REDENTOR AGPULDO TAGALA, as proprietor of 7TH CONCEPT TRADING / 7C CONSTRUCTION v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY THIRD DIVISION REDENTOR AGPULDO CTA Case No. 10720 TAGALA, as the proprietor of 7 TH CONCEPT TRADING / Members: 7C CONSTRUCTION, MANAHAN, Chairperson, Petitioner, REYES-FAJARDO, and ANGELES, JJ. -versus- COMMISSIONER OF Promulgated: INTERNAL REVENUE, Respondent. FE8 0 6 2025 Z-! X - - - - - - - - - - - - - - - - - - - - - - ~ - ~ fJ' -~ �- - - - - -X RESOLUTION MANAHAN, J.: For resolution of the Court is respondent's Motion for Reconsideration Re: Decision dated 14 August 2024 filed on September 6, 20241 ("Motion"}, with petitioner's Opposition To Motion for Reconsideration posted on October 1 1, 2024 and received by the Court on October 14, 20242 (" Opposition"). Respondent's Motion seeks that the Court reverse and set aside its Decision dated August 14, 2024 ("assailed Decision"}, the dispositive portion of which reads: ACCORDINGLY, the Petition for Review is GRANTED. The FLD and Assessment Notices, both dated October 15, 2020, and the FDDA dated December 21, 2021, are CANCELLED and SET ASIDE. SO ORDERED. In his Motion, respondent argues that the subject Letter of Authority ("LOA") was validly issued to petitioner. Although not received by the taxpayer himself, the latter was informed of its existence through his accountant, Ms. Julia Divina 1 Docket - Vol. 2, pp. 62 1-630. 2 Id., pp. 642-653 . ~

� RESOLUTION CTA Case No. 10720 Martin. That petitioner did not assail the service of the LOA shows that he acquiesced to the authority of the revenue officers who examined his books of accounts. Considering that said revenue officers were properly authorized and such authority was recognized by petitioner, the conduct of the examination and the resulting assessment are valid. In his Opposition, petitioner maintains that the Court well-considered the fact that the LOA was not validly served, thereby rendering the assessment void. He faults respondent's Motion for insisting on the validity of the LOA regardless of how it was served on the taxpayer because the revenue officers acted pursuant thereto. According to petitioner, this is ''only half of the full concept of due process." Petitioner prays that the Court dismiss or deny the Motion since respondent failed to present any new argument overall. We agree with petitioner. In the assailed Decision, the Court already addressed respondent's arguments in this wise:3 ...The taxpayer is entitled to know that the revenue officer knocking at his or her door has the proper authority to examine his or her books of accounts. To fulfill the requirement of due process, proper service of the LOA itself is e sse ntial. Service of a copy of any other BIR document does not suffice. In Medicard Philippines, Inc. v. Commis sioner of Internal Revenue, the Supreme Court ruled that mere issuance of a Letter Notice to the taxpayer violates the latter's due process if no corresponding LOA was served. It is also well settled that when a new revenue officer is assigned to conduct the examination or assessment, service of a new LOA must be made to prove the existence of the authority of such r evenue officer. In Commissione r of Internal Re ve nue v. McDonald 's Philippines Realty Corp. , the Suprem e Court explained: 3 Docket - Vol. 2, p p. 6 15-6 16. Citations omitted, Emphasis supplied. O""..~._ . _ __

RESOLUTION CTA Case No. 10720 ... notice of the fact of reassignment and transfer of cases is one thing; proof of the existence of authority to conduct an examination and assessment is another thing... Evidence in the instant case strongly supports petitioner's claim that the BIR failed to properly serve the assailed LOA dated December 3, 2018. During the cross- examination of RO Ramos, he admitted that: 1.) petitioner was not present at the time he served the LOA; 2 .) he merely relied on the r epresentation of petitioner's supposed relative as to Ms. Martin's authority to receive the LOA; and 3.) Ms. Martin is not an employee of petitioner. Contrary to respondent's theory, it is not sufficient that the revenue officers examining the taxpayer's records are acting pursu ant to an existing LOA. Proof of such existence to th e taxpayer m u s t b e made. Th e essen ce of t h e LOA is to a pprise t h e taxpayer that th e revenue officer knocking at its door is duly authorized. This would be rendered meaningless in th e absence of service upon the taxpayer. In Commissioner ofInternal Revenue v. McDonald's Philippines Realty Corp.,4 the Supreme Court held: .. .The only way for th e taxpayer to verify the existence of that authority is wh en, upon reading the LOA, there is a link between the said LOA and the revenue officer who will conduct the examination and assessment; and the only way to make that link is by looking at the names of the revenue officers who are authorized in the said LOA.. . Due process requires that taxpayers must have the right to know that the revenue officers are duly authorized to conduct the examination and assessment, and this r equires that the LOAs must contain the n ames of the authorized r evenue officers. In other words, identifying the authorized r evenue officers in the LOA is a jurisdictional requirem en t of a valid audit or inve stigation by the BIR, and ther efore of a valid a ssessment. 4 G. R. No. 2426 7 0 , May 10, 202 1 [Per J . Lopez, Third Division] . a.c -

RESOLUTION CTA Case No. 10720 Clearly, an LOA that is not validly served is not a valid LOA. In fact, Revenue Audit Memorandum Order (RAMO) No. 1-00 provides: 2. Serving ofLetter ofAuthority 2.1 On the first opportunity of the Revenue Officer to have personal contact with the taxpayer, he should present the Letter of Authority (LA) together with a copy of the Taxpayer's Bill of Rights. The LA should be served by the Revenue Officer assigned to the case and no one else. He should have the proper identification card and should be in proper attire. Sin ce respondent failed to present any new argument to convince the Court that the LOA was validly served upon petitioner, the Court finds no reason to disturb the findings in the assailed Decision. ACCORDINGLY, respondent's Motionfor Reconsideration Re: Decision dated 14 August 2024 .filed on September 6, 2024 is DENIED for lack of merit. SO ORDERED. ch~~'i~ANtHAN Associate Justice WE CONCUR: ~ ~{:~ -Fty~ MARIAN IviJF. REY~S-FAJARDO Associate Justice HENRY s !lf:NGELES Associate Justice