Facts:

The case revolves around Bank of the Philippine Islands (BPI) as the petitioner, challenging the decision of the Commissioner of Internal Revenue (CIR), the respondent. This petition for review was filed against the Court of Appeals (CA) decision promulgated on May 29, 2007, and the subsequent resolution on February 12, 2008, which reversed a prior ruling by the Court of Tax Appeals (CTA) dated February 12, 2001. The CA reinstated the assessment against BPI, requiring payment of P1,259,884.50 in deficiency documentary stamp tax (DST) for the taxable year 1985, including a compromise penalty.

BPI, as the successor-in-interest of Citytrust Banking Corporation, is a recognized commercial bank in the Philippines. On May 19, 1989, the Bureau of Internal Revenue (BIR) issued Assessment No. FAS-5-85-89-000988, indicating that BPI was liable for DST on sales of foreign bills of exchange it made to the Central Bank. The taxable amount was sizable, amounting to P839,723,000. The assessmen

...

Facts:

Parties and Institutional Background

• Bank of the Philippine Islands (BPI), petitioner, is a commercial banking corporation and the successor-in-interest of Citytrust Banking Corporation.
• The respondent is the Commissioner of Internal Revenue (CIR) representing the Bureau of Internal Revenue (BIR).

Assessment of Deficiency DST

• On 19 May 1989, the BIR issued Assessment No. FAS-5-85-89-000988 against BPI for deficiency documentary stamp tax (DST) on the sales of foreign bills of exchange to the Central Bank for the taxable year 1985.
• The computation included:
• A base tax on foreign bills of exchange amounting to P839,723,000.00 multiplied by P0.30, plus
• A suggested compromise penalty, resulting in a total assessment of P1,259,884.50.
• BPI received the demand for payment on 16 June 1989.

Protest and Subsequent Actions

• On 23 June 1989, BPI, through counsel, filed a protest letter seeking reinvestigation and/or reconsideration of the assessment.
• BPI argued, among other things:
• Under recognized business practice (incorporated in the Bankers Association of the Philippines Foreign Exchange Trading Center Rule 2(e)), the responsibility for DST was for the buyer’s account.
• BIR Ruling No. 135-87 indicated that neither party should be liable for DST before the effectivity of PD No. 1994 on 1 January 1986.
• Since the then law allowed the tax to be paid indifferently by either party and the liable party was exempt, the document should be exempt from DST.
• The same DST assessment had been previously made for activities covering taxable years 1982–1986.
• The CIR, in a letter dated 4 August 1998, denied the request for reconsideration, holding that BPI’s arguments were legally untenable and citing earlier BIR rulings (including the Unnumbered Ruling dated 30 May 1977 and BIR Ruling No. 144-84 dated 3 September 1984).

Court Proceedings and Decisions

• On 4 January 1999, BPI filed a petition for review before the Court of Tax Appeals (CTA).
• On 23 February 1999, the CIR filed an answer, demanding payment of the assessed DST.
• On 12 February 2001, the CTA issued a decision canceling the assessed DST by holding that neither BPI nor the tax-exempt Central Bank could be held liable for the tax, especially since before PD 1994 there was no law shifting the liability when the taxpayer was exempt.
• Dissatisfied with the CTA ruling, the CIR appealed to the Court of Appeals (CA).
• On 29 May 2007, the CA reversed the CTA decision, reinstating Assessment No. FAS-5-85-89-000988 and ordering BPI to pay the amount due along with a compromise penalty and interest.
• Following the CA decision, BPI filed a petition for review before the Supreme Court, contesting the reinstated assessment.

Prescription Issue and Clarification on Protest Letter

• In a resolution dated 5 August 2013, the Third Division of the Supreme Court observed that the statute of limitations (prescription) on the collection of the assessed DST may have already expired.
• The issue of prescription was raised despite the fact that the CIR argued it could not be raised for the first time on appeal.
• Central to the controversy was whether the protest letter filed by BPI constituted a valid request for reinvestigation (which would suspend the prescriptive period) or merely a request for reconsideration (which would not suspend the period).

Issue:

Whether the BIR has the right to collect the assessed deficiency DST from BPI given the lapse of the applicable prescriptive period.

• Specifically, whether the collection of the internal revenue tax, assessed in 1989 for taxable year 1985, was time-barred by the three-year limitation period provided under the law.
• Whether BPI’s protest letter, characterized as a request for reconsideration rather than a bona fide request for reinvestigation, could suspend the running of the prescriptive period for the collection of the assessed tax.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)