G.R. No. 238914 - Qatar Airways Co. with Limited Liability vs. Commissioner of Internal Revenue

Case Summary (G.R. No. 238914)

BIR assessment, payments, and administrative correspondence

On May 18, 2012, the BIR issued Assessment Notice No. QA-12-000-135 assessing: (a) a 25% surcharge of P7,385,209.00; (b) interest of P16,186.76 for late payment; and (c) a compromise penalty of P50,000.00. Qatar Airways paid the interest and compromise penalty (total P66,186.76) via eFPS on July 3, 2012 but sought abatement of the P7,385,209.00 surcharge through letters dated July 4, 2012 and March 7, 2013. The BIR denied abatement in a letter dated October 3, 2013 and reiterated the denial in a February 10, 2014 letter for lack of new justification under RR No. 13-2001 as amended. A final denial was issued by the CIR in a letter dated April 3, 2014, which concluded there was no evidence of eFPS unavailability on November 29, 2011, that filing could have been done earlier or on the first working hour of the following day, and that mere log-in problems did not amount to meritorious circumstances warranting abatement. The CIR’s April 3, 2014 letter stated that the denial was final and demanded payment of the surcharge within ten days.

Procedural history before the CTA Division

Qatar Airways filed a Petition for Review with the CTA (CTA Case No. 8816) on May 8, 2014. The CTA Second Division denied the petition for lack of jurisdiction, reasoning that the 30-day period to file a petition had begun when the petitioner received the BIR’s February 10, 2014 denial of its first reconsideration; because Qatar Airways had filed a second request for reconsideration and awaited the BIR’s action thereon, the Division held it lacked jurisdiction over the belated petition filed May 8, 2014. A motion for reconsideration before the Division was denied on May 25, 2016.

CTA En Banc ruling on timeliness and merits

On appeal, the CTA En Banc concluded that the petition for review was seasonably filed but proceeded to resolve the merits against Qatar Airways. The En Banc held that the BIR-imposed surcharge was not unjust or excessive under Section 248(A)(1) of the NIRC and denied the petition for lack of merit. A motion for reconsideration filed with the CTA En Banc was denied in a resolution dated April 12, 2018.

Supreme Court’s review and legal framework applied

The Supreme Court reviewed the CTA En Banc decision. It reaffirmed the CIR’s statutory authority under Section 204(B) of the NIRC to abate or cancel tax liabilities when they appear unjust or excessive or when collection costs do not justify collection. The Court noted RR No. 13-2001 (and its amendment by RR No. 4-2012) as the implementing guidelines indicating instances when penalties or interest may be abated, including circumstances “beyond the taxpayer’s control” or meritorious circumstances, but subject to limitations (e.g., abatement generally confined to surcharge and compromise penalty, not interest, in certain instances).

Supreme Court’s factual and legal reasoning rejecting abatement

The Court accepted the CTA’s factual findings that Qatar Airways did not prove technical unavailability of the eFPS on November 29, 2011 and that the one-day delay could have been avoided had the taxpayer filed earlier or availed itself of alternatives (such as filing a tentative return pursuant to Section 6(A) of the NIRC). The Court concluded that a mere technical malfunction, absent proof of system unavailability or other compelling evidence, did not constitute a circumstance so extraordinary as to render the taxpayer completely without recourse. The CTA’s determination that the surcharge was not unjus

Case Syllabus (G.R. No. 238914)

Case Caption, Citation and Panel

Reporter citation: 873 Phil. 592, First Division, G.R. No. 238914, June 08, 2020.
Parties: Qatar Airways Company with Limited Liability (petitioner) v. Commissioner of Internal Revenue (respondent).
Decision authored by Justice Reyes, Jr., J.; Peralta, C.J. (Chairperson), Caguioa (Working Chairperson), Lazaro-Javier, and Lopez, JJ., concur.
The petition assails the September 5, 2017 Decision and the April 12, 2018 Resolution of the Court of Tax Appeals (CTA) En Banc in CTA EB No. 1468.

Procedural Posture and Relief Sought

Petition for Review on Certiorari filed under Rule 45 of the Rules of Court challenging CTA En Banc Decision and Resolution.
The petition seeks relief from the CTA’s denial of petitioner’s request to abate a surcharge imposed by the BIR and from CTA rulings upholding that denial.

Relevant Chronology of Events and Filings

November 30, 2011: Petitioner filed, through the eFPS of the BIR, its 2nd Quarterly Income Tax Return (ITR) for the fiscal year ending March 31, 2012, and paid tax due of P29,540,836.00 — the filing was one day late.
April 11, 2012: Petitioner sent a letter to the Commissioner of Internal Revenue requesting abatement of the surcharge.
May 18, 2012: BIR issued Assessment Notice No. QA-12-000-135 charging: (a) 25% surcharge amounting to P7,385,209.00; (b) interest of P16,186.76 for late payment; and (c) compromise penalty of P50,000.00.
July 3, 2012: Petitioner paid P66,186.76 via the eFPS to cover the compromise penalty and interest for late payment.
July 4, 2012 and March 7, 2013: Petitioner submitted letters to the CIR requesting abatement/cancellation of the P7,385,209.00 surcharge on grounds of unjust/excessive imposition, one-day tardiness, circumstances beyond control, and good faith.
October 3, 2013: BIR, in a letter signed by Legal Taxpayers Service OIC-ACIR Alfredo V. Misajon, denied the application for abatement and deemed the P66,186.76 payment as partial payment of the total amount due; requested payment of balance P7,385,209.00 within 10 days.
February 10, 2014: BIR denied due course petitioner’s reconsideration for lack of new/additional justification as required under RR No. 13-2001 (as amended).
April 3, 2014: CIR letter (signed Kim S. Jacinto-Henares) denied petitioner’s further request for reconsideration, stating: (a) no law permits a second motion for reconsideration in abatement cases; (b) no advice of eFPS unavailability on November 29, 2011; (c) if login problems existed on November 29, 2011, filing should have been done on the first working hour of the following day; (d) petitioner filed only on November 30, 2011 at 1:38 p.m.; (e) petitioner had 60-day filing period and chose to file on the last day; (f) the only acceptable excuse would be a major natural catastrophe; (g) the denial was final and payment within ten days was demanded, failing which collection would be enforced through administrative summary remedies.
May 8, 2014: Petitioner filed a Petition for Review before the CTA, docketed as CTA Case No. 8816.
January 22, 2016: CTA 2nd Division denied the petition for lack of jurisdiction, reasoning the 30-day period to file had commenced when petitioner received the February 10, 2014 BIR letter and that petitioner‘s second reconsideration attempt and waiting for BIR action deprived the CTA of jurisdiction.
May 25, 2016: CTA 2nd Division denied petitioner’s motion for reconsideration.
CTA En Banc (CTA EB No. 1468): Held that the petition for review was seasonably filed but ruled the surcharge imposed by the BIR was not unjust nor excessive under Section 248(A)(1) of the 1997 NIRC; disposed with a denial for lack of merit (decision text notes “Petition for Review filed by [petitioner] on June 10, 2016 is hereby DENIED, for lack of merit”); Motion for Reconsideration denied in a Resolution dated April 12, 2018.
Supreme Court review: Petition for review on certiorari under Rule 45 of the Rules of Court filed to the Supreme Court, assailing CTA En Banc Decision (Sept. 5, 2017) and Resolution (Apr. 12, 2018).

Facts Material to the Controversy

The tax return was filed and tax paid one day late via eFPS.
Petitioner paid the interest and compromise penalty but sought abatement of the 25% surcharge imposed on the amount due.
Petitioner’s grounds for abatement: (a) late filing was only one day after the deadline; (b) belated filing resulted from technical failure beyond petitioner’s control (faulty internet connection/eFPS log-in problems); (c) petitioner acted in good faith; (d) difficulties in interpreting correct Gross Philippine Billings computation under RR No. 11-2011.
BIR’s repeated denials were premised on lack of proof of eFPS unavailability, petitioner’s choice to file on the last day, absence of new justifications on reconsideration, and that only major natural catastrophes would merit excusal.

Legal Provisions, Regulations and Authorities Invoked

Section 204(B) of the 1997 National Internal Revenue Code (Authority of