The SC has affirmed the decision of the tax court to cancel Maxicare Healthcare Corp.’s tax obligations amounting to P419.77 million for the 2012 tax year.
On October 4, a 21-page decision was released by the tribunal, dated July 10, which concurred with the Court of Tax Appeals’ (CTA) determination that Maxicare did not receive proper due process during the assessment of its tax obligations.
According to the ruling by Associate Justice Maria Filomena D. Singh, the inclusion of a written notice requirement in both the final demand letter and assessment notice is necessary to ensure due process. This gives the taxpayer enough time to file a protest regarding the assessment.
According to the Tax Code, the CIR must allow 60 days for an entity to provide supporting documentation before making a decision on a tax assessment.
The High Court observed that the CIR made a final ruling on the disputed assessment prior to the expiration of the 60-day period, which was deemed a violation of Maxicare’s right to fair treatment.
The commissioner contended that the company was not deprived of its right to due process because Maxicare was able to submit a letter of protest regarding the assessment in question.
The High Court had a different opinion, stating that the company did not have a true chance to present their case, as the CIR had already made a final decision before Maxicare could provide additional documents upon their request for a tax liability review.
In this instance, the lack of proper legal procedure is clearly apparent and was duly acknowledged by both the CTA First Division and the CTA En Banc.
“The protection of due process is essential in tax investigations and assessments, as they have a direct impact on the property rights of individuals,” stated the Supreme Court, as quoted by John Victor D. Ordoñez.