THE Supreme Court (SC) has upheld a tax court ruling that set aside Maxicare Healthcare Corp.’s tax liabilities worth P419.77 million for the taxable year 2012.
In a 21-page decision dated July 10 and made public on Oct. 4, the tribunal agreed with the Court of Tax Appeals’ (CTA) conclusion that Maxicare was not afforded due process when its tax liabilities were assessed.
“A written notice requirement for both the final letter of demand and the final assessment notice is in observance of due process — to afford the taxpayer adequate opportunity to file a protest on the assessment,” Associate Justice Maria Filomena D. Singh said in the ruling.
Under the Tax Code, an entity must be given 60 days to submit supporting documents before the commissioner of internal revenue (CIR) decides on a tax assessment.
The High Court noted that the CIR issued its final decision on the disputed assessment before the 60-day window had lapsed, which it said violated Maxicare’s right to due process.
The commissioner argued that the firm was not denied due process since Maxicare was able to submit a protest letter to the subject assessment.
The High Court disagreed, saying the firm was not afforded a “genuine opportunity to be heard” since the CIR had issued its final decision before Maxicare could submit additional supporting documents following its request to reinvestigate its tax liabilities.
In this case, the denial of due process is manifestly evident and was clearly recognized by the CTA First Division and wholly affirmed by the CTA En Banc.
“Tax investigation and assessment necessarily demand the observance of due process because they affect the proprietary rights of specific persons,” the Supreme Court said. — John Victor D. Ordoñez
