G.R. No. 227049 - Commissioner of Internal Revenue vs. Bank of the Philippine Islands

On May 6, 1991, the Commissioner of Internal Revenue (CIR) sent Assessment Notices to Citytrust Banking Corporation (Citytrust) for deficiency internal revenue taxes for the year 1986 totaling ₱20,865,320.29, covering:

Income tax (IT): ₱19,202,589.97
Expanded withholding tax (EWT): ₱1,582,815.03
Withholding tax on deposit substitutes (WTD): ₱33,065.29
Real estate dealer’s fixed tax (DFT): ₱7,175.00
Penalties for late remittance of withholding tax on compensation (WTC): ₱39,675.00

The assessments followed Citytrust’s execution of three Waivers of the Statute of Limitations dated August 11, 1989, July 12, 1990, and November 8, 1990, intended to extend the prescriptive period for tax assessment.
Citytrust protested the assessments on May 30, 1991, and again on February 17, 1992.
On February 5, 1992, the Bureau of Internal Revenue (BIR) formally demanded payment within 10 days via letter.

The deficiency IT portion was subject to a compromise and collection process, leading to the Supreme Court case G.R. No. 224327 decided in 2018.
The deficiency EWT, WTD, DFT, and WTC amounts (totaling ₱1,624,930.32) were the subject of the present petition.

Attempts at compromise pursuant to RMO 45-93 failed. CIR initially agreed on settlement but later denied Citytrust’s application.
Citytrust and BPI merged on October 4, 1996, with BPI as the surviving entity.
In 2011, CIR issued a Notice of Denial to BPI requesting payment of Citytrust's deficiency IT of ₱19,202,589.97.
CIR issued a Warrant of Distraint and/or Levy dated September 21, 2011 against BPI to collect this amount.
BPI filed a petition before the Court of Tax Appeals (CTA) to cancel the warrant; the CTA canceled the warrant and the Supreme Court affirmed this cancellation on November 16, 2018, emphasizing:

Lack of proof that Citytrust received the February 5, 1992 letter, hence no valid assessment issued.
BPI was not estopped from questioning the defects in waivers extending the statute of limitations.

On November 4, 2011, BPI received a separate Warrant of Distraint and/or Levy relating to the other deficiency taxes totaling ₱1,624,930.32.
BPI again filed a petition before the CTA hoping to suspend collection, cancel the warrant, enjoin further implementation, and declare assessments prescribed and invalid.
CTA Third Division canceled and set aside the November 2011 Warrant in a Decision dated April 16, 2014.
The CTA Division ruled:

CTA had jurisdiction over the petition, covering questions arising under tax laws.
The CIR’s issuance of assessment notices on May 6, 1991 was beyond the three-year prescriptive period for EWT, WTD, and WTC; only DFT assessment fell within a ten-year prescriptive period.
No suspension of prescriptive periods occurred since no reinvestigation or reconsideration was granted.
Only the first waiver was valid; the two subsequent waivers did not conform to formal requirements and were invalid, failing to extend the prescriptive period.
The warrant of distraint was issued in 2011, too late to collect these taxes.

The CIR’s motion for reconsideration was denied, leading to elevation to the CTA En Banc.

BPI did not question any final decision but primarily assailed the issuance and implementation of the warrant.
The petition involved the CIR’s right to assess and collect, matters under the CTA’s jurisdiction.
All three waivers were invalid due to lack of CIR’s signature; none extended the prescriptive period.
While some deficiency taxes (DFT and some EWT months) were assessed within the ten-year period, CST could no longer collect them because the warrant was issued more than three years after assessment.

CIR’s motion for reconsideration before the CTA En Banc was denied.
CIR, through the Office of the Solicitor General (OSG), filed a Petition for Review on Certiorari before the Supreme Court.

Whether the Court of Tax Appeals had jurisdiction over BPI’s petition to cancel the warrant of distraint and/or levy.
Whether the CIR timely issued valid deficiency assessments on Citytrust for EWT, WTD, DFT, and WTC for taxable year 1986.
Whether the CIR may still collect the unpaid deficiency taxes given the prescriptive periods and procedural history.