G.R. No. 256868 - PEOPLE OF THE PHILIPPINES, VS. CORAZON C. GERNALE.D E C I S I O N - Supreme Court E-Library

Ruling

Accordingly, on May 3, 2006, the Assessment Division prepared a Preliminary Assessment Notice (PAN) for mailing to GECC. Subsequently, on June 28, 2006, the Assessment Division issued to GECC Final Assessment Notice No. 34-2003 (FAN) for the respective tax deficiencies and the formal letter of demand, which were transmitted to the Administrative Division for mailing to GECC. [7] In her defense, respondent alleged that the PAN and FAN issued against GECC were sent to her residential address instead of sending them to GECC's principal place of business rendering the service thereof invalid. Moreover, she alleged that despite the preparation of the PAN for mailing, there was no evidence on the part of the prosecution that the same was properly served upon GECC. Lastly, she also alleged that the prosecution failed to prove that GECC likewise received a copy of the LN. [8] The CTA Special Third Division Ruling In a Decision [9] dated September 26, 2018, the CTA Division dismissed the case for petitioner's failure to prove respondent's guilt beyond reasonable doubt, resulting in the acquittal of respondent of the charge of violating Section 255, in relation to Section 253(d) of the NIRC. [10] In so ruling, the CTA Division ruled that the subject assessment was void due to the prosecution's failure to prove that the PAN was either personally received by GECC's authorized representative or was mailed to GECC. Considering the lack of a valid assessment, the CTA Division thus ruled that respondent cannot be held liable for the non-payment of the deficiency taxes. [11] Aggrieved, petitioner moved for the partial reconsideration on the civil aspect of the case, which was denied in a Resolution [12] dated December 17, 2018. Unsatisfied, petitioner filed a Petition for Review [13] before the CTA En Banc with regard to respondent's liability on the civil aspect of the case. The CTA En Banc Ruling In a Decision [14] dated July 30, 2020, the CTA En Banc denied the Petition for Review for lack of merit and affirmed the decision and resolution of the CTA Division on the aspect of respondent's solidary civil liability with GECC for the latter's tax deficiencies. [15] Mainly upholding the findings of the CTA Division, the CTA En Banc ruled that respondent cannot be made solidarily liable with GECC for the tax deficiencies due to the failure to convert the LN into a letter of authority (LOA). According to the CTA En Banc , an LOA is an indispensable requirement prior to the conduct of an audit and the validity of an assessment. As found by the CTA En Banc , the FAN merely arose from an LN, without an audit conducted pursuant to a valid LOA, thereby making the FAN at issue void. With the FAN's invalidity, the CTA En Banc held that there can be no valid source of obligation for GECC or respondent for that matter to pay the deficiency taxes. Even assuming that the FAN is valid, the CTA En Banc further ruled that respondent cannot be held liable for her refusal to pay