Bank of the Philippine Islands v. Commissioner of Internal Revenue
MODIFICATIONFacts
The Antecedents: Petitioner Bank of the Philippine Islands (BPI) sold US$1,000,000.00 worth of foreign bills of exchange to the Central Bank of the Philippines (Central Bank) on June 6 and 14, 1985. The Bureau of Internal Revenue (BIR) issued Assessment No. FAS-5-85-89-002054 on October 10, 1989, demanding payment of ₱28,020.00 as deficiency documentary stamp tax (DST) for these transactions. Procedural History: BPI protested the assessment on November 17, 1989, arguing that the buyer (Central Bank) was exempt from DST and that the proviso shifting liability to the seller under PD 1994 was not yet effective in 1985. The BIR issued a Warrant of Distraint and/or Levy on October 15, 1992, which was served on BPI on October 23, 1992. On August 13, 1997, the BIR denied BPI's protest. BPI filed a Petition for Review with the Court of Tax Appeals (CTA), raising issues of prescription and taxability. The CTA ruled that the collection period had not prescribed but ordered the cancellation of the assessment, finding the transactions tax-exempt. The Court of Appeals (CA) reversed the CTA on the taxability issue, reinstating the assessment. The Petition: BPI filed a Petition for Review on Certiorari with the Supreme Court, assailing the CA decision and raising two main issues: (1) whether the right of the BIR to collect the deficiency DST had prescribed, and (2) whether the sales of foreign currency were subject to DST.
Issue(s)
Whether the right of the Commissioner of Internal Revenue to collect the deficiency documentary stamp tax from petitioner BPI had prescribed. Whether the sales of foreign currency by petitioner BPI to the Central Bank in 1985 were subject to documentary stamp tax.
Ruling
The Supreme Court granted the petition, reversed the Court of Appeals decision, and ordered the cancellation of Assessment No. FAS-5-85-89-002054. The Court ruled that the right of the Commissioner of Internal Revenue to collect the deficiency DST had prescribed.
Ratio Decidendi
On the issue of prescription: The Court ruled that the statute of limitations for the collection of the deficiency DST had already prescribed. The three-year period for collection, starting from the assessment notice received by BPI on October 20, 1989, would have expired on October 19, 1992. The BIR's earliest attempt to collect was the issuance of a Warrant of Distraint and/or Levy on October 15, 1992, but this was served only on October 23, 1992, which was beyond the prescriptive period. The Court clarified that for distraint and levy proceedings to suspend the statute of limitations, both issuance and service of the warrant are necessary, and service must occur within the prescriptive period. The subsequent denial of BPI's protest in 1997 and the filing of an Answer in 1997 were also well beyond the prescriptive period. The Court disagreed with the CTA and CA that BPI's protest suspended the prescriptive period. The Court distinguished between a request for reconsideration and a request for reinvestigation, as defined by Revenue Regulations (RR) No. 12-85. A request for reconsideration, which BPI's protest was, does not suspend the running of the statute of limitations. Only a request for reinvestigation, which is granted by the Commissioner, can suspend the period under Section 224 of the Tax Code. The Court found no evidence that BPI's protest was treated as a reinvestigation or that it was granted by the BIR Commissioner. Furthermore, BPI did not execute any waiver of the statute of limitations on collection, which is another statutory ground for suspension. The Court also distinguished the present case from Commissioner of Internal Revenue v. Wyeth Suaco Laboratories, Inc., noting that in Wyeth Suaco, the BIR had actually granted and acted upon the request for reinvestigation, leading to a revised assessment, which is not the case here. The Court also reiterated the principle from Collector of Internal Revenue v. Suyoc Consolidated Mining Co. that while repeated requests by a taxpayer might estop them from claiming prescription, BPI's single protest for reconsideration did not constitute such repeated acts. The Court concluded that the BIR's failure to act promptly on BPI's protest and enforce collection within the statutory period meant the right to collect had prescribed. On the issue of whether the sales of foreign currency by petitioner BPI to the Central Bank in 1985 were subject to documentary stamp tax: [This section is intentionally left blank because the provided text does not contain any ratio decidendi related to this issue. If the original document contains information on this issue, it should be included here.]
Main Doctrine
The statute of limitations on collection of taxes may only be interrupted or suspended by a valid waiver executed in accordance with paragraph (d) of Section 223 of the Tax Code of 1977, as amended, and the existence of the circumstances enumerated in Section 224 of the same Code, which include a request for reinvestigation granted by the BIR Commissioner. A mere protest for reconsideration, without more, does not suspend the prescriptive period for collection.