Case Digest (G.R. No. L-19638) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
In Commissioner of Internal Revenue v. Philippine Daily Inquirer, Inc., G.R. No. 213943, decided on March 22, 2017 under the 1987 Constitution, the petitioner, the Commissioner of Internal Revenue (CIR), challenged the cancellation by the Court of Tax Appeals (CTA) of BIR’s Formal Letter of Demand (FLD) dated March 11, 2008 and Assessment No. LN # 116-AS-04-00-00038-000526 for PDI’s alleged deficiency VAT and income tax for the taxable year 2004. PDI, a newspaper publisher, filed its 2004 Annual Income Tax Return on April 15, 2005 and its quarterly VAT returns on April 20, July 16, October 18, 2004, and January 21, 2005. On June 30, 2006, BIR Region 20—Large Taxpayers’ Service issued Letter Notice (LN) No. 116-AS-04-00-00038 alleging underdeclaration of purchases amounting to P317,705,610.52 based on the RELIEF computerized third-party matching. PDI submitted reconciliation reports and executed three separate waivers of the statute of limitation (First on March 21, 2007; Second Case Digest (G.R. No. L-19638) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Parties and Context
- Philippine Daily Inquirer, Inc. (PDI) – newspaper publisher; filed 2004 Annual Income Tax Return on April 15, 2005 and quarterly VAT returns in April, July, October 2004 and January 2005.
- Bureau of Internal Revenue (BIR) – through Region 020 Large Taxpayers Service and the RELIEF system, matched third-party data against PDI’s VAT returns and found alleged underdeclaration of purchases and input VAT for 2004.
- Audit, Waivers, and Assessments
- Letter Notice (LN) dated June 30, 2006 – invited PDI to reconcile discrepancy of PHP 317,705,610.52; PDI submitted reconciliation reports in August and December 2006.
- First Waiver executed March 21, 2007 (extend assessment to June 30, 2007); Second Waiver executed June 5, 2007 (extend to December 31, 2007); Third Waiver executed December 12, 2007 (extend to April 30, 2008).
- Preliminary Assessment Notice (PAN) October 15, 2007 – deficiency VAT PHP 2,981,475.66 and deficiency income tax PHP 1,438,669.23.
- Formal Letter of Demand (FLD) March 11, 2008 – deficiency VAT PHP 3,154,775.56 and deficiency income tax PHP 1,524,229.99.
- PDI filed protest May 16, 2008 and petition before CTA First Division December 12, 2008, alleging prescription and disputing assessment computations.
- CTA Proceedings
- CTA First Division (Feb. 16, 2012) – granted PDI’s petition; cancelled FLD and assessment due to expiration of 3-year prescriptive period and defective waivers; also found BIR failed to prove underdeclaration justified additional tax.
- CTA First Division denied CIR’s motion for reconsideration (May 8, 2012).
- CTA En Banc (Nov. 4, 2013) – affirmed First Division in toto; held PDI adequately controverted the assessment, no proof of fraud under Sec. 222, and waivers invalidly executed.
- CTA En Banc denied CIR’s motion for reconsideration (Aug. 1, 2014).
- CIR elevated case to the Supreme Court via Rule 45 petition.
Issues:
- Whether the BIR’s authority to assess deficiency VAT and income tax prescribed under Sec. 203 and Sec. 222 of the NIRC.
- Whether PDI adequately controverted the BIR’s deficiency assessments based on third-party matching (RELIEF system).
- Whether fees paid to Harrison Communications Inc., McCann Erickson Inc., and WPP Marketing Communications Inc. constitute cost of services (thus affecting VAT and income tax base).
- Whether the waivers executed by PDI validly extended the prescriptive period under Revenue Memorandum Order No. 20-90 and related issuances.
- Whether PDI is estopped from raising prescription due to alleged waiver agreements.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)