Total (Philippines) Corp. v. Commissioner of Internal Revenue

THIRD DIVISION [C.T.A. CASE NO. 8479. December 22, 2016.] TOTAL (PHILIPPINES) CORPORATION , petitioner , vs. COMMISSIONER OF INTERNAL REVENUE , respondent . DECISION BAUTISTA , J p : Before the Court is a Petition for Review 1 filed by petitioner Total (Philippines) Corporation ("Total") on April 27, 2012, pursuant to Rule 4, Section 3 (a) (1) 2 of the Revised Rules of the Court of Tax Appeals, as amended ("RRCTA") ,in relation to Section 7 (a) (1) 3 of Republic Act ("RA") No. 1125 , 4 as amended by RA No. 9282 5 and RA No. 9503 , 6 which seeks for the Court to render judgment declaring petitioner to be free from any liability for expanded withholding tax ("EWT") and fringe benefits tax ("FBT") deficiencies for taxable year 2005, as well as the corresponding interest and compromise penalties in the aggregate amount of Php104,708,380.71; and that the Formal Letter of Demand ("FLD") and Final Assessment Notices ("FAN") dated November 12, 2009, and the Final Decision on Disputed Assessment ("FDDA") dated March 26, 2012, be cancelled and set aside. 7 The Parties Petitioner is a domestic corporation duly registered with the Securities and Exchange Commission, with principal office address at the Penthouse, Philplans, Corporate Center 1012 Triangle Drive, North Bonifacio, Bonifacio Global City, 1201 Taguig City. 8 Respondent is the duly appointed Commissioner of Internal Revenue ("CIR"), 9 empowered under the 1997 National Internal Revenue Code, as amended ("1997 NIRC") ,to authorize the examination of any taxpayer and the assessment of the correct amount of taxes; as well as to decide disputed assessments arising under said law and other laws administered by the Bureau of Internal Revenue ("BIR"). 10 The CIR holds office at the BIR National Office Building, Agham Road, Diliman, Quezon City. 11 The Facts Pursuant to Letter of Authority ("LOA") No. 2001-90040857 12 dated July 4, 2006 and received by petitioner on July 11, 2006 authorizing the examination of the books of accounts and other accounting records for all internal revenue taxes, respondent conducted a tax investigation on petitioner for taxable year 2005. 13 Respondent issued a Preliminary Assessment Notice ("PAN") 14 with Details of Discrepancy dated May 19, 2009, for alleged deficiency EWT, FBT and final withholding tax ("FWT"). 15 Petitioner replied to the PAN via a Letter 16 dated June 30, 2009, opposing all the assessments in the PAN. Respondent issued the FLD 17 and FANs 18 on November 12, 2009, 19 with findings of alleged deficiency EWT and FBT. After receipt thereof by petitioner on November 13, 2009, 20 it submitted a Protest 21 dated and filed 22 with the BIR on December 11, 2009. 23 On March 26, 2012, respondent issued the FDDA 24 assessing petitioner for alleged EWT and FBT deficiencies amounting to Php104,708,380.71, inclusive of interests and penalties. 25 The FDDA was received by petitioner on March 28, 2012. 26 TIADCc Petitioner filed the instant Petition for Review on April 27, 2012, 27 which is within the thirty (30)-day period to appeal, reckoned from the date of receipt of the FDDA. Petitioner argues that the assessments were issued beyond the prescriptive period; that the four (4) Waivers of the Defense of Prescription under the Statute of Limitations of the Tax Code ("Waivers") executed by petitioner are defective and not valid; and that it is not liable for deficiency EWT and FBT. 28 The FDDA contained the following assessments: TAX TYPE BASIC INTEREST COMPROMISE TOTAL PENALTY EWT Php45,857,766.13 Php56,939,012.63 Php50,000.00 Php102,846,778.76 FBT 821,540.84 1,020,061.11 20,000.00 1,861,601.95 TOTAL PHP46,679,306.97 PHP57,959,073.74 PHP70,000.00 PHP104,708,380.71 =============== =============== =========== ================ Upon notice 29 and with extension granted, 30 respondent filed an Answer 31 on June 29, 2012; and an Amended Answer 32 on August 17, 2012, which was admitted in a Resolution 33 dated September 24, 2012. Respondent argues that the Waivers were valid and binding; and that even if said Waivers are defective, petitioner is estopped from assailing the subject Waivers. 34 Further, respondent argues that the assessments were timely issued within the prescriptive periods, as stated in the Waivers; that the assessments were issued in accordance with law, rules and jurisprudence; and that as withholding agent, petitioner has the legal duty to collect the tax for the Government. 35 Respondent and petitioner filed their Pre-Trial Briefs, on July 25, 2012 36 and July 30, 2012, 37 respectively. The Joint Stipulation of Facts and Issues ("JSFI") 38 was filed on October 22, 2012, and approved in the Pre-Trial Order 39 dated November 7, 2012. The case proceeded to trial. Petitioner presented two witnesses: (1) Mr. Dennis Odra ("Mr. Odra"),Total's tax manager, and (2) Mr. Enrico T. Pizarro ("Mr. Pizarro"),the Independent Certified Public Accountant ("ICPA"). Mr. Odra's testimony is contained in his Judicial Affidavit, 40 Supplemental Judicial Affidavit, 41 and Second Supplemental Judicial Affidavit. 42 Mr. Odra was presented as witness on January 21, 2013, 43 February 25, 2013, 44 April 15, 2013, 45 and December 9, 2013. 46 Upon motion 47 and despite opposition 48 from respondent, Mr. Pizarro was commissioned as the ICPA, 49 and was ordered to submit the ICPA report within 30 days from August 22, 2013 or until September 21, 2013. 50 The ICPA Report 51 was filed on September 20, 2013. Mr. Pizarro's Judicial Affidavit 52 was submitted on September 27, 2013, and he was presented as witness on September 30, 2013. 53 On February 13, 2014, considering petitioner's failure to file the judicial affidavit of the next witness, the Court denied its motion to reset hearing and its presentation of further evidence was deemed waived. 54 Petitioner was granted five (5) days to file its Formal Offer of Evidence ("FOE"). 55 Petitioner timely filed its FOE 56 on February 18, 2014, formally offering Exhibits "A" to "H," "I," "I-1," "J," "J-1," "K," "K-1," "L" to "Z," "AA," "BB," "CC," "CC-1," "DD," "DD-1," "EE," "EE-1," "EEE-1" to "EEE-6," "FFF-1," "FFF-1.1" to "FFF-1.16," "FFF-2," "FFF-2.1" to "FFF-2.35," "FFF-3," "FFF-3.1" to "FFF-3.9," "FFF-4," "FFF-4.1" to "FFF-4.3," "GGG-1," "GGG-1.1" to "GGG-1.3," "GGG-2," "GGG-2.1" to "GGG-2.6," "HHH," "III," "III-1," "JJJ," "JJJ-1," "KKK" to "PPP," and "QQQ." On April 11, 2014, the Court admitted all of petitioner's exhibits, save for Exhibit "BB" for failure to have the same identified. 57 Petitioner also submitted a Supplemental FOE 58 for the purpose of remarking its Amended Articles of Incorporation 59 as Exhibit "RRR," which was admitted by the Court in a Resolution dated November 10, 2014. 60 After filing a Judicial Affidavit 61 and two resettings, 62 on May 19, 2015, 63 respondent presented its sole witness, Revenue Officer Rosario Arriola. Thereafter, respondent was granted until May 29, 2015, 64 and later extended up to June 8, 2015, 65 for the filing of the FOE. On June 15, 2015, Respondent's Formal Offer of Documentary Evidence 66 was timely filed, offering as evidence Exhibits "R-1" to "R-19," and "R-19-A." In a Resolution dated August 13, 2015, respondent's exhibits were admitted. 67 On rebuttal, petitioner presented its Accounting and Tax Manager, Mr. Leonard Escueta ("Mr. Escueta"),with Judicial Affidavit 68 dated September 30, 2015. 69 Aside from the Judicial Affidavit, the Court also admitted Exhibit "SSS," 70 which is the LOA issued for the investigation of petitioner. 71 Considering respondent's manifestation 72 that he will no longer present further evidence, the Court granted the parties thirty (30) days from notice within which to file their respective memoranda. 73 Respondent filed a Motion for Leave to File and Admit Attached Memorandum 74 on December 21, 2015. Petitioner, after extension was granted, 75 filed its Memorandum 76 on December 28, 2015. In a Resolution 77 dated January 14, 2016, the Court admitted respondent's Memorandum, took note of petitioner's Memorandum, and deemed the case submitted for decision; hence, this Decision. The Issue 78 WHETHER PETITIONER IS LIABLE TO PAY DEFICIENCY EWT AND FBT ASSESSMENTS FOR TAXABLE YEAR 2005, IN THE AGGREGATE AMOUNT OF ONE HUNDRED FOUR MILLION SEVEN HUNDRED EIGHT THOUSAND THREE HUNDRED EIGHTY AND 71/100 PESOS (PHP104,708,380.71) INCLUSIVE OF INTEREST AND COMPROMISE PENALTIES, PURSUANT TO SECTIONS 248 AND 249 OF THE 1997 NIRC . Petitioner's Arguments 79 Petitioner argues that the period to assess deficiency EWT and FBT for taxable year 2005 has already prescribed. It likewise contends that the Waivers are defective considering that they were not signed by the CIR; that the dates of acceptance by the officials of respondent were not indicated therein; that they failed to specify the kind and amount of tax due; that they were not notarized on the part of the respondent; that they do not conform with the requirements for a valid execution of a waiver; and that the officers who signed on behalf of petitioner were not authorized to do so. With respect to the assessed deficiency taxes, petitioner argues that the assessment is invalid for having arisen from an LOA which was not furnished to petitioner. Petitioner further argues that in the assessment for deficiency EWT, respondent erroneously included items that are not subject to withholding taxes, or were already subjected by petitioner to the proper withholding tax rates. As to the assessment for deficiency FBT, petitioner argues that the taxable fringe benefits granted to its officers have been properly subjected thereto. Respondent's Counter-Arguments 80 Respondent argues that petitioner voluntarily executed the subject Waivers; that such Waivers were duly accepted and approved by the person delegated by respondent; and that the failure to indicate the date of acceptance by respondent is a mere oversight which is not fatal to the validity of the Waivers, bearing in mind that the date of acceptance can be presumed to be between the date of notarization and the date of receipt by the taxpayer. Respondent further argues that the first three (3) waivers did not specify the kind and amount of tax, as there was yet no assessment at the time of their execution; and that the fourth waiver already specified the kind of tax being assessed. He likewise claims that it is only petitioner who is required to have the Waivers acknowledged before a notary public; and that petitioner is estopped from questioning the validity of the Waivers. AIDSTE Lastly, respondent alleges that the assessments are valid and binding since the same were issued within the prescriptive period; and are in accordance with the law, rules and jurisprudence. The Ruling of the Court The Court has jurisdiction to entertain the present Petition for Review since the assessments have not yet attained finality. A cursory reading of the relevant portions of Section 228 of the 1997 NIRC should shed light on this issue, as follows: SECTION 228. Protesting of Assessment. When the Commissioner or his[/her] duly authorized representative finds that proper taxes should be assessed, he[/she] shall first notify the taxpayer of his[/her] findings: Provided, however, That a preassessment notice shall not be required in the following cases: ... xxx xxx xxx Within a period to be prescribed by implementing rules and regulations, the taxpayer shall be required to respond to said notice. If the taxpayer fails to respond, the Commissioner or his[/her] duly authorized representative shall issue an assessment based on his[/her] findings. Such assessment may be protested administratively by filing a request for reconsideration or reinvestigation within thirty (30) days from receipt of the assessment in such form and manner as may be prescribed by implementing rules and regulations. Within sixty (60) days from filing of the protest, all relevant supporting documents shall have been submitted; otherwise, the assessment shall become final. If the protest is denied in whole or in part, or is not acted upon within one hundred eighty (180) days from submission of documents, the taxpayer adversely affected by the decision or inaction may appeal to the Court of Tax Appeals within thirty (30) days from receipt of the said decision, or from the lapse of the one hundred eighty (180)-day period; otherwise, the decision shall become final, executory and demandable. The above provision provides the remedy to dispute a tax assessment within a certain period of time. It states that an assessment may be protested by filing a request for reconsideration or reinvestigation within thirty (30) days from receipt of the assessment by the taxpayer. Within sixty (60) days from filing of the protest, all relevant supporting documents shall have been submitted; otherwise, the assessment shall become final. Should the protest be denied, it may be appealed to the CTA within thirty (30) days from receipt of said denial. On November 13, 2009, petitioner received the FLD and the FANs, assessing petitioner for deficiency EWT and FBT for taxable year 2005. 81 Therefore, petitioner had until December 14, 2009 82 to protest, which it timely filed 83 on December 11, 2009. On March 28, 2012, petitioner received the FDDA, 84 effectively denying its protest. Accordingly, it had until April 27, 2012 within which to appeal the adverse decision of respondent. Considering that petitioner filed the instant Petition for Review on April 27, 2012, 85 it is evident that the Court has jurisdiction over this case and that the assessments have not yet attained finality. The Letter of Authority is valid. Petitioner questions the validity of LOA No. 000405857 86 on the ground that it contained a statement that it "supersedes LOA No. 00081620." Petitioner's witness 87 asserts that it never received the said LOA No. 00081620, and thus resulted to a deprivation of due process. 88 The Court finds the argument without merit. Petitioner has admitted that LOA No. 000405857 was issued to and received by petitioner in connection with the present case. An LOA is the authority given to the appropriate revenue officer assigned to perform assessment functions. 89 The fact that LOA No. 000405857 supersedes another LOA, which was not received by petitioner, is irrelevant. What is necessary is that the investigation for taxable year 2005 was covered by a valid LOA served upon petitioner. Thus, in view of the fact that petitioner received LOA No. 000405857, the investigation conducted by the revenue officers was done with proper authority. The Waivers are binding on the parties and the assessments were issued within the prescriptive period, as extended. Sections 203 of the 1997 NIRC provides the general rule that respondent should issue an assessment for deficiency taxes within three (3) years from the last day prescribed by law to file the tax return or the actual date of filing of such return, whichever comes later; and any assessment notice issued beyond this 3-year prescriptive period shall not be valid, to wit: SECTION 203. Period of Limitation Upon Assessment and Collection. Except as provided in Section 222, internal revenue taxes shall be assessed within three (3) years after the last day prescribed by law for the filing of the return ,and no proceeding in court without assessment for the collection of such taxes shall be begun after the expiration of such period: Provided, That in a case where a return is filed beyond the period prescribed by law, the three (3)-year period shall be counted from the day the return was filed .For purposes of this Section, a return filed before the last day prescribed by law for the filing thereof shall be considered as filed on such last day . 90 Nonetheless, Section 222 (b) of the 1997 NIRC provides that the period to assess and collect taxes may be extended upon a written agreement between the CIR and the taxpayer executed before the expiration of the 3-year period, viz. : Section 222. Exceptions as to Period of Limitation of Assessment and Collection of Taxes. xxx xxx xxx (b) If before the expiration of the time prescribed in Section 203 for the assessment of the tax, both the Commissioner and the taxpayer have agreed in writing to its assessment after such time, the tax may be assessed within the period agreed upon. The period so agreed upon may be extended by subsequent written agreement made before the expiration of the period previously agreed upon. AaCTcI Since the instant case involves deficiency EWT and FBT, the prescribed due dates for the filing of the returns, to be used as bases for the prescriptive periods, vary accordingly. 1. Expanded Withholding Tax Section 6.3.2 (a) of RR No. 17-10 states the following relating to large taxpayers, such as petitioner: 91 6.3.2 Withholding Tax Remittance and Information Returns a. All withholding taxes for remittance by the Head Office and/or all branches/units of a Large Taxpayer shall be e-filed in a consolidated return within ten (10) days following the end of each month for January to November, and on or before January 15 of the following year for the month of December, using BIR Form Nos. 1601-C, 1601-E, 1601-F and 1602, respectively, on a staggered basis according to the classification of industry pursuant to existing issuances .For the e-payment, the taxpayer shall give instruction to the AAB to debit its account for the amount of tax payable on or before the due date for payment thereof as prescribed under the prevailing/applicable laws/regulations. xxx xxx xxx In view of petitioner's enrollment with the Electronic Filing and Payment System ("EFPS") of the BIR, filing of returns (except for December) shall be in accordance with the schedule set forth in RR No. 26-2002 ,to wit: Group A Fifteen (15) days following the end of the month Group B Fourteen (14) days following the end of the month Group C Thirteen (13) days following the end of the month Group D Twelve (12) days following the end of the month Group E Eleven (11) days following the end of the month Based on the foregoing, the returns for EWT are set to be filed eleven (11) to fifteen (15) [fifteen (15) days for the month of December] days from the end of each month. Prudently assuming that fifteen (15) days applies to petitioner, the last days to assess are as follows: 92 2005 DUE DATE FOR ACTUAL DATE OF LAST DAY TO FILING OF RETURN FILING OF RETURN ASSESS January February 15, 2005 February 14, 2005 93 February 15, 2008 February March 15, 2005 March 14, 2005 94 March 15, 2008 March April 15, 2005 April 13, 2005 95 April 15, 2008 April May 15, 2005 May 13, 2005 96 May 15, 2008 May June 15, 2005 June 10, 2005 97 June 15, 2008 June July 15, 2005 July 12, 2005 98 July 15, 2008 July August 15, 2005 August 10, 2005 99 August 15, 2008 August September 15, 2005 September 12, 2005 100 September 15, 2008 September October 15, 2005 October 13, 2005 101 October 15, 2008 October November 15, 2005 November 14, 2005 102 November 15, 2008 November December 15, 2005 December 13, 2005 103 December 15 2008 December January 15, 2006 January 12, 2006 104 January 15, 2009 2. Fringe Benefit Tax Section 6.3.2 (b) of RR No. 17-10 provides the following relating to large taxpayers, such as petitioner: 105 6.3.2 Withholding Tax Remittance and Information Returns xxx xxx xxx b. Quarterly Remittance Return of Final Income Taxes Withheld (On Fringe Benefits Paid to Employees Other than Rank and File) (BIR Form No. 1603) shall be e-filled and e-paid on or before the fifteenth (15th) day of the month following the calendar quarter. 106 Based on the foregoing, the returns for FBT are set to be filed fifteen (15) days from the end of each quarter. Therefore, the last days to assess are as follows: 107 2005 DUE DATE FOR ACTUAL DATE OF LAST DAY TO FILING OF RETURN FILING OF RETURN ASSESS 1st Quarter April 15, 2005 April 14, 2005 108 April 15, 2008 2nd Quarter July 15, 2005 July 15, 2005 109 July 15, 2008 Third Quarter October 15, 2005 October 13, 2005 110 October 15, 2008 Fourth Quarter January 15, 2006 January 13, 2006 111 January 15, 2009 Considering that the FLD and the FANs were issued on November 12, 2009 and received by petitioner on November 13, 2009, 112 it would appear that the assessments have prescribed absent a waiver, as provided in Section 222 (b) of the 1997 NIRC . Evidence on record provides the contrary. The parties submitted into evidence four (4) Waivers 113 extending the period for assessment until June 30, 2008, December 31, 2008, June 30, 2009, and December 31, 2009, respectively. With these extensions, the FLD and the FANs received by petitioner on November 13, 2009 were issued within the extended period agreed upon, or before December 31, 2009, as contained in the fourth waiver. Petitioner now argues against the validity of the Waivers and asserts that the assessments have prescribed. The Court finds that the glaring defects in the four waivers are the absence of the notarized authority of the persons signing the Waivers on behalf of petitioner and the BIR official's failure to indicate the BIR's date of acceptance. It has been consistently held that the procedures for the execution of a waiver must be strictly followed; otherwise, the waiver shall be rendered defective and shall not extend the period to assess the tax. 114 However, in cases such as this, where the parties are equally at fault in making the waiver defective, the Supreme Court has declared said waivers to be valid. Thus, in Commissioner of Internal Revenue v. Next Mobile, Inc. , 115 the Supreme Court ruled: To be sure, both parties in this case are at fault. Here, respondent, through Sarmiento, executed five Waivers in favor of petitioner. However, her authority to sign these Waivers was not presented upon their submission to the BIR. In fact, later on, her authority to sign was questioned by respondent itself, the very same entity that caused her to sign such in the first place. Thus, it is clear that respondent violated RMO No. 20-90 which states that in case of a corporate taxpayer, the waiver must be signed by its responsible officials and RDAO 05-01 which requires the presentation of a written and notarized authority to the BIR. Similarly, the BIR violated its own rules and was careless in performing its functions with respect to these Waivers. It is very clear that under RDAO 05-01 it is the duty of the authorized revenue official to ensure that the waiver is duly accomplished and signed by the taxpayer or his authorized representative before affixing his signature to signify acceptance of the same. It also instructs that in case the authority is delegated by the taxpayer to a representative, the concerned revenue official shall see to it that such delegation is in writing and duly notarized. Furthermore, it mandates that the waiver should not be accepted by the concerned BIR office and official unless duly notarized. Vis--vis the five Waivers it received from respondent, the BIR has failed, for five times, to perform its duties in relation thereto: to verify Ms. Sarmiento's authority to execute them, demand the presentation of a notarized document evidencing the same, refuse acceptance of the Waivers when no such document was presented, affix the dates of its acceptance on each waiver, and indicate on the Second Waiver the date of respondent's receipt thereof. Both parties knew the infirmities of the Waivers yet they continued dealing with each other on the strength of these documents without bothering to rectify these infirmities. In fact, in its Letter Protest to the BIR, respondent did not even question the validity of the Waivers or call attention to their alleged defects. In this case, respondent, after deliberately executing defective waivers, raised the very same deficiencies it caused to avoid the tax liability determined by the BIR during the extended assessment period. It must be remembered that by virtue of these Waivers, respondent was given an opportunity to gather and submit documents to substantiate its claims before the CIR during investigation. It was able to postpone the payment of taxes, as well as contest and negotiate the assessment against it. Yet, after enjoying these benefits, respondent challenged the validity of the Waivers when the consequences thereof were not in its favor. In other words, respondent's act of impugning these Waivers after benefiting therefrom and allowing petitioner to rely on the same is an act of bad faith. EcTCAD On the other hand, the stringent requirements in RMO 20-90 and RDAO 05-01 are in place precisely because the BIR put them there. Yet, instead of strictly enforcing its provisions, the BIR defied the mandates of its very own issuances. Verily, if the BIR was truly determined to validly assess and collect taxes from respondent after the prescriptive period, it should have been prudent enough to make sure that all the requirements for the effectivity of the Waivers were followed not only by its revenue officers but also by respondent. The BIR stood to lose millions of pesos in case the Waivers were declared void, as they eventually were by the CTA, but it appears that it was too negligent to even comply with its most basic requirements. The BIR's negligence in this case is so gross that it amounts to malice and bad faith. Without doubt, the BIR knew that waivers should conform strictly to RMO 20-90 and RDAO 05-01 in order to be valid. In fact, the mandatory nature of the requirements, as ruled by this Court, has been recognized by the BIR itself in its issuances such as Revenue Memorandum Circular No. 6-2005, among others. Nevertheless, the BIR allowed respondent to submit, and it duly received, five defective Waivers when it was its duty to exact compliance with RMO 20-90 and RDAO 05-01 and follow the procedure dictated therein. It even openly admitted that it did not require respondent to present any notarized authority to sign the questioned Waivers. The BIR failed to demand respondent to follow the requirements for the validity of the Waivers when it had the duty to do so, most especially because it had the highest interest at stake. If it was serious in collecting taxes, the BIR should have meticulously complied with the foregoing orders, leaving no stone unturned. The general rule is that when a waiver does not comply with the requisites for its validity specified under RMO No. 20-90 and RDAO 05-01, it is invalid and ineffective to extend the prescriptive period to assess taxes. However, due to its peculiar circumstances, We shall treat this case as an exception to this rule and find the Waivers valid for the reasons discussed below. First, the parties in this case are in pari delicto or "in equal fault." In pari delicto connotes that the two parties to a controversy are equally culpable or guilty and they shall have no action against each other. However, although the parties are in pari delicto ,the Court may interfere and grant relief at the suit of one of them, where public policy requires its intervention, even though the result may be that a benefit will be derived by one party who is in equal guilt with the other. Here, to uphold the validity of the Waivers would be consistent with the public policy embodied in the principle that taxes are the lifeblood of the government, and their prompt and certain availability is an imperious need. Taxes are the nation's lifeblood through which government agencies continue to operate and which the State discharges its functions for the welfare of its constituents. As between the parties, it would be more equitable if petitioner's lapses were allowed to pass and consequently uphold the Waivers in order to support this principle of public policy. Second, the Court has repeatedly pronounced that parties must come to court with clean hands. Parties who do not come to court with clean hands cannot be allowed to benefit from their own wrongdoing. Following the foregoing principle, respondent should not be allowed to benefit from the flaws in its own Waivers and successfully insist on their invalidity in order to evade its responsibility to pay taxes. Third, respondent is estopped from questioning the validity of its Waivers. While it is true that the Court has repeatedly held that the doctrine of estoppel must be sparingly applied as an exception to the statute of limitations for assessment of taxes, the Court finds that the application of the doctrine is justified in this case. Verily, the application of estoppel in this case would promote the administration of the law, prevent injustice and avert the accomplishment of a wrong and undue advantage. Respondent executed five Waivers and delivered them to petitioner, one after the other. It allowed petitioner to rely on them and did not raise any objection against their validity until petitioner assessed taxes and penalties against it. Moreover, the application of estoppel is necessary to prevent the undue injury that the government would suffer because of the cancellation of petitioner's assessment of respondent's tax liabilities. Finally, the Court cannot tolerate this highly suspicious situation. In this case, the taxpayer, on the one hand, after voluntarily executing waivers, insisted on their invalidity by raising the very same defects it caused. On the other hand, the BIR miserably failed to exact from respondent compliance with its rules. The BIR's negligence in the performance of its duties was so gross that it amounted to malice and bad faith. Moreover, the BIR was so lax such that it seemed that it consented to the mistakes in the Waivers. Such a situation is dangerous and open to abuse by unscrupulous taxpayers who intend to escape their responsibility to pay taxes by mere expedient of hiding behind technicalities. It is true that petitioner was also at fault here because it was careless in complying with the requirements of RMO 20-90 and RDAO 05-01. Nevertheless, petitioner's negligence may be addressed by enforcing the provisions imposing administrative liabilities upon the officers responsible for these errors. The BIR's right to assess and collect taxes should not be jeopardized merely because of the mistakes and lapses of its officers, especially in cases like this where the taxpayer is obviously in bad faith. 116 Here, petitioner executed four consecutive waivers, without presenting the signatories' written authority to the BIR upon submission thereof. Petitioner also received, without complaint, the accepted Waivers from the BIR, even without an indicated date of acceptance. On the other hand, the BIR officials likewise neglected their duty to ensure that the Waivers are duly accomplished and signed by petitioner's representative with a notarized written authority, to demand such notarized written authority if none is presented, and to refuse acceptance of the said Waivers when no such authority is submitted. Moreover, the BIR officials failed to indicate the date of acceptance on each waiver. Despite these defects, the parties continued to deal with each other on the strength of the defective Waivers. These circumstances are sufficient to declare the parties in pari delicto and to declare the four Waivers submitted by petitioner as valid, thereby extending the period of prescription. Considering that the fourth waiver 117 extended the period until December 31, 2009, and that the FLD and the FANs were issued on November 12, 2009 and received by petitioner on November 13, 2009, the assessments were indeed issued within the prescriptive period, as extended. HSAcaE The Court will now determine petitioner's liabilities for deficiency EWT and FBT. The assessment for deficiency EWT is reduced and the assessment for deficiency FBT is upheld. Respondent computed the basic deficiency EWT as follows: INCOME PAYMENTS PER AUDIT PER ALPHALIST DEFICIENCY RATE TAX DUE SUBJECT TO EWT Suppliers Php8,146,692,500.38 Php3,606,020,786.70 Php4,540,671,713.68 1% Php45,406,717.14 Contractors 564,874,179.89 542,321,730.35 22,552,449.54 2% 451,048.99 TOTAL PHP8,711,566,680.27 PHP4,148,342,517.05 PHP4,563,224,163.22 PHP45,857,766.13 ================= ================= ================= =============== The above assessment can be broken down as follows: PARTICULARS AMOUNT (A) PER ALPHALIST (B) DIFFERENCE DEFICIENCY EWT (A-B=C) (Cx1% or 2%) EWT at 1% (Supplier) Purchases ULG Php3,056,935,713.82 Php173,531,602.16 Php2,883,404,111.66 Php28,834,041.12 Purchases REG 503,203,112.72 - 503,203,112.72 5,032,031.13 Purchases Additives-MOGAS 255,935.52 - 255,935.52 2,559.36 Purchases Additives-Diesel 890,616.02 - 890,616.02 8,906.16 Purchases Kerosene 348,405,053.77 - 348,405,053.77 3,484,050.54 Purchases RFO 12,665,089.12 - 12,665,089.12 126,650.89 Purchases Lubes 26,445,793.33 - 26,445,793.33 264,457.93 Purchases Lube Materials 258,209,695.16 - 258,209,695.16 2,582,096.95 Purchases Lube Freight Depot 1,209,072.80 - 1,209,072.80 12,090.73 Purchases Lube Filling Charges 1,062,367.46 - 1,062,367.46 10,623.67 Purchases LPG Bulk 492,092,681.14 - 492,092,681.14 4,920,926.81 Purchases SP Fluids 6,222,290.70 - 6,222,290.70 62,222.91 Surveyors Fee Special Fluids 15,350.00 - 15,350.00 153.50 Port Charges Special Fluids 72,339.88 - 72,339.88 723.40 Purchases Lubmarine 1,986,379.26 - 1,986,379.26 19,863.79 Purchases Lubmarine Materials 376,241.95 - 376,241.95 3,762.42 Uniforms 100,214.09 - 100,214.09 1,002.14 Purchases Materials/Equipment 348,844.84 - 348,844.84 3,488.45 Office Supplies 893,123.42 - 893,123.42 8,931.23 Office Supplies 3,345,870.20 1,490,338.65 1,855,531.55 18,555.32 Office Supplies HSE 134,588.87 - 134,588.87 1,345.89 I/S Expenses 677,204.42 - 677,204.42 6,772.04 Retails Stations Supplies 146,076.00 - 146,076.00 1,460.76 Sub-Total Php4,715,693,654.49 Php175,021,940.81 Php4,540,671,713.68 Php45,406,717.14 EWT at 2% (Contractor) Port Charges Client Php10,683,306.31 Php2,496,310.40 Php8,186,995.91 Php163,739.92 Charter Hire Oilink Terminal 3,708,802.68 1,255,680.37 2,453,122.31 49,062.45 Postage, Courier, Express Mail 552,417.09 - 552,417.09 11,048.34 TRD Support Data Proc & Phone 1,878,206.88 - 1,878,206.88 37,564.14 System Admin & Operation 1,638,659.01 - 1,638,659.01 32,773.18 Warehouse/Storage Charges Lubes 251,218.19 - 251,218.19 5,024.36 VOC SF Storage Charges 2,454,545.41 - 2,454,545.41 49,090.91 Fop Maintenance & Others 3,823,609.20 - 3,823,609.20 76,472.18 Photocopying, Printing Services 1,313,675.54 - 1,313,675.54 26,273.51 Sub-Total Php26,304,440.31 Php3,751,990.77 Php22,552,449.54 Php451,048.99 TOTAL PHP4,741,998,094.80 PHP178,773,931.58 PHP4,563,224,163.22 PHP45,857,766.13 ================= ================= ================= ================= Petitioner argues that the amounts included in respondent's audit were attributable to importations that are not subject to EWT and to payments that were already subjected to EWT at different rates. In order to satisfactorily overcome the presumption of regularity and correctness of the assessment, petitioner should provide import documents such as Import Entry Internal Revenue Declaration ("IEIRD"),Bill of Lading (for sea freight)/Airway Bill (for air freight) or Authority to Release Imported Goods ("ATRIG").In the case of the amounts that were already subjected to EWT, petitioner should provide BIR Form 1601-E or any other document to prove its arguments. Mr. Pizarro declared in his report 118 that based on his examination and validation of petitioner's pertinent documents, it is not liable for deficiency EWT at 1%,as computed below: DETAILS AMOUNTS Total Purchases, per Books Php20,699,021,880.22 Less: Importations a) Importation transactions supported by IEIRD documents Php14,995,644,494.60 b) Importation transactions supported by foreign invoices 492,681,277.15 c) Importation classified in the BIR assessment 1,625,076,111.00 Php17,113,401,882.75 Total Local Purchases Php3,585,619,997.47 Less: Amount per Alphalist of suppliers BIR Form No. 1604-E 3,606,020,786.70 Purchases subject to Withholding Tax Php(20,400,789.23) Tax Rate 1% WITHHOLDING TAX DUE PHP- ================= Mr. Pizarro also stated in his Judicial Affidavit 119 that the right thing to do is to compute the total amount of purchases of goods subject to 1% withholding tax and to deduct the total amount actually subjected to 1% EWT per alphalist. This approach would give the overall result of the amount subject or not subject to withholding tax. Considering that the amount per alphabetical listing of suppliers is greater than the expenses that should have been subjected to EWT, the ICPA, concluded that petitioner is not liable for deficiency EWT at 1%. However, an examination of the IEIRDs and foreign sales invoices amounting to Php14,995,644,494.60 and Php492,681,277.15, respectively, shows that these amounts pertain only to petitioner's importation of ULG, ADO, LPG Bulk and SPFUIDS, broken down as follows: SCHEDULE OF IMPORTATION YEAR 2005 ACCOUNT NAME SUPPLIER NAME DESCRIPTION AMOUNT EXHIBIT Purchases ULG Total Oil Trading SA Unleaded Gasoline Php139,572,231.81 FFF-1.1 Purchases ULG Total Oil Trading SA Unleaded Gasoline 272,734,927.57 FFF-1.2 Purchases ULG Total Oil Trading SA Unleaded Gasoline 177,514,603.11 FFF-1.3 Purchases ULG Total Oil Trading SA Unleaded Gasoline 169,408,199.64 FFF-1.4 Purchases ULG Total Oil Trading SA Unleaded Gasoline 133,870,963.76 FFF-1.5 Purchases ULG Total Oil Trading SA Unleaded Gasoline 134,303,743.57 FFF-1.6 Purchases ULG Total Oil Trading SA Unleaded Gasoline 251,520,552.35 FFF-1.7 Purchases ULG Total Oil Trading SA Unleaded Gasoline 171,194,532.56 FFF-1.8 Purchases ULG Total Oil Trading SA Unleaded Gasoline 148,953,924.23 FFF-1.9 Purchases ULG Total Oil Trading SA Unleaded Gasoline 183,165,217.01 FFF-1.10 Purchases ULG Total Oil Trading SA Unleaded Gasoline 122,638,270.60 FFF-1.11 Purchases ULG Total Oil Trading SA Unleaded Gasoline 202,155,423.63 FFF-1.12 Purchases ULG Total Oil Trading SA Unleaded Gasoline 242,265,719.25 FFF-1.13 Purchases ULG Total Oil Trading SA Unleaded Gasoline 376,152,903.73 FFF-1.14 Purchases ULG Total Oil Trading SA Unleaded Gasoline 344,224,490.25 FFF-1.15 Purchases ULG Total Oil Trading SA Unleaded Gasoline 175,311,973.28 FFF-1.16 Sub-Total Purchases ULG Supported with IEIRD Php3,244,987,676.35 Purchases ADO Total Oil Trading SA Diesel Php243,447,190.60 FFF-2.1 Purchases ADO Total Oil Trading SA Diesel 306,602,044.09 FFF-2.2 Purchases ADO Total Oil Trading SA Diesel 157,379,946.01 FFF-2.3 Purchases ADO Total Oil Trading SA Diesel 414,660,290.01 FFF-2.4 Purchases ADO Total Oil Trading SA Diesel 456,620,368.43 FFF-2.5 Purchases ADO Total Oil Trading SA Diesel 318,257,352.03 FFF-2.6 Purchases ADO Total Oil Trading SA Diesel 266,643,437.30 FFF-2.7 Purchases ADO Total Oil Trading SA Diesel 442,472,048.11 FFF-2.8 Purchases ADO Total Oil Trading SA Diesel 180,416,775.64 FFF-2.9 Purchases ADO Total Oil Trading SA Diesel 414,128,869.65 FFF-2.10 Purchases ADO Total Oil Trading SA Diesel 176,572,909.43 FFF-2.11 Purchases ADO Total Oil Trading SA Diesel 24,752,984.48 FFF-2.12 Purchases ADO Total Oil Trading SA Diesel 411,632,187.64 FFF-2.13 Purchases ADO Total Oil Trading SA Diesel 340,902,993.31 FFF-2.14 Purchases ADO Total Oil Trading SA Diesel 506,108,901.54 FFF-2.15 Purchases ADO Total Oil Trading SA Diesel 136,577,392.36 FFF-2.16 Purchases ADO Total Oil Trading SA Diesel 78,329,062.89 FFF-2.17 Purchases ADO Total Oil Trading SA Diesel 406,806,516.32 FFF-2.18 Purchases ADO Total Oil Trading SA Diesel 328,843,658.99 FFF-2.19 Purchases ADO Total Oil Trading SA Diesel 257,017,200.00 FFF-2.20 Purchases ADO Total Oil Trading SA Diesel 72,565,785.71 FFF-2.21 Purchases ADO Total Oil Trading SA Diesel 343,159,304.65 FFF-2.22 Purchases ADO Total Oil Trading SA Diesel 308,186,320.62 FFF-2.23 Purchases ADO Total Oil Trading SA Diesel 376,871,119.33 FFF-2.24 Purchases ADO Total Oil Trading SA Diesel 480,377,468.46 FFF-2.25 Purchases ADO Total Oil Trading SA Diesel 159,265,993.39 FFF-2.26 Purchases ADO Total Oil Trading SA Diesel 554,727,727.55 FFF-2.27 Purchases ADO Total Oil Trading SA Diesel 222,024,955.57 FFF-2.28 Purchases ADO Total Oil Trading SA Diesel 278,348,991.43 FFF-2.29 Purchases ADO Total Oil Trading SA Diesel 30,926,738.23 FFF-2.30 Purchases ADO Total Oil Trading SA Diesel 455,037,526.41 FFF-2.31 Purchases ADO Total Oil Trading SA Diesel 158,952,080.79 FFF-2.32 Purchases ADO Total Oil Trading SA Diesel 204,960,728.30 FFF-2.33 Purchases ADO Total Oil Trading SA Diesel 51,696,653.17 FFF-2.34 Purchases ADO Total Oil Trading SA Diesel 312,870,559.88 FFF-2.35 Sub-Total Purchases ADO Supported with IEIRD Php9,878,144,082.32 Purchases LPG Bulk Total International Limit Purchases LPG Php233,767,226.39 FFF-3.1 Purchases LPG Bulk Total International Limit Purchases LPG 222,883,990.32 FFF-3.2 Purchases LPG Bulk Total International Limit Purchases LPG 163,528,572.57 FFF-3.3 Purchases LPG Bulk Total International Limit Purchases LPG 171,026,944.11 FFF-3.4 Purchases LPG Bulk Shell Gas Eastern, Inc. Purchases LPG 172,480,241.44 FFF-3.5 Purchases LPG Bulk Total International Limit Purchases LPG 116,104,421.29 FFF-3.6 Purchases LPG Bulk Shell Gas Eastern, Inc. Purchases LPG 269,352,649.78 FFF-3.7 Purchases LPG Bulk Total International Limit Purchases LPG 240,946,720.55 FFF-3.8 Purchases LPG Bulk Shell Gas Eastern, Inc. Purchases LPG 179,861,138.03 FFF-3.9 Sub-Total Purchases LPG Bulk Supported with IEIRD Php1,769,951,904.47 Purchases LPG Bulk Shell Gas Eastern, Inc. Purchases LPG Php110,563,578.40 GGG-1.1 Purchases LPG Bulk Shell Gas Eastern, Inc. Purchases LPG 143,156,331.22 GGG-1.2 Purchases LPG Bulk Total International Limit Purchases LPG 188,405,727.28 GGG-1.3 Purchases LPG Bulk Supported with Invoice 442,125,636.90 Sub-Total Purchases LPG Bulk Php2,212,077,541.37 Purchases SPFLUIDS Total Fluides (Solvants) Banole Bulk Php48,671,605.65 FFF-4.1 Purchases SPFLUIDS Total Fluides (Solvants) Spirdane D60L 815,019.56 FFF-4.2 Purchases SPFLUIDS Total Fluides (Solvants) Banole Bulk 53,074,206.25 FFF-4.3 Purchases SP Fluids Supported with IEIRD Php102,560,831.46 Purchases SPFLUIDS Total Oil South East Asia Ketrul 220 Php38,115.14 GGG-2.1 Purchases SPFLUIDS Total Oil South East Asia Spirdane D60L 212,525.46 GGG-2.1 Purchases SPFLUIDS Total Fluides (Solvants) Spirdane D60L 674,501.03 GGG-2.2 Purchases SPFLUIDS Total Fluides (Solvants) Spirdane D60L 674,501.03 GGG-2.3 Purchases SPFLUIDS Total Fluides (Solvants) Banole Bulk 46,628,747.83 GGG-2.4 Purchases SPFLUIDS Total Fluides (Solvants) Spirdane D60L 689,565.95 GGG-2.5 Purchases SPFLUIDS Total Fluides (Solvants) Spirdane D60L 817,326.74 GGG-2.6 Purchases SPFLUIDS Total Fluides (Solvants) Spirdane D60L 756,182.51 GGG-2.6 Purchases SPFLUIDS Total Fluides (Solvants) Isane Ip 165 64,174.57 GGG-2.6 Purchases SP Fluids Supported with Invoice 50,555,640.25 Sub-Total Purchases SPFLUIDS Php153,116,471.71 TOTAL Php15,488,325,771.75 ================== Consequently, only the assessment on deficiency EWT at 1% for the importations of ULG, LPG Bulk and SP Fluids amounting to Php28,834,041.12, Php4,920,926.81 and Php62,222.91, respectively, or in the total amount of Php33,817,190.84 shall be cancelled because petitioner was able to substantially provide IEIRDs in support for such importations. On the other hand, the Court cannot give credit to the IEIRDs 120 in support of the importations of ADO amounting to Php9,878,144,082.32 since such purchases were not part of the assessment. Petitioner also alleges that some of the items included in the assessment are subject to other withholding tax rates and were already subjected to proper withholding taxes. For example, "Purchases Lube Materials" in the amount of Php258,209,695.16 are payments for services subject to 2% EWT. Allegedly these were already subjected to 2% EWT by petitioner, thus, should be excluded from the computation of deficiency EWT at 1%.However, petitioner failed to provide evidence to corroborate its claim. Since petitioner argued that it relies heavily on importation, it is expected of the company to provide, at the very least, an IEIRD on every import transaction. In this connection, petitioner is liable for deficiency EWT in the amount of Php11,589,526.30 for failure to provide any import document or any corroborating evidence to refute respondent's evaluation of tax deficiency, to wit: PARTICULARS AMOUNT (A) PER ALPHALIST (B) DIFFERENCE DEFICIENCY EWT (A-B=C) (Cx1%) EWT at 1% (Supplier) Purchases REG Php503,203,112.72 Php- Php503,203,112.72 Php5,032,031.13 Purchases Additives-MOGAS 255,935.52 - 255,935.52 2,559.36 Purchases Additives-Diesel 890,616.02 - 890,616.02 8,906.16 Purchases Kerosene 348,405,053.77 - 348,405,053.77 3,484,050.54 Purchases RFO 12,665,089.12 - 12,665,089.12 126,650.89 Purchases Lubes 26,445,793.33 - 26,445,793.33 264,457.93 Purchases Lube Materials 258,209,695.16 - 258,209,695.16 2,582,096.95 Purchases Lube Freight Depot 1,209,072.80 - 1,209,072.80 12,090.73 Purchases Lube Filling Charges 1,062,367.46 - 1,062,367.46 10,623.67 Surveyors Fee Special Fluids 15,350.00 - 15,350.00 153.50 Port Charges Special Fluids 72,339.88 - 72,339.88 723.40 Purchases Lubmarine 1,986,379.26 - 1,986,379.26 19,863.79 Purchases Lubmarine Materials 376,241.95 - 376,241.95 3,762.42 Uniforms 100,214.09 - 100,214.09 1,002.14 Purchases Materials/Equipment 348,844.84 - 348,844.84 3,488.45 Office Supplies 893,123.42 - 893,123.42 8,931.23 Office Supplies 3,345,870.20 1,490,338.65 1,855,531.55 18,555.32 Office Supplies HSE 134,588.87 - 134,588.87 1,345.89 I/S Expenses 677,204.42 - 677,204.42 6,772.04 Retails Stations Supplies 146,076.00 - 146,076.00 1,460.76 TOTAL PHP1,160,442,968.83 PHP1,490,338.65 PHP1,158,952,630.18 PHP11,589,526.30 ================= ================= ================= ================= With regard to the assessments on EWT at 2% and FBT, the Court finds merit in respondent's arguments. Based on the examination of the records of the case and as verified by the ICPA in his report, 121 petitioner did not present even an iota of proof to show that the assessment of its tax liability is excessive or erroneous. Petitioner failed to demonstrate that the assessment was levied without statutory authority or that it is beyond the limits of statutory authority. In the absence of proof, the presumption of correctness of assessments would prevail. After all, assessments are prima facie presumed correct and made in good faith. 122 It is an elementary rule that in the absence of proof of any irregularity in the performance of official duties, an assessment will not be disturbed and will justify judicial affirmance of said assessment. 123 Considering the failure of petitioner to prove that the deficiency tax assessment is "erroneous" or "excessive," the same may not be abated or cancelled. AcICHD Subsequently, petitioner is liable for basic deficiency EWT at 1% and 2% in the amounts of Php11,589,526.30 and Php451,048.99, respectively, as well as basic deficiency FBT of Php821,540.84. Petitioner is not liable for compromise penalties. Respondent imposed compromise penalties on petitioner in the aggregate amount of Php70,000.00, 124 which must be deleted. It is well-settled that the Court has no jurisdiction to compel a taxpayer to pay the compromise penalty because, by its very nature, it implies a mutual agreement between the parties in respect to the thing or subject matter that is so compromised, and the choice of paying or not paying it distinctly belongs to the taxpayer. 125 The imposition of the same without the conformity of the taxpayer is illegal and unauthorized. 126 WHEREFORE ,the Petition for Review is PARTIALLY GRANTED .Accordingly, the assessment issued by respondent against petitioner for taxable year 2005 covering deficiency Expanded Withholding Tax and Fringe Benefit Tax is UPHELD but in the reduced amount of Sixteen Million Seventy-Seven Thousand Six Hundred Forty-Five Pesos and 16/100 Pesos (Php16,077,645.16) ,inclusive of the 25% surcharge imposed under Section 248 (A) (1) (3) of the 1997 NIRC ,computed as follows: TYPE OF TAX BASIC 25% TOTAL SURCHARGE Expanded Withholding Tax Supplier at 1% Php11,589,526.30 Php2,897,381.58 Php14,486,907.88 Contractor at 2% 451,048.99 112,762.25 563,811.24 Fringe Benefit Tax 821,540.84 205,385.21 1,026,926.05 TOTAL PHP12,862,116.13 PHP3,215,529.03 PHP16,077,645.16 =============== =============== =============== In addition, petitioner is also ORDERED TO PAY : 1. Deficiency interest at the rate of twenty percent (20%) per annum on the basic deficiency EWT and FBT computed from the dates indicated below until full payment thereof pursuant to Section 249 (B) of the 1997 NIRC : TYPE OF TAX BASIC DEFICIENCY INTEREST COMPUTED FROM Expanded Withholding Tax Supplier at 1% Php11,589,526.30 January 16, 2006 Contractor at 2% 451,048.99 January 16, 2006 Fringe Benefit Tax 821,540.84 January 16, 2006 2. Delinquency interest at the rate of twenty percent (20%) per annum on the amount of Php16,077,645.16, representing the basic deficiency EWT and FBT and the corresponding 25% surcharge; and on the twenty percent (20%) deficiency interest which have accrued as aforestated in item (1),computed from March 26, 2012 127 until full payment thereof pursuant to Section 249 (C) of the 1997 NIRC . SO ORDERED. (SGD.) LOVELL R. BAUTISTA Associate Justice Esperanza R. Fabon-Victorino, J. ,concurs. Ma. Belen M. Ringpis-Liban, J. ,is on leave. Footnotes 1. Records, CTA Case No. 8479, Vol. 1, Petition for Review ,pp. 9-174, with annexes. 2. "Sec. 3. Cases within the jurisdiction of the Court in Divisions. (a) Exclusive original or appellate jurisdiction to review by appeal the following: (1) Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue." 3. "Sec. 7. Jurisdiction. The Court of Tax Appeals shall exercise: (a) Exclusive appellate jurisdiction to review by appeal, as herein provided: (1) Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue." 4. An Act Creating the Court of Tax Appeals, as amended. 5. An Act Expanding the Jurisdiction of the Court of Tax Appeals ("CTA"), Elevating its Rank to the Level of a Collegiate Court with Special Jurisdiction and Enlarging its Membership, Amending for the Purpose Certain Sections of Republic Act No. 1125, as amended, Otherwise Known as the Law Creating the Court of Tax Appeals, and for Other Purposes. 6. An Act Enlarging the Organizational Structure of the Court of Tax Appeals, Amending for the Purpose Certain Sections of the Law Creating the Court of Tax Appeals, and for Other Purposes. 7. Records, Vol. 1, Petition for Review, Prayer ,pp. 35-36. 8. Id.,Joint Stipulation of Facts and Issues ("JSFI") ,p. 300. 9. Formerly her Honorable Commissioner of Internal Revenue ("CIR") Kim S. Jacinto-Henares, now his Honorable CIR Caesar R. Dulay. 10. Records, Vol. 1, JSFI ,p. 300. 11. Id. 12. BIR Records, Vol. 1, Exhibit "SSS"/"R-1," Letter of Authority ("LOA") ,pp. 1-3. 13. Records, Vol. 1, JSFI ,p. 300. 14. Records, Vol. 2, Preliminary Assessment Notice ("PAN"),Exhibit "G," pp. 875-884, with annexes; BIR Records, Vol. 1, Exhibit "R-10," pp. 720-732, with annexes. 15. Records, Vol. 1, JSFI ,p. 300. 16. Records, Vol. 2, Exhibit "H," Reply to the PAN ,pp. 885-894. 17. Id.,Exhibit "I," Formal Letter of Demand ("FLD") ,p. 895; BIR Records, Vol. 1, Exhibit "R-13," p. 817. 18. Id.,Exhibit "I," Final Assessment Notices ("FANs") ,pp. 896-909, with annexes; BIR Records, Vol. 1, Exhibit "R-13," pp. 803-816, with annexes. 19. Records, Vol. 1, JSFI ,p. 300. 20. Records, Vol. 2, Exhibit "I-1," FLD ,p. 795. 21. Id.,Exhibit "J," Protest to FAN ,pp. 910-921, with annexes. 22. Id.,Exhibit "J-1," p. 910. 23. Records, Vol. 1, JSFI ,p. 300. 24. Records, Vol. 2, Exhibit "K," Final Decision on Disputed Assessment ("FDDA") ,pp. 922-937. 25. Records, Vol. 1, JSFI ,p. 301. 26. Records, Vol. 2, Exhibit "K-1," p. 922. 27. Records, Vol. 1, Petition for Review ,pp. 9-174, with annexes. 28. Id. at 16-35. 29. Records, Vol. 1, Summons ,p. 175. 30. Id. at 177-181, in relation to p. 183. 31. Id.,Answer ,pp. 184-211. 32. Id.,Amended Answer ,pp. 243-269. 33. Id.,Resolution ,pp. 288-289. 34. Id.,Amended Answer ,pp. 244-258. 35. Records, Vol. 1, Amended Answer ,pp. 259-267. 36. Id.,Respondent's Pre-Trial Brief ,pp. 214-221. 37. Id.,Pre-Trial Brief ,pp. 222-231. 38. Id.,JSFI ,pp. 299-302. 39. Id.,Pre-Trial Order ("PTO") ,pp. 305-312. 40. Records, Vol. 2, Exhibit "CC," Judicial Affidavit ("JA") of Dennis Odra ,pp. 820-829. 41. Id.,Exhibit "DD," Supplemental JA of Dennis Odra ,pp. 830-839. 42. Id.,Exhibit "QQQ," Second Supplemental JA of Dennis Odra ,pp. 953-959. 43. Records, Vol. 1, January 21, 2013 Minutes of Hearing ,p. 325. 44. Records, Vol. 1, February 25, 2013 Minutes of Hearing ,p. 446. 45. Id.,April 15, 2013 Minutes of Hearing ,p. 447. 46. Records, Vol. 2, December 9, 2013 Minutes of Hearing ,p. 800. 47. Records, Vol. 1, Motion to Avail the Provisions of Rule 13 of the Revised Rules of the Court of Tax Appeals ("RRCTA") ,pp. 448-454, with annex. 48. Records, Vol. 1, Opposition to the Commissioning of Mr. Enrico T. Pizarro as ICPA ,pp. 466-488, with annexes. 49. Id.,Vol. 1 ,pp. 413-415; Records, Vol. 2, August 22, 2013 Minutes of Hearing ,p. 418; Records, Vol. 2, Oath of Commission ,p. 419; Records, Vol. 2 ,pp. 421-422. 50. Records, Vol. 2, August 22, 2013 Minutes of Hearing ,p. 418; Records, Vol. 2 ,pp. 421-422. 51. Id.,Exhibit "III," Independent Certified Public Accountant ("ICPA") Report ,pp. 423-647. 52. Id.,Exhibit "JJJ," JA of Enrico Pizarro ,pp. 840-853. 53. Id.,September 30, 2013 Minutes of Hearing ,p. 762. 54. Id.,February 13, 2014 Minutes of Hearing ,p. 801; Records, Vol. 3 ,p. 1136. 55. Id. 56. Records, Vol. 2, Formal Offer of Evidence ("FOE") ,pp. 802-819. 57. Records, Vol. 3 ,pp. 1142-1143. 58. Id.,Supplemental FOE ,pp. 1159-1162. 59. Records, Vol. 2 ,pp. 854-866. 60. Records, Vol. 3 ,pp. 1171-1172. 61. Id.,Exhibit "R-19," JA of Rosario Arriola ,pp. 1194-1205. 62. Records, Vol. 3 ,pp. 1180 and 1211. 63. Id.,May 19, 2015 Minutes of Hearing ,p. 1216. 64. Id. 65. Records, Vol. 3 ,p. 1225. 66. Id.,Respondent's Formal Offer of Documentary Evidence ,pp. 1241-1253. 67. Id. ,at 1263-1264. 68. Id.,JA of Leonard Escueta ,pp. 1267-1273, with annex. 69. Id.,October 5, 2015 Minutes of Hearing ,p. 1274. 70. BIR Records, Vol. 1, Exhibit "SSS"/"R-1," LOA ,pp. 1-3. 71. Records, Vol. 3 ,pp. 1280-1281. 72. Id. at 1282-1285. 73. Id. at 1286. 74. Id. at 1296-1302, with attached respondent's Memorandum, see pp. 1303-1325. 75. Id. at 1294. 76. Id.,petitioner's Memorandum ,pp. 1326-1358. 77. Records, Vol. 3 ,p. 1360. 78. Records, Vol. 1, PTO ,p. 307. 79. Records, Vol. 3, petitioner's Memorandum ,pp. 1332-1356. 80. Id.,respondent's Memorandum ,pp. 1305-1323. 81. Records, Vol. 2, Exhibit "I," FLD ,p. 895. 82. December 13, 2009 fell on a Sunday. 83. Records, Vol. 2, Exhibit "J," p. 910. 84. Id.,Exhibit "K," FDDA ,pp. 922-937. 85. Records, Vol. 1, Petition for Review ,pp. 9-174, with annexes. 86. BIR Records, Vol. 1, Exhibit "SSS"/"R-1," LOA ,pp. 1-3. 87. Records, Vol. 3, JA of Leonard Escueta ,pp. 1267-1273, with annex. 88. Id.,petitioner's Memorandum ,p. 1348. 89. Section 13 of the 1997 NIRC provides: "Section 13. Authority of a Revenue Officer. ...a Revenue Officer assigned to perform assessment functions in any district may, pursuant to a Letter of Authority issued by the Revenue Regional Director, examine taxpayers within the jurisdiction of the district in order to collect the correct amount of tax, or to recommend the assessment of any deficiency tax due in the same manner that the said acts could have been performed by the Revenue Regional Director himself." 90. Underscoring ours. 91. BIR Records, Vol. 1, Exhibit "SSS"/"R-1," Letter of Authority ("LOA") ,pp. 1-3. 92. Underlined are the bases for the counting of the three (3)-year period. 93. Records, Vol. 2, Exhibit "L," BIR Form No. 1601-E January 2005 ,p. 938. 94. Id.,Exhibit "M," BIR Form No. 1601-E February 2005 ,p. 990. 95. Id.,Exhibit "N," BIR Form No. 1601-E March 2005 ,p. 998. 96. Id.,Exhibit "O," BIR Form No. 1601-E April 2005 ,p. 1007. 97. Id.,Exhibit "P," BIR Form No. 1601-E May 2005 ,p. 1016. 98. Id.,Exhibit "Q," BIR Form No. 1601-E June 2005 ,p. 1025. 99. Records, Vol. 2, Exhibit "R," BIR Form No. 1601-E July 2005 ,p. 1033. 100. Id.,Exhibit "S," BIR Form No. 1601-E August 2005 ,p. 1040. 101. Id.,Exhibit "T," BIR Form No. 1601-E September 2005 ,p. 1048. 102. Id.,Exhibit "U," BIR Form No. 1601-E October 2005 ,p. 1056. 103. Id.,Exhibit "V," BIR Form No. 1601-E November 2005 ,p. 1064. 104. Id.,Exhibit "W," BIR Form No. 1601-E December 2005 ,p. 1072. 105. BIR Records, Vol. 1, Exhibit "SSS"/"R-1," LOA ,pp. 1-3. 106. Underscoring ours. 107. Underlined are the bases for the counting of the three (3)-year period. 108. Records, Vol. 2, Exhibit "X," BIR Form No. 1603 1st Quarter 2005 ,p. 1080. 109. Id.,Exhibit "Y," BIR Form No. 1603 2nd Quarter 2005 ,p. 1083. 110. Id.,Exhibit "Z," BIR Form No. 1603 3rd Quarter 2005 ,p. 1086. 111. Id.,Exhibit "AA," BIR Form No. 1603 4th Quarter 2005 ,p. 1089. 112. Id.,Exhibit "I-1," FLD ,p. 895. 113. Id., Exhibits "C," "D," "E," and "F," Waivers of the Defense of Prescription under the Statute of Limitations under the National Internal Revenue Code ,pp. 868-874. 114. Philippine Journalists, Inc. v. Commissioner of Internal Revenue , G.R. No. 162852, December 16, 2004, 447 SCRA 214; Commissioner of Internal Revenue v. FMF Development Corporation ,G.R. 167765, June 30, 2008, 556 SCRA 698; Commissioner of Internal Revenue v. Kudos Metal Corporation , G.R. No. 178087, May 5, 2010, 620 SCRA 232. 115. G.R. No. 212825, December 7, 2015. 116. Citations omitted. 117. Records, Vol. 2, Exhibit "F," Waiver of the Defense of Prescription under the Statute of Limitations under the National Internal Revenue Code ,p. 874. 118. Records, Vol. 2, Exhibit "III," ICPA Report ,p. 429. 119. Records, Vol. 2, Exhibit "JJJ," JA of Enrico Pizarro ,p. 850. 120. Records, Vol. 2, Exhibits "FFF-2-1" to "FFF-2-3," pp. 551-559. 121. Id.,Exhibit "III," ICPA Report, pars. 3 and 4 ,p. 430. 122. Commissioner of Internal Revenue v. Hantex Trading Co., Inc. , G.R. No. 136975, March 31, 2005, 454 SCRA 301. 123. Commissioner of Internal Revenue v. Court of Appeals, et al. , G.R. No. 104151, March 10, 1995; 242 SCRA 289; Atlas Consolidated Mining and Development Corporation v. Court of Appeals, et al. , G.R. No. 105563, March 10, 1995, 242 SCRA 289. 124. Records, Vol. 2, Exhibit "K," FDDA ,pp. 922-929. 125. The Philippines International Fair, Inc. v. The Collector of Internal Revenue, et al. ,G.R. Nos. L-12928 and L-12932, March 31, 1962, 4 SCRA 774. 126. Commissioner of Internal Revenue v. Lianga Bay Logging Co., Inc., et al. ,G.R. No. L-35266, January 21, 1991, 193 SCRA 86. 127. Records, Vol. 2, Exhibit "K," FDDA ,p. 922.