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FACTS:
Liquigaz Philippines Corporation (Liquigaz) is a corporation duly organized and existing
under the Philippine Law. On 2006, said corporation received a copy of Letter of Authority
issued by Commissioner of Internal Revenue, authorizing the investigation of all internal
revenue taxes for taxable year 2005.
EWT P 5,535,890.38
WTC P 4,500,169.94
P
FBT
14,296,286.88
P
TOTAL
24,332,347.20
On July 2008, Liquigaz filed its protest against the FLD. On the same month, it received
a copy of FDDA covering the tax audit for calendar year ending December 2005. As reflected in
the FDDA, the CIR found Liquigaz liable for deficiency withholding tax liabilities, in aggregate
amount of Php 22, 380, 025.19; as follows:
EWT P 3,479,426.75
WTC P 4,508,025.93
FBT P14,392,572.51
P
TOTAL
22,380,025.19
On November 2012, CTA Division partially granted Liquigazs petition cancelling the
Expanded Withholding Tax (EWT) and Extended Benefits Tax (EBT) assessments, but affirmed
with modification the Withholding Tax on Compensation (WTC).
CTA En Banc affirmed the assailed decision of CTA Division. It reiterated its
pronouncement that the requirement that the taxpayer should be informed in writing of the law
and the facts on which the assessment was made applied to FDDA otherwise the assessment
would be void. While CTA en banc sustained the WTC assessment.
ISSUE:
Whether or not the failure of the FDDA to state the facts and law on which it is based
renders the assessment void.
HELD:
YES. Supreme Court agreed with the CTA that the FDDA was void for failure to comply
with the requirements that FDDA shall state the facts and the law on which the decision is based.
While it provided for the legal basis for the assessment, it fell short of informing the taxpayer of
the factual bases thereof. As the amounts in the FDDA are different from those in the FAN, it
becomes even more imperative that the FDDA contains details of the discrepancy. Failure to do
so would deprive the taxpayer adequate opportunity to prepare an intelligent appeal.
The case is remanded to the CTA for the assessment on EWT and FBT.