COMMISSIONER OF INTERNAL REVENUE v. STARSMASH BADMINTON CENTER CORPORATION

Republic of the Philippines COURT OF TAX APPEALS Quezon City En Bane COMMISSIONER OF INTERNAL CTA EB No. 1379 REVENUE, (CTA Case No. 8523) Petitioner, Present: -versus- DEL ROSARIO, Pj, CASTANEDA, JR., BAUTISTA, UY, CASANOVA, FABON-VICTORINO, MINDARO-GRULLA, RINGPIS-LIBAN, and MANAHAN, J1. STARSMASH BADMINTON CENTER Promulgated: CORPORATION, Respondent. J Ul 2 4 2017'j �!if___!:'-� X- -- - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - ~- - -- - - - - X RESOLUTION CASANOVA, L.: Before Us is petitioner's Motion for Reconsideration (Decision dated 21 March 2017)1 filed on April 12, 2017 with respondent's Comment (To Respondent's [sic] Motion for Reconsideration) 2 filed on June 1, 2017. In his Motion, petitioner seeks reconsideration of the Court En Bane Decision3 dated March 21, 2017. He prays that a new one be rendered upholding the validity of Assessment No. 39-804-07 which~ 1 CTA En Bane Rollo, pp. 75 -81 2Jbid. , pp. 92-103 3 !d. , pp. 54-6 7

RESOLUTION CTA EB No. 1379 (CTA Case No. 8523) Page 2 ofS was issued against respondent. The dispositive portion of the assailed En Bane Decision reads as follows: "WHEREFORE, the instant Petition for Review is hereby DENIED for lack of merit. The Decision dated May 29, 2015 and Resolution dated October 20, 2015 in CTA Case No. 8523 are both A~FIRMED. SO ORDERED." In assailing the above Decision, petitioner alleges that the Court En Bane erred in ruling that the assessments were issued in violation of respondent's right to due process. He insists that nowhere in Section 228 of the National Internal Revenue Code (NIRC) of 1997, as amended, does it state that a constructive service of the Final Assessment Notice (FAN) should be attested by at least two revenue officers, other than the revenue officer who constructively served the same, and, that a written report thereof should be made which shall form part of the case docket. Nonetheless, petitioner believes that the purported violation of Revenue Regulations (RR) No. 12-994, does not in any manner affect the validity of the assessment since what matters most was that respondent was duly informed in writing of the law and fact on which the assessment was made. Thus, the fact that the FAN was duly received by respondent would set aside the alleged irregularities in the service of the FAN. Furthermore, petitioner likewise alleges that the Court En Bane erred in ruling that the Waiver of the Defense of Prescription under the Statute of Limitations of the National Internal Revenue Code ("Waiver" for brevity) was defective. Petitioner insists that, considering the Waiver is an agreement between him and the respondent, it is primarily governed by the applicable provisions on contracts, such as Article 13055 of the New Civil Code, as amended. Lastly, petitioner claims that by failing to question the infirmities in the mandatory requirements of the Waiver at the earliest possible time, respondent is also equally at fault under the principle of in pari delicto. Petitioner cites th~ 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", dated September 6, 1999 s Art. 1305. A contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service.

RESOLUTION CTA EB No. 1379 (CTA Case No. 8523) Page 3 ofS Concurring Opinion of Presiding Justice Roman G. Del Rosario in upholding the validity of the subject Waiver. Meanwhile, in its Comment, respondent chiefly claims that there is no reason to .disturb the conclusions reached by the majority in the En Bane decision. Respondent contends that petitioner's allegations are wrong and misplaced; it asserts that, ever since the onset, it has established that the FAN was not properly served. Respondent also claims that the Waiver failed to observe the provisions of executing a valid waiver thereby making the said Waiver void and without effect. As such, respondent prays that petitioner's Motion for Reconsideration be denied for lack of merit. After consideration of the arguments raised by petitioner in his Motion, We find no merit in the same. Perusal of the arguments in the instant Motion reveals that they are rehash of what were already thoroughly discussed in the En Bane Decision. In fact, the only thing new in petitioner's Motion is his adoption of the rationale enunciated in the Supreme Court case of Commissioner of Internal Revenue vs. Next Mobile, Inc. (formerly Nexte/ Communications Phils., Inc.)6, as cited by the Honorable Presiding Justice in his Concurring Opinion. Thus, to discuss anew the issues reiterated in the instant Motion would only be mere superfluity. On this note, assuming arguendo, that the Waiver is valid, petitioner's assessments are still considered void due to the fact that the service of the FAN was tainted with irregularities. It cannot be emphasized enough that, while constructive service7 is a valid mode of serving assessment notices, the procedure on how it is effected should, ~ 6 G.R. No. 212825, December 7, 2015 7 3.1.7 Constructive Service. - If the notice to the taxpayer herein required is served by registered mail, and no response is received from the taxpayer within the prescribed period from date of the posting thereof in the mail, the same shall be considered actually or constructively received by the taxpayer. If the same is personally served on the taxpayer or his duly authorized representative who, however, refused to acknowledge receipt thereof, the same shall be constructively served on the taxpayer. Constructive service thereof shall be considered effected by leaving the same in the premises of the taxpayer and this fact of constructive service is attested to, witnessed and signed by at least two (2) revenue officers other than the revenue officer who constructively served the same. The revenue officer who constructively served the same shall make a written report of this matter which shall form part ofthe docket of this case. (Emphasis Ours)

RESOLUTION CTA EB No. 1379 (CTA Case No. 8523) nonetheless, be strictly observed. There has been a plethora of casess wherein the Supreme Court held that the procedures provided in RR No. 12-99 are mandatory, and non-compliance therewith renders the assessment void. Accordingly, finding no reversible error, We find no cogent justification to disturb the conclusions reached in the assailed En Bane Decision dated March 21, 2017. WHEREFORE, the instant Motion for Reconsideration is hereby DENIED for lack of merit. SO ORDERED. ~ CAESAR A. CASANOVA Associate Justice WE CONCUR: {I reiterate my curring Opinion) ROMAN G. DEL ROSARIO Presiding Justice ~~4t: -~~~,9- LOVELfa. BAUTISTA ft,JANITO C. CASTANEDA, JR. Associate Justice Associate Justice ERL~.UY Associate Justice s Commissioner of Internal Revenue vs. United Salvage and Towage (Phils.), Inc, G.R. No. 197515, July 2, 2014; Commissioner of Internal Revenue vs. Metro Star Superama, Inc, G.R. No. 185371, December 8, 2010; Pilipinas Shell Petroleum Corporation vs. Commissioner of Internal Revenue, G.R. No. 172598, December 21, 2007; Commissioner of Internal Revenue vs. Azucena T. Reyes, G.R. Nos. 159694 & 163581, January 27, 2006; Estate of the late Juliana Diez vda. De Gabriel vs. Commissioner of Internal Revenue, G.R. No. 155541, January 27, 2004; Commissioner of Internal Revenue vs. Pascor Realty and Development Corporation, Rogelio A. Dio and Virginia S. Dio, G.R. No. 128315, June 29, 1999; Commissioner of Internal Revenue vs. Algue, Inc., G.R. No. L-28896, February 12, 1988

RESOLUTION CTA EB No. 1379 (CTA Case No. 8523) ~ ~-M~~,(i~ ~. ~ ll...-..' CIELITO N. MINDARO-GRULLA MA. BELEN M. RINGPIS-LIBAN Associate Justice Associate Justice ~7�~ CATHERINE T. MANAHAN Associate Justice