KEPCO PHILIPPINES CORPORATION v. THE COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY ENBANC KEPCO PHILIPPINES CTA EB No. 1698 CORPORATION, (CTA Case No. 8761) Petitioner, CTA EB No. 1699 (CTA Case No. 8761) -versus- Present: COMMISSIONER OF INTERNAL REVENUE, Respondent. x--------------------------------------x COMMISSIONER OF INTERNAL REVENUE, Petitioner, -versus- DEL ROSARIO , PJ, CASTANEDA, JR., BAUTISTA, UY, CASANOVA, FABON-VICTORINO , MINDARO -GRULLA , RINGPIS-LIBAN, and MANAHAN, JJ. KEPCO PHILIPPINES Promulgated: CORPORATION, MAY 15 2018 X- -3. ~... . Respondent. ~- � - - - - - - - - - - - - - - - - - - - - - - - - -- ---------- X RESOLUTION On March 27, 2018, the Court ordered Kepco Philippines Cor poration (Kepco) to submit the following documents, in relation to its Manifestation and Motion to Render Judgment on the Case Based on the Parties' Compromise Settlement Under Section 204(A) ofthe National Internal Revenue Code: 1~ 1 Rollo , CTA EB No . 1698, pp. 192-197.

RESOLUTION CTA EB Nos. 1698 & 1699 Page 2 of4 1) Original or certified true copies of the payment forms and proof of payments made; 2) Document showing OIC-ACIR Alfredo V. Misajon's authority to issue the Certificate of Availment; and 3) Other supporting schedules regarding the deficiency taxes compromised and the amounts paid.2 On April 13, 2018, Kepco filed its Compliance and Manifestation submitting the following: 1) Certified true copy of Revenue Delegation Authority Order No. 6-2007 (RDAO 6-2007), showing Mr. Alfredo V. Misajon's authority to sign Kepco's Certificate of Availment as the Assistant Commissioner of Internal Revenue (ACIR), of the Bureau of Internal Revenue's (BIR) Collection Service;3 2) The Formal Letter of Demand (FLD) that the BIR issued against Kepco for taxable year 2006, as well as the Final Decisions on Disputed Assessment (FDDAs) that the BIR issued for taxable years 2007 and 2009;4 and 3) Original computerized print-outs of the Payment Forms (BIR Form No. 0605) showing Kepco's total compromise payment to the BIR, in the amount of Php260,848,425. 79. s In its Manifestation and Motion, filed on December 19, 20 17, Kepco asserts that it availed of the BIR's compromise settlement program under Section 204(A) of the 1997 National Internal Revenue Code, as amended (NIRC), and implemented by Revenue Regulations No. 30-2002, as amended. Kepco's application for compromise included the tax assessments for taxable year 2009, which is the subject of the instant consolidated cases. Kepco asserts that it has paid the following compromise amounts for taxable year 2009: ~ 2 Rollo, pp. 254-256. 3 Rollo, pp. 263-266. 4 Rollo, pp. 267-281. 5 Rollo, pp. 296-315.

RESOLUTION CTA EB Nos. 1698 & 1699 Page 3 of4 Tax Type Amount of Basic Compromise Date Paid Compromise Tax in FDDA Amount Paid 1/17//2017 Rate VAT 35,036,103.19 14,014,441.286 5/16/2017 11,470,692.287 1/17/2017 72.74% WG 27,769,598.67 11,107,839.478 (Withholding 10/19/2017 100% 69,423,996.67 16,661,759.209 Tax- VAT 132,229,698.53 1/17/2017 40% and Other 27,769,598.6710 Percentage 81,024,330.90 Taxes) Final Withholding Tax Total Kepco also states that the application for compromise was approved by the National Evaluation Board (NEB) on December 11, 2017, as shown by the Certificate of Availment (Compromise Settlement) CAC201700000422 issued on said date; and, that in view of said approval, Kepco prays that the consolidated cases of CTA EB Nos. 1698 and 1699 be closed and terminated. In its Compliance and Manifestation, and in response to this Court's Resolution dated March 27, 2018, Kepco states that under RDAO 6-2007, the ACIR for Collection Service is authorized to sign the certification documenting/proving the approval of the compromise settlement of cases entrusted to the National Evaluation Board (NEB); and, that what was delegated was merely the CIR's power to sign the Certificate of Availment and not his power to compromise. Kepco also provided schedules 11 of the total assessments, compromise amounts paid, and compromise rates for taxable years 2006, 2007, and 2009. The Commissioner of Internal Revenue (CIR), on the other hand, in his Manifestation filed on February 26, 2018 merely stated that he has no objection to Kepco's Manifestation and Motion only for the purpose of the compromise settlement and without necessarily admitting the defenses raised by Kepco against its deficiency tax liabilities. ~ 6 Rollo, Annex J, pp. 226-229. 7 Rollo, Annex K, pp. 230-232. 8 Rollo, Annex G, pp. 215-218. 9 Rollo, Annex H, pp. 219-221. 10 Rollo, Annex I, pp. 222-225. 11 Rollo, pp. 259-261.

RESOLUTION CTA EB Nos. 1698 & 1699 Page 4 of4 The Court finds Kepco's submissions that: (1) outline the payments of compromise settlement for taxable year 2009 in the total amount of Php81,024,330.90, as shown in the table above; (2) prove that the payments comply with the minimum compromise rate of at least 40�/o of the basic tax involved; and, (3) confirm the approval of the compromise by the NEB, as evidenced by the Certificate of Availment, in order. WHEREFORE, the compromise payments having complied with the minimum amounts set in Section 204(A) of the NIRC and approved by the National Evaluation Board; and, there being no objection from the Commissioner of Internal Revenue, the instant cases docketed as CTA EB Nos. 1698 and 1699 are hereby CLOSED and TERMINATED. SO ORDERED. Presiding Justice ~C.Q7-~~~~ LOVEL~. BAUTISTA J6ANITO C. CASTANEDA, JR. Associate Justice Associate Justice ERL~P.UY ~ Associate Justice CAESAR A. CASANOVA Associate Justice . FABON-VICTORINO ~N,M~~~G~ CIELITO N. MINDARO-GRULLA Associate Justice ~- ~ J./'- ~7~ MA. BELEN M. RINGPIS-LIBAN CATHERINE T. MANAHAN Associate Justice Associate Justice