Technicality gets Dionisia Pacquiao off the hook in P1.39-M tax case

MANILA, Philippines – The Pacquiaos have been on a roll in knocking down their tax cases, as Dionisia Pacquiao walked away victorious from a P1.39-million tax case at the Court of Tax Appeals (CTA).

Pacquiao, mother of boxing icon and senator Manny Pacquiao, won the 4-year-long litigation by a technicality – the CTA agreed with her that her right to due process was violated because the person who received the notice regarding her case could not be proven to be her authorized representative.

Pacquiao was assessed by the Bureau of Internal Revenue (BIR) to have a collectible P1.39-million tax deficiency, as computed from discrepancies in her declarations and the data provided by withholding agents or payors and payees or income recipients.

Pacquiao elevated the case to the CTA in 2015. In 2018, she won the case before a CTA division which ruled that her right to due process was violated.

In a ruling promulgated on July 5, the tax court en banc upheld the earlier division decision.

"The challenged Decision and Resolution dated May 30, 2017 and January 18, 2018 respectively, both rendered by the Court in Division are affirmed," said the ruling penned by Associate Justice Esperanza Fabon Victorino, with concurrences from Presiding Justice Roman del Rosario and Associate Justices Juanito Castañeda Jr, Erlinda Uy, Cielito Mindaro Grulla, Maria Belen Ringpis Liban, and Catherine Manahan.

Due process

The BIR served its preliminary assessment notice (PAN) on Pacquiao in 2015, which was received on record by a certain Analyn Abrera.

"Without any formidable proof that Analyn N. Abrera was authorized to receive the PAN on respondent's behalf, it is safe to conclude that no valid PAN was served, let alone received by respondent, rendering the assessments issued against respondent invalid," said the CTA en banc.

Absence of proof that a notice or summons was validly served is a technicality that can win cases. It is also how Senator Imee Marcos got away from paying $4.16 million in damages for the death of student activist Archimedes Trajano in 1977.

The CTA also said there was no verifiable letter of authority (LOA) when the revenue officers audited Pacquiao's taxes.

An LOA, the CTA said, is required by Section 6(A) of the Tax Code.

"This means that the investigation/audit on respondent...from which the subject assessments were predicated has no prior legal authorization from the Commissioner of Internal Revenue or petitioner, rendering the final assessment notice void and without legal consequence," said the CTA.

In July 2018, the CTA lifted the sanctions on Pacquiao's son in a 6-year-old tax case where he was previously required to pay the government P3.3 billion in tax deficiencies.

The CTA found the case too weak for not following procedures, and for being based only on news articles.

In that case, the BIR accused the boxer-turned-senator of not declaring his dollar winnings from his fights against Juan Manuel Marquez, David Diaz, and Oscar de la Hoya in 2008; and Ricky Hatton and Miguel Cotto in 2009. – Rappler.com

Lian Buan

Lian Buan covers justice and corruption for Rappler. She is interested in decisions, pleadings, audits, contracts, and other documents that establish a trail. If you have leads, email lian.buan@rappler.com or tweet @lianbuan.

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