G.R. No. 201665 - Edison Cogeneration Corp. vs. Commissioner of Internal Revenue

Petition for Review on Certiorari consolidated under G.R. Nos. 201665 and 201668 challenged decisions and resolutions rendered by the Court of Tax Appeals (CTA) in CTA EB Case Nos. 766 and 769.
The proceedings originated from assessments issued by the Commissioner of Internal Revenue (CIR) against Edison (Bataan) Cogeneration Corporation (EBCC) for deficiency income tax, Value Added Tax (VAT), withholding tax on compensation, Expanded Withholding Tax (EWT) and Final Withholding Tax (FWT) for the taxable year 2000.

On February 2, 2004, EBCC received a Formal Letter of Demand and Final Assessment Notice dated January 23, 2004, assessing it of a total deficiency tax amounting to P84,868,390.16.

ii. VAT – P168,866.15 iii. Withholding Tax on Compensation – P128,087.84 iv. Expanded Withholding Tax – P79,066.13

EBCC filed a letter-protest with the CIR on March 3, 2004, following inaction from the CIR.
Subsequently, EBCC elevated the matter to the CTA by filing a Petition for Review, and during pending proceedings, it availed itself of the Tax Amnesty Program under Republic Act No. 9480.
On November 7, 2008, the CTA Second Division, in a resolution, deemed the petition partially withdrawn, thereby closing the case with respect to the deficiency income tax and VAT assessments.
On March 18, 2009, the CTA Second Division set aside the assessments for deficiency income tax and VAT for taxable year 2000 in view of EBCC’s availment of the tax amnesty.

Determined that EBCC had paid the correct amounts for EWT and withholding tax on compensation and cancelled corresponding deficiency assessments.
Assessed deficiency FWT for taxable year 2000 at a reduced amount of P2,232,146.91.
Canceled deficiency assessments for FWT on interest payments related to the loan with Ogden, as its liability arose only when the interest became due on June 1, 2002.
Also set aside deficiency assessments on loan interest payments to other banks because such remittances had already been effected by EBCC.

Both the CIR and EBCC filed respective Motions for Reconsideration and/or Clarification, which were denied on April 7, 2011.
The case was elevated to the CTA En Banc, which on January 30, 2012, denied the appeals and sustained the findings of the Former Second Division regarding the liability on FWT.
A subsequent Motion for Reconsideration filed by the CIR was denied on April 17, 2012 by the CTA En Banc.

EBCC argued that it was not liable for any deficiency taxes since it had remitted an amount it contended should deduct from the FWT—but its alleged remittance was not supported by documents accepted by the court.
The CIR contended that there was no judicial admission of such payment and emphasized that the burden of proof rested with EBCC to demonstrate payment.
A dispute arose regarding the proper time when the withholding obligation attached, especially in relation to the interest payments on loans, with reference to Revenue Regulations 02-98 versus 12-01.

Whether the CTA En Banc erred in not recognizing the CIR’s alleged judicial admission that it had reduced the deficiency FWT assessment from P10,227,622.72 to P7,384,922.52.
Whether EBCC’s contention on the alleged remittance (and hence deduction) of P2,842,630.20 amounts to a question of fact improperly raised before the appellate court.

Whether EBCC is liable for deficiency Final Withholding Tax for the taxable year 2000, particularly in view of its handling of withholding tax on interest payments.
Whether Revenue Regulation No. 12-01 should be applied retroactively in this case, affecting the period and computation of the withholding tax obligation.