G.R. No. 176625 - Mactan-Cebu International Airport Authority vs. Lozada, Sr.

On December 6, 2004, the Commissioner of Internal Revenue (CIR) issued Formal Letters of Demand and Assessment Notices against Covanta Energy Philippine Holdings, Inc. (CEPHI) for deficiency value-added tax (VAT) and expanded withholding tax (EWT) for taxable year 2001, totaling ₱754,496.99.
CEPHI protested these deficiency assessments through two separate Letters of Protest filed on January 19, 2005.
On January 11, 2005, the CIR issued another Formal Letter of Demand and Assessment Notice against CEPHI for deficiency minimum corporate income tax (MCIT) amounting to ₱467,801.99 for the same taxable year. CEPHI protested via a Letter of Protest on February 16, 2015.

Since the CIR did not act on the protests, CEPHI filed separate petitions with the CTA on October 10, 2005 (for VAT and EWT), docketed as CTA Case No. 7338, and on November 9, 2005 (for MCIT), docketed as CTA Case No. 7365.
CIR filed Answers on December 6, 2005 (Case No. 7338) and January 10, 2006 (Case No. 7365). Upon CIR’s motion, the cases were consolidated.
After the formal offer of evidence, CEPHI filed a Supplemental Petition on October 7, 2008, informing the CTA of its availing to the tax amnesty program pursuant to Republic Act (R.A.) No. 9480 and submitted supporting documents.
CTA required memoranda from the parties and submitted the case for decision.

On July 27, 2010, the CTA Second Division partially granted CEPHI’s petitions, cancelling the deficiency VAT and MCIT assessments but maintained CERPHI’s liability for the deficiency EWT totaling ₱131,791.02 plus interests and surcharge, citing that tax amnesty does not extend to withholding tax liabilities.
CIR’s Motion for Reconsideration was denied on December 13, 2010.

CIR elevated the case to the CTA en banc. Its sole issue was the validity of CEPHI’s tax amnesty under R.A. No. 9480, questioning whether CEPHI complied with the documentary requirements.
On March 30, 2012, the CTA en banc denied the CIR’s appeal and affirmed the CTA Second Division’s decision, upholding CEPHI’s tax amnesty and cancellation of deficiency VAT and MCIT assessments while sustaining the deficiency EWT liability.
The en banc held that CEPHI’s net worth was presumed compliant in the absence of evidence showing understatement by at least 30%.
CIR’s motion for reconsideration was denied on August 16, 2012.

CIR filed a petition for review on certiorari before the SC, contending CEPHI failed to fully comply with R.A. No. 9480’s tax amnesty requirements, particularly disputing the completeness of CEPHI’s Statement of Assets, Liabilities, and Networth (SALN).
CIR also argued that there is no prescriptive period for challenging CEPHI’s compliance with the tax amnesty law.

Whether CEPHI complied with the documentary requirements of the tax amnesty program under Republic Act No. 9480, particularly regarding the completeness of the Statement of Assets, Liabilities, and Networth (SALN), including the Reference and Basis of Valuation columns.
Whether CEPHI is entitled to the immunities and privileges under the tax amnesty law despite alleged deficiencies in its SALN.
Whether the presumption of truthfulness of CEPHI’s SALN can be overturned by the CIR due to alleged understatement of net worth.
Whether there exists a period of limitation within which the CIR can challenge the taxpayer’s compliance with the tax amnesty law.