You are on page 1of 3

Republic vs.

No. L-15547. February 29, 1964.

Doctrine: The taxpayer is barred from invoking the defense of prescription if the delay
was due to his repeated requests for reinvestigation and for extensions of time to pay,
which the government acted upon.

Republic of the Philippines filed an action against Joseph Arcache (principal) and the
Globe Assurance Company, Inc. (surety) for the forfeiture of the surety bond executed by
them to secure payment of P22,524.41 representing Arcache's income tax for the year
1946 and surcharge, plus 1% monthly interest on the income tax proper amounting to
P18,289.71, from June 21, 1954 to August 31, 1956.

Arcache interposed the defense of prescription. He alleged that he was "compelled

against his will" to execute the surety bond sought to be forfeited, because the BIR refused
to issue him a tax clearance unless he executed said bond to secure the payment of his
alleged tax obligation.

Globe Assurance Company, Inc. adopted the defense of fact and law raised by Arcache.
And that the surety bond sought to be forfeited became null and void as against it after the
lapse of one year from the date of its execution, for lack of consideration (non-payment of

By way of cross-claim, it sought judgment against its co-defendant for the entire amount
that it might be sentenced to pay to the plaintiff by reason of the surety bond plus the
unpaid premium.

Arcache was declared in default on the cross-claim. The Lower Court ordered Arcache to
pay whatever may be adjudged against Globe Assurance. Further, it ordered Archache
and Globe Assurance to pay the BIR.

Arcache appealed claiming that the lower court erred in not sustaining his defense of
The evidence discloses that on March 1, 1947, Archache filed his income tax return for the
year 1946.

Subsequent investigations revealed, however, that in 1946 he had an unexplained

increase in net worth. As a result, the corresponding assessment was issued against him
in 1948.

Upon his petition, several reinvestigations of his income tax liability were thereafter made,
until finally in 1952 an assessment was issued.

Arcache asked for a further re-examination. BIR made another reinvestigation.

Accordingly, on September 16, 1953, the BIR assessed against him the amounts of
P19,080.96 and P9,540.48 as income tax, and 50% surcharge.

He wrote the CIR and told them that he was willing to pay the assessed amount and
requested that the 50% surcharge be removed.

Again, this request was granted, and on December 9, 1953, another demand was made
upon him.

On December 28, he wrote another letter to the Deputy CIR reminding him of the previous
payment of P2,000 on account of his 1946 income tax liability of P19,080.96, and
requesting for an extension of 120 days within which to pay the balance.

Although this request was also granted, appellant failed to pay within the extension

Instead, on June 17, 1954, he remitted to the BIR a P1,000.00-check as partial payment of
his tax liability "in sign of good faith", and requested another extension to pay.

A final demand on him and his surety for the settlement of their obligation under the bond
of August 23, 1955 was made, and when they both failed to do so, the present case was

ISSUE: Whether Arcache can raise the defense of prescription

A taxpayer may be prevented from setting up the defense of prescription even if he has not
previously waived it in writing as when by his repeated requests or positive acts the
Government has been, for good reasons, persuaded to postpone collection to make him
feel that the demand was not unreasonable or that no harassment or injustice is meant by
the Government.

In the given case, it appears obvious that the delay in the collection of his 1946 tax liability
was due to his own repeated requests for reinvestigation and similarly repeated requests
for extension of time to pay.

In the second place, appellant admitted in writing his tax obligation and promised to pay
the same, not once but several times even after the date whenaccording to himthe
government's right to collect had already prescribed.

In the third place, it is to be noted that the present action was filed for the forfeiture of the
bond in satisfaction of the tax obligation of appellant. Thus, the action is for the
enforcement of a written contractual obligation, for which the prescriptive period is ten
yearswhich in this case had not yet elapsed when the action was filed.

It is already settled in this connection that the giving of a bond as a condition of an

extension of time for the payment of income tax, even after the collection of the tax as
such was barred by the statute of limitations, does not preclude recovery on the bond.