CTA Case No. 9590, March 12, 2020.
CTA Third Division
Uy, J:
Lessons Applicable: CTA Jurisdiction, Prescription, Due Process
Laws Applicable: RA 1124, as amended by RA 9282, Section 3 (a) (1), Rule 4, under Section 228 of the NIRC of 1997, as amended, and RR No. 12-99
FACTS:
- September 3, 2009: Commissioner of Internal Revenue (CIR) issued a Letter Notice informing Jones Lang Lasalle (Philippines), Inc. (JLL) that a computerized matching on the information/data provided by 3rd-party sources against its declarations per income/VAT/percentage withholding tax returns, disclosed discrepancies for calendar year 2007.
- May 11, 2010: CIR issued Letter of Authority (LOA).
- May 31, 2010: CIR issued an undated Notice for Informal Conference.
- October 8, 2010: CIR issued the Preliminary Assessment Notice (PAN).
- October 19, 2011: CIR issued a FAN.
- September 19, 2016: JLL filed a letter stating that the deficiency VAT assessment for VY 2007 and Collection Letter should be cancelled.
- May 8, 2017: JLL received a Final Notice Before Seizure (FNBS) dated February 28, 2017.
- JLL filed a petition for Review (With Urgent Motion for the Issuance of an Order to Suspend the Collection of Tax)
1. W/N CTA has jurisdiction to act on the Petition for Review
2. W/N period to assess has already prescribed.
3. W/N due process requirements under NIRC and its regulations has been complied with.
HELD: Granted.
1. YES. Issuance of the subject FBNS constitutes the final decision of CIR that is appealable before the CTA.
- Jurisdiction over the subject matter or nature of an action is fundamental for a court to act on a given controversy. CTA being a court of special jurisdiction can take cognizance only of matters that are clearly within its jurisdiction.
- Based on RA 1124, as amended by RA 9282 and Section 3 (a) (1), Rule 4 of the Revised Rules of the CTA, the jurisdiction of the CTA is not limited to decisions of the CIR involving disputed assessments. The second part thereof also includes “other matters” arising under the NIRC or other laws administered by the BIR.
- Jurisdiction of the CTA to rule on “other matters arising under the NIRC or other laws administered by the BIR” include among others, the validity of the warrant of distraint and levy and waiver of statute of limitations.
- Moreover, the term “other matters” pertain to matters directly related to disputed assessments or refunds or internal revenue taxes, fees or other charges, penalties imposed in relation thereto.
- CIR v. Isabela Cultural Corporation (G.R. No. 135210, July 11, 2001): FBNS which indicates that the taxpayer was being given "this LAST OPPORTUNITY" to pay; otherwise, its properties would be subjected to distraint and levy, constitutes the CIR’s final decision.
2. NO. Section 11 of RA 1125 as amended, provides that any party adversely affected by a decision or ruling of the CIR may file an appeal with the CTA 30 days after the receipt of such decision or ruling. Since FBNS was received on May 8, 2017, thus it has until June 7, 2017 or 30 days, to appeal and challenge its validity with the CTA. Hence, May 15, 2017 was within the 30-day period.
3. NO. Failure to strictly comply with the notice requirements prescribed under Section 228 of the NIRC of 1997, as amended, and RR No. 12-99 is tantamount to denial of due process.
- If there exists sufficient basis to assess the taxpayer, the CIR or his authorized representative is mandated to issue a PAN. Thereafter, a formal letter of demand and an assessment notice shall be issued by the CIR or his duly authorized representative. The use of the word “shall” in these legal provisions indicates the mandatory nature of the requirements laid down therein. Thus, it is essential for CIR to establish and prove that the requisite assessment notices were fully served to the taxpayer within the prescription period.
- Tax assessment, due process requires that the taxpayer must actually receive the assessment.
- If the taxpayer denies having received the assessment notices, it is incumbent upon respondent to prove by competent evidence that the assessment notices were indeed received by the taxpayer.
- It is basic in the rule of evidence that bare allegations unsubstantiated by evidence, are not equivalent proof.
- BIR was fully informed of the change in address in accordance to Section 11 of RR No. 12-8531. Court notes that the new address was likewise indicated in the documents issued by the BIR in the BIR records. Evidently, BIR had knowledge of the change of address and should have sent the PAN and FAN to its new address. But, they were sent to the old address. While it appears that BIR did indeed issued the assessment notices, it failed to present evidence to refute JLL’s claim that it did not receive said assessment notices. Consequently, there was no valid service of assessment notices to petitioner.