POWER SECTOR ASSETS AND LIABILITIES MANAGEMENT CORPORATION VS. CIR, GR NO. 198146 DATED AUGUST 8, 2017G.R. No. 198146POWER SECTOR ASSETS AND LIABILITIES MANAGEMENT CORPORATION,Petitioner, vs.COMMISSIONER OF INTERNAL REVENUE,RespondentD E C I S I O NCARPIO, J.:The CaseThis petition for review1assails the 27 September 2010 Decision2and the 3 August 2011 Resolution3ofthe Court of Appeals in CA-G.R. SP No. 108156. The Court of Appeals nullified the Decisions dated 13March 2008 and 14 January 2009 of the Secretary of Justice in OSJ Case No. 2007- 3 for lack ofjurisdiction.The FactsPetitioner Power Sector Assets and Liabilities Management Corporation (PSALM) is a government-ownedand controlled corporation created under Republic Act No. 9136 (RA 9136), also known as the ElectricPower Industry Reform Act of 2001 (EPIRA).4Section 50 of RA 9136 states that the principal purpose ofPSALM is to manage the orderly sale, disposition, and privatization of the National Power Corporation(NPC) generation assets, real estate and other disposable assets, and Independent Power Producer (IPP)contracts with the objective of liquidating all NPC financial obligations and stranded contract costs in anoptimal manner.PSALM conducted public biddings for the privatization of the Pantabangan-Masiway Hydroelectric PowerPlant (Pantabangan-Masiway Plant) and Magat Hydroelectric Power Plant (Magat Plant) on 8 September2006 and 14 December 2006, respectively. First Gen Hydropower Corporation with its $129 Million bidand SN Aboitiz Power Corporation with its $530 Million bid were the winning bidders for thePantabanganMasiway Plant and Magat Plant, respectively.On 28 August 2007, the NPC received a letter5dated 14 August 2007 from the Bureau of InternalRevenue (BIR) demanding immediate payment of ₱3,813,080,4726deficiency value-added tax (VAT) forthe sale of the Pantabangan-Masiway Plant and Magat Plant. The NPC indorsed BIR's demand letter toPSALM.On 30 August 2007, the BIR, NPC, and PSALM executed a Memorandum of Agreement (MOA),7whereinthey agreed that:A) NPC/PSALM shall remit under protest to the BIR the amount of Php 3,813,080,472.00, representingbasic VAT as shown in the BIR letter dated August 14, 2007, upon execution of this Memorandum ofAgreement (MOA).B) This remittance shall be without prejudice to the outcome of the resolution of the Issues before theappropriate courts or body.1
C) NPC/PSALM and BIR mutually undertake to seek final resolution of the Issues by the appropriatecourts or body.D) BIR shall waive any and all interests and surcharges on the aforesaid BIR letter, except when the caseis elevated by the BIR before an appellate court.E) Nothing contained in this MOA shall be claimed or construed to be an admission against interest as toany party or evidence of any liability or wrongdoing whatsoever nor an abandonment of any positiontaken by NPC/PSALM in connection with the Issues.