BARRIO FIESTA MANUFACTURING CORPORATION v. COMMISSIONER OF INTERNAL REVENUE

CTA Form No.8 (For DCC) 1111111111111111111111 11111 11111 1111111111111111111111111 11111 111111111111111111 I 8-000258-0077 REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY SPECIAL FIRST DIVISION CTA CASE NO. .9850 BARRIO FIESTA Petitioner, MANUFACTURING CORPORATION, NOTICE OF RESOLUTION -versus- COMMISSIONER OF INTERNAL REVENUE, Respondent. To: OFFICE OF THE SOLICITOR GENERAL 134 Amorsolo St., Legazpi Vi llage Makati City ATTY. AYLEEN B. ALMIRA Bureau of Internal Revenue-Revenue Region No.5 Legal Division, 9th Floor, BIR Executive Building No. 140 Bo. Kalaanan, Brgy. 86 M. Concepcion St., Caloocan City DU-BALADAD & ASSOCI ATES 20th Floor, Chatham House Rufino cor. Valero Streets Salcedo Village, Makati City GREETINGS: You are hereby notified by these presents that on November 7, 2024, a Reso lution was rendered in the above-entitled case, copy of which is attached hereto. Quezon City, Philippines, November 8, 2024. Atty. Page I of I

REPUBLIC OF THE PHILIPPINES COURT OFTAX APPEALS QUEZON CITY SPECIAL FIRST DIVISION BARRIO FIESTA CTA Case No. 9850 MANUFACTURING Members: CORPORATION, DEL ROSARIO, PJ, Chairperson, MANAHAN, and Petitioner, REYES-FAJARDO, JL - versus - COMMISSIONER OF Promulgated : INTERNAL REVENUE, Respondent. X- - -- --- - ----- ------------- - -- R E SOLU T ION REYES-FAJARDO, J.: For action is petitioner's Motion for Reconsideration (Re: Decision dated February 20, 2024)1 filed on March 15, 2024, w ith respondent's Comment/Opposition (on Petitioner's Motion for Reconsideration to this Honorable Court's February 20, 2024 Decision)2 filed on May 7, 2024. Un der Decision dated Febr uary 20, 2024 3 (the "assailed Decision"), CTA Case No. 9850 was disposed as follows:4 "WHEREFORE, we RESOLVE to: a. DENY the Petition for Review dated June 6, 2018, filed by Barrio Fiesta Manufacturing Corporation, for lack of merit; b. ORDER petitioner to PAY the total amount of NINE MILLION FIVE HUNDRED NINETY-THREE THOUSAND FIVE Motion for Reconsideration, Docket, Vol. II, pp. 957- 981 . 2 Comment/Opposition, Docket, Vol. II, pp. 984-991. 3 Decision, Docket, Vol. II, pp. 937 - 952. 4 Id. at pp. 950- 951 .

RESOLUTION CTA Case No. 9850 HUNDRED SIXTY-EIGHT PESOS AND TWENTY-NINE CENTAVOS (1"9,593,568.29), inclusive of the surcharge and deficiency interest imposed under Sections 248(A)(3) and 249(B) of the NIRC of 1997, as amended by Republic Act (RA) No. 10963, also known as Tax Reform for Acceleration and Inclusion (TRAIN), as implemented by Revenue Regulations (RR) No. 21-2018, computed as follows: Basic Deficiency VAT p 6,166,075.17 25% Surcharge 1,541,518.79 20% Deficiency Interest from 07/26/2016 to 12/31/2017 1,770,423.77 {!'6,166,075.17 X 20% X 524/365 dn1JS} 12% Deficiency Interest from 01/01/2018 to 02/26/2018 115,550.56 p 9,593,568.29 [!'6,166,075.17 x 12% x 57/365 dnvs] Total Amount Due as of February 26, 2018 c. ORDER petitioner to PAY respondent delinquency interest at the rate of twelve percent (12%) per annum on the P9,593,568.29 total amount due as of February 26, 2018, or an amount equivalent to P3,154.05 per day, from February 26, 2018 until full payment thereof pursuant to Section 249(C) of the NIRC of 1997, as amended by RA No. 10963 and implemented by RR No. 21-2018; and, d. UPHOLD the Final Notice Before Seizure assailed by petitioner in this case. SO ORDERED." In its Motion for Reconsideration,s petitioner argues: a) a void assessment can never be final and executory, as held in Commissioner of Internal Revenue v. Metro Star Superama, Inc. ("Metro Star");6 b) the assessments in question were void for respondent's violation of petitioner's right to due process by not complying with the "duty to give reason"; c) the Formal Letter of Demand/Final Assessment Notices (FLD/FAN) is void for being issued and signed by an officer without proper authority; d) petitioner is not liable for the alleged deficiency value-added tax (VAT) and compromise penalty for the 1st and 2nd quarters of 2016 arising from supposed undeclared sales per third party information; and e) the Preliminary Collection Letter (PCL) and Final Notice Before Seizure (FNBS) issued against petitioner are void. Motion for Reconsideration, Docket, Vol. II, pp. 957- 981. 6 G.R. No. 185371, December 8 2010.

RESOLUTION CTA Case No. 9850 On the other hand, respondent, in his Comment/Opposition, 7 retorts that: a) the final assessment has become final, executory and demandable, there being no protest filed by the petitioner; b) petitioner was timely assessed following the prescribed audit procedure; and c) petitioner was afforded due process in the issuance of a deficiency tax assessment pursuant to Revenue Regulations No. 12-99, as amended by Revenue Regulations No. 18-2013. The Motion lacks merit. First. We note that all the grounds advanced by petitioner in its Motion are centered around the supposed nullity of the final assessment. Before such grounds may even be reviewed by the Court, petitioner should have first disputed the FLD/FAN, and appeal the decision or inaction thereon by respondent or his duly authorized representative. As discussed in page 14 of the assailed Decision, petitioner failed to validly lodge an administrative protest on the FLD/FAN, despite receipt thereof; precisely, the assessed taxes found therein was conclusive upon petitioner. Second. Metro Star is inapplicable here. True, in said case, the Supreme Court ruled that it need not discuss the matter of whether therein taxpayer registered an administrative protest because a void assessment bears no valid fruit. Such conclusion was grounded on the violation of therein taxpayer's right to due process for the BIR's failure to prove that said taxpayer actually received the Preliminary Assessment Notice (PAN). Contrasted from Metro Star, petitioner's receipt of the PAN was not at issue in this case. In fact, petitioner: (1) admitted that it received the PAN, served by the BIR; s and (2) it filed a Reply thereon.9 On these accounts, due process has been observed in the issuance of the PAN with respect to petitioner. Finally. Had petitioner registered a valid administrative protest on the BIR's FLD/FAN, the former could have properly ventilated its points why such final assessment is null, and eventually, we could have possibly reviewed the soundness of those points. Petitioner did 7 Comment/Opposition, Docket, Vol. II, pp. 984- 991. Decision, Docket, Vol. II, p. 938. !d

RESOLUTION CTA Case No. 9850 no such thing. Therefore, the only one to blame for such predicament is petitioner itself. WHEREFORE, petitioner's Motion for Reconsideration (Re: Decision dated February 20, 2024) is DENIED, for lack of merit. The Decision dated February 20,2024 is AFFIRMED. SO ORDERED. ~ ~ F.~-fa1~ MARIAN I\76)F. RD9mi-FAYARDO Associate Justice WE CONCUR: Presiding Justice C~' /.A~ec...<. -r..~..t.~- cATHERINE T. MANAHAN Associate Justice