Case Digest (G.R. No. L-14761) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
In Commissioner of Internal Revenue v. Transitions Optical Philippines, Inc. (G.R. No. 227544, November 22, 2017), the Commissioner of Internal Revenue (CIR) filed a Petition for Review on Certiorari before the Supreme Court seeking to nullify the June 7, 2016 Decision and September 26, 2016 Resolution of the Court of Tax Appeals (CTA) En Banc, which had affirmed the First Division’s cancellation of P19,701,849.68 in deficiency tax assessments against Transitions Optical Philippines, Inc. (Transitions). On April 28, 2006, the BIR issued a Letter of Authority to examine Transitions’ 2004 books. The parties allegedly executed two waivers of the defense of prescription—one on October 9, 2007 (extending the assessment period to June 20, 2008), and another on June 2, 2008 (extending it to November 30, 2008). The CIR then issued a Preliminary Assessment Notice (PAN) on November 11, 2008, a Final Assessment Notice (FAN) and a Formal Letter of Demand (FLD) on November 28, 2008, assessin Case Digest (G.R. No. L-14761) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Audit authorization and waivers
- On April 28, 2006, Transitions Optical Philippines, Inc. (Transitions Optical) received Letter of Authority No. 00098746 (dated March 23, 2006) from the BIR–Revenue Region No. 9, San Pablo City, authorizing examination of its 2004 books.
- The parties executed two Waivers of the Defense of Prescription:
- First Waiver on October 9, 2007, extending the prescriptive period to June 20, 2008, signed by Transitions’ Finance Manager and BIR Revenue District Officer.
- Second Waiver on June 2, 2008, extending the prescriptive period to November 30, 2008, likewise signed by the parties’ representatives.
- Assessments and administrative protests
- On November 11, 2008, the Commissioner of Internal Revenue issued a Preliminary Assessment Notice (PAN) for deficiency taxes for 2004; Transitions Optical filed a protest on November 26, 2008.
- On November 28, 2008, a Final Assessment Notice (FAN) and Formal Letter of Demand (FLD) demanding ₱19,701,849.68 were issued; Transitions Optical protested on December 8, 2008, alleging prescription and a clerical error in the return period.
- Final administrative decision and CTA proceedings
- On January 24, 2012, the BIR issued a Final Decision on the Disputed Assessment upholding the ₱19.7 million deficiency for 2004.
- Transitions Optical filed a Petition for Review before the Court of Tax Appeals (CTA) on March 16, 2012.
- The CTA First Division (September 1, 2014) declared the waivers void and canceled the assessment for being issued beyond the extended period; its motion for reconsideration was denied (November 7, 2014).
- The CTA En banc affirmed the First Division’s Decision (June 7, 2016) and denied the Commissioner’s motion for reconsideration (September 26, 2016).
- Petition for review to the Supreme Court
- The Commissioner of Internal Revenue filed this Petition for Review on Certiorari seeking to set aside the CTA en banc’s rulings.
- Transitions Optical filed a Comment opposing the petition.
Issues:
- Whether the two Waivers of the Defense of Prescription (October 9, 2007 and June 2, 2008) were validly executed.
- Whether the assessment of deficiency taxes for taxable year 2004 had already prescribed.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)