PHILIPPINE ASSOCIATED SMELTING AND REFINING CORPORATION

vs. COMMISSIONER OF INTERNAL REVENUE

CTA EB NO. 2172; 27 January 2021

IMPORTANT RULING:

The Court En Banc has consistently declared that, being a court of record, cases filed before
it are litigated de novo, party-litigants must prove every minute aspect of their cases.
Indubitably, no evidentiary value can be given to any documentary evidence that is merely
attached to the records of the case as the rules on documentary evidence require that such
documents must be formally offered before the Court. Pertinent is Section 34, Rule 132 of
the Rules of Court which reads:

"Section 34. Offer of evidence. ~ The court shall consider no evidence which has not
been formally offered. The purpose for which the evidence is offered must be
specified."

FACTS:

Petitioner Philippine Associated Smelting and Refining Corporation (PASAR) is engaged in

the business of exporting, processing, smelting and refining metals. In its operations, P
ASAR uses petroleum products such as industrial diesel oil (IDO), automotive diesel oil
(ADO), diesel, bunker fuel oil (BFO) or industrial fuel oil (IFO) and lubricants. These are
purchased from local distributors like Petron Corporation (Perron), which imports the same
and pays the corresponding customs duties to the Bureau of Customs (BOC) and the excise
taxes to the Bureau of Internal Revenue (BIR). Petron, in turn, bills PASAR the duties and
excise taxes it paid on the petroleum products.

On November 23, 2006, PASAR filed an application for tax credit and/ or refund arising
from excise tax payments in connection with its purchase of petroleum products covering the
period January 2005 to October 2005 in the total amount of Php11,687,467.62. Respondent
denied PASAR's Application for tax credit and/or refund of excise tax payments. Hence, this
Petition.

ISSUE:

Whether or not PASAR is entitled to a refund.

RULING:

The Court En Banc agrees with the findings of the Court in Division that PASAR is not
entitled to refund because it failed to prove that Petron paid to the BIR the excise taxes due
 on petroleum products it sold to P ASAR and that the said excise taxes were substantially
charged to and paid by PASAR.

As to PASAR's contention that the Court shall recognize the letter dated January 3, 2017
although not formally offered in evidence because the said letter contains the BIR Regional
Office's finding on the payment of excise taxes by Petron. The Court En Bane finds this
argument without merit.

The Court En Banc has consistently declared that, being a court of record, cases filed before
it are litigated de novo, party-litigants must prove every minute aspect of their cases.
Indubitably, no evidentiary value can be given to any documentary evidence that is merely
attached to the records of the case as the rules on documentary evidence require that such
documents must be formally offered before the Court. Pertinent is Section 34, Rule 132 of
the Rules of Court which reads:

"Section 34. Offer of evidence. ~ The court shall consider no evidence which has not
been formally offered. The purpose for which the evidence is offered must be
specified."

Also, in the case of Pilipinas Shell Petroleum Corporation v. Commissioner of Customs the
Supreme Court held that the mere fact that a particular document is identified and marked as
an exhibit does not mean that it has already been offered as part of the evidence of a party.

The Petition for Review filed with the Court is a judicial claim for refund which partakes of
the nature of a tax exemption, and is therefore strictly construed against the claimant. As
such, it is incumbent upon PASAR to prove not only its entitlement to the grant of the claim
under substantive law, but also its compliance with all the documentary and evidentiary
requirements provided by the NIRC, as well as by revenue regulations implementing them.

In this case, PASAR was not able to prove that it is entitled to a refund or issuance of a tax
credit certificate representing excise taxes paid for the period January 2005 to October 2005.

COMMISSIONER OF INTERNAL REVENUE

Vs. PENTA TECHNOLOGY, INC.
CTA EB NO. 2046, 09 February 2021

IMPORTANT RULING:

An 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. An LOA is premised on the fact that the examination of a taxpayer who has
already filed his tax returns is a power that statutorily belongs only to the CIR himself or his
duly authorized representatives.

FACTS:

On 17 July 2008, Bureau of Internal Revenue (BIR), Regional Director (RD), Manuel V.
Mapoy, issued Tax Verification Number (TVN) 0088511 authorizing Revenue Officer (RO)
Wilhelfortes Asprer (Asprer) of Revenue District Office (RDO) No. 49 to examine and audit
respondent Penta Technology, Inc. (PTI/respondent). The TVN covered respondent's internal
revenue taxes for taxable year (TY) 2007. A certain Mel Cordero (Cordero) received the
TVN.

Later, respondent received a Re-assignment Notice (RN) from the BIR informing it that RO
Asprer was being replaced by RO Elma Delluta (Delluta) and Group Supervisor (GS) Rodel
Buenaobra (Buenaobra). Still later, respondent also received a letter informing it that RO
May F. Quiambao (Quiambao) and GS Arnel B. Magbag (Magbag) will continue
respondent's audit investigation.

On 17 March 2010, respondent received another letter notifying respondent of RO

Quiambao's transfer and its case's re-assignment to RO Janet Q. Soretta (Soretta), under the
supervision of GS Adolf M. Viacrusis (Viacrusis). On 07 October 2010, RO Soretta served
on respondent a Notice of Informal Conference10 (NIC). On 03 December 2010, respondent
received a Preliminary Assessment Notice (PAN) dated 25 November 2010. On 11 January
2011, respondent likewise received a Final Assessment Notice (FAN) dated 07 January 2011,
through Marissa Marquez (Marquez).

On 11 February 2011, respondent filed a protest against the FAN and on 29 August 2012
respondent received a Final Decision on Disputed Assessment (FDDA) dated 17 August
2012, denying its protest. On 04 October 2012, respondent elevated its protest against the
FDDA to petitioner. On 23 April 2013, the BIR served a Preliminary Collection Letter (PCL)
on respondent and a Final Notice Before Seizure (FNBS) on 26 June 2013.

Later, in his Decision dated 07 January 2016, petitioner denied respondent's protest.
Thereafter, respondent appealed petitioner's Decision via a Petition for Review (CTA Case
No. 9258) to this Court on 15 February 2016. On 14 November 2018, the Special First
Division granted the Petition for Review. Hence, this Petition.

ISSUE:

Whether or not the assessment in this case is void due to the absence of Letter of Authority
(LOA).

RULING:
It is well-settled that the absence of an LOA is tantamount to a denial of a taxpayer's right to
due process. Such absence is an incurable defect that renders a tax assessment void ab initio.

The importance of the issuance of an LOA as an element of due process cannot be

overemphasized. In Medicard Philippines, Inc. v. Commissioner of Internal Revenue
(Medicard), the Supreme Court underscored the indispensability of the LOA in an audit
investigation, to wit:

“An 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. An LOA is premised on the fact that
the examination of a taxpayer who has already filed his tax returns is a power that
statutorily belongs only to the CIR himself or his duly authorized representatives.
Section 6 of the NIRC clearly provides as follows:

SEC. 6. Power of the Commissioner to Make Assessments and Prescribe Additional

Requirements for Tax Administration and Enforcement. -(A) Examination of Return
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.”