Tax II: Requirements to Inform Taxpayer of Factual and Legal Basis of Assessment - 36

Basil Maguigad
PHIL. MINING SERVICE CORP vs. CIR
CTA No, 5725, June 25, 2002, RULING

The instant Petition for Review is an appeal for the
cancellation and withdrawal of the deficiency income tax,
value-added tax and excise tax assessments issued by the
respondent against the petitioner for the fiscal year ended
April 30, 1995 in the aggregate amount of P130,305,575.00.
FACTS
Petitioner entered into a service contract with Dolomite
Mining Corporation (DMC), the lessee of Mining Lease
granted in its favor by the Philippine government
covering mining area located in Cebu province.
The BIR sent a letter to petitioner informing the latter
that a report of investigation on its income and
business tax returns has been submitted to Revenue
District Officer for appropriate action.
• Attached thereto were the report of investigation
and the memorandum of Revenue Officer
recommending, among others, the issuance of an
assessment notice for alleged deficiency taxes.
The petitioner received Pre-Assessment Notices
assessing petitioner deficiency taxes.
• Petitioner received from the respondent's office
various assessment assessing petitioner for alleged
deficiency income tax, value added tax, and excise
tax.
• Assessing the petitioner for alleged deficiency
income tax, value added tax, and excise tax for
fiscal year ending April 30, 1995 in the aggregate
amount of P130,305,575.00.
• The various assessment notices merely contained
the amounts of alleged deficiency income tax, value
added tax and excise tax petitioner was being
assessed of without any showing as to how said
amounts were arrived at or computed.
Petitioner was sufficiently informed.
It is undisputed that the BIR sent a letter to the
petitioner informing the latter that a report of
investigation on its income and business tax returns
had been submitted for appropriate action.
• Attached thereto were the report of investigation
and the memorandum of Revenue Officer
recommending, among others, the issuance of an
assessment notice for the alleged deficiency taxes.
• The attached investigation report of Revenue Officer
contained the detailed findings made by the latter,
the facts and the law on which the recommended
assessments were based.
• The recommended assessments were basically
the same amounts that were finally assessed
against petitioner. They differed only because of
the period covered for the imposition of interest
charges.
Moreover, in its protest petitioner was able to
effectively contest the subject assessments and submit
documents to support its claim that the assessments
were erroneous.
• Indeed, at the time the assessments were issued,
petitioner knew very well the law and the facts on
which they were based. Since the requirement
under Section 228 of the 1997 Tax Code that the
"taxpayer shall be informed in writing of the law
and the facts on which the assessment is based" has
been sufficiently met, it follows then that the
assessments dated April 6, 1998 were not null
and void.

Later, petitioner filed with the BIR a protest letter

against the alleged deficiency income tax, value- added
tax and excise tax assessments and requested that the
same be withdrawn and cancelled.

Subsequently, Revenue Officer modified his findings as to

the amount of alleged liability of petitioner but reiterated his
recommendation for the issuance of an assessment notice.

Respondent failed to act on the case or resolve the

protest and supplemental protest filed by petitioner
within the period of one hundred eighty (180) days.
Hence, Petitioner filed the instant Petition for Review.

ISSUE(S)

Whether or not the Petitioner was sufficiently informed

of the factual and legal basis for the assessment. (YES)

Whether or not the assessments for the alleged

deficiency income tax and value-added tax are valid.
(YES)