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Cir V B.F. Goodrich Phil., Inc., Et Al GR No. 104171, February 24, 1999

The Supreme Court affirmed the Court of Appeals decision that the BIR issued deficiency tax assessments beyond the five-year statute of limitations. The BIR initially assessed private respondent for deficiency income tax in 1975 which was paid. In 1980 and 1981, the BIR issued two more assessments for alleged deficiency donors tax regarding the 1974 sale of land, which private respondent contested. While the CTA ruled the limitation period did not apply due to alleged falsity, the Supreme Court found no basis to disregard the five-year period and that the BIR did not prove fraudulent intent or failure to file, so the assessments were time-barred.

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324 views1 page

Cir V B.F. Goodrich Phil., Inc., Et Al GR No. 104171, February 24, 1999

The Supreme Court affirmed the Court of Appeals decision that the BIR issued deficiency tax assessments beyond the five-year statute of limitations. The BIR initially assessed private respondent for deficiency income tax in 1975 which was paid. In 1980 and 1981, the BIR issued two more assessments for alleged deficiency donors tax regarding the 1974 sale of land, which private respondent contested. While the CTA ruled the limitation period did not apply due to alleged falsity, the Supreme Court found no basis to disregard the five-year period and that the BIR did not prove fraudulent intent or failure to file, so the assessments were time-barred.

Uploaded by

Gela Bea Barrios
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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CIR V B.F. GOODRICH PHIL., INC., ET AL GR No.

104171, February 24, 1999

On April 23, 1975, petitioner issued against private respondent an assessment for deficiency income
tax for its 1974 income in the amount of P6,005.35, which private respondent duly paid. Subsequently,
on October 10, 1980, petitioner again issued an assessment for deficiency donors tax in the amount
of P1,020,850.00 against private respondent in relation to the sale of its Basilan Landholdings to
Siltown Realty Phils. Inc. in 1974 at a price less than its market value. The BIR deemed the
consideration for the sale insufficient, and the difference between the Fair Market Value and the actual
purchase price a taxable donation. On April 9, 1981, private respondent received another assessment
from petitioner dated March 16, 1981 which increased to P1,092,949.00 the amount demanded for the
alleged deficiency donors tax, surcharge, interest and compromise penalty. Private respondent
assailed the correctness and the legality of these last two assessments to the Court of Tax
Appeals. The CTA modified the decision of the Commissioner of Internal Revenue as to the
amount. The CTA ruled that the ordinary period of limitation upon assessment and collection does
not apply when there is falsity with intent to evade tax as in this case, thus, petitioners right to assess
private respondent has not yet prescribed.

Private respondent appealed to the Court of Appeals, which reversed the CTAs decision. Hence, this
petition.

In affirming the decision of the Court of Appeals, the Supreme Court found the questioned
assessments to have been issued by the BIR beyond the five-year statute of limitations. There was
no basis to disregard the five-year period of prescription expressly provided under Section 331 of the
National Internal Revenue Code. Likewise, Section 15 of the NIRC does not provide an exception to
the statute of limitations on the issuance of an assessment, by allowing the initial assessment to be
made on the basis of the best evidence available. Having made its initial assessment in the manner
prescribed, petitioner could not have been authorized to issue, beyond the five-year prescriptive
period, the second and the third assessments under consideration. Nor is petitioners claim of falsity
sufficient to take the questioned assessments out of the ambit of the statute of limitations. The fact
that private respondent sold its real property for a price less than its declared fair market value did not
by itself justify a finding of false return. Since private respondent declared the said sale in its 1974
Income Tax Return, the BIR should have issued the questioned assessment within the five-year
prescriptive period. Moreover, since the BIR failed to prove that respondents 1974 return had been
filed fraudulently with intent to evade the payment of the correct amount of tax, or that it had failed to
file a return at all, the period for assessments had obviously prescribed.

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