BIR loses P443.5 million tax case vs Kepco

February 14, 2017

The Supreme Court has junked with finality an appeal by the Bureau of Internal Revenue seeking to nullify the judgment rendered by the Court of Tax Appeals awarding to Korea Electric Power Corp.(Kepco) Ilijan Corp. a tax refund amounting to P443.5 million.

In a resolution, the SC upheld its June 21, 2016 decision, which directed the Office of the Ombudsman to investigate the BIR.

The decision, written  by Associate Justice Diosdado Peralta,  said the BIR must come up with mechanisms and measures that can monitor progress of cases being handled by its counsels.

“The Ombudsman is directed to conduct an in-depth investigation to determine who were responsible for the apparent mishandling of the present case that resulted in the loss of almost half-a-billion pesos, which the government could have used to finance its much needed infrastructure, livelihood projects, and other equally important projects,” the SC ruled.

Then BIR Commissioner Kim Jacinto-Henares asked the Supreme Court to set aside the CTA’s denial of its petition to annul judgment and order the tax court to re-open the case  to allow the agency to submit memoranda detailing its legal defenses.

Henares said she learned of the adverse decision and the subsequent issuance of the writ of execution on March 7, 2011 when the Office of the Deputy Commissioner for Legal and Inspection Group received a memorandum from the Appellate Division of the National Office recommending issuance of a tax certificate in favor of Kepco amounting to P443.4 million.

Kepco sought the dismissal of the petition, arguing the BIR is not entitled to the annulment of judgment and that the CTA en banc has no jurisdiction to entertain that annulment.

In upholding the CTA en banc’s denial of BIR’s petition to annul judgment, the SC explained that the Revised Rules of the CTA and even the Rules of Court do not provide such recourse. DMS