COMMISSIONER OF INTERNAL REVENUE vs STANDARD CHARTERED BANK

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

FACTS:

Respondent received CIR's Formal Letter of Demand for alleged deficiency income tax, final income
tax, withholding tax, final and compensation, and increments for the taxable year worth
P33,326,211.37. Respondent protested the said assessment by filing a letter-protest with the CIR
requesting the assessment to be withdrawn.

Respondent paid the BIR the assessed deficiency for both the withholding taxes. Respondent then filed
for a petition for the cancellation and setting aside of the assessments which the CTA granted. The CTA
held that it has already prescribed as it covered the taxable year of 1998.

The NIRC provides that the assessments should have been issued within the three-year prescriptive
period. The CIR also presented the Waivers of Statute of Limitations executed by the parties which
extended the period to assess respondent. The CTA held that the CIR failed to strictly comply and
conform with the provisions of Revenue Memorandum Order No. 20-90. The CTA held that the
waivers were invalid.

ISSUE:

1. Whether or not the assessments were already prescribed.

2. Whether or not the waiver was invalid.

RULING:

Yes. The NIRC is clear that in a case where a return is filed beyond the period prescribed by law, the
three-year period shall be counted from the day the return was filed. The waiver, as also provided by
the NIRC, is an exception to the three-day prescription. But, as the CTA first held, the provisions of the
RMO should have been strictly complied with. Failing to comply renders a waiver defective and
ineffectual.