REPUBLIC OF THE PHILIPPINES

SUPREME COURT
MANILA
[email protected] | Tel No. +63 2 8552-9644

COMMISSIONER OF
INTERNAL REVENUE,
Petitioner,

- versus -
G.R. No. 249540
ARTURO E.
VILLANUEVA, JR.,
Respondent.

x------------------------------------------x

MEMORANDUM
(FOR COMMISSIONER OF INTERNAL REVENUE)

APPELLANT, COMISSIONER OF INTERNAL REVENUE (CTA EB No.

1771.), by counsel, to the Honorable Court most respectfully avers that:

TIMELINESS OF FILING

1. It is most respectfully manifested that upon perusal of records of the

case, the undersigned counsel has not received an Order of the Court to
submit a Memorandum.

2. It is further manifested that COMMISSIONER OF INTERNAL REVENUE

through the undersigned counsel has actively participated in the instant
case to defend his rights and interests in the subject matter.

3. In this light, the undersigned respectfully moves that this

Memorandum be admitted by this Honorable Court as part of the records of
the instant case.
 STATEMENT OF THE CASE
MATERIAL FACTS OF THE CASE

4. ARTURO E. VILLANUEVA, JR. is engaged in the business of providing

hauling services under the name Producers Connection Logistics, with
registered address at No. 324 Younger St., Balut, Tondo, Manila.

5. For taxable year 2006, ARTURO E. VILLANUEVA, JR. filed with the
BUREAU OF INTERNAL REVENUE his Annual Income Tax Return (ITR) and
Quarterly VAT Returns, among other tax returns, on the dates prescribed
by law.

6. On July 11, 2008, ARTURO E. VILLANUEVA, JR. received Letter Notice No.
029-WEI-00-00041 dated June 20, 2008. Meanwhile, on May 14, 2009, he
received a follow-up letter (Tax Reconciliation System). Thereafter, on
June 15, 2009, he received Letter of Authority No. 2001-00012853 dated
June 8, 2009 and the First Request for Presentation of Records.

7. ARTURO E. VILLANUEVA, JR. then received the 1st Call-up dated May 23,
2011 from Revenue District Office (RDO) No. 29 for the collection of
deficiency income tax and VAT in the amounts of [PHP] 23,349,944.59
and [PHP] 7,374,006.51, respectively.

8. On June 21, 2011, ARTURO E. VILLANUEVA, JR. received a Final Notice

Before Seizure (FNBS) dated June 6, 2011, issued by RDO No. 29 of
Revenue Region No. 6-Manila.

9. On July 13, 2011, ARTURO E. VILLANUEVA, JR. sent a reply-letter to RDO

No. 29, seeking clarification with regard to the 1st Call-up and FNBS, and
requesting a clarification and re-investigation of his case.

10. On September 6, 2011, ARTURO E. VILLANUEVA, JR. received a letter

dated August 31, 2011 from the Regional Director of Revenue Region No.
6-Manila.

11. ARTURO E. VILLANUEVA, JR. received a Collection Notice dated October

29, 2012 from the BIR. On November 14, 2012, he requested for the
revocation of the Collection Notice ... but the same was denied in a letter
issued by [the CIR] through the Chief of Collection Division of Revenue
Region No. 6-Manila.

12. On December 13, 2013, ARTURO E. VILLANUEVA, JR. sent a letter dated
December 11, 2013 to the Regional Director of Revenue Region No. 6-
 Manila, requesting reconsideration of the denial of the request for
revocation of the collection notices issued by [the CIR]. Then, on October
31, 2014, ARTURO E. VILLANUEVA, JR. received a letter dated October
14, 2014, issued by the Regional Director of Revenue Region No. 6-
Manila, denying ARTURO E. VILLANUEVA, JR.'s request for
reconsideration and reinvestigation.

PROCEEDINGS IN THE COURT A QUO

13. ARTURO E. VILLANUEVA, filed a Petition for Review before the CTA
Division;

14. The case was set for pre-trial conference where both parties admitted
that the Final Assessment Notices (FAN) was issued only sometime in
2011 and that no Waiver of the Statute of Limitation has been issued by
ARTURO E. VILLANUEVA, JR. for taxable year 2006.

15. CTA Division directed the parties to submit their respective

Memoranda containing their positions.

16. Both parties submitted their respective position papers. However, the
CIR claimed that the prescriptive period should be ten (10) years as the
case involves a substantial under declaration, amounting to falsity or
fraud on [respondent]'s part.

17. On June 9, 2015, CTA Division issued a Resolution on June 9, 2015,

holding that the arguments raised by both parties involve evidentiary
matters requiring a full-blown trial, and that no valid ground to dismiss
the case, to render a judgment based on the pleadings, or to render a
summary judgment at that stage of the proceedings. Hence, trial
ensued.

18. In its Decision dated August 18, 2017, the CTA Division found that the
CIR was able to establish that the Preliminary Assessment Notice (PAN)
and FAN with Formal Letter of Demand (FLD) were properly issued and
served to respondent at his registered business address, through
registered mail. However, it ordered the cancellation of the deficiency
income tax and VAT assessments for taxable year 2006 because the CIR
was not able to clearly establish any substantial under-declaration and/or
fraud on respondent's income tax and VAT returns. Hence, the CTA
Division ruled that the three-year period within which to assess internal
revenue taxes under Section 203 of the National Internal Revenue Code
(NIRC) of 1997, as amended, had already lapsed when the FAN and FLD
were issued on January 24, 2011.
19. The CIR moved for reconsideration but this was denied by the CTA
Division in its Resolution dated January 10, 2018.

20. The CTA En Banc affirmed the CTA Division's findings. It ruled that the
applicable prescriptive period in this case is three years and not 10 years
because the CIR failed to establish that respondent's tax return was false
or fraudulent.

21. CTA EB denied the CIR's Motion for Reconsideration.

ISSUE

22. Herein parties submit the following issue for the resolution of this
Honorable Court:

a. Whether the PAN and FAN were validly served upon respondent;
and
b. Whether the Bureau of Internal Revenue's (BIR) right to assess
respondent for deficiency taxes for taxable year 2006 has already
prescribed.

ARGUMENTS

23. Herein party submits the following arguments:

a. CIR insists that it was able to prove receipt by appellant of the

pertinent PAN and FAN/FLD despite the latter's unfounded claim of
denial. According to the CIR, Registry Receipt No. 921958 dated
December 28, 2010, and Registry Receipt No. 903220 dated
January 24, 2011 proved that the PAN and F AN/FLD were duly
issued and served to respondent at his registered business address,
through registered mail.
b. CIR further claims that the assessment notices were issued and
served to respondent well within the prescribed period to make an
assessment.
c. CIR argues that the subject assessments are already final,
executory, and demandable because respondent failed to file a
valid protest within 30 days from receipt of the assessments.

DISCUSSION

I. CIR insists that it was able

 to prove receipt by appellant
of the pertinent PAN and FAN/FLD

24. Despite the latter's unfounded claim of denial, CIR insists that Arturo E.
Villanueva Jr. was able to receive the pertinent PAN and FAN/FLD.
According to the CIR, Registry Receipt No. 921958 dated December 28,
2010, and Registry Receipt No. 903220 dated January 24, 2011 proved
that the PAN and F AN/FLD were duly issued and served to respondent at
his registered business address, through registered mail.

II. CIR further claims that the

assessment notices were issued
and served to respondent well
within the prescribed period
to make an assessment

25. The CIR further claims that the assessment notices were issued and
served to respondent well within the prescribed period to make an
assessment. Citing the case of Commissioner of Internal Revenue v.
Asalus (Asalus), where the Court defined a false return under Section
222(a) of the 1997 NIRC as deviation from the truth, whether intentional
or not, the CIR maintains that the 10-year prescriptive period applies in
this case in view of respondent's failure to disclose in his 2006 ITR his
gross income amounting to PHP 31,671,388.34

It is respectfully submitted that the claim for certiorari by

COMMISSIONER OF INTERNAL REVENUE be granted outright for
it is evident that the assessments for deficiency income tax and
value-added tax (VAT) for taxable year 2006 issued against
respondent Arturo E. Villanueva Jr. is valid on the ground of
prescription.

PRAYER

WHEREFORE, premises considered, it is most respectfully prayed of

the Honorable Court that:

a. in relation to CTA EB No. 1771, the Decision and Resolution of the

Honorable CTA dated March 13, 2019, 2019 and September 16,
 2019 26, 2022 and May 8, 2023 in re CTA Case No. 8935 be
DENIED.

Other just and equitable reliefs under the premises are likewise prayed
for.

Respectfully submitted.

Batangas City for Manila, 24th day of May, 2024.