COMMISSIONER OF INTERNAL REVENUE v. BELLE CORPORATION

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY ENBANC COMMISSIONER OF INTERNAL CTA EB No. 962 REVENUE, (CTA Case No . 8175) Petitioner, - versus- Present: Del Rosario, PJ, Castaneda, Jr., Bautista, Uy, Casanova, Fabon-Victorino, Mindaro-Grulla, Cotangco-Manalastas, and Ringpis-Liban, JJ. BELLE CORPORATION , Promulgat ed�. C1Hd.�<,/..;_' ~ Respondent. AUG 15 2013 , 'V~ , t?-.c- d -, )'y1 ){- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ){ DECISION COTANGCO-MANALASTAS, J .: Before the Court En Bane is a Petition for Review filed by petitioner, Commissioner of Internal Revenue (CIR), assailing the Decisionl dated September 18, 2012, and the Resolution2 dated November 19, 2012, of the former Third Division of the Court cancelling and setting aside the assessments issued against respondent for deficiency e){panded withholding ta){ (EWT) and final withholding ta){ (FWT) and compromise penalty on withholding ta){ on compensation (WTC) in the total amount of P19 ,536,607.66 for ta){able year 2002 for being issued beyond the three-year prescriptive period.j_, 1 Rollo, pp. 40-60. 2 Rollo, pp. 61-62.

DECISION Page 2 of 18 CTA EB No. 962 (C.T.A. Case No. 8 175) CIR vs. Belle Corporation The Facts The facts, as culled from the records3 , are as follows: Petitioner is the duly appointed Commissioner of Internal Revenue (CIR) , authorized under the National Internal Revenue Code (NIRC) of 1997, as amended, to examine any taxpayer and to assess the correct amount of internal revenue tax. She may be served with summons and other court processes at the Bureau of Internal Revenue (BIR) National Office Building, BIR Road, Diliman, Quezon City. Respondent, on the other hand, is a domestic corporation duly organized and existing under the laws of the Republic of the Philippines. Respondent filed its EWT and FWT Returns for taxable year 2002 on the following dates: Month EWT Returns FWT Returns Date Filed Date Filed January February February 11 , 2002 February 11 , 2002 Ma rch 11 , 2002 March 11, 2002 March April 10, 2002 April 10, 2002 April May 10, 2002 May 10, 2002 May June 10, 2002 June 10, 2002 June July 10, 2 002 July 10, 2002 July August 9, 2002 August 12, 2002 August S e pte mber September 10, 2002 September 10, 2002 October October 10, 2002 October 9 , 2002 Nove mber November 8 , 2002 November 8 , 2002 December December 10, 2002 January 15, 2003 December 10, 2002 January 14, 2003 On April 21 , 2008, respondent received a Formal Letter of Demand/Final Assessment Notice (FLD/FAN) dated April 16, 2008. On May 21 , 2008, respondent filed a protest to the FLD/FAN. On May 25, 2009, respondent received a Final Decision on Disputed Assessment (FDDA) dated May 8, 2009, issued by Zenaida Garcia, OIC-Assistant Commissioner, Large Taxpayers Service. ~ 3 Rollo, pp. 4 1-44.

DECISION Page 3 of 18 CTA EB No. 962 (C.T.A. Case No. 8175) CIR vs. Belle Corporation On June 24, 2009, respondent filed an appeal to then Commissioner Sixto Esquivias IV, pursuant to Revenue Regulations (RR) No. 12-99, questioning the propriety of the assessment for deficiency EWT and FWT, and the compromise penalty on WTC. On September 8, 2010, respondent received a Revised Final Decision on Disputed Assessment (RFDDA) dated September 2, 2010, issued by Assistant Commissioner Nestor Valeroso, Large Taxpayers Service-Regular. The RFDDA still found due from respondent the following: Tax Type/ Basic Interest Compromise Total Assessment No. 1,192,966.18 Penalty 3,028 ,702 .54 Deficiency EWT 6,492,400.00 EWT-02-000210 1,83 5 ,73 6.36 -- Deficiency FWT -- FWT-0 2 - 0 0 0 0 6 3 7,685,366.18 9 ,990,505 . 12 -- 16,482 ,905. 12 Compromise Penalty- WTC WCP-02-000115 -- 25,000.00 25,000.00 Total 11,826,241.48 25,000.00 19,536,607.66 On October 7, 2010, respondent filed its Petition for Review. On December 2, 2010, petitioner filed her Answer and alleged by way of special and affirmative defenses that: petitioner is liable to pay its deficiency withholding taxes for calendar year 2002 in the total amount of P18,029,811.21 including penalties and interests; withholding tax is not an internal revenue tax that can be subject of an assessment; the period of limitation under Section 203 of the Tax Code is not applicable to assessment of deficiency withholding tax; petitioner was assessed in its capacity as a withholding agent and not in its personality as a taxpayer; the petition was filed out of time considering that petitioner received the FDDA on May 25, 2009, hence, it had until June 25, 2009 within which to file a Petition for Review to the Court of Tax Appeals (CTA); the assessment for taxable year 2002 was issued in accordance with law and regulations; and the burden of proof is on the taxpayer to establish the fact that it is not liable for any deficiency taxes subject of the assessment. Respondent presented Amelita Vanta, as its sole witness and documentary evidence, marked as Exhibits "A" to "GG", inclusive of their submarkings, which were all admitted by the Court in a Resolution dated October 14, 2011.J

DECISION Page 4 of 18 CTA EB No. 962 (C.T.A. Case No. 8175) CIR vs. Belle Corporation On the other hand, petitioner presented Melinda Rugayan, as witness, and documentary evidence, marked as Exhibits 1II II to "7" and "9" to 11 inclusive of their 16 ' II submarkings, which were all admitted by the Court in a Resolution dated March 29, 2012. Thereafter, both parties were ordered to file their simultaneous memoranda, within thirty (30) days from notice; afterwhich, the case shall be deemed submitted for decision. Considering respondent's memorandum filed on May 4, 2012 and petitioner's memorandum filed on May 23, 2012, the case was deemed submitted for decision on June 25, 2012. The former Third Division, in its Decision 4 dated September 18, 2012, granted respondent's Petition for Review. Accordingly, the assessments issued against respondent for deficiency EWT and FWT and compromise penalty on WTC for taxable year 2002 were cancelled and set aside for being issued beyond the three-year prescriptive period. The Motion for Reconsiderations filed by petitioner was denied for lack of merit in the Resolution6 dated November 19, 2012. Aggrieved, petitioner filed the instant Petition for Review7 . Respondent was ordered to file its comment within ten (10) days from receipt of the Resolutions dated December 26, 2012. Respondent filed its Comment/Opposition (To Petitioner's Petition for Review Dated 23 November 20 12)9 on February 8, 2013. Considering the issues raised by both parties, this Court resolved to give due course to the petition and ordered the parties to submit their respective memoranda1o. Petitioner filed a Manifestation 11 on March 27, 20 13 stating that she is adopting the arguments she raised in the j_ 4 Supra, Note I . 5 Division Docket, pp. 581-607. 6 Supra, Note 2. 7 Rollo, pp 1-37. 8 Rollo, pp. 71-72. 9 Rollo, pp. 73-86. 10 Rollo, pp. 94-95, Reso lution dated February 2 1, 20 13 .

DECISION Page 5 of 18 CTA EB No. 962 (C.T.A. Case No. 8175) CIR vs. Belle Corporation Petition for Review. Respon dent filed a Supplemental Comment/ Opposition to the Petition for Review with Manifestation 12 on April 12, 20 13 stating that it is likewise adopting its arguments in its earlier Comment/ Opposition (To Petitioner's Petition for Review Dated 23 November 2 0 12) as its Memorandum. Thus, the above-cap tioned case was submitted for decision on May 15, 2013. The Issue The issues stipulated by the parties were summarized by the former Third Division as follows 13: "The foregoing issues raised by both parties boil down to the principal issue of whether or not petitioner may be held liable for deficiency EWT, FWT and compromise penalty on WTC in the total amount of P19,536,607.66, including penalties and interests, for taxable year 2002." The Ruling of the Court The Petition for Review has no merit. Timeliness of filing Petition (or Review As to the timeliness of the filing of respondent's Petition for Review before the Court in Division, We rule that the petition was filed on time. Section 228 of the NIRC of 1997, as amended, provides: "SEC. 228. Protesting of Assessment. - When the Commissioner or his duly authorized representative finds that proper taxes should be assessed, he shall first notify the taxpayer of his findings: Provided, however, That a pre- assessment notice shall not be required in the following cases: XXX XXX XXX Such assessment may be protested administratively by J filing a request for reconsideration or reinvestigation within thirty (30) days from receipt of the assessment in such form 11 Rollo, pp. 101-103. 12 Rollo, pp. I 07-I II. 13 Rollo, p. 45 .

DECISION Page 6 of 18 CTA EB No. 962 (C.T.A. Case No. 8175) CIR vs. Belle Corporation and manner as may be prescribed by implementing rules and regulations. Within sixty (60) days from filing of the protest, all relevant supporting documents shall have been submitted; otherwise, the assessment shall become final. If the protest is denied in whole or in part, or is not acted upon within one hundred eighty (180) days from submission of documents, the taxpayer adversely affected by the decision or inaction may appeal to the Court of Tax Appeals within thirty (30) days from receipt of the said decision, or from the lapse of the one hundred eighty (180)-day period; othe rwise, the decision shall become final, executory and demandable ." (Emphasis supplied) In relation thereto, Section 3.1.5 of RR 12-9914, provides: "SEC. 3.1.5.Disputed Assessment.- XXX XXX XXX In general, if the protest is denied, in whole or in part, by the Commissioner or his duly authorized representative, the taxpayer may appeal to the Court of Tax Appeals within thirty (30) days from date of receipt of the said decision, otherwise, the assessment shall become final, executory and demandable: Provided, however, that if the taxpayer elevates his protest to the Commissioner within thirty (30) days from date of receipt of the final decision of the Commissioner's duly authorized representative , the latter's decision shall not be considered final, executory, demandable, in which case, the protest shall be decided by the Commissione r. xxx xxx xxx." (Emphasis supplied) In this case, respondent received the FDDA dated May 8, 2009 issued by Zenaida Garcia, OIC-Assistant Commissioner, Large Taxpayers Service, on May 25, 2009. Applying Section 228, respondent had until June 24, 2009 within which to appeal said decision to the Court in Division. However, on June 24, 2009, instead of filing an appeal to the Court in Division, respondent opted to file an appeal to then CIR Sixto Esquivias IV, pursuant to RR No. 12-99. t On September 8, 2010, petitioner received the RFDDA dated September 2, 2010 issued by Assistant Commissioner 14 Implementing the Provisions of the National Internal Revenue Code of 1997 Governing the Rules on Assessment of National Internal Revenue Taxes, Civil Penalties and Interest and the Extra-Judicial Settlement of a Taxpayer's Criminal Violation of the Code Through Payment of a Suggested Compromise Penalty.

DECISION Page 7 of 18 CTA EB No. 962 (C.T.A. Case No. 8175) CIR vs. Belle Corporation Nestor Valeroso, Large Taxpayers Service-Regular. Pursuant to Section 228 of the NIRC of 1997, as amended, in relation to Section 3.1.5 of RR No. 12-99, petitioner had until October 8, 20 10 within which to appeal said decision to the Court in Division. Thus, respondent timely filed its petition for review on October 7, 2010. As held by this Court En Bane in the case of Moog Controls Corporation Philippine Branch us. CIR 1S, the above- cited provision of RR No 12-99 is not inconsistent with Sec. 228 of the NIRC of 1997, as amended. On the contrary, it merely implements Sec. 228 by establishing a clear guideline on the nature of a decision rendered by the authorized representative of the Commissioner of Internal Revenue on a disputed assessment. The taxpayer is given a choice whether to appeal the decision to the CIR or to the CTA. It further provides that the decision of the authorized representative will not attain finality if the taxpayer appeals the same to the CIR who shall then be required to decide the protest himself. Prescription This Court shall now resolve the issue on whether petitioner's right to assess respondent for the alleged deficiency EWT and FWT is barred by prescription. Section 203 of the NIRC of 1997, as amended, provides: "SEC. 203. Period of Limitation Upon Assessment and Collection. - Except as provided in Section 222, internal revenue taxes shall be assessed within three (3) years after the last day prescribed by law for the filing of the return, and no proceeding in court without assessment for the collection of such taxes shall be begun after the expiration of such period: Provided, That in a case where a return is filed beyond the period prescribed by law, the three (3)-year period shall be counted from the day the return was filed. For purposes of this Section, a return filed before the last day prescribed by law for the filing thereof shall be considered as filed on such last day." (Emphasis supplied) Based on the above provision, internal revenue taxes must be assessed within three years counted from the period j._ 15 CTA EB Case No. 44, May 10, 2005 .

DECISION Page 8 of 18 CTA EB No. 962 (C.T.A. Case No. 8175) CIR vs. Belle Corporation fixed by law for the filing of the tax return or the actual date of filing, whichever is later.16 In relation thereto, Section 2.58(A)(2) of RR No. 2-98, as amended, provides that the EWT and FWT return, shall be filed and payments should be made, within ten (10) days after the end of each month, except for taxes withheld for the month of December of each year, which shall be filed on or before January 15 of the following year. With respect, however, to the period where petitioner availed of the electronic filing and payment (EFPS), the deadline for electronically filing the applicable withholding tax returns and paying the taxes due thereon via the EFPS shall be five (5) days later than the deadlines set. Records show that respondent filed its EWT returns manually from January to June 2002 and electronically from July to December 2002. On the other hand, the FWT returns were all filed manually.17 The Court summarized below the dates relevant to the filing of respondent's tax returns for EWT and FWT and the dates until which to assess respondent: a. EWT Month Date of Filing of Last Day of Filing Last Day to Assess January EWT Returns as Required by Law February 11, 2002 February 11, 2005 February February 11, 2002 (February 10, 2002 is March 11, 2005 March March 11, 2002 a Sunday) April March 11, 2002 April 10, 2005 May April 10, 2002 (March 10, 2002 is a MaylO, 2005 June May 10, 2002 June 10, 2005 July June 10, 2002 Sunday) July 10, 2005 August July 10, 2002 April 10, 2002 August 15,2005 August 9, 2002 May 10, 2002 September 16, 2005 September September 10, 2002 June 10, 2002 October July 10, 2002 October 15, 2005 October 10, 2002 August 15, 2002 November 15, 2005 November November 8, 2002 September 16, 2002 December 16, 2005 December 10, 2002 (September 15, 2002 December is a Sunday) January 20, 2006 1-- January 15, 2003 October 15, 2002 November 15, 2002 December 16, 2002 (December 15, 2002 is a Sunday) January 20, 2003 16 Commissioner ofInternal Revenue vs. FMF Development Corporation (G.R. No. 167765, June 30, 2008). 17 Per RMO No. 5-02, BIR Form 1601-F (FWT Return) was not initially available in the EFPS.

DECISION Page 9 of 18 CTA EB No. 962 (C.T.A. Case No. 8175) CIR vs. Belle Corporation b. FWT Month Date o f Filing of Last Day of F iling Last Day to Assess January FWT Returns as Required by Law February 11 , 2002 February 11, 2005 February February 11, 2002 (February 10, 2002 is March 11, 2005 March March 11 , 2002 a Sunday) April March 11, 2002 April 10, 2005 May April 10, 2002 (March 10, 2002 is a May 10, 2005 June May 10, 2002 June 10, 2005 July June 10, 2002 S u n d ay ) July 10, 2005 July 10, 2002 April 10, 2002 August 12, 2005 August August 12, 2002 May 10, 2002 September June 10, 2002 September 10, 2005 September 10, 2002 July 10, 2002 October 10, 2005 October October 9, 2002 August 12, 2002 November 11, 2005 (August 10, 2002 is a November November 8, 2002 December 10, 2005 December Saturday) January 15, 2006 December 10, 2002 September 10, 2002 January 14, 2003 October 10, 2002 November 11 , 2002 (November 10, 2002 is a Sunday) December 10, 2002 January 15, 2003 As mentioned earlier, respondent received the FLD and FAN dated April 16, 2008 on April 21, 2008. Cleary, the FLD and FAN were issued beyond the three-year period prescribed under Section 203 of the NIRC of 1997, as amended. Thus, petitioner's right to assess respondent for deficiency EWT and FWT has prescribed. Imposition of Compromise Penalty This Court notes that petitioner imposed compromise penalty on withholding tax on compensation in the amount of P25,000.00, in view of respondent's alleged erroneous data on the personal exemption on some of its employees terminated before December 31, 2002. Pursuant to Revenue Memorandum Order (RMO) No. 01 - 90, compromise penalties are only suggested in settlement of criminal liability, and may not be imposed or exacted on the taxpayer in the event that a taxpayer refuses to pay the same. The imposition of the same without the conformity of the taxpayer is illegal and unauthorized. 18 Absent any showing that respondent consented to the compromise penalty, the same should not be imposed. Accordingly, this Court holds /- 18 Commissioner of Internal Revenue vs. Lianga Bay Logging Co., Inc., et a/. (G. R. No. L-35266, January 2 1, 1991 ).

DECISION Page 10 of 18 CTA EB No. 962 (C.T.A. Case No . 8175) CIR vs. Belle Corporation that petitioner's imposition of the compromise penalty, without the consent of respondent, cannot be sustained. Waiver o(the Statute o(Limitations Petitioner claims that respondent executed a series of waivers of the statute of limitations. Section 222 (b) of the NIRC of 1997, as amended, provides that an assessment notice may be issued after the lapse of the three-year prescriptive period, as follows: "SEC. 222. Exceptions as to Period of Limitation of Assessment and Collection of Taxes. - XXX XXX XXX (b) If before the expiration of the time prescribed in Section 203 for the assessment of the tax, both the Commissioner and the taxpayer have agreed in writing to its assessment after such time, the tax may be assessed within the period agreed upon. The period so agreed upon may be extended by subsequent written agreement made before the expiration of the period previously agreed upon." In relation thereto, BIR issued RMO No. 20-90 and Revenue Delegation Authority Order (RDAO) No. 5-01, which provide for the procedures to be followed in the proper execution of waivers of the statute of limitations. In CIR us. Kudos Metal Corporation1 9, the Supreme Court enunciated the requirements of a properly executed waiver: "Section 222 (b) of the NIRC provides that the period to assess and collect taxes may only be extended upon a written agreement between the CIR and the taxpayer executed before the expiration of the three-year period. RMO 20-90 issued on April4 , 1990 and RDAO 05-01 18 issued on August 2, 2001 lay down the procedure for the proper execution of the waiver, to wit: 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 J upon to assess/collect the tax after the regular three-year period of prescription, should be filled up. 19 G.R. No . 178087, May 5, 2010.

DECISION Page II of 18 CTA EB No. 962 (C.T.A. Case No. 8175) CIR vs. Belle Corporation 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. In case the authority is delegated by the taxpayer to a representative, such delegation should be in writing and duly notarized. 3. The waiver should be duly notarized. 4. The CIR or the revenue official authorized by him must sign the waiver indicating that the BIR has accepted and agreed to the waiver. The date of such acceptance by the BIR should be indicated. However, before signing the waiver, the CIR or the revenue official authorized by him must make sure that the waiver is in the prescribed form, duly notarized, and executed by the taxpayer or his duly authorized representative. 5. Both the date of execution by the taxpayer and date of acceptance by the Bureau should be before the expiration of the period of prescription or before the lapse of the period agreed upon in case a subsequent agreement is executed. 6. The waiver must be executed in three copies, the original copy to be attached to the docket of the case, the second copy for the taxpayer and the third copy for the Office accepting the waiver. The fact of receipt by the taxpayer of his j her file copy must be indicated in the original copy to show that the taxpayer was notified of the acceptance of the BIR and the perfection of the agreement." (Emphasis supplied) In the instant case, records show that respondent executed six (6) waivers of the statute of limitations, to wit: Exhibit Date Executed Date of Acceptance Last Day No. Agreed Upon 10 November 29, 2005 November 30, 2005/ June 30, 2006 December 2 (no year) 11 May 29,2006 September 30, 2006 June 8, 2006 December 31, 2006 12 August 8, 2006 August 25, 2006 November 28, 2006 June 30, 2007 13 November 16, 2006 December 31 , 2007 May 18, 2007 14 May 15, 2007 No date June 30, 2008 15 November 20, 2007 After a careful review of the subject waivers, We agree with the findings of the Court in Division that the waivers are defective. Pertinent portions of the assailed decision are quoted hereunder: ~

DECISION Page 12 of 18 CTA EB No. 962 (C.T.A. Case No. 8175) CIR vs. Belle Corporation "A careful examination of the waivers executed for petitioner reveals that the first and last waivers failed to comply with the above procedure. To begin with, it is imperative to pass upon the validity of the first waiver executed by Cecilia Patricio on November 29, 2005 (Exhibit" 10") in order to determine the propriety of the subsequent waivers. Upon a careful perusal of the first waiver executed on November 29, 2005, this Court finds the following infirmities: 1) the waiver was executed without the notarized written authority from petitioner authorizing Cecilia Patricio to sign the waiver in behalf of the corporation; 2) the date of acceptance of the waiver was not clearly indicated, as there are two (2) dates appearing to be the date of acceptance: November 30, 2005, which is indicated on the space provided for the date of acceptance; and December 2 (with no year), which is indicated beside the signature of the signatory, Corazon Pangcog, Head Revenue Executive Assistant, Large Taxpayers Service; and 3) the waiver was not properly notarized considering that: the name of the affiant was not specified; there was a superimposition on the date and place of notarization without any counter-signature; and the date and place of issuance of the Community Tax Certificate was not indicated therein. Considering the above defects in the execution of the first waiver, this Court finds the same invalid, hence, without force and legal effect. Thus, it necessarily follows that the subsequent waivers are likewise without force and effect for having been executed based on an invalid first waiver. There was nothing to extend when the subsequent waivers were executed, as the period for assessment was not tolled nor extended, and had prescribed on February 11, 2005, at the earliest and January 20, 2006, at the latest. Therefore, for failure of the waiver of the statute of limitation to strictly conform with RMO 20-90 and RDAO 05- 01, the period of limitation was not extended, hence, the FLD /FAN dated April 16, 2008, which was received by petitioner on April 21, 2008, is void for having been issued beyond the three (3)-year period to assess."20 ~ 20 Rollo, pp. 55-57.

DECISION Page 13 of 18 CTA EB No. 962 (C.T.A. Case No. 8175) CIR vs. Belle Corporation Petitioner argues that respondent's voluntary execution of the series of waivers is a unilateral act, hence said waivers should not be considered as contracts. The acceptance by the Commissioner has no further effect as to the validity of the waiver. To bolster its argument, petitioner cited Stange us United States, 282 U.S. 270 (1931), a US case which held that a waiver is not a contract and the provision requiring the Commissioner's signature was inserted for purely administrative purposes and not to convert into a contract what is essentially a voluntary, unilateral waiver of a defense by the taxpayer. Since Section 203 of the NIRC of 1997 was adopted from the United States Internal Revenue Code, the said American jurisprudence provides a certain persuasion. However, as held in Philippine Journalists, Inc. us. Commissioner of Internal Revenue 21 , 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. Even though our income tax laws are of American origin, hence, interpretations by American courts of our parallel tax laws have persuasive effect on the interpretation of these laws22 , We agree with respondent that they are not controlling in our jurisdiction especially when our jurisprudence is replete with cases on the subject matter. Petitioner posits that respondent cannot now belatedly make assertions relative to the alleged defects of the waivers. If there were indeed defects in the waivers, why then did it not invoke the same before the BIR? The validity of the waivers cannot be raised as an issue for the first time on appeal. It must be emphasized that Section 8 of Republic Act No. 1125 (An Act Creating the Court of Tax Appeals) provides categorically that the Court of Tax Appeals shall be a court of record and as such it is required to conduct a formal trial (trial de novo) where the parties must present their evidence accordingly if they desire the Court to take such evidence into consideration. 23 ~ 21 G.R. No. 162852, December 16, 2004. 22 Chamber of Real Estate and Builders' Association, Inc. vs. Romulo, et. al. (G.R. No. 160756, March 9, 2010). 23 Commissioner ofInternal Revenue vs. Manila Mining Corporation (G.R. No. 153204, August 31, 2005).

DECISION Page 14 of 18 CTA EB No. 962 (C.T.A. Case No. 8 175) CIR vs. Belle Corporation Petitioner also argues that respondent is already estopped from impugning the validity of the waivers considering that it is quite absurd and unfair that when the FLD and FAN proved to be adverse to respondent, the same waivers utilized by respondent for its own advantage is now being used to defeat the validity of the waivers it executed out of its own volition and free will. We are not persuaded. The Supreme Court already ruled that estoppel does not apply in this kind of case, to wit: "The doctrine of estoppel cannot be applied in this case as an exception to the statute of limitations on the assessment of taxes considering that there is a detailed procedure for the proper execution of the waiver, which the BIR must strictly follow. As we have often said, the doctrine of estoppel is predicated on, and has its origin in, equity which, broadly defined, is justice according to natural law and right. As such, the doctrine of estoppel cannot give validity to an act that is prohibited by law or one that is against public policy. It should be resorted to solely as a means of preventing injustice and should not be permitted to defeat the administration of the law, or to accomplish a wrong or secure an undue advantage, or to extend beyond them requirements of the transactions in which they originate . Simply put, the doctrine of estoppel must be sparingly applied . Moreover, the BIR cannot hide behind the doctrine of estoppel to cover its failure to comply with RMO 20-90 and RDAO 05-01 , which the BIR itself issued. As stated earlier, the BIR failed to verify whether a notarized written authority was given by the respondent to its accountant, and to indicate the date of acceptance and the receipt by the respondent of the waivers. Having caused the defects in the waivers, the BIR must bear the consequence. It cannot shift the blame to the taxpayer. To stress, a waiver of the statute of limitations, being a derogation of the taxpayer's right to security against prolonged and unscrupulous investigations, must be carefully and strictly construed."24 (Emphasis supplied, citations omitted) Petitioner insists that respondent having availed of the Tax Amnesty Program (TAP), it consequently admits the validity of the assessments and waiver. Petitioner then cited the case of Rizal Commercial Banking Corporation us. CIR (CTA EB Case No. 83) to bolster its claim. Again, We are not persuaded. ~ 24 Commissioner ofInternal Revenue vs. Kudos Metal Corporation (G.R. No. 178087, May 5, 201 0).

DECISION Page 15 of 18 CTA EB No. 962 (C.T.A. Case No. 8175) CIR vs. Belle Corporation In the case of Commissioner of Internal Revenue us. Philex Mining Corporation2s, the Court En Bane has already resolved the issue on whether or not a t axpayer's availment of the tax amnesty automatically means that a taxpayer admits the validity of any prior assessments or waivers. Relevant portions of the decision are quoted below: "The Court En Bane quotes with approval the disquisition made by the Court in Division in the Resolution dated December 19, 2009, to wit: Section 1 of R.A. No. 9480 provides that the tax amnesty covers all national internal revenue taxes for taxable year 2005 and prior years, with or without assessments, that have remained unpaid as of December 31, 2005. Clearly, the availment of the said tax amnesty does not necessarily mean that a taxpayer admits the validity of any prior assessments and waivers, as argued by respondent; since the tax amnesty covers even those without any assessment. The law does not impose such conditions, save for the taxpayer to satisfy all the qualification requirements. (Boldfacing supplied) In addition, with the findings that the waivers were null and void which consequently failed to extend the period within which the CIR may assess PMC for any deficiency taxes, the assessment issued therefor was made outside of the prescribed period and is thus, void. Therefore, PMC's availment of the tax amnesty program would fall under those without any assessments required." (Emphasis supplied) In Rizal Commercial Banking Corporation v. Commissioner ofInternal Revenue26(RCBC case), th e Supreme Cou rt held th at: "Estoppel is clearly applicable to the case at bench. RCBC, through its partial payment of the revised assessments issued within the extended period as provided for in the questioned waivers, impliedly admitted the validity of those waivers. Had petitioner truly believed that the waivers were invalid and that the assessments were issued beyond the prescriptive period, then it should not have paid the reduced amount of taxes in the revised assessment. RCBC's subsequent action effectively belies its insistence that the waivers are invalid. The records show that on December 6, 2000, upon receipt of the revised assessment, RCBC immediately made payment on the uncontested taxes. Thus, RCBC is estopped from questioning the validity of the waivers. To hold otherwise and allow a party to gainsay its own act or deny rights/ 25 CTA EB No. 578, June 28, 20 I0. 26 G.R. No. 170257, September 7, 2011.

DECISION Page 16 of 18 CTA EB No. 962 (C.T.A. Case No. 8175) CIR vs. Belle Corporation which it had previously recognized would run counter to the principle of equity which this institution holds dear." (Emphasis supplied) The RCBC Case, however, is not on all fours with the instant case. Respondent never made any partial payment on the questioned assessments. Petitioner likewise insists that the period of limitation provided in Section 203 of the NIRC of 1997, as amended, finds no application to withholding tax as the same is not an internal revenue tax but is only a system to collect tax. We agree with the ruling of the Court in Division that petitioner's above contention is devoid of merit. Quoted hereunder is the relevant portion of the assailed decision: "xxx Section 21 of the NIRC of 1997, as amended, provides: "SEC. 21. Sources of Revenue. -The following taxes, fees and charges are deemed to be national internal revenue taxes: (a) Income tax; (b) Estate and donor's taxes; (c) Value-added tax; (d) Other percentage taxes; (e) Excise taxes; (f) Documentary stamp taxes; and (g) Such other taxes as are or hereafter may be imposed and collected by the Bureau of Internal Revenue. " Withholding taxes are taxes withheld from income payments by withholding agents, which is clearly mandated under the NIRC and collected by the BIR. In this case, respondent allegedly found deficiency EWT and FWT from income payments made by petitioner pursuant to Sections 57 and 28 of the NIRC of 1997, as amended, respectively. It is clear, therefore, that the alleged deficiency EWT and FWT are covered by the period of limitation of assessment and /r collection under Section 203 of the NIRC of 1997, as amended."

DECISION Page 17 of 18 CTA EB No. 962 (C.T.A. Case No. 8175) CIR vs. Belle Corporation Moreover, in a number of cases27, the Supreme Court has uniformly applied Section 203 of the NIRC of 1997, as amended, to withholding tax assessments. Finding no reversible error, We affirm the assailed Decision dated September 18, 2012 and Resolution dated November 19, 2012 of the former Third Division. WHEREFORE, premises considered, the instant Petition for Review is hereby DISMISSED for lack of merit. SO ORDERED. AMEfJdAJRJC_OT~AN~fdG.C_O_~.MA,N/A~LASTAS Associate Justice WE CONCUR: Presiding Justice 5A~ c. ~~o& I <;l., � ~ JffANITO c. CASTANEDK,'.JR. CAESAR A. CASANOVA Associate Justice Associate Justice ERL~' P.UY Associate Justice .... 27 Philippine Journalist, Inc. vs. Commissioner ofInternal Revenue (G. R. No. 162852, December 16, 2004); Commissioner of Internal Revenue vs. FMF Development Corporation (G.R. No. 167765, June 30, 2008); Commissioner ofInternal Revenue vs. Kudos Metal Corporation (G .R. No. 178087, May 5, 2010).

DECISION Page 18 of 18 CTA EB No. 962 (C.T.A. Case No. 8175) CIR vs. Belle Corporation ~ N.M~ - 6~ CIELITO N. MINDARO-GRULLA Associate Justice ~-~~A MA. BELEN M. RINGPIS-LIBAN Associate Justice CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the above Decision has been reached in consultation with the members of the Court En Bane before the case was assigned to the writer of the opinion of the Court. Presiding Justice