Commissioner of Internal Revenue vs. Ritegroup Incorporated

DECISION

CUI-DAVID, J.:

Before the Court En Bane is a Petition for Review1 filed on February 15, 2023 by the Commissioner of Internal Revenue ("Petitioner" or "CIR"), under Section 3(b), Rule 8 ,2 in relation to Section 2(a)(l), Rule 4 3 of the Revised Rules of the Court of

Ta}C Appeals 4

("RRCTA"), assailing the Decision dated 1 Received by the Court on February 21, 2023: En Bane (EB) Docket, pp. 5-11. 2 Sec/ion 3. Who May Appeal; Period 10 File Pel ilion. -

(a) x x

(b) A party adversely affected by a decision or resolution of a Division of the Court on a motion for reconsideration or new trial may appeal to the Court by filing before it a petition for review within fifteen days from receipt of a copy of the questioned decision or resolution. Upon proper motion and the payment of the full amount of the docket and other lawful fees and deposit for costs before the expiration of the reglementary period herein fixed, the Court may grant an additional period not exceeding fifteen days from the expiration of the original period within which to file the petition for review.

3 Sec lion 2. Cases Wilhin !he Jurisdielion o[1he Cour1 En Bane. -The Court en bane shall exercise exclusive appellate jurisdiction to review by appeal the following:

(a) Decisions or resolutions on motions for reconsideration or new trial of the Court in Divisions in the exercise of its exclusive appellate jurisdiction over:

(I) Cases arising from administrative agencies - Bureau of Internal Revenue, Bureau of Customs. Department of Finance, Department ofTrade and Industry, Department of Agriculture. 4 A.M.

o. 05-11-07-CT A. i

CTA EB No. 2729 (CTA Case No. 9708) Commissioner of Internal Revenue v. Ritegroup Incorporated

September 22, 20225 ("assailed Decision") and the Resolution dated January 9, 2023 6 ("assailed Resolution") of the First Division ("Court in Division") in CTA Case No. 9708 entitled Ritegroup Incorporated v. Commissioner of Internal Revenue.

THE PARTIES

Petitioner is the Commissioner of the Bureau of Internal Revenue ("BIR"), the government agency in charge of, among others, the assessment and collection of all national internal revenue taxes, fees, and charges. 7

Respondent Ritegroup

Incorporated is a domestic corporation duly organized under Philippine laws, engaged in the business of supplying medical and laboratory products, with principal office at Unit 2202, Prestige Tower, F. Ortigas Road, Ortigas Center, Pasig City 1605.s

THE FACTS

The undisputed facts, as narrated in the assailed Decision in CTA Case No. 9708, are as follows:9 On September 15,2014, a Letter of Authority (LOA) No. 43A-2014-00000750 was issued by Regional Director Alfredo V. Misajon of RR 7 -Quezon City, authorizing Revenue Officer

(RO) Verjun Solomon Catapia and Group Supervisor (GS)

Roummel Bernas to examine [respondent]'s books of account and other accounting record for the periods January 1, 2013 to December 31, 2013.

Pursuant

to

LOA

No.

43A-2014-00000750, a Preliminary Assessment Notice (PAN) was issued, finding [respondent] liable for deficiency IT, VAT, EWT, and WTC, inclusive of interest and surcharge in the total amount of

Three Million Seven Hundred Seven Thousand Two Hundred

and

Twenty-Nine

Pesos

and

Forty-Eight

Centavos

(P3,707,229.48), broken down as follows: 5 EB Docket, pp. 12-27: penned by Associate Justice Marian Ivy F. Reyes-Fajardo. with Presiding Justice Roman G. Del Rosario and Associate Justice Catherine T. Manahan, concurring. 0 /d., pp. 28·3 I.

7 Par. 2. Joint Stipulation of Facts. Docket- Vol. II. pp. 595-596. 8 Par. 3. Roman Numeral I .. ibid.

9 Supra at note 5.

CTA EB No. 2729 (CTA Case No. 9708) Commissioner of Internal Revenue v. Ritegroup Incorporated

Tax Type

Deficiency IT

Deficiency VAT

Deficiency EWT

Deficiency WTC

Total

Amount Due

1"3,331,015.67 83,469.19 124,976.72 167,767.90 P3, 707,229.48 On January 11, 2017, [petitioner] released the FAN, and FLD with Details of Discrepancy, assessing [respondent] for deficiency IT, VAT, EWT, and WTC inclusive of surcharge, interest and penalty forTY 2013 in the total amount of Three

Million Seven Hundred Forty-Nine Thousand One Hundred

Eight

Pesos

and

Thirteen

Centavos

(1"3,749,108.13), computed as follows:

Tax Type

Deficiency IT

Deficiency VAT

Deficiency EWT

Deficiency WTC

Total

Amount Due

1"3,368,760.89 84,388.96 126,348.68 169,609.60 1"3,749,108.13 On February 10, 2017, [respondent] protested the FAN, and FLD with Details of Discrepancy by way of a request for reinvestigation.

In [petitioner]'s

Letter

dated

March

7, 2017, [respondent] was informed that its request for reinvestigation was given due course, and was directed to submit supporting documents within sixty (60) days from filing of its protest, which was complied with through [respondent]'s Letter dated April 7, 2017, and filed with the BIRon even date.

PROCEEDINGS BEFORE THE COURT IN DIVISION

We likewise quote the Court in Division in its narration of facts that had transpired before it.

On November 3, 2017, [respondent] filed its Original Petition for Review dated October 30, 2017, docketed as CTA Case No. 9708, initially raffled to the Third Division of the Court.

On January 12, 2018, [petitioner] filed an Answer to the Original Petition for Review.

On January 29, 2018, [respondent] filed a Motion for Leave to File Amended Petition for Review, together with the attached Amended Petition for Review of even date. In so moving, [respondent] explained that the Amended Petition for v

CTA EB No. 2729 (CTA Case No. 9708) Commissioner of Internal Revenue v. Ritegroup Incorporated

Review seeks to add matters which transpired after the filing of its Original Petition for Review.

On February 2, 2018, [respondent] filed a Motion to Set for Hearing (Motion for Leave to File Amended Petition for Review), which the Court denied in the Resolution dated February 19, 2018.

In a Resolution dated March 28, 2018, the Court granted [respondent]'s Motion for Leave to File Amended Petition for Review and accordingly admitted the Amended Petition for Review dated January 29, 2018 attached thereto as part of the case record.

On May 4, 2018, [petitioner] filed an Amended Answer to the Amended Petition for Review dated January 29, 2018. In the Pre-Trial Conference held on July 24, 2018, the Court directed the parties to submit their Joint Stipulation of Facts and Issues (JSFI), set the schedule for the presentation of evidence for the parties and the commissioner's hearings for the marking of their respective evidence.

On August 8, 2018, the parties submitted their JSFI. On August 29, 2018, the Court issued a Pre-Trial Order.

In an Order dated September 25, 2018, this case was transferred from the Third Division to the First Division of the Court pursuant to CTA Administrative Circular No. 02- 2018 dated September 18, 2018.

During

trial, [respondent] presented

Mhay

Madlangbayan Agana, Franklin R. Casedo, and Mary Grace L. Castro as its witnesses.

On June 17, 2019, [respondent] filed a Manifestation with Omnibus Motion for (1) Leave to File and Admit the Supplemental Judicial Affidavit of Mary Grace Castro; (2) Issuance of Subpoena Duces Tecum; and (3) Referral to Mediation.

In the Hearing held on July 19, 2019, [respondent]'s request for issuance of subpoena duces tecum and motion to refer the case for mediation were denied; while [respondent]'s witness Mary Grace Castro was allowed to testify on the additional matters stated in her Supplemental Judicial Affidavit.

On July 26, 2019, [respondent] filed its Manifestation with Ad Cautelam Formal Offer of Evidence.

CTA EB No. 2729 (CTA Case No. 9708) Commissioner of Internal Revenue v. Ritegroup Incorporated

Under Resolution dated August 3, 2020, the pieces of evidence offered by [respondent] were admitted, save for Exhibits "P-9" and "P-9-a."

On September 11, 2020, [respondent] filed its Motion for Reconsideration (Re: Resolution dated 03 August 2020), followed by another Motion to Refer Case to Mediation filed on October 29, 2020.

In a Resolution dated December 2, 2020, the Court granted [respondent]'s Motion for Reconsideration (Re: Resolution 03 August 2020). Accordingly, Exhibits "P-9" and "P-9-a" were admitted as [respondent]'s evidence. Its Motion to Refer Case to Mediation was again denied. In the Hearing held on May 27, 2021, upon motion of counsel for [petitioner], the initial presentation of evidence for [petitioner] was reset on September 7, 2021 at 9:00 a.m. Counsel for [petitioner] was also required to submit the Judicial Affidavits of the proposed witnesses until June 7, 2021, lest the presentation of his evidence be waived. In a Resolution dated July 8, 2021, the presentation of [petitioner]'s witnesses was waived because of counsel for [petitioner]'s failure to file the Judicial Affidavits of his witnesses within the period granted.

In a Resolution dated December 16, 2021, the case was submitted for decision taking into account the filing of [respondent]'s Memorandum; and [petitioner]'s failure to [file] Memorandum within the period granted.

On September 22, 2022, the Court in Division ruled m favor of respondent. 1o The dispositive portion reads:

WHEREFORE, the Amended Petition for Review dated January 29, 2018, filed by Ritegroup, Incorporated is GRANTED. Accordingly, the deficiency Income Tax, Value- Added Tax, Expanded Withholding Tax, and Withholding Tax on Compensation assessments, inclusive of surcharge, interest, and penalty for taxable year 2013 in the total amount P3,749,108.13 issued against Ritegroup, Incorporated under the Final Assessment Notices all with Demand No. 043A-B207-13 and Formal Letter of Demand No.

043A-B207-13

dated

January

11, 2017 are CANCELLED.

The Commissioner of Internal Revenue, his [or her] representatives, agents, or other persons acting in his [or her] behalf are ENJOINED from enforcing the collection of deficiency

Income

Tax,

Value-Added

Tax,

Expanded

10 Supra at note 5.

CTA EB No. 2729 (CTA Case No. 9708) Commissioner of Internal Revenue v. Ritegroup Incorporated

Withholding Tax, and Withholding Tax on Compensation assessments, inclusive of surcharge, interest and penalty for taxable year 2013 in the total amount of P3,749,108.13, under the Final Assessment Notices all with Demand No. 043A-B207-13 and Formal Letter of Demand No. 043A- B207 -13 dated January 11, 2017 issued against Ritegroup, Incorporated.

WHEREFORE, [petitioner]'s

Motion

Reconsideration (Decision dated 22 September belatedly filed on October 18, 2022, is DENIED. for 2022),

PROCEEDINGS BEFORE THE COURT EN BANC

On January 31, 2023, petitioner filed his Motion for Extension of Time to File Petition for Review, 14 which was granted in a Minute Resolution dated February 1, 2023.15 On February 15, 2023, petitioner posted his Petition for Review. 16 After being ordered by the Court to attach proof of receipt of the assailed Resolution, 17 petitioner filed his Compliance on March 13, 2023.18 Pursuant to the Minute Resolution dated March 15, 2023, 19 respondent filed its Comment (to Petition for Review dated February 15, 2023) on March 31, 2023.20 11 Division Docket- Vol. III. pp. \396-1398. "Division Docket- Vol. lll. pp. 1401-1406. 13 Supra at note 6.

14 EB Docket. pp. 1-3 15 /d .• p.4 16 Supra at note I.

17 EB Docket, p. 39 18 /d .. pp. 40-41 19 /d .. p. 43.

" /d., pp. H-H ~ CTA EB No. 2729 (CTA Case No. 9708) Commissioner of Internal Revenue v. Ritegroup Incorporated Thus, on April 24, 2023, this Court issued a Resolution submitting the Petition for decision.2l Hence, this Decision.

ISSUES

Petitioner raises the following grounds for his Petition for

Review with the Court En Bane:

I.

THE HONORABLE COURT ERRED IN RULING THAT THE

AMOUNT STATED IN THE FORMAL LETTER OF DEMAND

(FLD) REMAINS INDEFINITE AS IT DID NOT FIX THE TAX

DUE FROM THE PETITIONER THUS RENDERING THE

SUBJECT ASSESSMENT VOID AND OF NO EFFECT. II.

ASSUMING FOR THE SAKE OF ARGUMENT THAT THE

HONORABLE COURT HAS JURISDICTION TO DETERMINE

THE VALIDITY

OF THE ASSESSMENT WHICH

HAS

ALREADY

BECOME

FINAL,

EXECUTORY

AND

DEMANDABLE, THE HONORABLE COURT ERRED IN RULING THAT THE SUBJECT FDDA IS VOID FOR NOT STATING THE FACTS, LAW OR JURISPRUDENCE ON WHICH THE DECISION IS BASED.

PETITIONER'S ARGUMENTS

Petitioner argues that the Court in Division erred in ruling that the amount stated in the FLD remains indefinite. 22 According to petitioner, the case of CIR v. Fitness by Design (Fitness by Design case)23 is inapplicable considering that the phraseology employed by the Final Assessment Notices ("FANs")jFormal Letter of Demand ("FLD") in the Fitness by Design case includes the word "if prior" which is absent in the FANs/FLD in this case. He posits that assuming no due date is stated in the FANs, such a date is easily determinable by counting 30 days from the date of receipt of the FANs/FLD. He further posits that the mere fact that the interest and the total amount due will have to be adjusted if paid after the due date does not amount to a lack of a fixed and determinate amount of tax liability.24 21 !d .. p. 76.

:'~Petition fm RcYiC\\, p. 7.

CTA EB No. 2729 (CTA Case No. 9708) Commissioner of Internal Revenue v. Ritegroup Incorporated

Petitioner faults the Court in Division in denying the Motion for Reconsideration and submits that the Court should relax procedural rules when a rigid application of these rules only hinders substantial justice. According to petitioner, the handling counsel believed in good faith that LBC Express, Inc. was an accredited private courier.25

RESPONDENT'S COUNTER-ARGUMENTS

In its Comment, respondent highlights that the Petition for Review is a mere rehash of petitioner's arguments before the Court in Division. 26 According to respondent, the statement in the FLD "palpably shows that there is no definite amount of tax liability for which petitioner is accountable." It contends that the FANsfFLD merely provided that the tax due, as well as its interest, are still subject to modification depending on the date of payment. 27 Respondent adds that the FANs/FLD failed to indicate a final and definite date within which payment must be made. It further adds that the requirement to indicate a fixed and definite period or a date certain within which a taxpayer must pay the assessed deficiency tax liabilities cannot be presumed and is indispensable to the validity of the assessment.2s Respondent contends that the Court in Division correctly ruled that the Motion for Reconsideration filed by petitioner was belatedly filed. Respondent argues that the belated filing of the motion before the Court in Division is not justified. 29

RULING OF THE COURT EN BANC

The Court En Bane finds the instant Petition for Review outrightly dismissible.

25 /d .. pp. 8-9.

26 Comment. par. 1.

~ 7 !d. p:lr. 5.

28 !d.. par. 8.

29 /d, pars. 12-17.

CTA EB No. 2729 (CTA Case No. 9708) Commissioner of Internal Revenue v. Ritegroup Incorporated

Petitioner's

Motion

for Reconsideration before the Court in Division was filed out of time; hence, the assailed Decision has already become final and executory.

On September 22, 2022, promulgated a Decision granting Review. 30

the Court in Division

respondent's Petition for Under Section 1, Rule 15 of the RRCTA, any aggrieved party may seek a reconsideration of the Decision of the Court by filing a motion for reconsideration within fifteen (15) days from receipt of the assailed decision, viz.: SECTION 1. Who may and when to file motion. - Any aggrieved party may seek a reconsideration or new trial of any decision, resolution, or order of the Court by filing a motion for reconsideration or new trial within fifteen days from the date of receipt of notice of the decision, resolution or order of the Court in question. [Emphasis supplied] Moreover, under Section 3, Rule 13 of the Revised Rules of Court, as amended, 31 pleadings may be filed in court personally, by registered mail, by accredited courier, or by electronic mail or other electronic means as may be authorized by the court, viz.:

SECTION 3. Manner of Filing.- The filing of pleadings and other court submissions shall be made by: ~ 0 Supra at nok 5.

(a) Submitting personally the original thereof, plainly indicated as such, to the court;

(b) Sending them by registered mail;

(c) Sending them by accredited courier; or

(d) Transmitting them by electronic mail or other electronic means as may be authorized by the [c]ourt in places where the court is electronically equipped.

31 2019 Amendments to the 1997 Rules of Civil Procedure. A.M. No. 19-1 0-20-SC. October 15, 2019.

CTA EB No. 2729 (CTA Case No. 9708) Commissioner of Internal Revenue v. Ritegroup Incorporated

In the first case, the clerk of court shall endorse on the pleading the date and hour of filing. In the second and third cases, the date of the mailing of motions, pleadings, [and other court submissions, and] ... , shall be considered as the date of their filing, ... in court ..... [Emphasis supplied] Notably, Administrative Order No. 242-A-2020, which provides guidelines on the accreditation of courier service providers given the 2019 Rules of Civil Procedure, took effect only on October 1, 2020. It must be emphasized that under the old Rules of Court, filing via private couriers, although not prohibited, is nevertheless not recognized. 32 However, the established rule is that the date of delivery of pleadings to a private letter-forwarding agency is not to be considered as the date of filing thereof in court and that in such cases, the date of actual receipt by the court and not the date of delivery to the private carrier is deemed the date of filing of that pleading.33 Records reveal that petitioner received the assailed Decision on September 30, 2022. Accordingly, petitioner had 15 days, or until October 17, 2022 - since the 15th day, October 15, 2022, fell on a Saturday - to file a Motion for Reconsideration.

Petitioner sent his Motion for Reconsideration to the Court in Division via LBC Express, Inc. (LBC), a private courier, on October 17, 2022, but it was only delivered and received by the Court in Division on October 18, 2022.

LBC was not yet an accredited courier service provider when petitioner sent his Motion for Reconsideration. Pursuant to the Office of the Court Administrator (OCA) Circular No. 54- 2023 dated February 13, 2023, LBC was accredited as a Courier Service Provider nationwide for a period of one (1) year, from February 1, 2023 to January 31, 2024. Hence, the rule applicable in the instant case is as follows: the date of receipt by the court, and not the date of delivery to LBC, is deemed the date of filing of the pleading.

32 Bureau of Internal Revenue v. Can-Lim. Jr., G.R. No. 254939 (Notice). March 3. 2021. 33 IP £-Carne l'entures, Inc. v. Beijing Perfect IVorld Software Co .. Ltd .. G.R. No. 220250. September 7. 2020; c:v v Flun::s, t\.;\;l. Nu. RTJ-12-2332. Jum.: 2j, 201-f; Fl!illfJfJille .Yaliunu/ Bunk r. Cunuuissiuner ufllllernaf Revenue, G.R. No. 172458. December 14. 2011: Charter Chemical and Coating Corp. v. Tan. e/ a! .. 606 Phil. 75. 80-81 (2009). G.R. No. 163891. May 21.2009.

CTA EB No. 2729 (CTA Case No. 9708) Commissioner of Internal Revenue v. Ritegroup Incorporated

}(------------------------------------------------------------------------------------------){

Given

the foregoing, petitioner's

Motion

for Reconsideration, due for filing on October 17, 2022, was deemed filed only on October 18, 2022, or one (1) day late. Petitioner attempts to justify his late filing by stating that the Supreme Court has relaxed procedural rules in a long line of cases when a rigid application of the rules only hinders substantial justice. He claims that filing via registered mail "usually takes more than a week to deliver mail," thus, the handling counsel opted to send the Motion for Reconsideration via LBC, believing in good faith that LBC was an accredited private courier.

The Court is not convinced.

It bears reiterating that when petitioner sent the Motion for Reconsideration through LBC, the latter was not yet an accredited courier service provider. Moreover, invoking "the interest of substantial justice" is not a magic wand that will automatically compel this Court to suspend procedural rules. Like all rules, they must be followed except only for the most persuasive reasons when they may be relaxed to relieve a litigant of an injustice not commensurate with the degree of its thoughtlessness in not complying with the procedure prescribed. 34 Petitioner's reasons do not merit the relaxation of procedural rules prayed for. The manner of filing of pleadings and motions before the courts is a matter that lawyers ought to know, and this Court will not sanction such negligence. As stated in Section 1, Rule 8 of the RRCTA, the filing of a Petition for Review before the Court En Bane must be preceded by a timely filing of a motion for reconsideration or new trial with the Division.

Indeed, before the Court En Bane could take cognizance of a case falling under its exclusive appellate jurisdiction, the litigant must sufficiently show that it sought prior reconsideration or moved for a new trial with the concerned CTA division 35 within fifteen ( 15) days from receipt of the assailed decision.

--------\V

34 Lim v. Delos Santos, G.R. No. 172574. July 31. 2009, citing La::aro v. Court of Appeals. G.R. No. 137761. April 6. 2000.

35 Asiatms! ncvt'/O/J/11('/1/ Rank. 111(', \'_ Commissioner o( lntemn! I?('W'IIIU'. G.R. Nos. 201530 and 201 ORO-R 1. April 19. 2017. citing Commissioner a/Customs v. Marina Sales, Inc .. G.R. No. \83868. November 22. 2010.

CTA EB No. 2729 (CTA Case No. 9708) Commissioner of Internal Revenue v. Ritegroup Incorporated

The rule is and has been that the period for filing a motion for reconsideration is non-extendible. 36 If no motion for reconsideration is filed on time, the judgment or final order of the court becomes final and executory.37 In the case of Bureau of Internal Revenue v. TICO Insurance Company, Inc., et al. (TIC0), 38 the Supreme Court ruled that the 15-day period to file a motion for reconsideration is non-extendible. Thus:

... "Under Section 1, Rule 52 of the Rules of Court, a motion for reconsideration of a judgment or final resolution should be filed within 15 days from notice. If no appeal or motion for reconsideration is filed within this period, the judgment or final resolution shall forthwith be entered by the clerk in the book of entries of judgment, as provided under Section 10 of Rule 51. The 15-day reglementary period for filing a motion for reconsideration is non-extendible."

That the motion for reconsideration was filed only one day late is immaterial; the Court has similarly refused to admit motions for reconsideration which were filed late without sufficient justification. Indeed, "[j]ust as a losing party has the right to appeal within the prescribed period, the winning party has the correlative right to enjoy the finality of the case." [Emphasis supplied) The Supreme Court underscored in the TICO case that once a decision attains finality, it becomes the law of the case, irrespective of whether the decision is erroneous or not. No court- not even the Supreme Court- has the power to revise, review, change or alter the same, viz.:

It is settled that the perfection of an appeal in the manner and within the period prescribed by law is not only mandatory but jurisdictional. This means that the failure to interpose a timely appeal deprives the appellate body of any jurisdiction to alter the final judgment, more so to entertain the appeal. Once a decision attains finality, it becomes the law of the case irrespective of whether the decision is erroneous or not, and no court - not even the Supreme Court - has the power to revise, review, change or alter the same. The right to appeal is not a part of due process of law but is a mere statutory privilege to be exercised only in the manner, and in accordance with, the provisions of the law. After a decision is declared final and executory, vested rights are acquired by the winning party.

36 Apex MininJ!. Co. Inc. v. Commissioner o(imernal Revenu~ Courr n/.·ippeols. G.R. No. 122472. October 20. ZUU5.

Ji Far East Bank & Trust Company v. Commissioner of Internal Revenue. G.R. No. 149589 (Resolution). September

15. 2006.

CTA EB No. 2729 (CTA Case No. 9708) Commissioner of Internal Revenue v. Ritegroup Incorporated

In the same vein, "a motion for reconsideration must necessarily be filed within the period to appeal. When filed beyond such period, the motion for reconsideration ipso facto forecloses the right to appeal." [Emphasis supplied] A decision that has acquired finality becomes immutable and unalterable and may no longer be modified in any respect, even if the modification is meant to correct erroneous conclusions of fact or law and whether it was made by the court that rendered it or by the highest court of the land. 39 Thus, We sustain the Court in Division's ruling in the assailed Resolution that the Motion for Reconsideration was belatedly filed on October 18, 2022, leading to the finality of the assailed Decision.

Having attained finality, the instant case is already beyond the Court En Bane's power to amend or revoke. The Court in Division did not err in ruling that the FANs and FLD are void for failure to indicate a definite due date.

Even if the Court were to disregard petitioner's one-day delay and the finality of the September 22, 2022 Decision, the instant Petition for Review would still be denied due to the invalidity of the assessments.

The Issuance of a

valid formal assessment is a substantive prerequisite for the collection of taxes. 40 An assessment not only includes a computation of tax liabilities; it also includes a demand for payment within a prescribed period. 41 In Commissioner of Internal Revenue v. Pascor Realty and Development Corporation et al., 42 the Supreme Court held: An assessment contains not only a computation of tax liabilities, but also a demand for payment within a prescribed period. It also signals the time when penalties and interests begin to accrue against the taxpayer. To enable the taxpayer to determine his remedies thereon, due process 39 Roberto A. Torres. eta/ .. v. Antonia F. Aruef!o. G.R. No. 201271. September 20. 2017. "Comnuss10ner ojfnternal Revenue v. MengwiO. u.K. No. 167560. September 17. 200g. 41 Tupa:: v. U!ep, G.R. No. 127777, October l. 1999. "G.R.I\o. 128315. June 29. 1999.

·--···-·-----------------

CTA EB No. 2729 (CTA Case No. 9708) Commissioner of Internal Revenue v. Ritegroup Incorporated requires that it must be served on and received by the taxpayer. ... [Emphasis and underscoring supplied.] Further, the Supreme Court, in the Fitness by Design case,43 is unambiguous:

A final assessment notice provides for the amount of tax due with a demand for payment . ... The issuance of a valid formal assessment is a substantive prerequisite for collection of taxes. Neither the National Internal Revenue Code nor the revenue regulations provide for a "specific definition or form of an assessment." However, the National Internal Revenue Code defines its explicit functions and effects. An assessment does not only include a computation of tax liabilities; it also includes a demand for payment within a period prescribed. Its main purpose is to determine the amount that a taxpayer is liable to pay.

A final assessment is a notice "to the effect that the amount therein stated is due as tax and a demand for payment thereof." This demand for payment signals the time "when penalties and interests begin to accrue against the taxpayer and enabling the latter to determine his remedies[.]" Thus, it must be "sent to and received by the taxpayer, and must demand payment of the taxes described therein within a specific period."

The disputed Final Assessment Notice is not a valid assessment.

First, it lacks the definite amount of tax liability for which respondent is accountable. It does not purport to be a demand for payment of tax due, which a final assessment notice should supposedly be. An assessment, in the context of the National Internal Revenue Code, is a "written notice and demand made by the [Bureau of Internal Revenue] on the taxpayer for the settlement of a due tax liability that is there definitely set and fixed." Although the disputed notice provides for the computations of respondent's tax liability, the amount remains indefinite. It only provides that the tax due is still subject to modification, depending on the date of payment. Thus:

43 Supra at note 23.

CTA EB No. 2729 (CTA Case No. 9708) Commissioner of Internal Revenue v. Ritegroup Incorporated

The complete details covenng the aforementioned discrepancies established during the investigation of this case are shown in the accompanying Annex 1 of this Notice. The 50% surcharge and 20% interest have been imposed pursuant to Sections 248 and 249 (B) of the [National Internal Revenue Code], as amended.

Please note, however, that the interest and the total amount due will have to be adjusted if prior or beyond April 15, 2004.

Contrary to petitioner's view, April 15, 2004 was the reckoning date of accrual of penalties and surcharges and not the due date for payment of tax liabilities. The total amount depended upon when respondent decides to pay. The notice, therefore, did not contain a definite and actual demand to pay. [Emphasis and underscoring supplied; citations omitted] Following the Fitness by Design case, which the Court in Division cited in the assailed Decision, the Supreme Court has consistently nullified an assessment that does not contain a definite due date, such as in Republic v. First Gas Power Corp.44 and Commissioner of Internal Revenue v. T Shuttle Services, Inc. 45 Reference to the due date in an assessment is found in Section 249(C) of the NIRC of 1997, as amended. We quote: Section 249- Interest.

(C) Delinquency Interest. - In case of failure to pay:

(3) A deficiency tax, or any surcharge or interest thereon on the due date appearing in the notice and demand of the Commissioner, there shall be assessed and collected on the unpaid amount, interest at the rate prescribed in Subsection (A) hereof until the amount is fully paid, which interest shall form part of the tax.

[Emphasis and

underscoring supplied.]

Accordingly, indicating the due date in an assessment is directly related to the requirement of showing the definite amount that is assessed. The delinquency interest may not be properly computed if a due date does not appear in the "G.R. No. 214933. February 15.2022.

"G.R. No. 240729 (Resolution). August 24, 2020.

CTA EB No. 2729 (CTA Case No. 9708) Commissioner of Internal Revenue v. Ritegroup Incorporated

FANs/FLD, as in this case. It bears stressing that an assessment, in the context of the NIRC, is a “written notice and demand made by the BIR on the taxpayer for the settlement of a due tax liability that is there definitely set and fixed.”46 Failing to indicate the due date negates petitioner’s demand for payment.*’ In the instant case, the spaces for the due date in the FANs, all with Demand No. 043A-B207-13, were left blank as shown below:48 hs zones n bs aR BE sola te wets - rn ve \ ray Ere AAGEAI SER bea Pa AMALAAT as pty PECSEG FERRIS Se KAWANIHAN NG ACATAS INTERNAS ° . . . wo see 77

1 708 ASSESSMENT HORCE |

[te SRYER ENTE TON ON NUMBER,

~~ 943A-B207-13 |

CATE Sys0 ‘Petiod Coveted

P3ILEA OGLE barvary 11. 2017 243 ” Y Far dere Of sns Ur res PHC SORTA TSUT TAL AR Te sd SEIN Suk Glas wtb oF

DETAILS OF ASSESSMENT

PARIKULARS

2, 982,657.08.

3 363,760.85 ,

IMPORTANT =~

iF YOU DISAGREE WITH TiS ASSCSSMENT, FLE YOUR PROTES] IN RIE NS (WITH FACTUAL AND LEAGAL BSSES) WIW THE ‘COMAIISSIONER OF INTERNAL REVENUE CR WITH THE AUTHORIZEC BIA OF FICIAL ATHIN THIRTY 120) DAYS FROM RLGLIP] HEREOF, QTHERASE THE SAME BECOMES FINAL AND UNAPPEA. ARLE PURSJANT TO THE PERTINENT PRCVISIONS OF THE NATIONAL INTERNAL REVENUE CCDZ OF 1937, AS! iAMENDED FAURE TO PAY THIS ASSESSMENT ON TIME WILL FURTHER SUQUECT THE TOTAL AMOUNT DUE TO ADCITICNAL PENALTICS FOR LATs.

iPAYMENT._ ee oe Stn aR aa aOR ——— — oe I eo i CAESARA OULAY |

a COMMISIONER CF INTCRNAL RLVENUE :

REL IMMIEND WS ABER OVAL LEER LED !

mo) iter CAD, 2 Ph a ANALYS § CHU ALFREDO V,SISAION | OC Cre Atiguyrey Dae i9 (fo swoon! |

Ce — \

a rr

M0" 168%

inet FART BGS “Pe ate soe attached Formal t viter of Demand for tha ‘ectua! acd legal bases of assessment \iq " You may ive your protest ia writing to fae Reg.caal O.rector's Office, 517 wt Floor, BR Blog. Quez07 Ave. cor. Sci Saritiaga, Quezon City ya pal 7 est * Preose atiacn pnoto copy of this notices te your crotes! ferter. rae met . | ayo r ate oe AUS at, Gos ms reo) © Adamson et al. v. Court of Appeals. G.R. Nos. 120935 & 124557, May 21. 2009, 7 Supra at note 23.

8 Division Docket, Vol. | — pp. 67-70.

DECISION ;

CTA EB No. 2729 (CTA Case No. 9708} Commissioner of Internal Revenue v. Ritegroup Incorporated

Page 17 of 22

x BR SEF. A. CSG PLEAS

FORY NO PASAWSRSN NG PAN ANAAP

DO ISD SEDRYroy 1604 KAWAMHAN NG REHTAS INTERHAS

1 708 ASSESSMENT NOTICE

i ~ srmeeemerme om

DATE ISSUED Partod Cyvered :

SDENTIAICA? ON NUVAER 239 ALK Jaweary 11, 2017 i013 ;

ee nna ——— Dn ene ooo

* BETEPLYES

T RITEGROUP INC, ; sOCRESS Une da)2 Presega “nee F Cesjan ds Ro Sav Avene, Gogas Gertie 1S Perey Cty i PLEASE HE NSFORVLS TRIAT YOLRINTERYAL SEVEN FE TAK CAB. * HAS BSH ASSESSET AST NAN: LE) sree suc APRA" LL S] ATLSTPE AQT

{__Te] NORD USRFEE*

~" DETARSOFASSESSNENT

CHECK KINO OF TAX PARTICULARS | AMOUNT

Pa ete Or L_Flesvacans 0 Tas tu 12 ay] wWibaons — | ; e 30% STALGS © ALO NURI RERSE 2545;

FWT

| ee [Po leancresncee ~/ lt) FERTENTAG? PUMA CL LANTCUS 1 EF towns ‘ iorwets Sregratie [TOTAL Intenet (0 26 14 10 2.46.97) Tovey pase Feaste a

N

SLES? PRESENT TAS SOTILE TC THE NESRLL? SEYONUT OSTRITT CRF CE DR SHER DULY CT EGUANDE Of PAYMENT FORM (SIR FORM NO. OSJR) ANT PAY TEE TOTEL AMOUNT ears le ON DR EAFORE ATORED 727 BANE WHERE YCU ENROLLED CRIG -ECHIEF ASSESSMENT CS'CN ST PLCOs Rig? QUE

IMPQRTAN™ a

IF YOU DISAGREE WAH THIS ASSESSMENT, FE YOUR PROTEST IN WRITING (WITH FACTUAL AND LEAGAL BASES) With TE COMMISSIONER GF INTERNAL REVENUE OR WITH THE AUTHORIZED Bik OF FICIAL WITRIN TH RTY (30) DAYS FROM RECEIPT HEREOF. OTHERWISE, TEE SANE BECOMES FINAL AND UNAPPEALABLE PURSUANT TO THE PERTINENT PROVISIONS OF THE NATIONAL INTERNAL REVENUE CODE OF $567, 4S. AVENOED, . FAURE TQ PAY THI ASSESSMENT ON TiME WALL FURTHER SUBJECT THE TOTAL AMQUAT OUE TO AODITIGNAL PEHALTIES FOR LATE PAYMENT, a.

, a CLESERRDUAY SO”

COMMISIONER CF INTERNAL REVENUE

ZECIUNEN ING AERC YA AP PSOVED

~ 14 f : Ab;

ANALYNS CHU REDE V, MN Chef dexessreg: Lv g 01 7 Raiorghies i?

oR

TDPOTP RUS OY SEC

C298

we INO SR ease see attached Formed Letier of Dernand for tie factus! and faqel bases of assessment * You may file your protest in weiting to thy Regional Ovector’s Office, 5th Flocr, BIR Bkig., Quezon Ave. cor. Sc£ Santisgo, Quezon City * Please attach photo cocy of this nouses to your protest letter.

pre ete ous Whew ewe ee be OO

CTA EB No. 2729 (CTA Case No. 9708) Commissioner of Internal Revenue v. Ritegroup Incorporated

REP LB CO NG PIAS

TAA MARAN NS PSSA

KAWANBIAN NG RENTAS INTERNAS

1708

RITEGROUP INC

wri 2208 Frestee Town F Otgare Cd see friave Ungss Cares 1655 Pag Sy z EINFORVED “raT YOUR TERNAL REVENUE TAX LCG LITY HAS SESK ASSESSED AEGIO ON iG) THE RETUSH PLES (J) ae en FReaunr CT) APTERALC™ 3} ASTER PAE.AUOT (TE SoReTOsnF ves _. ____ DETALS OF ASSESEIACNT . —

CHEGH KINO OF TAX PARTICULARS

’ JE atone Tier GENS : { x ee TKR AS SING [Eres STAMAS

Cid

~ IF

2.00 S.REMARGE ies) Terence cen: * Tes "AR" . i Pe ceculancees eS i ajor RE Sosyems2 TOTAL

SUEKT FORM BR EOS

4 MERE 1O LENE Ot 10 THe one ASSESSVELT OV S.O%. 21 LOTR RES QUE oe TWPORTANT HO IF YOU OSAGREE WITH TH:'S ASSESSMENT, FILE YOUR PROTEST 1H WRITING (W/TH FACTUAL ANO LLAGAL BASES) WiIH THE! COMMISSIONER OF INTERNAL REWC NUE OR VATI THE AUTHORIZED BIR OFFICIAL WITH. THIRTY (39) DAYS FROM RECEIPT HEREOF, OTHERWISE, THE! SAME EECOMES FINAL AND UNAPPEALABLE PURSUANT TO THE PERT HENT PROVISIONS OF THE NATIONAL INTERNAL REVENUL COUE OF 1667, a AWENDED.

Ti gSeS1 [TIE M4 to 2.10.17) Cote ise Fenaty FAILURE 1O PAY TRIS ASSESSMENT ON THE WAL FURTHER SUBJECT THE TOTAL AMOUNT OUE TO ADDITONAL PENALTIES FOR ve PAWENI._ _—— - CAESAR R. DULAY ' COMAUSIONER OF INTERNAL REVENUE '

PASO CMMEND NG APSROVAL AP PSO ED

.

| "ea nF ORES Le oer

WAT

URW H 34)

*Plasse sec attached Farmal Letter of Demand for Ure factual and legal bases of assessment.

* You muy File your protest in wrting to the Regtorat Ciractor’s Office. th Floor, BAR Bidg , Quezon Ave.. cor. Sct. Sentiage, Queren City * Please altach photo copy cf thes nousss fo your promest Aner.

io) > "ho Wwe ae tS CTA EB No. 2729 (CTA Case No. 9708) 4 Commissioner of Internal Revenue v. Ritegroup Incorporate re eR OE RS x xX ee TOSM AD aaah ASN WEP TAM or wo SE ASED FEBRLAKY. 1104 KAWANIHAN NS RENTAS 'NTERNAS “a Cuziza Gea OE 1708 denenstis — O43AB 207-13 bpiie= DENT? CATICN NINE ES ~ | ves Deniiews 233 054-096 092 january 4 > g -

— "TRPATER

RITEGROUP INS, sDO0RESS lS Zot Prestge Tow = Ofger cr Pa Sor trises Otess Caver 1605 Pate Sy ___RABASE BE NECSMED THAT YOUR NTERNA. REVENUE “22, LIB LITY HAL SEEN ALSTSSEO RSET On: 1 da) THEREILRN FLED . [1D AFTER ORCA. OT Ce sRTEReUTT | TYE sFres eres

{Tap aS ROURS PD

ee, DETANS OF ASSESSMENT

CHECK KIND OF TAX ~ PARTICULARS

CE arma iL Le}erten oat | cen a avs Jo)sec staves (ce os PTAA OME Po 05634, 7G 2 #R GjRO~aRGE GEM) !

4 (Taprvvce acncrn scree 51 (0.16.48 10 219 171 64,574.31 | } | = LS) PoRcentace | beagcc neo Scireaive Peay , mm JEL aes [. ore

a. = PLEAGF PRISERT THiS nT CE ra 7 PAL GT Re CAN FOTST er eee |

SidanCS GF PAYMENT FIRY BR SCAM NC

AQURLCIIED Bah AHERE “SU ENROLLED OR OT

THE “27a AWOL

SESREN" DY SGN,

HAP ORT ANT

IF YCU DISAGREE WITH TeHIS ASSCSSMENT, FILE YOUR PROTEST #h WRITING (WITH FACTUAL AND LEAGAL BASCS) WITH TRE} COWMA'SSIONER OF INTERNAL REVEAUE OR WITH THE AUTHOR GED BIR OFF.CiAL WITHIN THIRTY (20) DAYS FROM RECEIPT REREOF. OTHERWISE TRE SAME BECOMES FINAL AND UNAPPEALABEE PURSUANT TO TKE PERTINENT PROVISIONS SF THE HATONAL INTERNAL REVENUE COOF CF i497, * AMENDED.

FAILURE 10 PAY THIS ASSESSMENT OW TIME WILL FURTHER SUBJECT TRE TOTAL AMOUNT DUE TO ACD TIONAL PENALT.ES FOR Le!

PAYMENT. ~ —_ oe Sf CAESAR 8. DULAY

COMMISION ER OF INTERNAL REVENUE

RESOVMENCING 22 PROVEL SPPROVET

>» ¢ <a Cae! ane AHALYNS.CHU __ ALFREDO, vishaon:

OC-Ore! Asonyrey. DiZg weve oess oe ame —— ~ — rate OAS ap dee

BITES

av RVO 27-} Horse be attsched Formal Lette: af Dernand for the factual ard {agai bases of oxssessmurt * You may file your protest ki writing fo the Regional Director's Office, tn Floor, BIR Rhig.. Quezon Ave, cor. Sct. Santiagn, Qveron City * Pose ettach photo copy of Wis noliges to your protest ieitey.

Ue ee

CTA EB No. 2729 (CTA Case No. 9708) Commissioner oflnternal Revenue v. Ritegroup Incorporated

Petitioner's argument that the due date is easily determinable by counting 30 days from the date of receipt of the FANs/FLD finds no basis in law and regulations. The due date cannot be assumed or surmised and is expressly required to be indicated in the FANs/FLD.

Thus, We rule that the assessments subject of this case are void for failure to indicate the due date for payment. The issue on the violation of respondent's right to due process is inextricably linked to the validity of the assessment. It is primal that the BIR's right to collect deficiency taxes must flow from a valid assessment. 49 The law imposes a substantive, not merely a formal, requirement.so It is axiomatic that void assessments bear no valid fruit.st

WHEREFORE, in light of the foregoing, the instant Petition for Review is DISMISSED for lack of jurisdiction. Accordingly, the assailed Decision dated September 22, 2022, and the Resolution dated January 9, 2023, in CTA Case No. 9708 are AFFIRMED.

Associate Justice

WE CONCUR:

0

Presiding Justice

49 Prime Steel Mi!/, Inc. v. Commissioner of Internal Revenue, G.R. I'<o. 249153. September 12.2022. 5° Commissioner of Internal Revenue v. Pifipinas Shell Petroleum Corp .. G.R. Nos. 197945 and 204119, Julv 9. 2018 citing Commissioner of Internal Revenue v. Azucena T. Reyes. G.R. Nos. 159694 and 163581. January 27,2006. ' 1 C'ommi_\·sioncr ofln!cmal Rct·cmlc 1' . • l::ucena T Reyes, G.R. Nos. 15969-1 and ccccccc 163581, January 27, 2006; Commissioner of Internal Revenue v .. Herro Star Superama. Inc .. Ci.R. No. 185371. Decc:rnber 8, 2010: Commissioner of Internal Revenue v. BASF Coating..,.. Inks ?hils .. Inc .. G.R. No. 198677. November 26. 2014: Samar-/ Electric Cooperative v. Commissioner of Internal Revenue. G.R. No. 193100. December I 0, 2014.

CTA EB No. 2729 (CTA Case No. 9708) Commissioner of Internal Revenue v. Ritegroup Incorporated

)(------------------------------------------------------------------------------------------)( ~. ~ ~"'""' MA. BELEN M. RINGPIS-LIBAN

Associate Justice

~·7-~ CATHERINE T. MANAHAN

Associate Justice

~ . BACORRO-VILLENA

Justice

~ ~ f.~-fa;~ MARIAN IVY ~. REY&--FAJARDO

Associate Justice

~v.~ CORi\¢l)N G. FERRW-FLO~S

Associate Justice

HENRY f.P;,_NGELES

Associate Justice

CTA EB No. 2729 (CTA Case No. 9708) Commissioner of Internal Revenue v. Ritegroup Incorporated

){------------------------------------------------------------------------------------------){

CERTIFICATION

Pursuant to Article VIII, Section 13 of the Constitution, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court.

Presiding Justice