Case Digest (G.R. No. 214485)
Facts:
In Commissioner of Internal Revenue v. Court of Tax Appeals Third Division and Citysuper, Inc. (G.R. No. 239464, May 10, 2021), the Commissioner of Internal Revenue (CIR) issued on April 1, 2013, a Letter of Authority to audit Citysuper, Inc.’s books for taxable year 2011. Two years later, on April 1, 2015, a Preliminary Assessment Notice was sent, followed by a Formal Letter of Demand and Assessment Notices on April 24, 2015, asserting a total deficiency of ₱2,083,016,072.43. Citysuper responded by letter dated April 29, 2015 and subsequently filed on August 13, 2015, a Petition for Review under Rule 43, seeking to cancel the assessments for income tax, VAT, withholding tax on compensation, expanded withholding tax, and documentary stamp tax. During the Court of Tax Appeals (CTA) Third Division proceedings, Citysuper’s corporate secretary testified that no waiver of prescription was authorized, while the CIR’s revenue officer presented a Waiver allegedly signed by an unauthorizCase Digest (G.R. No. 214485)
Facts:
- Assessment Proceedings
- On April 1, 2013, the Commissioner of Internal Revenue (CIR) issued Letter of Authority No. 116-2013-00000017 to audit Citysuper, Inc.’s (Citysuper) 2011 books.
- On April 1, 2015, the CIR issued a Preliminary Assessment Notice for deficiency income tax, VAT, withholding tax on compensation (WTC), expanded withholding tax (EWT), and documentary stamp tax (DST), totaling ₱2,083,016,072.43.
- On April 24, 2015, Citysuper received the Formal Letter of Demand (FLD) and Assessment Notices.
- Administrative Protest and CTA Petition
- On April 29, 2015, Citysuper’s representative wrote to the BIR protesting and requesting more time to compile supporting documents.
- On August 13, 2015, Citysuper filed a Petition for Review under Rule 43 of the Rules of Court before the Court of Tax Appeals (CTA) to cancel the FLD, attaching audit details.
- On February 29, 2016, Citysuper moved for preferential resolution of the prescription issue; the CIR opposed.
- Trial on Prescription; CTA Third Division’s Decision
- Citysuper’s corporate secretary testified that the Board did not authorize Conchita V. Lee to waive prescription.
- The CIR’s revenue officer testified that Lee signed a waiver extending the assessment period to December 31, 2015, but could not present a notarized authorization letter.
- On December 15, 2017, the CTA partially granted Citysuper’s petition: it canceled deficiency income tax, VAT, WTC, and EWT assessments for prescription lapses and ordered a full trial on DST.
- Motions for Reconsideration and Certiorari
- The CIR filed for reconsideration, arguing (a) lack of CTA jurisdiction because no valid protest was filed; (b) 10-year prescriptive period under Sec. 222(a) IRC for false returns; and (c) validity of the notarized waiver.
- On March 20, 2018, the CTA denied the motion, applying estoppel by laches (Tijam doctrine).
- On June 13, 2018, the CIR lodged a Rule 65 petition for certiorari with the Supreme Court, assailing the CTA’s interlocutory orders, the application of laches, and exclusion of Lee’s authorization letter.
Issues:
- Did the CIR avail the correct remedy against the CTA’s December 15, 2017 and March 20, 2018 Resolutions?
- Did the CTA gravely abuse its discretion in finding the CIR barred by laches from raising lack of subject-matter jurisdiction?
- Did the CTA gravely abuse its discretion in refusing to admit Lee’s authorization letter under Rule 132, Section 20 of the Rules of Court?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)