THE Court of Tax Appeals (CTA) granted the petition filed by former senator and boxing legend Manny Pacquiao and his wife, Jinkee, junking their tax deficiency assessment of P2.2-billion.
The CTA Special Third Division said the assessment for deficiency income tax assessments against the Pacquiaos is “void” for violating their right to due process and for “lack of sufficient factual basis”.
The government is pursuing P2.22 billion in taxes against the Pacquiaos, inclusive of interests and surcharges, for the boxer’s prize money in matches abroad and product endorsements for 2008 and 2009.
The court, in ruling that due process was not observed, noted that no notice of informal conference (NIC) was sent by revenue officials to the Pacquiaos, a requirement under the law to afford the taxpayer with an opportunity to present his side.
“(R)ecords reveal that the NIC was not served to petitioners (Pacquiaos). No proof of service was presented to show that it was actually received by petitioners,” the CTA said in its September 29 ruling.
The court noted that the assessment against Pacquiao was principally based on news articles.
Revenue officials’ tax assessment has the presumption of correction and regularity, but the CTA said “it should be considered void if not supported by sufficient evidence or is based on mere presumptions.”
“Likewise, there is no showing that the revenue officers performed due diligence to confirm the veracity of the information contained in the said articles before issuing the subject (tax) assessment,” the CTA said.
In a letter of authority in March 2010, Bureau of Internal Revenue (BIR) director Antonio Montemayor sought to examine the books of accounts and other accounting records of the Pacquiaos for 2008.
In May 2012, a formal letter of demand was issued by the BIR for deficiency taxes amounting to PHP2,200,310,754.23 while a final notice before seizure was subsequently sent out Aug. 7, 2013, prompting Pacquiao to question the proceedings.
Pacquiao had repeatedly said in the past that the tax assessment has no basis.
In 2018, the CTA First Division ruled the BIR committed “several violations and irregularities” when it issued its Final Decision on Disputed Assessment (FDDA), which said Pacquiao and his wife have unpaid tax obligations worth PHP3.29 billion.
“(BIR) is hereby ordered to cease and desist from implementing the subject FDDA and from collecting the subject deficiency tax assessments issued against petitioners for taxable years 2008 and 2009 for lack of merit,” the CTA said then, while also citing the absence of the NIC.
The BIR likewise failed to establish that the Pacquiaos committed fraud or tax evasion, the court said.
