G.R. No. 220835 - Commissioner of Internal Revenue vs. Systems Technology Institute, Inc.

Systems Technology Institute, Inc. (STI) filed its Amended Annual Income Tax Return for fiscal year ending March 31, 2003 on August 15, 2003; Quarterly VAT Returns on July 23, 2002, October 25, 2002, January 24, 2003, and May 23, 2003; and Bureau of Internal Revenue (BIR) Form 1601E for Expanded Withholding Tax (EWT) covering May 10, 2002 to April 15, 2003.
On May 30, 2006, Amiel C. Sangalang of STI signed a Waiver of the Defense of Prescription under the National Internal Revenue Code (NIRC), stating the assessment and collection of taxes for fiscal year 2003 must occur no later than December 31, 2006.
The waiver was accepted and notarized on June 2, 2006 by Virgilio R. Cembrano, Large Taxpayers District Officer of Makati.
Subsequent waivers were executed on December 12, 2006 (extending period to March 31, 2007) and a third on an unspecified later date (extending period to June 30, 2007), signed by the same parties and notarized accordingly.

On June 28, 2007, STI received a Formal Assessment Notice from the Commissioner of Internal Revenue (CIR) for deficiency income tax, VAT, and EWT totaling P161,835,737.98 for fiscal year 2003.
STI filed a request for reconsideration/reinvestigation on July 25, 2007.
On September 11, 2009, STI received a Final Decision on Disputed Assessment (FDDA) dated August 17, 2009 reducing the deficiency amount to P124,257,764.20.
STI appealed the FDDA by filing a petition for review with the Court of Tax Appeals (CTA) on October 12, 2009.

The CTA Second Division promulgated a Decision on April 17, 2013, granting STI’s petition, cancelling and setting aside the assessments on the ground of prescription.
The CTA Division declared the waivers defective for failure to strictly comply with Revenue Memorandum Order (RMO) No. 20-90 and Revenue Delegation Authority Order (RDAO) No. 05-01, ruling that the periods for assessment or collection were not extended.
The CIR’s motion for reconsideration was denied by the CTA Division on July 17, 2013.
The CIR appealed to the CTA En Banc, which affirmed the previous decisions in its March 24, 2015 Decision and September 2, 2015 Resolution, again emphasizing strict compliance with waiver requirements and upheld the prescription defense.

The CIR filed a petition for review on certiorari before the Supreme Court raising the issue of whether prescription had set in against the subject deficiency tax assessments.

Whether the prescription period had already set in against the deficiency income tax, VAT, and EWT assessments for fiscal year 2003 issued to Systems Technology Institute, Inc. despite waivers executed by the parties.

Whether STI is estopped from invoking the defense of prescription due to its participation in administrative reinvestigation and the resulting reduced assessment.