BIR ordered to halt tax case vs mining firm

By Dane Angelo M. Enerio
THE BUREAU of Internal Revenue (BIR) has been ordered to drop a P46,461,056.54 tax deficiency case against mining firm Lepanto Consolidated Mining Company.
A 22-page decision penned by Court of Tax Appeals Third Division Associate Justice Ma. Belen M. Ringpis-Liban ruled that BIR’s right to assess Lepanto’s alleged tax deficiencies for 2009 had already lapsed.
The decision read in part that Lepanto “on September 24, 2010… received (a Letter of Authority from the BIR) for the examination of its books of accounts and other accounting records for all internal revenue taxes covering the period of January 1, 2009 to December 31, 2009” before the execution of Waivers of Statute of Limitations on Jan. 27, 2012 and Sept. 16, 2013 for BIR to authorize an assessment.
The BIR, in its tax investigation of Lepanto back in 2013, alleged that the company was liable for deficiency income tax, value added tax, withholding tax on compensation, final tax, documentary stamp tax, and excise tax for 2009 over its foreign loans amounting to 47,783,670.23 and its sale of land with an unrecorded income of P20,735,829.50.
The court, however, ruled that the Waiver of Statute of Limitations executed by the BIR on January 27, 2012 was defective as the tax agency could not prove it was signed by an authorized representative.
“Clearly, the defects in the Waivers resulted to the non-extension of the period to assess or collect taxes, and made the assessments issued by the BIR beyond the three-year prescriptive period void,” the decision read.
It added: “Accordingly, (the BIR) failed to show whether the signatures that appeared in the first waiver belonged to any of (its) agents… and since the first waiver is defective, the right of (the BIR) to assess (Lepanto) for deficiency tax has already lapsed.”
The decision cancelled and set aside the Final Decision on Disputed Assessment dated Dec. 15, 2014.