Commissioner of Internal Revenue v. Metro Rail Transit Corp.

EN BANC [C.T.A. EB CASE NO. 2204. September 2, 2021.] (C.T.A. Case No. 9016) COMMISSIONER OF INTERNAL REVENUE , petitioner , vs. METRO RAIL TRANSIT CORPORATION , respondent . DECISION DEL ROSARIO , P.J p : This is a Petition for Review 1 filed by the Commissioner of Internal Revenue (CIR) on January 7, 2020 assailing the October 2, 2019 Amended Decision 2 and December 4, 2019 Resolution 3 promulgated by the Special Second Division (Court in Division) in CTA Case No. 9016 entitled Metro Rail Transit Corporation, Petitioner versus Commissioner of Internal Revenue, Respondent , which cancelled and set aside the CIR's Decision dated February 5, 2015, finding Metro Rail Transit Corporation (Metro Rail) liable for deficiency taxes for taxable year 2007 in the aggregate amount of P1,631,807,856.98. The respective dispositive portions of the assailed Amended Decision and Resolution state: October 2, 2019 Amended Decision " WHEREFORE , premises considered, respondent's Motion for Partial Reconsideration Re: Decision dated 8 January 2019 is DENIED for lack of merit. On the other hand, petitioner's Motion for Partial Reconsideration (of the Decision dated January 8, 2019) and Supplemental Motion for Partial Reconsideration (of the Decision dated January 8, 2019) are GRANTED . Accordingly, the dispositive portion of the Court's Decision dated January 8, 2019 is amended to read as follows: ' WHEREFORE , premises considered, the instant Petition for Review is GRANTED . Accordingly, respondent's Decision dated February 5, 2015, finding petitioner liable for deficiency taxes for taxable year 2007 in the aggregate amount of P1,631,807,856.98, is CANCELLED and SET ASIDE . SO ORDERED .' SO ORDERED ." December 4, 2019 Resolution " WHEREFORE , premises considered, respondent's Motion for Reconsideration Re: Decision dated 02 October 2019 is DENIED for lack of merit. SO ORDERED ." THE PARTIES Petitioner is the Commissioner of the Bureau of Internal Revenue (BIR), 4 duly appointed to exercise the powers and perform the duties of his office including, inter alia , the power to decide disputed assessments, refunds of internal revenue taxes, fees, other charges, and penalties imposed in relation thereto, or other matters arising under the National Internal Revenue Code (NIRC) of 1997, as amended. He holds office at the BIR National Office Building, Agham Road, Diliman, Quezon City. 5 Respondent Metro Rail Transit Corporation is a corporation duly organized and existing under Philippine laws. Its office address is at 15th floor, The Belvedere Tower, San Miguel Avenue, Ortigas Center, Pasig City. 6 Its primary purpose is to build, lease, maintain and transfer a railway transit system in Metro Manila known as Phase I of the Light Rail Transit (LRT) Line 3. It was built pursuant to the Agreement dated August 8, 1997 between Metro Rail Transit Corp. Limited and the Department of Transportation and Communications, now the Department of Transportation. 7 CAIHTE THE FACTS On February 3, 2009, Metro Rail received Letter of Authority (LOA) No. 2007 003807 8 dated January 27, 2009 issued by the Head Revenue Executive Assistant (HREA) of Large Taxpayers Service (LTS)-Regular Large Taxpayers, Romulo L. Aguila, Jr., authorizing Revenue Officer (RO) Edison O. Larin and Group Supervisor (GS) Roberto P. Castro of Large Taxpayers Audit and Investigation Division I (LTAID 1), to examine Metro Rail's books of accounts and other accounting records for all internal revenue taxes for the period from January 1, 2007 to December 31, 2007. On May 15, 2009, Memorandum Referral No. D-LOA-27-05-09 9 was issued by the Chief, LTAID 1, Conrado C. Lee, re-assigning the case to RO Elizabeth U. Cadiz and GS Edison O. Larin for the continuation of the audit of Metro Rail's books of accounts and other accounting records for the taxable year 2007. On May 19, 2010, the BIR sent a Notice of Informal Conference to Metro Rail, informing it of the results of the audit and requiring it to present its side by submitting whatever evidence it may have in its favor. 10 On July 15, 2010, Metro Rail received an undated Preliminary Assessment Notice (PAN) with Details of Discrepancies from the BIR's Large Taxpayers Regular Audit Division. 11 On August 20, 2010, Metro Rail received the Formal Letter of Demand (FLD) with Final Assessment Notices (FAN) and Details of Discrepancies dated August 2, 2010, assessing it for deficiency income tax, value-added tax (VAT), final withholding tax (FWT), expanded withholding tax (EWT), fringe benefit tax (FBT) and documentary stamp tax (DST) for taxable year 2007. 12 On September 15, 2010, Metro Rail filed its Protest 13 dated September 9, 2010 with the BIR. 14 On September 23, 2014, Metro Rail received an undated Final Decision on Disputed Assessment (FDDA) with Details of Discrepancies, demanding payment of P1,590,724,214.41, allegedly representing deficiency income tax, VAT, FWT, EWT and FBT, inclusive of increments, for taxable year 2007. 15 On October 23, 2014, Metro Rail filed its Request for Reconsideration 16 dated October 22, 2014. 17 On February 24, 2015, Metro Rail received the CIR's Decision dated February 5, 2015 denying its request for reconsideration and demanding payment of P1,631,807,856.98 from Metro Rail, allegedly representing deficiency income tax, VAT, FWT, EWT, FBT and increments for late payment of income tax for taxable year 2007. 18 On March 19, 2015, Metro Rail paid the deficiency EWT 19 and FBT 20 assessments, including the interests thereon through the Electronic Filing and Payment System of the BIR in the amount of P7,574,619.54 and P4,671,888.83, respectively. 21 On March 25, 2015, Metro Rail filed its Petition for Review before the Court in Division. 22 After trial, the Court in Division promulgated a Decision 23 on January 8, 2019, which partially granted Metro Rail's Petition for Review, viz. : " WHEREFORE , premises considered, the instant Petition for Review is PARTIALLY GRANTED . The assessments issued by respondent against petitioner for taxable year 2007 covering deficiency VAT (penalties only), FWT, and increments for late payment of IT are CANCELLED and SET ASIDE . On the other hand, the deficiency IT, EWT and FBT assessments are AFFIRMED but with MODIFICATION . Accordingly, petitioner is ORDERED TO PAY respondent the amount of P1,731,830,990.47 , representing basic deficiency income tax and the 25% surcharge, 20% deficiency interest and 20% delinquency interest imposed on the deficiency IT, EWT and FBT under Sections 248(A)(3) and 249(B) and (C) of the NIRC of 1997, as amended, respectively, computed until December 31, 2017, as determined below: IT EWT FBT TOTAL Basic P368,828,806.59 P3,099,479.97 P1,911,703.39 P373,839,989.95 Surcharge (25%) 92,207,201.65 774,869.99 477,925.85 93,459,997.49 Deficiency Interest (20%) until February 24, 2015 IT 4/16/08 to 2/24/2015 (P368,828,806.59 x 20% x 2,506 days/365 days) 506,457,528.39 506,457,528.39 EWT 1/16/08 to 2/24/2015 (P3,099,444.38 x 20% x 2,597 days/365 days) 4,410,602.46 4,410,602.46 FBT 1/11/08 to 2/24/2015 (P1,911,703.39 x 20% x 2,602 days/365 days) 2,725,617.66 2,725,617.66 Total Amount Due, February 24, 2015 P967,493,536.63 P8,284,952.42 P5,115,246.90 P980,893,735.95 Deficiency Interest (20%) from February 25, 2015 until December 31, 2017/March 19, 2015 IT 2/25/2015 to 12/31/17 (P368,828,806.59 x 20% x 1,041 days/365 days) 210,383,993.24 210,383,993.24 EWT 2/25/15 to 3/19/2015 (P3,099,444.38 x 20% x 23 days/365 days) 39,061.94 39,061.94 FBT 2/25/15 to 3/19/2015 (P1,911,703.39 x 20% x 23 days/365 days) 24,092.70 24,092.70 Delinquency Interest (20%) from February 24, 2015 until December 31, 2017/March 19, 2015 IT 2/25/15 to 12/31/17 (P967,493,536.63 x 20% x 1,041 days/365 days) 551,868,915.96 551,868,915.96 EWT 2/25/15 to 3/19/15 (P8,284,952.42 x 20% x 23 days/365 days) 104,413.10 104,413.10 FBT 2/24/15 to 3/19/15 (P5,115,246.89 x 20% x 23 days/365 days) 64,466.13 64,466.13 Delinquency Interest (20%) on Surcharge from March 19, 2015 until December 31, 2017 EWT 3/19/15 to 12/31/17 (P774,869.99 x 20% x 1,018 days/365 days) 432,228.85 432,228.85 FBT 3/19/15 to 12/31/17 (P477,925.85 x 20% x 1,018 days/365 days) 266,590.97 266,590.97 Total P1,729,746,445.83 P8,860,656.31 P5,470,396.70 P1,744,077,498.84 Less: Payment on March 19, 2015 Basic Tax (3,099,479.97) (1,991,703.39) (5,011,183.36) Interest (4,475,139.57) (2,760,185.44) (7,235,325.01) Total P1,729,746,445.83 P1,286,036.77 P798,507.87 P1,731,830,990.47 In addition, petitioner is ORDERED to PAY delinquency interest at the rate of 12% computed from January 1, 2018 until full payment thereof, pursuant to Section 249(C) of the NIRC of 1997, as amended by Republic Act No. 10963, also known as Tax Reform for Acceleration and Inclusion (TRAIN) and as implemented by RR No. 21-2018, on the following amounts: Income Tax P967,493,536.63 EWT P774,869.99 FBT P477,925.85 SO ORDERED ." On January 24, 2019, both parties timely filed their respective Motions for Partial Reconsideration of the Decision dated January 8, 2019. 24 On April 2, 2019, Metro Rail filed its Supplemental Motion for Partial Reconsideration (of the Decision dated January 8, 2019). 25 On October 2, 2019, the Court in Division promulgated the assailed Amended Decision, 26 denying the CIR's Motion for Partial Reconsideration for lack of merit. The said Amended Decision granted Metro Rail's Motion for Partial for Reconsideration and Supplemental Motion for Partial Reconsideration, thereby cancelling Metro Rail's more than P2.5 Billion tax liability, inclusive of interest and surcharge. DETACa On October 23, 2019, the CIR timely filed his Motion for Reconsideration Re: Decision dated 02 October 2019, 27 which was denied by the Court in the Division in the assailed Resolution dated December 4, 2019. 28 Dissatisfied, the CIR filed on January 7, 2020 the present Petition for Review before this Court En Banc . 29 In the Resolution dated February 5, 2020, Metro Rail was ordered to file its comment on the Petition for Review within ten (10) days from notice. 30 On February 27, 2020, Metro Rail filed its Comment (on the Petition for Review dated January 2, 20[20]). 31 On July 15, 2020, the Court En Banc referred the case to the Philippine Mediation Center-Court of Tax Appeals (PMC-CTA) for mediation, 32 pursuant to Section II of the Interim Guidelines for Implementing Mediation in the Court of Tax Appeals. 33 Considering that the parties decided not to have their case mediated by the PMC-CTA, 34 in its Resolution dated September 23, 2020, the Court En Banc terminated the mediation proceedings, reinstated the Court's proceedings on the case, and submitted the case for decision. 35 Meanwhile, on May 28, 2021, Metro Rail filed an Extremely Urgent Omnibus Motion (For the Suspension of the Collection of Taxes and To Dispense with the Posting of a Bond) and a Formal Offer of Documentary Exhibits (In support of MRTC's Extremely Urgent Omnibus Motion). 36 In a Resolution dated June 15, 2021, the Court En Banc directed the CIR to file his Comment within five (5) days from notice. 37 On July 7, 2021, the CIR filed a Motion to Admit Attached Comment, attaching thereto his (i) Opposition [Re: Urgent Motion to Lift Warrant of Distrain and/or Levy and Suspend Collection of Tax]; and, (ii) Comment (Re: Petitioner's Formal Offer of Evidence). 38 On July 23, 2021, Metro Rail filed an Urgent Motion to Resolve praying for the immediate resolution of Metro Rail's Extremely Urgent Omnibus Motion. On August 13, 2021, Metro Rail filed an Extremely Urgent Motion to Resolve praying for the immediate resolution of its Omnibus Motion. THE ISSUES The Court En Banc shall resolve the following issues as culled from CIR's Petition for Review: (i) Whether the Court in Division erred when it ruled on the issue of lack of authority, which was raised only in Metro Rail's supplemental motion for partial reconsideration filed with the Court in Division; and, (ii) Whether the Court in Division erred when it held that the referral memorandum is not sufficient to grant the revenue officer the authority to continue the conduct of the audit investigation. PETITIONER'S ARGUMENTS 39 The CIR avers that Metro Rail raised the issue of lack of authority of the revenue officers who conducted the audit of Metro Rail's books and other accounting records for taxable year 2007 for the first time in its Supplemental Motion for Partial Reconsideration. According to the CIR, Metro Rail has effectively waived any defenses regarding the validity of the audit proceedings due to lack of authority of the revenue officers. The CIR further insists that the presumption of regularity afforded to public officers in the performance of their functions should stand, as Metro Rail was unable to present any evidence that would prove otherwise. Moreover, the CIR contends that the Memorandum Referral signed by the Chief, LTAID 1, is valid. Consequently, the audit conducted pursuant to the LOA, the subsequent Memorandum Referral, and the assessments issued as a result of said audit, are valid. RESPONDENT'S ARGUMENTS 40 Metro Rail counters that the Petition for Review should be dismissed outright, as it merely rehashes the arguments raised by the CIR in his Motion for Reconsideration to the Amended Decision. Furthermore, Metro Rail asserts that the Revised Rules of the Court of Tax Appeals (RRCTA) and jurisprudence clearly provide that the Court is not bound by the issues raised by the parties, and may rule upon related issues necessary to achieve an orderly disposition of the case. According to Metro Rail, it is the CIR who has effectively waived his right to question the purported procedural error ( i.e. , that new issues should not be raised for the first time on appeal), given his silence on the issue anent the authority of the revenue officers to conduct the audit of Metro Rail, after having been given the opportunity to raise the same in his Opposition to the Supplemental Motion. Finally, Metro Rail argues that the Court in Division correctly ruled that the Memorandum Referral was not sufficient to grant RO Cadiz the authority to continue the conduct of the audit investigation. aDSIHc THE COURT EN BANC 'S RULING The Court En Banc finds merit in the Petition for Review. The Petition for Review was timely filed Section 18 of Republic Act No. 1125, as amended, 41 vis--vis Section 3 (b), Rule 8 of the 2005 RRCTA, 42 provides that a party adversely affected by a decision or a resolution of a Division of the Court on a motion for reconsideration or new trial, may file a petition for review with the Court En Banc within fifteen (15) days from receipt of the questioned decision or resolution. The assailed Resolution dated December 4, 2019, which denied CIR's Motion for Reconsideration of the Court in Division's October 2, 2019 Amended Decision, was received by the CIR on December 9, 2019. 43 The CIR had fifteen (15) days from December 9, 2019 or until December 24, 2019 within which to file his Petition for Review with the Court En Banc . On December 19, 2019, the CIR filed a Motion for Extension of Time to File Petition for Review, 44 which was granted in the Minute Resolution dated December 20, 2019, 45 giving the CIR until January 8, 2020, within which to file his Petition for Review. Plainly, the filing of the Petition for Review by the CIR on January 7, 2020 was made within the extended period. Thus, the Court En Banc has acquired jurisdiction to take cognizance of the case. Audit of Metro Rail was validly conducted; FLD and FAN issued pursuant thereto are valid The CIR argues that Metro Rail cannot raise the issue of lack of authority of the revenue officers for the first time in its Supplemental Motion for Partial Reconsideration. While the issue of the authority of the revenue officers to conduct audit of Metro Rail was not included in the parties' stipulated issues, and was raised by Metro Rail only in its Supplemental Motion for Partial Reconsideration, the Court is nonetheless vested with sufficient authority to consider the same, pursuant to Section 1, Rule 14 of the RRCTA which provides that " in deciding cases, 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 ." In Commissioner of Internal Revenue vs. Lancaster Philippines, Inc. , 46 the Supreme Court clarified that the CTA can indeed resolve the issue involving the authority of the ROs to conduct the audit, albeit the same was not raised by the parties in their pleadings or memoranda. It further declared the assessment therein void for want of a valid LOA. There is no denying that the authority of the revenue officers who audited Metro Rail is relevant in determining the validity of the disputed assessments as the absence of a validly issued LOA shall render the assessment void. A perusal of LOA No. 2007 00038087 dated January 27, 2009, received by Metro Rail on February 3, 2009, reveals that the same was validly issued by the HREA of LTS-Regular Large Taxpayers, Romulo L. Aguila, Jr. The NIRC of 1997, as amended, is clear and categorical in requiring an authority from the CIR or from his duly authorized representatives before an examination of a taxpayer may be made. 47 Section 6 thereof provides: "SEC. 6. Power of the Commissioner to Make Assessments and Prescribe Additional Requirements for Tax Administration and Enforcement. (A) Examination of Returns and Determination of Tax Due After a return has been filed as required under the provisions of this Code, the Commissioner or his duly authorized representative may authorize the examination of any taxpayer and the assessment of the correct amount of tax: Provided, however; That failure to file a return shall not prevent the Commissioner from authorizing the examination of any taxpayer. x x x" (Boldfacing and underscoring supplied) Relatedly, Section 13 of the NIRC of 1997, as amended, states: "Sec. 13. Authority of a Revenue Officer. Subject to the rules and regulations to be prescribed by the Secretary of Finance, upon recommendation of the Commissioner, 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." (Boldfacing and underscoring supplied) Under Revenue Memorandum Order (RMO) No. 29-07, 48 the equivalent of a Revenue Regional Director in the LTS is the Assistant Commissioner/HREA who are also authorized to issue LOAs for audit of large taxpayers, viz. : "II. AUDIT POLICIES AND GUIDELINES 1. The Chief, Large Taxpayers Audit & Investigation Divisions/LTDOs shall draw a list of taxpayers selected for audit under its current selection criteria. The list shall state the name of taxpayer selected for audit, the nature of business, the amount of gross sales/receipts, the selection code, the PSIC code, and the corresponding amount of tax paid for the period. The said list shall be submitted to the Assistant Commissioner/Head Revenue Executive Assistant, Large Taxpayers Service for approval, copy furnished the Commissioner of Internal Revenue. 2. All Letters of Authority (LOAs) shall be issued and approved by the Assistant Commissioner/Head Revenue Executive Assistants . " (Boldfacing and underscoring supplied) Thus, the "authorized representative" contemplated under Section 6 of the NIRC of 1997, as amended, who is vested with the power to issue an LOA is the Revenue Regional Director, pursuant to Section 13 thereof, or the Assistant Commissioner/Head Revenue Executive Assistant of the Large Taxpayers Service . The authority of GS Edison O. Larin to examine Metro Rail's books of accounts and other accounting records for the year 2007 emanated from LOA No. 2007 00038087, albeit GS Larin was still an RO then. In the October 2, 2019 Amended Decision and December 4, 2019 Resolution, the Court in Division found that the tax assessments involving more than P2.5 Billion tax liability, inclusive of interest and surcharge, are void as the Memorandum Referral was not sufficient to grant RO Cadiz the authority to continue the audit of Metro Rail for taxable year 2007. ETHIDa Perusal of the records of the case, however, shows that the Memorandum Referral is insignificant in determining the validity of assessments against Metro Rail. While a Memorandum Referral was issued by the Chief, LTAID 1, Conrado C. Lee, authorizing RO Cadiz to continue the audit/investigation of Metro Rail, naming GS Larin as group supervisor of RO Cadiz, the fact remains that GS Larin's authority to conduct the examination of Metro Rail pursuant to LOA No. 2007 00038087 where he was originally named as the revenue officer authorized to conduct the audit was not invalidated thereby. More importantly, the Memorandum Referral, not having been issued by the Assistant Commissioner/HREA of the LTS, is itself void ab initio and could not revoke or supersede the validly issued LOA. Said Memorandum Referral produces no legal effect and no valid authority could spring forth from it. Stated differently, the source of the authority of GS Larin to audit respondent remains to be LOA No. 2007 00038087. Truth be told, GS Larin conducted the actual audit of Metro Rail's books of accounts and other accounting records. His involvement and participation in the entire process were thorough and extensive. BIR Records is replete with correspondences and submissions from Metro Rail which were addressed to GS Larin himself as well as other documents which confirm his personal examination of Metro Rail's financial records, among which were as follows: 1. BIR Letter dated January 30, 2009 addressed to Metro Rail requesting that certain documents be made available for the conduct of audit by RO Larin and GS Castro, and that for any queries, Metro Rail may look for RO Larin or GS Castro; 49 2. Metro Rail's Letter dated April 28, 2009 addressed to RO Larin, among others, forwarding standard auditing documents that Metro Rail submits to BIR and requesting that Metro Rail's representative be conducted anent other documents needed in relation to Metro Rail's audit; 50 3. Metro Rail's Letter dated May 31, 2010 specifically for the attention of GS Larin, requesting for a schedule for conference on the second week of June 2010; 51 4. Metro Rail's Letter dated June 7, 2010 responding to the undated Letter of the BIR regarding the result of the investigation under LOA No. 00038082 dated January 27, 2009 conducted by revenue officers, one of which was GS Larin; 52 and, 5. Metro Rail's Letter dated April 22, 2013 addressed to GS Larin and RO Cadiz submitting documents which were discussed during the meeting between Metro Rail's representative and GS Larin and RO Cadiz on March 22, 2013. 53 After the conduct of the audit, GS Larin recommended the issuance of Preliminary Assessment Notices , 54 and eventually, the issuance of the Formal Letter of Demand and Final Assessment Notices, 55 against Metro Rail. In sum, the Court En Banc cannot disregard the fact that GS Larin, the revenue officer named in the LOA, conducted the actual audit and examination of Metro Rail and thereafter recommended the issuance of assessments against it . And while his position may be supervisory in character, this alone does not invalidate the authority for him to actually conduct the audit himself. After all, the law recognizes that even a much higher official no less than the Revenue Regional Director whose function is basically supervisory may conduct an audit pursuant to Section 13 of the NIRC of 1997, as amended. The scenario involved in the present controversy is not even unfamiliar to the Court. In Green Valley Marking Corporation vs. Commissioner of Internal Revenue/Commissioner of Internal Revenue vs. Green Valley Marketing Corporation , CTA EB Nos. 1801 and 1808 , 56 GS Glorializa Samoy was authorized in an LOA to audit Green Valley's books of accounts. Subsequently, GS Samoy was promoted as Assistant Division Chief, Regular Large Taxpayers Audit Division (RLTAD) I. A mere Memorandum of Assignment was later issued assigning the audit of Green Valley to RO Carolyn V. Mendoza and GS Rolando Balbido who eventually recommended the issuance of the preliminary assessment and final assessment against Green Valley. The Court En Banc declared that the examination of Green Valley's books of accounts and other accounting records (which resulted in the issuance of the assessments) was valid, viz. : cSEDTC "On the other hand, the Memorandum dated June 19, 2014 submitted by the team of RO Carolyn Mendoza, recommending the issuance of the FAN/FLD, was reviewed by among others, Gloria Liza G. Samoy, Assistant Division Chief-RLTAD I, which was among the individuals named in the LOA dated September 23, 2011. On the ground that the validation of the Corporation's books of account and other accounting record which resulted in the issuance of the subject assessment was reviewed and oversaw by a person specifically named in the LOA, the Corporation's contention that the CIR's agents illegally conducted a tax examination against it must perforce fail ." 57 (Boldfacing and underscoring supplied) In other words, the Court En Banc declared that the assessment was valid despite the fact that GS Samoy, the person named in the LOA, merely reviewed the recommendation of RO Mendoza and GS Balbido as Assistant Division Chief, RLTAD I; and, sans any evidence that she herself conducted the actual audit of Green Valley. Considering that GS Larin herself conducted the audit of Metro Rail, pursuant to a validly issued LOA, the Formal Letter of Demand and Final Assessment Notices, dated August 2, 2010 that resulted therefrom are not tainted with intrinsic invalidity. Apropos, albeit records disclosed that the conduct of Metro Rail's audit was not completed within 120 days from Metro Rail's receipt of the LOA on February 3, 2009, the same does not constitute a fatal infirmity that invalidates the LOA as so declared by this Court En Banc in its previous decisions. 58 Revenue Memorandum Order (RMO) No. 33-84 provides for the guidelines in the submission of the report within the 120-day period, to wit: "A final report of investigation of a tax case shall be accomplished and submitted by the examiner to his supervisor within 120 days from the date of issuance of the letter of authority. In case of failure to do so, the Division Chief or Revenue District Officer, respectively, shall require the examiner to show cause why sanctions should not be imposed against him for failure to render report of a tax case within the period required." There is nothing in RMO No. 33-84 which directly or impliedly states that the failure to accomplish and submit a final report on the investigation within the 120-day prescribed period shall ipso facto lead to its invalidation, at most, it may only result to a possible administrative sanction against the concerned revenue officer. Similarly, Revenue Audit Memorandum Order (RAMO) No. 2-95 and RMO No. 43-90, which lay down procedures and policy guidelines in the issuance of an LOA, do not state that the failure to submit a final report within the 120-day period will result in the invalidation of the LOA and the corresponding assessment. More importantly, Revenue Memorandum Circular (RMC) No. 23-09 is simply categorical in providing that failure of the revenue officer to request for revalidation of LOA or the expiration of the revalidation period does not nullify the LOA nor will it affect or modify the rules on the reglementary period within which an assessment may be validly issued, to wit: "I. Revalidation of LAs The revalidation of LA shall give rise to the extension of the period within which the Revenue Officer (RO) assigned to the case shall submit the report of investigation to higher authorities for review and approval, without the imposition of applicable administrative sanctions. Depending on the classification of the pending tax case, said extension period shall be equivalent to the original prescribed number of days within which to report the case under existing revenue issuances. Failure on the part of the RO to request for the revalidation of LA or the expiration of the 'revalidation period' does not nullify the LA nor will it affect or modify the rules on the reglementary period within which an assessment may be validly issued . However, this shall be considered as a ground for the imposition of disciplinary action and demerit in the performance rating of the concerned RO, including the reassignment of the case to another RO if the Regional Director, upon the recommendation of the Revenue District Officer, deems it necessary." (Boldfacing supplied) Thus, no cogent reason exists to nullify the LOA on the ground that the revenue officers failed to finish the conduct of Metro Rail's audit, submit the report on the outcome thereof, and request a revalidation of the LOA, within the 120-day period. Having settled the validity of the assessments, and after carefully reviewing the merits thereof, the Court En Banc finds no sufficient basis to disturb or modify the findings, conclusions, and the corresponding computations of Metro Rail's tax liabilities judiciously made by the Court in Division in its Decision dated January 8, 2019 (which cancelled and set aside the assessments for taxable year 2007 covering deficiency VAT [penalties only], FWT, and increments for late payment of income tax, and affirming with modification the assessments for deficiency income tax, EWT, and FBT). The Court En Banc likewise affirms the Court in Division's pronouncement that the CIR's Motion for Partial Reconsideration (of the Decision dated January 8, 2019) is bereft of merit. Suspension of Collection of Taxes In view of the Court En Banc 's findings that the assessments issued against respondent are valid, and that the Court in Division's findings, conclusions, and the corresponding computations of Metro Rail's tax liabilities in its Decision dated January 8, 2019 59 are correct, the Court En Banc finds Metro Rail's Extremely Urgent Omnibus Motion (For the Suspension of the Collection of Taxes and To Dispense with the Posting of a Bond) partly meritorious. SDAaTC The suspension of the collection of the assessments for taxable year 2007 covering deficiency VAT [penalties only], FWT, and increments for late payment of income tax is warranted. On the other hand, the Court En Banc finds no basis to suspend the collection of the deficiency income tax, EWT, and FBT as modified in the Court in Division's Decision dated January 8, 2019. WHEREFORE , premises considered, the instant Petition for Review is GRANTED . The Amended Decision dated October 2, 2019 and Resolution dated December 4, 2019 rendered by the Special Second Division of this Court, in CTA Case No. 9016, are hereby REVERSED and SET ASIDE , and the Decision dated January 8, 2019 is REINSTATED and AFFIRMED . The assessments issued by the Bureau of Internal Revenue against Metro Rail Transit Corporation for taxable year 2007 covering deficiency VAT (penalties only), Final Withholding Tax, and increments for late payment of Income Tax are CANCELLED and SET ASIDE . On the other hand, the deficiency Income Tax, Expanded Withholding Tax and Fringe Benefit Tax assessments are AFFIRMED with MODIFICATION . Accordingly, Metro Rail Transit Corporation is ORDERED TO PAY the Bureau of Internal Revenue the amount of P1,731,830,990.47 , representing basic deficiency income tax, 25% surcharge, 20% deficiency interest and 20% delinquency interest imposed on the deficiency Income Tax, Expanded Withholding Tax and Fringe Benefit Tax under Sections 248 (A) (3) and 249 (B) and (C) of the NIRC of 1997, as amended, respectively, computed until December 31, 2017, as shown below: Income Tax Expanding Withholding Tax Fringe Benefit Tax TOTAL Basic P368,828,806.59 P3,099,479.97 P1,911,703.39 P373,839,989.95 Surcharge (25%) 92,207,201.65 774,869.99 477,925.85 93,459,997.49 Deficiency Interest (20%) until February 24, 2015 IT 4/16/08 to 2/24/2015 (P368,828,806.59 x 20% x 2,506 days/365 days) 506,457,528.39 506,457,528.39 EWT 1/16/08 to 2/24/2015 (P3,099,479.97 x 20% x 2,597 days/365 days) 4,410,602.46 4,410,602.46 FBT 1/11/08 to 2/24/2015 (P1,911,703.39 x 20% x 2,602 days/365 days) 2,725,617.66 2,725,617.66 Total Amount Due, February 24, 2015 967,493,536.63 8,284,952.42 5,115,246.90 980,893,735.95 Deficiency Interest (20%) from February 25, 2015 until December 31, 2017/March 19, 2015 IT 2/25/2015 to 12/31/17 (P368,828,806.59 x 20% x 1,041 days/365 days) 210,383,993.24 210,383,993.24 EWT 2/25/15 to 3/19/2015 (P3,099,479.79 x 20% x 23 days/365 days) 39,061.94 39,061.94 FBT 2/25/15 to 3/19/2015 (P1,911,703.39 x 20% x 23 days/365 days) 24,092.70 24,092.70 Delinquency Interest (20%) from February 24, 2015 until December 31, 2017/March 19, 2015 IT 2/25/15 to 12/31/17 (P967,493,536.63 x 20% x 1,041 days/365 days) 551,868,915.96 551,868,915.96 EWT 2/25/15 to 3/19/15 (P8,284,952.42 x 20% x 23 days/365 days) 104,413.10 104,413.10 FBT 2/25/15 to 3/19/2015 (P5,115,246.89 x 20% x 23 days/365 days) 64,466.13 64,466.13 Delinquency Interest (20%) on Surcharge from March 20, 2015 until December 31, 2017 EWT 3/20/15 to 12/31/17 (P774,869.99 x 20% x 1,018 days/365 days) 432,228.85 432,228.85 FBT 3/20/15 to 12/31/17 (P477,925.85 x 20% x 1,018 days/365 days) 266,590.97 266,590.97 Total 1,729,746,445.83 8,860,656.31 5,470,396.70 1,744,077,498.84 Less: Payment on March 19, 2015 Basic Tax (3,099,479.97) (1,991,703.39) (5,011,183.36) Interest (4,475,139.57) (2,760,185.44) (7,235,325.01) Total P1,729,746,445.83 P1,286,036.77 P798,507.87 P1,731,830,990.47 In addition, Metro Rail Transit Corporation is ORDERED to PAY delinquency interest at the rate of 12% computed from January 1, 2018 until full payment thereof, pursuant to Section 249 (C) of the NIRC of 1997, as amended by Republic Act No. 10963, also known as Tax Reform for Acceleration and Inclusion (TRAIN) and as implemented by RR No. 21-2018, on the following amounts: AaCTcI Income Tax P967,493,536.63 Expanded Withholding Tax P774,869.99 Fringe Benefit Tax P477,925.85 Meanwhile, Metro Rail Transit Corporation's Extremely Urgent Omnibus Motion (For the Suspension of the Collection of Taxes and To Dispense with the Posting of a Bond) is PARTIALLY GRANTED . The Commissioner of Internal Revenue, his authorized representatives or any other person acting on his behalf are hereby ENJOINED from enforcing the collection of the deficiency VAT (penalties only), Final Withholding Tax, and increments for late payment of Income Tax for taxable year 2007. This order of suspension is IMMEDIATELY EXECUTORY consistent with Section 4, Rule 39 of the Rules of Court. Metro Rail Transit Corporation's Urgent Motion to Resolve filed on July 23, 2021 and Extremely Urgent Motion to Resolve filed via electronic mail on August 13, 2021 are NOTED . SO ORDERED. (SGD.) ROMAN G. DEL ROSARIO Presiding Justice Juanito C. Castaeda, Jr., Erlinda P. Uy, Ma. Belen M. Ringpis-Liban, Jean Marie A. Bacorro-Villena and Maria Rowena Modesto-San Pedro, JJ. , concur. Catherine T. Manahan, J. , with due respect, please see my dissenting opinion. Separate Opinions MANAHAN , J., dissenting opinion : "Clearly, there must be a grant of authority before any revenue officer can conduct an examination or assessment. Equally important is that the revenue officer so authorized must not go beyond the authority given. In the absence of such an authority, the assessment or examination is a nullity." So says the Supreme in the case of CIR vs. Sony Philippines, Inc. 1 and reiterated in the case of Medicard Philippines, Inc., vs. CIR , 2 where it was further declared that "unless undertaken by the CIR himself or his duly authorized representatives, other tax agents may not validly conduct any of these kinds of examinations without prior authority." The foregoing pronouncements of the Supreme Court serve as the bases of my dissent to the majority opinion which upheld the validity of the assessments issued against respondent for taxable year 2007. While the majority ruled that the Memorandum Referral issued for the continuance of the audit was not sufficient to grant revenue officer (RO) Elizabeth Cadiz the requisite authority to examine the books and other accounting records of respondent and clothe validity to the ensuing assessments, it recognized the authority of Group Supervisor (GS) Edison Larin who was also mentioned in said Memorandum Referral and acknowledged that the latter's authority to examine respondent stemmed from the original Letter of Authority (LOA). I humbly disagree as facts would reveal that the actual examination was conducted by RO Cadiz and not GS Larin. In the Judicial Affidavit executed by RO Cadiz dated November 4, 2015, it was clear that she was the one who conducted the investigation of respondent's accounting records and not GS Edison Larin, and, in part, we quote: "Q You mentioned that you just continued the audit and examination to whom was the same originally assigned? A. A Letter of Authority No. 2007 00038087 dated January 27, 2009 was issued authorizing Edison O. Larin to conduct the audit and examination of MRTC's internal revenue taxes for taxable year 2007. He said Letter of Authority was served to MRTC on February 3, 2009 together with the Letter dated January 30, 2009 requesting for the production of documents on or before February 16, 2009. Q. I have here the Letter of Authority No. 2007 00038087 dated January 27, 2009, marked as Exhibit "R-1" for respondent (found on page 757, folder 1 of the BIR Records,) and Letter dated January 30, 2009, marked as Exhibit "R-2" (found on page 761-760, folder 1 of the BIR Records) what relation these (sic) documents have to the Letter of Authority and Letter Request you mentioned earlier? A. This is the Letter of Authority and Letter Request I referred to earlier. Q. What then is your authority to continue the audit? A. Revenue Officer Edison Larin was promoted as Group Supervisor thus I was tasked to continue the audit through a Memorandum dated May 15, 2009. xxx xxx xxx Q. What happened after the case was reassigned to you? A. I again requested for the submission of accounting records twice. x x x xxx xxx xxx Q. What happened after you served the notices? A. I immediately conducted the investigation on the basis of all available records and/or documents gathered and furnished by Ms. Aileen Lee, a DBP seconded employee and authorized by the Board to handle MRTC tax matters . Thereafter I prepared and finalized my audit findings which was the basis for the Notice of Informal Conference (NIC). Since the taxpayer has not submitted any rebuttal on the audit findings, I prepared a Memorandum report dated June 4, 2010 together with the Preliminary Assessment Notice recommending the approval of the attached PAN." (emphasis supplied). Nowhere in the records and testimony of respondent's witness does it show that GS Larin conducted the audit of respondent. Rather, it was RO Cadiz, named in the Memorandum Referral, who examined the books and thereafter prepared the Memorandum Report dated June 4, 2010 as shown by the scanned copies of the first page and second to the last page of said report, set forth below: SDHTEC The conclusion that the Memorandum Referral did not effectively clothe RO Elizabeth Cadiz with the requisite authority to conduct the examination contradicts the ruling that the assessments issued are valid. In my humble opinion, the investigation conducted by the "unauthorized" RO Cadiz resulted to the invalidity of the assessments, contrary to the conclusion of the majority. The inclusion of the name of GS Larin in the Memorandum Referral whose participation did not include the actual examination of respondent's accounting records but his mere review of the findings as shown by the affixture of his signature in the Memorandum Report dated June 4, 2010, did not cure the inherent and glaring defects of the ensuing investigations under said Memorandum Referral. This is consistent with the Resolution of the Supreme Court in the case of CIR vs. Opulent Landowners, Inc. , 3 where it was ruled that "any reassignment/transfer of cases to another revenue officer(s), and revalidation of a LOA which had already expired, shall require the issuance of a new LOA." Departing from the clear and succinct jurisprudential doctrine that an LOA is required to subject a taxpayer to audit and examination by the revenue authorities, will cause confusion on the part of the taxpayers. As taxation imposes burden on the citizenry, its exercise must always be balanced by the observance of due process. Accordingly, I vote to AFFIRM the assailed Amended Decision dated October 2, 2019 and assailed Resolution dated December 4, 2019 rendered by the Special Second Division of this Court. Footnotes 1. CTA EB Docket, pp. 6-43 (inclusive of annexes) . 2. Penned by Associate Justice Catherine T. Manahan, with Associate Justice Juanito C. Castaeda, Jr., concurring; CTA EB Docket, pp. 23-38. 3. Penned by Associate Justice Catherine T. Manahan, with Associate Justice Juanito C. Castaeda, Jr., concurring; CTA EB Docket, pp. 39-43. 4. The incumbent Commissioner of the BIR is Hon. Caesar R. Dulay. 5. Parties, Petition for Review, CTA EB Docket, p. 7. 6. Id. 7. Decision, CTA Division Docket, Vol. V, p. 3432; Exhibit "P-1", CTA Division Docket, Vol. IV, pp. 2259-2260. 8. Exhibit "R-1", BIR Records Folder I, p. 757. 9. Exhibit "R-3", BIR Records Folder I, p. 765. 10. Exhibit "P-7", BIR Records Folder I, p. 1017. 11. Decision, CTA Division Docket, Vol. V, p. 3432; Par. 2, Joint Stipulation of Facts and Issues ("JSFI"), CTA Division Docket, Vol. II, p. 1147; Exhibits "P-8", "P-8-A", "R-7", BIR Records, p. 1047. 12. Decision, CTA Division Docket, Vol. V, p. 3432; Par. 3, JSFI, CTA Division Docket, Vol. II, p. 1147; Exhibit "P-9", BIR Records, p. 1069. 13. Exhibit "P-14", Folder No. 1, Judicial Affidavit of Carmen F. Cintura. 14. Decision, CTA Division Docket, Vol. V, p. 3432; Par. 5, JSFI, CTA Division Docket, Vol. II, p. 1148. 15. Decision, CTA Division Docket, Vol. V, p. 3433; Par. 6, JSFI, CTA Division, Docket Vol. II, p. 1148. 16. Exhibit "P-23", Folder No. 1, Judicial Affidavit of Carmen F. Cintura. 17. Decision, CTA Division Docket, Vol. V, p. 3433. 18. Decision, CTA Division, Docket Vol. V, p. 3433; Par. 7, JSFI, CTA Division Docket, Vol. II, p. 1148. 19. Par. 8, JSFI, CTA Division Docket, Vol. II, p. 1148; Exhibits "P-25", "P-25-A", "P-25-B", "P-25-C", "P-25-D", "P-25-E", CTA Division Docket, Vol. IV, p. 2846-2853. 20. Par. 9, JSFI, CTA Division, Docket Vol. II, p. 1148; Exhibits "P-26", "P-26-A", "P-26-B", "P-26-C", "P-26-D", "P-26-E", CTA Division Docket, Vol. IV, pp. 2854-2860. 21. Decision, CTA Case Division Docket, Vol. V, p. 3433. 22. Petition for Review, CTA Division, Docket Vol. I, pp. 10-790 (inclusive of annexes) . 23. CTA Division Docket, Vol. V, pp. 3431-3498. 24. Metro Rail's Motion for Partial Reconsideration (of the Decision dated January 8, 2019), CTA Division Docket, Vol. VI, pp. 3499-3536; CIR's Motion for Partial Reconsideration Re: Decision dated 8 January 2019, CTA Division Docket, Vol. VI, pp. 3537-3549. 25. CTA Division Docket, Vol. VI, pp. 3609-3616. 26. CTA Division Docket, Vol. VI, pp. 3671-3686. 27. CTA Division Docket, Vol. VI, pp. 3687-3696. 28. CTA Division Docket, Vol. VI, pp. 3718-3722. 29. Supra , note 1. 30. CTA EB Docket, p. 45. 31. CTA EB Docket, pp. 47-62. 32. Resolution dated July 15, 2020, CTA EB Docket, p. 64. 33. Approved by the Supreme Court on January 18, 2011. 34. No Agreement to Mediate, CTA EB Docket, p. 66. 35. CTA EB Docket, pp. 68-69. 36. CTA EB Docket, pp. 70-109. 37. CTA EB Docket, pp. 215 to 216. 38. CTA EB Docket, unpaginated. 39. Discussions, Petition for Review, CTA EB Docket, pp. 8-14. 40. Discussion, Comment (on the Petition for Review dated January 2, 20[20]) CTA EB Docket, pp. 49-60. 41. SEC. 18. Appeal to the Court of Tax Appeals En Banc. No civil proceeding involving matter arising under the National Internal Revenue Code, the Tariff and Customs Code or the Local Government Code shall be maintained, except as herein provided, until and unless an appeal has been previously filed with the CTA and disposed of in accordance with the provisions of this Act. A party adversely affected by a resolution of a Division of the CTA on a motion for reconsideration or new trial, may file a petition for review with the CTA en banc. 42. SEC. 3. Who may appeal, period to file petition . x x x (b) A party adversely affected by a decision or resolution of a Division of the Court on a motion for reconsideration or new trial may appeal to the Court by filing before it a petition for review within fifteen days from receipt of a copy of the questioned decision or resolution. Upon proper motion and the payment of the full amount of the docket and other lawful fees and deposit for costs before the expiration of the reglementary period herein fixed, the Court may grant an additional period not exceeding fifteen days from the expiration of the original period within which to file the petition for review. 43. Notice of Resolution, CTA Division Docket, Vol. VI, p. 3717. 44. CTA EB Docket, pp. 1-3. 45. CTA EB Docket, p. 5. 46. G.R. No. 183408, July 12, 2017. 47. Medicard Philippines, Inc. vs. Commissioner of Internal Revenue , G.R. No. 222743, April 5, 2017. 48. Prescribing the Audit Policies, Guidelines and Standards at the Large Taxpayers Service. 49. BIR Records, pp. 760-761. 50. BIR Records, pp. 216-217. 51. BIR Records, p. 1018. 52. BIR Records, pp. 1048-1051. 53. BIR Records, p. 0377. 54. Exhibit "R-6", Memorandum dated June 4, 2010, BIR Records, pp. 1029-1039. 55. Exhibit "P-9", BIR Records Folder I, pp. 1056-1069; Exhibit "R-8", BIR Records, p. 1055. 56. Decision dated October 14, 2019; Presiding Justice Roman G. Del Rosario opined that the assessment was invalid because RO Mendoza and GS Balbido who actually conducted the audit and recommended the issuance of the assessments were not named in the LOA. 57. Resolution dated July 2, 2020; Presiding Justice Roman G. Del Rosario maintained his concurring and dissenting opinion. 58. Decision dated November 6, 2018 in Commissioner of Internal Revenue vs. Total (Philippines) Corporation/Total (Philippines) Corporation vs. Commissioner of Internal Revenue , CTA EB Case Nos. 1616 & 1621; Decision dated April 15, 2019 in Telstar Manufacturing Corporation vs. Commissioner of Internal Revenue/Commissioner of Internal Revenue vs. Telstar Manufacturing Corporation , CTA EB Case Nos. 1797 & 1879. 59. The Decision dated January 8, 2019 cancelled and set aside the assessments for taxable year 2007 covering deficiency VAT [penalties only], FWT, and increments for late payment of income tax, and affirmed modification the assessments for deficiency income tax, EWT, and FBT. MANAHAN, J., dissenting opinion: 1. G.R. No. 178697, November 17, 2010. 2. G.R. No. 222743, April 5, 2017. 3. G.R. Nos. 249883-84, January 27, 2020.