Case Digest (G.R. No. 214933) Core Legal Reasoning Model
Facts:
This case, Republic of the Philippines, represented by the Bureau of Internal Revenue (BIR) vs. First Gas Power Corporation, G.R. No. 214933, decided on February 15, 2022, involves a tax assessment dispute concerning deficiency income taxes and penalties for the taxable years 2000 and 2001. On October 24, 2002, First Gas received a Letter of Authority authorizing BIR representatives to examine its books and accounting records for the years in question. After various correspondences and conferences, First Gas received Preliminary Assessment Notices in late 2003 and early 2004, and on September 6, 2004, it received Final Assessment Notices (FAN) and Formal Letters of Demand dated July 19, 2004, assessing it for deficiency income taxes and penalties totaling several million pesos for the two taxable years.
First Gas filed its Preliminary Reply to the PAN in April 2004 and later lodged a Letter of Protest in October 2004, which went unacted upon, prompting First Gas to file a Petit
Case Digest (G.R. No. 214933) Expanded Legal Reasoning Model
Facts:
- Parties and Subject Matter
- The Republic of the Philippines, represented by the Bureau of Internal Revenue (BIR), filed a Petition for Review on Certiorari against First Gas Power Corporation (First Gas).
- The petition assailed the Court of Tax Appeals (CTA) En Banc Decision dated May 12, 2014, which affirmed the CTA Third Division’s Decision dated September 24, 2012.
- The CTA Third Division granted First Gas’ appeal against the Final Assessment Notices (FANs) and Formal Letters of Demand dated July 19, 2004, issued by BIR for deficiency income taxes and penalties for taxable years 2000 and 2001.
- Timeline and Correspondences
- October 24, 2002: First Gas received a Letter of Authority authorizing BIR to examine its tax records for 2000 and 2001.
- September 30, 2003: First Gas received a Notice to Taxpayer for an informal conference scheduled on October 15, 2003.
- March 11, 2004: First Gas received Preliminary Assessment Notices dated December 15, 2003 and January 28, 2004, assessing deficiency income taxes and penalties for 2000 and 2001, including:
- Deficiency Income Tax 2000: ₱84,571,959.65
- Deficiency Income Tax 2001: ₱97,999,363.41
- Late Payment Penalties 2001: ₱4,670,630.18
- April 6, 2004: Filing of Preliminary Reply by First Gas to the PANs.
- September 6, 2004: First Gas received FANs and Formal Letters of Demand dated July 19, 2004, assessing:
- Deficiency Income Tax 2000: ₱37,099,915.29
- Deficiency Income Tax 2001: ₱82,365,799.90
- Late Payment Penalties 2001: ₱4,670,630.18
- Basis of Assessment
- For 2000: Deficiency income tax assessed on unreported income from pre-income tax holiday electricity sales to Meralco and Siemens, unreported interest income from foreign investments and dollar loan proceeds before operations.
- For 2001: Deficiency income tax assessed on disallowed interest expenses from dollar deposits in foreign banks and disallowed compensation expenses.
- Penalties assessed for late payment of withholding tax on interest for foreign loans and excise tax on natural gas for 2001.
- Waivers of the Defense of Prescription
- Three waivers were executed between First Gas and BIR:
| Waiver No. | Date of Waiver | Period Extended | Person Who Signed | |------------|----------------|--------------------|--------------------------| | First | April 12, 2004 | Until June 15, 2004| Celia C. King (BIR) | | Second | June 14, 2004 | Until August 15, 2004| Celia C. King (BIR) | | Third | August 13, 2004| Until October 15, 2004| Celia C. King (BIR) |
- Petitioner BIR’s representatives signed the waivers; however, the date of acceptance by BIR was not indicated on the waivers.
- Administrative and Judicial Proceedings
- October 5, 2004: First Gas filed a Letter of Protest which was not acted upon.
- June 30, 2005: First Gas filed Petition for Review with the CTA against FANs and Formal Letters of Demand.
- September 24, 2012: CTA Third Division granted First Gas’ petition and cancelled the FANs and Formal Letters of Demand for deficiency taxes and penalties.
- December 13, 2012: CTA denied BIR’s motion for reconsideration.
- BIR elevated the case to CTA En Banc.
- May 12, 2014: CTA En Banc denied BIR’s petition and affirmed the Third Division Decision.
- June 11, 2014 and October 7, 2014: BIR’s motion for reconsideration denied by CTA En Banc.
- BIR filed the instant Petition for Review on Certiorari before the Supreme Court.
Issues:
- Whether the deficiency tax assessments (Final Assessment Notices and Formal Letters of Demand) for taxable years 2000 and 2001 issued by the BIR against First Gas are valid.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)