COMMISSIONER OF INTERNAL REVENUE

vs
THE STANLEY WORKS SALES (PHILS.),
INCORPORATED

G.R. No. 187859 3 December 2014

SERENO, CJ:
 Stanley Works Sales-PH is a domestic
corporation duly organized and existing
under PH laws and duly registered with the
SEC. It is authorized to engage in the
business of dealing with constructions and
hardware materials, tools, fixtures and
equipment.

Stanley Works Sales-PH

 Stanley-PH filed with the BIR its
Annual Income Tax Return for
taxable year 1989.

On 9 March 1993, pursuant to

Letter of Authority, the BIR issued
against respondent a Pre- Income taxable return
Assessment Notice (PAN) for 1989
deficiency tax.

CIR (petitioner) issued to Stanley-

PH an Assessment Notice for
deficiency income tax for taxable
year 1989. BIR
Stanley-PH, through its external
auditors, filed a protest letter and
requested reconsideration and
cancellation of the assessment.
 FACTS:
A certain Mr. John Ang, on behalf of
Stanley-PH, executed a “Waiver of the
Defense of Prescription Under the Statute
of Limitation of the NIRC”.
o Under the terms of the waiver, Stanley-PH waived its right to raise the
defense of prescription under Sec. 223 of the NIRC of 1977.
o The waiver was not signed by the CIR or any of his authorized
representatives and did not state the date of acceptance as prescribed under
R.M.O. 20-90.
o Stanley-PH did not execute any other waiver or similar document
before or after the expiration of the 16 November 1993 Waiver on 30 June
1994.
Stanley-PH wrote letters asking the Chief of the BIR
Appellate Division and the Rev. District Officer
(RDO) of BIR Rev. Region 4B-2 to take cognizance
of it’s protest for reconsideration.

The Chief of the BIR Appellate Div. sent a letter to Stanley-

PH requiring it to submit duly authenticated financial
statements for the worldwide operations of Stanley Works
and a sworn declarations from the home office on the share
of Stanley-PH as a “branch office.”
 January 2002: Stanley-PH sent a
request for an extension of period to
Stanley-PH, through submit a Supplemental Memorandum .
its counsel, the
Quisumbing Torres
Stanley-ph
Law Offices, wrote
the BIR Appellate Request for extension
Division and asked
for an extension of
period within which
to comply with the
request for
submission of
documents. BIR
 Supplemental
memorandum

right to collect the alleged deficiency

income tax has prescribed.

Stanley-PH, through its counsel, submitted a

Supplemental Memorandum alleging, inter alia, that
CIR’s right to collect the alleged deficiency income tax
has prescribed. CIR rendered a Decision denying
respondent’s request for reconsideration and ordering
respondent to pay the deficiency income tax plus
interest that may have accrued.
Respondent filed before the CTA Division a petition for
review
 Court of Tax Appeals

CTA (first div): ruled in favor of Stanley-PH. The

period within which CIR may collect deficiency
income taxes had already lapsed. Further, the
waiver of statute of limitations by Stanley-PH was
considered defective due to infirmities.
 Court of Tax Appeals

CTA (en banc): affirmed the CTA (first div) decision. The waiver could not be
used by CIR as there was no evidence that the latter had acted upon the
waiver. As to the issue of estoppel, this measure could not be used against
Stanley-PH, as it was CIR who had failed to act within the prescribe period on
the protest asking for a consideration of the assessment.
 Whether or not CIR’s right to collect the
deficiency income tax of Stanley-PH for taxable
year 1989 has prescribed

NO. 1
Whether or not Stanley-PH’s repeated requests
and positive acts constitute “estoppel” from
setting up the defense of prescription under the
NIRC.

NO. 2
 Ruling 1
Petitioner mainly argues that in view of respondent’s execution of
the Waiver of the statute of limitations, the period to collect the
assessed deficiency income taxes has not yet prescribed.

However, applying jurisprudence and relevant BIR rulings, the

waiver was considered defective; thus, the period for collection of
deficiency income tax had already prescribed. the SC found that the
following requisites for the proper execution of the waiver are
absent in this case: (1) conformity of either CIR or a duly authorized
representative; (2) date of acceptance showing that both parties had
agreed on the Waiver before the expiration of the prescriptive
period; and (3) proof that Stanley-PH was furnished a copy of the
Waiver.
 Ruling 1
(doctrine) The Waiver is not a unilateral act of the taxpayer;
hence, the BIR must act on it, either by conforming to or by
disagreeing with the extension. A waiver of the statute of
limitations, whether on assessment or collection, should not
be construed as a waiver of the right to invoke the defense of
prescription but, rather, an agreement between the taxpayer
and the BIR to extend the period to a date certain, within
which the latter could still assess or collect taxes due. The
waiver does not imply that the taxpayer relinquishes the right
to invoke prescription unequivocally.
 Ruling 2
The SC did not agree with petitioner that
respondent is now barred from setting up the
defense of prescription by arguing that the
repeated requests and positive acts of the latter
constituted estoppels, as there were attempts to
persuade the CIR to delay the collection of
respondent’s deficiency income tax.
 Ruling 2
True, respondent filed a Protest and asked for a
reconsideration and cancellation of the Assessment Notice;
however, it is uncontested that petitioner failed to act on that
Protest until 29 November 2001, when the latter required the
submission of other supporting documents. In fact, the
Protest was denied only on 4 March 2004.