Facts:
The Revenue District Office of the BIR issued a letter of authority for the examination of petitioner Philippine Journalists books of accounts. From the examination, the petitioner was told that there were deficiency taxes, inclusiveof surcharges, interest and compromise penalty. Then, petitioner, through itsComptroller, Lorenza Tolentino, executed a waiver of statute of limitations pursuant to Sec.223 and Sec.224 and consented to the assessment and collection of taxes which may be found due after the examination at any time after the lapse of the period of limitations fixed by said Sections 223 and 224and other relevant provisions of the NIRC, until the completion of the investigation.Petitioner had a deficiency of P136,952,408.97. On October 5, 1998, theAssessment Division of the BIR issued Pre-Assessment Notices which informedpetitioner of the results of the investigation. A Final Notice Before Seizure wassent to the petitioner but the latter merely questioned the amount of thedeficiency and how the same was arrived.A Warrant of Distraint/Levy was received by petitioner for the deficiency.Petitioner filed a Petition for Review with the CTA, contending that noassessment was received by him; that the warrant of distraint/levy was issuedprematurely; and that the assessment was made beyond the 3-year period.Regarding the assessment, the CTA ruled that the assessment was sufficientlyproven by the receipts of the Post Master. As to the premature distraint/levy and the assessment made beyond the 3-year period, the CTA ruled in favor of the petitioner. The waiver of statute of limitations by the petitioner was invalidwhich resulted in the lapse of the 3 year period for assessment. Consequently,the petition was granted, declaring the order for payment of deficiency tax nulland void. The CIR filed a motion for reconsideration but the same was denied.Undaunted, the CIR filed an appeal with the CA. The CA reversed the ruling of the CTA, stating that the waiver of limitations was valid and that the assessmentnotices was final and executory. Hence, this appeal.
Issue:
Whether or not the waiver of limitations was invalid, making the assessment beyond the 3 year period
Ruling:
Yes, the court ruled that the waiver of limitation was invalid, making the assessment beyond the allowable period of 3 years.
The waiver of thestatute of limitations is not a waiver of the right to invoke the defense of prescription as erroneously held by the Court of Appeals. It is an agreementbetween the taxpayer and the BIR that the period to issue an assessment andcollect the taxes due is extended to a date certain. The waiver does not meanthat the taxpayer relinquishes the right to invoke prescription unequivocallyparticularly where the language of the document is equivocal. For the purposeof safeguarding taxpayers from any unreasonable examination, investigation orassessment, our tax law provides a statute of limitations in the collection of taxes. Thus, the law on prescription, being a remedial measure, should beliberally construed in order to afford such protection. As a corollary, the exceptions to the law on prescription should perforce be strictly construed.
The Revenue District Office of the BIR issued a letter of authority for the examination of petitioner Philippine Journalists books of accounts. From the examination, the petitioner was told that there were deficiency taxes, inclusiveof surcharges, interest and compromise penalty. Then, petitioner, through itsComptroller, Lorenza Tolentino, executed a waiver of statute of limitations pursuant to Sec.223 and Sec.224 and consented to the assessment and collection of taxes which may be found due after the examination at any time after the lapse of the period of limitations fixed by said Sections 223 and 224and other relevant provisions of the NIRC, until the completion of the investigation.Petitioner had a deficiency of P136,952,408.97. On October 5, 1998, theAssessment Division of the BIR issued Pre-Assessment Notices which informedpetitioner of the results of the investigation. A Final Notice Before Seizure wassent to the petitioner but the latter merely questioned the amount of thedeficiency and how the same was arrived.A Warrant of Distraint/Levy was received by petitioner for the deficiency.Petitioner filed a Petition for Review with the CTA, contending that noassessment was received by him; that the warrant of distraint/levy was issuedprematurely; and that the assessment was made beyond the 3-year period.Regarding the assessment, the CTA ruled that the assessment was sufficientlyproven by the receipts of the Post Master. As to the premature distraint/levy and the assessment made beyond the 3-year period, the CTA ruled in favor of the petitioner. The waiver of statute of limitations by the petitioner was invalidwhich resulted in the lapse of the 3 year period for assessment. Consequently,the petition was granted, declaring the order for payment of deficiency tax nulland void. The CIR filed a motion for reconsideration but the same was denied.Undaunted, the CIR filed an appeal with the CA. The CA reversed the ruling of the CTA, stating that the waiver of limitations was valid and that the assessmentnotices was final and executory. Hence, this appeal.
Issue:
Whether or not the waiver of limitations was invalid, making the assessment beyond the 3 year period
Ruling:
Yes, the court ruled that the waiver of limitation was invalid, making the assessment beyond the allowable period of 3 years.
The waiver of thestatute of limitations is not a waiver of the right to invoke the defense of prescription as erroneously held by the Court of Appeals. It is an agreementbetween the taxpayer and the BIR that the period to issue an assessment andcollect the taxes due is extended to a date certain. The waiver does not meanthat the taxpayer relinquishes the right to invoke prescription unequivocallyparticularly where the language of the document is equivocal. For the purposeof safeguarding taxpayers from any unreasonable examination, investigation orassessment, our tax law provides a statute of limitations in the collection of taxes. Thus, the law on prescription, being a remedial measure, should beliberally construed in order to afford such protection. As a corollary, the exceptions to the law on prescription should perforce be strictly construed.
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