Case Summary (G.R. No. 162852)
Petitioner
Philippine Journalists, Inc., a media organization assessed for deficiency taxes for the year 1994.
Respondent
Commissioner of Internal Revenue, Bureau of Internal Revenue (BIR).
Key Dates
• Calendar year ended December 31, 1994: PJI files its annual income tax return.
• August 10, 1995: Letter of Authority issued.
• September 22, 1997: Waiver of Statute of Limitations executed by PJI’s Comptroller.
• July 2, 1998: Audit report recommending assessment of P136,952,408.97.
• December 9, 1998: Assessment/Demand No. 33-1-000757-94 issued for P111,291,214.46.
• March 16 & November 10, 1999: Collection letters issued.
• March 28, 2000: Warrant of Distraint and/or Levy No. 33-06-046 served.
• May 14, 2002: Court of Tax Appeals (CTA) decision nullifying assessment and warrant.
• August 5, 2003: Court of Appeals (CA) decision reversing CTA.
• March 31, 2004: CA denies motion for reconsideration.
• December 16, 2004: Supreme Court renders final decision.
Applicable Law
• 1987 Philippine Constitution (decision after 1990)
• National Internal Revenue Code, Sections 203 and 222 (prescriptive periods)
• Revenue Memorandum Order No. 20-90 (formal requisites for waivers of the statute of limitations)
• Republic Act No. 1125, Section 7(1) (jurisdiction of the Court of Tax Appeals)
Facts
PJI declared a 1994 net income of P30,877,387.00, paid P10,247,384.00 after credits, and submitted to BIR examination upon Letter of Authority No. 87120. The BIR alleged deficiency taxes totaling P127,980,433.20. PJI executed an undated, unlimited waiver of prescription on September 22, 1997. The BIR Audit Report of July 2, 1998 recommended P136,952,408.97 deficiency. Assessment/Demand No. 33-1-000757-94 (December 9, 1998) fixed liability at P111,291,214.46. After preliminary and final collection notices in 1999 and a warrant of distraint in March 2000, PJI filed for review before the CTA.
Court of Tax Appeals Decision
On May 14, 2002, the CTA held that:
- Assessment notices were validly received.
- The waiver was invalid for lacking a definite expiry date, date of BIR acceptance, and a copy furnished to the taxpayer, in violation of RMO No. 20-90.
- Assessment and levy were time-barred and void.
The CTA granted PJI’s petition and canceled the assessments and warrant.
Court of Appeals Decision
On August 5, 2003, the CA reversed the CTA, ruling that:
- The CTA lacked jurisdiction because PJI appealed mere assessment notices, not a denial of reconsideration.
- Formal defects in the waiver under RMO No. 20-90 were immaterial; the document evidenced clear agreement and acceptance.
- A waiver need not specify an expiry date when it constitutes an outright renunciation of prescription.
- Assessments became final and executory after reglementary periods lapsed without protest.
Jurisdictional Issue
Under RA 1125, Section 7(1), the CTA has exclusive appellate jurisdiction over decisions “involving disputed assessments” or “other matters arising under” the NIRC. The Supreme Court affirmed CTA jurisdiction to determine the validity of distraint warrants and statute-of-limitations waivers even absent a formal reconsideration denial.
Waiver Formalities under RMO No. 20-90
RMO No. 20-90 mandates strict compliance:
• Use of prescribed form without deviation.
• Insertion of a definite post-prescription expiry date.
• Indication of BIR’s date of acceptance.
• Execution in three copies, one furnished to the taxpayer.
• Signature by the Commissioner for cases e
Case Syllabus (G.R. No. 162852)
Facts
- Philippine Journalists, Inc. (PJI) filed its Annual Income Tax Return for 1994 showing net income of ₱30,877,387.00 and tax due of ₱10,807,086.00, of which ₱10,247,384.00 was paid after credits.
- On August 10, 1995, BIR Revenue District Office No. 33 issued Letter of Authority No. 87120 authorizing audit of PJI’s 1994 books.
- Audit findings disclosed deficiency taxes (inclusive of surcharges, interest, and compromise penalty) totaling ₱127,980,433.20 (VAT, income tax, withholding tax).
- PJI’s Comptroller executed on September 22, 1997 a “Waiver of the Statute of Limitation” consenting to assessment after the regular prescriptive period without specifying an expiration date or indicating BIR acceptance, and without PJI receiving a copy.
- On July 2, 1998, Revenue Officer de Vera’s audit report recommended deficiency taxes of ₱136,952,408.97.
- On December 9, 1998, BIR issued Assessment/Demand No. 33-1-000757-94 for ₱111,291,214.46 (income tax, VAT, withholding tax).
- Preliminary and final collection notices and a Warrant of Distraint and/or Levy No. 33-06-046 were issued between March 1999 and March 2000.
Procedural History
- PJI filed a Petition for Review with the Court of Tax Appeals (CTA) in May 2000, amended May 12, alleging lack of assessment receipt, premature warrant, prescription bar, due process violation, and entitlement to preliminary injunction.
- On May 14, 2002, the CTA granted the petition, ruled the waiver invalid under RMO No. 20-90, declared the assessment and warrant null and void, and canceled liabilities totaling ₱111,291,214.46.
- Commissioner of Internal Revenue’s Motion for Reconsideration was denied by the CTA on August 2, 2002.
- The Commissioner appealed to the Court of Appeals (CA), which on August 5, 2003 set aside the CTA decision, held the CTA lacked jurisdiction over mere assessment notices, validated the waiver, and reinstated the assessment.
- PJI’s Motion for Reconsideration before the CA was denied on March 31, 2004. PJI then filed a petition for review with the Supreme Court.
Issues
- Wh