Due process requires that the receipt of the Preliminary Assessment Notice (PAN) be proven by the prosecution for the accused to be held liable under Section 255 of the NIRC.

The taxpayer informed the Bureau of Internal Revenue (BIR) that it has decided to permanently close and cease operations effective September 2005. Tax Verification Notice was issued by the BIR to verify supporting documents and pertinent records relative to the taxpayer’s closure of business. The verification prompted the issuance of the assessment for alleged value-added tax (VAT) deficiency, which in turn, led to the filing of the case, against accused, as the alleged responsible officers of taxpayer. The accused asserted that they did not receive the Preliminary Assessment Notice (PAN) and Final Assessment Notice (FAN). Since accused supposedly never received any of the assessment notices, no willfulness could be attributed as such and in fact they were not even aware of the legal and factual bases of the tax assessment. The Court ruled that due process requires that the receipt of the PAN be proven by the prosecution for the accused to be held liable under Section 255 of NIRC. The accused should be acquitted because prosecution failed to prove beyond reasonable doubt the essential elements of the offense and also failed to show that the PAN was indeed personally received by the accused. Considering that the prosecution failed to prove that the PAN was received by the accused, the assessment made by the CIR is void. It is well-settled that a void assessment bears no fruit. Thus, no civil liability arises in this case. (People of the Philippines vs. Katherine M. Lim and Edelyn Coronacion, CTA Crim. Case No.0-113, December 12, 2011)