Commissioner of Internal Revenue v. Planters Products, Inc.

FIRST DIVISION [CA-G.R. SP CASE NO. 45556. October 8, 1999.] COMMISSIONER OF INTERNAL REVENUE , petitioner , vs . PLANTERS PRODUCTS, INC. , respondent . D E C I S I O N ELBINIAS, P. , J p : Petition for review assailing the Decision of the Court of Tax Appeals dated June 10, 1997 in C.T.A. Case No. 507 as well as its Resolution dated September 2, 1997 denying reconsideration thereof. llcd Planter Products, Inc., respondent herein, is a VAT registered corporation engaged in the wholesale and retail trade of fertilizers, agricultural and industrial products. On June 30, 1988, respondent filed its VAT return for the first quarter of 1988, showing a zero VAT liability. On August 30, 1991, petitioner Commissioner of Internal Revenue issued to respondent a notice of assessment with letter of demand for payment of deficiency VAT for the first quarter of 1988, in the amount of P1,292,737.29, inclusive of interest, surcharge and compromise penalty. The deficiency VAT assessment arose from petitioner's disallowance of respondent's claim of 8% presumptive input tax credit on the value of its inventory of Calcine, on the ground that Calcine is a manufactured product. The respondent filed a letter-protest, claiming that it could avail of the 8% presumptive input tax credit, regardless of whether or not Calcine is a manufactured product. The petitioner denied the protest. Respondent then appealed to the Court of Tax Appeals (CTA) on the same ground, adding that petitioner's notice of assessment was issued beyond the three-year prescriptive period for assessment of taxes, as provided under Section 203 of the Tax Code. The CTA rendered its decision cancelling the notice of assessment in question on the ground of prescription. Petitioner's motion for reconsideration was denied. Hence, this petition. The Petitioner contends that "the CTA erred in holding that the deficiency tax assessment in question was issued beyond the three-year prescriptive period despite respondent's execution of a waiver of the statute of limitations upon its request to withhold the issuance of said assessment. The petition is impressed with merit. It may be true that a mere statement mentioned in a letter (signed by the representative of herein respondent) indicating an intention of waiving the running of the prescriptive period is not a valid waiver. Pursuant to Sec. 223 (b) of the Tax Code, the waiver must be embodied in a written agreement signed by the taxpayer and the Commissioner of Internal Revenue. llcd However, as pointed out by the Supreme court in Republic vs . Arcache (No. L-15547, 10 SCRA 337 1964]) , a taxpayer may be prevented from setting up the defense of prescription even if he has not previously waived it in writing when by his requests or positive acts the government has been, for good reasons, persuaded to postpone collection to make him feel that the demand was not unreasonable or that no harassment or injustice is meant by the government. An examination of the record (Rollo, p. 10) shows that on June 18, 1991, respondent, through its vice-president for administration, Mr. Ceferino A. Patino, Jr., wrote a letter to herein petitioner requesting for a review/reinvestigation of its tax liability for the first quarter of 1988; in the same letter, respondent also expressly waived the running of the 3-Year prescriptive period up to August 31, 1991. Acting on said letter, petitioner purposely withheld the issuance of respondent's deficiency VAT assessment until August 30, 1991. The assurance given by herein respondent to petitioner that it was waiving the running of the prescriptive period is binding on the former; having given that assurance, respondent cannot turn around and do the exact opposite of what it said it would do. A party may not go back on his own acts and representations to the prejudice of the other party who relied upon them. (PNB vs . Intermediate Appellate Court, GR No . 66715, 189 SCRA 680 [1990]; Republic vs . Court of Appeals, L-52774, 133 SCRA 505 [1984]; Republic Flour Mills, Inc . vs . Central Bank, L-23642, 93 SCRA 12 [1979]) The respondent is thus estopped from repudiating its waiver and invoking the defense of prescription. WHEREFORE, the petition is GRANTED. The questioned Decision and Resolution of the Court of Tax Appeals are hereby REVERSED and SET ASIDE. SO ORDERED. Magtolis and Cosico, JJ ., concur.