BASF v. CIR
BASF v. CIR
QUEZON CITY
SECOND DIVISION
CASTANEDA, JR.,
-versus- CASANOVA,
MINDARO-GRULLA, JJ.
Promulgated:
COMMISSIONER OF INTERNAL
REVENUE, NOV 2 2 2011/
Respondent.
)(- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - )(
DECISION
CASANOVA, J.:
petitioner BASF Philippines, Inc. liable for deficiency Value-Added Tax (VAT)
and Income Tax for taxable year 2002 in the aggregate amount of
P100,319,246.85.
The facts of the case, as culled from the records, are as follows:
who holds office at the Bureau of Internal Revenue, National Office, Diliman,
Quezon City. 3
No. 9 - San Pablo City stating that, in connection with Letter of Notice No.
respectively: 5
1
Par. I , Summary of Admitted Facts, Amended Joint Stipulation of Facts (AJSF), Docket, Vol. II ,
p.606
2
Par. 3, Petition for Review, Docket, Vol. I, p. 4
3
Par. 2, Ibid
4
Exhibit " A"
5
Par. I, Stipulation ofFacts, ASJF, Docket, Vol. II, p. 609
DECISION
CTA CASE NO. 8128
Page 3 of 22
The PAN states that the computerized matching conducted by the SIR
between the records of the Bureau of Customs and the petitioner's VAT
Returns. 6
6
Par. 6, Petition, Docket, Vol. I, p. 6
7
Exhibit " A-3 "
8
Par. 3, Summary of Admitted Facts, Docket, Vol. II , pp. 606-607
DECISION
CTA CASE NO. 8128
Page 4 of 22
Discrepancy on Importation p
Multiply by tax rate %
Deficiency tax
INCOME TAX
Discrepancy on Importation p
( Overcla imed deductions)
Multiply by normal income tax rate %
Deficiency income tax p
an accounting staff who is not authorized to sign tax returns nor represent
petitioner before the BIR. Since the PAN was not addressed to a particular
officer, Ms. Tolentino did not refer the PAN to her superiors. 9
Merlinda L. Orodoyo. 11
2005 12, which she filed with Revenue Region No. 9 on 22 December 2005,
February 15, 2006 14 sent to the attention of Ms. Tolentino, the BIR provided
the requested list of importations called the Details of Importation with Return
In a letter dated April 21, 2006 16 , Ms. Tolentino replied to Ms. Corazon
raised to our concern" and asserting that "our company outrightly settles~
9
Par. 7, Petition, Docket, Vol. I, p. 6
10
Exhibit " 8 "
11
Par. 4, Summary of Admitted Facts, Docket, AJSF, Vol. II , pp. 607-608
12
Exhibit "C"
13
Par. 6, Stipu lation of Facts, AJSF, Docket, Vol. II , p. 610
14
Exhibit " D"
15
Par. 6, Stipulation of Facts, AJSF, Docket, Vol. II , p. 608
16
Exhibit " E"
DECISION
CTA CASE NO. 8128
Page 6 of 22
import taxes and duties." Ms. Tolentino attached a Certification from the
Manila dated August 27, 2001, 3rd Indorsement dated August 24, 2001 from
June 26, 2006 addressed to Ms. Villa Tolentino and signed by Oscar A.
Aguilar, OIC Chief, Legal Division, Revenue Region No. 9 stating that
dated April 30, 2010 and May 21, 2010 19 from the Department of Justice
dated March 18, 2010 20 filed by the respondent for violation of Section 255 of
the National Internal Revenue Code on account of the alleged failure to pay
deficiency income tax and VAT for taxable year 2002. The complaint was
based on an Affidavit of Oscar Aguilar alleging that tax assessments are final
and demandable because no timely protest was filed by petitioner against the
Antoinette Molleno dated March 18, 2010, which was signed by Commissionere>-
17
Par. 7, Stipu lation of Facts, AJSF, Docket, Vol. II , p. 608
18
Par. 7, Stipu lation ofFacts, AJSF, Docket, Vol. ll , p. 610
19
Exhibit " L"
20
Exh ibit " L-1 "
21
Par. 8, Summary of Admitted Facts, AJSF, Docket, Vol. II , p. 608
DECISION
CTA CASE NO. 8128
Page 7 of 22
Hence, this instant Petition for Review with Urgent Motion for
25
Prescribing Additional Guidelines Governing the Rules on Assessment ofNational Internal Revenue
Taxes Covered by a Letter Notice (LN) issued under the RELIEF System as Defined in Revenue
Memorandum Order (RMO) No. 30-2003 and other data matching processes.
26
Guidelines and Procedures in the Extraction, Analysis, Disclosure/Dissemination, Utilization and
Monitoring of RELIEF Data for Audit and Enforcement Purposes.
27
Regulations Providing for the Policies, Procedures and Guidelines in the Implementation of the
Voluntary Assessment and Abatement Program (VAAP) for Taxpayers with Underdeclared
Sales/Receipts/Income for the Calendar and Fiscal Years 2000, and 2001, and the First and Second
Quarter ending June 30, 2002, Pursuant to the RELIEF Program of the Bureau of Internal Revenue
and the Consequences for Non-Availment thereof.
DECISION
CTA CASE NO. 8128
Page 9 of 22
Discrepancy on P386,965,346. 70
Purchases
Divide by Cost Ratio 76.68%
Additional sales based 504,649,266.47
on discrepancy
Multiply by Gross Profit
Rate 23.32%
Additional gross profit 117,684,266.47
Multiply by tax rate 10%
VAT deficiency 11,768,426.65
Add: 50% Surcharge P5,884,213.32
Interest 6,429,107.60 12,313,320.92
Total Amount Due P24,081,747 .57
profit
Adjusted Taxable 117,684,266.47
Income
Tax due 37,658,965.27
Add: 50% surcharge P18,829,482.64
Interest 18,922,340.36 37,751,822.99
Total Amount Due P75,410,788.26
31
Section 228 of the NJRC of 1997 . Protesting of Assessment. - When the
Commissioner or his duly authorized representative finds that proper
taxes should be assessed , he shall first notify the taxpayer of his
findings : Provided, however, That a pre-assessment notice shall not be
required in the following cases:
(a) When the finding for any deficiency tax is the result of
mathematical error in the computation of tax as appearing on
the return ; or
(b) When a discrepancy has been determined between the tax
withheld and the amount actually remitted by the withholding
agent; or
(c) When a taxpayer who opted to claim a refund or tax credit of
excess creditable withholding tax for a taxable period was
determ ined to have carried over and automatically applied
the same amount claimed against the estimated tax liabilities
for the taxable quarter or quarters of the succeeding taxable
year; or
(d) When the excise tax due on excisable articles has not been
paid; or
(e) When the article locally purchased or imported by an exempt
person , such as, but not limited to, vehicles, capital
equipment, machineries and spare parts, has been sold ,
traded or transferred to non-exempt persons.
The taxpayer shall be informed in writing of the law and the facts on
which the assessment is made; otherwise, the assessment shall be void .
If the protest is denied in whole or in part, or is not acted upon within one
hundred eighty (180) days from submission of documents, the taxpayer
adversely affected by the decision or inaction may appeal to the Court of
Tax Appeals within thirty (30) days from receipt of the said decision , or
from the lapse of one hundred eighty (180)-day period ; otherwise, the
decision shall become final , executory and demandable .. a;-
DECISION
CTA CASE NO. 8128
Page 13 of 22
32
Asian Auctioneers, Inc . vs . Commissioner of Internal Revenue, CTA EB No. 276 , August 3, 2007.
33
G.R. No. 118176, Apri l 12,2000.
DECISION
CTA CASE NO. 8128
Page 14 of 22
34
Section 6, Revenue Regulations No. 12-85: Procedure covering administrative protests on
assessments of the Bureau of Internal Revenue
35
Docket,Vol. I, pp. 157-158
36
Docket, Vol. ll, p. 620
DECISION
CTA CASE NO. 8128
Page 16 of 22
On June 28, 2011 37 , this Court ordered the parties to file their
respective Memorandum within thirty (30) days from receipt of the said
Resolution.
Petitioner asserts that the PAN and the FAN are void because they do
not state the facts on which the assessments were based in violation of
To illustrate, petitioner argues that the PAN and FAN simply stated that
" per computerized matching [that] was conducted by the Bureau, [petitioner
37
Docket, Vo l. rr, pp. 1043- 1044
38
Docket, Vo l. fl , pp. 1045- 1057
39
Docket, Vol. II, pp. I059- 1099
40
Amended Joint Stipul ation of facts and Iss ues, Docket, Vol. II, pp. 608-609
DECISION
CTA CASE NO. 8128
Page 17 of 22
from the BOC used by the BIR for its comparison was not provided by the
BIR. Moreover, petitioner points out that the figures appearing in the
appearing in the deficiency income tax and VAT assessment on the face of
the PAN. Further, petitioner stressed that the amounts assessed in the PAN
and FAN are totally and inexplicably different from the amount assessed in
Based on the foregoing, petitioner submits that the PAN and the FAN
are void ab initio and without legal effect. Consequently, petitioner contends
writing of the legal and factual bases of the tax assessment made against
him. The use of the word "shall" in these legal provisions indicates the
41
Commissioner of Internal Revenue vs. Enron Subic Power Corporation, G.R. No. 166387, January
19,2009.
DECISION
CfA CASE NO. 8128
Page 19 of 22
A review of the records of the case would reveal that respondent did
not inform petitioner in writing of the law and facts on which the assessments
conducted by the Bureau, you have an undeclared importation for the year,
amounts appearing in the computation sheet attached to the PAN. For that
respondent.
provide petitioner with the list of the alleged undeclared importations which
has given rise to the deficiency assessments issued against it. In fact, it is
after its former employee, Ms. Tolentino, wrote and requested for a copy
from Acting Regional Director Merlinda L. Orodoyo, after having received the
PAN. d-'
DECISION
CTA CASE NO. 8128
Page 20 of 22
notices issued against petitioner are not valid. The details stated therein are
notices failed to state the legal and factual bases of the assessment for
deficiency VAT and income tax arising from the alleged undeclared
importation of petitioner.
deficiency taxes, and it divests the taxing authority of the right to collect
them. 43
necessary.~
42
Supra
43
FMF Development Corporation vs. Co mmiss ioner of Internal Revenue, CA-G R SP No. 73973 ,
February 23 , 2004
DECISION
CTA CASE NO. 8128
Page 21 of 22
assessments issued against petitioner for taxable year 2002 in the aggregate
said assessments.
SO ORDERED.
$-
CAESAR A. CASANOVA
Associate Justice
WE CONCUR:
a-~c.~~.~
Jt1'ANITO c. CASTANEDA( JR:
Associate Justice
~ N .M ~ , C~
CIELITO N. MINDARO-GRULLA
Associate Justice
ATTESTATION
~~ 0.,. a;r-~ Q.
i'UANITO C. CASTANEDA( .fR. ·
Associate Justice
Chairperson, Second Division
DECISION
CTA CASE NO. 81 28
Page 22 of 22
CERTIFICATION
~~~. \)....,.-L,
ERNESTO D. ACOSTA
Presiding Justice