The Bureau of Internal Revenue (BIR) has lost its bid to collect ₱78.32 million in value-added tax (VAT) assessments from Euro Autocars Inc., the company doing business as Lamborghini Manila and Bentley Manila, after the Court of Tax Appeals (CTA) ruled that the government’s collection period had already expired.
The CTA Special First Division ruled that the BIR could no longer enforce the assessment covering Euro Autocars’ transactions from January to June 2014.
The decision, promulgated on Aug. 11, 2026, effectively bars the tax agency from collecting the assessment because the statutory period for collection had already lapsed. The CTA’s official case listing identifies the dispute as CTA Case No. 11094, Euro Autocars Inc. doing business under the name and style of Lamborghini Manila and Bentley Manila v. Commissioner of Internal Revenue.
The missed deadline
The case centered not only on the underlying VAT assessment but on whether the BIR acted within the legally prescribed period to collect it.
According to the CTA’s ruling, the ordinary three-year prescriptive period applied because the BIR did not establish that fraud had been invoked in the assessment.
The computation was also affected by periods during which the collection period was suspended. The court accounted for a 301-day suspension connected with Euro Autocars’ request for reinvestigation, as well as 420 days attributable to COVID-19-related suspensions.
After taking those periods into account, the CTA determined that the BIR had until June 17, 2021 to pursue collection.
But the BIR issued its final decision only on Jan. 20, 2023—more than a year and a half after the collection deadline had already passed.
The agency subsequently pursued judicial collection, but the CTA found no earlier valid warrant of distraint or levy, or another collection action that had interrupted or suspended the running of the prescriptive period.
By the time the BIR took the relevant collection action, the court found that its right to collect had already expired.
The tax bill was not simply erased because there was no VAT issue
One important distinction in the ruling is that the CTA did not conclude that every underlying tax issue raised by the BIR was baseless.
In fact, after reviewing the assessment, the court recalculated Euro Autocars’ basic deficiency output VAT at about ₱19.91 million, plus ₱444,923.20 in interest for late remittances.
The original assessment had been much larger.
The BIR initially assessed Euro Autocars at approximately ₱119.33 million before the amount was reduced following the company’s submission of additional documents during the reinvestigation. The later assessment reached ₱78.32 million, inclusive of surcharge and interest, along with an ₱85,000 compromise penalty.
Despite finding portions of the assessment supportable, the CTA held that the BIR could no longer collect because the statutory collection period had expired.
Lamborghini Aventador transaction also challenged
The assessment involved several alleged VAT deficiencies, including gross receipts allegedly not subjected to VAT, sales of second-hand trade-in vehicles, an alleged undeclared sale involving a Lamborghini Aventador, unaccounted inventory and alleged undeclared output VAT.
The CTA rejected some of these components after finding that the BIR had not sufficiently established the alleged taxable sales.
Among the items cancelled were the assessment involving a ₱44-million Lamborghini Aventador transaction and approximately ₱43.75 million in alleged unaccounted inventory that the BIR treated as sold.
The court also struck down a ₱1.48-million surcharge and an ₱85,000 compromise penalty.
Input VAT assessment also ran into trouble
The CTA separately voided the BIR’s disallowance of approximately ₱20.65 million in input VAT.
The problem, according to the court, was the lack of adequate notice to the taxpayer regarding the actual basis for the disallowance.
The BIR had communicated that Euro Autocars’ invoices and receipts failed to comply with tax requirements. However, the supporting schedule indicated that the disallowance was actually based on discrepancies involving third-party information.
The CTA found that the taxpayer had not been properly informed of that specific basis.
In effect, the court said the tax agency could not defend an assessment using a ground that differed from the basis actually reflected in its supporting documents.
Why the ruling matters
The case underscores an important principle in Philippine tax enforcement: the government must act within the legally prescribed period to collect taxes.
The CTA cited the Supreme Court’s November 2025 ruling in Commissioner of Internal Revenue v. Standard Insurance Co., Inc., emphasizing that statutes of limitation on tax collection protect taxpayers from unreasonable or stale government claims.
That principle is particularly significant because the Euro Autocars case involved transactions dating back more than a decade.
The CTA found that the BIR had an opportunity to pursue collection within the applicable period but failed to do so before the deadline expired.
The CTA itself is a specialized Philippine court with jurisdiction over tax disputes, including cases involving internal revenue taxes and the collection of assessments that have become final. Decisions of a CTA division may be elevated to the CTA En Banc and, under the applicable rules, may eventually reach the Supreme Court.
A costly lesson for tax collection
For Euro Autocars, the ruling means that the BIR is barred from enforcing the ₱78.32-million assessment covered by the case.
For the tax agency, however, the decision is a reminder that establishing a tax deficiency is only part of the process. Collection must also be pursued within the period allowed by law and through legally effective collection measures.
The ruling therefore goes beyond a headline involving luxury-car brands and a multimillion-peso tax bill.
At its core, the case is about prescription, due process and the consequences of delay in tax collection—with the government ultimately losing its opportunity to collect after the statutory deadline passed.
WWC ONE MEDIA J.M.S
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