SC to BIR: Do not deprive taxpayers’ right to due process

Published July 2, 2019, 4:42 PM

by Martin Sadongdong & Antonio Colina

By Rey Panaligan 

The Supreme Court (SC) has cautioned the Bureau of Internal Revenue (BIR) against violations of taxpayers’ right to due process in its efforts to collect taxes.


In a recent resolution, the SC denied the petition filed by the BIR which challenged the Court of Tax Appeals’ (CTA) ruling that declared cancelled and withdrawn the April 12, 2013 final assessment notice (FAN) issued by the tax agency against Roca Security and Investigation Agency, Inc.

Questioned by the BIR before the SC was CTA’s en banc (full court) March 7, 2018 ruling which states:

“Wherefore, the Petition for Review dated Oct. 19, 2016 filed by Roca Security and Investigation Agency, Inc. is hereby granted. The Decision dated July 21, 2016 and the Resolution dated Sept. 16, 2016, both rendered by the Court in Division are reversed and set aside.

“Consequently, the assessment in the Formal Letter of Demand and Assessment Notices for deficiency income tax (IT) and improperly accumulated earnings tax (IAET) for the year 2009 is cancelled and withdrawn. So ordered.”

In denying BIR’s petition, the SC said that the CTA en banc did not commit any error in its ruling.

“As correctly held by the CTA en banc, the Final Assessment Notice (FAN) issued by the Commissioner of Internal Revenue (CIR) is void as it violates respondent’s (Roca Security) right to due process,” the SC said.

It explained that “Section 2282 of the National Internal Revenue Code (NIRC) gives the taxpayer being assessed a period of sixty (60) days from the date of filing a protest assailing the Preliminary Assessment Notice (PAN) within which to submit relevant supporting documents.”

The SC also said:

“In this case, the respondent filed its protest on April 18, 2013. It had sixty (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 by respondent only on April 19, 2013 violated the latter’s right to due process as the latter had only one (1) day (instead of 60 days) to present its relevant documents in support of its protest.

“Besides, the 60-day period to protest alluded 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 the CIR to have violated the statutory guidelines in terms of affording respondent taxpayer the right to due process.”

The SC resolution did not contain the details of Roca Security’s alleged tax deficiencies for IT and IAET.