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CIR v. Wyeth Suaco - CTA

This document summarizes a tax case between the Commissioner of Internal Revenue (CIR) and Wyeth Suaco regarding the collection of deficiency taxes. Wyeth Suaco claimed that the right to collect had prescribed according to the statute of limitations. However, the court ruled that Wyeth Suaco's letters requesting reinvestigation and reconsideration of the tax assessments interrupted the prescriptive period. While the initial letters did not explicitly use those words, later correspondence from the company showed they were seeking reconsideration. As such, the Bureau of Internal Revenue properly reviewed the assessments upon the company's request, and issued a new final assessment, restarting the five-year prescriptive period.

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167 views3 pages

CIR v. Wyeth Suaco - CTA

This document summarizes a tax case between the Commissioner of Internal Revenue (CIR) and Wyeth Suaco regarding the collection of deficiency taxes. Wyeth Suaco claimed that the right to collect had prescribed according to the statute of limitations. However, the court ruled that Wyeth Suaco's letters requesting reinvestigation and reconsideration of the tax assessments interrupted the prescriptive period. While the initial letters did not explicitly use those words, later correspondence from the company showed they were seeking reconsideration. As such, the Bureau of Internal Revenue properly reviewed the assessments upon the company's request, and issued a new final assessment, restarting the five-year prescriptive period.

Uploaded by

DaLe Aparejado
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Digest for Tax 2

were made within the five-year period of


38. CIR v. Wyeth Suaco & CTA
limitation, the right of CIR to collect the
same has already prescribed, in accordance
DOCTRINE/S: Settled is the rule that the with Sec. 319(c) of the NIRC.
prescriptive period provided by law to make
a collection by distraint or levy or by a
proceeding in court is interrupted once a ISSUE/S: Whether or not the right of CIR to
taxpayer requests for reinvestigation or collect has already prescribed
reconsideration of the assessment.
RULING:
FACTS: On December 19, 1974, Wyeth
Suaco received notice of assessment from NO. CTA is wrong. Settled is the rule that
the BIR for its failure to remit withholding the prescriptive period provided by law to
tax at source for the 4th quarter of 1973 on make a collection by distraint or levy or by a
accrued royalties, remuneration for technical proceeding in court is interrupted once a
services paid abroad and cash dividends, taxpayer requests for reinvestigation or
including the deduction of non-deductible reconsideration of the assessment.
raw materials from its reports.
In another case, this Court stated that the
The company, thru its tax consultant, SVG statutory period of limitation for collection
& co., sent BIR two letters dated January 17, may be interrupted if by the taxpayer's
1975 and February 8, 1975 protesting the repeated requests or positive acts the
Government has been, for good reasons,
assessment and requesting their cancellation
persuaded to postpone collection to make
or withdrawal on the ground that said him feel that the demand was not
assessments lacked factual or legal basis. unreasonable or that no harassment or
Also, there were letters from the company to injustice is meant by the Government.
the BIR to such effect. On September 12,
1975, the CIR offered to compromise but After carefully examining the records of the
only resulted to a slight reduction of the tax case, we find that Wyeth Suaco admitted
that it was seeking reconsideration of the tax
as per the acting Commissioner’s decision assessments as shown in a letter of James A.
on December 10,1979. Gump, its President and General Manager,
dated April 28, 1975, the relevant portion of
On January 18, 1980, Wyeth Suaco filed which is quoted hereunder, to wit: "We
petition for review with the CTA, praying submit this letter as a follow-up to our
that CIR been joined from enforcing the protest filed with. your office, through our
tax advisers, Sycip, Gorres, Velayo & Co.,
assessments by reason of prescription and
on January 20 and February 10, 1975
that assessments be declared null and void regarding alleged deficiency on withholding
for lack of legal and factual basis. The CTA tax at source of P3,178,994.15 and on
decided against the CIR holding that while percentage tax of P60,855.21, including
the assessments for the deficiency taxes

Page 1 of 3
Digest for Tax 2

interest and surcharges, on which we are


seeking reconsideration."

Although the protest letters prepared by


SGV & Co. in behalf of private respondent
did not categorically state or use the words
"reinvestigation" and "reconsideration," the
same are to be treated as letters of
reinvestigation and reconsideration. By
virtue of these letters, the Bureau of Internal
Revenue ordered its Manufacturing Audit
Division to review the assessments made.
Furthermore, private respondent's claim that
it did not seek reinvestigation or
reconsideration of the assessments is belied
by the subsequent correspondence or letters
written by its officers, as shown above.

These letters of Wyeth Suaco interrupted the


running of the five-year prescriptive period
to collect the deficiency taxes. The Bureau
of Internal Revenue, after having reviewed
the records of Wyeth Suaco, in accordance
with its request for reinvestigation, rendered
a final assessment. This final assessment
issued by then Acting Commissioner Ruben
B. Ancheta was dated December 10, 1979
and received by private respondent on
January 2,1980, fixed its tax liability at
P1,973,112.86 as deficiency withholding tax
at source and P61,1 55.21 as deficiency
sales tax. It was only upon receipt by Wyeth
Suaco of this final assessment that the five-
year prescriptive period started to run again.

Page 2 of 3
Digest for Tax 2

Page 3 of 3

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