GR 211289; (January, 2019) (Digest)
G.R. No. 211289 , January 14, 2019
COMMISSIONER OF INTERNAL REVENUE, Petitioner, vs. LA FLOR DELA ISABELA, INC., Respondent.
FACTS
Respondent La Flor dela Isabela, Inc. (La Flor) filed its monthly Expanded Withholding Tax (EWT) and Withholding Tax on Compensation (WTC) returns for calendar year 2005. The Commissioner of Internal Revenue (CIR) issued Formal Letter of Demand and Final Assessment Notices (FANs) for deficiency taxes for 2005 on December 17, 2009. La Flor protested, arguing the assessments were issued beyond the three-year prescriptive period under Section 203 of the National Internal Revenue Code (NIRC), which expired between February 15, 2008, and March 1, 2009. The CIR contended the period was extended by three Waivers of the Statute of Limitations executed by La Flor on September 3, 2008, February 16, 2009, and December 2, 2009.
The Court of Tax Appeals (CTA) Division cancelled the assessments, ruling they were barred by prescription. It held the February 16, 2009 Waiver was defective for non-compliance with Revenue Memorandum Order (RMO) No. 20-90, as it failed to state the nature and amount of the tax, and the other two Waivers were not offered in evidence. The CTA En Banc affirmed. The CIR appealed, arguing Section 203 does not apply to withholding tax assessments against a withholding agent and that the Waivers validly extended the period.
ISSUE
Whether the assessments for deficiency EWT and WTC for taxable year 2005 against La Flor are barred by prescription.
RULING
Yes, the assessments are barred by prescription. The Supreme Court affirmed the CTA En Banc. First, the prescriptive period under Section 203 of the NIRC applies to assessments against withholding agents for deficiency withholding taxes. The Court clarified that while a withholding agent acts as a collector, the assessment is for the tax liability itself, not merely a penalty, and is thus governed by the same prescriptive rules.
Second, the Waivers did not validly extend the prescriptive period. The Waivers dated September 3, 2008, and December 2, 2009, were correctly deemed inadmissible as they were not formally offered in evidence before the CTA Division. Judicial notice cannot be taken of them as they do not constitute official acts or matters of public knowledge. The Waiver dated February 16, 2009, is invalid for failure to comply with the substantive requirements under RMO No. 20-90, specifically the omission of the kind and amount of tax, which is essential for a taxpayer to knowingly waive its right against indefinite assessment. Consequently, without a valid waiver, the three-year period was not extended. The FANs issued on December 17, 2009, were therefore issued beyond the prescriptive period and are void.