The Court of Tax Appeals (CTA) has erased the P9.6 billion tax liabilities of Metro Rail Transit Corporation (MRTC) for failure of the Bureau of Internal Revenue (BIR) to follow the correct audit procedure. The court's Special Third Division stated the examination of the MRTC's books of accounts should have been done through a a letter of authority (LA) as required by the Tax Code, and not through a memorandum of assignment (MOA). Court records showed that an LA was issued by the head of the BIR's large taxpayers service against the railway company to a group of  revenue officers (ROs). However, the LA was replaced with a MOA to continue the audit after the original ROs were transferred to other field offices. The Court explained that the old LA should have been replaced with another LA with the names of the new ROs as required by the Tax Code and it's implementing rules and regulations. "The absence of LA is fatal to the validity of the BIR's deficiency assessment against MRTC as the MOA is not equivalent to an LA," said the 16-page decision penned by Associate Justice Maria Rowena Modesto-San Pedro. The deficiency assessment covered  various deficiency taxes, including income, expanded withholding and documentary stamp taxes for the year 2012.