The Revenue District Office of the Bureau of Internal Revenue (BIR) issued Letter of Authority for Revenue Officer Federico de Vera, Jr. and Group Supervisor Vivencio Gapasin to examine petitioner’s books of account and other accounting records for internal revenue taxes. Revenue District Officer Jaime Concepcion invited petitioner to send a representative to an informal conference for an opportunity to object and present documentary evidence relative to the proposed assessment. Petitioner’s Comptroller, LorenzaTolentino, executed a “Waiver of the Statute of Limitation Under the National Internal Revenue Code (NIRC)”. Records show that, it did not bear the date of acceptance, that petitioner was not furnished a copy of the waiver, and the waiver was signed only by the Revenue District Officer. The tax liability exceeds One Million Pesos (P1,000,000.00).
Whether the waiver is in accordance with RMO No. 20-90 to validly extend the three-year prescriptive period under the NIRC.
The waiver document is incomplete and defective and thus the three-year prescriptive period was not tolled or extended and continued to run. Consequently, the Assessment/Demand was invalid because it was issued beyond the three (3) year period. In the same manner, Warrant of Distraint and/or Levy which petitioner received thereafter is also null and void for having been issued pursuant to an invalid assessment.
The NIRC, under Sections 203 and 222, provides for a statute of limitations on the assessment and collection of internal revenue taxes in order to safeguard the interest of the taxpayer against unreasonable investigation. Unreasonable investigation contemplates cases where the period for assessment extends indefinitely because this deprives the taxpayer of the assurance that it will no longer be subjected to further investigation for taxes after the expiration of a reasonable period of time.
A waiver of the statute of limitations under the NIRC, to a certain extent, is a derogation of the taxpayers’ right to security against prolonged and unscrupulous investigations and must therefore be carefully and strictly construed. xxx Thus, the law on prescription, being a remedial measure, should be liberally construed in order to afford such protection.
The waiver is also defective from the government side because it was signed only by a revenue district officer, not the Commissioner, as mandated by the NIRC and RMO No. 20-90. The waiver is not a unilateral act by the taxpayer or the BIR, but is a bilateral agreement between two parties to extend the period to a date certain. The conformity of the BIR must be made by either the Commissioner or the Revenue District Officer. This case involves taxes amounting to more than One Million Pesos (P1,000,000.00) and executed almost seven months before the expiration of the three-year prescription period. For this, RMO No. 20-90 requires the Commissioner of Internal Revenue to sign for the BIR.