Philippine Journalists Inc.

v CIR
G.R No. 162852
December 15, 2004
Facts:
Revenue District Office 33 issued a letter of authority for the
examination of petitioner Philippine Journalists books of accounts. From the
examination, deficiency taxes, inclusive of surcharges, interest and
compromise penalty were revealed. Petitioner, through its Comptroller,
Lorenza Tolentino, executed a waiver of statute of limitations pertaining to
Secs. 223 and 224 of the NIRC, 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 fixed limitaitons by those sections ()
until the completion of the investigation.
Petitioner had a deficiency of P136,952,408.97. On October 5, 1998,
the Assessment Division of the BIR issued Pre-Assessment Notices which
informed petitioner of the results of the investigation. A Final Notice Before
Seizure was sent to the petitioner but the latter merely questioned the
amount of the deficiency and how the same was arrived.
A Warrant of Distraint/Levy was received by petitioner for the
deficiency.
Petitioner contended with the CTA (1) that no assessment was received
by them; (2) that the warrant of distraint/levy was issued prematurely; (3)
and that the assessment was made beyond the 3-year period.
Regarding the assessment, the CTA ruled that the assessment was
sufficiently proven 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 invalid because the waiver was an unlmited waiver it did
not have an expiry date. In addition, the waiver failed to indicate an
acceptance by the BIR in the lapse of the 3 year period for assessment.
Consequently, the petition was granted, declaring the order for payment of
deficiency tax null and 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
assessment notices was final and executory due primarily to the fact that
the grounds for the invalidity of petitioner s waiver, as declared by the CTA,
were merely formal in nature. Hence, this appeal.

Issue: Whether or not the waiver of limitations was invalid, making the
assessment beyond the 3 year period?
Held:
Yes, the court ruled that the waiver of limitation was invalid,
making the assessment beyond the allowable period of 3 years. The waiver
of the statute 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
agreement between the taxpayer and the BIR that the period to issue an
assessment and collect the taxes due is extended to a date certain. The
waiver does not mean that the taxpayer relinquishes the right to invoke
prescription unequivocally particularly where the language of the document
is equivocal. For the purpose of safeguarding taxpayers from any
unreasonable examination, investigation or assessment, our tax law provides
a statute of limitations in the collection of taxes. Thus, the law on
prescription, being a remedial measure, should be liberally construed in
order to afford such protection. As a corollary, the exceptions to the law on
prescription should perforce be strictly construed.
As found by the CTA, the Waiver of Statute of Limitations, signed by
petitioners comptroller on September 22, 1997 is not valid and binding
because it does not conform with the provisions of RMO No. 20-90. It did not
specify a definite agreed date between the BIR and petitioner, within which
the former may assess and collect revenue taxes. Thus, petitioners waiver
became unlimited in time, violating Section 222(b) of the NIRC.