COMMISSIONER OF INTERNAL REVENUE v. KULTURA STORE, INC.

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY ENBANC ********* COMMISSIONER OF INTERNAL CTA EB No. 2342 REVENUE, (CTA Case No. 9315) Petitioner, Present: -versus- DEL ROSARIO, P.J. , CASTANEDA, JR., UY, RINGPIS-LIBAN, MANAHAN, BACORRO-VILLENA, MODESTO-SAN PEDRO, REYES-FAJARDO, and CUI-DAVID, JJ. Promulgated: KULTURA STORE, INC., Respondent. JUN17 ~ 11 - '~o<a .,... . X- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - X RESOLUTION UY, J.: For the Court En Bane's resolution is petitioner's MOTION FOR RECONSIDERATION (Re: Decision dated 22 February 2022) filed on March 17, 2022,1 with respondent's COMMENT (To the Commissioner of Internal Revenue's Motion for Reconsideration) filed on April 22, 2022 .2 In the said Motion , petitioner moves for the reversal and setting rv aside of the Decision promulgated on February 22, 2022, theAi dispositive portion of which reads: 1 EB Docket, pp. 112 to 118. 2 EB Docket, pp. 122 to 127.

RESOLUTION CTA EB No. 2342 (CTA Case No. 9315) Page 2 of6 "WHEREFORE, in light of the foregoing considerations, the instant Petition for Review is hereby DENIED for lack of merit. Accordingly, the Decision dated November 11, 2019 and the Resolution dated September 18, 2020, rendered by the Second Division of this Court in CTA Case No. 9315 are hereby AFFIRMED. SO ORDERED." Petitioner's arguments: In its Motion for Reconsideration, petitioner argues that the Court En Bane erred in ruling that the assessment notices against respondent is a nullity for allegedly not indicating a definite due date for the payment of the tax liabilities. Petitioner insists that the Formal Letter of Demand (FLO) have stated and definitely set the due date of the deficiency tax liabilities of respondent. The basic tax deficiency as well as the surcharge and interest were already fixed in said assessment notices as that due on or before June 27, 2014. Allegedly, the said due date corresponds with the amount of interest due thereon and is necessarily intertwined with the deficiency interest citing Section 249 of the National Internal Revenue Code (NIRC) of 1997. Petitioner also adds that respondent was given enough opportunity to present its case. Hence, there can be no showing that respondent was deprived of due process. The doctrines laid down in Commissioner of Internal Revenue vs. Dominador Menguito3 (Menguito) and Commissioner of Internal Revenue vs. Fitness by Design4 (Fitness by Design) should allegedly be revisited as the ruling in the Menguito case was misapplied in the Fitness by Design case. Lastly, petitioner posits that since the receipt of the FLO and Assessment notices was not disputed by respondent in this case, i~ 3 G.R. No. 167560, September 17, 2008. 4 G.R. No. 215957, November 9, 2016.

RESOLUTION CTA EB No. 2342 (CTA Case No. 9315) Page 3 of6 should be taken into consideration that respondent was given the chance to refute the findings but failed to do so and that the undisputed issues during the administrative proceeding are deemed final and executory and should not be considered in an appeal. Respondent's counter-arguments: Respondent counter-argues that the contentions raised in petitioner's Motion for Reconsideration are not new but just reiterations of his positions before the Court in Division and the present Petition before the Court En Bane. Respondent reiterates the ruling in the assailed Decision that an assessment contains not only a computation of tax liabilities, but also a demand for payment within a prescribed period. It also signals the time when penalties and interest begin to accrue against the taxpayer. To enable the taxpayer to determine his remedies thereon, due process requires that it must be served on and received by the taxpayer. Respondent asserts that the date June 27, 2014 cannot be inferred as the due date for payment of tax liabilities. The requirement of a demand for payment of the tax liability per final assessment notice could only be complied with when the accrual date for payment is indicated and not merely inferred from a vague statement of when an adjustment of "the interest and the total amount due" will be made. Lastly, respondent counters that the Menguito and Fitness by Design cases are applicable in the instant case. THE COURT EN BANC'S RULING After due consideration, the Court En Bane finds no merit in petitioner's Motion for Reconsideration. Notably, the arguments raised in the said Motion for Reconsideration raises no new and substantial issues but are mere rehash of the same issues and arguments which have already been discussed exhaustively in the Decision dated February 22, 2022t-V

RESOLUTION CTA EB No. 2342 (CTA Case No. 9315) Page 4 of6 Nevertheless, We reiterate that the FLO and Assessment Notices dated June 9, 2014 do not state a due date for the payment of the assessed taxes. It is clear from the records that the Assessment Notices attached to the FLO where the due date is to be indicated were left blank. Consequently, the failure to indicate the due date for payment invalidates the assessment. An invalid assessment bears no valid fruit. The law imposes a substantive, not merely a formal requirement. 5 Anent petitioner's argument that the cases of Menguito and Fitness by Design need to be revisited as the ruling in the Menguito case was misapplied therein, We maintain our position that the doctrine laid down in the Menguito and Fitness by Design are applicable in the instant case. We quote the pertinent portion in the assailed Decision, to wit: "x x x. To reiterate, the Supreme Court in the Menguito case discussed the difference among a formal assessment notice, a post-reporting notice and a pre- assessment notice and made it clear what a valid formal assessment is, i.e., an assessment contains not only a computation of tax liabilities but also a demand for payment within a prescribed period. Parenthetically, the application of the Menguito case in the Fitness by Design case may not be the subject of this Court's review, much more, its reversal." 6 Petitioner is reminded of Article 8 of the New Civil Code which provides that judicial decisions applying or interpreting the laws or the Constitution shall form part of the legal system of the Philippines. Stare decisis et non quieta movere. This principle of adherence to precedents has not lost its luster and continues to guide the bench in keeping with the need to maintain stability in the law. 7 Hence, this Court finds no cogent reason to disturb the assailed , /0 Decision. 5 Commissioner of Internal Revenue vs. BASF Coating +Inks Phils, Inc., G.R. No. 198677, November 26, 2014. 6 EB Docket, p. 106. 7 Rep. Reynaldo Umali vs. The Judicial Bar Council, G.R. No. 228628, July 25, 2017.

RESOLUTION CTA EB No. 2342 (CTA Case No. 9315) Page 5 of6 WHEREFORE, in light of the foregoing considerations, petitioner's Motion for Reconsideration is DENIED for lack of merit. SO ORDERED. ER~P.UY Associate Justice WE CONCUR: Presiding Justice ~~~c. a....T~ol.. ~ JU'ANITO C. CASTANEDA, JR. Associate Justice ~. ~ -?-(_ MA. BELEN M. RINGPIS-LIBAN Associate Justice c~, 7- fi:.......-.....~..t.:e....- - CATHERINE T. MANAHAN Associate Justice . JEAN MARl PEDRO

RESOLUTION CTA EB No. 2342 (CTA Case No. 9315) Page 6 of6 M~ ARIA~ N lvVJF.1,: RbEY~-fi;' A~O Associate Justice ~ LANEE S. CUI-DAVID Associate Justice