Monday, February 29, 2016

Commissioner of Internal Revenue (CIR) vs Kudos Metal Corporation

FACTS: CIR assessed Kudos Metal Corporation for taxable year 1998. A Waiver of the Statute of Limitations was executed on December 2001. The Court of Tax Appeals (CTA) issued a Resolution cancelling the assessment notices issued against petitioner for having been issued beyond the prescriptive period as the waiver purportedly failed to (a) have the valid officer execute the same (i.e., only the Assistant Commissioner signed it and not the CIR); (b) the date of acceptance was not indicated; (c) the fact of receipt by the taxpayer was not indicated in the original copy.

ISSUE: Whether or not the CIR's right to assess has prescribed

RULING: Yes. The requirements for a valid waiver as laid down in Revenue Memorandum Order No. (RMO) 20-90 and RDAO No. 5-01 are mandatory to give effect to Section 222 of the Tax Code. Specifically, the flaws in the waiver executed by Kudos Metal were as follows: (a) there was no notarized written authority in favor of the signatory for the company; (b) there is no stated date of acceptance by the Commissioner or his representative; and (c) the fact of the receipt of the copy was not indicated in the original waivers.

Neither can it be said that by merely executing the waiver the taxpayer is already estopped from disputing an action by the CIR beyond the statutory three (3) year period since the exception under the Suyoc case (i.e., when the delays were due to taxpayer's acts) does not apply.

Note: Requisites of a valid waiver: (i) acceptance date; (ii) expiry date; (iii) signed date by authorized officer of taxpayer and Bureau of Internal Revenue (BIR); (iv) notarized; (v) fact of receipt must be indicated in the copies

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