THIRD DIVISION
[G.R. No. 227231. July 12, 2017.]
COMMISSIONER OF INTERNAL REVENUE, petitioner,vs. SVI INFORMATION SERVICES CORPORATION, respondent.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, Third Division, issued a Resolution datedJuly 12, 2017, which reads as follows: cTDaEH
"G.R. No. 227231 (Commissioner of Internal Revenue, Petitioner, v. SVI Information Services Corporation, Respondent) — The Office of the Solicitor General's motion for an extension of thirty (30) days within which to file a petition for review on certiorari is GRANTED, counted from the expiration of the reglementary period.
The respondent received the letter of authority dated September 11, 2008 (LOA) from the Bureau of Internal Revenue (BIR) authorizing the examination of its books of account and other financial records for all internal revenue taxes for taxable year 2007. On October 20, 2009, it received a post-reporting notice from BIR Revenue District Office No. 43A informing it of the tentative findings for deficiency taxes for taxable year 2007 and directing it to submit documentary evidence to refute the findings. It replied to the post-reporting notice by letter dated October 26, 2009.
On November 11, 2010, the respondent received from the BIR a Final Assessment Notice (FAN) and a formal letter of demand with attached details of discrepancies showing that it was liable for the following deficiency taxes, inclusive of interest, for taxable year 2007, to wit:
|
Deficiency Income Tax |
P10,637,383.58 |
|
Deficiency Value Added Tax |
3,207,864.81 |
|
Deficiency Expanded Withholding Tax |
668,513.05 |
|
|
–––––––––––––– |
|
Total Amount Due |
P14,513,761.44 |
|
|
============ |
On December 10, 2010, the respondent filed a protest against the FAN. On May 24, 2012, it received a final notice before seizure from BIR RDO No. 43A reiterating the demand for payment of the deficiency taxes. As a consequence, it filed a petition for review in the Court of Tax Appeals (CTA) on May 25, 2012.
On February 10, 2014, the CTA Second Division rendered its decision granting the respondent's petition; and cancelling the preliminary collection letter dated April 23, 2012.
After the CTA Second Division denied the motion for reconsideration, the petitioner appealed to the CTA En Banc, which affirmed the decision of the CTA Second Division. The CTA En Banc explained that the CTA Second Division had jurisdiction to review the decisions of the petitioner involving disputed assessments, including assessments challenged by the taxpayer; that disputed assessments presupposed the issuance of the valid assessments by the petitioner; that the review of the preliminary collection letter was within the exclusive appellate jurisdiction of the CTA in Division under "other matters arising from the NIRC;" that the assessment made against the respondent was void because the respondent had not received the FAN; and that the petitioner had not established that the FAN had been duly delivered and actually received by the respondent. 1
After the CTA En Banc denied the motion for reconsideration, the petitioner has come to the Court for ultimate review, insisting that the assessment for deficiency taxes for taxable year 2007 was valid; that the FAN was sent to the respondent via registered mail; that the BIR could rightfully rely on the Bureau of Posts to deliver the mail to the intended recipient; that the CTA in Division had no jurisdiction to determine the validity of the preliminary collection letter issued to the respondent; and that the cancellation thereof amounted to the suspension of payment prohibited under Republic Act No. 9282.
Ruling of the Court
After a judicious review of the records, the Court RESOLVES TO DENY the petition for review on certiorari for failure of the petitioner to show that the CTA En Banc committed reversible error in denying the petition for review and in affirming the decision of the CTA Second Division.
Section 228 2 of the National Internal Revenue Code, as implemented by Section 3.1.2 3 of Revenue Regulations No. 12-99, requires that the taxpayer must first be informed that it was liable for deficiency taxes through the sending of the Preliminary Assessment Notice (PAN). The taxpayer must be informed of the facts and the law upon which the assessment was being made. This information was a substantive, not merely a formal, requirement. For the BIR to proceed heedlessly with the tax collection without first establishing the issuance of a valid assessment would be violative of the cardinal principle in administrative investigations — that taxpayers should be able to present their case and adduce supporting evidence. 4 The sending of the PAN to the taxpayer to inform it of the assessment made is but part of the due process requirement in the issuance of the deficiency tax assessment, the absence of which renders nugatory any assessment by the tax authorities. 5 cSaATC
WHEREFORE, the Court DENIES the petition for review on certiorari; and UPHOLDS the decision promulgated on March 3, 2016 by the Court of Tax Appeals En Banc affirming the decision dated February 10, 2014 of the Court of Tax Appeals (Second Division) cancelling the Preliminary Collection Letter dated April 23, 2012, without pronouncement on costs of suit. (Jardeleza, J., on wellness leave.)
SO ORDERED."
Very truly yours,
(SGD.) WILFREDO V. LAPITANDivision Clerk of Court
Footnotes
1.Rollo, pp. 33-45; penned by Associate Justice Lovell R. Bautista, with the concurrence of all the other Members of the CTA.
2. Section 228. Protesting of Assessment. — When the Commissioner or his duly authorized representative finds that proper taxes should be assessed, he shall first notify the taxpayer of his findings: provided, however, that a preassessment notice shall not be required in the following cases:
(a) When the finding for any deficiency tax is the result of mathematical error in the computation of the tax as appearing on the face of the return; or
(b) When a discrepancy has been determined between the tax withheld and the amount actually remitted by the withholding agent; or
(c) When a taxpayer who opted to claim a refund or tax credit of excess creditable withholding tax for a taxable period was determined to have carried over and automatically applied the same amount claimed against the estimated tax liabilities for the taxable quarter or quarters of the succeeding taxable year; or
(d) When the excise tax due on exciseable articles has not been paid; or
(e) When the article locally purchased or imported by an exempt person, such as, but not limited to, vehicles, capital equipment, machineries and spare parts, has been sold, traded or transferred to non-exempt persons.
The taxpayers shall be informed in writing of the law and the facts on which the assessment is made; otherwise, the assessment shall be void.
xxx xxx xxx
3. 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). 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.
4.Commissioner of Internal Revenue v. Metro Star Superama, Inc., G.R. No. 185371, December 8, 2010, 637 SCRA 633, 644.
5.Id. at 646.