request for reconsideration meritorious, except for the issue on whether the disallowance of petitioner's excess input VAT credits is proper. x x x xxx xxx xxx Petitioner filed the instant Petition for Review with this Court on August 10, 2016. On November 16, 2016 respondent filed his Answer ,interposing the following special and affirmative defenses, to wit: xxx xxx xxx The pre-trial conference was set and held on March 14, 2017. After being directed by the Court to transmit the BIR Records of this case, respondent submitted the same on January 16, 2017. Petitioner's Pre-Trial Brief was filed on March 8, 2017, while Respondent's Pre-Trial Brief was submitted on March 9, 2017. The parties submitted their Joint Stipulations of Facts and Issues on April 3, 2017. Thereafter, the Pre-Trial Order dated May 2, 2017 was issued, deeming the Pre-Trial Conference terminated. The trial of the case then proceeded. During trial, petitioner presented documentary and testimonial evidence. x x x On June 20, 2017, the Formal Offer of Evidence for Petitioner was filed. Respondent filed his Opposition (Re: Petitioner's Formal Offer of Evidence) on June 27, 2017. Petitioner's exhibits were all admitted by the Court in the Resolution dated September 6, 2017. Respondent likewise presented his documentary and testimonial evidence. x x x On May 8, 2018, respondent filed his Formal Offer of Evidence .Petitioner filed its Comment to Respondent's Formal Offer of Evidence on May 25, 2018. Thereafter, in the Resolution dated July 5, 2018, the Court admitted respondent's exhibits, except for the following: x x x xxx xxx xxx The Memorandum for the Petitioner was filed on May 8, 2019; while the respondent's Memorandum was filed on May 31, 2019. In the Order dated June 4, 2019, the instant case was deemed submitted for decision. xxx xxx xxx" On June 30, 2020, the Court in Division rendered the assailed Decision 5 granting respondent's Petition for Review. On September 1, 2020, petitioner filed a "Motion for Reconsideration [re: Decision dated 09 July 2020]." 6 On January 15, 2021, the Court in Division issued the assailed Resolution 7 denying petitioner's "Motion for Reconsideration [re: Decision dated 09 July 2020]" for having been filed out of time. On February 5, 2021, petitioner filed a "Motion for Extension to File Petition for Review" before the Court En Banc . 8 The same was granted in the Minute Resolutions 9 dated February 8, 2021, and petitioner was given until February 21, 2021 within which to file his Petition for Review. Petitioner filed the present Petition for Review 10 before the Court En Banc on February 22, 2021. 11 Despite the period granted, respondent failed to file its comment on the Petition for Review; 12 thus, the Petition for Review was submitted for decision on June 30, 2021. On July 19, 2021, respondent filed a "Motion for Reconsideration (of the Resolution dated 30 June 2021) with Submission" attaching thereto its "Comment (To Petitioner's Petition for Review)," and praying that the Court En Banc : (i) grant the Motion for Reconsideration; (ii) note the Comment electronically filed by respondent on March 25, 2021; and, (iii) admit respondent's Comment to the Petition for Review in the interest of justice and equity. THE ISSUES Petitioner raises the following issues 13 for the Court En Banc 's resolution. I. The Court in Division erred in ruling that petitioner's Motion for Reconsideration of the assailed Decision was filed out of time; II. The Court in Division erred in ruling on an issue never raised by respondent, never joined by the pleadings, never raised during the Pre-Trial and never defined by the Court in the Pre-Trial Order. Thus, petitioner's basic right to fair play and due process was violated when the Court in Division ruled to grant the original Petition on the ground that the assessments are void for failure to indicate due dates and definite tax liability of respondent; and, III. Assuming the Court may suddenly decide the case based on an issue that was never raised by respondent, never joined by the pleadings, never raised during the Pre-Trial and never defined by the Court in the Pre-Trial Order and never tried by the parties the Court in Division erred in ruling that the assessments are void as it lacks the due date and the definite amount of tax liability. RULING OF THE COURT EN BANC Respondent's "Motion for Reconsideration (of the Resolution dated 30 June 2021) with Submission" lacks merit Before discussing the merits of the case, the Court En Banc shall first rule on respondent's "Motion for Reconsideration (of the Resolution dated 30 June 2021) with Submission" 14 filed on July 19, 2021. Respondent prays that the Court: (i) grant the "Motion for Reconsideration";and, (ii) note and admit the "Comment (To Petitioner's Petition for Review)" electronically filed on March 25, 2021. In support thereof, respondent avers that contrary to the Resolution dated June 30, 2021, it filed its "Comment (To Petitioner's Petition for Review)" via electronic mail (email) on March 25, 2021 15 and its receipt was acknowledged by the Office of the Clerk of Court (OCC) En Banc . 16 Respondent's Motion is bereft of merit. En Banc Resolution No. 4-2021 17 dated February 24, 2021 states: "3. Considering that pleadings, motions, and other court submissions filed with the CTA oftentimes consist of a large number of pages including the annexes appended thereto and that each pleading, motion, and other court submission is required to be filed with the CTA, at the very least, in four (4) copies for Division cases and ten (10) copies for En Banc cases, litigants shall submit, by personal filing or licensed courier, the required number of hard copies of the pleadings, motions, and other court submissions within five (5) calendar days from date of filing by email ; xxx xxx xxx 6. Failure to comply with paragraphs 1, 3, 4, and 5 of these guidelines shall be a ground for declaring the pleading, motion, and other court submission as deemed not filed which may result to the dismissal of the petition for review, complaint or information, and the imposition of other appropriate sanctions as may be determined by the Court. ( Boldfacing supplied ) A careful scrutiny of the records shows that the OCC En Banc received respondent's Comment filed via email on March 25, 2021. Respondent had five (5) days from the filing of the Comment via email or until March 30, 2021 within which to submit the hard copies thereof by personal filing or licensed courier. Meanwhile, the Supreme Court, in addressing the rising cases of COVID-19, issued several administrative circulars, 18 ordering the physical closure of courts in affected areas, and suspending the filing and service of motions, pleadings, and other court submissions beginning March 29, 2021, and declaring the resumption thereof seven (7) calendar days counted from the first day of the physical reopening of the relevant court. The CTA physically reopened on May 17, 2021, pursuant to Supreme Court Administrative Circular (AC) No. 33-2021 dated May 14, 2021. Counting seven (7) calendar days from May 17, 2021, the period for filing and service of motions, pleadings, and other court submissions resumed on May 24, 2021. Considering that respondent had until March 30, 2021 to submit the hard copies of its Comment, and the period to file and serve motions, pleadings, and other court submissions was suspended beginning March 29, 2021, respondent had two (2) days from the physical reopening of the CTA within which to submit the hard copies of its Comment. Respondent, however, failed to submit the hard copies of its Comment to the Petition for Review within two (2) days from May 24, 2021 or until May 26, 2021, as per Records Verification dated June 16, 2021. It was only on July 19, 2021 when respondent submitted the required hard copies of its Comment or fifty-four (54) days late. In view thereof, the Court finds no cogent reason to grant respondent's "Motion for Reconsideration (of the Resolution dated 30 June 2021)." Petitioner's Motion for Reconsideration of the assailed Decision was timely filed before the Court in Division In insisting that his Motion for Reconsideration of the assailed Decision was timely filed, petitioner cites Supreme Court AC No. 43A-2020 dated August 3, 2020 which states: " ADMINISTRATIVE CIRCULAR NO. 43A -2020 xxx xxx xxx 1. The reglementary periods for filing of petitions, appeals, complaints, motions, pleadings and other court submissions before the courts shall be suspended from 4 to 18 August 2020, and shall resume on 19 August 2020, without prejudice to those who have already filed such pleadings and documents within their reglementary periods. In the same manner, the periods for court actions with prescribed periods are likewise suspended, and shall resume on 19 August 2020. xxx xxx xxx" Petitioner posits that during the period August 4 to 18, 2020, the running of the reglementary period to file any motions, pleadings, and other court submissions was suspended, and the same resumed on August 19, 2020. Petitioner points out that he received the assailed Decision on July 30, 2020; thus, he had fifteen (15) days therefrom or until August 14, 2020 within which to file his Motion for Reconsideration before the Court in Division. When the running of the reglementary period to file said Motion for Reconsideration was suspended from August 4 to 18, 2020, petitioner had eleven (11) days left within which to file his Motion for Reconsideration before the Court in Division. Petitioner contends that the remaining eleven (11) days should begin to run from August 19, 2020 when the filing of motions, pleadings, and other court submissions resumed. Thus, petitioner argues that it had until August 29, 2020 within which to file his Motion for Reconsideration; and the filing thereof on September 1, 2020, or the next working day, was timely. Assuming arguendo that his Motion for Reconsideration was filed out of time, petitioner appeals to the kind indulgence of the Court En Banc for the liberalization of the rules and to admit said Motion as he was under the honest belief that the period for filing the same was tolled. He further submits that it would be the height of injustice to dismiss his Motion for being belatedly filed considering that he has meritorious arguments therein, and that the present case involves taxes which are essential to the government's very existence. The Court En Banc agrees with petitioner. Indeed, Supreme Court AC No. 43A-2020 dated August 3, 2020 suspended the reglementary periods within which petitions, appeals, complaints, motions, pleadings and other court submissions may be filed from August 4 to 18, 2020. It also indicated therein that the same shall resume on August 19, 2020. Petitioner's remaining eleven (11) days within which to file his Motion for Reconsideration of the assailed Decision before the Court in Division began to run again from August 19, 2020. Petitioner had until August 29, 2020 within which to file his Motion for Reconsideration of the assailed Decision. Considering that petitioner's "Motion for Reconsideration" was filed on September 1, 2020 or the next working day after August 29, 2020, the same was timely made. The Petition for Review was timely filed before the Court En Banc As to whether the present Petition for Review was timely filed, Section 3 (b), Rule 8 of the Revised Rules of the Court of Tax Appeals (RRCTA) states: " SEC. 3. Who may appeal; period to file petition . x x x 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)" Records show that petitioner received the assailed Resolution on January 22, 2021. Petitioner had fifteen (15) days from January 22, 2021 or until February 6, 2021 within which to file his Petition for Review before the Court En Banc .With the filing of a "Motion for Extension to File Petition for Review" on February 5, 2021, petitioner was given until February 21, 2021 19 within which to file his Petition for Review. The Petition for Review was timely filed on February 22, 2021 20 or the next working day after February 21, 2021. 21 The CTA may rule upon related issues necessary to achieve an orderly disposition of the case Petitioner claims that his basic right to fair play and due process was violated when the Court in Division ruled on a matter not raised as an issue by respondent in its Petition for Review or Pre-Trial Brief, not joined by the parties, nor defined by the Court in the Pre-Trial Order. The Court En Banc finds petitioner's contention bereft of merit. Section 1, Rule 14 of the RRCTA provides: "Rule 14 JUDGMENT, ITS ENTRY AND EXECUTION SECTION 1. Rendition of judgment. x x x xxx xxx xxx In deciding cases, the Court may not limit itself to the issues stipulated by the parties but may also rule upon related issues necessary to achieve an orderly disposition of the case." In Commissioner of Internal Revenue v. Lancaster Philippines, Inc. , 22 the Supreme Court affirmed the authority of the CTA to resolve the issue involving the authority of the revenue officer to conduct the audit, albeit the same was not raised by the parties in their pleadings or memoranda, viz .: "On whether the CTA can resolve an issue which was not raised by the parties, we rule in the affirmative. Under Section 1, Rule 14 of A.M. No. 05-11-07-CTA, or the Revised Rules of the Court of Tax Appeals, the CTA is not bound by the issues specifically raised by the parties but may also rule upon related issues necessary to achieve an orderly disposition of the case. The text of the provision reads: SECTION 1. Rendition of judgment . x x x In deciding the case, the Court may not limit itself to the issues stipulated by the parties but may also rule upon related issues necessary to achieve an orderly disposition of the case. The above section is clearly worded. On the basis thereof, the CTA Division was, therefore, well within its authority to consider in its decision the question on the scope of authority of the revenue officers who were named in the LOA even though the parties had not raised the same in their pleadings or memoranda. The CTA En Banc was likewise correct in sustaining the CTA Division's view concerning such matter." There is no denying that the resolution of the issue on the authority of revenue officer and group supervisor to continue the audit of respondent is relevant in determining the validity of the disputed assessments. The necessity of a valid Letter of Authority (LOA) in audit investigations is not merely an administrative requirement but a statutory requirement which is vital to the validity of an audit of a taxpayer, and necessarily, to the validity of the assessment that may be issued after said audit. In other words, while the parties did not specifically put into issue the authority of the revenue officer and group supervisor to continue the audit of respondent that ultimately led to the issuance of the subject tax assessments, said issue being vital in the disposition of the case, the CTA is imbued with authority to rule upon the same; otherwise, the CTA would abdicate its primary objective which is the just and orderly disposition of cases brought before it. The revenue officer and group supervisor who continued the audit of respondent were not authorized by a valid LOA; hence, the assessment issued pursuant to said audit is void ab initio Petitioner contends that an LOA is not a requirement when the audit investigation is conducted by the Office of the CIR. Contrary to petitioner's argument, the requirement of an LOA before examination of a taxpayer is not dispensed with even if the investigation is conducted by the Office of the CIR. While all offices of the BIR are under the CIR, who is the head of the BIR, the law is clear and categorical that the examination of any taxpayer, when delegated to any revenue officer and group supervisor by the CIR or his duly authorized representative, must be pursuant to a valid LOA. Records show that on October 11, 2011, respondent issued LOA No. LOA-116-2011 00000155 (eLA201100003057) 23 signed by Alfredo V. Misajon, Officer-in-Charge Assistant Commissioner of the Large Taxpayers Division, authorizing Revenue Officers (RO) Myrna Ramirez, Ma. Salud Maddela, Zenaida Paz, Cletofel Parungao, Allan Maniego, Joel Aguila and Group Supervisor (GS) Glorializa Samoy of the Regular Large Taxpayer Audit Division 1 (RLTAD 1) to examine respondent's books of accounts and other accounting records for all internal revenue taxes, for the period from April 1, 2010 to March 31, 2011. Subsequently, Mr. Cesar A. Escalada, Chief of RLTAD 1 of the BIR, issued a Memorandum of Assignment (MOA) dated February 25, 2013, 24 referring respondent's case/docket to RO Susan L. Salcedo and GS Marivic P. Bautista for the continuation of audit/investigation to replace the previously assigned ROs who resigned/retired/transferred to another district office. The audit/examination conducted by RO Salcedo and GS Bautista eventually led to the issuance of the PAN against respondent. To be sure, Section 6 of the National Internal Revenue Code (NIRC) of 1997, as amended, is clear and categorical in requiring an authority from the CIR or from his duly authorized representatives before an examination of a taxpayer may be made, 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. x x x" ( Boldfacing supplied ) A revenue officer cannot simply subject a taxpayer to audit without a valid LOA issued for that purpose. 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) In Commissioner of Internal Revenue v. Sony Philippines, Inc. , 25 the Supreme Court was clear in holding that the issuance of an LOA prior to the conduct of an examination of a taxpayer's books and other accounting records by any revenue officer is indispensable to the validity of an assessment, to wit: "Based on Section 13 of the Tax Code ,a Letter of Authority or LOA is the authority given to the appropriate revenue officer assigned to perform assessment functions. It empowers or enables said revenue officer to examine the books of account and other accounting records of a taxpayer for the purpose of collecting the correct amount of tax. The very provision of the Tax Code that the CIR relies on is unequivocal with regard to its power to grant authority to examine and assess a taxpayer. xxx xxx xxx Clearly, there must be a grant of authority before any revenue officer can conduct an examination or assessmen t. Equally important is that the revenue officer so authorized must not go beyond the authority given. In the absence of such an authority, the assessment or examination is a nullity. " ( Boldfacing and underscoring supplied ) This principle was also reiterated in Medicard Philippines, Inc. v. Commissioner of Internal Revenue , 26 to wit: Based on the afore-quoted provision, it is clear that unless authorized by the CIR himself or by his duly authorized representative, through an LOA, an examination of the taxpayer cannot ordinarily be undertaken .The circumstances contemplated under Section 6 where the taxpayer may be assessed through best-evidence obtainable, inventory taking, or surveillance among others has nothing to do with the LOA. These are simply methods of examining the taxpayer in order to arrive at the correct amount of taxes. Hence, unless undertaken by the CIR himself or his duly authorized representatives, other tax agents may not validly conduct any of these kinds of examinations without prior authority .( Boldfacing supplied ) Moreover, Revenue Memorandum Order (RMO) No. 43-90 is explicit that the continuation of an audit by a revenue officer other than the officer named in a previous LOA, requires the issuance of a new LOA , viz .: "C. Other policies for issuance of L/As. 1. All audit/investigations, whether field or office audit, should be conducted under a Letter of Authority . xxx xxx xxx 5. Any re-assignment/transfer of cases to another RO(s) ,and revalidation of L/As which have already expired, shall require the issuance of a new L/A , with the corresponding notation thereto, including the previous L/A number and date of issue of said L/As ." ( Boldfacing and underscoring supplied ) In the recent case Commissioner of Internal Revenue v. McDonald's Philippines Realty Corp. , 27 the practice of reassigning or transferring revenue officers originally named in the LOA and substituting or replacing them with new ROs to continue the audit or investigation without a separate or amended LOA (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 on the requirement of an LOA in the grant of authority by the CIR or his duly authorized representative to examine the taxpayer's books of accounts. It is erroneous for petitioner to insist that the reassignment of the audit to a new set of revenue officer and group supervisor does not invalidate the assessment. A new LOA must be issued in case of reassignment of the audit/investigation to another revenue officer and group supervisor. Even if the Court En Banc considers the MOA as equivalent to a new LOA and a valid source of authority for RO Salcedo and GS Bautista to audit respondent, the same will not suffice since the MOA in this case was not signed or issued by the CIR or his duly authorized representative. As previously mentioned, an LOA can only be issued either by the CIR or his duly authorized representative, as identified in Section 10 (C) of the NIRC of 1997, as amended, to be the Revenue Regional Director, to wit: "SEC. 10. Revenue Regional Director. Under rules and regulations, policies and standards formulated by the Commissioner, with the approval of the Secretary of Finance, the Revenue Regional director shall, within the region and district offices under his jurisdiction, among others: xxx xxx xxx (c) Issue Letters of Authority for the examination of taxpayers within the region;" Under RMO No. 29-07, the equivalent of a Regional Director in the Large Taxpayers Service (LTS) is the Assistant Commissioner or Head Revenue Executive Assistants. Thus, they are the ones authorized to issue a new LOA, to wit: "II. AUDIT POLICIES AND GUIDELINES 1. The Chief, Large Taxpayers Audit & Investigation Divisions/LTDOs shall draw a list of taxpayers selected for audit under its current selection criteria. The list shall state the name of taxpayer selected for audit, the nature of business, the amount of gross sales/receipts, the selection code, the PSIC code, and the corresponding amount of tax paid for the period. The said list shall be submitted to the Assistant Commissioner/Head Revenue Executive Assistant, Large Taxpayers Service for approval, copy furnished the Commissioner of Internal Revenue. 2. All Letters of Authority (LOAs) shall be issued and approved by the Assistant Commissioner/Head Revenue Executive Assistants ." ( Boldfacing supplied ) The power to issue an LOA may not be further delegated by the Assistant Commissioner/Head Revenue Executive Assistants of the LTS to any other officer. On this point, the pronouncement in NPC Drivers and Mechanics Association, (NPC DAMA),et al. v. The National Power Corporation (NPC),et al. 28 is instructive, viz. : "We agree with petitioners. In enumerating under Section 48 those who shall compose the National Power Board of Directors, the legislature has vested upon these persons the power to exercise their judgment and discretion in running the affairs of the NPC. x x x. It is to be presumed that in naming the respective department heads as members of the board of directors, the legislature chose these secretaries of the various executive departments on the basis of their personal qualifications and acumen which made them eligible to occupy their present positions as department heads. Thus, the department secretaries cannot delegate their duties as members of the NPB, much less their power to vote and approve board resolutions, because it is their personal judgment that must be exercised in the fulfillment of such responsibility. x x x [T]he rule enunciated in the case of Binamira v. Garrucho is relevant in the present controversy, to wit: An officer to whom a discretion is entrusted cannot delegate it to another, the presumption being that he was chosen because he was deemed fit and competent to exercise that judgment and discretion, and unless the power to substitute another in his place has been given to him, he cannot delegate his duties to another ." ( Boldfacing supplied ) In the present case, the MOA was signed and issued by Mr. Escalada, Chief of RLTAD 1. He is neither the CIR nor a Revenue Regional Director, nor is he an Assistant Commissioner/Head Revenue Executive Assistant of the LTS. The MOA dated February 25, 2013 did not validly authorize RO Salcedo and GS Bautista to conduct the audit/investigation of respondent for the taxable year ending March 31, 2011. The conduct of the audit of respondent was legally flawed, and as a consequence thereof, the assessments issued against it are inescapably void. Needless to say, a void assessment bears no fruit 29 and must be slain at sight. In light of the foregoing, the Court need not belabor the other issues raised by petitioner. WHEREFORE ,in light of the foregoing, the Petition for Review filed on February 22, 2021 by the Commissioner of Internal Revenue is DENIED for lack of merit. The assailed Decision dated June 30, 2020 of the Court in Division in CTA Case No. 9422 is AFFIRMED ; while, the assailed Resolution dated January 15, 2021 is SET ASIDE . Anent respondent's "Motion for Reconsideration (of the Resolution dated 30 June 2021) with Submission," the same is DENIED for lack of merit; and, its "Comment (To Petitioner's Petition for Review)" is EXPUNGED from the records of the case for being filed out of time. Petitioner Commissioner of Internal Revenue or any person acting on his behalf is ENJOINED from proceeding with the collection of the taxes subject of the present case. SO ORDERED. (SGD.) ROMAN G. DEL ROSARIO Presiding Justice Juanito C. Castaeda, Jr.,Erlinda P. Uy, Catherine T. Manahan, Jean Marie A. Bacorro-Villena, Marian Ivy F. Reyes-Fajardo and Lanee S. Cui-David, JJ. , concur. Ma. Belen M. Ringpis-Liban, J. ,with separate concurring opinion. Maria Rowena Modesto-San Pedro, J. , I join the separate concurring opinion of Associate Justice Ma. Belen M. Ringpis-Liban. Separate Opinions RINGPIS-LIBAN, J.,concurring opinion: I concur with the ponencia of my esteemed colleague, Presiding Justice Roman G. Del Rosario, in holding the value-added tax (VAT) assessment issued against respondent as void ab initio due to lack of requisite authority on the part of the revenue officer and group supervisor who continued the audit/investigation of respondent's books of accounts and other accounting records for taxable year ending March 31, 2011. I just wish to add that the subject VAT assessment can also be declared void on the ground that it lacks the definite amount of tax liabilities for which respondent is accountable. In Commissioner of Internal Revenue vs. Fitness By Design, Inc. , 1 the Supreme Court said: " ... the Final Assessment Notice is not valid if it does not contain a definite due date for payment by the taxpayer. xxx xxx xxx The issuance of a valid formal assessment is a substantive prerequisite for collection of taxes . Neither the National Internal Revenue Code nor the revenue regulations provided for a 'specific definition or form of an assessment.' However, the National Internal Revenue Code defines its explicit functions and effects. An assessment does not only include a computation of tax liabilities; it also includes a demand for payment within a period prescribed. Its main purpose is to determine the amount that a taxpayer is liable to pay . xxx xxx xxx A final assessment is a notice 'to the effect that the amount therein stated is due as tax and a demand for payment thereof.' This demand for payment signals the time 'when the penalties and interests begin to accrue against the taxpayer and enabling the latter to determine his remedies[.]' Thus, it must be 'sent to and received by the taxpayer, and must demand payment of the taxes described therein within a specific period .' The disputed Final Assessment Notice is not a valid assessment. First, it lacks the definite amount of tax liability for which respondent is accountable. It does not purport to be a demand for payment of tax due, which a final assessment notice should supposedly be. An assessment, in the context of the National Internal Revenue Code, is a 'written notice and demand made by the [Bureau of Internal Revenue] on the taxpayer for the settlement of a tax liability that is there definitely set and fixed.' Although the disputed notice provides for the computation of respondent's tax liability, the amount remains indefinite. It only provides that the tax due is still subject to modification, depending on the date of payment. Thus: The complete details covering the aforementioned discrepancies established during the investigation of this case are shown in the accompanying Annex 1 of this Notice. The 50% surcharge and 20% interest have been imposed pursuant to Sections 248 and 249 (B) of the [National Internal Revenue Code], as amended. Please note, however, that the interest and the total amount due will have to be adjusted if prior or beyond April 15, 2004 .(Emphasis Supplied) Second, there are no due dates in the Final Assessment Notice. This negates petitioner's demand for payment .Petitioner's contention that April 15, 2004 should be regarded as the actual due date cannot be accepted. The last paragraph of the Final Assessment Notice states that the due dates for payment were supposedly reflected in the attached assessment: In view thereof, you are requested to pay your aforesaid deficiency internal revenue tax liabilities through the duly authorized agent bank in which you are enrolled within the time shown in the enclosed assessment notice .(Emphasis in the original) However, based on the findings of the Court of Tax Appeals First Division, the enclosed assessment pertained to remained unaccomplished. Contrary to petitioner's view, April 15, 2004 was the reckoning date of accrual of penalties and surcharges and not the due date for payment of tax liabilities. The total amount depended upon when respondent decides to pay. The notice, therefore, did not contain a definite and actual demand to pay . Compliance with Section 228 of the National Internal Revenue Code is a substantive requirement. It is not a mere formality. Providing the taxpayer with the factual and legal bases for the assessment is crucial before proceeding with tax collection. Tax collection should be premised on a valid assessment ,which would allow the taxpayer to present his or her case and produce evidence for substantiation." (Emphases and underscoring supplied) Based on the foregoing, to be valid, a tax assessment must not only contain a computation of tax liabilities, it must also include a demand upon the taxpayer for the settlement of a tax liability that is there definitely set and fixed. It is further required that the due date in the final assessment notice be stated. A careful scrutiny of the subject FLD dated August 27, 2014, 2 reveals that just as in the Fitness by Design case, although the same FLD provides for the computation of petitioner's tax liabilities, the amount thereof remains indefinite, since the tax due is still subject to modification. Specifically, the said FLD states: "Please take note that the interest will have to be adjusted if paid beyond the date specified therein." (Emphasis and underscoring ours) Notably, the same statement is found in the FDDA dated March 14, 2016, 3 and in the Amended FDDA dated June 30, 2016. 4 In addition, it is not clear as to which does the phrase "the date specified therein" actually refer. In view of this vagueness, the indefiniteness in the amount being assessed becomes even more apparent. Moreover, note that the accompanying Audit Result/Assessment Notice No. VT-116-LOA-00000155-11-16-258 5 in the said Amended FDDA does not contain any due date for the payment of the assessed deficiency VAT. Particularly, the space in the said Audit Result/Assessment Notice where the due date is to be stated " remained unaccomplished ," just as in the Fitness By Design case . Thus, the subject VAT assessment hardly fall under the jurisprudential definition of a tax assessment under the NIRC, considering that it lacked " a due tax liability that is there definitely set and fixed ." It likewise do not purport to be a demand for payment of tax due, which a final assessment notice should supposedly be. All told, I vote to DENY the present Petition for Review. Footnotes 1. Composed of Associate Justice Erlinda P. Uy, Associate Justice Ma. Belen M. Ringpis-Liban, and Associate Justice Maria Rowena Modesto-San Pedro. 2. Par. 1, Summary of Admitted Facts, Joint Stipulation of Facts and Issues (JSFI), CTA Division Docket ,p. 409. 3. Par. 1, Stipulation of Facts, JSFI, CTA Division Docket ,p. 410. 4. The Commissioner of Internal Revenue was the respondent; and Sumitomo Corporation-Philippine Branch was the petitioner in CTA Case No. 9422. 5. Annex "A",CTA En Banc Docket, pp. 34-53. 6. CTA Division Docket ,pp. 900-919. 7. Annex "B", CTA En Banc Docket ,pp. 56-61. 8. CTA En Banc Docket ,pp. 1-5. 9. CTA En Banc Docket ,p. 6. 10. CTA En Banc Docket ,pp. 7-29. 11. February 21, 2021 is a Sunday. 12. Records Verification dated June 16, 2021. 13. Petition for Review, CTA En Banc Docket ,p. 10. 14. CTA EB Docket ,pp. 69-73. 15. Annex "A", CTA EB Docket ,p. 75 16. Annex "B", CTA EB Docket ,p. 75. 17. Re: Pleadings, Motions and other Court Submissions Filed by Email. 18. Administrative Circular (AC) No. 14-2021 dated March 28, 2021, AC No. 15-2021 dated April 3, 2021, AC No. 21-2021 dated April 10, 2021, AC No. 22-2021 dated April 14, 2021, AC No. 29-2021 dated April 30, 2021, and AC No. 33-2021 dated May 14, 2021. 19. Supra Note 9. 20. Supra Note 10. 21. See Note 11. 22. G.R. No. 183408, July 12, 2017. 23. Par. 2, Summary of Admitted Facts, JSFI, CTA Division Docket ,Vol. 1, p. 409; Exhibit "P-3", CTA Division Docket ,Vol. 1, p. 461; Exhibit "R-1",BIR Records, p. 503. 24. Exhibit "R-2",BIR Records, p. 509. 25. G.R. No. 178697, November 17, 2010. 26. G.R. No. 222743, April 5, 2017. 27. G.R. No. 242670, May 10, 2021 28. G.R. No. 156208, September 26, 2006. 29. Commissioner of Internal Revenue v. Metro Star Superama, Inc. ,G.R. No. 185371, December 8, 2010. RINGPIS-LIBAN, J.,concurring opinion: 1. G.R. No. 215957, November 9, 2016 ('Fitness By Design'). 2. Exhibit "P-6",Docket Vol. 2, pp. 504 to 515; Exhibits "R-11","R-11-a","R-12","R-12-a","R-12-b",Docket Vol. 2, pp. 799 to 810. 3. Exhibit "P-9",Docket Vol. 2, at p. 557; Exhibit "R-14",BIR Records, at p. 1016. 4. Exhibit "P-11",Docket Vol. 2, at p. 594; Exhibit "R-18",BIR Records, at p. 1087. 5. Exhibit "P-12",Docket Vol. 2, at p. 597; Exhibit "R-19",BIR Records, at p. 1085.