Case Digest (G.R. No. 76281)
Facts:
In Commissioner of Internal Revenue v. Wyeth Suaco Laboratories, Inc., G.R. No. 76281, September 30, 1991, the Supreme Court Third Division, Fernan, C.J., writing for the Court, resolved whether collection of alleged deficiency withholding tax and sales tax was barred by prescription.Wyeth Suaco Laboratories, Inc. (Wyeth Suaco) is a domestic manufacturer of pharmaceutical and nutritional products using a fiscal year ending October 31. By Letter of Authority No. 52415 (June 17, 1974) a Revenue Examiner investigated Wyeth Suaco’s books and, in a report submitted October 15, 1974, found unpaid withholding taxes purportedly due for the 4th quarter of 1973 (on accrued royalties, technical service fees and dividends) aggregating P3,178,994.15, and deficiency advance/sales taxes for periods in late 1972 and 1973 totaling P60,855.21 (plus a P300 compromise penalty).
The Bureau of Internal Revenue (BIR) issued assessment notices dated December 16 and 17, 1974, which Wyeth Suaco received on December 19, 1974. Through its tax adviser Sycip, Gorres, Velayo & Co. (SGV & Co.), Wyeth Suaco sent letters dated January 17, 1975 and February 8, 1975 protesting the assessments and asking for their cancellation on factual and legal grounds, asserting among other things that royalties and dividends were not remitted abroad because of Central Bank restrictions and that withholding became due only upon actual payment or remittance. Wyeth also admitted liability for a P1,000 short payment on a particular import.
The BIR’s Manufacturing Audit Division undertook review in response to the protests. Subsequent correspondence from Wyeth Suaco’s officers (a letter of April 28, 1975 by its president and a July 1, 1975 letter by its finance manager) expressly described the prior protests as requests for reconsideration and acknowledged that the matter was undergoing review. After reinvestigation, Acting Commissioner Ruben B. Ancheta rendered a final assessment on December 10, 1979 reducing the withholding-tax assessment to P1,973,112.86 while leaving the sales-tax figure at P61,155.21; this final assessment was received by Wyeth Suaco on January 2, 1980.
Wyeth Suaco filed a petition for review with the Court of Tax Appeals (CTA) on January 18, 1980 seeking to enjoin enforcement on grounds of prescription and lack of basis. Meanwhile the BIR issued warrants of distraint and levy which were served March 12, 1980; the CTA temporarily enjoined collection by resolution dated May 22, 1980. On August 29, 1986, the CTA reversed the BIR action and enjoined collection, holding that although assessment was within five years, collection w...(Subscriber-Only)
Issues:
- Was the Commissioner’s right to collect the assessed deficiency withholding tax and sales tax barred by prescription?
- Did Wyeth Suaco’s protest letters and subsequent correspondence amount to a request for reinvestigation or reconsideration that interrupted the running of the five-year prescriptive period under Section 319(c) of the Tax Code of 1977?
- On the merits, was Wyeth Suaco obligated to remit withholding tax at source on accrued royalties and dividends despite Central Bank restrictions on remittance?
- Was the deficiency sales tax assessmen...(Subscriber-Only)
Ruling:
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Ratio:
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Doctrine:
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