191. CIR vs. Next Mobile, Inc. (GR No.

212825 dated December 29, 2015)

FACTS:

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 perios 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.