MANILA – The Court of Tax Appeals has ordered the cancellation of P2.229-billion tax assessment on former Senator Manny Pacquiao and his wife, Jinkee.
In a decision of the Special 3rd Division promulgated on September 29, 2022, the court granted the petition for review filed by the Pacquiaos against the Bureau of Internal Revenue (BIR) for taxable years 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 court said in the decision penned by Special 3rd Division Chairperson Erlinda Uy, with the concurrence of Associate Justices Ma. Belen Ringpis-Liban and Maria Rowena Modesto-San Pedro.
The court noted that in the years 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 product endorser with various commercials and television appearances.
In 2012, a formal letter of demand was issued against the Pacquiaos for deficiency income tax and value added tax in the aggregate amount of P2.200 billion for 2008 and 2009.
Broken down, taxes of the couple amounted to P766.889 million for 2008 and P1.433 billion for 2009.
The Pacquiaos filed their protest in the same year followed by the issuance of the final assessment of the deficiency 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 VAT assessments totaling P32.196 million.
In 2013, the BIR noted 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.
“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.
“The court finds that the foregoing news articles are not sufficient basis for an assessment,” the court said.