GR 241848; (May, 2021) (Digest)
G.R. No. 241848 , May 14, 2021
Himlayang Pilipino Plans, Inc., Petitioner, vs. Commissioner of Internal Revenue, Respondent.
FACTS
Petitioner Himlayang Pilipino Plans, Inc. received a Formal Letter of Demand (FLD) and Final Assessment Notices (FAN) from the Commissioner of Internal Revenue (CIR) for deficiency taxes for taxable year 2009. The audit was initiated under an electronic Letter of Authority (LOA) dated September 29, 2010, which specifically authorized Revenue Officer Ruby Cacdac and Group Supervisor Barnardo Andaya to examine petitioner’s books. However, the audit was subsequently conducted by Revenue Officer Bernard R. Bagauisan pursuant to a Memorandum of Assignment dated October 28, 2011, signed by Revenue District Officer Clavelina Nacar, which reassigned the case to Bagauisan for continuation. No new LOA was issued for this reassignment. Petitioner protested the FAN/FLD, but the CTA Division and En Banc dismissed the petition, ruling the assessment had become final due to an untimely protest. Petitioner then elevated the case to the Supreme Court, arguing the assessment was null and void because the auditing revenue officer lacked a valid LOA.
ISSUE
Whether the tax assessment against petitioner is null and void due to the lack of a valid Letter of Authority authorizing the revenue officer who conducted the audit.
RULING
Yes, the assessment is null and void. The Supreme Court granted the petition. It ruled that Revenue Officer Bernard R. Bagauisan was not authorized by a valid LOA to conduct the audit. The original LOA specifically named Revenue Officer Ruby Cacdac. Under Revenue Memorandum Order (RMO) No. 43-90, any reassignment or transfer of cases to another revenue officer requires the issuance of a new LOA. Since no new LOA was issued naming Bagauisan, his authority to examine petitioner’s books was invalid. Following Section 13 of the National Internal Revenue Code and jurisprudence (Commissioner of Internal Revenue v. Sony Philippines, Inc.), an audit conducted without a valid LOA is a nullity, rendering the resulting assessment void. The Court set aside the CTA En Banc’s decision and declared the FLD and Assessment Notices unauthorized.