CIR v. Jopauen Realty Corporation
CTA EB NO.2206
February 21, 2022
Doctrine:
An LOA as an instrument of due process should particularly name the revenue officers who are authorized to conduct an audit.
The Use of Memorandum of Assignment, Referral Memorandum, or Such Equivalent Document, Directing the Continuation of Audit or Investigation by an Unauthorized Revenue Officer Usurps the Functions of the LOA
Facts:
On January 22, 2010, petitioner received Letter of Authority (LOA) No. LOA 2008-0002369268, dated December 29, 2009, together with the First Request for Presentation of Records. Subsequently, respondent issued a Second Request for Presentation of Records, which petitioner received on February 2, 2010. Thereafter, respondent issued a Final Request for Presentation of Records, which petitioner received on May 12,2010. Respondent then issued a Notice of Informal Conference (NIC), which was received by the petitioner on April 14, 2011, scheduling the informal conference within fifteen (15) days from receipt ofthe notice. On May 24,2011, an informal conference was set with the Revenue District Officer, Atty. Honorata S. Aguilar, together with the Revenue Examiners. It is argued by the parties that the Court in Division erred when it ruled the assessments void for lack of authority noting that the Memorandum of Assignment ("MOA") was issued by Revenue District Officer Honorata S. Aguilar ("RDO Aguilar"). The subject MOA merely flowed from the instant LOA. In Revenue Memorandum Order No. ("RMO'') 62-2010, the CIR expressly delegates to the Head of Investigating Office the authority to sign the MOA in case of changes in the composition of the revenue officers due to resignation, retirement or reassignment, pursuant to an existing LOA. An MOA subsequently issued derived its authority from the original LOA initially issued. Thus, an MOA need not be signed by the CIR or a Regional Director. An MOA is just a mere reassignment of the case from a previous examiner to another revenue officer, which a head of office can lawfully do.
Hence, the subject MOA properly transferred the audit to Revenue Officer Teresita Tibayan ("RO Tibayan").
Issues:
Whether or not a Memorandum of Assignment can take the place of a Letter of Authority.
Held:
No. In the McDonald's Case, the Supreme Court declared that an MOA cannot substitute for an LOA. An MOA simply notifies a taxpayer of the transfer of an audit/investigation to another set of revenue officers. Unlike an LOA, an MOA does not show that the new set of revenue officers who will pursue the audit are properly authorized to do so. An LOA is a special grant of authority to a specific set of revenue officers to examine a taxpayer's books of accounts and other accounting records for purposes of determining the taxes due.
It is true that the service of a copy of a memorandum of assignment, referral memorandum, or such other equivalent internal BIR document may notify the taxpayer of the fact of reassignment and transfer of cases of revenue officers. However, 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. The memorandum of assignment, referral memorandum, or any equivalent document is not a proof of the existence of authority of the substitute or replacement revenue officer. The memorandum of assignment, referral memorandum, or any equivalent document is not issued by the CIR or his duly authorized representative for the purpose of vesting upon the revenue officer authority to examine a taxpayer's
books of accounts. It is issued by the revenue district officer or other subordinate official for the purpose of reassignment and transfer of cases of revenue officers.
