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Asian Transmission Corp. v. CIR (2022)
Asian Transmission Corp. v. CIR (2022)
RESOLUTION
INTING, J : p
Our Ruling
The Court denies the Motion for Reconsideration.
ATC's proposition seeks to divest the CIR of its right to assess and
collect deficiency taxes on account of alleged defects caused by the BIR that
outnumber the one caused by ATC. It makes much out of the singular defect
that had been attributable to it and how this pales in comparison when
juxtaposed against the three defects attributable to the tax authorities.
The Court rejects this reasoning. If a waiver suffers from defects on
account of both parties, the waiver's validity in relation to the timeliness of
the CIR's subsequent issuance of a tax assessment is not determined by a
mere plurality of the defects committed between the BIR and the taxpayer.
I n Commissioner of Internal Revenue v. Next Mobile, Inc. 30 (Next
Mobile), which was relied upon in the Main Decision, the taxpayer's
representative who signed the waivers had no authority to execute the same
on behalf of the corporation (i.e., no notarized written authority). 31 On the
other hand, the responsible revenue officer: (a) failed to verify the taxpayer
representative's authority to execute the waivers; (b) accepted the
documents despite not having received any proof of the taxpayer
representative's authority; and (c) signed the waivers upon submission by
the taxpayer but failed to indicate clearly the date of acceptance. 32
More recently, in Commissioner of Internal Revenue v. Transitions
Optical Philippines, Inc., 33 the circumstances were similar to those under
consideration in Next Mobile. On the one hand, the taxpayer failed to attach
a corresponding notarized written authority to each of the waivers executed.
On the other, the responsible revenue officer also failed to signify properly
the BIR's receipt and acceptance of the waivers (i.e., no dates of
receipt/acceptance). 34
Verily, both parties in those cases contributed flaws to the waivers.
However, the Court upheld the waivers as effective because, although both
parties caused separate defects, the taxpayer contested the waivers' validity
only on appeal. 35
ONTRIBUTORY FAULT CAS ESTOPPEL
&
A more circumspect appreciation of the relevant jurisprudence reveals
that the taxpayer's contributory fault or negligence coupled with estoppel 36
will render effective an otherwise flawed waiver, regardless of the physical
number of mistakes attributable to a party.
In other words, while a waiver may have been deficient in formalities,
the taxpayer's belated action on questioning its validity tilts the scales in
favor of the tax authorities.
In the present case, the Court considers the following:
First, it is no longer disputed that the subject defects were the result of
both parties failure to observe diligence in performing what is incumbent
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upon them, respectively, relative to the execution of a valid waiver,
particularly the requirements outlined in applicable BIR issuances. 37 That
the defects attributable to one party had been greater in number cannot
diminish the seriousness of the counter-party's fault or negligence.
Second, ATC issued eight successive Waivers over the course of four
years (2004-2008). 38 The Waivers had always been marred by defects and,
yet, ATC continued to correspond with the tax authorities and allowed them
to proceed with their investigation, as extended by the Waivers in question.
Third, when the CIR issued the FLD, ATC did not question the Waivers'
validity. It raised this argument for the first time in its appeal to the CTA,
after obtaining an unfavorable CIR decision on their administrative protest.
That ATC acquiesced to the BIR's extended investigation and failed to
assail the Waivers' validity at the earliest opportunity gives rise to estoppel.
Moreover, ATC's belated attempt to cast doubt over the Waivers' validity
could only be interpreted as a mere afterthought to resist possible tax
liability. 39
Verily, it has been held that the doctrine of estoppel, as a bar to the
statute of limitations protecting a taxpayer from prolonged investigations, 40
must be applied sparingly. 41 cCHITA
Footnotes
3. Id. at 9-30.
5. Id. at 83-90.
6. Id. at 33-34.
7. Id. at 79.
8. Id. at 33.
9. In general, the period to assess internal revenue taxes is limited to three years
after the last day prescribed by law for the filing of the return or the date of
actual filing of the return, whichever is later. See Section 203 of Presidential
Decree No. 1158 or the National Internal Revenue Code of 1997.
10. The Waiver of the Statute of Limitation under the National Internal Revenue
Code dated May 30, 2008 extended the assessment period to December 31,
2008, rollo, p. 90.
17. See Final Decision on Disputed Assessment dated April 14, 2009, id. at 110-
111; signed by OIC-ACIR Zenaida G. Garcia.
18. See Decision dated November 15, 2011, id. at 122-130; signed by
Commissioner of Internal Revenue Kim S. Jacinto-Henares.
19. See Petition for Review dated April 13, 2012, id. at 131-156.
22. See Decision dated November 28, 2014 of the Court of Tax Appeals (CTA) in
CTA Case No. 8476, id. at 229-261; penned by Associate Justice Caesar A.
Casanova, with Associate Justices Juanito C. Castañeda, Jr., and Amelia R.
Cotangco-Manalastas, concurring.
23. See Decision dated August 9, 2016 of the CTA, id. at 32-45.
25. Id.
26. Id.
27. Id.
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28. Rollo, pp. 393-407.
35. See Commissioner of Internal Revenue v. Next Mobile, Inc., supra note 30, and
Commissioner of Internal Revenue v. Transitions Optical Philippines, Inc.,
supra note 33.
36. Asian Transmission Corp. v. Commissioner of Internal Revenue, supra note 2.
39. See AFP General Insurance Corp. v. Commissioner of Internal Revenue, G.R. No.
222133, November 4, 2020.
40. La Flor Dela Isabela, Inc. v. Commissioner of Internal Revenue, G.R. No.
202105, April 28, 2021.
41. Commissioner of Internal Revenue v. Kudos Metal Corporation, 634 Phil. 314,
328-329 (2010).
42. Commissioner of Internal Revenue v. Next Mobile, Inc., supra note 30 at 445.
n Note from the Publisher: Copied verbatim from the official document.