Connect with us

Hi, what are you looking for?


Court of Tax Appeals cancels P172-M tax assessment on Red Ribbon

THE Court of Tax Appeals (CTA) cancelled the tax assessment against Red Ribbon Bakeshop, Inc. of P172.2 million for being audited by unauthorized officers.

In a 17-page ruling dated Jan. 7, the court’s Third Division granted the petition of Red Ribbon seeking to cancel its tax assessment for 2009.

The court noted that the revenue officers who conducted the audit investigation were not authorized through a Letter of Authority (LoA), as required by the Tax Code and Revenue Memorandum Order No. 43-90.

Citing a Supreme Court ruling, the court said that as the revenue officers who conducted the audit had no authority to do so, “the resulting assessment is void.”

“Having found the assessment void, the Court will no longer discuss the other issues raised in the present petition,” the court ruled.

“Consequently, respondent is enjoined and prohibited from collecting the said amount against petitioner,” it ruled.

Section 6 of the Tax Code states that the commissioner or his duly authorized representative may authorize the examination of a taxpayer, while Section 13 says that a revenue officer may perform assessment pursuant to an LoA issued by the revenue regional director.

RMO 43-90 requires a new LoA for the re-assignment of cases.

An LoA was initially issued to revenue officers to assess the company, but the officers, who were authorized through a memorandum of assignment (MoA), conducted the audit and recommended the issuance of the assessment.

The court noted a ruling of the CTA en banc, which stated that a document may be treated as an equivalent of a new LoA, but it should contain all elements of an LoA and issued by the Bureau of Internal Revenue (BIR) commissioner or his representatives either, the revenue regional director or the assistant commissioner/head revenue executive assistants in case of taxpayers falling under the large taxpayers division.

The court noted that the three MoAs were signed by the chief of the BIR’s Regular Large Taxpayers Audit Division 1, who is not one of the authorized representatives of the commissioner to issue an LoA.

Red Ribbon is being assessed for alleged deficiency income tax and value-added tax of P172.2 million arising from alleged undeclared purchases.

The court said the BIR compared the firms summary list of purchases (SLP) to the monthly alphalist of payees (MAP) and the reconciliation of listings for enforcement (RELIEF) and allegedly showed that the purchases in the MAP/RELIEF were higher than the declared SLP. The BIR said that the difference should be subject to both income tax and VAT.

Red Ribbon claimed that the assessment is null and void for being issued beyond the three-year prescriptive period and the waivers for the extension of the assessment period as it had defects.

It also claimed that the assessment lacked factual and legal bases, claiming the BIR failed to verify the correctness of the tax base used in coming up with the assessment and it erred in imposing VAT on its supposed under-declared purchases without showing proof that it had sales or income from clients.

The BIR on the other hand said that the assessment had a factual and legal basis, saying the assessment was derived from one of the audit methods prescribed by the law.

It said the defects such as the failure to indicate the type and amount of the tax noted in the waivers, did not affect the validity as the information was not yet determinable when it was issued. — Vann Marlo M. Villegas

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Get the daily email that makes reading the news actually enjoyable. Stay informed and entertained, for free.
Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!



RISING FOOD PRICES pushed inflation to a 14-year high in November, the Philippine Statistics Authority (PSA) said on Tuesday. Preliminary data from the Philippine...


THE WORLD BANK upgraded its growth forecast for the Philippines this year but expects the economy to expand at a weaker pace in 2023...


By Arjay L. Balinbin, Senior Reporter A PROPOSED MEASURE seeks to require National Economic and Development Authority (NEDA) Board approval only for projects worth...


THE MANAGEMENT ASSOCIATION of the Philippines (MAP) is seeking the creation of a public-private sector advisory council for various sectors, in order to improve...


THE HOLIDAYS shouldn’t be used as an excuse to binge-eat, warned a dietitian.  Christmas is just around the corner and with it comes an...


MANILA Electric Co. (Meralco) has secured a certificate of exemption from the Department of Energy (DoE) from the competitive selection process (CSP) for the...

You May Also Like


The minute that any question pops into your head, you can simply ask Google. No longer do we have to pour over books and...


Having a good Instagram marketing agency to back up your Instagram account is an absolute must going into the new year. With competition stronger...


Browsing history makes referring to sites and pages you’ve visited in the past seamless. It’ll help you recall what page you checked out on...


Insomnia is the most common sleep disorder in the global population. Therefore, it is a problem that many people suffer or have suffered throughout...

Disclaimer:, its managers, its employees, and assigns (collectively "The Company") do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2021 SmartRetirementReport. All Rights Reserved.