CIR v. NEXT MOBILE, INC.

GR No. 212825. December 7, 2015

Respondent filed with the BIR taxes for 2001. Respondent, through
Sarmiento, their director of Finance, executed several waivers of the statute
of limitations to extend the prescriptive period of assessment for taxes.

On 2005, respondent received from the BIR a PAN and a formal letter
of demand to pay deficiency income tax. The BIR denied respondent's
protest.

With the CTA, it was held that the demand was beyond the three year
prescription period under the NIRC. That the case does not apply the 10
year prescripton period as there was not false return by the respondent.
Also, the waivers did not validly extend the prescription because of
irregularities.

ISSUE: Whether the period to pay has prescribed.

RULING: NO.

The SC held that a waiver of the statute of limitations must faithfully

comply with RMO No. 20-90 and RDAO 05-01 in order to be valid.
Sarmiento failed to show her authority to the BIR to sign the waivers.

The BIR were also at fault having to neglect their ministerial duties.

Both parties knew the infirmities of the waivers but still continued.
Respondents were held in bad faith as after having benefited by the waivers
by giving them more time to pay, they used the waivers they made
themselves when the consequences were not in their favor.

The BIR's negligence amounts to malice and bad faith as they also
knew the waivers did not conform with RMO 20-90 and RDAO 05-01.

As both parties are in bad faith, the SC granted the petition on the
issue of the nullification of the formal letter of demand to the CTA.