The Court of Tax Appeals (CTA) has denied the petition filed by Golden Donuts Inc., the exclusive franchiser and license grantee of Dunkin' Donuts, against the Bureau of Internal Revenue (BIR).

Golden Donuts Inc. filed a Petition for Review with Urgent Motion for the Issuance of a Temporary Restraining Order (TRO, which was treated as a Petition for Certiorari.

In it, the petitioner sought to nullify the Letter of Authority (LOA) No. LOA-211-2017-00000037/eLA201500081454 dated April 27, 2017 authorizing the examination of petitioner's books of accounts for all internal revenue taxes including Documentary Stamp Tax (DST) and other taxes for the period of Jan. 1, 2007 to Dec. 31, 2007 as well as the Subpoena Duces Tecum with No. M-2017-0021 dated Aug. 23, 2017, both issued by the BIR.

Golden Donuts Inc. insisted that the inspection of books of accounts and other related accounting records of a taxpayer shall be made only once in a year. In its case, both the LOA 2008 and the Run After Tax Evader (RATE) LOA pertain to the same taxable year, so the subsequent RATE LOA is already in violation of Section 235.

The petitioner explained that when the BIR made an initial assessment based on their books of accounts and it paid the resulting deficiency taxes, BIR was already without authority to issue another assessment for that same year.

On the other hand, the BIR remained firm on its findings that Golden Donuts Inc. "made a 56 percent underdeclaration of its sales." The BIR also said that the underdeclaration already constituted prima facie fraud under Section 248 of the National Internal Revenue Code (NIRC) of 1997, as amended. So despite the petitioner's claims, it is not precluded from examining the books of Golden Donuts for 2007.

After reviewing both sides, the CTA sided with the BIR. "Based on the records of the case, respondent [BIR] anchored the issuance of the RATE LOA for 2007 on the finding of prima facie evidence of fraud," the decision said. "This alone is sufficient reason for the court to deny petitioner's claim that respondent committed grave abuse of discretion in issuing another LOA for the same year."

Golden Donuts Inc. accused the BIR of grave abuse of discretion amounting to lack or excess of jurisdiction, but the CTA said that "the party alleging the same should be able to clearly establish that the agency blatantly abused its discretion such that it was deprived of its authority to dispense justice."

"In herein petition, we do not find this to be the case," it said.

Associate Justice Jean Marie A. Bacorro-Villena wrote the 27-page decision with the concurrence of Associate Justice Lanee S. Cuid David.