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    BPI v. CIR (2005)

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    JP Murao III
    This case discusses the prescriptive period for the Bureau of Internal Revenue (BIR) to assess and collect deficiency taxes. The Supreme Court ruled that the BIR only had three years from issuing its assessment to collect the deficiency tax from the Bank of the Philippine Islands (BPI). However, the BIR only issued a warrant to collect four days after the three-year period expired. While BPI's protest could suspend the period, it was considered a request for reconsideration based on existing records rather than newly discovered evidence. Therefore, the prescriptive period was not suspended and the BIR's collection was barred by prescription. The Supreme Court reversed the Court of Tax Appeals and Court of Appeals rulings, finding in

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    BPI v. CIR (2005)

    Uploaded by

    JP Murao III
    130 views2 pages
    This case discusses the prescriptive period for the Bureau of Internal Revenue (BIR) to assess and collect deficiency taxes. The Supreme Court ruled that the BIR only had three years from issuing its assessment to collect the deficiency tax from the Bank of the Philippine Islands (BPI). However, the BIR only issued a warrant to collect four days after the three-year period expired. While BPI's protest could suspend the period, it was considered a request for reconsideration based on existing records rather than newly discovered evidence. Therefore, the prescriptive period was not suspended and the BIR's collection was barred by prescription. The Supreme Court reversed the Court of Tax Appeals and Court of Appeals rulings, finding in

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    This case discusses the prescriptive period for the Bureau of Internal Revenue (BIR) to assess and collect deficiency taxes. The Supreme Court ruled that the BIR only had three years from issuing its assessment to collect the deficiency tax from the Bank of the Philippine Islands (BPI). However, the BIR only issued a warrant to collect four days after the three-year period expired. While BPI's protest could suspend the period, it was considered a request for reconsideration based on existing records rather than newly discovered evidence. Therefore, the prescriptive period was not suspended and the BIR's collection was barred by prescription. The Supreme Court reversed the Court of Tax Appeals and Court of Appeals rulings, finding in

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    130 views2 pages

    BPI v. CIR (2005)

    Uploaded by

    JP Murao III
    This case discusses the prescriptive period for the Bureau of Internal Revenue (BIR) to assess and collect deficiency taxes. The Supreme Court ruled that the BIR only had three years from issuing its assessment to collect the deficiency tax from the Bank of the Philippine Islands (BPI). However, the BIR only issued a warrant to collect four days after the three-year period expired. While BPI's protest could suspend the period, it was considered a request for reconsideration based on existing records rather than newly discovered evidence. Therefore, the prescriptive period was not suspended and the BIR's collection was barred by prescription. The Supreme Court reversed the Court of Tax Appeals and Court of Appeals rulings, finding in

    Copyright:

    © All Rights Reserved
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    Case: 45. BPI vs. CIR, G.R. No.

    139736, October 17, 2005


    Topic: Prescriptive period to assess and collect deficiency taxes
    DOCTRINE:

    The prescriptive period for assessment and collection was devised for the protection of
    taxpayers and may only be suspended by a valid waiver like granted requests for reinvestigation
    (based on newly-discovered evidence) not requests for reconsideration (based on existing
    records).

    ACTION SEQUENCE:

    BIR Assessment of 28.02K DST to BPI  CTA granted BPI’s PetRev  PetRevCert to SC
    GRANTED

    FACTS

    In 1985, BPI sold $500K to the Central Bank of the Philippines in two separate occasions. In
    October 20, 1989, the BIR issued an assessment finding BPI liable for deficiency Documentary
    Stamp Tax (DST) for the 2 transactions totaling to 28.02K pesos. BPI protested the assessment
    on the ground that established market practice dictate that DST from the sale of foreign
    exchange is paid by the buyer and the Central Bank is exempt from payment of DST. After 3
    years and 4 days or on October 23, 1992, the BIR issued a Warrant of Distraint and/or Levy for
    the deficiency DST and service was made to BPI after a week. Another 5 years went by when
    the BIR denied BPI’s request for reconsideration of the points raised by BPI in its 1989 protest
    letter. In its denial, the BIR admitted that such was the established market practice but the BIR
    is not bound by the same and that as early as 1977, BIR Rulings preceded a 1986 amendment
    to the Tax Code requiring the other party not exempt from payment of DST to be liable for
    payment of it.

    BPI filed a Petition for Review with the CTA raising the defense of prescription that the BIR only
    had 3 years to collect on its transaction. The CTA ruled that BPI’s protest can be treated as a
    request for reconsideration that suspended the prescriptive period to collect on an assessment.
    However, the CTA also ruled that through Resolution No. 35-85 of the Fiscal Incentive Board,
    the Central Bank was given tax exemptions like payment of DST from June 11, 1984- March 9,
    1987. The BIR appealed to the CA.

    The CA sustained the CTA ruling that BIR’s duty to collect had not been barred by prescription
    but reversed the CTA on the ground that although the Central Bank was exempt from payment
    of DST, the BIR is not bound by the market practice of the buyer of foreign exchange
    shouldering payment for the DST.

    ISSUE/S

    W/N the CA erred in affirming the CTA’s decision that the BIR’s duty to collect had already been
    barred by prescription?

    RULING
    YES. Under the Sec. 203 of the 1977 Tax Code, the BIR has to assess and collect an internal
    revenue tax within 3 years from the last day prescribed by law for filling of the return and after a
    validly filed assessment, the BIR has another 3 years or 10 years in cases of fraud to collect. In
    the instant case, the BIR had 3 years or 1,095 days from October 20, 1989 to collect its
    assessed deficiency DST from BPI but it only issued a Warrant of Distraint 4 days after the
    expiration of the 3 year. The CA erred in adopting the CTA ruling that BPI’s protest suspended
    the prescriptive period since said period was precisely devised for the protection of taxpayers
    with the 1977 Tax Code on suspension applicable only to valid waivers like granted requests for
    reinvestigation (based on newly-discovered evidence) not requests for reconsideration (based
    on existing records).

    DISPOSITIVE PORTION

    Petition is GRANTED. CA Decision requiring BPI to pay P28,020 as deficiency DST is


    REVERSED.

    NOTES

    Other Notes

    Digest by Murao

    ----------------------------------------------------------------------

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