Bank of the Philippine Islands v CIR; G.R. No. 174942; 07 Mar 2008

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Petitioner filed on 20 April 1989 a protest on the demand/assessment notices issued against it for deficiency withholding tax at source (Swap Transactions and DST for the years 1982 to 1986. On 09 August 2002, respondent issued a final decision on petitioner’s protest withdrawing and cancelling the deficiency withholding tax assessment, but reiterating the deficiency DST assessment and ordering petitioner to pay its tax liabilities within 30 days from receipt of such order. CTA denied petitioner’s petition for review ruling that BPI’s protest and supplemental protest should be considered requests for reinvestigation which tolled the prescriptive period provided by law to collect a tax deficiency by distraint, levy, or court proceeding.

Whether or not petitioner’s request for reinvestigation suspended the running of the prescriptive period for assessment and collection.

NO. Section 320 of the 1977 Tax Code is plainly worded. In order to suspend the running of the prescriptive periods for assessment and collection, the request for reinvestigation must be granted by the CIR.

There is nothing in the records of this case which indicates, expressly or impliedly, that the CIR had granted the request for reinvestigation filed by BPI. What is reflected in the records is the piercing silence and inaction of the CIR on the request for reinvestigation, as he considered BPI’s letters of protest to be.

The inordinate delay of the CIR in acting upon and resolving the request for reinvestigation filed by BPI and in collecting the DST allegedly due from the latter had resulted in the prescription of the government’s right to collect the deficiency.

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