Case Summary (G.R. No. 181836)
Background of the Case
BPI, being the successor-in-interest of Citytrust Banking Corporation, received an assessment notice from the Bureau of Internal Revenue (BIR) on 19 May 1989, indicating a deficiency DST amounting to P1,259,884.50 for tax year 1985, including a compromise penalty. The basis for the assessment was a computation related to the foreign bills of exchange.
Legal Arguments Presented by BPI
On 23 June 1989, BPI protested the assessment, asserting it was not liable for the DST based on several grounds:
- Business Practice: Citing the Bankers Association of the Philippines’ rules, BPI contended that the DST should be borne by the buyer.
- Tax-Exempt Status: Citing BIR Ruling No. 135-87, BPI argued that neither party in the transaction should be liable for the tax before the effectiveness of Presidential Decree No. 1994 on 1 January 1986.
- Indifference of Law: BPI claimed the law did not clearly assign the liability when one party was tax-exempt.
- Historical Consistency: The assessment was consistent with previously made assessments by the BIR regarding transactions from 1982 to 1986.
BIR's Response and the CTA Ruling
The CIR denied BPI's protest on 4 August 1998, asserting that BPI's arguments lacked legal basis and highlighting precedents where liability shifted to the non-exempt party. In a subsequent ruling in February 2001, the Court of Tax Appeals (CTA) sided with BPI, concluding that neither BPI nor the Central Bank could be held liable for the DST due to the exemptions and legal interpretations of tax law prior to the presidential decree.
Court of Appeals Ruling
The CIR appealed the CTA's decision. The Court of Appeals (CA), in a ruling dated 29 May 2007, reversed the CTA's decision, upholding the CIR's position and emphasizing the failure of BPI to justify its tax exemption argument. The CA ordered BPI to pay the assessed amount along with accrued interest.
Petition for Review
After the CA denied BPI's motion for reconsideration in February 2008, BPI subsequently filed a petition for review with the Supreme Court, which raised the issue of whether the BIR had the right to collect the assessed DST due to the expiration of the statute of limitations.
Statute of Limitations on Tax Collection
The Supreme Court confirmed that the three-year prescriptive period for collecting the assessed tax began upon BPI's receipt of the assessment notice on 16 June 1989, thereby establishing a collection deadline of 15 June 1992. The BIR failed to initiate any collection procedures before this deadline, as the first official action in this vein came in 1999, which was well beyond the prescribed period.
Distinction Between Reconsideration and Reinvestigation
The Court n
...continue readingCase Syllabus (G.R. No. 181836)
Case Overview
- This case involves a petition for review filed by the Bank of the Philippine Islands (BPI) against the Commissioner of Internal Revenue (CIR), contesting the Decision of the Court of Appeals (CA) which reinstated a deficiency documentary stamp tax (DST) assessment.
- The pertinent decisions being appealed were promulgated on 29 May 2007 and 12 February 2008 by the CA, which reversed the earlier ruling of the Court of Tax Appeals (CTA) dated 12 February 2001.
Background Facts
- BPI, as the successor-in-interest to Citytrust Banking Corporation, received an assessment notice dated 19 May 1989 from the Bureau of Internal Revenue (BIR), indicating a DST liability of ₱1,259,884.50 for the taxable year 1985.
- The assessment was based on the sale of foreign bills of exchange to the Central Bank, with the breakdown of the tax due amounting to ₱839,723,000.00 and additional penalties.
- Upon receiving the assessment on 16 June 1989, BPI protested the assessment on 23 June 1989, arguing that it should not be liable for the DST due to various reasons, including tax-exempt status and established business practices.
CTA Ruling
- The CTA ruled on 12 February 2001, favoring BPI by canceling the DST assessment, asserting that neither BPI nor the Central Bank could be liable for the payment of the assessed DST before the applicable law changed in 1986.
- The CTA’s decision emphasized that no legal basis existed for shifting the tax liability to a non-exempt entity prior to the enactment of Presidential Decree No. 1994.
CA Ruling
- The CA r