The Court of Tax Appeals (CTA) has upheld the dismissal of the P18.9 million tax case against Altimax Broadcasting Co., Inc. for failure of the Bureau of Internal Revenue (BIR) to observe due process.

In a 20-page decision promulgated on Oct. 3, 2023 and written by Associate Justice Ma. Belen M. Ringpis-Liban, the CTA -- as a full court (en banc) -- dismissed “for lack of merit” the BIR's petition for review which sought the reversal of the rulings of the CTA’s second division that favored Altimax, a media and telecommunications firm.

“The Court En Banc finds no cogent reason to set aside the Second Division’s assailed decision and resolution.  At the outset, the taxpayer correctly observed that the petition is a mere reiteration of the previous arguments of the CIR (commissioner of internal revenue),” it said. 

The case involved the Warrant of Distraint and/Levy (WDL) that Altimax received on Jan. 31, 2019 from the BIR “for alleged deficiency income tax, VAT (value added tax), and EWT (expanded withholding tax) liabilities, for taxable year 2013, in the total amount of P18,903,909.58.”

After Altimax transferred to a new location in Mandaluyong City on Sept. 1, 2014, the CTA learned that BIR’s Revenue District Office No. 43A-East Pasig issued a Letter of Authority (LOA) dated Sept. 8, 2014 to the old Pasig address of the broadcasting company for the examination of the firm's books of accounts and other accounting records for 2013.

While the BIR conducted an on-site inspection of Altimax's new address, the CTA noted that “the taxpayer claimed that it did not receive any correspondence from the BIR.”

The CTA said the WDL was issued after the BIR served a Preliminary Assessment Notice (PAN) on Oct. 6, 2016 to the old Pasig address of Altimax and, later, a Final Assessment Notice (FAN)/Formal Letter of Demand (FLD) dated Oct. 27, 2016 to the same location.

“Under Section 228 of the 1997 NIRC, as amended, it is explicitly required that the taxpayer be informed in writing of the law and of the facts on which the assessment is made; otherwise, the assessment shall be void,” the CTA stressed. 

“Tax assessments issued in violation of this due process requirement in Section 228 are null and void. While the government has an interest in the swift collection of taxes, the Bureau of Internal Revenue and its officers and agents cannot be overreaching in their efforts, but must perform their duties in accordance with law, with their own rules of procedure, and always with regard to the basic tenets of due process,” it added.

Reviewing the facts of the case, the CTA  cited “the evidence presented confirm the court a quo's findings that due process was not observed when the PAN and FAN were issued to the taxpayer.”

The CTA noted, after the PAN was served, the BIR’s revenue district reported that the Pasig address was no longer occupied.

“In addition, any lingering doubt the BIR may have entertained as to the current address of the taxpayer should have been dispelled when the new ROs (revenue officers) attempted to serve the PAN in person and discovered that the address they relied upon was no longer current. Having admitted that the old address was vacant, that fact should have alerted them that the old address can no longer be used to reach the taxpayer. Service by registered mail to Pasig City cannot reasonably be expected to reach the taxpayer, who, by this time, had already relocated to Mandaluyong City,” the court said. 

“Based on the BIR's own regulations, the taxpayer's location in Mandaluyong City qualifies as a known address, which is defined as ‘a place other than the registered address where business activities of the party are conducted.’ Thus, instead of adhering to the old address in Pasig City, the BIR should have updated its system to properly serve the assessment in Mandaluyong City and comply with Section 228's mandate,” it also said.