TOASTERLEVER, INC. v. COMMISSIONER OF INTERNAL REVENUE

CTA Forrn No. 8 (For DCC) 1111111111111111111111 11111 11111 111111111111111111111111111111111111111111111111 21 -000400-0064 REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY FIRST DIVISION CTA CASE N0.10646 TOASTERLEVER, INC., Petitioner, - versus - NOTICE OF RESOLUTION COMMISSIONER OF INTERNAL REVENUE, Respondent. To: OFFICE OF THE SOLICITOR GENERAL 134 Amorsolo Street, Legazpi Vill age Makati City ATTY. ALBERT C. ARPON ATTY. CARL FITRI A. HUSSIN ATTY. AVELINO G. ALFELOR JR. Bureau of Internal Revenue-Revenue Region No. 8A 36th Floor, Legal Division, Export Bank Plaza Building Sen. Gil Puyat Avenue corner Chino Roces Avenue Makati City CAYETANO SEBASTIA!\ ATA DADO & CRUZ LAW OFFICES 12th Floor, NDC Building, 116 Tordesillas Street Salcedo Village, Makati City GREETINGS: You are hereby notified by these presents that on March 25, 2025, Resolution was rendered in the above-entitled case, copy of which is attached hereto. Quezon City, Philippines, March 27, 2025. Atty. Ma garette Y. uzman Executi e Clerk of Cou III

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY FIRST DIVISION TOASTERLEVER, INC., CTA CASE NO. 10646 Petitioner, Members: -versus- DEL ROSARIO, P.J., Chairperson, BACORRO-VILLENA, and CUI-DAVID, JJ. COMMISSIONER OF Promulgated: INTERNAL REVENUE, Respondent. '{j).tXJA!Jl CUI-DAVID, J.: Before this Court 1s respondent's Motion for Reconsideration (Motion), filed via accredited courier and electronic mail (e-mail) on October 17, 2024, with respondent's Comment/Opposition [RE: Motion for Reconsideration dated 17 October 2024], filed via accredited courier and e-mail on October 24, 2024. Respondent seeks the reversal of the Court's Decision promulgated on September 23, 2024, which granted petitioner's Amended Petition for Review. The dispositive portion of the Decision reads: WHEREFORE, in light of the foregoing, the instant Amended Petition for Review is GRANTED. Accordingly, respondent's Formal Letter ofDemand with Assessment Notices, all dated October 12, 2020, assessing petitioner for deficiency taxes for taxable year 2017 in the total amount of P8,070,828.51, inclusive of interest, and ~he Warrant of Distraint and/or Levy dated June 30, 2021, are CANCELLED and SET ASIDE.

RESOLUTION CTA Case No. 10646 Toasterlever, Inc. v. Commissioner of Internal Revenue X------------------------------------------------------------------------------------------X Further, respondent is ENJOINED and PROHIBITED from proceeding with the collection of taxes in the above- captioned case. SO ORDERED. In his Motion, respondent contends that he was able to establish that the individuals who received the Bureau of Internal Revenue (BIR) notices were registered employees of petitioner. He further argues that petitioner's protests were invalid, and, as such, the BIR was justified in disregarding them without violating due process. Petitioner, on the other hand, maintains that the improper service of the Notice of Informal Conference (NIC), Preliminary Assessment Notice (PAN), and the Final Assessment Notice and Formal Letter of Demand (FLD) violated its right to due process. After due consideration, the Court resolves to DISMISS respondent's Motion. Firstly, records reveal that respondent, through the Office of the Solicitor General (OSG), received the Notice ofDecision on September 30, 2024, while the BIR received it on October 2, 2024. Section 11 of Republic Act (RA) No. 1125,1 as amended by RA No. 9282,2 provides: SEC. 11. Who May Appeal; Mode of Appeal; Effect of Appeal.- ... "All other cases involving rulings, orders or decisions filed with the CTA as provided for in Section 7 shall be raffled to its Divisions. A party adversely affected by a ruling, order or decision of a Division of the CTA may file a motion for reconsideration or new trial before the same Division of the CTA within fifteen (15) days from notice thereof: Provide, however, That in criminal cases, the general rule applicable in regular Courts on matters of prosecution and appeal shall likewise apply. ... [Emphasis supplied] AN ACT CREATING THE COURT OF TAX APPEALS. 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 OF REPUBLIC ACT NO. 1125. AS AMENDED, OTHERWISE KNOWN AS THE LAW CREATING THE COURT OF TAX APPEALS, AND FOR OTHER PURPOSES.

RESOLUTION CTA Case No. 10646 Toasterlever, Inc. v. Commissioner of Internal Revenue Page 3 of4 X------------------------------------------------------------------------------------------X Accordingly, respondent had 15 days from September 30, 2024, or until October 15, 2024, to file a Motion for Reconsideration. However, respondent filed the Motion for Reconsideration only on October 17, 2024, two days beyond the deadline. The Court emphasizes that the proper basis for computing the reglementary period to file an appeal and in determining whether a decision has attained finality is service on the OSG, not to the BIR. The lawyer deputized by the OSG is considered a mere representative of the latter, who retains supervision and control over the deputized lawyer. As a consequence, copies of orders and decisions served on the deputized counsel, acting as agent or representative of the Solicitor General, are not binding until they are actually received by the latter.3 Given the late filing of respondent's Motion, the assailed Decision dated September 23, 2024, has become final, executory, and unappealable, thereby depriving thi~ Court of jurisdiction to entertain the Motion. Even assuming arguendo that the Motion was timely filed, it would still fail on the merits. The violation of due process committed by respondent has been thoroughly addressed in the assailed Decision. It is evident that the notices were received by individuals who were not authorized by petitioner to receive communications. Specifically, the undated NIC was received by Mr. Carlo Manaois, a dining server at petitioner's restaurant;4 the PAN was received by Mr. Curt Bartolome, who was not an employee of petitioner;s and the FAN/FLD was received by Mr. Rodolfo Fonte, a former dining assistant at The Flying Pan.6 The Court underscores that being an employee of a taxpayer does not, in itself, confer authority to receive BIR notices, contrary to what respondent seems to suggest. BIR( Ba!dovino-Torres v. Torres, G.R. No. 248675, July 20, 2022 [Per J. Inting, Third Division], citing ,11./ational Power Corp. v. National Labor Relations Commission, G.R. Nos. 90933-61, May 29, 1997 [Per J. Romero, Second Division]. Amended Petition for Reviev.�, par. 3.3 and 3.3.1, admitted by respondent in his Answer, pars. 4 and 7: Exhibit "P- 1T, Docket- VoL lV, p. 1750. Amended Petition for Review, par. 3.4.1, admitted by respondent in his Answer, par. 4; Exhibit ..P-11-a.., Docket- Vol. IV. p. I687. Amended Petition for Review, par. 3.12, admitted by respondent in his Answer, par. 15; Exhibit .. P-12-a'', Docket -Vol. IV, p. I696.

RESOLUTION CTA Case No. 10646 Toasterlever, Inc. v. Commissioner of Internal Revenue Page 4 of4 x------------------------------------------------------------------------------------------x issuances7 mandate strict compliance with service procedures to ensure that notices are received by individuals duly authorized to act on behalf of the taxpayer, thereby safeguarding the taxpayer's right to due process. Moreover, Mr. Bartolome, who received the PAN, 1s not even considered an employee of petitioner. Thus, the Court reaffirms its ruling that respondent's failure to strictly comply with the requirements laid down by law and the BIR rules constitutes a denial of the taxpayer's right to due process. 8 The improper service of the NIC, PAN, and FAN /FLD violated petitioner's right to be properly informed and heard and rendered the deficiency tax assessment null and void. WHEREFORE, in light of the foregoing, respondent's Motion for Reconsideration is hereby DENIED for being filed out of time. SO ORDERED. ~/h1~ LANEE S. CUI-DAVID Associate Justice WE CONCUR: Presiding Justice ON OFFICIAL BUSINESS JEAN MARIE A. BACORRO-VILLENA Associate Justice Section 3.1.6 of Revenue Regulations (RR) No. 12-99, as amended by RR 18-13. Commissioner of Internal Revenue v. South Entertainment Gallery, Inc., G.R. No. 223767, April 24, 2023 [Per C.J. Gesmundo, First Division].