The Court of Tax Appeals (CTA) has ordered the cancellation for lack of merit of the P2.229-billion tax assessment on former Senator Manny Pacquiao and his wife Jinkee.
The CTA special third division, in a decision promulgated on September 29, 2022, granted the Pacquiao couple’s petition for review of the Bureau of Internal Revenue (BIR) tax assessments for 2008 and 2009.
“In sum, the court finds that the subject assessment for deficiency income tax is void for violation of petitioners’ right to due process and for lack of sufficient factual basis,” the ruling stated.
The decision was penned by Justice Erlinda Uy, and concurred to by Associate Justices Ma. Belen Ringpis-Liban and Maria Rowena Modesto-San Pedro.
The court noted that in 2008 and 2009, Pacquiao’s professional earnings were sourced from the United States and the Philippines, not just by being a professional boxer but also as a product endorser with numerous commercials and television appearances.
In 2012, a formal demand letter was issued by the BIR against the Pacquiaos for alleged deficient income tax and value added tax (VAT) in the aggregate amount of P2.2 billion for 2008 and 2009, broken down as P766.889 million for 2008 and P1.433 billion for 2009.
The Pacquiaos filed their protest in the same year following the issuance of the final assessment of the deficient income tax and VAT amounting to P2.261 billion.
The couple however decided not to contest the 2008 and 2009 VAT assessments as records showed they paid the deficiency in VAT assessments totaling P32.196 million.
In 2013, the BIR claimed that the petition for review was filed by the Pacquiaos beyond the 30-day period from their receipt of the final decision on disputed assessment. But in their reply, the couple stated, among others, that the BIR failed to establish that they actually received a copy of the assessment.
The CTA upheld their argument on this issue. “No proof of service was presented by respondent to show that it was actually received by petitioners,” the court said.
The court also noted that the tax assessments against the Pacquiaos lacked sufficient basis, as they were principally based on news articles.
The news articles mentioned the pay-per-view hits of Pacquiao’s fights, as well as his estimated earnings therefrom.
“The court finds that the foregoing news articles are not sufficient basis for an assessment,” the court said.