2. Hotel Specialist (Tagaytay), Inc. vs. CIR (CTA Case no. 9349, Jan.

18, 2019)

Facts:

Respondent issued Letter of Authority, authorizing the concerned revenue officers to examine
petitioner's books of accounts and other accounting records for all internal revenue taxes for the
period January 1, 2009 to December 31, 2009. Petitioner received the Preliminary Assessment
Notice with Details of Discrepancies for alleged deficiency income tax, VAT, WTC, and EWT,
including interest and compromise penalty, for taxable year 2009. Petitioner filed its Protest
questioning the PAN's validity for lack of factual and legal bases. Petitioner received the Formal
Letter of Demand with Details of Discrepancies and Assessment Notices for alleged deficiency
income tax, VAT, WTC, and EWT, inclusive of interest and compromise penalty, for taxable
year 2009. Petitioner filed its Protest on the FLD/FAN, on the ground that the FAN lacks factual
and legal bases. Petitioner received the FDDA issued by respondent finding it liable for
deficiency income tax, VAT, WTC, and EWT, inclusive of interest and compromise penalty, in
the aggregate amount of P30,845,693. 98 for taxable year 2009.

Issue:

Whether or not, petitioner is liable for deficiency income tax, VAT, EWT and WTC, including
interest and penalties for taxable year 2009.

Ruling:

Pursuant to Section 228 of the 1997 NIRC, as amended, petitioner has thirty (30) days from
receipt of the FLD/FAN within which to file its administrative protest and another thirty (30) days
from receipt of respondent's decision, or from the lapse of one hundred eighty (180)-day period
from submission of documents within which to file its Petition for Review with the Court of Tax
Appeals.
The records of the case show that petitioner received the FLD/FAN for alleged deficiency
income tax, VAT, WTC, and EWT, inclusive of interest and compromise penalty, for taxable
year 2009 on February 26, 2015. Hence, petitioner had 30 days from its receipt of the FLD/FAN
on February 26, 2015 or until March 30, 2015 within which to file its administrative protest.
Accordingly, petitioner's protest filed on March 30, 2015 was within the said prescriptive period.
Petitioner received the FDDA dated April 12, 2016 for alleged deficiency income tax, VAT,
WTC, and EWT, inclusive of interest and compromise penalty, in the aggregate amount of
P30,845,693. 98 for taxable year 2009. Counting 30 days from April 14, 2016, petitioner had
until May 16, 201640 within which to file its Petition for Review before the Court. Consequently,
the Petition for Review filed on May 16, 2016 was filed within the 30-day prescriptive period.

This Court agrees with the petitioner that the basic deficiency EWT and WTC assessments
must be cancelled in view of the payment/settlement already made. However, we find that
petitioner is not totally relieved from its liability as it is still required to pay the increments
thereon, such as the 25% surcharge and the 20% delinquency interest imposed under Sections
248(A)(3) and 249(C) of the 1997 NIRC. The law is clear. The imposition of surcharge is
mandatory, the intention being to discourage delay in the payment of taxes due to the State.
The delay in the payment of the deficiency tax within the time prescribed for its payment in the
notice of assessment justifies the imposition of a 25°/o surcharge, pursuant to Section 248(A)(3)
of the 1997 NIRC, as amended.