Taxation

National Internal Revenue Code; irrevocability of option to

carry-over of excess income tax credits. It is undisputed (3) the waiver should be duly notarized;
that taxpayer indicated in its 1997 income tax return (ITR)
its option to carry-over as tax credit for the next year its (4) the Commissioner of Internal Revenue (CIR) or the
tax overpayment. In its 1998 ITR, taxpayer again indicated revenue official authorized by him must sign the waiver
its preference to carry-over the excess income tax credit indicating that the Bureau of Internal Revenue (BIR) has
against the tax liabilities for the succeeding taxable years. accepted and agreed to the waiver; the date of the BIR’s
Clearly, taxpayer chose to carry-over and apply the acceptance should be indicated; before signing the
overpaid tax against the income tax due in the succeeding waiver, the CIR ort he revenue official authorized by him
taxable years. Under section 76 of the National Internal must make sure that the waiver is in the prescribed form,
Revenue Code of 1997, once the taxpayer exercises the duly notarized, and executed by the taxpayer or his duly
option to carry-over and apply the excess creditable tax authorized representative;
against the income tax due for the succeeding taxable
years, such option is irrevocable. Thus, taxpayer can [in (5) both the date of execution by the taxpayer and date
the succeeding years, i.e., 1999] no longer claim a refund of acceptance by the BIR should be before the expiration
of its excess income tax credit in the taxable year 1997 of the period of prescription or before the lapse of the
because it has already opted to carry-over the excess period agreed upon in case a subsequent agreement is
income tax credit against the tax due in the succeeding executed; and
taxable years. Commissioner of Internal Revenue vs. The
Philippine American Life and General Insurance (6) the waiver must be executed in three copies, the
Company, G.R. No. 175124, September 29, 2010. original copy to be attached to the docket of the case, the
second copy for the taxpayer and the third copy for the
Assessment; prescriptive period. The government must office accepting the waiver; the fact of receipt by the
assess internal revenue taxes within three years from the taxpayer of his/her file copy must be indicated in the
last day prescribed by law for the filing of the tax return original copy to show that the taxpayer was notified of the
or the actual date of filing of such return, whichever acceptance of the BIR and the perfection of the
comes later. An assessment notice issued after the three- agreement. Commissioner of Internal Revenue vs. Kudos
year prescriptive period is no longer valid and effective Metal Corporation, G.R. No. 178087, May 5, 2010.
unless falling under the exceptions. Commissioner of
Internal Revenue vs. Kudos Metal Corporation, G.R. No. Prescriptive period; estoppel. The doctrine of estoppel
178087, May 5, 2010. cannot be applied in this case as an exception to the
statute of limitations on the assessment of taxes
Prescriptive period for assessment; exceptions. In the case considering that there is a detailed procedure for the
of a false or fraudulent return with intent to evade tax or proper execution of the waiver, which the BIR must strictly
of failure to file a return, the tax may be assessed at any follow. Estoppel has its origin in equity, which is justice
time within ten years after the discovery of the falsity, according to natural law and right. Thus, it cannot give
fraud or omission. If before the expiration of the time validity to an act that is prohibited by law or that is
prescribed in the National Internal Revenue Code (NIRC) against public policy. Unlike in the case of Collector of
for the assessment of the tax, both the Commissioner and Internal Revenue vs Suyoc Consolidated Mining Company,
the taxpayer have agreed in writing to its assessment after where the doctrine of estoppel prevented the taxpayer
such time, the tax may be assessed within the period from raising the defense of prescription against the
agreed upon. The period so agreed upon may be extended government’s efforts to collect the assessed tax, the
by subsequent written agreement made before the assessments were issued beyond the prescribed period and
expiration of the period previously agreed upon. there was no showing that the taxpayer made any request
Commissioner of Internal Revenue vs. Kudos Metal to persuade the BIR to postpone the issuance of the
Corporation, G.R. No. 178087, May 5, 2010. assessments. Commissioner of Internal Revenue vs.
Kudos Metal Corporation, G.R. No. 178087, May 5, 2010.
Prescriptive period for assessment; requirements for a
proper waiver. RMO 20-90 and RDAO 05-01 lay down the
following procedures for the proper execution of the
waiver of the prescriptive period:

(1) the waiver must be in the proper form prescribed by

RMO 20-90; the phrase “but not after ___ 19____,” which
indicates the expiry date of the period agreed upon to
assess the tax after the regular three-year period of
prescription must be filled up;

(2) the waiver must be signed by the taxpayer himself

or his duly authorized representative; in the case of a
corporation, the waiver must be signed by any of its
responsible officials; if the authority is delegated by the
taxpayer to a representative, such should be in writing and
duly notarized;
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