REPUBLIC OF THE PHILIPPINES

COURT OF TAX APPEALS

MANILA
San Miguel Corporation
Petitioner,
--versus-Commissioner of Internal Revenue,
Respondent
X------------------------------------------X

PETITION FOR REVIEW WITH MOTION TO SUSPEND

COLLECTION OF TAX
Petitioner, by counsel and unto this Honorable Court of
Tax Appeals most respectfully alleges, that:

NATURE OF THE PETITION

1- This is a petition for review under a procedure
analogous to that provided for under Rule 42 of the
Rules of Civil Procedure (and Section 3 (a) (1), Rule 4
of the Revised Rules of the Court of Tax Appeals) is a
remedy sought from decisions of the Commissioner
of Internal Revenue in cases involving disputed
assessments, refunds of internal revenue taxes, fees
or other charges, penalties in relation thereto, or
other matters arising under the National Internal
Revenue Code or other laws administered by the
Bureau of Internal Revenue.
2- Section 2, Rule 10 of the Revised Rules of the Court
of Tax Appeals, is another remedy sought where the
collection of the amount of the taxpayers liability,
sought by means of a demand for payment, by levy,
distraint or sale of any property of the taxpayer, or
by whatever means, as provided under existing laws,

may jeopardized the interest of the Government or

the taxpayer, an interested party may file a motion
for the suspension of the collection of the tax liability.

THE PARTIES
3- That petitioner San Miguel Corp. is a domestic
corporation duly organized and existing by virtue of
the laws of the Republic of the Philippines, its
President Sarah Labahti, is represented in this case
by her counsel, Atty. Douglas Baldado Jr with office
address at Suite 402, PNB Building , 4400
Dumaguete City;
4- Respondent Commissioner of Internal Revenue may
be served with summons, writs and all orders of the
Honorable Court at her office address at Barangay
South Triangle, Quezon City 1100, Philippines;
5- Parties have the capacity to sue and be sued and
may be served with processes at aforementioned
address and through counsels of records.

MATERIAL DATES SHOWING

TIMELINESS OF THE PETITION
6- Petitioner received on May 15, 2015 a copy of the
Final Notice of Seizure dated May 12, 2015 giving the
petitioner last opportunity to settle its deficiency tax
liabilities within 10 days from receipt thereof,
otherwise BIR shall be constrained to serve and
execute the Warrants of Distraint and/or Levy and
Garnishment to enforce collection.
7- The motion for the suspension of the collection of the
tax may be filed together with the petition for review
or with the answer, or in a separate motion filed by
the interested party at any stage of the proceedings.

8- The petitioner now files this motion to suspend

collection of taxes together with the petition for
review.
STATEMENT OF FACTS AND OF THE CASES
9-

That sometime on January 26, 2014, the Regional

Director of Revenue Region No. 10, issued Letter of
Authority No. 00001111 for Revenue Office to
examine petitioners books of accounts and other
accounting records for income tax and other internal
revenue taxes for the taxable year 2013;

10- That the Bureau of Internal Revenue issue an

Indorsement dated September 26, 2014 informing
the Revenue District Officer of Revenue Region No.
67 to proceed with the investigation based on the
best evidence obtainable for failure of the petitioner
to comply with several request for the presentation
of records and Subpoena Duces Tecum;
11- That on November 8, 2014, Revenue District
Officer issued a Preliminary 15-day Letter, which
stated that a post audit review was held and it was
ascertained that there was deficiency value-added
and withholding taxes due from the petitioner in the
amount of P2,092,874.16;
12- That on April 11, 2015, petitioner received a
Formal Letter of Demand dated April 3, 2015 from
Revenue District No.67, assessing the petitioner the
amount of Two Million Ninety Two Thousand Eight
Hundred Seventy Four Pesos and Sixteen Centavos
(P2,092,874.16) for deficiency value-added and
withholding taxes for the taxable year 2013;
13- That Revenue District Office No. 67 sent a copy of
the Final Notice of Seizure dated May 12m 2015,
which petitioner received on May 15, 2015, giving
the latter last opportunity to settle its deficiency tax
liabilities within 10 days from receipt.
14- That on June 6, 2015, petitioner received from
Revenue District Office No. 67 a Warrant of Distraint
and/or Levy dated May 12, 2015 demanding

payment of deficiency value-added tax and

withholding tax payment in the amount of
P2,092,874.16.

ASSIGNMENT OF ISSUES
ISSUE NO. 1
THE PRELIMINARY 15-DAY LETTER IS NOT EQUIVALENT TO A
PRELIMINARY ASSESSMENT NOTICE, SINCE IT ONLY
CONTAINED THE RDO'S FINDINGS ON THEIR POST AUDIT
REVIEW.

ISSUE NO. 2
THE PRELIMINARY 15-DAY LETTER LACKS THE REQUIREMENT
TO AFFORD THE PETITIONER AMPLE OPPOTURNITY TO
REFUTE THE FINDINGS OF THE ASSESSMENT MADE BY THE
EXAMINER, THUS, THE PETITIONER WAS NOT ACCORDED
DUE PROCESS.

DISCUSSION OF ISSUES

ISSUE NO. 1
THE PRELIMINARY 15-DAY LETTER IS NOT EQUIVALENT TO A
PRELIMINARY ASSESSMENT NOTICE, SINCE IT ONLY
CONTAINED THE RDO'S FINDINGS ON THEIR POST AUDIT
REVIEW.
15- The Preliminary 15-day Letter is not equivalent to
a Preliminary Assessment Notice issued by the
Revenue District Officer for its failure to state the law
and/or facts upon which they are based.
16- In Stock Exchange vs. Commissioner, (CTA Case
No. 5995, Oct 15, 2002) emphasized the objective

why Preliminary Assessment Notice must contain the

law and facts on which assessment is made:
Section 228 of the 1997 Tax Code requires that the
taxpayer be informed of the law and facts on which
assessment is made. The objective is to give the
taxpayer the opportunity to refute the findings of the
examiner and give a more accurate and detailed
explanation regarding the proposed assessment. It is
sufficient that computations are attached to the preassessment notice clearly showing the specific
provisions of the law from which the assessments
were based and the facts on how the amounts of the
deficiency taxes were arrived at.
17- The Preliminary 15-day Letter only stated that a
post audit review was held and that deficiency were
ascertained against the petitioner. Clearly lacking the
required information mandated by law.
18- In Lantin v. Commissioner, (CTA Case No. 1951,
Apr. 10, 1969):
An assessment may also be in the form of a letter or
other less formal communications to the taxpayer. In
order to constitute an assessment, the notification
must contain an outright demand for payment of the
amount alleged to be due. Thus, it was ruled that a
letter containing a computation of supposed tax
liabilities, giving the taxpayer an opportunity to show
the incorrectness of the findings of the examiner, or
urging the taxpayer to produce his books or records
for verification or to present his side is not an
assessment.
19- The Preliminary 15-day Letter did demand
payment of the tax deficiency ascertained by the
post audit review within a stated period of time.

ISSUE NO. 2
THE PRELIMINARY 15-DAY LETTER LACKS THE REQUIREMENT
TO AFFORD THE PETITIONER AMPLE OPPOTURNITY TO
REFUTE THE FINDINGS OF THE ASSESSMENT MADE BY THE
EXAMINER, THUS, THE PETITIONER WAS NOT ACCORDED
DUE PROCESS.

20- The petitioner was not accorded due process by

the Bureau. Deficiency tax can be collected through
administrative and/or judicial remedies but it has to
afford the deficient tax payer the time to file a
protest against the assessment. The petitioner could
not ascertain the proper defense to refute the
findings of the examiner and give a more accurate
and detailed explanation regarding the assessment
since the Preliminary 15-day Letter lacks the law and
facts on which the assessment is made.
21- Preliminary Assessment Notice is required in this
case because the nature of the petitioner's deficiency
is not one of those excepted by the National Internal
Revenue Code, Sec. 228 enumerates the nonrequirement of pre-assessment notice:
(a) When the finding for any deficiency tax is the
result of mathematical error in the computation of
the tax appearing on the face of the tax return filed
by the taxpayer; 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 determined 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 an 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 nonexempt persons.
22- In CIR v. Metro Star Superama, Inc., (637 SCRA
633), the Court ruled:
The sending of a Preliminary Assessment Notice
(PAN) to taxpayer to inform him of the assessment
made is but part of the due process requirement in
the issuance of a Deficiency Tax Assessment, the
absence of which renders nugatory any assessment

made by the tax authorities. The persuasiveness of

the right to due process reaches both substantial and
procedural rights and failure of the CIR to strictly
comply with the requirements laid down by law and
its own rules is a denial of Metro Stars right to due
process. Thus, for its failure to send the PANA stating
the facts and law on which the assessment was
made as required by Section 228 of the Republic Act
No. 8424, the assessment made by the CIR is void.

23- In PNZ Marketing vs. Commissioner, (CTA Case

No. 5726, Dec. 14, 2001):
The rule requiring the BIR to inform the taxpayer in
writing of the laws and the facts on which the
assessment is made runs parallel to the due process
clause for it is believed that it is only through a detailed
appraisal of its basis that the taxpayer may be able to
dispute the imposition or agree with it.
PRAYERS
WHEREFORE, premises considered it is most
respectfully prayed the suspension of the collection
of the subject taxes against petitioner.
Other reliefs are prayed for.

VERIFICATION
I , SARAH LABAHTI, President of San Miguel
Corporation, Filipino, of legal age, married and
resident of Motong, Dumaguete City, Negros
Oriental, after being sworn to in accordance with law
hereby state:
1. That I am the petitioner of the above instant case.
2. That I have caused the preparation of the aboveentitled petition.
3. That I have read the same and that it is true and
correct based on my personal knowledge or base on
authentic records.
SARAH LABAHTI
PETITIONER

IN WITNESS WHEREOF, I DOUGLAS BALDADO JR,

counsel of the petitioner have hereunto affixed my
signature, September 21, 2015, Dumaguete City,
Negros Oriental.
______________________ Counsel for the petitioner
PTR No._______________
IBP No._______________
Roll No._______________
Banilad, Dumaguete City,
Negros Oriental,
Philippines
NON FORUM SHOPPING CERTIFICATE
That petitioner have not commenced any other
action or proceeding involving the same issues in the
Supreme Court, the Court of Appeals or any tribunal
or agency; and that to the best of his knowledge, no
such action or proceeding is pending in the Supreme
Court, the Court of Appeals or any divisions, thereof
or any tribunal or agency; and that if he should
thereafter learn that similar action or proceeding has
been filed or is pending before the Supreme Court,
the Court of Appeals or different divisions thereof, or
any other tribunal or agency, he undertakes to
promptly inform the aforesaid courts and such other
tribunal or agency.

Taxation Law I

Submitted to: Atty. Toni Marie Escao

Submitted by: Douglas J Baldado Jr