G.R. No. 139736 – 510 Phil. 1 – 473 SCRA 205 – Taxation Law – Tax Collection – Prescriptive Period – Reconsideration vs Reinvestigation
On October 20, 1989, the Bureau of Internal Revenue (BIR) issued a formal assessment notice (FAN) against the Bank of the Philippine Islands (BPI). The FAN demanded BPI to pay P28k in taxes. In November 1989, BPI filed a protest however the protest did not specify if it was a request for reconsideration or a reinvestigation. The BIR did not reply to the protest but on October 15, 1992 (four days before the expiration of the period to collect – or 1095 days [3 years] after issuance of FAN on 10/20/1989), the Commissioner of Internal Revenue (CIR) issued a warrant of distraint/levy against BPI for the satisfaction of the assessed tax. The warrant was served to BPI on October 23, 1992 (four days after period has prescribed). In September 1997, the CIR finally sent a letter to BPI advising the latter that its protest is denied.
ISSUE:
1. Whether or not the filing of the protest by BPI suspended the running of the prescriptive period.
2. Whether or not the government’s right to collect the assessed tax has prescribed.
HELD:
- No. The protest did not indicate whether BPI was asking for a reconsideration or a reinvestigation but since BPI did not adduce additional evidence, it should be treated as a request for reconsideration. Under the tax code, a request for reconsideration does not suspend the running of the prescriptive period. Even assuming that the protest is a request for reinvestigation, the same did not toll the running of the prescriptive period because the CIR failed to show proof that the request has been granted and that a reinvestigation has been actually conducted. In fact, BPI never heard from the BIR not until the CIR decided the protest in September 1997 – 5 years after the protest has been filed.
- Yes. When it comes to collection, even though the warrant for distraint/levy was issued within the prescriptive period, it is required that the same should be served upon the taxpayer within the prescriptive period. This is because it is upon the service of the Warrant that the taxpayer is informed of the denial by the BIR of any pending protest of the said taxpayer, and the resolute intention of the BIR to collect the tax assessed. In the case at bar, BPI received the warrant 4 days after the expiration of the prescriptive period hence, the right to collect has already prescribed.
