COMMISSIONER OF INTERNAL REVENUE v. TOTAL (PHILIPPINES) CORPORATION

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY ENBANC ********* COMMISSIONER OF INTERNAL CTA EB NO. 1616 REVENUE, (CTA Case No. 8479) Petitioner, -versus - TOTAL (PHILIPPINES) CORPORATION, Respondent. x------------------------------------------x TOTAL (PHILIPPINES) CTA EB NO. 1621 CORPORATION, (CTA Case No. 8479) Pet it ioner, Present: - versus - DEL ROSARIO, P.J., CASTANEDA, JR., UY, F A S O N -VICTORINO , MINDARO-GRULLA, RINGPIS -LIBAN , MANAHAN, BACORRO-VI LLENA, and MODESTO-SAN PEDRO, JJ. COMMISSIONER OF INTERNAL Promulgated: REVENUE, Respondent. SEP 2 6 2019 x-------------------------------------------------------------------- ~ ~----a----. �--.--p~~--.--I'-A-oxt_. RESOLUTION UY, J .: For resolution are the followi ng: f 1) " MOTION FOR PARTIAL RECONSIDERATION (Re: Amended Decision dated 10 May 2019" filed by the

RESOLUTION CTA EB Nos. 1616 & 1621 (CTA Case No. 8479) Page 2 of6 Commissioner of Internal Revenue (CIR} on May 30, 2019, 1 with "COMMENT (To Motion for Partial Reconsideration filed by Commissioner of Internal Revenue dated 30 May 2019)" filed by Total (Philippines) Corporation (TPC) on July 12, 2019;2 and 2) "MOTION FOR RECONSIDERATION" filed by TPC on May 31, 2019,3 without the CIR's comment despite due notice.4 as per Records Verification dated July 18, 2019. Both Motions pray for the reconsideration of the Court En Bane's Amended Decision dated May 10, 2019,5 the dispositive portion of which reads: "WHEREFORE, in light of the foregoing considerations, the CIR's Motion for Partial Reconsideration and TPC's Motion for Reconsideration are both DENIED for lack of merit. However, the dispositive portion of the Decision dated November 6, 2018 is hereby MODIFIED to read as follows: 'WHEREFORE, in light of the foregoing considerations, the consolidated Petitions for Review are PARTIALLY GRANTED. The Decision dated December 22, 2016 and the Resolution dated March 6, 2017, both rendered by the Court in Division in CTA Case No. 8479, are AFFIRMED with MODIFICATION. Accordingly, TPC is ORDERED TO PAY EIGHTY THREE MILLION SEVEN HUNDRED SIXTY FOUR THOUSAND SEVEN HUNDRED FIFTY-NINE AND 88/100 PESOS (P83,764,759.88) representing deficiency EWT and FBT for taxable year 2005, inclusive of the twenty-five percent (25%) surcharge, and twenty percent (20%) deficiency interest and delinquency interest imposed under Sections 248(A) and 249(8) and (C), of the NIRC of 1997, as amended, 1 EB Docket (CTA EB No. 1616), pp. 257 to 262. 2 EB Docket (CTA EB No. 1616), pp. 293 to 303. 3 EB Docket (CTA EB No. 1616), pp. 264 to 282. ('1 4 EB Docket (CTA EB No. 1616), p. 307. 5 EB Docket (CTA EB No. 1616), pp. 239 to 250.

RESOLUTION CTA EB Nos. 1616 & 1621 (CTA Case No. 8479) Page 3 of6 respectively, computed until December 31, 2017, as follows: EWT FBT TOTAL Basic Tax Due Supplier at 1% Contractor at 2% 1"821,540.84 ~12,862,116.13 205,385.21 Add: 25% Surcharge ~11,589,526.30 ~451,048.99 3,215,529.04 Add: 20% Deficiency 2,897,381.58 112,762.25 Interest from January 16, 2006 14,396,414.31 14,396,414.31 March 31,20126 560,289.35 560,289.35 ~11' 589,526.30 x20%x 1,020,511.28 1,020,511.28 2,2671365 days/ ~28,883,322.19 ~1 '124, 100.59 ~2,047,437.33 ~32,054,860.11 ~451,048.99 X 13,342,243.70 13,342,243.70 20%x 2,2671365 davs/ 519,262.43 519,262.43 ~821,540.84 X 945,784.82 945,784.82 20%x 33,251 ,430.09 33,251 ,430.09 2,2671365 davs/ Total Amount Due, 1,294, 101.56 1,294, 101.56 March 31, 2012 2,357,077.17 2,357,077.17 Add: 20% Deficiency Interest from April ~75,476,995.98 ~2.937 ,464.58 ~5.350,299.32 ~83,764,759.88 1, 2012 to December 31, 2017 ~11,589,526.30 x 20%x 2,1011365 days] ~451,048.99 X 20%x 2,1011365 days] {~821,540.84 X 20%x 2,1011365 days] 20% Delinquency Interest from April 1,2012to December 31 , 2017 ~28,883,322.19 x20%x 21011365 days/ ~1. 124,100.59 x 20%x 2,1011365 days/ ~.047,437.33x 20%x 2,1011365 days/ Total Amount Due, Dec.31,2017 In addition, TPC is ORDERED TO PAY delinquency interest at the rate of twelve percent (12%}, on the total unpaid amount as of March 31, 2012 in the amount of P32,054,860.11, as determined above, computed from January 1, 2018 until full payment thereof pursuant to Section 249(C) of 6 Exhibit "K", Division Docket- Vol. 2 (CTA Case No. 8479), pp. 922 to 925. ~

RESOLUTION CTA EB Nos. 1616 & 1621 (CTA Case No. 8479) Page 4 of6 the NIRC of 1997, as amended by RA No. 10963 and implemented by RR No. 21-2018. SO ORDERED.' SO ORDERED.'' The CIR's arguments: In his Motion for Partial Reconsideration, the CIR maintains its position that TPC failed to prove that its purchases were valid importations, hence, the same should be subject to deficiency assessment for expanded withholding tax (EWT). The CIR likewise reiterates his allegation that the assessment issued against TPC is valid and lawful. According to the CIR, all presumptions are in favor of the correctness of tax assessments. TPC's arguments: In its Motion for Reconsideration, TPC reaffirms its stand that the revenue officers lack the authority to conduct the audit investigation. It insists that the assessment is a nullity in view of the failure of the revenue officer to submit a report within the 120-day validity period of the LOA, and that no evidence was shown that the LOA was revalidated. TPC further reiterates that the assessment for the deficiency EWT and fringe benefit tax (FBT) liabilities for taxable year 2005 had already prescribed. TPC submits that the principle of in pari delicto as enunciated in the case of Commissioner of Internal Revenue vs. Next Mobile, Inc. is not applicable to the present case; and that the waivers executed in this case are defective as the requisites for the validity of the waivers under Section 222(b) of the 1997 Tax Code and Revenue Memorandum Order No. 20-90 were not complied with. Finally, in its Comment to the CIR's Motion, TPC contends that it is not liable for the alleged deficiency EWT and FBT since the Final ;d" Letter of Demand issued to the petitioner lacked factual and legal bases, and thus it is void.

RESOLUTION CTA EB Nos. 1616 & 1621 (CTA Case No. 8479) Page 5 of6 THE COURT EN BANC'S RULING Both Motions lack merit. A careful perusal of the CIR's Motion for Partial Reconsideration and TPC's Motion for Reconsideration show that the arguments respectively raised therein are mere reiterations of matters which have already been considered, weighed and resolved in the Court's Decision dated November 6, 2018 and in the assailed Amended Decision. Finding no compelling reason to reconsider or reverse Our Amended Decision, We shall no longer belabor in this Resolution, to repeat the disquisitions made therein. WHEREFORE, in light of the foregoing considerations, the CIR's Motion for Partial Reconsideration and TPC's Motion for Reconsideration are both DENIED for lack of merit. SO ORDERED. ER~P.UY WE CONCUR: Associate Justice Presiding Justice ' Q_~ C. Q.$�..Aof.. I ~. R. FASON-VICTORINO J<lANITO C. CASTANEDA'; JR. Associate Justice ~ N IV\k.'J.w- 6'nJL+ ~. ~ /S"'L..: CIELITO N: MINDARO-GRULLA MA. BELEN M. RINGPIS-LIBAN Associate Justice Associate Justice

RESOLUTION CTAEBNos.1616& 1621 (CTA Case No. 8479) Page 6 of6 / .-1},..-J 7-~ ~THERINE T. MANAHAN Associate Justice