China Banking Corporation v. Revenue

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 172509 February 4, 2015 CHINA BANKING CORPORATION, Petitioner, vs. COMMISSIONER OF INTERNAL REVENUE, Respondent. SERENO,CJ: This Rule 45 Petition1 requires this Court to address the question of prescription of the government's right to collect taxes. Petitioner China Banking Corporation (CBC) assails the Decision2 and Resolution3 of the Court of Tax Appeals (CTA) En Banc in CTA En Banc Case No. 109.

The CTA En Banc affirmed the Decision4 in CTA Case No. 6379 of the CTA Second Division, which had also affirmed the validity of Assessment No. FAS-5-82/85-89-000586 and FAS-5-86-89-00587. The Assessment required petitioner CBC to pay the amount of ₱11,383,165.50, plus increments accruing thereto, as deficiency documentary stamp tax (DST) for the taxable years 1982 to 1986. FACTS Petitioner CBC is a universal bank duly organized and existing under the laws of the Philippines.

For the taxable years 1982 to 1986, CBC was engaged in transactions involving sales of foreign exchange to the Central Bank of the Philippines (now Bangko Sentral ng Pilipinas), commonly known as SWAP transactions.5 Petitioner did not file tax returns or pay tax on the SWAP transactions for those taxable years. On 19 April 1989, petitioner CBC received an assessment from the Bureau of Internal Revenue (BIR) finding CBC liable for deficiency DST on the sales of foreign bills of exchangeto the Central Bank. The deficiency DST was computed as follows: Deficiency Documentary Stamp Tax Amount For the years 1982 to 1985 ₱8,280,696.00 For calendar year 1986 ₱2,481,975.60 Add : Surcharge ₱620,493.90