CTA upholds Standard Insurance ruling after denying BIR appeal

THE Court of Tax Appeals (CTA) denied for lack of merit the appeal of the Bureau of Internal Revenue (BIR) against the cancellation of the alleged P218.9-million tax deficiency of Standard Insurance Co., Inc. for 2001.

In a seven-page resolution on June 4, the CTA second division upheld its March 25 decision setting aside and cancelling the documentary stamp tax (DST) deficiency assessment against Standard Insurance as the prescribed period for the collection of the tax has lapsed.

“In sum, we found that no substantial argument was raised to merit reconsideration of our Decision promulgated on March 25, 2019,” the CTA ruled.

The BIR, in its motion for reconsideration, claimed that the court was mistaken in failing to consider the request of Standard Insurance to hold in abeyance the service and execution of warrants of distraint and/or levy and garnishment which justify the suspension of the prescriptive collection period.

“After a careful examination of petitioner’s motion for reconsideration, the Court finds that the issues and arguments raised in said motion had already been sufficiently passed upon and discussed by the Court’s Decision promulgated on March 25, 2019,” the court said.

According to the Tax Code, internal revenue taxes assessed may be collected within five years following the assessment. The court said that as the final assessment notice was received by Standard Insurance on May 5, 2004, the BIR had until May 5, 2009 to collect the tax.

It said that Standard Insurance had requested to hold in abeyance the issuance of warrants for collection in January 2005, which was granted by the BIR in a memorandum dated Jan. 24, 2005, but Standard claimed it “was not informed or notified” of the memorandum.

The court also noted that “no other written communication” was sent by the BIR to Standard Insurance other than its Jan. 31, 2017 decision denying its request for reconsideration.

“The issuance thereof was certainly beyond the five-year period to collect, which had expired on May 5, 2009. Consequently, the said assailed Decision can no longer be enforced as the same was already barred by prescription,” the CTA said.

“For such reasons, respondent’s defense that the prescriptive period provided for the collection of the assessed tax was suspended by the issuance of the said Memorandum has no leg to stand on,” it added.

The decision was written by Associate Justice Cielito N. Mindaro-Grulla and was concurred in by Associate Justice Juanito C. Castañeda, Jr. — Vann Marlo M. Villegas