BPI vs.

CIR Held:
G.R. No. 139736. October 17, 2005
There is no valid ground for suspending the running of the
Facts: Petitioner BPI is a commercial banking corporation organized prescriptive period for collection of the deficiency DST assessed
and existing under the laws of the Philippines. On two separate against petitioner BPI.
occasions, particularly on 06 June 1985 and 14 June 1985, it sold
United States (US) $500,000.00 to the Central Bank of the Anent the question of prescription, this Court disagrees in the
Philippines (Central Bank), for the total sales amount of Decisions of the CTA and the Court of Appeals, and herein
US$1,000,000.00. determines the statute of limitations on collection of the deficiency
DST in Assessment No. FAS-5-85-89-002054 had already prescribed.
On 10 October 1989, the Bureau of Internal Revenue (BIR) issued
assessment notice finding petitioner BPI liable for deficiency DST on The statute of limitations on assessment and collection of taxes is
its afore-mentioned sales of foreign bills of exchange to the Central for the protection of the taxpayer and, thus, shall be construed
Bank. Petitioner BPI received the Assessment, together with the liberally in his favor.
attached Assessment Notice, on 20 October 1989.
Though the statute of limitations on assessment and collection of
Petitioner BPI, through its counsel, protested the Assessment in a national internal revenue taxes benefits both the Government and
letter dated 16 November 1989, and filed with the BIR on 17 the taxpayer, it principally intends to afford protection to the
November 1989. Petitioner BPI did not receive any immediate reply taxpayer against unreasonable investigation. The protest filed by
to its protest letter. However, on 15 October 1992, the BIR issued a petitioner BPI did not constitute a request for reinvestigation,
Warrant of Distraint and/or Levy against BPI only on 23 October granted by the respondent BIR Commissioner, which could have
1992 suspended the running of the statute of limitations on collection of
the assessed deficiency DST under Section 224 of the Tax Code of
Then again, petitioner BPI did not hear from the BIR until 11 1977, as amended.
September 1997, when its counsel received a letter, dated 13
August 1997, signed by then BIR Commissioner Liwayway Vinzons- The Tax Code of 1977, as amended, also recognizes instances when
Chato, denying its “request for reconsideration,”. the running of the statute of limitations on the assessment and
collection of national internal revenue taxes could be suspended,
Upon receipt of the above-cited letter from the BIR, petitioner BPI even in the absence of a waiver,
proceeded to file a Petition for Review with the CTA on 10 October
1997 Of particular importance to the present case is one of the
circumstances enumerated in Section 224 of the Tax Code of 1977,
Petitioner BPI raised in its Petition for Review before the CTA, in as amended, wherein the running of the statute of limitations on
addition to the arguments presented in its protest letter, dated 16 assessment and collection of taxes is considered suspended “when
November 1989, the defense of prescription of the right of the taxpayer requests for a reinvestigation which is granted by the
respondent BIR Commissioner to enforce collection of the assessed Commissioner.”
amount. It alleged that respondent BIR Commissioner only had
three years to collect on Assessment No. FAS-5-85-89-002054, but This Court gives credence to the argument of petitioner BPI that
she waited for seven years and nine months to deny the protest. there is a distinction between a request for reconsideration and a
request for reinvestigation. Revenue Regulations (RR) No. 12-85,
The CTA held that the statute of limitations for respondent BIR issued on 27 November 1985 by the Secretary of Finance, upon the
Commissioner to collect on the Assessment had not yet prescribed. recommendation of the BIR Commissioner, governs the procedure
In resolving the issue of prescription, the CTA reasoned that— for protesting an assessment and distinguishes between the two
types of protest, as follows—
In the case of Commissioner of Internal Revenue vs.
Wyeth Suaco Laboratories, Inc., G.R. No. 76281, (a)Request for reconsideration.—refers to a plea for a
September 30, 1991, 202 SCRA 125, the Supreme reevaluation of an assessment on the basis of existing
records without need of additional evidence. It may involve
Court laid to rest the first issue. It categorically ruled
both a question of fact or of law or both.
that a “protest” is to be treated as request for
reinvestigation or reconsideration and a mere request (b)Request for reinvestigation.—refers to a plea for
for reexamination or reinvestigation tolls the reevaluation of an assessment on the basis of newly-
prescriptive period of the Commissioner to collect on discovered or additional evidence that a taxpayer intends to
an assessment. . . present in the reinvestigation. It may also involve a question
of fact or law or both.
The CA affirmed the decision of the CTA. Hence, the instant case.
It bears to emphasize that under Section 224 of the Tax Code of
Issues: 1977, as amended, the running of the prescriptive period for
collection of taxes can only be suspended by a request for
1. Whether or not the right of respondent BIR Commissioner reinvestigation, not a request for reconsideration. Undoubtedly, a
to collect from petitioner BPI the alleged deficiency DST reinvestigation, which entails the reception and evaluation of
for taxable year 1985 had prescribed; and additional evidence, will take more time than a reconsideration of a
2. Whether or not a request for reconsideration tolls the tax assessment, which will be limited to the evidence already at
prescriptive period of the CIR to collect on an assessment; hand; this justifies why the former can suspend the running of the
statute of limitations on collection of the assessed tax, while the
latter cannot.
 CIR v.TRANSITIONS OPTICAL PHILIPPINES, INC. 1. As a general rule, petitioner has three (3) years to assess
G.R. No. 227544 Nov. 22, 2017 taxpayers from the filing of the return. An exception to the rule of
DOCTRINE: prescription is found in Section 222(b) and (d) of this Code, viz:

Estoppel applies against a taxpayer who did not only raise at the Section 222. Exceptions as to Period of Limitation of Assessment
earliest opportunity its representative's lack of authority to execute and Collection of Taxes-
two (2) waivers of defense of prescription, but was also accorded,
through these waivers, more time to comply with the audit ....
requirements of the Bureau of Internal Revenue. Nonetheless, a tax
assessment served beyond the extended period is void. (b) If before the expiration of the time prescribed in Section 203 for
the assessment of the tax, both the Commissioner and the taxpayer
Facts: On April 28, 2006, Transitions Optical received Letter of have agreed in writing to its assessment after such time, the tax
Authority No. 00098746 dated March 23, 2006 from Revenue may be assessed within the period agreed upon. The period so
Region No. 9, San Pablo City, of the Bureau of Internal Revenue. It agreed upon may be extended by subsequent written agreement
was signed by then Officer-in-Charge-Regional Director Corazon C. made before the expiration of the period previously agreed upon.
Pangcog and it authorized Revenue Officers Jocelyn Santos and Levi
Visaya to examine Transition Optical's books of accounts for intenul ....
revenue tax purposes for taxable year 2004.
(d) Any intemal revenue tax, which has been assessed within the
On October 9, 2007, the parties allegedly executed a Waiver of the period agreed upon as provided in paragraph (b) hereinabove, may
Defense of Prescription (First Waiver). In this supposed First be collected by distraint or levy or by a proceeding in court within
Waiver, the prescriptive period for the assessment of Transition the period agreed upon in writing before the expiration of the five
Optical 's internal revenue taxes for the year 2004 was extended to (5) year period. The period so agreed upon may be extended by
June 20, 2008. The document was signed by Transitions Optical 's subsequent written agreements made before the expiration of the
Finance Manager, Pamela Theresa D. Abad, and by Bureau of period previously agreed upon.
Internal Revenue's Revenue District Officer, Myrna S. Leonida.
Thus, the period to assess and collect taxes may be extended
This was followed by another supposed Waiver of the Defense of upon the Commissioner of Internal Revenue and the taxpayer's
Prescription (Second Waiver) dated June 2, 2008. This time, the written agreement, executed before the expiration of the three
prescriptive period was supposedly extended to November 30, (3) year period.
2008.
In this case, two (2) waivers were supposedly executed by the
Thereafter, the Commissioner of Internal Revenue, through parties extending the prescriptive periods for assessment of income
Regional Director Jaime B. Santiago (Director Santiago), issued a tax, value-added tax, and expanded and final withholding taxes to
Preliminary Assessment Notice (PAN) dated November 11, 2008, June 20, 2008, and then to November 30, 2008.
assessing Transitions Optical for its deficiency taxes for taxable year
2004. Transitions Optical filed a written protest on November 26, Estoppel applies in this case.
2008.
Indeed, the Bureau of Internal Revenue was at fault when it
The Commissioner of Internal Revenue, again through Director accepted respondent's Waivers despite their non-compliance with
Santiago, subsequently issued against Transitions Optical a Final the requirements of RMO No. 20-90 and RDAO No. 05-01.
Assessment Notice (FAN) and a Formal Letter of Demand (FLD)
dated November 28, 2008 for deficiency income tax, value-added Nonetheless, respondent's acts also show its implied admission of
tax, expanded withholding tax, and final tax for taxable year 2004 the validity of the waivers.
amounting to P19, 701,849.68.
First, respondent never raised the invalidity of the Waivers at the
In its Protest Letter dated December 8, 2008 against the FAN, earliest opportunity, either in its Protest to the PAN, Protest to the
Transitions Optical alleged that the demand for deficiency taxes FAN, or Supplemental Protest to the FAN. It thereby impliedly
had already prescribed at the time the FAN was mailed on recognized these Waivers' validity and its representatives' authority
December 2, 2008. to execute them. Respondent only raised the issue of these
Waivers' validity in its Petition for Review filed with the Court of Tax
Issues: Appeals.

1. WON the two (2) Waivers of the Defense of Prescription entered Second, respondent does not dispute petitioner's assertion that
into by the parties on October 9, 2007 and June 2, 2008 were valid. respondent repeatedly failed to comply with petitioner's notices,
YES. directing it to submit its books of accounts and related records for
examination by the Bureau of Internal Revenue. Respondent also
2. WON the assessment of deficiency taxes against respondent ignored the Bureau of Internal Revenue's request for an Informal
Transitions Optical Philippines, Inc. for taxable year 2004 had Conference to discuss other "discrepancies" found in the partial
prescribed. YES. documents submitted. The Waivers were necessary to give
respondent time to fully comply with the Bureau of Internal
Held: Revenue notices for audit examination and to respond to its
Informal Conference request to discuss the discrepancies. Thus,
having benefitted from the Waivers executed at its instance,
respondent is estopped from claiming that they were invalid and CTA granted the petition and cancelled the Assessment Notice
that prescription had set in. because it was already time-barred. The CTA ruled that the
waiver did not extend the three-year prescriptive period
2. But, even as respondent is estopped from questioning the within which the BIR can make a valid assessment because it
validity of the Waivers, the assessment is nonetheless void because did not comply with the procedures laid down in Revenue
it was served beyond the supposedly extended period. Memorandum Order (RMO) No. 20-90:
 First, the waiver did not state the dates of execution
The First Division of the Court of Tax Appeals found that "the date and acceptance of the waiver, by the taxpayer and
indicated in the envelope/mail matter containing the FAN and the the BIR, respectively
FLD is December 4, 2008, which is considered as the date of their  Second, FMF was not furnished a copy of the waiver
mailing. Since the validity period of the second Waiver is only until signed by RDO Zambarrano.
November 30, 2008, prescription had already set in at the time  Third, since the case involves an amount of more
the FAN and the FLD were actually mailed on December 4, 2008. than P1 million, and the period to assess is not yet
about to prescribe, the waiver should have been
For lack of adequate supporting evidence, the Court of Tax Appeals signed by the Commissioner of Internal Revenue,
rejected petitioner's claim that the FAN and the FLD were already and not a mere RDO.
delivered to the post office for mailing on November 28, 2008 but
were actually processed by the post office on December 2, 2008, ISSUES:
since December 1, 2008 was declared a Special Holiday. 1. Is the waiver valid?
2. Did the three-year period to assess internal revenue taxes
This Court finds no clear and convincing reason to overturn these already prescribe?
factual findings of the Court of Tax Appeals.
HELD:
WHEREFORE, the Petition is DENIED.
1. NO. The waiver is invalid. Applying RMO No. 20-90, the waiver in
question here was defective and did not validly extend the original
three-year prescriptive period. (*SAME SA FINDINGS NG CTA: no
date of execution, no copies furnished, must be signed by CIR).
RMO No. 20-90 is not merely directory and must be strictly
followed.
CIR v. FMF Dev. Corp.,
2. YES. The waiver was incomplete and defective and thus, the
G.R. NO. 167765 : June 30, 2008
three-year prescriptive period was not tolled nor extended and
continued to run until April 15, 1999. Even if the three-year period
FACTS:
be counted from May 8, 1996, the date of filing of the amended
 FMF Development Corporation (FMF) is a domestic
return, assuming the amended return was substantially different
corporation organized and existing under Philippine laws.
from the original return, a case which affects the reckoning point of
 In 1996, FMF filed its Corporate Annual Income Tax
the prescriptive period, still, the subject assessment is definitely
Return for taxable year 1995 and declared a loss of
considered time-barred.
P3,348,932. However, it later filed an amended return
and declared a loss of P2,826,541.
WHEREFORE, the petition is DENIED for lack of merit. CTA Decision
 In 1998, the BIR then sent FMF pre-assessment notices is affirmed.
informing it of its alleged tax liabilities. FMF filed a protest
against these notices with the BIR and requested for a ***Under RMO No. 20-90, which implements Sections 203 and 222
reconsideration/reinvestigation.
(b), the following procedures should be followed:
 On February 9, 1999, FMF President Enrique Fernandez
executed a waiver of the three-year prescriptive period
for the BIR to assess internal revenue taxes, hence 1. The waiver must be in the form identified as Annex "A" hereof'.
extending the assessment period until October 31, 1999.
The waiver was accepted and signed by Revenue District 2. The waiver shall be signed by the taxpayer himself or his duly
Officer (RDO) Zambarrano. authorized representative. In the case of a corporation, the waiver
 On October 18, 1999, FMF received amended pre- must be signed by any of its responsible officials.
assessment notices and it immediately filed a protest. On
the same day of filing the protest, it received BIR's Soon after the waiver is signed by the taxpayer, the Commissioner
Demand Letter and Assessment Notice reflecting FMF's of Internal Revenue or the revenue official authorized by him, as
alleged deficiency taxes and accrued interests. hereinafter provided, shall sign the waiver indicating that the
 FMF filed a letter of protest on the assessment invoking Bureau has accepted and agreed to the waiver. The date of such
the defense of prescription by reason of the invalidity of acceptance by the Bureau should be indicated. Both the date of
the waiver. execution by the taxpayer and date of acceptance by the Bureau
 BIR insisted that the waiver is valid because it was signed should be before the expiration of the period of prescription
by the RDO, a duly authorized representative of or before the lapse of the period agreed upon in case a subsequent
petitioner. agreement is executed.
 FMF filed a Petition for Review with the CTA challenging
the validity of the assessment. 3. The following revenue officials are authorized to sign the waiver.

CTA Ruling:
A. In the National Office declaration from the home office on the allocated share
of respondent as a "branch office."
xxx  On December 11, 2001, respondent, through its counsel,
the Quisumbing Torres Law Offices, wrote the BIR
Appellate Division and asked for an extension of period
3. Commissioner For tax cases involving more than P1M
within which to comply with the request for submission
of documents.
B. In the Regional Offices  On March 22, 2004, petitioner rendered a Decision
denying respondent’s request for reconsideration and
1. The Revenue District Officer with respect to tax cases still ordering respondent to pay the deficiency income tax
pending investigation and the period to assess is about to prescribe plus interest that may have accrued.
regardless of amount.  on April 28, 2004, respondent filed before the Court in
xxx Division a Petition for Review on the CTA
4. The waiver must be executed in three (3) copies, the original
copy to be attached to the docket of the case, the second copy for CTA Ruling
the taxpayer and the third copy for the Office accepting the  the assessment was made within the prescribed period
waiver. The fact of receipt by the taxpayer of his/her file copy but the period within which petitioner may collect
shall be indicated in the original copy. deficiency income taxes had already lapsed. The court
5. The foregoing procedures shall be strictly followed. Any revenue cancelled Assessment Notice dated 12 April 1993.
official found not to have complied with this Order resulting in  the request for reconsideration did not suspend the
prescription of the right to assess/collect shall be administratively running of the prescriptive period to collect deficiency
dealt with. (Emphasis supplied.) income tax.
 There was no valid waiver of the statute of limitations, as
the following infirmities were found: (1) there was no
conformity, either by respondent or his duly authorized
representative; (2) there was no date of acceptance to
show that both parties had agreed on the Waiver before
the expiration of the prescriptive period; and (3) there
was no proof that respondent was furnished a copy of the
CIR v. STANLEY WORKS (PHILS.) INC. Waiver. Applying jurisprudence and relevant BIR rulings,
G.R. No. 187589 December 3, 2014 the waiver was considered defective; thus, the period for
collection of deficiency income tax had already
FACTS: prescribed.
 Respondent Stanley Works Sales (Phils.), Inc. is authorized  CTA En Banc:
to engage in the business of designing, manufacturing,
fabricating, or otherwise producing, and the purchase, ISSUE:
sale at whole sale, importation, export, distribution, Whether or not petitioner’s right to collect the deficiency
marketing or otherwise dealing with, construction and income tax of respondent for taxable year 1989 has
hardware materials, tools, fixtures and equipment. prescribed.
 On April 16, 1990, respondent filed with the BIR its
Annual Income Tax Return for taxable year 1989. HELD:
 On March 19, 1993, BIR issued against respondent a Pre- 1. YES. Although there was a waiver executed by the
Assessment Notice (PAN) for 1989 deficiency income tax. respondent, such waiver lacks the following requisites:
 On April 12, 1993, CIR issued to respondent Assessment (1) Conformity of either petitioner or a duly authorized
Notice for deficiency income tax for taxable year 1989. representative;
The Notice was sent on April 15, 1993 and respondent (2) Date of acceptance showing that both parties had
received it on April 21, 1993. agreed on the Waiver before the expiration of the
 On May 19, 1993, respondent filed a protest letter and prescriptive period; and
requested reconsideration and cancellation of the (3) Proof that respondent was furnished a copy of the
assessment. Waiver.
 On November 16, 1993, a certain Mr. John Ang, on behalf  The BIR cannot claim the benefits of extending the period
of respondent, executed a "Waiver of the Defense of to collect the deficiency tax as a consequence of the
Prescription Under the Statute of Limitations of the Waiver when, in truth it was the BIR’s inaction which is
National Internal Revenue Code" (Waiver). the proximate cause of the defects of the Waiver. The BIR
 On January 6, 1994, respondent wrote a letter to the has the burden of ensuring compliance with the
Chief of the BIR Appellate Division and requested the requirements of RMO No. 20-90, as they have the burden
latter to take cognizance of respondent's protest/request of securing the right of the government to assess and
for reconsideration, asserting that the dispute involved collect tax deficiencies. This right would prescribe absent
pure questions of law any showing of a valid extension of the period set by the
 On November 29, 2001, the Chief of the BIR Appellate law.
Division sent a letter to respondent requiring it to submit  The Waiver was not a unilateral act of the taxpayer;
duly authenticated financial statements for the hence, the BIR must act on it, either by conforming to or
worldwide operations of Stanley Works and a sworn by disagreeing with the extension. A waiver of the statute
of limitations, whether on assessment or collection,
 should not be construed as a waiver of the right to invoke RCBC v. CIR
the defense of prescription but, rather, an agreement G.R. No. 170257 September 7, 2011
between the taxpayer and the BIR to extend the period to
a date certain, within which the latter could still assess or FACTS:
collect taxes due.  Petitioner Rizal Commercial Banking Corporation (RCBC)
 Since the Waiver in this case is defective and therefore is a corporation engaged in general banking operations. It
invalid, it produces no effect; thus, the prescriptive period seasonably filed its Corporation Annual Income Tax
for collecting deficiency income tax for taxable year 1989 Returns for Foreign Currency Deposit Unit for the
was never suspended or tolled. Consequently, the right to calendar years 1994 and 1995
enforce collection based on Assessment Notice has  January 23, 1997, RCBC executed 2 waivers of Defense of
already prescribed. Prescription. Under the statute of limitation of the NIRC
covering the Internal Revenue Taxes due for 1994 and
WHEREFORE, premises considered, the Petition is DENIED. 1995 extending the assessment up to Dec. 31, 2000.
 January 27, 2000: RCBC received a formal letter of
demand together with assessment notices for deficiency
CIR v. Kudos Metal Corporation taxes. RCBC filed a Protest and then, a Petition for
GR 178087, May 5, 2010 Review before the CTA pursuant to Sec. 228 of the 1997
Tax Code.
 Dec. 6, 2000: It again received a letter of demand which
Facts: The BIR reviewed and audited Kudos Metal’s records after drastically reduced the deficiency tax except from the
the latter filed its income tax return. Meanwhile, Pasco, the onshore tax and document stamp tax (DST).
corporation’s accountant, executed two waivers of raising the  RCBC argued the validity of the waivers for not being
defense of prescription so that the BIR may complete its signed and for the onshore tax, it should not be primarily
investigation even after the 3-year period of assessment expires. liable since it is only a withholding agent.
The waivers, however, were executed with the following defects:  CTA terminated the assessment for other deficiencies
first, Pasco was not duly authorized to sign the waiver in behalf of except for the FCDU shore tax and DST charging 20%
Kudos; second, the date of acceptance by the Commissioner were deficiency tax. Being denied in CTA en banc, it raised the
not indicated in the first waiver; and lastly, the fact of receipt by matter to the Supreme Court. While the case is pending,
Kudos Metal of its file copy was not indicated in the original copies the DST deficiency was paid after the BIR approved its
of the waivers. application for abatement.
When BIR issued a PAN for the taxable year 1998, followed by FAN, ISSUE: Whether a taxpayer, by paying the other tax
which was dated September 3, 2003 and received by Kudos Metal assessments covered by a Waiver of the Statute of Limitations,
on November 3, 2003, the latter protested the assessments. The is consider estopped from questioning the validity of the said
BIR insisted on collecting the tax so Kudos Metal brought the issue waiver (on the basis that the CIR did not sign it) with respect to
before the CTA, claiming that the government’s right to assess the other covered but unsettled assessments?
taxes had prescribed.
HELD: YES. RCBC is considered estopped through its partial
Issue 1: W/N the notices of assessment were issued by BIR beyond
payment of the revised assessments within the extended
the 3-year prescriptive period
period provided in the said waivers. Thus, it had impliedly
admitted the validity of the said waivers. Had it believed that
Held:
the waiver was invalid and that the period to assess had
Yes. The period for assessment prescribed already because the effectively prescribed, RCBC could have refused to make any
waivers allowing the extension of the period were void. Section payment based on any assessment against it.
222 of the NIRC and RMO-20-90, which lays down the procedure
for the proper execution of waivers, were not complied with. Most Ratio:
importantly, the date of acceptance by the BIR was not indicated so • Article 1431 of the New Civil Code gives basis to the
there is no way to determine if the suspension was made within the doctrine of estoppel. It states that an admission or
prescriptive period. The BIR as a result is now barred from representation is rendered conclusive upon the person making
collecting the unpaid taxes from Kudos Metal. it, and cannot be denied or disproved as against the person
relying thereon. A party is precluded from denying his own
Issue 2: W/N Kudos Metal is estopped from claiming prescription acts, admissions or representations to the prejudice of the
by executing the waivers other party in order to prevent fraud and falsehood.
• Such doctrine is applicable here as RCBC, through its
Held: partial payment of the revised assessments issued within the
extended period impliedly admitted the validity of the waivers.
No. The doctrine of estoppel, which is predicated on equity, is not • As evidence, RCBC even immediately paid the said
applicable here because there is a detailed procedure for the deficiency tax upon receipt of the revised assessments on Dec.
proper execution of a waiver. The BIR failed to comply with the 6, 2000. Thus, RCBC is already estopped. Had RCBC truly
requirements of such law, plain and simple. It cannot now use believed that the waivers were invalid and that the
estoppel to make up for its failure most especially because a waiver assessments were issued beyond the prescriptive period, then
of the statute of limitations, which derogates a taxpayer’s right to it shouldn’t have paid the reduced amount in the assessment.
security against prolonged and unscrupulous investigations, must
be carefully and strictly construed.
 Considering that the deficiency assessment was based on the
CIR v. PHOENIX ASSURANCE CO., LTD., amended return which, as aforestated, is substantially different
G.R. No. L-19727 May 20, 1965 from the original return, the period of limitation of the right to
issue the same should be counted from the filing of the amended
Same; Same; Period of prescription to assess deficiency income tax income tax return. From August 30, 1955, when the amended
commences from filing of amended return.—Where the deficiency return was filed, to July 24, 1958, when the deficiency assessment
assessment is based on the amended return, which is substantially was issued, less than five years elapsed. The right of the
different from the original return, the period of prescription of the Commissioner to assess the deficiency tax on such amended return
right to issue the same should be counted from the filing of the has not prescribed.
amended, not the original income tax return.

Facts:
Phoenix Assurance Co., Ltd., a foreign insurance corporation BPI v. CIR
organized under the laws of Great Britain, is licensed to do business G.R. No. 139736. October 17, 2005
in the Philippines with head office in London. Through its head
office, it entered in London into worldwide reinsurance treaties
with various foreign insurance companies. It agree to cede a Facts:
portion of premiums received on original insurances underwritten Petitioner BPI is a commercial banking corporation organized and
by its head office, subsidiaries, and branch offices throughout the existing under the laws of the Philippines. On two separate
world, in consideration for assumption by the foreign insurance occasions, particularly on 06 June 1985 and 14 June 1985, it sold
companies of an equivalent portion of the liability from such United States (US) $500,000.00 to the Central Bank of the
original insurances. Philippines (Central Bank), for the total sales amount of
US$1,000,000.00.
On August 1, 1958 the Bureau of Internal Revenue deficiency
assessment on income tax for the years 1952 and 1954 against On 10 October 1989, the Bureau of Internal Revenue (BIR) issued
Phoenix Assurance Co, Ltd. The assessment resulted from the assessment notice finding petitioner BPI liable for deficiency DST on
disallowance of a portion of the deduction claimed by Phoenix its afore-mentioned sales of foreign bills of exchange to the Central
Assurance Co., Ltd. as head office expenses allocable to its business Bank. Petitioner BPI received the Assessment, together with the
in the Philippines fixed by the Commissioner at 5% of the net attached Assessment Notice, on 20 October 1989.
Philippine income instead of 5% of the gross Philippine income as Petitioner BPI, through its counsel, protested the Assessment in a
claimed in the returns. letter dated 16 November 1989, and filed with the BIR on 17
November 1989. Petitioner BPI did not receive any immediate reply
Phoenix Assurance Co., Ltd. protested against the aforesaid to its protest letter. However, on 15 October 1992, the BIR issued a
assessments for withholding tax and deficiency income tax. Warrant of Distraint and/or Levy against BPI only on 23 October
However, the Commissioner of Internal Revenue denied such 1992
protest. Subsequently, Phoenix Assurance Co., Ltd. appealed to the
Court of Tax Appeals. In a decision dated February 14, 1962, the Then again, petitioner BPI did not hear from the BIR until 11
Court of Tax Appeals allowed in full the decision claimed by Phoenix September 1997, when its counsel received a letter, dated 13
Assurance Co., Ltd. for 1950 as net addition to marine insurance August 1997, signed by then BIR Commissioner Liwayway Vinzons-
reserve; determined the allowable head office expenses allocable Chato, denying its “request for reconsideration,”.
to Philippine business to be 5% of the net income in the Philippines; Upon receipt of the above-cited letter from the BIR, petitioner BPI
declared the right of the Commissioner of Internal Revenue to proceeded to file a Petition for Review with the CTA on 10 October
assess deficiency income tax for 1952 to have prescribed; absolved 1997
Phoenix Assurance Co., Ltd. from payment of the statutory
penalties for non-filing of withholding tax return. Petitioner BPI raised in its Petition for Review before the CTA, in
addition to the arguments presented in its protest letter, dated 16
Issue: Whether or not the right of the Commissioner of Internal November 1989, the defense of prescription of the right of
Revenue to assess deficiency income tax for the year 1952 against respondent BIR Commissioner to enforce collection of the assessed
Phoenix Assurance Co., Ltd. has prescribed; amount. It alleged that respondent BIR Commissioner only had
three years to collect on Assessment No. FAS-5-85-89-002054, but
Held: she waited for seven years and nine months to deny the protest.
The question is: Should the running of the prescriptive period The CTA held that the statute of limitations for respondent BIR
commence from the filing of the original or amended return? Commissioner to collect on the Assessment had not yet prescribed.
‘xxx the deficiency income tax in question could not possibly be In resolving the issue of prescription, the CTA reasoned that—
determined, or assessed, on the basis of the original return filed on In the case of Commissioner of Internal Revenue vs. Wyeth Suaco
April 1, 1953, for considering that the declared loss amounted to Laboratories, Inc., G.R. No. 76281, September 30, 1991, 202 SCRA
P199,583.93, the mere disallowance of part of the head office 125, the Supreme Court laid to rest the first issue. It categorically
expenses could not possibly result in said loss being completely ruled that a “protest” is to be treated as request for reinvestigation
wiped out and Phoenix being liable to deficiency tax. Not until the or reconsideration and a mere request for reexamination or
amended return was filed on August 30, 1955 could the reinvestigation tolls the prescriptive period of the Commissioner to
Commissioner assess the deficiency income tax in question.” collect on an assessment. . .

Accordingly, he would wish to press for the counting of the The CA affirmed the decision of the CTA. Hence, the instant case.
prescriptive period from the filing of the amended return.
Issues: tax assessment, which will be limited to the evidence already at
1. Whether or not the right of respondent BIR Commissioner hand; this justifies why the former can suspend the running of the
to collect from petitioner BPI the alleged deficiency DST for taxable statute of limitations on collection of the assessed tax, while the
year 1985 had prescribed; and latter cannot.
2. Whether or not a request for reconsideration tolls the
prescriptive period of the CIR to collect on an assessment;
AZNAR v. CTA
Held: No. L-20569. August 23, 1974
There is no valid ground for suspending the running of the
prescriptive period for collection of the deficiency DST assessed Facts:
against petitioner BPI.
The late Matias H. Aznar who died on May 18, 1958, predecessor in
Anent the question of prescription, this Court disagrees in the interest of herein petitioner, during his lifetime as a resident of
Decisions of the CTA and the Court of Appeals, and herein Cebu City, filed his income tax returns on the cash and
determines the statute of limitations on collection of the deficiency disbursement basis from1945 TO 1951. The Commissioner of
DST in Assessment No. FAS-5-85-89-002054 had already prescribed. Internal Revenue having his doubts on the veracity of the reported
The statute of limitations on assessment and collection of taxes is income of one obviously wealthy, caused B.I.R. Examiner Honorio
for the protection of the taxpayer and, thus, shall be construed Guerrero to ascertain the taxpayer's true income for said years by
liberally in his favor. using the net worth and expenditures method of tax investigation.
The assets and liabilities of the taxpayer during the above-
Though the statute of limitations on assessment and collection of mentioned years were ascertained and it was discovered that from
national internal revenue taxes benefits both the Government and 1946 to 1951, his net worth had increased every year, which
the taxpayer, it principally intends to afford protection to the increases in net worth was very much more than the income
taxpayer against unreasonable investigation. The protest filed by reported during said years.
petitioner BPI did not constitute a request for reinvestigation,
granted by the respondent BIR Commissioner, which could have Based on the above findings the BIR notified the taxpayer (Matias
suspended the running of the statute of limitations on collection of H. Aznar) of the assessed tax delinquency. The taxpayer requested
the assessed deficiency DST under Section 224 of the Tax Code of a reinvestigation which was granted for the purpose of verifying the
1977, as amended. merits of the various objections of the taxpayer to the deficiency
income tax assessment of November 28, 1952.
The Tax Code of 1977, as amended, also recognizes instances when The notice of final and last assessment was receive by the
the running of the statute of limitations on the assessment and petitioner on March 2, 1955. Petitioner contends that 8 years had
collection of national internal revenue taxes could be suspended, elapsed and the five year period provided by law.
even in the absence of a waiver,
Of particular importance to the present case is one of the Issue:
circumstances enumerated in Section 224 of the Tax Code of 1977,
as amended, wherein the running of the statute of limitations on Whether or not the right of the Commissioner of Internal Revenue
assessment and collection of taxes is considered suspended “when to assess deficiency income taxes of the late Matias H. Aznar for the
the taxpayer requests for a reinvestigation which is granted by the years 1946, 1947, and 1948 had already prescribed at the time the
Commissioner.” assessment was made on November 28, 1952.

This Court gives credence to the argument of petitioner BPI that Held:
there is a distinction between a request for reconsideration and a
request for reinvestigation. Revenue Regulations (RR) No. 12-85, The CIR is not barred. The ordinary period of prescription of 5 years
issued on 27 November 1985 by the Secretary of Finance, upon the within which to assess tax liabilities under Sec. 331 of the NIRC
recommendation of the BIR Commissioner, governs the procedure should be applicable to normal circumstances, but whenever the
for protesting an assessment and distinguishes between the two government is placed at a disadvantage so as to prevent its lawful
types of protest, as follows— agents from proper assessment of tax liabilities due to false returns,
fraudulent return intended to evade payment of tax or failure to
(a)Request for reconsideration.—refers to a plea for a reevaluation file returns, the period of ten years provided for in Sec. 332 (a)
of an assessment on the basis of existing records without need of NIRC, from the time of the discovery of the falsity, fraud or
additional evidence. It may involve both a question of fact or of law omission even seems to be inadequate and should be the one
or both. enforced.

(b)Request for reinvestigation.—refers to a plea for reevaluation of There being undoubtedly false tax returns in this case, the Court
an assessment on the basis of newly-discovered or additional affirm the conclusion of the respondent Court of Tax Appeals that
evidence that a taxpayer intends to present in the reinvestigation. Sec. 332 (a) of the NIRC should apply and that the period of ten
It may also involve a question of fact or law or both. years within which to assess petitioner's tax liability had not
It bears to emphasize that under Section 224 of the Tax Code of expired at the time said assessment was made.
1977, as amended, the running of the prescriptive period for
collection of taxes can only be suspended by a request for
reinvestigation, not a request for reconsideration. Undoubtedly, a
reinvestigation, which entails the reception and evaluation of
additional evidence, will take more time than a reconsideration of a