THE Court of Tax Appeals (CTA) has affirmed its decision ordering the private owner of Metro Rail Transit (MRT) Line 3 (MRT-3) to pay at least P1.73 billion in income taxes for the year 2007.
In a 13-page ruling dated July 5, 2021 and penned by Presiding Justice Roman G. del Rosario, the CTA en banc held that both the petitioner Bureau of Internal Revenue and respondent MRT Corp. failed to raise new arguments in their respective motions for partial reconsideration of its decision promulgated last September 2, 2021.
In its September 2, 2021 decision, the tax court cancelled and set aside the assessments issued by the BIR against MRT Corp. for taxable year 2007 covering deficiency value-added-tax (penalties only), final withholding tax and increments for late payment of income tax amounting to P1.61 billion.
However, MRT Corp. was ordered to pay the BIR the amount of P1.73 billion representing the following: basic deficiency income tax; 25-percent surcharge; 20-percent deficiency interest; and, 20-percent delinquency interest imposed on the deficiency income tax, expanded withholding tax and fringe benefit tax.
In addition MRT Corp. was ordered to pay a 12-percent delinquency interest computed from January 1, 2018 until full payment.
Likewise, the CTA enjoined the BIR from enforcing the collection of the deficiency VAT, final withholding tax and increments for late payment of income tax for the year 2007.
In its motion for partial reconsideration, MRT Corp. insisted that the examination of and the assessments issued against it are null and void since not all the revenue officers (ROs) who examined it were authorized.
In its comment to the motion of MRT Corp., the BIR said it raised no points of contention that would warrant the reversal of the CTA en banc’s decision.
The BIR also filed its own motion for partial reconsideration reiterating its plea in its petition for review for the Court to uphold the P1.61 billion deficiency tax assessment against MRT Corp. for taxable year 2007 plus 25 percent surcharge, 20 percent deficiency and delinquency interest.
In junking the partial motion for reconsideration of MRT Corp., the CTA held that its arguments questioning the authority of the revenue officers who conducted the audit and assessment were already raised by the respondent in its previous pleadings which it had already considered and addressed in the September 2, 2021, decision.
On the other hand, the CTA said the grounds raised by the BIR in its partial motion for reconsideration are the same grounds raised in its previous pleadings which had already been addressed and passed upon also in its September 2, 2021, decision.
“To repeat, the Court en banc finds no sufficient basis to disturb or modify the findings, conclusions and the corresponding computations of respondent’s liabilities judiciously made by the Court in Division in its Decision dated January 8, 2019,” the CTA said.
“There being no substantial arguments or cogent reasons put forth by the parties in their respective motions, the Court sees no basis to modify much more reverse the Assailed Decision,” it added.
The tax liabilities of MRT Corp. stemmed from underreported income uncovered by the BIR during an audit of the books of the company.
It was discovered by BI officers that some lease financing income rentals paid by the government for the construction and public use of the rail system was not accurately taxed.
MRT Corp., it turned out, used different accounting methods that led to only P3.49 billion being reported in its income tax return, despite audited financial statements reflecting a much higher figure in the amount of P4.28 billion.