CIR v. South Entertainment Gallery, Inc.

 

CIR v. South Entertainment Gallery, Inc.

G.R. No. 223767

April 24, 2023

FACTS:

                Respondent SEGI is in the business of Bingo games and other games of chance. It received an assessment for deficiency income tax and VAT. It invoked its tax-exempt status as a grantee of the PAGCOR. The RDO reiterated the initial assessment. SEGI received a Preliminary Assessment Notice from the BIR amounting to P8M and P30.5M respectively. A Formal Letter of Demand was received by SEGI. A Warrant for Distraint and/or Levy (WDL) was issued. SEGI then requested for the withdrawal and cancellation of WDL for being premature due to the absence of a FLD-DDAN, as well as the opportunity to submit a written protest against the same.

ISSUE:

                Whether or not the CTA had jurisdiction to entertain the original Petition for Review filed by SEGI

                Whether or not the CTA En Banc erred in sustaining the CTA Third Division’s ruling that there was insufficient delivery of the Formal Letter of Demand (FLD) by petitioner CIR.

               

HELD:

                Yes. The petition for review with the CTA was filed on time; the 30-day reglementary period should be reckoned from receipt of the letter dated March 28, 011 of OIC-RDO Ducut. In this case, SEGI could not have filed a timely administrative protest with the CIR, because the latter failed to prove that SEGI was properly served by registered mail of a copy of the FLD-DDAN. Such invalid service rendered the said assessment void and without force and effect, for noncompliance with the due process requirement in the issuance of a deficiency tax assessment. For the same reason, neither the date of receipt of the FNBS nor that of the WDL could be considered the reckoning point of the 30-day reglementary period to file a petition for review before the CTA. Both the FNBS and WDL issued by OIC-RDO Ducut are fruits of a void assessment, as they were both based on the FLD-DDAN, specifically, Assessment No. 021R-0804084618 issued on December 9, 2009, which was improperly served.

                No. While it is true that as a rule, the warrant of distraint and levy is "proof of the finality of the assessment" and "renders hopeless a request for reconsideration," being tantamount to an outright denial thereof and makes the said request deemed rejected, there is a special circumstance in this case that prevents the application of this accepted doctrine. The special circumstance is that the CIR failed to prove that the FLD-DDAN was properly served on SEGI. Therefore, SEGI has nothing to protest for reconsideration or reinvestigation. It is sufficient that SEGI filed a letter to cancel the WDL to exhaust the administrative remedy. Thus, the decision or ruling that is subject of the petition for review before the CTA is the March 28, 2011 Letter of OIC-RDO Ducut because this can be deemed as the denial of protest by the CIR's authorized representative.