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    Part E-1 CIR vs. Liquigaz Philippines Corporation

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    Cyruz Tuppal
    While an invalid FDDA does not automatically invalidate the assessment, the FDDA must inform the taxpayer of the basis for the assessment in writing to allow them to file an effective appeal. The FDDA received by Liquigaz only listed tax liabilities without details, depriving the company of the ability to prepare an intelligent appeal.

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    Part E-1 CIR vs. Liquigaz Philippines Corporation

    Uploaded by

    Cyruz Tuppal
    115 views2 pages
    While an invalid FDDA does not automatically invalidate the assessment, the FDDA must inform the taxpayer of the basis for the assessment in writing to allow them to file an effective appeal. The FDDA received by Liquigaz only listed tax liabilities without details, depriving the company of the ability to prepare an intelligent appeal.

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    While an invalid FDDA does not automatically invalidate the assessment, the FDDA must inform the taxpayer of the basis for the assessment in writing to allow them to file an effective appeal. The FDDA received by Liquigaz only listed tax liabilities without details, depriving the company of the ability to prepare an intelligent appeal.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    115 views2 pages

    Part E-1 CIR vs. Liquigaz Philippines Corporation

    Uploaded by

    Cyruz Tuppal
    While an invalid FDDA does not automatically invalidate the assessment, the FDDA must inform the taxpayer of the basis for the assessment in writing to allow them to file an effective appeal. The FDDA received by Liquigaz only listed tax liabilities without details, depriving the company of the ability to prepare an intelligent appeal.

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    © All Rights Reserved
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    of 2

    COMMISSIONER OF INTERNAL REVENUE, Petitioner, v.

    LIQUIGAZ PHILIPPINES
    CORPORATION, Respondent. G.R. No. 215534, April 18, 2016

    Facts:

    Liquigaz Philippine Corp received a copy of Letter of Authority (LOA) issued by the CIR authorizing
    investigation of all internal revenue taxes for 2005. It also received a copy of the PAN on May 20, 2008,
    and was assessed 23,931,708.72 PHP as deficiency tax.

    On June 25, 2008, it received a Formal Assessment Notice (FAN) together with its attached details of
    discrepancies for December 31, 2005. Liquigaz filed a protest on July 25, 2008, and submitted
    documents on September 23, 2008. It received the copy of FDDA on July 1, 2010 and still liable for
    22,380,025.19 PHP Liquigaz filed a petition for review to the CTA division CTA division—partially
    granted Liquigaz’s petition to cancel EWT and FBT assessments.

    CTA en banc-affirmed the CTA division. It is a requirement that the taxpayer should be informed in
    writing of the law and the facts on which the assessment was made applied to the FDDA—otherwise,
    the assessment shall be void.

    Issue:

    W/N the assessment made by the CIR is valid

    Ruling:

    Under Section 228 of the NIRC, a taxpayer shall be informed in writing of the law and the facts on which
    the assessment is made, otherwise, it shall be void. Again, Section 3.1.4 of RR No. 12-99 requires that
    the FLD must state the facts and law on which is it is based.

    Section 228 of the NIRC should not be read restrictively to limit the written notice only to the assessment
    itself. The written notice requirement for both the FLD and the FAN is in observance of due process—
    to afford the taxpayer adequate opportunity to file a protest on the assessment and file an appeal in
    case of an adverse decision.

    However, a void FDDA does not ipso facto render the assessment void. A decision differs from an
    assessment. An assessment becomes a disputed assessment after a taxpayer has filed its protest to
    the assessment. The CIR either issues a decision on the disputed assessment or fails to act on it and
    is considered denied. The taxpayer may then appeal the decision on the disputed assessment or the
    inaction of the CIR. As such, the FDDA is not the only means that the final tax liability of a taxpayer is
    fixed, which may then be appealed by the taxpayer.

    A decision of the CIR on a disputed assessment differs from the assessment itself. The invalidity of one
    does not necessarily result in the invalidity of the other. However the FFDA issued reveals that it merely
    contained a table of Liquigaz’s supposed tax liabilities, without providing any details. The FDDA must
    state the facts and law on which it is based to provide the taxpayer with the opportunity to file an
    intelligent appeal.

    As established, an FDDA that does not inform the taxpayer in writing of the facts and law on which it is
    based renders the decision void. Therefore, it is as if there was no decision rendered by the CIR. It is
    tantamount to a denial by inaction by the CIR, which may still be appealed before the CTA and the
    assessment evaluated on the basis of the available evidence and documents. The merits of the EWT
    and FBT assessment should have been discussed and not merely brushed aside on account of the
    void FDDA.

    The Court agrees that the FDDA substantially informed Liquigaz of its tax liabilities with regard to its
    WTC assessment. Substantial compliance with the requirement under Section 228 of the NIRC is
    permissible provided that the tax payer would be eventually apprised in writing of the factual and legal
    bases of the assessment to allow him to file an effective protest against.
    It is imperative that the FDDA contain details of the discrepancy. Failure to do so would deprive LIquigaz
    adequate opportunity to prepare an intelligent appeal. It would have no way of determining what was
    considered by the CIR in the defenses it had raised in the protest to the FLD.

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