PHILIPPINE HYDRO (PH) INC. v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES

COURT OF TAX APPEALS

QUEZON CITY

SPECIAL SECOND DIVISION

PHILIPPINE HYDRO (PH)INC. Petitioner, Members: CTA CASE NO.11179

versus FERRER-FLORES, JJ RINGPIS-LIBAN, P.J., Chairperson. MODESTO-SAN PEDRO,and

COMMISSIONER OF INTERNALPromulgated: REVENUE, Respondent. SEP 2 9 2026 4'1+P

RESOLUTION

FERRER-FLORES, J.:

For the Court'sresolutionisrespondent'sMotion for Reconsideration (Re: Decision dated 6 May 2026) filed on June 3, 2026 with petitioner's Comment (on Respondent's Motion for Reconsideration dated June 3, 2026) filed on July 2, 2026.

against petitioner for taxable years (TYs) 2008 to 2012, for being conducted pursuant to a void Letter of Authority (LOA), the dispositive portion of respondent's deficiency income tax and value-added tax (VAT) assessments which reads as follows: On May 6, 2026, the Court promulgated a Decision, cancelling

Formal Letter of Demand dated March 9, 2022 assessing petitioner of deficiency income tax and value-added tax for the period from 2008 to 2012 in the total amount of P425,142,892.82 is hereby CANCELLED and SET ASIDE. ACCORDINGLY, the Petition for Review is GRANTED.The

said amount from petitioner. Correspondingly, respondent is ENJOINED from collecting the

SO ORDERED.

Docket --Vol.III p. 1248 to 1265.

Philippine Hydro (PH) Inc. vs. Commissioner of Internal Revenue CTA Case No. 11179 Page 2 of 6 RESOLUTION

subject deficiency assessments as void, contending that the second Letter of In his Motion, respondent argues that the Court erred in declaring the

Authority with LOA No. LOA-211-2021-00000009 (SN: eLA201900006387) issued on February 26, 2021 (Second LOA), specifically covering taxable period January 1, 2008 to December 31,2012

(RMO) No. 43-90,3 what is prohibited is the issuance of LOAs covering is valid. Respondent explains that pursuant to Revenue Memorandum Order audit of "unverified prior years, and not LOAs covering multiple taxable years per se.

extraordinary period within which to assess petitioner since the said Demand (FLD) on March 9, 20224 was well within the 10-year Respondent also asserts that the issuance of the Formal Letter of

deficiency assessments were made pursuant to the discovery of falsified and fraudulent returns. Consequently, as petitioner is being investigated for falsity, fraud, or omission in its tax returns by the National Investigation Division, the holding period applicable for petitioner's accounting records is not the five-year period, but the 10-year period as well.

Lastly, respondent assails the Court's conclusion in declaring the validity of the Second LOA as an issue directly adjudged in Court of Tax Appeals (CTA) Case No. 10618, which can no longer be relitigated in the present case by virtue of the principle res judicata.

On the other hand, in its Comment, petitioner points out that respondent's Motion for Reconsideration clearly reveals that the arguments

previously stated in his Answer filed on August 22, 2023. As such, there is and discussions raised are nothing but a mere rehash of the averments

present Motion since they were already exhaustively passed upon, duly no cogent reason to reconsider the arguments raised by respondent in the considered, and resolved by this Court in the assailed Decision.

Nonetheless, petitioner echoes the Court's finding in adopting the conclusion reached in CTA Case No. 10618, which held that the Second LOA is void. Petitioner reiterates that issuance of an LOA covering more

provides that, "a LOA should cover a taxable period not exceeding one than one taxable year is prohibited and the cited RMO No. 43-90 expressly

taxable year"

Exhibit "R-2", BIR Records -- Folder 3 (Exhibit "R-13-b"), p. 1890. Exhibit "P-17, Docket Vol. II, pp. 369 to 384; Exhibit "R-10, BIR Records Folder 4 (Exhibit "R- Philippine Hydro (PH), Inc. vs. Commissioner of Internal Revenue, CTA Case No. 10618, March 6, Docket - Vol. I. pp. 220 to 24'3 SUBJECT:Amendment of Revenue Memorandum Order No. 37-90 Prescribing Revised Policy 2023. This case was eventually appealed to the Supreme Court docketed as G.R. No. 274107. Guidelines for Examination of Returns and Issuance of Letters of Authority to Audit. 13-c), pp. 2318 to 2344.

Philippine Hydro (PH) Inc.vs. Commissioner of Internal Revenue Page 3 of 6 RESOLUTION CTA Case No.11179

Petitioner likewise contends that respondent's right to assess its internal revenue taxes for TYs 2008 to 2012 had already prescribed when the Second LOA was issued, as there was no indication that the tax examination was a result of fraud that would have triggered the application

submits that the Court properly held that the validity of the Second LOA is of the extraordinary prescriptive period of 10 years. Petitioner further an issue directly adjudged in CTA Case No. 10618 that is already conclusive in determining the validity of the 2008 to 2012 assessments, which is also the subject matter of the present case.

Lastly, petitioner insists that the assessment for deficiency income tax and VAT that stemmed from the Second LOA is also void as the revenue officers effectively lacked the requisite authority to conduct the audit investigation on petitioner's books of recounts.

After due consideration, the Court finds respondent's Motion for Reconsideration bereft of merit.

As 'correctly pointed out by petitioner, the arguments raised in

been considered and pronounced without merit by this Court in the Decision promulgated on May 6, 2026. Accordingly, it behooves the movant to arguments that were previously raised in his Answer,7 which have already respondent's Motion for Reconsideration are mere reiterations of the

raise any new or substantial legitimate ground or reason to justify the assailed are contrary to law. As it is, however, the instant motion does not convince the Court that certain findings or conclusions in the Decision being

reconsideration sought.

As the grounds relied upon by respondent are mere reiterations of the issues already passed upon, the Court need not deal individually and specifically with the arguments, in much the same way that the Court does in its judgment as regards the issues raised and submitted for decision. In the case of Social Justice Society (SJS) Officers v. Lim,' the Supreme Court held that the grounds relied on being mere reiterations of the issues already passed upon by the Court, there is no need tocut and paste pertinent portions of the Decision or re-write the ponencia in accordance with the outline of the instant motion, thus:

As succinctly put by then Chief Justice Andres R. Narvasa in Ortigas and Co. Ltd. Partnership v. Judge Velasco on the effect and disposition of a motion for reconsideration:

Docket -- Vol. I, pp. 220 to 243. Shangri-La International Hotel Management, Ltd., et al. v. Developers Group of Companies, Inc. G.R. No. G.R. No. 159938 (Resolution), January 22, 2007, citing Guerra Enterprises Company, Inc. v. Court of First Instance of Lanao del Sur, et al., G.R. No. L-28310, April 17, 1970. G.R. Nos. 187836 and 187916, March 10, 2015.

CTA Case No.11179 Philippine Hydro (PH) Inc. vs. Commissioner of Internal Revenue Page 4 of 6 RESOLUTION

already set forth in the judgment or final order for rejecting authorized by Rule 52 of the Rules of Court, does not impose on the Court the obligation to deal individually and specifically with the grounds relied upon therefor, in much order as regards the issues raised and submitted for invariably involving merely a reiteration of the reasons the same way that the Court does in its judgment or final decision. This would be a useless formality or ritual the arguments advanced by the movant; and it would be a needless act, too, with respect to issues raised for the first time,these being,as above stated,deemed waived because The filing of a motion for reconsideration.

not asserted at the first opportunity. It suffices for the Court to deal generally and summarily with the motion for passed upon, or the motion discloses no substantial modification of the judgment or final order; or the reconsideration, and merely state a legal ground for its denial (Sec. 14,Art. VIII, Constitution); i.e., the motion contains merely a reiteration or rehash of arguments argument or cogent reason to warrant reconsideration or arguments in the motion are too unsubstantial to require consideration, etc. already submitted to and pronounced without merit by the Court in its judgment, or the basic issues have already been

more than one taxable year, are invalid as they violate respondent's own Verily, the Court again stresses that the two LOAs, both covering

Internal Revenue vs. Sony Philippines, Inc.io rules and regulations, as ruled by the Supreme Court in Commissioner of

revenue officers went beyond the scope of their authority because the January to March 1998 or using the fiscal year which ended in March 31 investigation. Thus, if CIR wanted or intended the investigation to include unverified prior years. For said reason, the CIR acting through its deficiency VAT assessment they arrived at was based on records from 1998.As pointed out by the CTA-First Division in its April 28, 2005 Resolution, the CIR knew which period should be covered by the the year 1998, it should have done so by including it in the LOA or issuing another LOA. As earlier stated, LOA 19734 covered the period 1997 and

19734, particularly the phrase and unverified prior years, violated Section C of Revenue Memorandum Order No. 43-90 dated September 20. 1990, the pertinent portion of which reads: Upon review, the CTA-EB even added that the coverage of LOA

3. A Letter of Authority should cover a taxable period not taxpayer shall include more than one taxable period, the other / exceeding one taxable year. The practice of issuing L/As covering audit of "unverified prior years is hereby prohibited. If the audit of a

o G.R. No. 178697, November 17, 2010.

Page 5 of 6 Philippine Hydro (PH) Inc. vs. Commissioner of Internal Revenue CTA Case No. 11179 RESOLUTION

periods or years shall be specifically indicated in the L/A. [Emphasis supplied]"

to be audited. Section 6.2, Part II of RMO No. 36-99 states that: and consistently require the issuance of one LOA per taxable year or period In the same vein, both RMO Nos. 36-9911 and 19-201512 explicitly

III.GUIDELINES AND PROCEDURES

X X X

6.2 One LA shall be issued for each taxable year to include all internal revenue tax liabilities of the taxpayer. However, consolidated LA shall be issued to cover the estate tax liability and the income tax liability for the immediately preceding year up to the time of the death of the taxpayer. (Emphasis added) for purposes of verifying tax liabilities of a decedent, one

Whereas,Section 8,Part III of RMO No.19-2015 provides

III.Policies and Procedures

X X X

8. As a general policy, the simultaneous investigation of all

when a specific tax type had been previously examined (e.g.. liabilities of the taxpayer shall be followed. One (1) eLA audit of VAT under VAT Audit Program and VAT arising shall be issued for each taxable year or period to include all internal revenue tax liabilities of the taxpayer, except from claim of tax refund/credit). (Emphasis added)

The.nullification of the Second LOA in CTA Case No. 10618 is deemed conclusive between the parties and can no longer be relitigated

Entry of Judgment of the Supreme Court Resolution in G.R. No. 27410713 considering that the said ruling has already attained finality by virtue of the

denying respondent's petition.

promulgated on May 6, 2026. ( substantial issue raised by respondent in his Motion for Reconsideration, the Court finds no compelling reason to reverse or modify the Decision In view of the foregoing disquisitions, there being no new matter or

SUBJECT:Guidelines and Procedures in the Issuance of Letters of Authority, Approval of Audit Reports and Issuance of Assessment Notices and Amending Certain Provisions of Revenue Memorandum Order (RMO) Nos.26-94, 37-94 and 23-97.

Entry of Judgment dated January 30, 2025. SUBJECT:BIR Audit Program

RESOLUTION Philippine Hydro (PH) Inc. vs. Commissioner of Internal Revenue CTA Case No.11179 Page 6 of 6

Decision dated 6 May 2026) is DENIED for lack of merit. ACCORDINGLY, respondent's Motion for Reconsideration (Re:

SO ORDERED.

Associate Justice

We Concur:

Mny

MA.BELEN M. RINGPIS-LIBAN

Presiding Justice

MARIA ROWENA MODE$TO-SAN PEDRO

Associate Justice