CIR vs. Roca Security and Investigation Agency, Inc.

(2019)

FACTS:

* Facts were adopted from the CTA decision case no. 8718 (July 21, 2016) *

Petitioner Roca Security and Investigation Agency, Inc. (herein as respondent) is a

corporation duly organized and existing under and by virtue of the laws of the Philippines
and a registered taxpayer. On the other hand, the respondent (herein as petitioner) is the
duly appointed commissioner of the BIR vested under the appropriate laws with the
authority to carry out the functions, duties and responsibilities of said office, including, inter
alia, the power to decide disputed assessments and cancel and abate tax liabilities, pursuant
to the provisions of the NIRC and other tax laws, rules and regulations.

Petitioner filed its Annual ITR for taxable year 2009. However, CIR issued a Preliminary
Assessment Notice (PAN) against petitioner for alleged income tax deficiency and deficiency
improperly accumulated earnings tax (IAET). Petitioner then filed a Letter Protest assailing
the said PAN. Despite the protest, CIR sent a Formal Letter of Demand (FLD). Later on, CIR
issued a letter affirming the assessed tax deficiencies due to the alleged failure of petitioner
to submit relevant documents in support of its protest and stating that this is their Final
Decision on the Disputed Assessment (FDDA).

CIR Contention: Under Sec. 228 of the NIRC, as amended, a tax assessment maybe
administratively protested by filing a request for reinvestigation or reconsideration within 30
days from receipt of the assessment notice. Within 60 days from the filing of the protest, all
relevant supporting documents shall have been submitted; otherwise, the assessment shall
become final. In the instant case, while a protest on the assessment was indeed filed, the
respondent, however, failed to submit relevant supporting documents in support of its
protest. Therefore, considering that respondent failed to submit documents in support of its
protest, the FAN have become final, executory, and demandable. Accordingly, the legality
and validity thereof can no longer be the subject of a judicial inquiry in the Petition for
Review.

Moreover, there was no merit to the petitioner’s claim that the subject assessments were
void because the 3-year prescriptive period mandated by law in issuing assessment had
already lapsed. It is well-settled that it is not the issue date of the demand letter and/or
notice of assessment that is the reckoning point in prescription, but rather, it is the date
when the said demand letter or notice is released, mailed or sent to the taxpayer that
constitutes actual assessment. As long as the release thereof is effected before prescription
sets in, the assessment is deemed made on time even though the same is actually received
by the taxpayer after the expiration of the prescriptive period.

ISSUE: WON the CTA has jurisdiction over the petition for review.

HELD: NO.

SC resolves to deny the petition for failure to sufficiently show that the CTA En Banc
committed any reversible error in its decision as to warrant the exercise of the Court’s
appellate jurisdiction. As correctly held by the CTA En Banc, the FAN issued by the CIR is
void as it violates respondent’s right to due process.

Section 228 of the NIRC gives the taxpayer being assessed a period of 60 days from the
date of filing a protest assailing the PAN within which to submit relevant supporting
documents. In this case, the respondent filed its protest on April 18, 2013. It had 60 days
from that date, or until June 17, 2013, to present its relevant documents to support its
protest against the PAN.

Clearly, the FAN issued by the CIR on April 12, 2013 and received only on April 19, 2013
violated the latter’s right to due process as the latter had only 1 day instead of 60 days to
present its relevant documents prior of its protest. Besides, the 60-day period to protest
allude to in Section 228 of the NIRC refers to one made against the PAN and not the FAN as
the CIR insists, as only upon expiration of the said period does a contested assessment
“become final”.

Therefore, the CTA En Banc properly found CIR to have violated the statutory guidelines in
terms of affording respondent taxpayer the right to due process.