G.R. No. 238352. September 12, 2018
SECOND DIVISION: [G.R. No. 238352, September 12, 2018] COMMISSIONER OF INTERNAL REVENUE v. COMPOSITE MATERIALS, INC.
After reviewing the Petition and its annexes, including the Decision[1] dated August 15, 2017 and Resolution[2] dated March 21, 2018 of the Court of Tax Appeals (CTA) en banc in CTA EB No. 1314, the Court resolves to DENY the same for petitioner Commissioner of Internal Revenue's (CIR) failure to sufficiently show that the CTA en banc committed any reversible error in the assailed Decision and Resolution as to warrant the exercise of this Court's discretionary appellate jurisdiction.
It was error for the CIR to assert that respondent Composite Materials, Inc. (CMI)'s petition for review with the CTA en bane should be dismissed, following the case of Asiatrust Development Bank, Inc. v. Commissioner of Internal Revenue,[3] (Asiatrust) where the Court emphasized the requirement of filing a motion for reconsideration or new trial with the CTA Division before filing a petition for review with the CTA en banc, as provided under Section 1, Rule 8 of the Revised Rules of the CTA (RRCTA).
The Court agrees with the CTA en banc that CMI is not required to file a motion for reconsideration of the CTA Division's May 11, 2015 Amended Decision.[4] In stark contrast with Asiatrust, the May 11, 2015 Amended Decision, while denominated as such, was a mere resolution of CMI's MR because, apart from modifying CMI's tax liabilities on account of its partial payment, the Amended Decision simply affirmed the findings and conclusions of the CTA Division in its October 10, 2014 Decision. Moreover, to require CMI to file another motion for reconsideration would be violative of the rule against the filing of a second motion for reconsideration under Section 7, Rule 15 of the RRCTA.
As regards the issue on Revenue Officer Mary Anne P. Cruz's (RO Cruz) authority to examine CMI's records, the provisions of the National
Internal Revenue Code of 1997, as amended, are clear that a Revenue Officer may only examine the taxpayer's books pursuant to a Letter of Authority (LOA) issued by the Regional Director.[5] This was reiterated by the Court in Medicard Philippines, Inc. v. Commissioner of Internal Revenue. [6] ruling that in the absence of an LOA, the assessment or examination is a nullity.
Here, the CTA en banc found that the LOA issued in relation to the examination of CMI's book of accounts does not specifically mention the name of RO Cruz. Thus, the examination conducted by RO Cruz and the assessment issued against CMI was correctly declared null and void.
Moreover, the Court agrees with the CTA en banc that the Referral Memorandum issued by a Revenue District Officer directing RO Cruz to continue with the examination of CMI's records is not equivalent to an LOA nor does it cure RO Cruz's lack of authority. To be sure, Revenue Memorandum Order No. 43-90,[7] which specified the guidelines in the issuance of LOAs states that any reassignment or transfer of cases to another RO or revalidation of an expired LOA shall require the issuance of a new LOA.
Verily, the Court finds no reason to deviate from the CTA en bane's findings. The assailed Decision and Resolution of the CTA en bane are hereby AFFIRMED.
SO ORDERED (CARPIO, J.,on wellness leave; PERLAS-BERNABE, J., designated Acting Chairperson per S.O. No. 2592 dated September 5, 2018; REYES, J., JR., J.,designated Additional Member per S.O. No. 2587 dated August 28, 2018)
[1] Rollo, pp. 46-59. Penned by Associate Justice Cielito N. Mindaro-Grulla, with Presiding Justice Roman G. Del Rosario (with Concurring Opinion, id. at 60-71), Associate Justices Juanito C. Castaneda, Jr., Lovell R. Bautista (with Concurring Opinion, id. at 72-76), Erlinda P. Uy, Esperanza R. Fabon-Victorino, and Catherine T. Manahan concurring; Associate Justices Caesar A. Casanova (with Dissenting Opinion, id. at 77-80) and Ma. Belen M. Ringpis-Liban (with Dissenting Opinion, id. at 81- 88) dissenting.
[2] Id. at 90-92.
[3] G.R. Nos. 201530 & 201680-81, April 19, 2017, 823 SCRA 648, 664-665.
[4] Rollo, pp. 94-107. Rendered by the CTA Third Division in CTA Case No. 8306 and penned by Associate Justice Ma. Belen M. Ringpis-Liban, with Associate Justices Lovell R. Bautista and Esperanza R. Fabon-Victorino concurring.
[5] Sections 10 and 13, NATIONAL INTERNAL REVENUE CODE, as amended.
[6] G.R. No. 222743, April 5, 2017, 822 SCRA 444, 461.
[7] Revenue Memorandum Order No. 43-90 dated September 20, 1990, amending Revenue Memorandum Order No. 37-90 prescribing revised policy guidelines for Examination of Returns and Issuance of Letters of Authority to Audit.
After reviewing the Petition and its annexes, including the Decision[1] dated August 15, 2017 and Resolution[2] dated March 21, 2018 of the Court of Tax Appeals (CTA) en banc in CTA EB No. 1314, the Court resolves to DENY the same for petitioner Commissioner of Internal Revenue's (CIR) failure to sufficiently show that the CTA en banc committed any reversible error in the assailed Decision and Resolution as to warrant the exercise of this Court's discretionary appellate jurisdiction.
It was error for the CIR to assert that respondent Composite Materials, Inc. (CMI)'s petition for review with the CTA en bane should be dismissed, following the case of Asiatrust Development Bank, Inc. v. Commissioner of Internal Revenue,[3] (Asiatrust) where the Court emphasized the requirement of filing a motion for reconsideration or new trial with the CTA Division before filing a petition for review with the CTA en banc, as provided under Section 1, Rule 8 of the Revised Rules of the CTA (RRCTA).
The Court agrees with the CTA en banc that CMI is not required to file a motion for reconsideration of the CTA Division's May 11, 2015 Amended Decision.[4] In stark contrast with Asiatrust, the May 11, 2015 Amended Decision, while denominated as such, was a mere resolution of CMI's MR because, apart from modifying CMI's tax liabilities on account of its partial payment, the Amended Decision simply affirmed the findings and conclusions of the CTA Division in its October 10, 2014 Decision. Moreover, to require CMI to file another motion for reconsideration would be violative of the rule against the filing of a second motion for reconsideration under Section 7, Rule 15 of the RRCTA.
As regards the issue on Revenue Officer Mary Anne P. Cruz's (RO Cruz) authority to examine CMI's records, the provisions of the National
Internal Revenue Code of 1997, as amended, are clear that a Revenue Officer may only examine the taxpayer's books pursuant to a Letter of Authority (LOA) issued by the Regional Director.[5] This was reiterated by the Court in Medicard Philippines, Inc. v. Commissioner of Internal Revenue. [6] ruling that in the absence of an LOA, the assessment or examination is a nullity.
Here, the CTA en banc found that the LOA issued in relation to the examination of CMI's book of accounts does not specifically mention the name of RO Cruz. Thus, the examination conducted by RO Cruz and the assessment issued against CMI was correctly declared null and void.
Moreover, the Court agrees with the CTA en banc that the Referral Memorandum issued by a Revenue District Officer directing RO Cruz to continue with the examination of CMI's records is not equivalent to an LOA nor does it cure RO Cruz's lack of authority. To be sure, Revenue Memorandum Order No. 43-90,[7] which specified the guidelines in the issuance of LOAs states that any reassignment or transfer of cases to another RO or revalidation of an expired LOA shall require the issuance of a new LOA.
Verily, the Court finds no reason to deviate from the CTA en bane's findings. The assailed Decision and Resolution of the CTA en bane are hereby AFFIRMED.
SO ORDERED (CARPIO, J.,on wellness leave; PERLAS-BERNABE, J., designated Acting Chairperson per S.O. No. 2592 dated September 5, 2018; REYES, J., JR., J.,designated Additional Member per S.O. No. 2587 dated August 28, 2018)
[1] Rollo, pp. 46-59. Penned by Associate Justice Cielito N. Mindaro-Grulla, with Presiding Justice Roman G. Del Rosario (with Concurring Opinion, id. at 60-71), Associate Justices Juanito C. Castaneda, Jr., Lovell R. Bautista (with Concurring Opinion, id. at 72-76), Erlinda P. Uy, Esperanza R. Fabon-Victorino, and Catherine T. Manahan concurring; Associate Justices Caesar A. Casanova (with Dissenting Opinion, id. at 77-80) and Ma. Belen M. Ringpis-Liban (with Dissenting Opinion, id. at 81- 88) dissenting.
[2] Id. at 90-92.
[3] G.R. Nos. 201530 & 201680-81, April 19, 2017, 823 SCRA 648, 664-665.
[4] Rollo, pp. 94-107. Rendered by the CTA Third Division in CTA Case No. 8306 and penned by Associate Justice Ma. Belen M. Ringpis-Liban, with Associate Justices Lovell R. Bautista and Esperanza R. Fabon-Victorino concurring.
[5] Sections 10 and 13, NATIONAL INTERNAL REVENUE CODE, as amended.
[6] G.R. No. 222743, April 5, 2017, 822 SCRA 444, 461.
[7] Revenue Memorandum Order No. 43-90 dated September 20, 1990, amending Revenue Memorandum Order No. 37-90 prescribing revised policy guidelines for Examination of Returns and Issuance of Letters of Authority to Audit.
