REPUBLIC OF THE PHILIPPINES

COURT OF TAX APPEALS

QUEZON CITY

ENBANC

COMMISSIONER OF CTA EB No. 2507

INTERNAL REVENUE, (CTA Case No. 9915)
Petitioner,
Present:

DEL ROSARIO, EL
UY,
-versus- RINGPIS-LIBAN,
MANAHAN,
BACORRO-VILLENA,
MODESTO-SAN PEDRO,
REYES-FAJARDO,
CUI-DAVID, and
FERRER-FLORES, JJ.
FOUR SEAS TRADING
CORPORATION, Promulgated:

Respondent. APR 0 5 ~0~: ~'?':I:':": 'x

)(- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

DECISION

REYES-FAJARDO, J.:

Assailed in this Petition for Review filed on July 29, 2021 1 are
the Decision2 dated January 11, 2021 and Resolution3 dated June 16,
2021 in CTA Case No. 9915, whereby the Court in Division
invalidated the Commissioner of Internal Revenue's Final Notice
Before Seizure (FNBS), Preliminary Assessment Notice (PAN), and
Final Assessment Notices and Formal Letter of Demand (FAN/FLD)
issued against Four Seas Trading Corporation for calendar year (CY)
2014.

First, the facts.

Rollo, pp. 3-21.

2 ld. at pp. 28-49.
3 ld. at pp. 51-56.

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DECISION
CTA EB No. 2507
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Petitioner is the duly appointed Commissioner of the BIR, duly

appointed and empowered to perform the duties of his office,
including, among others, the power to decide, cancel, and abate tax
liabilities, pursuant to Section 204(B) of the Tax Code, as amended by
Republic Act (RA) No. 8424, otherwise known as the "Tax Reform
Act" of 1997, and as further amended by RA No. 10963, otherwise
known as the Tax Reform for Acceleration and Inclusion (TRAIN)
Act, with office address at the BIR National Office Building, Diliman,
Quezon City.

Respondent Four Seas Trading Corporation is a corporation

duly organized and existing under and by virtue of Philippine laws;
and is registered with the Bureau of Internal Revenue (BIR) with
Taxpayer's Identification Number (TIN) 000-765-784.

On February 3, 2016, respondent received a Letter of Authority

(LOA) with Serial Number (SN) eLA201200045177 /LOA-030-2016-
00000018 dated January 19, 2016, issued by Ms. Araceli L. Francisco,
OIC-Regional Director of Revenue Region No. 6-Manila, authorizing
Revenue Officer (RO) Mubarak Hadji Omar and Group Supervisor
(GS) Ma. Sherly Macaroy, to examine its books of accounts and other
accounting record for all internal revenue taxes, including
documentary stamp tax and other taxes (miscellaneous tax), for the
periods January 1, 2014 to December 31, 2014. This was accompanied
with a Checklist of Requirements and First Notice for Presentation of
Records.

In response to said LOA, respondent submitted several

documents to BIR-Revenue District Office (RDO) No. 30, through RO
Omar.

Sometime in July 2018, respondent received the BIR's letter

dated June 29, 2018, informing that it was duly selected as one of the
Tax Account Management Program (TAMP) taxpayers. Said letter
was sent to its Binondo address and received by a security guard on
duty.

On July 31, 2018, respondent received a Final Notice Before

Seizure (FNBS) of even date, stating that it had deficiency taxes for

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 DECISION
CIA EB No. 2507
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CY 2014 in the total amoun t of 1"34,235,794.91, broken down as

follows:

Assessm ent Notice No. Kind of Tax Basic Tax Surcharg e Total I

/Interest Amount Due

/Compro mise I

30-14-IT-17-564 Income 1'10,845,655.40 1'5,783,771.11 1'16,629,426.51 I

30-14-MC-17-564 (IT) MC 50,000.00 50,000.00 1

30-14-VT-17-565 Value-A dded Tax 4,285,138.85 2,547,240.80 6,832,379.65 I

(VAT) _j

30-14-MC-17-565 (VT) MC 40,000.00 4o,ooo.oo I

30-14-WE-17-566 Expande Withhold ing

d 17,150.00 10,290.00 27,44o.oo I
Tax (EWT)
30-14-MC-17-566 (WE) MC 4,000.00 4,000.00
30-14-IAET-17-567 Improper ly 5,945,532.25 1,486,383.06 10,602,548.75 1

Accumul ated Earnings 3,170,633.44

Tax (IAET) I

30-14-MC-17-567 (IAET) MC 50,000.00 50,000.00

TOTAL 1'21,093,476.50 1'1,486,383.06 P34,235,794.91 I

1'11,511,935.35
1'144,000.00 I

On August 1, 2018, respon dent request ed copies of the PAN

dated Decem ber 20, 2017, FAN dated January 12, 2018, and
Prelimi nary Collection Letter (PCL) dated July 31, 2018, with the BIR-
RDO No. 30. The request ed FAN was received by respon dent on
even date.

On August 30, 2018, respon dent filed a Petition for Review with
Applica tion for Tempo rary Restrai ning Order and/ or Writ of
Prelimi nary Injunction before the Court in Division.

On January 11, 2021, the Court in Division rendere d the

assailed Decision, disposi ng the case as follows:

WHERE FORE, the instant Petition for Review is GRANT ED.

Accordin gly, the Final Notice Before Seizure dated July 31, 2018 is
WITHD RAWN and SET ASIDE.

Moreove r, the PAN dated Decemb er 20, 2017, the FAN or

Assessment Notices, and the FLD, all dated January 12, 2018, issued
against [respond ent], for CY 2014, are CANCE LLED and SET
ASIDE, for being void.

SO ORDER ED.

Q
DECISION
CTA EB No. 2507
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On January 28, 2021, petitioner filed a Motion for

Reconsideration on the assailed Decision dated January 11, 2021.

Under the equally assailed Resolution dated June 16, 2021,

petitioner's Motion for Reconsideration was denied in this wise:

WHEREFORE, premises considered, [petitioner's] Motion

for Reconsideration (Re: Decision promulgated on January 11, 2021)
is DENIED for lack of merit.

SO ORDERED.

Hence, the present recourse.

Petitioner maintains that under Section 228 of the National

Internal Revenue Code (NIRC), as amended, as interpreted in
Commissioner of Internal Revenue v. V. Y. Domingo Jewellers, Inc. (VD JI), 4
a valid administrative protest to the final assessment must be filed,
within thirty (30) days from receipt thereof, lest the same attain
finality. Respondent requested copies of the FAN from the BIR and
was received on August 1, 2018. As respondent failed to protest the
FAN within said period, the assessment had become final, executory,
and demandable. Being so, the Court in Division has no jurisdiction
over this case.

Assuming, the Court in Division has jurisdiction over this case,

petitioner claims that the PAN, and the FAN/FLD were duly mailed
to respondent's address at 674 Muelle de Binondo Street, Barangay
287, Zone 27, Binondo, Manila, as evidenced by the relevant registry
receipts for said documents. As such, due process on assessment
under Section 228 of the NIRC, as amended, was duly complied with.

In closing, petitioner states that respondent is liable for her

deficiency tax assessments for CY 2014.

By way of Comment (on Petition for Review) dated November

19, 2021,5 respondent counters that VDJI does not apply because: one,
the tenor of the FNBS in this case, and the PCL in VD JI are different.
Said FNBS had a tenor of finality, whereas in VDJI, the PCL therein

4 G.R. No. 221780, March 25, 2019.

5 Rollo, pp. 62-82.

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DECISION
CTA EB No. 2507
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had no tenor of finality; and two, the Supreme Court recognized an

FNBS as petitioner's final act.

Granting, VDJI is applicable in this case, respondent ripostes

that it received the BIR's FNBS on July 31, 2018. As said FNBS is a
step in collecting the assessed taxes, it falls under the "other matters"
arising from the NIRC, as amended, over which, the Court in
Division may exercise jurisdiction.

Respondent further retorts that petitioner's witness admitted in

open court that the BIR has no proof that the PAN, and FLD and
FAN was received by it, or its authorized representative. Therefore, it
was not able to ventilate its defenses on said notices, violative of its
right to due process on assessment under Section 228 of the NIRC, as
amended.

To punctuate its arguments, respondent theorizes that the

Court in Division committed no reversible error in invalidating
respondent's PAN, FLD and FAN, and FNBS forTY 2014.

OUR RULING

We grant the Petition.

Section 7(a)(1) and (2) of Republic Act (RA) No. 1125,6 as

amended by RA No. 9282 reads:

Sec. 7. Jurisdiction.- The CTA shall exercise:

a. Exclusive appellate jurisdiction to review by appeal, as

herein provided:

1. Decisions of the Commissioner of Internal

Revenue in cases involving disputed assessments, refunds
of internal revenue taxes, fees or other charges, penalties in
relation thereto, or other matters arising under the
National Internal Revenue Code or other laws
administered by the Bureau of Internal Revenue;

2. Inaction by the Commissioner of Internal

Revenue in cases involving disputed assessments, refunds

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6 An Act Creating the Court of Tax Appeals.
DECISION
CTA EB No. 2507
Page 6 o£18

of internal revenue taxes, fees or other charges, penalties in

relations thereto, or other matters arising under the
National Internal Revenue Code or other laws administered
by the Bureau of Internal Revenue, where the National
Internal Revenue Code provides a specific period of action,
in which case the inaction shall be deemed a denial;

Pertinently, Section 3(a)(l) and (2), Rule 4 of the Revised Rules

of the Court of Tax Appealss (RRCTA) provides that the Court in
Division has jurisdiction over: one, petitioner's decision or inaction
involving disputed assessments (first part); and two, other matters
arising under the NIRC, as amended (second part), among others. 9

In relation to the first part of Section 7(a)(l) and (2) of RA No.

1125, as amended by RA No. 9282, as implemented by Section 3(a)(l)
and (2), Rule 4 of the RRCTA, for the decision or inaction of
respondent or her duly authorized representatives to be raised on
appeal before the Court in Division, there must first be a disputed
assessment.1o To properly dispute an assessment, a valid
administrative protest by the taxpayer must be made pursuant to
Section 228 of the NIRC,ll as amended which states:

Section 228. Protesting of Assessment. - ...

If the taxpayer fails to respond, the Commissioner or his duly

authorized representative shall issue an assessment based on his
findings.

Such assessment may be protested administratively by filing a

7 Boldfacing supplied.
8 A.M. No. 05-11-07-CTA.
9 SEC. 3. Cases within the jurisdiction of the Court in Divisions. - The Court in Divisions shall
exercise:
(a) Exclusive appellate jurisdiction to review by appeal the following:
(1) Decisions of the Commissioner of Internal Revenue in cases involving disputed
assessments, refunds of internal revenue taxes, fees or other charges, penalties in relation
thereto, or other matters arising under the National Internal Revenue Code or other
laws, administered by the Bureau of Internal Revenue;
(2) Inaction by the Commissioner of Internal Revenue in cases involving disputed
assessments, refunds of internal revenue taxes, fees or other charges, penalties in relation
thereto, or other matters arising under the National Internal Revenue Code or other
Jaws, administered by the Bureau of Internal Revenue ... (Boldfacing supplied)
10 See Commissioner of Internal Revenue v. Liquigaz Philippines Corporation, G.R. No. 215534,
April18, 2016.
11 Tax Reform Act of 1997.

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DECISION
CTA EB No. 2507
Page 7 of18

request for reconsideration or reinvestigation within thirty (30)

days from receipt of the assessment in such form and manner as
may be prescribed by implementing rules and regulations.

Within sixty (60) days from filing of the protest, all relevant,
supporting documents shall have been submitted; otherwise, the
assessment shall become final.

If the protest is denied in whole or in part, or is not acted upon

within one hundred eighty (180) days from submission of
documents, the taxpayer adversely affected by the decision or
inaction may appeal to the Court of Tax Appeals within thirty
(30) days from receipt of the said decision, or from the lapse of
one hundred eighty (180)-day period; otherwise, the decision
shall become final, executory and demandable.12

Here, respondent primarily challenged the FAN it requested

and received from the BIR, covering CY 2014. This observation is
supported by the following circumstances: one, its aim in filing the
petition for review with the Court in Division was to prevent the
FAN from attaining finality;13 two, the period to appeal with the
Court in Division was reckoned from receipt of said FAN on August
1, 2018;14 three, the nature of the case in the assailed Decision, " ...
prays for the cancellation and withdrawal of the Formal Assessment
Notice (FAN) issued by [petitioner] against [respondent] for its
alleged deficiency taxes for calendar year (CY) 2014 in the aggregate
amount of P34,235,794.91, inclusive of interests, etc." ;15 four, the issues
jointly raised by petitioner and respondent for resolution of the Court
in Division all pertain to the validity of the FAN;16 and five, the
specific prayer in respondent's Petition for Review seeks to invalidate
the FAN.1 7 Undeniably, this case falls under the first part of Section
7(a)(1) of RA No. 1125, as amended by RA No. 9282. As such,
respondent's failure to file an administrative protest thereto is fatal to
its cause.

We expound.

In VDJJ,1B V.Y. Domingo Jewellers, Inc. (Domingo) received a

PCL from the BIRon August 11,2011. Said PCL informed VDJI of the
12 Boldfacing supplied.
13 Par. 17, Petition for Review in CTA Case No. 9915. Docket (CT A Case No. 9915), p. 16.
14 Ibid.
15 Statement of the Case, assailed Decision dated January 11, 2021, p. 1. Rollo, p. 28.
Assailed Decision dated January 11, 2021, p. 9. Id. at p. 36.
"
17 Prayer, petitioner (now respondent)'s Petition for Review before the Court in Division.
Docket (CTA Case No. 9915), p. 40.
18 Supra note 4.

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DECISION
CIA EB No. 2507
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existence of the assessment (FAN) from which said PCL was based.
Domingo requested from the BIR, certified copies of such FAN. On
September 15, 2011, Domingo received copies of said FAN. On
September 16, 2011, Domingo appealed to the Court of Tax Appeals
(CTA) in Division, assailing the validity of the FAN and PCL. The
Commissioner of Internal Revenue (CIR) moved for the dismissal of
said case, claiming that Domingo failed to file a valid administrative
protest to the FAN. The CTA in Division dismissed the case for lack
of jurisdiction but was overturned by the CT A En Bane. In upholding
the dismissal made by the CTA in Division, the Supreme Court
decreed:

What is evident in the instant case is that Assessment Notice

Nos. 32-06-IT-0242 and 32-06-VT-0243 dated November 18, 2010
have not been disputed by V.Y. Domingo at the administrative
level without any valid basis therefor, in violation of the doctrine of
exhaustion of administrative remedies. To reiterate, what is
appealable to the CT A are decisions of the CIR on the protest of the
taxpayer against the assessments. There being no protest ruling by
the CIR when V.Y. Domingo's petition for review was filed, the
dismissal of the same by the CTA First Division was proper. As
correctly put by [Presiding] Justice Roman G. Del Rosario in his
Dissenting Opinion, "(C)learly, petitioner did not exhaust the
administrative remedy provided under Section 228 of the NIRC of
1997, as amended, and RR No. 12-99 which is fatal to its cause.
Consequently, the non-filing of the protest against the FLD led to
the finality of the assessment."

VDJI ordains that a taxpayer, who, after receiving the BIR's

collection letter referring to a final assessment, subsequently receives
such assessment, must file an administrative protest on said final
assessment before the BIR, lest appeal to the Court in Division be
considered premature.

VDJI also made it clear that said administrative protest to the

final assessment must be filed with the BIR, irrespective of whether
the receipt thereof by the taxpayer from the BIR was through valid
service, or the taxpayer's own request or volition. The reason is
evident-Secti on 228 of the NIRC, as amended19 does not distinguish

19 Section 228. Protesting of Assessment. - ...

Such assessment may be protested administratively by filing a request for

reconsideration or reinvestigation within thirty (30) days from receipt of the
assessment in such form and manner as may be prescribed by implementing rules and
regulations. (Boldfacing supplied)

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 DECISION
CTA EB No. 2507
Page 9 of18

as to how the final assessment was received by the taxpayer for the
requirement of prior administrative protest with the BIR to apply;
neither should we.zo

This case closely resembles VDJI. Specifically, as gathered from

the allegations in respondent's petition for review with the Court in
Division:21

On July 31, 2018, respondent received the BIR's

FNBS. Said FNBS referred to the assessment notices
(FAN) for Income Tax, Value-Added Tax, Expanded
Withholding Tax, Improperly Accumulated Earnings Tax,
and their corresponding miscellaneous charges. 22

On August 1, 2018, respondent requested from BIR

Revenue District Office (RDO) 30, copies of the PAN,
FAN, and PCL. 23 On the same day, the BIR provided
respondent with copies of the PAN, sans the second and
last page thereof, and FAN.24

On August 2, 2018, upon its request, the BIR

provided respondent a copy of the PAN with Details of
Discrepancy, along with the Formal Letter of Demand
(FLD) and FAN.2s

On August 30, 2018, respondent filed a petition for

review before the Court in Division, challenging the FAN.

20 In Ifurung v. Carpio-Morales, G.R. No. 232131, April 24, 2018, the Supreme Court declared
that: "It is an elementary rule in statutory construction that: where the law does not
distinguish, the courts should not distinguish. Ubi lex non distingnit, nee nos distinguere
debemus."
21 In Montero v. Montero, G.R. No. 217755, September 18, 2019, it was ruled that "a court's
jurisdiction over the subject matter of a particular action is determined by the plaintiff's
allegations in the complaint and the principal relief he seeks in the light of the law that
apportions the jurisdiction of courts." The petition for review, filed before the Court in
Division is the equivalent of said complaint.
22 Par. 10, respondent's Petition for Review (with Application for Temporary Restraining
Order and/ or Writ of Preliminary Injunction) before the Court in Division. Docket (CTA
Case No. 9915), p. 13.
23 Par. 11 respondent's Petition for Review (with Application for Temporary Restraining
Order and/ or Writ of Preliminary Injunction) before the Court in Division. Id. at p. 13.
24 Par. 17, respondent's Petition for Review (with Application for Temporary Restraining
Order and/ or Writ of Preliminary Injunction) before the Court in Division. Id. at p. 16.
25 Par. 13, respondent's Petition for Review (with Application for Temporary Restraining
Order and/ or Writ of Preliminary Injunction) before the Court in Division. Id. at p. 14.

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 DECISION
CTA EB No. 2507
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Consist ent with Section 228 of the NIRC, as amende d, in

relation to the first part of Section 7(a)(1) of RA No. 1125, as amend ed
by RA No. 9282, and VDJI, respon dent had thirty (30) days from its
date of receipt of the FAN on August 1, 2018,26 or until August 31,
2018, to file a valid admini strative protest thereto. Instead of lodging
an admini strative protest with the BIR, respon dent challen ged the
FAN, via a petition for review before the Court in Division, filed on
August 30, 2018. Withou t a valid admini strative protest, the final
assessm ent did not become a dispute d assessment. Therefore, review
thereof by the Court in Divisio n is not possible. To stress, it is
petition er's decision or inactio n over the taxpaye r's protest on the
assessment, and not the assessm ent itself, 27 which is appeala ble to
the Court in Division.

Respon dent, too, violate d the doctrin e of exhaus tion of

admini strative remedies. Its direct resort to the Court in Division,
sans a valid admini strative protest to the FAN, failed to accord
petition er the opportu nity to "re-examine its finding s and
conclusions" and to decide the issues raised within her competence.zs

Respon dent contend s that VDJI does not apply because: one, the
tenor of the FNBS in this case, and the PCL in VD JI are different. Said
FNBS had a tenor of finality, wherea s in VDJI, the PCL therein had no
tenor of finality; and two, Commissioner of Internal Revenue v. Isabela
Cultural Corporation (ICC)29 recogni zed an FNBS as petition er's final
act. For these reasons, such FNBS is appeala ble to the Court in
Division.

We are not swayed .

One, on the assump tion that the FNBS had a tenor of finality,
respon dent is not excused from the filing of an admini strative protest
to the FAN it request ed, and receive d from the BIR, as comma nded
by Section 228 of the NIRC, as amende d. VDJI settled the matter in
this wise:

26 Supra note 24.

27
Light Rail Transit Authority v. Bureau of Internal Revenue, represented by the Commissioner of
Internal Revenue, G.R. No. 231238, June 20, 2022, citing Commissioner of Internal Revenue v.
Villa, G.R. No. L-23988, January 2, 1968.
28 See Commissioner of Internal Revenue v. Avon Products Manufacturing, Inc., G.R. Nos.
201398-99, October 3, 2018.
29
G.R. No. 135210, July 11, 2001.

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DECISION
CTA EB No. 2507
Page 11 of18

That V.Y. Domingo believed that the PCL "undeniably

shows" the intention of the CIR to make it as its final "decision"
did not give it cause of action to disregard the procedure set forth
by the law in protesting tax assessments and act prematurely by
filing a petition for review before the courts. The word "decisions"
in the aforementioned provision of R.A. No. 9282 has been
interpreted to mean the decisions of the CIR on the protest of the
taxpayer against the assessments. Definitely, said word does not
signify the assessment itself. Where a taxpayer questions an
assessment and asks the Collector to reconsider or cancel the same
because he (the taxpayer) believes he is not liable therefor, the
assessment becomes a "disputed assessment" that the Collector
must decide, and the taxpayer can appeal to the CT A only upon
receipt of the decision of the Collector on the disputed
assessment. 3D

Two, ICC finds no application in this case. There, Isabela

Cultural Corporation (Isabela) received the BIR's deficiency tax
assessment covering TY 1986. Isabela protested said assessment by
way of a request for reconsideration. After said protest, the only
communication received by Isabela was the FNBS, which the latter
impugned before the CTA. ICC held:

A final demand letter from the Bureau of Internal Revenue,

reiterating to the taxpayer the immediate payment of a tax
deficiency assessment previously made, is tantamount to a denial
of the taxpayer's request for reconsideration. Such letter amounts to
a final decision on a disputed assessment and is thus appealable to
the Court of Tax Appeals (CTA).

Dissimilar to ICC, the FNBS in this case can hardly be treated as

a final decision on disputed assessment since respondent failed to
protest the FAN it requested and received from the BIR.

Respondent nonetheless argues that the BIR's FNBS falls under

the second part of Section 7(a)(l) and (2) of RA No. 1125, as amended
by RA No. 9282, i.e., other matters arising from the NIRC, as
amended, over which the Court in Division has jurisdiction.

We disagree.

For one, the existence of a collection letter, such as the BIR's

FNBS does not automatically fall under other matters arising under

30 Boldfacing supplied.

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DECISION
CTA EB No. 2507
Page 12 of18

the NIRC, as amended. Again, in VDJI, Domingo received the BIR's

PCL referring to the FAN. Next, it requested and received from the
BIR, for copies of such FAN. It appealed said FAN and PCL to the
CTA in Division. Notwithstanding Domingo's challenge on the FAN
and PCL, the Supreme Court considered VDJI as a case falling under
the first part of Section 7(a)(l) of RA No. 1125, as amended by RA No.
9282. Hence, Domingo's failure to institute a prior administrative
protest with the BIR resulted in the CTA in Division's lack of
jurisdiction. Owing to the striking similarity of the facts of this case,31
and that of VDJI, they must be treated, much more, be ruled alike.

For another, our jurisdiction over other matters arising from the
NIRC, as amended, in relation to a tax collection, was interpreted in
Philippine Journalists, Inc. v. Commissioner of Internal Revenue (PJI), 32
Commissioner of Internal Revenue v. Hambrecht & Quist Philippines, Inc.
(Hambrecht), 33 Commissioner of Internal Revenue v. Court of Tax Appeals
Second Division and QL Development, Inc. (QLDI),3 4 and Commissioner of
Internal Revenue v. Bank of the Philippine Islands (BPI). 35 Yet, these cases
may not be applied here, due to disparity in factual milieu. 36
Consider:

First, in PJI, the event which triggered the filing of an appeal to

the CTA was the Warrant of Distraint and/ or Levy (WDL) No. 33-06-
046. The taxpayer therein likewise raised the issue of the validity of
the waiver involved therein. PJI declared that questions on the
validity of the WDL and waiver fall within "other matters" arising
under the NIRC, as amended, as follows:

The appellate jurisdiction of the CT A is not limited to cases

which involve decisions of the Commissioner of Internal Revenue
on matters relating to assessments or refunds. The second part of
the provision covers other cases that arise out of the NIRC or
related laws administered by the Bureau of Internal Revenue. The
wording of the provision is clear and simple. It gives the CT A the
jurisdiction to determine if the warrant of distraint and levy
issued by the BIR is valid and to rule if the Waiver of Statute of
Limitations was validly effected.

31 See discussion on pages 8-9 of this Decision.

32 G.R. No. 162852, December 16, 2004.
33 G.R. No. 169225, November 17, 2010.
"35 G.R. No. 258947, March 29, 2022.
G.R. No. 227049, September 16, 2020.
36 PJI and Hambrecht were cited by the Court in Division as bases for the exercise of
jurisdiction in this case.

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DECISION
CTA EB No. 2507
Page 13 of18

37

Unlike in PJI, and as earlier discussed,38 the circumstance

leading to respondent's appeal with the Court in Division was
principally the FAN, and not the FNBS.

Second, in Hambrecht, the CTA, both in Division, and En Bane

found that the taxpayer therein failed to timely file a valid
administrative protest to the final assessment, resulting in the
incontestability thereof. It nonetheless held that the BIR may not
collect the taxes assessed therein because of prescription. On appeal,
the CIR posited that the CTA lacks jurisdiction, because the
assessments had attained finality. In holding the CIR's position
erroneous, the Supreme Court ruled:

Plainly, the assailed CT A En Bane Decision was correct in

declaring that there was nothing in the foregoing provision upon
which petitioner's theory with regard to the parameters of the term
"other matters" can be supported or even deduced. What is rather
clearly apparent, however, is that the term "other matters" is
limited only by the qualifying phrase that follows it.

Thus, on the strength of such observation, we have

previously ruled that the appellate jurisdiction of the CT A is not
limited to cases which involve decisions of the CIR on matters
relating to assessments or refunds. The second part of the
provision covers other cases that arise out of the National Internal
Revenue Code (NIRC) or related laws administered by the Bureau
of Internal Revenue (BIR).

In the case at bar, the issue at hand is whether or not the

BIR's right to collect taxes had already prescribed and that is a
subject matter falling under Section 223(c) of the 1986 NIRC, the
law applicable at the time the disputed assessment was made ....

Thus, from the foregoing, the issue of prescription of the

BIR's right to collect taxes may be considered as covered by the
term "other matters" over which the CT A has appellate jurisdiction.

Furthermore, the phraseology of Section 7, number (1),

denotes an intent to view the CT A's jurisdiction over disputed
assessments and over "other matters" arising under the NIRC or
other laws administered by the BIR as separate and independent of

37 Boldfacing supplied.
38
Supra notes 13-17.
\
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DECISION
CTA EB No. 2507
Page 14 of 18
that the latte r is
each other. This runs coun ter to petit ione r's theo ry
matter" mus t not
qualified by the statu s of the former, i.e., an "other
natively, mus t
be a final and unap peal able tax asse ssme nt or, alter
be a disp uted assessment.

ction of taxes
Hambrecht add ed that the issu e of prescription of colle
ssm ent itself:
is sepa rate and distinct from the vali dity of the asse

final for
To be sure, the fact that an asse ssme nt has become
allow ed only
failure of the taxp ayer to file a prot est with in the time
ssment may no
mea ns that the validity or correctness of the asse
validity of the
longer be ques tione d on appeal. How ever , the
from the issue of
asse ssme nt itself is a sepa rate and distinct issue
assessed tax has
whe ther the righ t of the CIR to collect the validly
er prov ided for
prescribed. This issue of pres cript ion, bein g a matt
A to decide.
by the NIRC, is well with in the juris dicti on of the CT

I atta ined
Similar to Hambrecht, the tax asse ssm ent in QLD
ive prot est wit h the
finality because of lack of prio r vali d adm inis trat
BIR. It was nev erth eles s held that the issu e on
prescription of tax
ter of the final
collection may be add ress ed sepa rate ly from the mat
asse ssm ent' s validity.

the issu e of
The thru st of Hambrecht and QLDI is that
by the CTA und er
pres crip tion of collection of taxe s may be dec ided
d, notw iths tand ing
othe r mat ters aris ing from the NIRC, as ame nde
wha t mat ters in
the imm utab ility of a final assessment. Truly,
ssm ent was mad e,
pres crip tion of collection of taxes is when the asse
peri od pres crib ed
and whe ther such collection was mad e with in the
is not necessary to
by law. Review on the validity of a final assessment
ers may be decided
determine prescription of tax collection;3 thus, these matt
9

separately.

s gro und for

Con tras ted to Hambrecht and QLD I, resp ond ent'
the collection of
the sup pos ed nullity of the BIR' s FNBS is not bec ause
S is pur por tedl y
taxes was barr ed by pres crip tion . Rather, said FNB
base d is alle ged ly
illegal because the FAN from whi ch the sam e was
S is inextricably
void . Inde ed, the pro prie ty of the BIR's FNB

and Trust Company) v. Commissioner

In Bank of the Philippine Islands (Fomrerly: Far East Bank
" of Internal Revenue, G.R. No. 174942, Marc h 7, 2008,
the Supr eme Cour t held that it need
the collection of tax made by the
not rule on the validity of a final asses smen t since
gove rnme nt has prescribed.
~
DECISION
CTA EB No. 2507
Page 15 of 18

interwo ven with the validity of said FAN. Review of such final
assessment is crucial to determine the soundness of the collection measure;
hence, these matters may not be addressed separately. For us to review a
final assessment, a prior admini strative protest thereto with the BIR
should be filed by respond ent, and a decision, or inactio n thereon by
petition er or her duly authori zed represe ntative must ensue, both of
which were wantin g in this case.

Third, in BPI, the taxpaye r's appeal to the CTA in Divisio n was
to solely impugn the BIR's WDL's issuanc e and implem entatio n. The
CTA, both division and En Bane, cancelled such WDL. On appeal, the
CIR contend ed that said taxpaye r failed to appeal her FDDA,
resultin g in the CTA's lack of jurisdiction. Finding the CIR's
content ion withou t merit, the Suprem e Court said:

.... As the CT A correctly pointed out, BPI did not come to

question any final decision issued in connecti on with Citytrus t's
assessments. They went before the CT A primaril y to assail the
Novemb er 2011 Warrant 's issuance and impleme ntation. To be
sure, the issue for the CT A to resolve was the propriet y not of any
assessme nt but of a tax collection measure impleme nted against
BPI. Accordingly, the CT A's dispositi on was distinctly for the
cancellation of the warrant and nothing else.

The law expressly vests the CTA the authorit y to take

cognizance of "other matters" arising from the 1977 Tax Code and
other laws adminis tered by the BIR which necessarily includes
rules, regulations, and measure s on the collection of tax. Tax
collection is part and parcel of the CIR's power to make
assessments and prescribe addition al requirem ents for tax
adminis tration and enforcement.

Undoub tedly, the taxpaye r in BPI solely impugn ed before the

CTA in Division, the BIR's WDL, which falls under other matters
arising from the NIRC, as amende d. The issue to be resolve d by the
CT A in Division is the validity of the collection measur e alone, and
nothing else.

What sets this case apart from BPI are: one, respon dent
40
challen ged before the Court in Divisio n the proprie ty of the FAN;
and two, the issues to be resolve d by the Court in Divisio n in this case
are differe nt-the legality of the tax assessments.41

40 Supra notes 13-17.

~
41 Supra note 16.
DECISION
CTA EB No. 2507
Page 16 of 18

Ergo, based on VDJI, and despite the existence of the BIR's

FNBS, this case does not fall under other matters arising from the
NIRC, as amended, spelled out in the second part of Section 7(a)(1)
and (2) of RA No. 1125, as amended by RA No. 9282.

Respondent whines that it never had the opportunity to

administratively protest the final assessment as it failed to receive
any of the assessment documents from the BIR; thus, its direct
recourse to the Court in Division is justified.

We differ.

To repeat, respondent requested copies of the FAN from the

BIR and were received by it on August 1, 2018. It had every
opportunity to administratively protest the same with the BIR. Yet, it
failed to do so. Precisely, the adverse effect of such failure, expressed
in Commissioner of Internal Revenue v. Court of Tax Appeals Third
Division and Citysuper Incorporated,42 merits iteration as a proper
closing:

When a taxpayer files a Petition for Review before the Court

of Tax Appeals without validly contesting the assessment with the
Commissioner of Internal Revenue, the petition is premature and
the Court of Tax Appeals has no jurisdiction.

WHEREFORE, the Petition for Review filed on July 29, 2021, by

the Commissioner of Internal Revenue, is GRANTED. The Decision
dated January 11, 2021 and Resolution dated June 16, 2021 of the
Court in Division are REVERSED and SET ASIDE. The Petition for
Review filed by Four Seas Trading Corporation in CTA Case No.
9915 is DISMISSED, for lack of jurisdiction.

SO ORDERED.

~~f.~ fi.
MARIAN lv~F. ~EY~S~F~~o
Associate Justice

42 G.R. No. 239464, May 10, 2021.

DECISIO N
CTA EB No. 2507
Page 17 of18

We Concu r:

Presid ing Justice

ER~ .UY
Assoc iate Justice

GA-r. ~ -v <......___
With due respect, please see Dissenting Opinion.
MA. BELEN M. RINGPIS-LIBAN
Assoc iate Justice

c~·;:~
CATHERINE T. MANA HAN
Assoc iate Justice

OtJ LEA'JE.
JEAN MARIE A BACORRO-VILLENA
Assoc iate Justice

Assoc iate Justice

/t#rM'dltt(
LANEE S. CUI-D AVID
Assoc iate Justice

With d~ tfe~entifjg Opinion.

CORA zON G. FERRER-FLORES
Assoc iate Justice
DECISION
CTA EB No. 2507
Page 18 of18

CERTIFICATION

Pursuan t to Article VIII, Section 13 of the Constitu tion, it is

hereby certified that the conclusi ons in the above Decision were
reached in consulta tion before the case was assigned to the writer of
the opinion of the Court.

Presidin g Justice
 REPUBLIC OF THE PHILIPPINES
COURT OF TAX APPEALS
QUEZON CITY

ENBANC

COMMISSIONER OF INTERNAL CTA EB NO. 2507

REVENUE, (CT.A Case No. 9915)
Petitioner,
Present:
DEL ROSARIO, P.J)
-versus- UY,
RINGPIS-LIBAN,
MANAHAN,
BACORRO-VILLENA,
MODESTO-SAN PEDRO,
REYES-FAJARDO,
CUI-DAVID, and
FOUR SEAS TRADING
FERRER-FLORES, Jl.
CORPORATION,

Promulgated:

Respondent. APR~-~- ~-A'' '~l?·,..,.·

X- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

DISSENTING OPINION

RIN GPIS-LIBAN, L:

With due respect, I dissent from the majority ruling that the Petition for
Review in CTA Case No. 9915 must be dismissed for lack of jurisdiction.

To recall, the Second Division held in its Decision1 dated January 11,2021
that it has jurisdiction, Respondent having filed an appeal to the Court of Tax
Appeals ("CTA") within thirty (30) days from its receipt on July 31, 2018 of the
Final Notice Before Seizure2 ("FNBS") dated on even date.

The position espoused by the ponencia is that Respondent should have flied
an administrative protest to the Formal Assessment Notice ("FAN") dated

1
Docket, pp. 1182-1203.
2 !d., Exh ibit " P-16", p. 889.
Dissenting Opinion
CTA EB No. 2S07 (CTA Case No. 991S)
Page 2 of 6

January 12, 2018 3 when it was given a copy of the same after the receipt of the
FNBS. Since Respondent failed to do this, its Petition for Review with the
Second Division was premature.

With due respect, I beg to differ.

Indeed, Section 3.1.4 of Revenue Regulations ("RR") No. 12-19994 , as

amended by RR No. 18-2013 5 provides that "[i]f the taxpayer fails to flle a valid
protest against the FLD /FAN within thirty (30) days from date of receipt
thereof, the assessment shall become final, executory and demandable." The
jurisdictional requirement of filing of the protest to the FAN however
presupposes that the normal course of events happened, to wit:

1) the issuance of a Letter of Authority ("LOA");

2) the issuance of a Request for Accounting Records;
3) the issuance of a Notice for Informal Conference (in some
cases);
4) the submission of documents by the taxpayer;
5) the issuance of a Preliminary Assessment Notice ("PAN");
6) the filing of a reply/ protest to the PAN by the taxpayer;
7) the issuance of a FAN;
8) the filing of a protest to the FAN by the taxpayer; and
9) the issuance of a Final Decision on a Disputed Assessment
(FDDA) by the Commissioner oflnternal Revenue ("CIR")
or his inaction. 6

Once the assessment stage of a particular tax case is completed, collection

proceeds. The Bureau of Internal Revenue ("BIR") may now enforce collection
through the issuance of collection letters and/ or writs, including but not limited
to Preliminary Collection Letter ("PCL"), FNBS, and Warrant of Distraint
and/ or Levy and Garnishment.

In a long line of cases 7, this Court exercised its jurisdiction over cases
which question the validity of collection of national internal revenue taxes,
/
3 !d., Exhibit "P-13", pp. 897-908.
4
Implementing the Provisions of the National Internal Revenue Code of 1997 Governing the
Rules on Assessment of National Internal Revenue Taxes, Civil Penalties and Interest and the
Extra-Judicial Settlement of a Taxpayer's Criminal Violation of the Code Through Payment of a
Suggested Compromise Penalty, September 06, 1999.
5
Amending Certain Sections of Revenue Regulations No. 12-99 Relative to the Due Process
Requirement in the Issuance of a Deficiency Tax Assessment, November 28, 2013.
6 See Revenue Audit Memorandum Order No. 1-00, Updated Handbook on Audit Procedures and
Techniques, Volume I (Revision- Year 2000), March 17, 2000 and Revenue Regulations ("RR")
No. 12-1999, as amended by RR No. 18-2013.
7
See Commissioner of Internal Revenue v. V.Y. Domingo Jewellers, Inc., CTA EB Case No. 2313
(CTA Case No. 9367), March 16, 2022; Penned by Associate Justice Jean Marie A. Bacorro-
Villena, concurred in by Associate Justices Juanito C. Castaneda, Jr., Erlinda P. Uy, Ma. Belen
M. Ringpis-Liban, Catherine T. Manahan, Maria Rowena Modesto-San Pedro, Marian Ivy F.
Dissenting Opinion
CTA EB No. 2507 (CTA Case No. 9915)
Page 3 of 6

following the Supreme Court cases of Philippine Journalists, Inc. v. Commissioner of

Internal Revenurf, Commissioner of Internal Revenue v. Hambrecht & Quist Philippines,
Inc. 9 ("CIR v. Hambrechf'), Commissioner of Internal Revenue v. Bank of the Philippine
Islands10 ("CIR v. BPT'). The High Court explained that this was based on the
11
second part of Section 7(a)(1) of Republic Act ("R.A.") No. 1125 , as amended
by R.A. No. 9282 12 , to wit:

"Sec 7. Jurisdiction.- The CTA shall exercise:

a. Exclusive appellate jurisdiction to review by appeal, as

herein provided:

(1) Decisions of the Commission er of

Internal Revenue in cases involving disputed
assessments , refunds of internal revenue taxes, fees or
other charges, penalties imposed in relation thereto,
or other matters arising under the National
Internal Revenue Code or other law or part oflaw
administer ed by the Bureau of Internal
Revenue[.]" 13

Simply put, the appellate jurisdiction of the CTA is not limited to cases
which involve decisions of the CIR on matters relating to assessments or refunds.
It also covers other cases that arise out of the National Internal Revenue Code
(NIRC) of 1997, as amended, or related laws administered by the BIR, which
necessarily includes the issue of collection.

A perusal of the factual antecedents of this case demonstrate s that the

process in the issuance of a deficiency tax assessment and its collection did not
proceed by the usual route.

On February 03, 2016, Respondent received LOA dated January 19,

2016 , authorizing the BIR to examine its books of accounts for all internal
14

revenue taxes for calendar year 2014. The LOA was accompanie d with a
/V

Reyes-Fajardo and La nee S. Cui-David, Presiding Justice Roman G. del Rosario with Concurring
Opinion.
8 G.R. No. 162852, December 16, 2004.
9 G.R. No. 169225, November 17, 2010.
10
G.R. No. 227049, September 16, 2020.
11 An Act Creating the Court of Tax Appeals, June 16, 1954.
12 An Act Expanding The Jurisdiction Of The Court Of Tax Appeals (CTA), Elevating Its Rank To
The Level Of A Collegiate Court With Special Jurisdiction And Enlarging Its Membership,
Amending For The Purpose Certain Sections Or Republic Act No. 1125, As Amended, Otherwise
Known As The Law Creating The Court Of Tax Appeals, And For Other Purposes, March 30,
2004.
13 Emphasis supplied.
14 Docket, Exhibit "P-4", p. 874.
Dissenting Opinion
CTA EB No. 2507 (CTA Case No. 9915)
Page 4 of 6

Checklist of Requir ements . Therea fter, the following series of corresp ondenc es
15

were exchan ged berwee n Petition er and Respon dent - First Notice for
Presen tation of Record s dated March 29, 2016 and Letter- Submis19sion of
16

Docum ents dated Februa ry 10, 2016 , April 08, 2016 , April 14, 2016 , April
17 18

21
11, 2017 20 and April 20, 2017 .

The next corresp ondenc e received by Respon dent from the BIR was a
Letter2 2 dated June 29, 2018 inform ing the compan y that it was selected as a Tax
Accoun t Manag ement Progra m (TAMP) taxpayer. Afterw ards, Respon dent was
given the FNBS dated July 31, 2018 on even date, signed by Chief of the
Collection Divisio n of Revenu e Region No. 6 Manila, demand ing payme nt of
the assessm ent for calenda r year 2014 within ten (10) days, failure of which will
result to the issuanc e of a Warran t of Distrai nt and/ or Levy and Garnis hment
already prepare d to enforce collection.

23
Conseq uently, Respon dent sent on August 01, 2018 a Letter to the BIR2
dated July 31, 2018 request ing copies of the PAN dated Decem ber 20, 2017 4,
25
FAN dated January 12, 2018 and PCL dated July 31, 2018 • On even date, 26
Respon dent was given photoc opies of the PAN and FAN, but not the PCL.

From above, it can be gathere d that the assessm ent procee ding for
Respon dent's deficiency taxes for the calenda r year of 2014 was already
conclud ed. Since no protest to the FAN was received, the BIR treated the
assessm ent as already final, executory and demand able. The FNBS was issued
for this reason, Respon dent's docket already given to the Collect ion Division.
Clearly, the BIR's audit was now in the collection stage.

Thus, Respon dent cannot be faulted when it decided not to file a protest
to the FAN. In the first place, Respon dent asked for copies of the PAN and
FAN in order to have knowle dge of the assessm ent, since it was not able to
receive any copies thereof . As far as Respon dent was concer ned, the proced ure
for the stages for assessm ent was already finished (i.e., the service of assessm ent
and taxpayer's reply to the assessment). Secondly, Respon dent was only given
photoc opies of the PAN and FAN, not their original copies. This point to an
inescap able conclus ion that the bestow al of the copies of the assessm ent is a
;"'/

15 !d., Exhibit "P-5", p. 875.

16 !d., Exhibit "P-6", p. 876.
17 !d., Exhibit "P-7", p. 877.
18 !d., Exhibit "P-8", p. 878.
19 !d., Exhibit "P-10", p. 881.
20 !d., Exhibit "P-9", pp. 879-880.
21 !d., Exhibit "P-11", pp. 882.
22 !d., Joint Stipulation of Facts and Issues, Facts Admitted, Par. 5, p. 572.
23
!d., Exhibit "P-14", p. 887.
24
!d., Exhibit "P-12", pp. 883-886.
25 As stated in Respondent's Letter to the BIR dated July 31, 2018.
No. 30 and
26 See Docket, Judicial Affidavit of Josephine B. Poche, Exhibit "P-3", Question
02, 2018, Exhibit "P-15", pp. 866-873 and 888
Respondent's Letter to the BIR dated August
respectively.
Dissenting Opinion
CfA EB No. 2507 (CfA Case No. 9915)
Page 5 of 6

mere afterthough t on the part of BIR and should not be really treated as valid
service of the PAN and FAN to Respondent. More importantly, filing a protest
to the FAN would be unnecessary and idle. The BIR already made a "decision"
on the assessment, the FNBS. The issuance of the same suggests that any request
for reconsiderat ion or reinvestigation of the assessment is already hopeless and
will just be rejected.

Since the audit for Respondent 's books is now in the collection stage, the
second part of Section 7(a)(1) of R.A. No. 1125, as amended by R.A. No. 9282,
"other matters arising under the National Internal Revenue Code or other law or
part of law administered by the Bureau of Internal Revenue" shall apply. Similar
to CIR v. Hambrecht and CIR v. BPI, the issue for the CTA to resolve in the case
at bar was the propriety not of the assessment issued by the BIR but of a tax
collection measure implemente d against Respondent .

Additionally, it could be said that the Second Division's jurisdiction over

the instant case is derived from Section 7 (c)(1) of R.A. No. 1125, as amended by
R.A. No. 9282. The provision states:

"Sec 7. Jurisdiction.- The CTA shall exercise:

XXX XXX XXX

c. Jurisdiction over tax collection cases as herein

provided:

1. Exclusive original jurisdiction in tax

collection cases involving final and executory
assessment s for taxes, fees, charges and
penalties: Provided, however, That collection cases
where the principal amount of taxes and fees.
exclusive of charges and penalties. claimed is less than
One million pesos (]'1.000.000.00) shall be tried by
the proper Municipal Trial Court. Metropolita n Trial
27
Court and Regional Trial Court."

Verily, when the principal amount of taxes and fees, exclusive of charges
and penalties, claimed is One million pesos (Php1,000,000.00) or more, the tax
collection case, whether the tax is a local tax or a national internal revenue tax, is
under the exclusive original jurisdiction of the CTA. The total amount due as
stated in the FNBS for the case under consideratio n is Php34,235,794.91. This
is more than the One million pesos limit and as such falls under the jurisdiction
of the CTA.r/

27
Emphasis and underscoring supplied.
Dissenting Opinion
CTA EB No. 2507 (CTA Case No. 9915)
Page 6 of 6

As to the matter on Respondent's violation of the doctrine of exhaustion

of administrative remedies, suffice it to say that the principle of exhaustion of
administrative remedies may be disregarded when there is a violation of due
process or when to require exhaustion of administrative remedies would be
unreasonable. 28 The BIR violated Respondent's due process rights when it did
not properly serve the PAN and FAN during the assessment process. On the
other hand, as discussed earlier, to require Respondent to ftle a protest to the
FAN would be an exercise in futility. In International Container TerminalS ervices, Inc.
v. City of Manila, Et. AL 29 , the Supreme Court held that "[i]f a party can prove
that the resort to an administrative remedy would be an idle ceremony such that
it will be absurd and unjust for it to continue seeking relief that evidently will not
be granted to it, then the doctrine of exhaustion of administrative remedies will
not apply."

Lastly, I am not unaware of Commissioner of Internal Revenue v. V Y Domingo

Jewellers, Inc. 30 ("CIR v. VY Domingo"). However, there are obvious differences
in the factual milieu between CIR v. V Y Domingo and this case and the former
should not be applied. In CIR v. V Y Domingo, the BIR validly issued the PAN
and the taxpayer was able to ftle a reply I protest to the PAN. In other words,
there was an assessment which the taxpayer was able to dispute. In this case,
there was none. Here, the PAN was not validly served to Respondent and thus
no reply I protest was ftled thereto.

Besides, in the recent case of Commissioner of Internal Revenue v. CTA Second

Division and QL Development, Inc. 31 the High Court ruled that notwithstanding the
taxpayer's failure to file a valid protest to the FAN, the CTA can still exercise its
jurisdiction under the term "other matters" of Section 7 (a) (1) of R.A. No. 1125,
as amended by R.A. No. 9282.

From all the foregoing, I vote to affirm the Decision dated January 11,
2021 and Resolution dated June 16, 2021 of the Second Division in CTA Case
No. 9915.

~. ~ _,_ <..___
MA. BELEN M. RINGPIS-LIBAN
Associate Justice

28 See Kilusang Mayo Uno, Et. AI. v. Hon. Benigno Simeon C. Aquino III, Et. AI., G.R. No. 210500,
April 02, 2019.
29
G.R. No. 185622, October 17, 2018.
30 G.R. No. 221780, March 25, 2019.
31 G.R. No. 258947, March 29, 2022.
 REPUBLIC OF THE PHILIPPINE S
Court of Tax Appeals
QUEZON CITY

En Bane

COMMISSION ER OF INTERNAL CTA EB NO. 2507

REVENUE, (CTA Case No. 9915)
Petitioner,
Present:
DEL ROSARIO, P.J.,
UY,
RING PIS-LIBAN,
-versus- MANAHAN,
BACORRO-VILLENA,
MODESTO-SAN PEDRO,
REYES-FAJA RDO,
CUI-DAVID, and
FERRER-FLO RES, JJ
FOUR SEAS TRADING
CORPORATIO N, Promulgated:

Respondent. APR 0 5 -~~-~~:~qX""'·

X ------------------- ------------------- ------------------- ----

DISSENTING OPINION

MODESTO-SA N PEDRO, J.:

With utmost respect, I withhold my assent to granting the instant

Petition for Review and to the consequent dismissal of CT A Case No. 9915
for lack of jurisdiction.

The ponencia anchored the dismissal of CT A Case No. 9915 on the first
part of Sections 7(a)(l) and (2) of R.A. No. 1125 as amended by R.A. No.
9282 pertaining to the jurisdiction of the CT A to review, by appeal, decisions
of the CIR on "disputed assessments".

I respectfully submit that the CTA Division can exercise jurisdiction

over the present case pursuant to its exclusive appellate jurisdiction to review,
by appeal, "the decisions of the CIR in cases involving other matters arising
under the NIRC or other laws administered by the BIR " as conferred in
Section 7(a)(l) of Republic Act (R.A.) N o. 1125 as amended by R.A. No.
9282.,
DISSENTING OPINION
CTA EB NO. 2507 (CT A CASE NO. 9915)
Page 2 of 6

The V. Y. Domingo Case is not

applicable in the instant case.

In concluding that the first part of Sections 7(a)(l) and (2) of R.A. No.
1125 as amended by R.A. No. 9282 on disputed assessments apply, the
ponencia explained that the factual antecedents of the instant case closely
resembled the factual circumstances in the V. Y. Domingo Case and that the
ruling in V. Y. Domingo Case should thus be applied.

I respectfully disagree.

Briefly, the factual antecedents of the V. Y. Domingo Case are as

follows:

1. On 9 September 2009, the Bureau of Internal Revenue ("BIR")

issued a Preliminary Assessment Notice ("PAN") against V.Y.
Domingo, assessing the latter the total amount of P2, 781,844.21
representing deficiency income tax and value-added tax, inclusive
of interest, for the taxable year 2006.
2. V.Y. Domingo filed a Request for Re-evaluation/Re-investigation
and Reconsideration, dated 17 September 2009, with the Regional
Director ofBIR- Revenue Region No. 6, requesting a "thorough re-
evaluation and re-investigation to verify the accuracy of the
computation as well as the accounts included in the Preliminary
Assessment Notice."
3. V.Y. Domingo then received a Preliminary Collection Letter
("PCL"), dated I 0 August 20 II, from the Revenue District Office
("RDO") No. 28 - Novaliches, informing it of the existence of
Assessment Notice No. 32-06-IT-0242 and Assessment Notice No.
32-06-VT -0243 ("FANs"), both dated 18 November 20 I 0, for
collection of its tax liabilities in the amounts of PI, 798,889.80 and
PI ,365,727.63, respectively, for a total amount ofP3, 164,617.43.
4. On 12 September 2011, V.Y. Domingo sent a letter to the BIR RDO
No. 28 in Quezon City, requesting certified true copies said FANs.
5. On 15 September 2011, V.Y. Domingo received the requested
copies of such notices.
6. On September 16, 20 II a Petition for Review with the CT A in
Division, under Section 7(1) of R.A. No. 1125 and Section 4, Rule
8 of the Revised Rules of the Court of Tax Appeals ("RRCTA''),
praying that Assessment Notice Nos. 32-06-IT-0242 and 32-06-VT-
0243, dated 18 November 2010, and the PCL, dated 10 August 2011,
be declared null and void, cancelled, withdrawn, and with no force
and effect, for allegedly having been issued beyond the prescriptive
period for assessment and collection of internal revenue taxes.

Meanwhile, the settled facts in the instant case as narrated in the

ponencia are as follows:~
DISSENTING OPINION
CTA EB NO. 2507 (CT A CASE NO. 9915)
Page 3 of 6

I. On 3 February 2016, respondent received a Letter of Authority

("LOA") authorizing the examination of respondent's books of
accounts and other accounting records for all internal revenue taxes
fortheperiod 1 January2014to31 December2014;
2. Respondent then submitted several documents in response to the
said LOA;
3. On 31 July 2018, respondent received a Final Notice Before Seizure
("FNBS") stating that it had deficiency taxes for CY 2014 in the
total amount ofP34,235,794.91;
4. On 1 August 2018, respondent requested copies of the Preliminary
Assessment Notice ("PAN"), Formal Assessment Notice ("FAN"),
and Preliminary Collection Letter ("PCL"); and
5. On 30 August 2018, respondent filed the present Petition for Review
with Application for Temporary Restraining Order and/or Writ of
Preliminary Injunction.

From the foregoing, the factual antecedents of the V. Y. Domingo Case

and the present case has significant differences particularly on the following:

V. Y. Domingo Case CIR v. Four Seas Trading

Corporation
A PAN was issued by the CIR No PAN was issued to the
and duly served to the taxpayer taxpayer
After receipt of the PAN, the Since no PAN was issued to the
taxpayer was g1ven the taxpayer, it was not given an
opportunity to file its Request for opportunity to reply thereto
Re-evaluation/Re-investigation
and Reconsideration
PCL was issued to the taxpayer FNBS was issued to the taxpayer
after it filed its Request for Re- after submission of several
evaluation/Re-investigation and documents in response to the
Reconsideration LOA
Upon receipt of the PCL, the Upon receipt of the FNBS, the
taxpayer requested the copies of taxpayer requested copies of the
the FANs from the BIR PAN, FAN, and PCL.

Among the noted differences in factual circumstances, the non-issuance

of the PAN is the most crucial, as it goes into the due process required in every
assessment and, consequently, to the validity of the assessment which
ultimately affects the validity of any collection efforts of the CIR.

Section 228 of the Tax Code is clear that the taxpayer should be
informed in writing of the law and the facts on which the assessment is based;
otherwise, the assessment is void:,k
DISSENTING OPINION
CTA EB NO. 2507 (CT A CASE NO. 9915)
Page4of6

"SEC. 228. Protesting of Assessment. - When the Commissioner or his

duly authorized representative finds that proper taxes should be
assessed. he shall first notify the taxpayer of his findings: provided,
however, That a preassessment notice shall not be required in the following
cases:
(a) When the finding for any deficiency tax is the result of
mathematical error in the computation of the tax as appearing on
the face of the return; or
(b) When a discrepancy has been determined between the tax
withheld and the amount actually remitted by the withholding
agent; or
(c) When a taxpayer who opted to claim a refund or tax credit of
excess creditable withholding tax for a taxable period was
determined to have carried over and automatically applied the
same amount claimed against the estimated tax liabilities for the
taxable quarter or quarters of the succeeding taxable year; or
(d) When the excise tax due on exciseable articles has not been paid;
or
(e) When the article locally purchased or imported by an exempt
person, such as, but not limited to, vehicles, capital equipment,
machineries and spare parts, has been sold, traded or transferred
to non-exempt persons.

The taxpayers shall be informed in writing ofthe law and the facts
on which the assessment is made; otherwise, the assessment shall be
void.

Within a period to be prescribed by implementing rules and

regulations, the taxpayer shall be required to respond to said notice. If the
taxpayer fails to respond, the Commissioner or his duly authorized
representative shall issue an assessment based on his findings."
(Emphasis and underscoring supplied.)

In Prime Steel Mill, Inc. v. Commissioner of Internal Revenue, 1 the

Supreme Court reiterated the well-settled principle enunciated in
Commissioner of Internal Revenue v. Metro Star Superama, Inc. 2 which
emphasized on the importance of a PAN, viz.:

"In the oft-cited case of Commissioner ofInternal Revenue v. Metro

Star Superama, Inc., the Court held that the sending of a PAN is part and
parcel of the due process requirement in the issuance of a deficiency tax
assessment and the BIR must strictly comply with the requirements laid
down by the law and by its own rules.

The importance of the PAN stage of the assessment process

cannot be discounted as it presents an opportunity for both the
taxpayer and the BIR to settle the case at the earliest possible time
without need for the issuance of a FAN."
(Emphasis and underscoring supplied.)

This distinction is crucial given the importance of a PAN. Thus, unlike

in V. Y. Domingo Case where the validity of the assessment can be upheld,
the same cannot be applied to the instant case).
1 G.R. No. 249153, 12 September 2022.
2 G.R. No. 185371,8 December2010.
DISSENTING OPINION
CT A EB NO. 2507 (CTA CASE NO. 9915)
Page 5 of 6

The Burden to prove receipt of

PAN, FAN, and FLD is shifted to
the CIR.

The ponencia further explains that the V. Y. Domingo Case made clear
that Section 228 of the Tax Code does not qualify how the taxpayer shall
receive the notice from the BIR, whether through a valid service or the
taxpayer's own request or volition.

I respectfully disagree with this conclusion.

I am of the firm view that V. Y. Domingo Case did not make a

categorical pronouncement that the manner of informing the taxpayer of the
facts and law on which the assessment is made may be in any form. The V. Y.
Domingo Case simply pronounced that the PCL is not the CIR's decision on
the disputed assessment which can be appealed to the CT A. There is a
"disputed assessment" to speak of unlike in the present case.

I echo the ruling ofthe Court in Division in CTA Case No. 9915 that in
view of respondent Four Seas' denial of receipt of the PAN, FLD, and FAN,
the burden is shifted to the CIR to prove that the same was received by Four
Seas or by its authorized representative but, the same was not sufficiently
proven by the CIR, viz.:

"In any event, establishing petitioner's address is one thing; but

whether the subject notices were properly served to petitioner in the said
address is quite another.

Based on the foregoing provisions, one of the modes of service of

the PAN, FLD, and FAN is by service through registered mail. As for such
mode of service, the same must be made by sending the said notices
"with instruction to the Postmaster to return the mail to the sender
after ten (10) days, if undelivered." Moreover, to constitute sufficient
proof of mailing, the registry receipt issued by the post office must contain
sufficiently identifiable details of the transaction. Furthermore, it is
required that the "[t]he server shall accomplish the bottom portion of the
notice" and "shall also make a written report under oath before a
Notary Public or any person authorized to administer oath[s] under
Section 14 of the NIRC, as amended, setting forth the manner, place
and date of service, the name of the person ... who received the same
and such other relevant information."

In addition, it has been settled that while a mailed letter is deemed

received by the addressee in the course of mail, this is merely a
disputable presumption subject to controversion, the direct denial of
which shifts the burden to the sender to prove that the mailed letter
was, in fact, received by the addressee.

Considering that petitioner directly denies due receipt of the

subject notices, the burden was shifted to respondent to prove that the;A..-
DISSENTING OPINION
CTA EB NO. 2507 (CT A CASE NO. 9915)
Page6of6

same were indeed received by petitioner or by its authorized

representative.

It can, thus, be inferred from the foregoing that the only evidence
adduced by respondent in proving the fact of mailing are the copies of
the corresponding Registry Receipts issued by the Central Post Office of
Manila when the mailed matters containing the subject PAN and FAN/FLD
were supposedly posted by the BIRon December 27, 2017 and March 20,
2018, respectively. Unfortunately, these hardly suffice to prove that the
said notices were indeed served and received by petitioner or by any of
its authorized representative/s, pursuant to the above-mentioned rules.
These Registry Receipts merely proved the fact of mailing, and nothing
.!!!..!!U:. The glaring fact remains that nowhere can it be seen from the
evidence presented that the said PAN, Assessment Notices, and FLD were
actually served and received by petitioner or by any of its authorized
representative. Particularly, there is no indication in the subject Registry
Receipts that the signatures respectively appearing therein refer to petitioner
or its authorized representative. On this matter, the recent case of
Commissioner of Internal Revenue v. T Shuttle Services, Inc. (T Shuttle
case) is on point, to wit:

Similar to the foregoing case, respondent's [CIR] witness, Mr.

Narcoda, had also expressly admitted during cross-examination that the BIR
has no proof that the said assessment notices were actually received by
petitioner [Four Seas], viz.:

Furthermore, it must be pointed out that a closer examination of the

same Registry Receipts reveals that these documents do not contain any
identifiable details of the transaction. Moreover, there is no showing that
the server of the subject PAN, Assessment Notices, and FLD accomplished
the respective bottom portion thereof; and that written reports under oath
were made, setting forth the manner, place and date of service, the
name of the person who received the same notices, and such other
relevant information. As already stated, these are all required under the
earlier quoted Section 3.1. 6 (iii) of RR No. 12-99, 73 as amended by RR No.
18-2013. Such being the case, respondent [CIR], not only failed to prove
that petitioner actually received the said notices, he likewise neglected
to show compliance with the requirements under the BIR's own rules
and regulations."
(Emphasis supplied; citations omitted)

All told, I VOTE to DENY the instant Petition for Review and
AFFIRM the Assailed Decision dated 11 January 2021 and Assailed
Resolution dated 16 June 2021 in CT A Case No. 9915.

'Ustice
 REPUBLIC OF THE PHILIPPINES
Court of Tax Appeals
QUEZON CITY

ENBANC

COMMISSIONER OF INTERNAL CTA EB No. 2507

REVENUE, (CTA Case No. 9915)
Petitioner,
Present:

DEL ROSARIO, P.J. ,

UY,
RINGPIS-LIBAN,
MANAHAN,
- versus - BACORRO-VILLENA,
MODESTO-SAN PEDRO,
REYES-FAJARDO,
CUI-DAVID, and
FERRER-FLORES, JJ.

FOUR SEAS TRADING Promulgated:

CORPORATION,
Respondent. APR 0 5 2023 p
X- - - - - - - - - - - - - (7J/ aJ.'3,Z q . ,.,.,.,_ .
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -X

DISSENTING OPINION

FERRER-FLORES, J.:

With due respect, I disagree with the ponencia that the Petition for
Review in CTA Case No. 9915 should be dismissed for lack of jurisdiction.

In the Decision, it was pointed out that the Court in Division has no
jurisdiction over the instant case considering that there was neither a decision
or inaction on the part of the Commissioner pursuant to the first part of Section
3(a)(l) and (2), Rule 4 of the 2005 Revised Rules of the Court of Tax Appeals
(RRCTA), 1 nor does it fall within the second part these sections.

1
t
SEC. 3. Cases within the jurisdiction ofthe Court in Division.- T he Court in Division shall exercise:

(a) Exclusive origi na l over or appellate jurisd iction to review by appeal the fo ll owing:
DISSENTING OPINION
CTA EB No. 2507 (CTA Case No. 9915)
Page 2 of6

According to the ponencia, respondent primarily challenged the Formal

Assessment Notice (FAN) it requested and received from the Bureau of
Internal Revenue (BIR) covering calendar year (CY) 2014 based on the
following: (1) aim in filing the petition for review with the Court in Division
was to prevent the FAN from attaining finality; (2) the period to appeal with
the Court in Division was reckoned from receipt of said FAN on August 1,
2018; (3) the nature of the case in the assailed Decision prays for the
cancellation and withdrawal of the FAN issued by petitioner against
respondent for its alleged deficiency taxes for CY 2014 in the aggregate
amount of P34,325, 794.91, inclusive of interests, etc.; (4) the issues jointly
raised by petitioner and respondent or resolution of the Court in Division all
pertain to the validity of the FAN; and (5) the specific prayer in respondent's
Petition for Review seeks to invalidate the FAN.

Considering that respondent appealed the FAN before the Court in

Division, it was found that respondent's ground for the supposed nullity of the
Final Notice Before Seizure (FNBS) was because the FAN from which it is
based is void; therefore, the propriety of the FNBS is inextricably interwoven
with the validity of the FAN. Accordingly, review of the FAN is crucial to
determine the soundness of the collection measure and may not be addressed
separately. The ponencia, thus, ruled that in order to review the FAN, there
should have been a prior protest thereto filed with the BIR, in compliance with
the doctrine of exhaustion of administrative remedy, and a decision or inaction
must ensue.

I respectfully beg to differ.

At the outset, I agree with the discussion of Justice Jean Marie A.

Bacorro-Villena in her Dissenting Opinion. Indeed, the Court in Division has
jurisdiction to entertain respondent's appeal under the second part of Section
3(a)(1) of the RRCTA.

As aptly stated by Justice Villena and Justice Ma. Belen M. Ringpis-

Liban in their Dissenting Opinions, petitioner had already concluded the
assessment proceedings and the assessment was treated by the BIR as final,
executory and demandable, which was the reason why the FNBS was issued.
Respondent can no longer be expected to file an administrative protest against \ .

(I) Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments, ~
refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other
matters arising under the National Internal Revenue Code or other laws administered by
the Bureau of Internal Revenue;
(2) Inaction by the Commissioner of Internal Revenue in cases involving disputed assessments,
refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other
matters arising under the National Internal Revenue Code or other laws administered by
the Bureau of Internal Revenue, where the National Internal Revenue Code or other
applicable law provides a specific period for action: xxx (Emphasis ours)
DISSENTING OPINION
CTA EB No. 2507 (CTA Case No. 9915)
Page 3 of6

the FAN, when it only received the FNBS pursuant to an alleged assessment,
and was not duly served with a PAN or a FAN. Clearly, any protest to an
assessment, if the petitioner had already initiated its collection proceedings,
would be useless and in vain as petitioner already has his own position on the
matter.

As fittingly pointed out by Justice Liban, respondent's assessment

process did not proceed by the usual route. In this case, respondent received
the FNBS before it received any assessment notice.

Still, the position of the ponencia is to require respondent to file a

protest to the FAN when it already received the FNBS, allegedly based on the
FAN. It is my position that, on the contrary, it would not be fair to require
respondent to comply with the usual procedure when petitioner himself did
not comply, i.e., commencing the collection proceedings without even
ensuring that the assessment notices were duly served and actually received
by respondent. Such is a clear violation of due process, a right protected by
our Constitution.

In the case of Commissioner of Internal Revenue vs. Avon Products

Manufacturing, Inc} the Supreme Court said:

"Tax assessments issued in violation of the due process rights of a

taxpayer 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.

The 1997 National Internal Revenue Code, also known as the Tax
Code, and revenue regulations allow a taxpayer to file a reply or otherwise
submit comments or arguments with supporting documents at each stage in
the assessment process. Due process requires the Bureau of Internal
Revenue to consider defenses and evidence submitted by the taxpayer
and to render a decision based on these submissions. Failure to adhere
to these requirements constitutes a denial of due process and taints the
administrative proceedings with invalidity." (Emphasis ours)

Assuming respondent still has to protest to the FAN it requested and

received, the procedure is still flawed; therefore, the assessment is void and,
as such, collection efforts made pursuant thereto should have no valid legal
effect.

Justice Maria Rowena Modesto-San Pedro, in her Dissenting Opinion,

has explained the importance of the issuance of a PAN, and the corresponding

2 G.R. Nos. 201398-99 and 201418-19, October 3, 2018.

~
DISSENTING OPINION
CTA EB No. 2507 (CTA Case No. 9915)
Page 4 of6

opportunity to reply thereto, citing the case of Commissioner of Internal

Revenue vs. Metro Star Superama, Inc, 3 where the Supreme Court reiterated:

"xxx that the sending of the PAN is part and parcel of the due process
requirement in the issuance of a deficiency tax assessment and the BIR must
strictly comply with the requirements laid down by the law and by its own
rules.

The importance ofthe PAN stage of the assessment process cannot

be discounted as it presents an opportunity for both the taxpayer and the
BIR to settle the case at the earliest possible time without need for the
issuance ofF AN." (Emphasis ours)

Based on the foregoing, the PAN is necessary so that the taxpayer and
the BIR may settle the case at the earliest possible time without the need for
the issuance a FAN. Yet, in the instant case, it is already too late for a
settlement as the BIR had already initiated its collection, a step way after the
issuance of a PAN; hence, replying thereto or even protesting to the FAN is
already futile.

This Court has already consistently ruled that, considering that the FAN
was issued without waiting for the lapse of the 15-day period the taxpayer to
file a reply to the PAN, the assessments are void since there is a violation of
the taxpayer's right to due process. 4

In Roca Security and Investigation Agency, Inc. vs. Commissioner of

Internal Revenue, 5 the CTA En Bane elucidated the importance of observing
the fifteen (15)-day period within which the taxpayer may respond to the PAN
before the BIR may issue a FAN, and the consequence of failure to do so, viz:

"It cannot also be denied that with the premature issuance of the FLD
on April 12, 2013, any argument or evidence adduced by petitioner in
support of its protest against the PAN was pointless, if not moot, for at
that time, respondent was already dead-set or bent on upholding the
assessment as contained in the PAN. This indubitably constitutes denial
of due process as petitioner was not given the opportunity to dispute and
present evidence against the PAN, before the final assessment was
issued."

Equally, protest to the FAN, in this case, is pointless, if not moot, for at
the time of respondent's receipt ofthe PAN and FAN, the FNBS was already
issued and petitioner is already set in his collection of the alleged deficiency
taxes.

~
3
G.R. No. 185371, December 8, 2010.
4 Commissioner of Internal Revenue vs. Airglobe, Inc., CTA EB Case No. 2348, May 23, 2022;
5 CTA EB
No. 1523, March 7, 2018.
DISSENTING OPINION
CTA EB No. 2507 (CTA Case No. 9915)
Page 5 of6

In this regard, my stance is that we cannot require respondent to file a

protest to the FAN before elevating the matter to this Court, when it was not
even given an opportunity to reply to the PAN which it allegedly received a
day before the claimed receipt of FAN, more so when FNBS was already
issued. The FAN, having been received a day after the PAN was provided to
the taxpayer, is already a clear violation of due process, thereby rendering the
assessment void, and the corresponding collection without any effect.

Moreover, the assessment of the alleged deficiency taxes contained in

the PAN and FAN have already prescribed. Respondent is being assessed for
income tax, value-added tax, expanded withholding tax and improperly
accumulated earnings tax covering CY 2014. Clearly, the last day to assess
for income tax, which has the last filing date among all the tax types assessed,
would be April2018. If the actual receipt of the FAN on August 2, 2018 is to
be considered, the assessment had already prescribed; 6 hence, the assessment
is still void and the corresponding deficiency taxes cannot be collected.

I also agree with Justice San Pedro's observation that the case of V Y
Domingo is not on all fours with the instant case considering that most factual
circumstances differ. Unlike in the case of V Y Domingo where the taxpayer
received the PAN and the taxpayer had been initially apprised of its tax
liabilities, respondent here is not aware of any possible assessment issued
against it until it received the FNBS. Since, the period to assess respondent
for CY 2014 taxes had already lapsed, respondent is no longer expecting any
assessment from petitioner.

Finally, the assailed Decision dated January 11, 2021 and the assailed
Resolution dated June 16, 2021 have extensively discussed the violation of
due process when respondent denied receipt of the assessment notices and
petitioner failed to overcome the burden of proving that the same were indeed
received by respondent or by its authorized representative.

Based on the foregoing, the assessment is void. Evidently, petitioner

believes that the assessment stage had already concluded, which is why he
issued an FNBS. Even if the assessment has become final, executory and
demandable, still the FNBS will have no legal effect considering that the
assessment is void to begin with.

~
6
SEC. 203. Period of Limitation Upon Assessment and Collection. • Except as provided in Section 222,
internal revenue taxes shall be assessed within three (3) years after the last day prescribed by law for the
filing of the rehJm, and no proceeding in court without assessment for the collection of such taxes shall
be begun after the expiration of such period: Provided, That in a case where a return is filed beyond the
period prescribed by law, the three (3)-year period shall be counted from the day the return was filed. For
purposes of this Section, a return filed before the last day prescribed by law for the filing thereof shall be
considered as filed on such last day.
DISSENTING OPINION
CTA EB No. 2507 (CTA Case No. 9915)
Page 6 of6

All told, I VOTE to DENY the instant Petition for Review and
AFFIRM the assailed Decision dated January 11, 2021 and assailed
Resolution dated June 16, 2021 in CTA Case No. 9915.

co~t.'~~s
Associate Justice