CIR vs. B.F. Goodrich., Inc.

(now SIME DIRBY INTERNATIONAL TIRE

CO., INC.), CA
G.R. No. 104171, 24 February 1999

Private respondent books of accounts were examined by BIR for purposes of

determining its tax liability for 1974. This examination resulted in the April
23, 1975 assessment of private respondent for deficiency income tax which
it duly paid. Siltown’s books of accounts were also examined, and on the
basis thereof, on October 10, 1980, the Collector of Internal Revenue
assessed deficiency donor’s tax of P1,020,850 in relation to the sale of the
Basilan landholdings.
Private respondent contested this assessment on November 24, 1980.
Another assessment dated March 16, 1981, increasing the amount
demanded for the alleged deficiency donor’s tax, surcharge, interest and
compromise penalty and was received by private respondent on April 9,
1981. On appeal, CTA upheld the assessment. On review, CA reversed the
decision of the court finding that the assessment was made beyond the 5-
year prescriptive period in Section 331 of the Tax Code.

Issue: Whether or not petitioner’s right to assess has prescribed.

Held: Applying then Sec. 331, NIRC (now Sec. 203, 1997 NIRC which
provides a 3-year prescriptive period for making assessments), it is clear
that the October 16, 1980 and March 16, 1981 assessments were issued by
the BIR beyond the 5-year statute of limitations. The court thoroughly
studied the records of this case and found no basis to disregard the 5-year
period of prescription, expressly set under Sec. 331 of the Tax Code, the law
then in force.