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PHILIPPINE JOURNALISTS v. CIR

FACTS:

Philippine Journalists, Incorporated (PJI) received deficiency tax assessments totaling P111,291,214.46 for the year 1994. PJI filed a Petition for Review with the Court of Tax Appeals (CTA) to challenge the assessments. One of the main issues was the validity of the waiver of the statute of limitations executed by PJI. The CTA found the waiver to be invalid due to various reasons, including the absence of an expiration date and failure to furnish PJI a copy of the waiver. The CTA ruled that the deficiency tax assessments were time-barred and declared the Warrant of Distraint and/or Levy against PJI null and void. The Commissioner of Internal Revenue appealed the decision to the Court of Appeals (CA), which held that the waiver executed by PJI was valid. The CA further held that the CTA should not have entertained the Petition for Review. PJI filed a Motion for Reconsideration with the CA, but it was denied. Consequently, PJI appealed to the Supreme Court, questioning the jurisdiction of the CTA and the validity of the waiver executed by PJI.

ISSUES:

  1. Whether the Court of Tax Appeals (CTA) has jurisdiction over the case

  2. Whether the waiver of the statute of limitations is valid despite non-compliance with Revenue Memorandum Circular No. 20-90

  3. Whether the waiver of the statute of limitations under the NIRC must strictly comply with the procedures set forth in RMO No. 20-90

  4. Whether a waiver that does not specify a definite agreed date for assessment and collection of taxes is valid and binding

  5. Whether the waivers executed by Carnation are valid despite the absence of the written consent of the BIR Commissioner.

  6. Whether the date of acceptance of the waiver can be reasonably inferred based on the date of execution.

  7. Whether the failure to furnish the taxpayer with a copy of the waiver renders it invalid.

RULING:

  1. The CTA has jurisdiction over the case. The jurisdiction of the CTA is not limited to cases involving decisions of the Commissioner of Internal Revenue on assessments or refunds. The CTA also has jurisdiction over cases arising out of the National Internal Revenue Code or related laws administered by the Bureau of Internal Revenue.

  2. The waiver of the statute of limitations is not valid. The Court of Appeals erred in ruling that the requirements in Revenue Memorandum Circular No. 20-90 are merely formal and do not invalidate the waiver. The NIRC, under Sections 203 and 222, provides for substantive requirements for a valid waiver of the statute of limitations.

  3. Yes, the waiver of the statute of limitations under the NIRC must strictly comply with the procedures set forth in RMO No. 20-90. Failure to strictly comply with the procedures renders the waiver invalid.

  4. No, a waiver that does not specify a definite agreed date for assessment and collection of taxes is not valid and binding. The waiver becomes unlimited in time, violating Section 222(b) of the NIRC.

  5. The waivers executed by Carnation are invalid because they do not bear the written consent of the BIR Commissioner as required by law.

  6. The date of acceptance of the waiver cannot be reasonably inferred based on the date of execution.

  7. The failure to furnish the taxpayer with a copy of the waiver renders it invalid.

PRINCIPLES:

  • The jurisdiction of the Court of Tax Appeals extends to cases arising out of the National Internal Revenue Code or related laws administered by the Bureau of Internal Revenue.

  • The waiver of the statute of limitations must comply with the substantive requirements set forth in the National Internal Revenue Code.

  • The law prescribing a limitation period for the collection of taxes is beneficial both to the government and to its citizens. It obliges tax officers to act promptly in making assessments and provides citizens with a feeling of security against unscrupulous tax agents. The law on prescription should be interpreted in a way that affords protection to the taxpayer.

  • A waiver of the statute of limitations is a derogation of the taxpayer's right to security against prolonged and unscrupulous investigations and must be carefully and strictly construed.

  • The waiver of the statute of limitations is an agreement between the taxpayer and the BIR that extends the period to issue an assessment and collect taxes due. The waiver does not waive the right to invoke prescription unless the language of the document is unequivocal.

  • The law on prescription, being a remedial measure, should be liberally construed to afford protection to taxpayers. Exceptions to the law on prescription should be strictly construed.

  • RMO No. 20-90 provides the procedures that must be followed in executing a waiver of the statute of limitations. Failure to comply with these procedures may result in the waiver being invalid.

  • The waiver is a bilateral agreement between the taxpayer and the BIR, and the conformity of the BIR must be made by either the Commissioner or the Revenue District Officer.

  • The requirement of a written agreement between the taxpayer and the BIR Commissioner for the waiver to be valid.

  • The need for the concurrence of both parties' signatures on the waiver for it to be binding.

  • The waiver must be executed in three copies, with the second copy for the taxpayer, as mandated by RMO No. 20-90.

  • Furnishing the taxpayer with a copy of the waiver is not just for notice but also for the taxpayer to know of the acceptance by the BIR and the perfection of the agreement.

  • Failure to comply with the requirements of a valid waiver would result in the continued running of the prescriptive period.