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G.R. No. 192173, July 29, 2015

FACTS: SCB received a Formal Letter of Demand dated June 24, 2004 for deficiency taxes and
increments for the taxable year 1998, amounting to P33.3M. On August 12, 2004, SCB protested
against said assessment and requested the CIR that it be withdrawn and cancelled. CIR had not
rendered a decision, prompting SCB to file a Petition for Review before the CTA in division.
The CTA in division granted the petition of SCB, canceled and set aside the FLD and
Assessment Notices on the ground that CIRs right to assess was already barred by prescription.
CIR presented copies of Waivers of Statute of Limitations executed by both parties. CTA in
division, however, noted that these waivers did not strictly comply with Revenue Memorandum
Order No. 20-90. CIR filed for MRecon, but it was denied.
CIR appealed with the CTA En Banc, but if affirmed in toto the decision of CTA in
division. Upon denial of CIRs Motion for Reconsideration, it filed the instant Petition for
Review on Certiorari.
ISSUE: W/N petitioners right to assess respondent for deficiency taxes for 1998 has already
The period for petitioner to assess and collect an internal revenue tax is limited only to
three years by Section 203 of the NIRC of 1997. This mandate is primarily to safeguard the
interests of taxpayers from unreasonable investigation by not indefinitely extending the period of
assessment and depriving the taxpayer of the assurance that it will no longer be subjected to
further investigation for taxes after the expiration of reasonable period of time.
As an exception, Section 222 authorizes the extension of the original three-year
prescriptive period by the execution of a valid waiver. RMO No. 20-90 outlines the procedure for
the proper execution of a waiver and failure to comply with any of the requisites renders a
waiver defective and ineffectual. The waivers executed by CIR and SCB were in violation of
RMO 20-90:
1. the CIR did not sign (assessment was more than P1M)
2. date of acceptance and the amount and kind of tax due were not indicated
3. the waiver speaks of request to extend the period to file additional documents, not the request
for recon or reinvestigation as required by RMO 20-90.
The period to assess the tax liabilities of respondent for taxable year 1998 was never
extended. Consequently, when the succeeding waivers of Statute of Limitations were
subsequently executed covering the same tax liabilities of respondent, and there being no
assessment having been issued as of that time, prescription has already set in.
[Although respondent paid the deficiency WTC and FWT assessments, it did not waive the defense
of prescription as regards the remaining tax deficiencies, it being on record that respondent continued to
raise the issue of prescription. Doctrine of estoppel not applicable.]
The Formal Letter of Demand and Assessment Notices are void. Petition is denied.