Commissioner of Internal Revenue v. Philusa Corp.

EN BANC [C.T.A. EB CASE NO. 2566. December 20, 2023.] (C.T.A. Case No. 9409) COMMISSIONER OF INTERNAL REVENUE , petitioner , vs. PHILUSA CORPORATION , respondent . RESOLUTION RINGPIS-LIBAN , J p : For resolution is the Motion for Reconsideration [re: Decision dated 13 September 2023] filed by petitioner Commissioner of Internal Revenue (CIR) on October 2, 2023 with Comment (Re: Motion for Reconsideration dated October 2, 2023) filed by the respondent taxpayer on October 18, 2023. cSEDTC Petitioner CIR moves for the reconsideration of the decision, which affirmed the cancellation of the deficiency income tax, value-added tax (VAT), expanded withholding tax (EWT) assessments and the compromise penalty against the taxpayer for calendar year 2009. The CIR reiterates the arguments that the waivers executed by the taxpayer are valid; his right to assess the taxpayer had not yet prescribed; his right to due process was violated; and, thus, the assessments are valid. In its Comment [Re: Motion for Reconsideration dated October 2, 2023] , the taxpayer counters that petitioner's right to assess had prescribed; his right to due process was not violated; and lastly, the Formal Letter of Demand (FLD)/Final Assessment Notice (FAN) issued by petitioner is null and void for having been issued without a definite due date. Petitioner's motion is denied for lack of merit. The taxpayer correctly notes that petitioner's discussion in the motion are mere reiterations of the issues already covered in the Petition for Review. 1 These issues have extensively been passed upon in the assailed decision. 2 Nonetheless, the Court deems it prudent to address the point raised by the petitioner that the taxpayer is estopped from assailing the validity of the waivers because it benefitted from the execution of the same. In support of this argument, it quoted the case of Commissioner of Internal Revenue v. Transitions Optical Philippines, Inc. , 3 whose doctrine was summarized in the prefatory statement of the case: "Estoppel applies against a taxpayer who did not only raise at the earliest opportunity its representative's lack of authority to execute two (2) waivers of defense of prescription, but was also accorded, through these waivers, more time to comply with the audit requirements of the Bureau of Internal Revenue. Nonetheless, a tax assessment served beyond the extended period is void." AIDSTE In this case, however, the waivers were invalidated not because of the lack of authority of the taxpayer's representative but because of several infirmities noted by the Court. These infirmities consisted of the failure to indicate the nature and amount of tax due and the fact that both dates of execution by the taxpayer and dates of acceptance by the Bureau of Internal Revenue took place after the prescription had already set in. 4 In short, the waivers were voided pursuant to the pronouncements of the Supreme Court in Commissioner of Internal Revenue v. Standard Chartered Bank , 5 Commissioner of Internal Revenue v. Kudos Metal Corporation , 6 Commissioner of Internal Revenue v. Systems Technology Institute, Inc. , 7 and Commissioner of Internal Revenue v. La Flor Dela Isabela, Inc. 8 Clearly, the case cited by the CIR is inapplicable to the facts of this case and estoppel cannot bar the taxpayer from questioning the validity of the waivers since it had no hand in their infirmity. WHEREFORE , premises considered, the CIR's Motion for Reconsideration [re: Decision dated 13 September 2023] is DENIED for lack of merit. SO ORDERED. (SGD.) MA. BELEN M. RINGPIS-LIBAN Associate Justice Roman G. del Rosario, P.J., Catherine T. Manahan, Jean Marie A. Bacorro-Villena, Maria Rowena Modesto-San Pedro, Marian Ivy F. Reyes-Fajardo, Lanee S. Cui-David, Corazon G. Ferrer-Flores and Henry S. Angeles, JJ. , concur. Footnotes 1. See the statements which stressed that petitioner's right to assess respondent taxpayer had not yet prescribed; its basic right to fair play and due process was violated when the court a quo ruled on a matter not raised as an issue by the taxpayer; and the assessments are valid and not contrary to law as there was no violation of taxpayer's right to due process; Petition for Review, Rollo , pp. 11-15, 15-18 and 18-23. 2. See the Court's discussion that no reversible error was committed when the court a quo ruled (a) On the issue of prescription that was, allegedly, neither raised by the taxpayer in the petition nor stipulated or tried by the parties; (b) That the assessments were a nullity for failure to state the due date for the payment of the tax liabilities arising from the same; and, (c) That the assessments are barred by prescription; Decision dated September 13, 2023, Rollo , pp. 115-118, 119-123 and 123-129. 3. G.R. No. 227544, November 22, 2017. 4. EWT for January, February, March, July, August, September and October of CY 2009; and, VAT for the 1st, 2nd and 3rd Quarters of CY 2009; See Decision dated September 13, 2023, Rollo , pp. 124-129. 5. G.R. No. 192173, July 29, 2015. 6. G.R. No. 178087, May 5, 2010. 7. G.R. No. 220835, July 26, 2017. 8. G.R. No. 211289, January 14, 2019.