HIMLAYANG PILIPINO PLANS, INC. VS.

COMMISSIONER OF INTERNAL
REVENUE
G.R No. 241848 May 14, 2021 FIRST DIVISION, (J. Carandang)

DOCTRINE

Section 13 of the NIRC requires that a revenue officer must be validly

authorized before conducting an audit of a taxpayer.

FACTS

The BIR Regional Director of Quezon City issued an electronic Letter of

Authority (eLOA) SN authorizing Officer Ruby Cacdac (Cacdac) and Barnardo
Andaya (Andaya) to examine Himalayang Pilipino Plans (Himalaya) books of
accounts and other accounting records for all internal revenue taxes for the
taxable year 2009. However, the actual audit was conducted by Officer
Bagauisan. On January 14, 2003, Himalaya received a Formal Letter of
Demand (FLD) with Final Assessment Notices (FAN) and Details of
Discrepancies. Himalaya protested the FAN on February 14, 2013 or 31 days
after it received the FAN.

Due to the alleged inaction of the Commissioner of Internal Revenue,

Himalaya filed a Petition for Review to the Court of Tax Appeal in Division (CTA).
The CTA dismissed the petition for lack of jurisdiction because Himalaya’s
protest against the FLD and FAN were filed out of time. It reiterated that the
FAN and FLD should have been disputed within 30 days. CTA En Banc affirmed
the ruling of the CTA Second Division. Taking a hint from the dissenting
opinion of Presiding Justice Del Rosario, Himalaya moved for the
reconsideration of the CTA En Banc’s decision and raised for the first time that
the FAN and FLD issued against it were null and void because Officer
Bagauisan who actually conducted the audit was not authorized by a valid LOA.
The CTA En Banc denied the motion because Himalaya belatedly raised the
issue on the authority of the revenue officer.

ISSUE

Is the assessment conducted against Himalaya null and void?

RULING:

Yes. The assessment against Himalaya is null and void. Under Revenue
Memorandum Order (RMO) No. 43-90, the reassignment of the examination of
petitioner's books of accounts pursuant to electronic LOA from revenue officer
Cacdac to revenue officer Bagauisan necessitates the issuance of a new LOA.
Moreover, the same RMO authorized only the Regional Directors, Deputy
Commissioner and the Commisioner to prepare and issue LOAs. Here, there
was no new LOA issued naming Bagauisan as the new officer who would
conduct the examination of Himalaya’s books of accounts. The authority of
Bagauisan is anchored only upon the memorandum of assignment signed by
revenue district officer Nacar.

Section 13 of the NIRC requires that a revenue officer must be validly

authorized before conducting an audit of a taxpayer. Hence, the lack of a valid
LOA authorizing Officer Bagauisan to conduct an audit on Himalaya’s books of
accounts makes the assessment void.

Lastly, the failure of petitioner to raise at the earliest opportunity, the

lack of the revenue officer's authority, does not preclude the Court from
considering the same because the said issue goes into the intrinsic
validity of the assessment itself.

Note: Despite filing the protest out of time, the taxpayer was still allowed
to question the intrinsic validity of the assessment.