The Court of Tax Appeals’ (CTA) Second Division invalidated the assessments issued against Dionisia Pacquiao that she did not pay income and value-added tax (VAT) totaling P1.39 million in 2010.
In a 26-page decision, the tax court granted Pacquiao’s petition that the Final Decision on Disputed Assessment issued by Thelma Milabao, then the acting regional director of the Bureau of Internal Revenue No. 18 be declared void.
“After a careful evaluation of the parties’ arguments and evidence presented vis-à-vis the applicable laws, jurisprudence and regulations, the Court resolves to invalidate the assessment,” the court said.
“Evidently, the PAN (Preliminary Assessment Notice) was not properly served. Let it be stressed that the law, regulation and jurisprudence require the service of the PAN upon the taxpayer or at least, upon its agent, and not upon any other person. To consider the receipt of the PAN by another person as deemed receipt by the taxpayer itself, despite the lack of prior verification of the former’s authority or agency, will put taxpayers in a disadvantageous position and at the mercy of revenue officers,” it said.
Under the National Internal Revenue Code (NIRC), a PAN showing the basis of the proposed assessment must be issued to the taxpayer if sufficient basis to assess him or her for any deficiency tax or taxes is found.
A formal letter of demand and assessment notice will be issued if the taxpayer fails to respond within 15 days from receipt of the PAN.
Based on the court’s ruling, Milabao issued two PANs on September 16, 2013 against Pacquiao. Milabao later issued FLDs on October 16, 2013, assessing Pacquiao with supposed deficiency income tax and value-added tax and for compromise penalties for 2010.
The grand total sum due and collectible in the assessments was P1,394,513.57.
Pacquiao received the FLD on November 5, 2013 and filed a protest.
In March 2015, Pacquiao received a letter to which the Final Decision on Disputed Assessment was attached. She filed a petition for review which the CTA, insisting that she did not receive the PAN.
Associate Justice Caesar Casanova penned the decision which was concurred in by Associate Justice Juanito Castañeda, who leads the court’s Second Division, and by Associate Justice Catherine Manahan.