MONTALBAN METHANE POWER CORPORATION v. COMMISSIONER OF INTERNAL REVENUE

CTA Form No.8 (For DCC) 111111111111111111111111111 1111111111 11111111111111111111IIIII1111111111 11111111 19-000078-0083 RF;llUBLIC OF THE PHILIPPINES ~OURT OF TAX APPEALS .. QUEZON CITY S,.PECIAL FIRST DIVISION CTA CASE N0.10038 MONTALBAN METHANE POWER CORPORATION, Petitioner, - versus - NOTICE OF RESOLUTION COMMISSIONER OF INTERNAL REVENUE, Respondent. To: OFFICE OF THE SOLICITOR GENERAL 134 Amorsolo S~, Legazpi Village Makati City ATTY. PIDLIP A. MAYO ATTY. CARL FITRI A. RUSSIN ATTY. JOEL VINCENT D. SALAZAR Bureau of Internal Revenue - Revenue Region 8A 36/F, Legal Division, Export Bank Plaza Bldg. 313 Sen. Gil Puyat Avenue cor. Chino Roces Avenue Makati City ZAMORA & POBLADOR 5th Floor, Montepino Building 138 Amorsolo St., Legazpi Village, Makati City GREETINGS: You are hereby notified by these presents that on February 7, 2024, a Resolution was rendered in the above-entitled case, copy of which is attached hereto. Quezon City, Philippines, February 12, 2024. J+. AttyE. Mxearciautiv~; F. Chan-Te Court II

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY SPECIAL FIRST DIVISION MONTALBAN METHANE CTA Case No. 10038 POWER CORPORATION, Petitioner, Members: -versus- DEL ROSARIO, P.J., Chairperson, MANAHAN, and REYES-FAJARDO, JJ. COMMISSIONER OF Promulgated: INTERNAL REVENUE, Respondent. EEB 0 ~tblJ1 ~ X- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -X RESOLUTION MANAHAN,J.: For this Court's resolution is respondent Commissioner of Internal Revenue's (CIR) Motion for Reconsideration posted on October 19, 2023 and received by the Court on October 25, 2023, with petitioner's Opposition (Re: Motion for Reconsideration dated 19 October 2023) filed on November 13, 2023. Respondent seeks reconsideration of the Court's Decision promulgated on September 21, 2023 (Assailed Decision), the dispositive portion of which, reads as follows: "WHEREFORE, in light of the foregoing considerations, the present Petition for Review is GRANTED. Accordingly, the assailed Decision of the CIR dated January 18, 2019, requesting petitioner to pay deficiency DST, including increments, in the aggregate amount of Php8,041 ,269.04; the FDDA dated April 25, 2017 and, the FAN dated December 13, 2013, issued against petitioner, for TY 2008, are all CANCELLED and SET ASIDE. an----- �

RESOLUTION CTA Case No. 10038 Unless reversed by higher courts, respondent is ENJOINED and PROHIBITED from collecting against petitioner the deficiency assessment forTY 2008. SO ORDERED." Respondent assails this Court's Decision based on the following grounds: 1. The Honorable Court erred in ruling that a new Letter of Authority (LOA) should be issued to the new Revenue Officer (RO) who conducted the reinvestigation; and 2. The Honorable Court erred in ruling on the foregoing despite being raised only for the first time on appeal. Respondent requests that the cancellation of the documentary stamp tax (DST) assessments against petitioner be re-evaluated by the Court because a reinvestigation of a tax case no longer requires the issuance of a new LOA. Citing the CTA Case entitled Sabre Travel Network (Philippines) Inc., (Formerly, Abacus Distribution Systems Philippines, Inc.) vs. Commissioner ofInternal Revenue,1 respondent alleges that the Court already ruled that an LOA is not required prior to the issuance of a Final Decision on Disputed Assessment (FDDA). Respondent contends that this ruling was reiterated in the more recent case of Commissioner of Internal Revenue vs. Titanium Corporation. 2 Lastly, respondent invokes the oft-repeated argument that the principle of estoppe l should have prevented the Court from ruling on the alleged want of authority of the revenue officers because petitioner neither raised the same during the tax audit in the administrative level, nor mentioned it in the Petition for Review filed in Court, having raised the same for the first time, in its Memorandum. In its Opposition to respondent's Motion for Reconsideration, petitioner finds the arguments of respondent misleading as the CTA cases cited to support his contention refer to statements that are mere obiter dictum and not on all fours with the instant case. Petitioner asserts that the Court � CTA Case No. 9532, October 25, 2019. ~ CTA EB Cas e No. 2502, February 13, 2023. 2

RESOLUTION CTA Case No. 10038 has in fact ruled recently that tax assessments are void when a revenue officer who conducted the "reinvestigation," was not equipped with the requisite LOA. Petitioner also invokes the ruling of the Supreme Court in the case of Commissioner of Internal Revenue vs. McDonald's Philippines Realty Corporation,3 (McDonald 's case) where it was allegedly ruled that a reassignment or transfer of revenue officers originally named in the LOA and substituting them with a new set of officers necessitates the issuance of a new LOA, otherwise, the corresponding assessment notice shall be rendered void. Petitioner further refutes the second contention of respondent and maintains that it is not precluded from raising for the first time, the issue of the lack of authority ofthe revenue officer in its Memorandum filed in Court. It argues that it could not have possibly raised it in his protest against the Final Assessment Notice because the reinvestigation had not yet commenced at the time. Neither can it be prohibited from raising this issue for the first time in its Memorandum b ecause the Court is not limited to the issues stipulated by the parties but may properly rule on related issues n ecessary for the orderly disposition of a case, citing Section 1, Rule 14 of the Revised Rules of the Court of Tax Appeals (RRCTA) . RULING OF THE COURT We deny the motion. The arguments raised by respondent are not novel to warrant an extensive discussion on the issues raised, such having been already discussed and ruled upon in the assailed Decision. It is, however, worthy of emphasis that a reinvestigation of a tax case is a continuation of the examination and audit of a taxpayer which n ecessita tes the is suance of a n ew LOA in case the RO , who would conduct su ch r einvestigation , is different from the one(s) named in the previously-issu ed LOA, a n ew LOA is required. 3 G.R. No. 242670, May 10, 202 1. ~

RESOLUTION CTA Case No. 10038 To recall, RO Pamela Tianco who was not one of those named in the original LOA was tasked to reinvestigate petitioner's books of accounts and other accounting records for taxable year 2008 on the basis of a Memorandum which the Court, in the assailed Decision, found to be insufficient to continue the examination of petitioner's books of account, there being no new nor revised LOA issued in her favor. The Court applied the ruling of the McDonald's case which emphasizes the necessity and importance of issuing a new or amended LOA for the substitute or replacement revenue officer to continue the audit or investigation of the taxpayer's books of accounts and other accounting records. As regards the issue of the Court ruling on issues not raised in the administrative level nor in the Petition for Review filed in Court, it is already well-settled that the Court is not bound by the issues raised by the parties, but may also rule on related issues necessary to achieve an orderly disposition of the case. Section 1, Rule 14 of the RRCTA provides as follows: "Rule 14 Judgement, its Entry and Execution Section 1. - Rendition ofJudgment.- x x x In deciding the case, the Court may not limit itself to the issues stipulated by the parties but may also rule upon related issues necessary to achieve an orderly disposition of the case ." (Emphasis supplied) This has been recognized by the Supreme Court, in the cases of Commissioner of Internal Revenue us. Lancaster Philippines, Inc.,4 and National Power Corporation us. Provincial Government ofBulacan, et.al, s which ruled, viz: "The CTA is not b ound by the issues stipulated by the parties but may also rule on related issues necessary to achieve an orderly disposition of the case." (emph a sis supplied) "Section 1, Rule 14 of the Revised Rules of the Court of Tax Appeals provides that "in deciding the case, th e [CTA] may not limit itself to the issu es specifically stipulated by t h e 4 G.R. No. 18340 8, July 12, 20 17 . s G.R. No. 207 140, January 30, 2023 . ~

RESOLUTION CTA Case No. 10038 parties but may also rule upon related issues necessary to achieve an orderly disposition of the case." In view of the foregoing disquisitions, there being no new matters or substantial issues specifically raised by respondent in his Motion for Reconsideration, the Court finds no compelling reason to reverse, amend, or modify the Decision promulgated on September 21, 2023. WHEREFORE, premises considered, respondent's Motion for Reconsideration posted on October 19, 2023, is DENIED for lack of merit. Accordingly, the Decision of the Court in the above- captioned case dated September 21, 2023, IS hereby AFFIRMED. SO ORDERED. c~'7. CATHERINE T. MANAHAN Associate Justice WE CONCUR: (I reiterate m Separate oncurring Opinion) ROMAN G. DEL ROSARIO Presiding Justice ~ ~ t ~.dl .fa;~ (I reiterate }orJing Presi�n~ Ju~tice Del Rosario's Separate Concurring Opinion) MARIAN IVY F. REYES-FAJARDO Associate Justice