This document is a Supreme Court decision regarding a tax assessment issued by the Bureau of Internal Revenue (BIR) against the Bank of the Philippine Islands (BPI) for deficiency documentary stamp tax (DST) in 1985. The Court of Tax Appeals had cancelled the assessment but the Court of Appeals reinstated it. The Supreme Court now denies the BIR's right to collect the assessed DST on the ground that the statute of limitations for collecting the alleged deficiency had expired. The Court was mandated to dismiss the claim due to prescription, even if this was not raised as a defense by BPI.
This document is a Supreme Court decision regarding a tax assessment issued by the Bureau of Internal Revenue (BIR) against the Bank of the Philippine Islands (BPI) for deficiency documentary stamp tax (DST) in 1985. The Court of Tax Appeals had cancelled the assessment but the Court of Appeals reinstated it. The Supreme Court now denies the BIR's right to collect the assessed DST on the ground that the statute of limitations for collecting the alleged deficiency had expired. The Court was mandated to dismiss the claim due to prescription, even if this was not raised as a defense by BPI.
This document is a Supreme Court decision regarding a tax assessment issued by the Bureau of Internal Revenue (BIR) against the Bank of the Philippine Islands (BPI) for deficiency documentary stamp tax (DST) in 1985. The Court of Tax Appeals had cancelled the assessment but the Court of Appeals reinstated it. The Supreme Court now denies the BIR's right to collect the assessed DST on the ground that the statute of limitations for collecting the alleged deficiency had expired. The Court was mandated to dismiss the claim due to prescription, even if this was not raised as a defense by BPI.
This document is a Supreme Court decision regarding a tax assessment issued by the Bureau of Internal Revenue (BIR) against the Bank of the Philippine Islands (BPI) for deficiency documentary stamp tax (DST) in 1985. The Court of Tax Appeals had cancelled the assessment but the Court of Appeals reinstated it. The Supreme Court now denies the BIR's right to collect the assessed DST on the ground that the statute of limitations for collecting the alleged deficiency had expired. The Court was mandated to dismiss the claim due to prescription, even if this was not raised as a defense by BPI.
The Case This petition for review 1 assails the Decision 2 promulgated on 29 May 2007 as well as the Resolution 3 promulgated on 12 February 2008 by the Court of Appeals (CA) in CA-G.R. SP No. 63640. The CA reversed the Decision 4 of the Court of Tax Appeals (CTA), dated 12 February 2001, and reinstated Assessment No. FAS-5-85-89-000988 requiring petitioner Bank of the Philippine Islands (BPI) to pay the amount of P1,259,884.50 as deficiency documentary stamp tax (DST) for the taxable year 1985, inclusive of the compromise penalty. The Facts BPI, successor-in-interest of Citytrust Banking Corporation, is a commercial banking corporation organized and existing under the laws of the Philippines. On 19 May 1989, the Bureau of Internal Revenue (BIR) issued Assessment No. FAS- 5-85-89-000988 5 finding BPI liable for deficiency DST on its sales of foreign bills of exchange to the Central Bank, computed as follows: DHSCTI
1985 Deficiency Documentary Stamp Tax
Foreign Bills of Exchange P839,723,000.00
Tax Due Thereon: P839,723,000.00 x P0.30 (Sec. 182 NIRC) P1,259,584.50 –––––––––––––– P200.00 Add: Suggested compromise penalty 300.00 –––––––––––––– TOTAL AMOUNT DUE P1,259,884.50 ============
On 16 June 1989, BPI received the assessment notice and demand letter from the BIR. IASTDE
The dispositive portion of the CTA decision reads:
WHEREFORE, in view of the foregoing, the Court finds the instant Petition for Review MERITORIOUS. Respondent is hereby ORDERED to CANCEL the 1985 deficiency documentary stamp tax assessment issued to Bank of the Philippine Islands (as successor-in-interest of Citytrust [B]anking Corporation) in the amount of P1,259,884.50 covered by Assessment No. FAS-5-85-89-000988. SO ORDERED. 9
On 12 February 2008, the CA denied the motion for reconsideration filed by BPI. Hence, BPI filed a petition for review before the Court. In a Resolution dated 5 August 2013, 12 the Court, through the Third Division, found that the assailed tax assessment may be invalidated because the statute of limitations on the collection of the alleged deficiency DST had already expired, conformably with Section 1, Rule 9 of the Rules of Court and the Bank of the Philippine Islands v. Commissioner of Internal Revenue 13 decision. However, to afford due process, the Court required both BPI and CIR to submit their respective comments on the issue of prescription. Only the CIR filed his comment on 9 December 2013. In his Comment, 14 the CIR argues that the issue of prescription can not be raised for the first time on appeal. The CIR further alleges that even assuming that the issue of prescription can be raised, the protest letter interrupted the prescriptive period to collect the assessed DST, unlike in the Bank of the Philippine Islands case. 15 cIDHSC
The Issue The issue boils down to whether or not BIR has a right to collect the assessed DST from BPI. The Ruling of the Court We deny the right of the BIR to collect the assessed DST on the ground of prescription. EaHATD
Section 1, Rule 9 of the Rules of Court expressly provides that:
Section 1. Defenses and objections not pleaded. — Defenses and objections not pleaded either in a motion to dismiss or in the answer are deemed waived. However, when it appears from the pleadings or the evidence on record that the court has no jurisdiction over the subject matter, that there is another action pending between the same parties for the same cause, or that the action is barred by prior judgment or by the statute of limitations, the court shall dismiss the claim. (Emphasis and underscoring supplied)
In the present case, although there was no allegation as to when the assessment notice had been released, mailed or sent to BPI, still, the latest date that the BIR could have released, mailed or sent the assessment notice was on the date BPI received the same on 16 June 1989. Counting the three-year prescriptive period from 16 June 1989, the BIR had until 15 June 1992 to collect the assessed DST. But despite the lapse of 15 June 1992, the evidence established that there was no warrant of distraint or levy served on BPI's properties, or any judicial proceedings initiated by the BIR. The earliest attempt of the BIR to collect the tax was when it filed its answer in the CTA on 23 February 1999, which was several years beyond the three-year prescriptive period. However, the BIR's answer in the CTA was not the collection case contemplated by the law. Before 2004 or the year Republic Act No. 9282 took effect, the judicial action to collect internal revenue taxes fell under the jurisdiction of the regular trial courts, and not the CTA. Evidently, prescription has set in to bar the collection of the assessed DST. The BIR nevertheless insists that the running of the prescriptive period to collect the tax was suspended by BPI's filing of a request for the reinvestigation and/or reconsideration on 23 June 1989. In the similar case of Bank of the Philippine Islands, 23 we already ruled on the matter as follows: Of particular importance to the present case is one of the circumstances enumerated in Section [320 (now, 223)] of the Tax Code of 1977, as amended, wherein the running of the statute of limitations on assessment and collection of taxes is considered suspended "when the taxpayer requests for a reinvestigation which is granted by the Commissioner." CITDES
This Court gives credence to the argument of petitioner BPI that there is a distinction between a request for reconsideration and a request for reinvestigation. Revenue Regulations (RR) No. 12-85, issued on 27 November 1985 by the Secretary of Finance, upon the recommendation of the BIR Commissioner, governs the procedure for protesting an assessment and distinguishes between the two types of protest, as follows —
. . . A close review of the contents thereof would reveal, however,
that it protested Assessment No. FAS-5-85-89-002054 based on a question of law, in particular, whether or not petitioner BPI was liable for DST on its sales of foreign currency to the Central Bank in taxable year 1985. The same protest letter did not raise any question of fact; neither did it offer to present any new evidence. In its own letter to petitioner BPI, dated 10 September 1992, the BIR itself referred to the protest of petitioner BPI as a request for reconsideration. These considerations would lead this Court to deduce that the protest letter of petitioner BPI was in the nature of a request for reconsideration, rather than a request for reinvestigation and, consequently, Section 224 of the Tax Code of 1977, as amended, on the suspension of the running of the statute of limitations should not apply. DTSIEc
Even if, for the sake of argument, this Court glosses over the distinction between a request for reconsideration and a request for reinvestigation, and considers the protest of petitioner BPI as a request for reinvestigation, the filing thereof could not have suspended at once the running of the statute of limitations. Article 224 of the Tax Code of 1977, as amended, very plainly requires that the request for reinvestigation had been granted by the BIR Commissioner to suspend the running of the prescriptive periods for assessment and collection. (Emphasis supplied) ADCEaH
SO ORDERED. Brion, Del Castillo, Perez and Perlas-Bernabe, JJ., concur. Footnotes 1. Under Rule 45 of the 1997 Rules of Civil Procedure. Rollo, pp. 8-22. 2. Penned by Associate Justice Regalado E. Maambong, with Associate Justices Conrado M. Vasquez, Jr. and Jose L. Sabio, Jr., concurring. Id. at 26-34. 3. Id. at 35-36. 4. Penned by Presiding Justice Ernesto D. Acosta, with Associate Justice Amancio Q. Saga, concurring, and Associate Justice Ramon O. De Veyra, dissenting. Id. at 76- 92. 5. Records, pp. 10-11.
17. Id., citing Heirs of Durano, Sr. v. Spouses Uy , 398 Phil. 125 (2000). 18. Commissioner of Internal Revenue v. Philippine Global Communication, Inc. , 536 Phil. 1131 (2006); Philippine Journalist, Inc. v. Commissioner of Internal Revenue, 488 Phil. 218 (2004), citing Republic of the Philippines v. Ablaza, 108 Phil. 1105 (1960).
19. D. B. T. Mar-Bay Construction, Inc. v. Panes, 612 Phil. 93 (2009); Dino v. Court of Appeals, 411 Phil. 594 (2001), citing Gicano v. Gegato, 241 Phil. 139 (1988); Chua Lamko v. Dioso, 97 Phil. 821 (1955).
20. The National Internal Revenue Code of 1997, Section 222 provides: Section 222. Exceptions as to Period of Limitation of Assessment and Collection of Taxes. — xxx xxx xxx
Supreme Court Memorandum Order No. 07-2021 - Templates of The Pre-Trial Order and of The Minutes of The Pre-Trial, As Well As Process Flow For Ordinary Civil Cases
Supreme Court Memorandum Order No. 07-2021 - Templates of The Pre-Trial Order and of The Minutes of The Pre-Trial, As Well As Process Flow For Ordinary Civil Cases
