BUTUAN SAWMILL INC V. CTA, G.R.

NO L-20601 (1966)

FACTS: Butuan Sawmill, Inc. (BSI) sold logs to Japanese firms at prices FOB Agusan. The FOB
feature of the sales indicated that the parties intended the title to pass to the buyer upon delivery of
the logs in Agusan on board the vessels that took the goods to Japan. The sales, being domestic or
local, are subject to sales tax under Sec. 186 of the Tax Code as amended.
1. 2. Upon investigation by the BIR, it was ascertained that no sales tax return was filed and
neither did BSI pay the corresponding sales tax. For the period Jan. 31, 1951 to June 8,
1953, the CIR assessed initially assessed BSI the amount of P40,004.01 but as a result of
reinvestigation, the amount was reduced to P38,917.74, as deficiency sales tax and surcharge
due on its sales of logs to the Japanese buyers.
2. The lower court held that the amended assessment of the sales tax and surcharge were
domestic or local sales and therefore subject to sales tax and that the assessment thereof was
made well within the ten year period prescribed by Sec. 332(a) of the same Code since
petitioners herein omitted to file its sales tax returns for the years 1951-53, and this omission
was discovered only on Sept. 17.1957.
3. It is clear that the said export sales had been consummated in the Philippines and hence,
subject to sales tax. Petitioner allege that the filing of its income tax return, wherein the
proceeds of the disputed sales were declared, is substantial compliance with the requirements
of filing a sales tax return, and if there should be deemed a return filed, Sec. 331 and not Sec.
332(a) of the Tax Code providing for a five year prescriptive period within which to make an
assessment and collection of the tax in question from the time the return was deemed filed,
should be applied to the case at bar.
4. Since petitioner filed its income tax returns for the years 1951, 1952 and 1953, and the
assessment was made in 1957 only it further contends that the assessment of the sales tax
corresponding to the years 1951 and 1952 had already prescribed for having been made
outside the five year period prescribed in Sec. 331 of the Tax Code and should, therefore, be
deducted from the assessment of the deficiency sales tax made by the BIR.
ISSUE: WON the assessment was made within the prescriptive period provided by the law.

HELD: Yes.
1. An income tax return cannot be considered as a return for compensating tax for
purposes of computing the period of prescription under Sec. 331 of the Tax Code and
that the taxpayer must file a return for the particular tax required by law in order to
avail himself of the benefits of Sec. 331 of the Tax Code; otherwise, if he does not
file a return, an assessment may be made within the time stated in Sec. 332(a) of
the same Code.
2. It is undisputed that petitioner failed to file a return for the disputed sales corresponding to
the years 1951, 1952 and 1953, and this omission was discovered only on September 17,
1957, and that under Section 332(a) of the Tax Code assessment thereof may be made
within ten (10) years from and after the discovery of the omission to file the return,
it is evident that the lower court correctly held that the assessment and collection of
the sales tax in question has not yet prescribed.