Commissioner of Internal Revenue v. Missouri Square, Inc.

FIRST DIVISION

[G.R. No. 238574. July 11, 2018.]

COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. MISSOURI SQUARE, INC., respondent.

NOTICE

Sirs/Mesdames :

Please take notice that the Court, First Division, issued a Resolution datedJuly 11, 2018which reads as follows:

"G.R. No. 238574 — Commissioner of Internal Revenue v. Missouri Square, Inc.

Acting on petitioner's Motion for Extension of Time, the Court resolves to GRANT petitioner a period of thirty (30) days from the expiration of the reglementary period within which to file a Petition for Review on Certiorari.

After a careful review of the allegations, issues, and arguments adduced in the instant Petition for Review on Certiorari filed under Rule 45 of the Rules of Court, the Court resolves to DENY the same for: 1) lack of payment of P1,000.00 for Sheriff's Trust Fund per A.M. No. 17-12-09-SC; and 2) failure of petitioner to show that the Court of Tax Appeals (CTA) En Banc committed any reversible error in denying petitioner's appeal. HTcADC

Petitioner imputes error on the part of the CTA En Banc: (1) in denying its appeal due to its failure to file a motion for reconsideration of the Amended Decision; and (2) in affirming the cancellation of the Final Assessment Notice (FAN) and the Formal Letter of Demand (FLD).

Petitioner admits failing to file a motion for reconsideration of the Amended Decision. However, it claims that there are instances when procedural rules may be relaxed in the interest of substantial justice. In this case, petitioner claims that respondent belatedly raised the defense of lack of due process in its motion for reconsideration which should not have been allowed by the CTA Division.

As to the cancellation of the FAN and the FLD, petitioner insists that there was no violation of respondent's right to due process as a protest against a Preliminary Assessment Notice (PAN) was not indispensable.

The Court finds no reversible error on the part of the CTA En Banc.

On the procedural issue, Section 1, 1 Rule 8 of the Revised Rules of the CTA clearly states that an appeal to the CTA En Banc must be preceded by the filing of a timely motion for reconsideration or new trial with the CTA Division. This rule likewise applies to amended decisions issued by the CTA Division. 2 In this case, petitioner failed to show any compelling reason to warrant the relaxation of the procedural rule requiring the filing of a motion for reconsideration. Thus, the CTA correctly denied the appeal for non-filing of a motion for reconsideration.

Besides, even if the procedural lapse were excused, still, the Court finds no reversible error on the part of the CTA En Banc in cancelling the FAN and the FLD.

Section 3 of Revenue Regulations (RR) No. 12-99 provides:

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3.1.2 Preliminary Assessment Notice (PAN). — If after review and evaluation by the Assessment Division or by the Commissioner or his duly authorized representative, as the case may be, it is determined that there exists sufficient basis to assess the taxpayer for any deficiency tax or taxes, the said Office shall issue to the taxpayer, at least by registered mail, a Preliminary Assessment Notice (PAN) for the proposed assessment, showing in detail, the facts and the law, rules and regulations, or jurisprudence on which the proposed assessment is based (see illustration in ANNEX A hereof). CAIHTE

If the taxpayer fails to respond within fifteen (15) days from date of receipt of the PAN, he shall be considered in default, in which case, a formal letter of demand and assessment notice shall be caused to be issued by the said Office, calling for payment of the taxpayer's deficiency tax liability, inclusive of the applicable penalties.

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In this case, the Court agrees with the findings of the CTA En Banc that respondent was deprived of procedural due process as petitioner failed to strictly comply with the procedure in the issuance of a deficiency tax assessment. Records show that respondent received the PAN on January 14, 2013. Accordingly, under the rules, respondent had fifteen (15) days from receipt within which to respond to the PAN. However, without waiting for the lapse of the 15-day period, petitioner immediately issued the FAN and the FLD, which were received by respondent on January 21, 2013 or seven (7) days after receiving the PAN. Petitioner, thus, deprived respondent of the full 15-day period to respond to the PAN.

It bears stressing that "[i]n balancing the scales between the power of the State to tax and its inherent right to prosecute perceived transgressors of the law on one side, and the constitutional rights of a citizen to due process of law and the equal protection of the laws on the other, the scales must tilt in favor of the individual, for a citizen's right is amply protected by the Bill of Rights under the Constitution." 3

ACCORDINGLY, the January 24, 2018 Decision and March 28, 2018 Resolution of the Court of Tax Appeals En Banc in CTA EB No. 1521 are hereby AFFIRMED. aScITE

SO ORDERED." Leonardo-De Castro, J., designated as Acting Chairperson of the First Division per Special Order No. 2559 dated May 11, 2018; Gesmundo, J., designated as Acting Member of the First Division per Special Order No. 2560 dated May 11, 2018.

Very truly yours,

(SGD.) LIBRADA C. BUENAActing Division Clerk of Court

 

Footnotes

1. SECTION 1. Review of cases in the Court en banc. — In cases falling under the exclusive appellate jurisdiction of the Court en banc, the petition for review of a decision or resolution of the Court in Division must be preceded by the filing of a timely motion for reconsideration or new trial with the Division.

2.Asiatrust Development Bank, Inc. v. Commissioner of Internal Revenue, G.R. Nos. 201530 & 201680-81, April 19, 2017.

3.Commissioner of Internal Revenue vs. Metro Star Superama, Inc., 652 Phil. 172, 187-188 (2010).