The Court of Tax Appeals (CTA) has canceled the P1.4-million tax liability of Dionisia Pacquiao, the celebrity mother of boxing champ and Sen. Manny Pacquiao, because the Bureau of Internal Revenue (BIR) violated her right to due process.
In a 26-page decision dated May 30, the CTA Second Division granted Dionisia’s petition for review of the January 2015 final decision on disputed assessment (FDDA), which was issued by former Revenue Region 18 Director Thelma Milabao.
“The assessment issued by respondent is void and a void assessment bears no valid fruit,” said the ruling penned by Associate Justice Caesar A. Casanova.
Associate Justices Juanito C. Castañeda Jr. and Catherine T. Manahan concurred with the ruling.
The FDDA had earlier junked Pacquiao’s protest against the income tax and value-added tax assessments levied on her for the year 2010.
The CTA, however, invalidated the tax assessments because records showed that Pacquiao was not properly served the preliminary assessment notice (PAN) dated Sept. 16, 2013, which would have informed her of the alleged tax deficiency.
Serving of notice
A certain Analyn Abrera, not Pacquiao, received the notice on Oct. 18, 2013, but the BIR failed to establish how she was related to Pacquiao.
“To consider the receipt of the PAN by another person as deemed receipt [sic] by the taxpayer itself, despite the lack of prior verification of the former’s authority of agency, will put taxpayers in a disadvantageous position and at the mercy of revenue officers,” said the decision.
Even if PAN was properly served, the court also faulted the BIR for not giving Pacquiao the chance to answer the notice.
The BIR issued both the final assessment notice and the final notice of demand on Oct. 16, merely two days before Pacquiao supposedly received the PAN.
Right to be heard
“It can be inferred that respondent (BIR) had no intention of giving petitioner (Pacquiao) the opportunity to be heard of her arguments against the PAN, if any,” the decision read.
Pacquiao’s tax case, which was filed in 2013, was an offshoot of the P3.299-billion tax case separately filed by the BIR against her son, Senator Manny, and his wife, Jinkee.
The BIR alleged that the couple failed to pay income and value-added taxes for earnings from his boxing fights in the United States from 2008 through 2009.
But the Pacquiao couple went to court and secured in 2014 an order from the CTA stopping BIR from garnishing their assets. The main case is pending with the CTA.