COMMISSIONER OF INTERNAL REVENUE v. RIECKERMANN PHILIPPINES, INC.

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY ENBANC COMMISSIONER OF INTERNAL CTA EB NO. 2704 REVENUE, (CTA Case No. 9613) Petitioner, Present: -versus- DEL ROSARIO, P.J., RINGPIS-LIBAN, RIECKERMANN PHILIPPINES, MANAHAN, INC. , BACORRO-VILLENA, MODESTO-SAN PEDRO, Respondent. REYES-FAJARDO , CUI-DAVID, . FERRER-FLORES, and ANGELES, JJ. Promulgated: OCT 0 1 202~ )C - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -)C RESOLUTION CUI-DAVID, J.: Before the Court En Bane is the Motion for Reconsideration (En Bane Decision dated 13 May 2024)1 filed by petitioner on May 28, 2024, assailing the Decision 2 promulgated on May 13, 2024 (assailed Decision) , the dispositive portion of which reads: WHEREFORE, premises considered , the Petition for Review filed by the Commissioner of Internal Revenue is DENIED, for lack of merit. The assailed Decision dated July 22, 2021 is AFFIRMED. SO ORDERED. ~ 1 En Bane Docket, pp. 99-1 02. 2 /d., pp. 67-93.

RESOLUTION CTA EB No. 2704 (CTA Case No. 9613) Commissioner of Internal Revenue v. Rieckermann Philippines, Inc. x------------------------------------------------------------------------------------------x The assailed Decision sustained the ruling of the Court in Division ordering the cancellation and setting aside� of the deficiency tax assessments issued by petitioner against respondent for taxable year (TY) 2006 for failure to prove the authority of the Revenue Officers (ROs) who conducted the audit/ examination of respondent's books of accounts and other accounting records for TY 2006. The assailed Decision further ruled that even assuming that the authorities of the ROs were duly proven, the deficiency tax assessments against respondent are still void for having been issued in violation of respondent's right to administrative due process. In moving for the reconsideration of the assailed Decision, petitioner reiterates his argument that the subject Letter of Authority (LOA) should not be offered in evidence. Allegedly, both parties admitted and never made an issue about the issuance of the LOA. Hence, for petitioner, the same constitutes judicial admission, and proof of the same 1s no longer necessary. Further, petitioner asserts that only the Final Decision on Disputed Assessment (FDDA) was challenged in respondent's Petition for Review and not the original assessment. Hence, petitioner submits that the administrative assessment that transpired before the issuance of the FDDA should not be questioned considering that respondent did not make it an lSSUe. By way of Comment (To the Motion for Reconsideration dated 28 May 2024}, respondent submits that petitioner's Motion for Reconsideration should be denied for lack of merit. First, the Court En Bane correctly ruled that the Court in Division did not err in ruling that the failure to present proof that the ROs were duly authorized to examine respondent's books of accounts and other accounting records for TY 2006 rendered the assessments null and void. According to respondent, the Court En Bane correctly found that "there was no admission on the existence or issuance of an LOA," given that both parties provided different details of the subject LOA. Hence, petitioner's failure to offer in evidence the subject LOA is detrimental to his case as there is no proof that the ROs who initially examined respondent's books of accounts are duly authorized. ~

RESOLUTION CTA EB No. 2704 (CTA Case No. 9613) Commissioner of Internal Revenue v. Rieckermann Philippines, Inc. x------------------------------------------------------------------------------------------x Second, petitioner's contention that the administrative assessment that transpired before the issuance of the FDDA should not be questioned, considering that respondent did not make it an issue, is untenable. According to respondent, the Revised Rules of the Court of Tax Appeals (RRCTA) provides that "the Court may not limit itself to the issues stipulated by the parties but may also rule upon related issues necessary to achieve an orderly disposition ofthe case." Petitioner's Motion for Reconsideration must fail. After a careful examination of the record and meticulous evaluation of the arguments proffered by petitioner in its Motion for Reconsideration, the Court En Bane finds that, except for petitioner's assertion that the administrative assessment that transpired before the issuance of th~ FDDA should not be questioned considering that respondent did not make it an issue, all the other arguments stated in the Motion have already been thoroughly discussed and passed upon, first by the Court in Division and subsequently on appeal, by the Court En Bane. Restating the discussion is a waste of time and resources for the Court. Anent petitioner's claim that the administrative assessment that transpired before the issuance of the FDDA should not be questioned considering that respondent did not make it an issue, suffice it to say that the Court of Tax Appeals (CTA) may also rule upon related issues necessary to achieve an orderly disposition of the case. This authority of the CTA was affirmed by the Supreme Court in Commissioner of Internal Revenue v. Lancaster Philippines, Inc., 3 to wit: "On whether the CTA can resolve an issue which was not raised by the parties, we rule in the affirmative. Under Section 1, Rule 14 of A.M. No. 05-11-07-CTA, or the Revised Rules of the Court of Tax Appeals, the CTA is not bound by the issues specifically raised by the parties but may also rule upon related issues necessary to achieve an orderly disposition of the case. The text of the provision reads: SECTION 1. Rendition ofjudgment. - x x x 3 G.R. No. 183408, 12 July 2017.

RESOLUTION CTA EB No. 2704 (CTA Case No. 9613) Commissioner of Internal Revenue v. Rieckermann Philippines, Inc. x------------------------------------------------------------------------------------------x In deciding the case, the Court may not limit itself to the issues stipulated by the parties but may also rule upon related issues necessary to achieve an orderly disposition of the case. The above section is clearly worded. On the basis thereof, the CTA Division was, therefore, well within its authority to consider in its decision the question on the scope of authority of the revenue officers who were named in the LOA even though the parties had not raised the same in their pleadings or memoranda. The CTA En Bane was likewise correct in sustaining the CTA Division's v1ew concerning such matter." (Boldfacing supplied) Clearly, the CTA has the authority to rule upon related issues necessary to achieve an orderly case disposition. Considering that the case involves deficiency tax assessments, it is imperative for the Court in Division first to determine their validity before it can proceed to determine the merits of the case. WHEREFORE, the Motion for Reconsideration filed by the petitioner Commissioner of Internal Revenue is DENIED, for lack of merit. SO ORDERED. kvvntiJJJj� . LANEE S. CUf-:DAVID Associate Justice We Concur: ROMAN G. DEL ROSARIO Presiding Justice CfN.. ~ __, '--- MA. BELEN M. RINGPIS-LIBAN Associate Justice ~�7�~ CATHERINE T. MANAHAN Associate Justice

RESOLUTION CTA EB No. 2704 (CTA Case No. 9613) Commissioner of Internal Revenue v. Rieckermann Philippines, Inc. X------------------------------------------------------------------------------------------X ~~ F.~-Faj~ MARIAN lVY<&J. REYES-FAJARDO Associate Justice ON LEAVE CORAZON G. FERRER-FLORES Associate Justice HENRY j/i}NGELES Associate Justice