Pilipinas Shell Petroleum Corporation
Pilipinas Shell Petroleum Corporation
Pilipinas Shell Petroleum Corporation
CORPORATION,
Petitioner,
- versus -
COMMISSIONER OF INTERNAL
REVENUE,
Respondent.
Promulgated:
when PSPC signified its intent to use the TCCs to pay part of its excise tax
liabilities, said payments were duly approved by the Center through the
issuance of Tax Debit Memoranda (TDM), and the BIR likewise accepted as
payments the TCCs by issuing its own TDM covering said TCCs, and the
corresponding Authorities to Accept Payment for Excise Taxes (ATAPETs).
However, on April 22, 1998, the BIR sent a collection letter[4] to PSPC
for alleged deficiency excise tax liabilities of PhP 1,705,028,008.06 for the
taxable years 1992 and 1994 to 1997, inclusive of delinquency surcharges
and interest. As basis for the collection letter, the BIR alleged that PSPC is
not a qualified transferee of the TCCs it acquired from other BOI-registered
companies. These alleged excise tax deficiencies covered by the collection
letter were already paid by PSPC with TCCs acquired through, and issued
and duly authorized by the Center, and duly covered by TDMs of both the
Center and BIR, with the latter also issuing the corresponding ATAPETs.
PSPC protested the April 22, 1998 collection letter, but the protest
was denied by the BIR through the Regional Director of Revenue Region
No. 8. PSPC filed its motion for reconsideration. However, due to
respondents inaction on the motion, on February 2, 1999, PSPC filed a
petition for review before the CTA, docketed as CTA Case No. 5728.
On July 23, 1999, the CTA rendered a Decision[5] in CTA Case No.
5728 ruling, inter alia, that the use by PSPC of the TCCs was legal and
valid, and that respondents attempt to collect alleged delinquent taxes and
penalties from PSPC without an assessment constitutes denial of due
process. The dispositive portion of the July 23, 1999 CTA Decision reads:
[T]he instant petition for review is GRANTED. The
collection letter issued by the Respondent dated April 22, 1998 is
considered withdrawn and he is ENJOINED from any attempts to
collect from petitioner the specific tax, surcharge and interest
subject of this petition.[6]
Respondent elevated the July 23, 1999 CTA Decision in CTA Case
No. 5728 to the Court of Appeals (CA) through a petition for
review[7] docketed as CA-G.R. SP No. 55329. This case was subsequently
consolidated with the similarly situated case of Petron Corporation under
CA-G.R. SP No. 55330. To date, these consolidated cases are still pending
resolution before the CA.
submit copies of pertinent sales invoices and delivery receipts covering sale
transactions of PSPC products to the TCC assignors/transferors purportedly
in connection with an ongoing post audit. The second letter similarly
required submission of the same documents covering PSPC Industrial Fuel
Oil (IFO) deliveries to Spintex International, Inc. The third letter is in reply
to the September 29, 1999 letter sent by PSPC requesting a list of the serial
numbers of the TCCs assigned or transferred to it by various BOI-registered
companies, either assignors or transferors.
In its letter dated October 29, 1999 and received by the Center
on November 3, 1999, PSPC emphasized that the required submission of
these documents had no legal basis, for the applicable rules and regulations
on the matter only require that both the assignor and assignee of TCCs be
BOI-registered entities.[11] On November 3, 1999, the Center informed
PSPC of the cancellation of the first batch of TCCs transferred to PSPC and
the TDM covering PSPCs use of these TCCs as well as the corresponding
TCC assignments. PSPCs motion for reconsideration was not acted upon.
On November 22, 1999, PSPC received the November 15,
1999 assessment letter[12] from respondent for excise tax deficiencies,
surcharges, and interest based on the first batch of cancelled TCCs and TDM
covering PSPCs use of the TCCs. All these cancelled TDM and TCCs were
also part of the subject matter in CTA Case No. 5728, now pending before
the CA in CA-G.R. SP No. 55329.
PSPC protested[13] the assessment letter, but the protest was denied by
the BIR, constraining it to file another petition for review [14] before the CTA,
docketed as CTA Case No. 6003.
Parenthetically, on March 30, 2004, Republic Act No. (RA)
9282 was promulgated amending RA 1125,[16] expanding the jurisdiction
of the CTA and enlarging its membership. It became effective on April 23,
2004 after its due publication. Thus, CTA Case No. 6003 was heard and
decided by a CTA Division.
[15]
In granting PSPCs petition for review, the CTA Division held that
respondent failed to prove with convincing evidence that the TCCs
transferred to PSPC were fraudulently issued as respondents finding of
alleged fraud was merely speculative. The CTA Division found that neither
the respondent nor the Center could state what sales figures were used as
basis for the TCCs to issue, as they merely based their conclusions on the
audited financial statements of the transferors which did not clearly show the
actual export sales of transactions from which the TCCs were issued.
In the same vein, the CTA Division held that the machinery and
equipment cannot be the basis in concluding that transferor could not have
produced the volume of products indicated in its BOI registration. It further
ruled that the Center erroneously based its findings of fraud on two
possibilities: either the transferor did not declare its export sales or
underdeclare them. Thus, no specific fraudulent acts were identified or
proven. The CTA Division concluded that the TCCs transferred to PSPC
were not fraudulently issued.
On the issue of whether a TCC transferee should be a supplier of
either capital equipment, materials, or supplies, the CTA Division ruled in
the negative as the Memorandum of Agreement (MOA)[19] between the DOF
and BOI executed on August 29, 1989 specifying such requirement was not
incorporated in the Implementing Rules and Regulations (IRR) of Executive
Order No. (EO) 226.[20] The CTA Division found that only the October 5,
1982 MOA between the then Ministry of Finance (MOF) and BOI was
incorporated in the IRR of EO 226. It held that while the August 29,
1989 MOA indeed amended the October 5, 1982 MOA still it was not
incorporated in the IRR. Moreover, according to the CTA Division, even if
the August 29, 1989 MOA was elevated or incorporated in the IRR of EO
226, still, it is ineffective and could not bind nor prejudice third parties as it
was never published.
Anent the affidavits of former Officers or General Managers of
transferors attesting that no IFO deliveries were made by PSPC, the CTA
Division ruled that such cannot be given probative value as the affiants were
not presented during trial of the case. However, the CTA Division said that
the November 15, 1999 assessment was not precluded by the prior CTA
Case No. 5728 as the latter concerned the validity of the transfer of the
TCCs, while CTA Case No. 6003 involved alleged fraudulent procurement
and transfer of the TCCs.
Respondent forthwith filed his motion for reconsideration of the
above decision which was rejected on January 20, 2005. And, pursuant to
Section 11[21] of RA 9282, respondent appealed the above decision through a
petition for review[22] before the CTA En Banc.
The Ruling of the Court of Tax Appeals En Banc
(CTA EB No. 64)
P285,766,987.00
71,441,746.75
213,368,667.86
P570,577,401.61
Third, PSPC was not an innocent purchaser for value of the TCCs as
they contained liability clauses expressly stipulating that the transferees are
solidarily liable with the transferors for any fraudulent act or violation of
pertinent laws, rules, or regulations relating to the transfer of the TCC.
Fourth, the BIR was not barred by estoppel as it is a settled rule that
in the performance of its governmental functions, the State cannot be
estopped by the neglect of its agents and officers. Although the TCCs were
confirmed to be valid in view of the TDM, the subsequent finding on post
audit by the Center declaring the TCCs to be fraudulently issued is entitled
to the presumption of regularity. Thus, the cancellation of the TCCs was
legal and valid.
Fifth, the BIRs assessment did not prescribe considering that no
payment took effect as the subject TCCs were canceled upon post
audit. Consequently, the filing of the tax return sans payment due to the
cancellation of the TCCs resulted in the falsity and/or omission in the filing
of the tax return which put them in the ambit of the applicability of the 10year prescriptive period from the discovery of falsity, fraud, or omission.
Finally, however, the CTA En Banc applied Aznar v. Court of Tax
Appeals,[25] where this Court held that without proof that the taxpayer
participated in the fraud, the 50% fraud surcharge is not imposed, but the
25% late payment and the 20% interest per annum are applicable.
Thus, PSPC filed this petition with the following issues:
I
WHETHER OR NOT THE COURT OF TAX APPEALS
GRAVELY ERRED IN ORDERING PETITIONER PSPC TO
PAY THE AMOUNT OF TWO HUNDRED EIGHTY FIVE
MILLION SEVEN HUNDRED SIXTY SIX THOUSAND NINE
HUNDRED EIGHTY SEVEN PESOS (P285,766,987.00), AS
ALLEGED DEFICIENCY EXCISE TAXES, FOR THE
TAXABLE YEARS, 1992 AND 1994 TO 1997.
II
WHETHER OR NOT THE COURT OF TAX APPEALS
GRAVELY ERRED IN ISSUING THE QUESTIONED
DECISION DATED 28 APRIL 2006 UPHOLDING THE
CANCELLATION OF THE TAX CREDIT CERTIFICATES
UTILIZED BY PETITIONER PSPC IN PAYING ITS EXCISE
TAX LIABILITIES.
III
The inescapable conclusion is that the TCCs are not subject to postaudit as a suspensive condition, and are thus valid and effective from their
issuance. As such, in the present case, if the TCCs have already been
applied as partial payment for the tax liability of PSPC, a post-audit of the
TCCs cannot simply annul them and the tax payment made through said
TCCs. Payment has already been made and is as valid and effective as the
issued TCCs. The subsequent post-audit cannot void the TCCs and allow
the respondent to declare that utilizing canceled TCCs results in nonpayment
on the part of PSPC. As will be discussed, respondent and the Center
expressly recognize the TCCs as valid payment of PSPCs tax liability.
Second, the only conditions the TCCs are subjected to are those found
on its face. And these are:
1. Post-audit and subsequent adjustment in the event of
computational discrepancy;
2. A reduction for any outstanding account/obligation of herein
claimant with the BIR and/or BOC; and
3. Revalidation with the Center in case the TCC is not utilized
or applied within one (1) year from date of issuance/date of
last utilization.
The above conditions clearly show that the post-audit contemplated in
the TCCs does not pertain to their genuineness or validity, but on
computational discrepancies that may have resulted from the transfer and
utilization of the TCC.
This is shown by a close reading of the first and second conditions
above; the third condition is self explanatory. Since a tax credit partakes of
what is owed by the State to a taxpayer, if the taxpayer has an outstanding
liability with the BIR or the BOC, the money value of the tax credit covered
by the TCC is primarily applied to such internal revenue liabilities of the
holder as provided under condition number two. Elsewise put, the TCC
issued to a claimant is applied first and foremost to any outstanding liability
the claimant may have with the government. Thus, it may happen that upon
post-audit, a TCC of a taxpayer may be reduced for whatever liability the
taxpayer may have with the BIR which remains unpaid due to inadvertence
or computational errors, and such reduction necessarily affects the balance
of the monetary value of the tax credit of the TCC.
For example, Company A has been granted a TCC in the amount of
PhP 500,000 through its export transactions, but it has an outstanding excise
tax liability of PhP 250,000 which due to inadvertence was erroneously
assessed and paid at PhP 225,000. On post-audit, with the finding of a
deficiency of PhP 25,000, the utilization of the TCC is accordingly corrected
and the tax credit remaining in the TCC correspondingly reduced by PhP
25,000. This is a concrete example of a computational discrepancy which
comes to light after a post-audit is conducted on the utilization of the
TCC. The same holds true for a transferees use of the TCC in paying its
outstanding internal revenue tax liabilities.
Other examples of computational errors would include the utilization
of a single TCC to settle several internal revenue tax liabilities of the
taxpayer or transferee, where errors committed in the reduction of the credit
tax running balance are discovered in the post-audit resulting in the
adjustment of the TCC utilization and remaining tax credit balance.
Third, the post-audit the Center conducted on the transferred TCCs,
delving into their issuance and validity on alleged violations by PSPC of
the August 29, 1989 MOA between the DOF and BOI, is completely
misplaced. As may be recalled, the Center required PSPC to submit copies
of pertinent sales invoices and delivery receipts covering sale transactions of
PSPC products to the TCC assignors/transferors purportedly in connection
with an ongoing post audit. As correctly protested by PSPC but which was
completely ignored by the Center, PSPC is not required by law to be a
capital equipment provider or a supplier of raw material and/or component
supplier to the transferors. What the law requires is that the transferee be a
BOI-registered company similar to the BOI-registered transferors.
The IRR of EO 226, which incorporated the October 5, 1982 MOA
between the MOF and BOI, pertinently provides for the guidelines
concerning the transferability of TCCs:
[T]he MOF and the BOI, through their respective
representatives, have agreed on the following guidelines to govern
the transferability of tax credit certificates:
1)
All tax credit certificates issued to BOI-registered
enterprises under P.D. 1789 may be transferred under conditions
provided herein;
2)
3)
The transferee may apply such tax credit
certificates for payment of taxes, duties, charges or fees directly
due to the national government for as long as it enjoys incentives
under P.D. 1789. (Emphasis supplied.)
The above requirement has not been amended or repealed during the
unfolding of the instant controversy. Thus, it is clear from the above proviso
that it is only required that a TCC transferee be BOI-registered. In requiring
PSPC to submit sales documents for its purported post-audit of the TCCs,
the Center gravely abused its discretion as these are not required of the
transferee PSPC by law and by the rules.
While the October 5, 1982 MOA appears to have been amended by
the August 29, 1989 MOA between the DOF and BOI, such may not operate
to prejudice transferees like PSPC. For one, the August 29, 1989 MOA
remains only an internal agreement as it has neither been elevated to the
level of nor incorporated as an amendment in the IRR of EO 226. As aptly
put by the CTA Division:
If the 1989 MOA has validly amended the 1982 MOA, it
would have been incorporated either expressly or by reference in
Rule VII of the Implementing Rules and Regulations (IRRs) of
E.O. 226. To date, said Rule VII has not been repealed, amended
or otherwise modified. It is noteworthy that the 1999 edition of
the official publication by the BOI of E.O. 226 and its IRRs
(Exhibit R) which is the latest version, as amended, has not
mentioned expressly or by reference [sic] 1989 MOA. The MOA
mentioned therein is still the 1982 MOA.
The 1982 MOA, although executed as a mere agreement
between the DOF and the BOI was elevated to the status of a rule
and regulation applicable to the general public by reason of its
having been expressly incorporated in Rule VII of the IRRs. On
the other hand, the 1989 MOA which purportedly amended the
1982 MOA, remained a mere agreement between the DOF and the
BOI because, unlike the 1982 MOA, it was never incorporated
either expressly or by reference to any amendment or revision of
the said IRRs. Thus, it cannot be the basis of any invalidation of
the transfers of TCCs to petitioner nor of any other sanction
against petitioner.[36]
For another, even if the August 29, 1989 MOA has indeed amended
the IRR, which it has not, still, it is ineffective and cannot prejudice third
parties for lack of publication as mandatorily required under Chapter 2 of
Book VII, EO 292, otherwise known as the Administrative Code of 1987,
which pertinently provides:
Section 3. Filing.(1) Every agency shall file with the
University of the Philippines Law Center three (3) certified copies
of every rule adopted by it. Rules in force on the date of
effectivity of this Code which are not filed within three (3) months
from the date shall not thereafter be the basis of any sanction
against any party or person.
(2) The records officer of the agency, or his equivalent
functionary, shall carry out the requirements of this section under
pain of disciplinary action.
It is clear that the Center or DOF cannot compel PSPC to submit sales
documents for the purported post-audit, as PSPC has duly complied with the
requirements of the law and rules to be a qualified transferee of the subject
TCCs.
Fourth, we likewise fail to see the liability clause at the dorsal portion
of the TCCs to be a suspensive condition relative to the result of the postaudit. Said liability clause indicates:
LIABILITY CLAUSE
Both the TRANSFEROR and the TRANSFEREE shall be
jointly and severally liable for any fraudulent act or violation of
the pertinent laws, rules and regulations relating to the transfer of
this TAX CREDIT CERTIFICATE. (Emphasis supplied.)
The above clause to our mind clearly provides only for the solidary
liability relative to the transfer of the TCCs from the original grantee to a
transferee. There is nothing in the above clause that provides for the liability
of the transferee in the event that the validity of the TCC issued to the
original grantee by the Center is impugned or where the TCC is declared to
have been fraudulently procured by the said original grantee. Thus, the
solidary liability, if any, applies only to the sale of the TCC to the transferee
by the original grantee. Any fraud or breach of law or rule relating to the
issuance of the TCC by the Center to the transferor or the original grantee is
the latters responsibility and liability. The transferee in good faith and for
value may not be unjustly prejudiced by the fraud committed by the claimant
the acceptance by the BIR of the subject TCCs as payment through the
issuance of its own TDM and ATAPETs.
Therefore, PSPC cannot be prejudiced by the Centers turnaround in
assailing the validity of the subject TCCs which it issued in due course.
Sixth, we are of the view that the subject TCCs cannot be canceled by
the Center as these had already been canceled after their application to
PSPCs excise tax liabilities. PSPC contends they are already functus
officio, not quite in the sense of being no longer effective, but in the sense
that they have been used up. When the subject TCCs were accepted by the
BIR through the latters issuance of TDM and the ATAPETs, the subject
TCCs were duly canceled.
The tax credit of a taxpayer evidenced by a TCC is used up or, in
accounting parlance, debited when applied to the taxpayers internal revenue
tax liability, and the TCC canceled after the tax credit it represented is fully
debited or used up. A credit is a payable or a liability. A tax credit,
therefore, is a liability of the government evidenced by a TCC. Thus, the tax
credit of a taxpayer evidenced by a TCC is debited by the BIR through a
TDM, not only evidencing the payment of the tax by the taxpayer, but
likewise deducting or debiting the existing tax credit with the amount of the
tax paid.
For example, a transferee or the tax claimant has a TCC of PhP 1
million, which was used to pay income tax liability of PhP 500,000,
documentary stamp tax liability of PhP 100,000, and value-added tax
liability of PhP 350,000, for an aggregate internal revenue tax liability of
PhP 950,000. After the payments through the PhP 1 million TCC have been
approved and accepted by the BIR through the issuance of corresponding
TDM, the TCC money value is reduced to only PhP 50,000, that is, a credit
balance of PhP 50,000. In this sense, the tax credit of the TCC has been
canceled or used up in the amount of PhP 950,000. Now, let us say the
transferee or taxpayer has excise tax liability of PhP 250,000, s/he only has
the remaining PhP 50,000 tax credit in the TCC to pay part of said excise
tax. When the transferee or taxpayer applies such payment, the TCC is
canceled as the money value of the tax credit it represented has been fully
debited or used up. In short, there is no more tax credit available for the
taxpayer to settle his/her other tax liabilities.
In the instant case, with due application, approval, and acceptance of
the payment by PSPC of the subject TCCs for its then outstanding excise tax
liabilities in 1992 and 1994 to 1997, the subject TCCs have been canceled as
the money value of the tax credits these represented have been used
up. Therefore, the DOF through the Center may not now cancel the subject
TCCs as these have already been canceled and used up after their acceptance
as payment for PSPCs excise tax liabilities. What has been used up,
Thus, with the due issuance of TDM by the Center and TDM by the
BIR, the payments made by PSPC with the use of the subject TCCs have
been effected and consummated as the TDMs serve as the official receipts
evidencing PSPCs payment or satisfaction of its tax obligation. Moreover,
the BIR not only issued the corresponding TDM, but it also issued ATAPETs
which doubly show the payment of the subject excise taxes of PSPC.
Based on the above discussion, we hold that respondent erroneously
and without factual and legal basis levied the assessment. Consequently, the
CTA En Banc erred in sustaining respondents assessment.
Second Issue: Cancellation of TCCs
PSPC argues that the CTA En Banc erred in upholding the
cancellation by the Center of the subject TCCs it used in paying some of its
excise tax liabilities as the subject TCCs were genuine and authentic, having
been subjected to thorough and stringent procedures, and approvals by the
Center. Moreover, PSPC posits that both the CTAs Division and En
Banc duly found that PSPC had neither knowledge, involvement, nor
participation in the alleged fraudulent issuance of the subject TCCs, and,
thus, as a transferee in good faith and for value, it cannot be held solidarily
liable for any fraud attendant to the issuance of the subject TCCs. PSPC
further asserts that the Center has no authority to cancel the subject TCCs as
such authority is lodged exclusively with the BOI. Lastly, PSPC said that
the Centers Excom Resolution No. 03-05-99 which the Center relied upon
as basis for the cancellation is defective, ineffective, and cannot prejudice
third parties for lack of publication.
31, 2000, the Sandiganbayan Fifth Division, hearing Criminal Case Nos.
25940-25962, dropped Cruz as accused.[40]
But even assuming that fraud attended the procurement of the subject
TCCs, it cannot prejudice PSPCs rights as earlier explained since PSPC has
not been shown or proven to have participated in the perpetration of the
fraudulent acts, nor is it shown that PSPC committed fraud in the transfer
and utilization of the subject TCCs.
On the issue of the authority to cancel duly issued TCCs, we agree
with respondent that the Center has concurrent authority with the BIR and
BOC to cancel the TCCs it issued. The Center was created under
Administrative Order No. (AO) 266 in relation to EO 226. A scrutiny of
said executive issuances clearly shows that the Center was granted the
authority to issue TCCs pursuant to its mandate under AO 266. Sec. 5 of AO
266 provides:
SECTION 5. Issuance of Tax Credit Certificates
and/or Duty Drawback.The Secretary of Finance shall
designate his representatives who shall, upon the recommendation
of the CENTER, issue tax credit certificates within thirty (30)
working days from acceptance of applications for the enjoyment
thereof. (Emphasis supplied.)
On the other hand, it is undisputed that the BIR under the NIRC and
related statutes has the authority to both issue and cancel TCCs it has issued
and even those issued by the Center, either upon full utilization in the
settlement of internal revenue tax liabilities or upon conversion into a tax
refund of unutilized TCCs in specific cases under the conditions provided.
[41]
AO 266 however is silent on whether or not the Center has authority to
cancel a TCC it itself issued. Sec. 3 of AO 266 reveals:
SECTION 3. Powers, Duties and Functions.The Center shall
have the following powers, duties and functions:
a. To promulgate the necessary rules and regulations and/or
guidelines for the effective implementation of this administrative
order;
xxxx
g. To enforce compliance with tax credit/duty drawback policy and
procedural guidelines;
xxxx
l. To perform such other functions/duties as may be necessary
or incidental in the furtherance of the purpose for which it has been
established. (Emphasis supplied.)
innocent transferee for value, which has not been shown to have participated
in the fraud. Respondent must go after the perpetrators of the fraud.
Third Issue: Imposition of surcharges and interests
PSPC claims that having no deficiency excise tax liabilities, it may
not be liable for the late payment surcharges and annual interests.
This issue has been mooted by our disquisition above resolving the
first issue in that PSPC has duly settled its excise tax liabilities for 1992 and
1994 to 1997. Consequently, there is no basis for the imposition of a late
payment surcharges and for interests, and no need for further discussion on
the matter.
Fourth Issue: Non-compliance with statutory and
procedural due process
Finally, PSPC avers that its statutory and procedural right to due
process was violated by respondent in the issuance of the assessment. PSPC
claims respondent violated RR 12-99 since no pre-assessment notice was
issued to PSPC before the November 15, 1999 assessment. Moreover, PSPC
argues that the November 15, 1999 assessment effectively deprived it of its
statutory right to protest the pre-assessment within 30 days from receipt of
the disputed assessment letter.
While this has likewise been mooted by our discussion above, it
would not be amiss to state that PSPCs rights to substantive and procedural
due process have indeed been violated. The facts show that PSPC was not
accorded due process before the assessment was levied on it. The Center
required PSPC to submit certain sales documents relative to supposed
delivery of IFOs by PSPC to the TCC transferors. PSPC contends that it
could not submit these documents as the transfer of the subject TCCs did not
require that it be a supplier of materials and/or component supplies to the
transferors in a letter dated October 29, 1999 which was received by the
Center on November 3, 1999. On the same day, the Center informed PSPC
of the cancellation of the subject TCCs and the TDM covering the
application of the TCCs to PSPCs excise tax liabilities. The objections of
PSPC were brushed aside by the Center and the assessment was issued by
respondent on November 15, 1999, without following the statutory and
procedural requirements clearly provided under the NIRC and applicable
regulations.
What is applicable is RR 12-99, which superseded RR 12-85, pursuant
to Sec. 244 in relation to Sec. 245 of the NIRC implementing Secs. 6, 7,
204, 228, 247, 248, and 249 on the assessment of national internal revenue
taxes, fees, and charges. The procedures delineated in the said statutory
provisos and RR 12-99 were not followed by respondent, depriving PSPC of
due process in contesting the formal assessment levied against
it. Respondent ignored RR 12-99 and did not issue PSPC a notice for
informal conference[44] and a preliminary assessment notice, as required.
[45]
PSPCs November 4, 1999 motion for reconsideration of the purported
Center findings and cancellation of the subject TCCs and the TDM was not
even acted upon.
PSPC was merely informed that it is liable for the amount of excise
taxes it declared in its excise tax returns for 1992 and 1994 to 1997 covered
by the subject TCCs via the formal letter of demand and assessment
notice. For being formally defective, the November 15, 1999 formal letter
of demand and assessment notice is void. Paragraph 3.1.4 of Sec. 3, RR 1299 pertinently provides:
3.1.4 Formal Letter of Demand and Assessment Notice.The
formal letter of demand and assessment notice shall be issued by the
Commissioner or his duly authorized representative. The letter of demand
calling for payment of the taxpayers deficiency tax or taxes shall state
the facts, the law, rules and regulations, or jurisprudence on which the
assessment is based, otherwise, the formal letter of demand and
assessment notice shall be void. The same shall be sent to the taxpayer
only by registered mail or by personal delivery. x x x (Emphasis supplied.)