Professional Documents
Culture Documents
Statute of Limitation
Statute of Limitation
NO 18804 (1965) doing an act required by law falls on a holiday, the act may
FACTS: On March 2, 1959, respondent Western Pacific Corp was be done on the next succeeding business day. (Section 31,
assessed deficiency income tax for the year 1953. The assessment Revised Administrative Code.) Similarly, in computing any period
was brought about by the disallowance listed in respondent’s of time prescribed by statute, the day of the act after which the
return as bad debts designated period of time begins to run is not included. But the
1. The assessment was received by respondent on the same last day of the period so computed is to be included, unless it is a
date (March 2, 1959). Sunday or a legal holiday, in which event the time shall run until
2. On March 5, 1959, CIR wrote a demand letter with the the end of the next day which is neither a Sunday or a holiday
final breakdown of the assessment. (Section 1, Rule 28, Rules of Court). Consequently, since
3. However, on June 29, 1959, Western Pacific Corp February 28, 1959 was a Saturday and the next day, March
requested for non-assessment, claiming that the claim had 1, 1959, a Sunday, respondent had until the next
prescribed and that said items should be considered as succeeding business day, March 2, 1959, Monday, within
allowable deductions which to issue the deficiency assessment. The assessment in
4. On July 30, 1959, CIR denied the request and demanded question having been issued on March 2, 1959, it was, therefore,
payment of the same within 30 days from receipt of seasonably made.
demand
5. Respondent corporation, on September 19, 1959, However, contrary to the ruling of the CTA, the assessment made
requested that it be allowed until September 25 to submit by the Commissioner should be maintained, for the simple reason
its formal objections to the assessment. The formal that when the petition for review was brought to the CTA by
objections submitted by Western Pacific were identical to the respondent corporation, the said Court no longer had
its former objections and as such, CIR denied the request. jurisdiction to entertain the same. The assessment had long
6. The CIR, then, sent on October 28, 1959 a letter become final. A petition for review should be presented,
demanding payment within 10 days within the reglementary period, as provided for in Section
7. On appeal, CA absolved the respondent from the 11, Republic Act No. 1125, which is "thirty (30) days from
assessment however it ruled out that the assessment receipt of the assessment." The thirty (30) day period is
letter dated March 2, 1959 was within 5-year prescriptive jurisdictional.
period
CAB: The assessment was received by the respondent corporation
ISSUE: WON the assessment had prescribed on March 2, 1959. It was only on June 29, 1959, when said
corporation formally assailed the assessment, on the grounds of
HELD: No. February 28, 1959 fell on a Saturday. Pursuant to prescription in making the assessment and the impropriety of the
Republic Act No. 1880, as, implemented by Executive Order No. disallowance of the listed deductions. From March 3 to June 29,
25, effective July 1, 1959, all bureaus and offices of the 1959, manifestly more than thirty (30) days had lapsed and the
government, except schools, court, hospitals and health clinics, assessment became final, executory and demandable.
hold office only five days a week or from Monday to Friday.
Saturday and Sunday, are constituted public holidays or days of
exemption from labor or work as far as government offices,
including that of respondent Commissioner, are concerned. The
offices and bureaus concerned are officially closed on those days.
So that on February 28, 1959 and March 1, 1959, which
were Saturday and Sunday, respectively, the office of
respondent was officially closed. And where the last day for
CIR V. PHOENIX ASSURANCE CO, G.R. NO L-19127 (1965) 7. On August 30, 1955 it amended its income tax return
FACTS: Phoenix Assurance is a foreign insurance company for 1952 by excluding from its gross income the amount
organized under the laws of Great Britain, is licensed to do of P316,526.75 representing reinsurance premiums ceded
business in the Philippines. to foreign reinsurers and further eliminating deductions
1. Through its head office, it entered in London into corresponding to the coded premiums.
worldwide reinsurance treaties with various foreign 8. The Commissioner of Internal Revenue disallowed
insurance companies. P15,826.35 of the claimed deduction for head office
2. It agree to cede a portion of premiums received on original expenses and assessed a deficiency tax of P5,667.00 on
insurances underwritten by its head office, subsidiaries, July 24, 1958.
and branch offices throughout the world, in consideration 9. On April 30, 1954, Phoenix Assurance Co., Ltd. filed its
for assumption by the foreign insurance companies of an Philippine income tax return for 1953..
equivalent portion of the liability from such original 10. On August 30, 1955 it amended its 1953 income tax
insurances. return.
3. Pursuant to such reinsurance treaties, Phoenix Assurance 11. To avoid the prescriptive period provided for in Section 306
Co., Ltd., ceded portions of the premiums it earned from of the Tax Code, it filed a petition for review on April 11,
its underwriting business in the Philippines on the years 1956 in the Court of Tax Appeals praying for such refund.
1952 to 1954. After verification of the amended income tax return the
4. Upon which the Commissioner of Internal Revenue, by Commissioner of Internal Revenue disallowed P12,304.10
letter of May 6, 1958, assessed the withholding tax for of the deduction representing head office expenses
each year from 1952-1954. allocable to Philippine business thereby reducing the
5. On April 1, 1951, Phoenix Assurance Co., Ltd. filed its refundable amount to P20,180.00.
Philippine income tax return for 1950, claiming therein, 12. On April 29, 1955, Phoenix Assurance Co., Ltd. filed its
among others, a deduction of P37,147.04 as net addition Philippine income tax return for 1954.
to marine insurance reserve equivalent to 40% of the 13. On August 1, 1958 the Bureau of Internal Revenue
gross marine insurance premiums received during the released the for deficiency income tax for the years
year. 1952 and 1954 against Phoenix Assurance Co., Ltd.
a. The Commissioner of Internal Revenue disallowed a. The above assessment resulted from the
P11,772.57 of such claim for deduction and disallowance of a portion of the deduction claimed
subsequently assessed against Phoenix Assurance by Phoenix Assurance Co., Ltd. as head office
Co., Ltd. the sum of P1,884.00 as deficiency expenses allocable to its business in the Philippines
income tax. fixed by the Commissioner at 5% of the net
b. The Commissioner assumed that "ninety and Philippine income instead of 5% of the gross
third, days are approximately the length of time Philippine income as claimed in the returns.
required before shipments reach their destination b. Phoenix Assurance Co., Ltd. protested against the
or before claims are received by the insurance aforesaid assessments for withholding tax and
companies." deficiency income tax. However, the Commissioner
6. On April 1, 1953, Phoenix Assurance Co., Ltd. filed of Internal Revenue denied such protest.
its Philippine income tax return for 1952, declaring 14. Subsequently, Phoenix Assurance Co., Ltd. appealed to the
therein a deduction from gross income of P35,912.25 as Court of Tax Appeals.
part of the head office expenses incurred for its Philippine 15. In a decision dated February 14, 1962, the Court of Tax
business, computed at 5% on its gross Philippine income. Appeals allowed in full the decision claimed by Phoenix
Assurance Co., Ltd. for 1950 as net addition to marine
insurance reserve; determined the allowable head office THE SC RULED IN FAVOR OF THE CIR: The changes and
expenses allocable to Philippine business to be 5% of the alterations embodied in the amended income tax return
net income in the Philippines; declared the right of the substantially MODIFIED the original return.
Commissioner of Internal Revenue to assess
deficiency income tax for 1952 to have prescribed; Considering that the deficiency assessment was based on
absolved Phoenix Assurance Co., Ltd. from payment of the the amended return which, as aforestated, is substantially
statutory penalties for non-filing of withholding tax return. different from the original return, the period of limitation of
the right to issue the same should be counted from the
ISSUE: WON the right of CIR to assess the deficiency income tax filing of the amended income tax return. From August 30,
for 1952 has already prescribed 1955, when the amended return was filed, to July 24, 1958, when
the deficiency assessment was issued, less than five years
HELD: NO. elapsed. The right of the Commissioner to assess the deficiency
tax on such amended return has not prescribed.
Phoenix Assurance Co., Ltd. filed its income tax return for
1952 on April 1, 1953 showing a loss of P199,583.93. It To strengthen our opinion, we believe that to hold otherwise, we
amended said return on August 30, 1955 reporting a tax would be paving the way for taxpayers to evade the payment of
liability of P2,502.00. On July 24, 1958, after examination of taxes by simply reporting in their original return heavy losses and
the amended return, the Commissioner of Internal Revenue amending the same more than five years later when the
assessed deficiency income tax in the sum of P5,667.00. Commissioner of Internal Revenue has lost his authority to assess
the proper tax thereunder. The object of the Tax Code is to
The Court of Tax Appeals found the right of the impose taxes for the needs of the Government, not to
Commissioner of Internal Revenue barred by prescription, enhance tax avoidance to its prejudice.
the same having been exercised more than five years from
the date the original return was filed.
Court of Tax Appeals - the lower court concluded that the tax
liability of the late Matias H. Aznar for the year 1946 to 1951,
inclusive should be P227,788.64 minus P96.87 representing the
tax credit for 1945, or P227,691.77
Neither was there grave abuse on the part of the municipal court
in ruling that the express approval of the Revenue Commissioner
himself was not necessary. The court relied upon
Memorandum Order No. V-634 of the Revenue
Commissioner, approved by the Finance Secretary, wherein
the former's functions regarding the administration and
enforcement of revenue laws and regulations — powers
broad enough to cover the approval of court actions as
required in the Tax Code — were expressly delegated to the
Regional Directors. This regulation, the issuance of which
was authorized by statute, has the force and effect of
law. To rely upon it, hence, would not be tantamount to
whimsical and arbitrary exercise of judgment.
SY CHUICO V. COLLECTOR, 107 PHIL 428 2. Has the collection of the tax in question already
DOCTRINE: For the purposes of amusement tax, the term prescribed? SC considered that petitioner waived this
"GROSS RECEIPTS" embraces all the receipts of the proprietor or defense.
operator of the business. Prescription is evidentiary in nature.
HELD: Section 260 of the Tax Code applies. The owner or
FACTS: Petitioner was the owner and operator of the La Loma operator of a cabaret is required to pay an amusement tax
Cabaret in QC from 1926 to January 1956. It charged its equivalent to 10 % of the gross receipts of his business
customers P0.30 per dance: P0.10 entrance fee and the remaining irrespective of whether or not any amount is charged or paid for
P0.20 to be paid to the "bailarinas" after the dance. The admission. The law further adds that, for the purposes of
customers were informed of the fees by means of posters found in amusement tax, the term "GROSS RECEIPTS" embraces all the
conspicuous places of the cabaret stating: receipts of the proprietor or operator of the business. A cabaret is
a place of amusement where customers go because of their desire
1. From January 1947 - August 1950, petitioner declared to dance and where the "bailarinas" are the main attraction.
in his return only the following gross receipts: Dancing is the main business and customers patronize the place
o receipts from gate admissions at P0.10 each, attracted by the "bailarinas". As a matter of fact, "bailarinas" are
P59,160.40; the indispensable factor in the operation of the business. Whatever
o receipts from restaurant sales, P5,339.90; is paid to them should, therefore, be considered as paid on
o receipts from bar sales, P47,459.10, account of the business, and as such it should be considered as
o --- and paid thereon a 10 % amusement tax of part of petitioner's gross receipts.
P11,197.40.
RE SURCHARGE: While there is no direct evidence to show actual
2. Petitioner failed to declare for tax purposes the P0.20 fraud on the part of petitioner, the circumstances found by the CTA
dance fee. Thus, respondent assessed against him a indicate that he has deliberately omitted in his book a
deficiency amusement tax, including50 % surcharge of sizeable portion of his taxable income which in substance
P17,616.05. As well as P300.00 penalty in settlement of amounts to fraud.
his violation of Section 260 of the Tax Code and the
Bookkeeping Regulations. RE PRESCRIPTION: This was not raised as an issue in the petition
for review filed in the CTA. It was not even touched by him in the
3. Petitioner appealed to the CTA which affirmed the memorandum he submitted. There is, therefore, enough reason to
contention of respondent holding petitioner liable to pay believethat petitioner has waived this defense and so it
P17,616.05 as deficiency amusement tax and surcharge cannot now be entertained. To hold otherwise would be to
for January 1947 - August, 1950; but, CTA rejected the deprive respondent of his right to show the contrary, this matter
P300.00 penalty alleging lack of power or authority to being evidentiary in nature.
order the payment of such penalty. Hence, this petition.
ISSUES:
1. Should the gross receipts include the dance fee charged by
the cabaret for its "bailarinas"? YES.
CIR V. ATLAS CONSOLIDATED MINING, G.R. NO 31230-32 CIR V. CA & CARNATION PHILS INC, G.R. NO 115712 (2000)
(2000) FACTS: Carnation Phils. Inc. (Carnation), filed its
Corporation Annual Income Tax Return for taxable year
ending September 30, 1981; and its
Manufacturers/Producers Percentage Tax Return for the
quarter ending September 30, 1981. 5
On October 13, 1986, March 16, 1987 and May 18, 1987,
Carnation, through its Senior Vice President Jaime O.
Lardizabal, signed three separate "waivers of the Statute of
Limitations Under the National Internal Revenue Code"
wherein it waives the running of the prescriptive period
provided for in sections 318 and 319 and other related
provisions of the National Internal Revenue Code and
consents to the assessment and collection of the taxes
which may be found due after reinvestigation and
reconsideration at anytime before or after the lapse of the
period of limitations fixed by said sections 318 and 319 and
other relevant provisions of the National Internal Revenue
Code, but not after (13 April 1987 for the earlier-executed waiver,
or June 14, 1987 for the later waiver, or July 30, 1987 for the
subsequent waiver, as the case may be). However, the taxpayer
(petitioner herein) does not waive any prescription already accrued
in its favor.
ISSUE: WON the 3 waivers signed by private respondent are valid Petitioner's submission is inaccurate. The same tax code is clear on
and binding as to toll the prescriptive period for assessment the matter, to wit:
Sec. 319.Exceptions as to period of limitation of
HELD: assessment and collection of taxes.—(a) . . .
(b) Where before the expiration of the time
Sec. 318 (now Section 203) of the National Internal Revenue prescribed in the preceding section for the
Code, the law then applicable reads: assessment of the tax, both the Commissioner of
Sec 318.Period of Limitations upon assessment and Internal Revenue and the taxpayer have consented
collection. — Except as provided in the succeeding in writing to its assessment after such time, the
section, internal revenue taxes shall be assessed tax may be assessed at anytime prior to the
within five years after the return was filed, and no expiration of the period agreed upon. The period
proceeding in court without assessment for the so agreed upon may be extended by subsequent
collection of such taxes shall be begun after the agreement in writing made before the expiration of
expiration of such period. For the purpose of this the period previously agreed upon.
section, a return filed before the last day
prescribed by law for the filing thereof shall be Verily, we discern no basis for overruling the aforesaid conclusions
considered as filed on such last day: Provided, arrived at by the Court of Appeals. In fact, there is every reason to
That this limitation shall not apply to cases already leave undisturbed the said conclusions, having in mind the precept
investigated prior to the approval of this that all doubts as to the correctness of such conclusions will be
Code. (emphasis ours) resolved in favor of the Court of Appeals.
Carnation filed its annual income tax and percentage tax What is more, the waivers in question reveal that they are
returns for the fiscal year ending September 30, 1981 on in no wise unequivocal, and therefore necessitates for its
January 15, 1982 and November 20, 1981, respectively. In binding effect the concurrence of the Commissioner of
accordance with the above-quoted provision of law, private Internal Revenue. In fact, in his reply dated April 18, 1995,
respondent's 1981 income and sales taxes could have been the Solicitor General, representing the Commissioner of
validly assessed only until January 14, 1987 and November Internal Revenue, admitted that subject waivers executed
19, 1986, respectively. However, Carnation's income and by Carnation were "for end in consideration of the approval
sales taxes were assessed only on July 29, 1987, beyond by the Commissioner of Internal Revenue of its request for
the five-year prescriptive period. reinvestigation and/or reconsideration of its internal
revenue case involving tax assessments for the fiscal year
Petitioner BIR Commissioner contends that the waivers signed by ended September 30, 1981 which were all pending at the
Carnation were valid although not signed by the BIR Commissioner time". On this basis neither implied consent can be
because (a) when the BIR agents/examiners extended the period presumed nor can it be contended that the waiver required
to audit and investigate Carnation's tax returns, the BIR gave its under Sec. 319 of the Tax Code is one which is unilateral
implied consent to such waivers; (b) the signature of the nor can it be said that concurrence to such an agreements a
Commissioner is a mere formality and the lack of it does not vitiate mere formality because it is the very signatures of both the
binding effect of the waivers; and (c) that a waiver is not a Commissioner of Internal Revenue and the taxpayer which
contract but a unilateral act of renouncing ones right to avail of the give birth to such a valid agreement.
CIR V. BF GOODRICH PHILS, G.R. NO 104171 (1999) HELD: The petition has no merit. Applying this provision of law to
FACTS: BF Goodrich was an American-owned and controlled the facts at hand, it is clear that the October 16, 1980 and the
corporation. As a condition for approving the manufacture of tires March 1981 assessments were issued by the BIR beyond the five-
and other rubber products, the Central Bank required that it year statute of limitations.
should develop a rubber plantation.
1. In compliance with this requirement, it purchased from the The subsequent assessment made by the respondent
Philippine government, certain parcels of land and there Commissioner on October 10, 1980, modified by that of March 16,
developed a rubber plantation. 1981, violates the law. Involved in this petition is the income of
2. On August 2, 1973, the justice secretary rendered an the petitioner for the year 1974, the returns for which were
opinion stating that, upon the expiration of the Parity required to be filed on or before April 15 of the succeeding year.
Amendment, the ownership rights over public agricultural The returns for the year 1974 were duly filed by the petitioner,
lands, including the right to dispose or sell their real and assessment of taxes due for such year — including that on the
estate, would be lost. transfer of properties on June 21, 1974 — was made on April 13,
3. On the basis of this Opinion, private respondent sold to 1975 and acknowledged by Letter of Confirmation terminating the
Siltown Realty, its Basilan landholding for P500,000. In examination on this subject.
accord with the terms of the sale, Siltown Realty, leased
the land to private respondent for a period of 25 years, For the purpose of safeguarding taxpayers from any unreasonable
with an extension of another 25 years at the latter's examination, investigation or assessment, our tax law provides
option. a statute of limitations in the collection of taxes. Thus, the
4. The books and accounts of private respondent were law on prescription, being a remedial measure, should be
examined for the purpose of determining its tax liability for liberally construed in order to afford such protection. As a
taxable year 1974. The examination resulted in the April corollary, the exceptions to the law on prescription should
23, 1975 assessment of for deficiency income tax, which it perforce be strictly construed.
duly paid.
5. Subsequently, the BIR also examined Siltown's business, Sec. 15 of the NIRC, on the other hand, provides that "[w]hen a
income and tax liabilities. The BIR issued against private report required by law as a basis for the assessment of any
respondent on October 10, 1980, an assessment for national internal revenue tax shall not be forthcoming within the
deficiency in donor's tax in relation to the sale of its time fixed by law or regulation, or when there is reason to believe
Basilan landholdings to Siltown. The BIR deemed the that any such report is false, incomplete, or erroneous, the
consideration for the sale insufficient. Commissioner of Internal Revenue shall assess the proper tax on
6. On November 24, 1980, private respondent contested this the best evidence obtainable." Clearly, Section 15 does not provide
assessment. On April 9, 1981, it received another an exception to the statute of limitations on the issuance of an
assessment dated March 16, 1981, which increased the assessment, by allowing the initial assessment to be made on the
amount demanded for the alleged deficiency donor's tax, basis of the best evidence available. Having made its initial
surcharge, interest and compromise penalty. assessment in the manner prescribed, the commissioner could not
7. Private respondent appealed the correctness and the have been authorized to issue, beyond the five-year prescriptive
legality of these last two assessments. period, the second and the third assessments under consideration
before us.
ISSUE: WON petitioner's right to assess herein deficiency donor's
tax has indeed prescribed as ruled by public respondent Court of Nor is petitioner's claim of falsity sufficient to take the questioned
Appeals. assessments out of the ambit of the statute of limitations. It is
possible that real property may be sold for less than adequate
consideration for a bona fide business purpose; in such event, the CIR V. PASCOR REALTY, G.R. NO 128315 (1999)
sale remains an "arm's length" transaction. DOCTRINE: An assessment contains not only a computation
of tax liabilities, but also a demand for payment within a
Since the BIR failed to demonstrate clearly that private prescribed period. It also signals the time when penalties
respondent had filed a fraudulent return with the intent to and interests begin to accrue against the taxpayer. To enable
evade tax, or that it had failed to file a return at all, the the taxpayer to determine his remedies thereon, due process
period for assessments has obviously prescribed. Such requires that it must be served on and received by the
instances of negligence or oversight on the part of the BIR cannot taxpayer. Accordingly, an affidavit, which was executed by
prejudice taxpayers, considering that the prescriptive period was revenue officers stating the tax liabilities of a taxpayer and
precisely intended to give them peace of mind. attached to a criminal complaint for tax evasion, cannot be
deemed an assessment that can be questioned before the Court of
Based on the foregoing, a discussion of the validity and legality of Tax Appeals.
the assailed assessments has become moot and unnecessary.
FACTS: By virtue of a Letter of Authority, BIR Commissioner Jose
U. Ong authorized 2 Revenue Officers to examine the books of
accounts and other accounting records of Pascor Realty (PRDC)
for the years 1986 - 1988. Examination resulted in a
recommendation for the issuance of an assessment in the
amounts of P7,498,434.65 and P3,015,236.35 for the years 1986
and 1987, respectively.
1. CIR then filed a criminal complaint before the DOJ against
the PRDC, its President Rogelio A. Dio, and its Treasurer
Virginia S. Dio, alleging evasion of taxes (P10,513,671).
Private respondents disputed the tax assessment and tax
liability. Private respondents received a subpoena from the
DOJ in connection with the criminal complaint filed by the
BIR against them.
2. May 17, 1995, CIR denied the urgent request for
reconsideration/reinvestigation on the ground that no
formal assessment has as yet been issued by the
Commissioner.
3. Private respondents elevated the case to the CTA on a
petition for review; CIR filed an MTD on the ground that
CTA has no jurisdiction over the subject matter, as there
was no formal assessment issued against the petitioners.
CTA denied the said MTD; CIR also did not file an answer
nor move to reconsider the resolution.
4. Instead, the CIR filed this petition with the CA alleging that
CTA acted with grave abuse of discretion and without
jurisdiction.
5. CA sustained the CTA and dismissed the petition. Hence, HELD: Neither the NIRC nor the revenue regulations governing the
this recourse to SC. protest of assessments provide a specific definition or form of an
6. CA held that the tax court committed no grave abuse of assessment. However, the NIRC defines the specific
discretion in ruling that the Criminal Complaint for tax functions and effects of an assessment. To consider the
evasion filed by the CIR with the DOJ constituted an affidavit attached to the Complaint as a proper assessment is to
assessment of the tax due, and that the said subvert the nature of an assessment and to set a bad precedent
assessment could be the subject of a protest. By definition, that will prejudice innocent taxpayers.
an assessment is simply the statement of the details and
the amount of tax due from a taxpayer. Based on this Not all documents coming from the BIR containing a computation
definition, the details of the tax contained in the BIR of the tax liability can be deemed assessments. An assessment
examiners Joint Affidavit, which was attached to the must be sent to and received by a taxpayer, and must
criminal Complaint, constituted an assessment. Since the demand payment of the taxes described therein within a
assailed Order of the CTA was merely interlocutory and specific period. Thus, the NIRC imposes a 25% penalty, in
devoid of grave abuse of discretion, a petition for certiorari addition to the tax due, in case the taxpayer fails to pay the
did not lie. deficiency tax within the time prescribed for its payment in the
7. Petitioner argues that the filing of the criminal complaint notice of assessment. Likewise, an interest of 20% per annum, or
with the DOJ cannot be construed as a formal assessment such higher rate as may be prescribed by rules and regulations, is
of private respondents tax liabilities. This position is based to be collected from the date prescribed for its payment until the
on Section 205 of the NIRC which provides that remedies full payment.
for the collection of deficient taxes may be by either civil
or criminal action. Likewise, petitioner cites Section The issuance of an assessment is vital in determining the period of
223(a) of the same Code, which states that in case of limitation regarding its proper issuance and the period within
failure to file a return, the tax may be assessed or a which to protest it.
proceeding in court may be begun without assessment.
8. Respondents, on the other hand, maintain that an Section 203: provides that internal revenue taxes must be
assessment is not an action or proceeding for the assessed within 3 years from the last day within which to
collection of taxes, but merely a notice that the amount file the return.
stated therein is due as tax and that the taxpayer is Section 222: specifies a period of 10 years in case a
required to pay the same. Thus, qualifying as an fraudulent return with intent to evade was submitted or in
assessment was the BIR examiners Joint Affidavit, which case of failure to file a return.
contained the details of the supposed taxes due from Section 228: states that said assessment may be protested
respondent for taxable years ending 1987 and 1988, and only within 30 days from receipt thereof.
which was attached to the tax evasion Complaint filed with
the DOJ. Consequently, the denial by the BIR of private Necessarily, the taxpayer must be certain that a specific document
respondents request for reinvestigation of the disputed constitutes an assessment. Otherwise, confusion would arise
assessment is properly appealable to the CTA. regarding the period within which to make an assessment or to
protest the same, or whether interest and penalty may accrue
ISSUE: Could the Affidavit-Report attached to the criminal thereon. That the said document is a notice duly sent to the
Complaint filed with the DOJ constituted an assessment that could taxpayer. Indeed, an assessment is deemed made only when
be questioned before the Court of Tax Appeals? NO. the collector of internal revenue releases, mails or sends
such notice to the taxpayer.
In the present case, the revenue officers Affidavit merely papers and documents to prove that the assessment is
contained a computation of respondent’s tax liability. It did unwarranted. If the commissioner is unsatisfied, an assessment
not state a demand or a period for payment. Worse, it was signed by him or her is then sent to the taxpayer informing the
addressed to the justice secretary, not to the taxpayers. latter specifically and clearly that an assessment has been made
against him or her. In contrast, the criminal charge need not go
That the BIR examiners Joint Affidavit attached to the Criminal through all these. The criminal charge is filed directly with the
Complaint contained some details of the tax liabilities of private DOJ. Thereafter, the taxpayer is notified that a criminal case had
respondents does not ipso facto make it an assessment. The been filed against him, not that the commissioner has issued an
purpose of the Joint Affidavit was merely to support and assessment. It must be stressed that a criminal complaint is
substantiate the Criminal Complaint for tax evasion. Clearly, it was instituted not to demand payment, but to penalize the
not meant to be a notice of the tax due and a demand to the taxpayer for violation of the Tax Code.
private respondents for payment thereof.
o The biggest flaw of the decision was the RMO No. 20-90 implements these provisions of the NIRC relating
pronouncement on the need for a definite expiration to the period of prescription for the assessment and collection of
date. The period of prescription for the assessment of taxes. The Order supports petitioner’s argument that the RMO
taxes may be extended provided that the extension be must be strictly followed. Any revenue official found not to have
made in writing and that it be made prior to the complied shall be administratively dealt with.
expiration of the period of prescription.
The waiver of the statute of limitations is not a waiver of
ISSUE: Was the waiver of the statute of limitation valid? NO. the right to invoke the defense of prescription as
erroneously held by the Court of Appeals. RMO No. 20-90
HELD: explains the rationale of a waiver:
RE JURISDICTION OF THE CTA. The petitioner argues that the case The phrase "but not after _________ 19___" should be filled up.
was brought to the CTA because the warrant of distraint or levy This indicates the expiry date of the period agreed upon to
was illegally issued and that no assessment was issued because it assess/collect the tax after the regular 3-year period of
was based on an invalid waiver of the statutes of limitations. prescription. The period agreed upon shall constitute the time
within which to effect the assessment/collection of the tax in
SC agrees with petitioner. Section 7 of RA No. 1125 (the Act addition to the ordinary prescriptive period.
Creating the CTA) provides for the jurisdiction. The appellate
jurisdiction of the CTA is not limited to cases which involve As found by the CTA, the Waiver of Statute of Limitations, signed
decisions of the CIR on matters relating to assessments or by petitioner’s comptroller (September 22, 1997) is not valid and
refunds. The second part of the provision covers other cases that binding because it does not conform with the provisions of
arise out of the NIRC or related laws administered by the the RMO. It did not specify a definite agreed date between the
BIR. It gives the CTA the jurisdiction to determine if the warrant BIR and petitioner, within which the former may assess and collect
of distraint and levy issued by the BIR is valid and to rule if the revenue taxes. Thus, petitioner’s waiver became unlimited in
Waiver of Statute of Limitations was validly effected. time, violating Section 222(b) of the NIRC.
RE RMO NO.20-90 (RMO No. 20-90) VALID WAIVER OF THE The waiver is also defective from the government side because
STATUTE OF LIMITATIONS. CA held that the requirements and it was signed only by a revenue district officer, NOT the
procedures laid down in the RMO are only formal in nature and did Commissioner, as mandated by the NIRC and RMO No. 20-90.
not invalidate the waiver that was signed even if the requirements The waiver is not a unilateral act by the taxpayer or the BIR, but is
were not strictly observed. a bilateral agreement between two parties to extend the period to
a date certain. The conformity of the BIR must be made by either
Sections 203 and 222 of NIRC provides for a statute of limitations the Commissioner or the Revenue District Officer.
on the assessment and collection of internal revenue taxes in order
to safeguard the interest of the taxpayer against unreasonable This case involves taxes amounting to more than P1M and
investigation. Unreasonable investigation contemplates cases executed almost seven months before the expiration of the three-
where the period for assessment extends indefinitely because this year prescription period. For this, the RMO requires the
deprives the taxpayer of the assurance that it will no longer be Commissioner of Internal Revenue to sign for the BIR.
Section 319 of NIRC is clear and explicit that the waiver of the assessment. WHEREFORE, the instant petition for review is
5-year prescriptive period must be in writing and signed by both GRANTED.
the BIR Commissioner and the taxpayer.
TAXATION : Three-year period within which to assess Internal
RE DEFECT IN THE DATE OF ACCEPTANCE. CA held that the date Revenue Taxes, Waiver and Extension, Requisites for Validity.
of the execution of the waiver on September 22, 1997 could
reasonably be understood as the same date of acceptance by the
BIR. Petitioner points out however that Revenue District Officer CIR V. FMF DEVELOPMENT CORP, G.R. NO 167765 (2008)
(Ms. Sarmiento) could not have accepted the waiver yet because FACTS: On April 15, 1996 respondent FMF Corporation filed its
she was not the Revenue District Officer on such date. Sarmiento’s corporate income tax return for taxable year 1995 and declared a
transfer and assignment to RDO was only signed by the BIR loss of Php 3,348,932. On May 8, 1996, it filed an amended return
Commissioner on January 16, 1998. CTA noted that it is and declared a loss of Php 2,826,541.00. Then the Bureau of
unlikely as well that Ms. Sarmiento made the acceptance on Internal Revenue sent FMF pre assessment notices all dated
January 16, 1998 because "Revenue Officials normally have to October 6, 1998 informing it of its alleged tax liabilities. FMF filed a
conduct first an inventory of their pending papers and property protest against the notices with the BIR and requested
responsibilities." reconsideration/reinvestigation.
1. On January 22, 1999, Revenue District Officer Rogelio
RE PETITIONER WAS NOT FURNISHED A COPY OF THE WAIVER. Zambarrano informed FMF that the reinvestigation had
Under RMO No. 20-90, the waiver must be executed in 3 copies been referred to Revenue Officer Alberto Fortaleza. He also
with the 2nd copy for the taxpayer. CA did not think this was advised FMF of the informal conference set on February 2,
important because the petitioner need not have a copy of the 1999 to allow it to present evidence to dispute the
document it knowingly executed. It stated that the reason copies assessments.
are furnished is for a party to be notified of the existence of a 2. On February 9, 1999, FMF President Enrique Fernandez
document, event or proceeding. CA assumes that the waiver is a executed a waiver of the three-year prescriptive period for
unilateral act of the taxpayer when it is in fact and in law an the BIR to assess taxes, thus extending the assessment
agreement between the taxpayer and the BIR. When the period until October 31, 1999. The waiver was accepted
petitioner’s comptroller signed the waiver on September 22, and signed by RDO Zambarrano.
1997, it was not yet complete and final because the BIR had 3. On October 18, 1999, FMF received from BIR amended
not assented. There is compliance with the provision only pre-assignment notices dated October 6, 1999. FMF
after the taxpayer received a copy of the waiver accepted immediately filed a protest on November 3, 1999 but on
by the BIR. The requirement to furnish the taxpayer with a copy that same date it received BIR’s demand letter and
of the waiver is not only to give notice of the existence of the assessment notice dated October 25, 1999 stating FMF’s
document but of the acceptance by the BIR and the perfection of alleged deficiency taxes in the sum of Php 1,608,015.50
the agreement. plus penalties and accrued interests all in the total of Php
2,053,698.25.
The waiver document is incomplete and defective and thus the 3- 4. FMF filed a letter of protest with BIR, invoking the defense
year prescriptive period was not tolled or extended and continued of prescription by reason of the invalidity of the waiver.
to run until April 17, 1998. Consequently, the Assessment issued BIR, however, insisted on the validity of the waiver and
on December 9, 1998 was invalid because it was issued beyond advised FMF to immediately settle its tax liabilities or be
the (3) year period. Similarly, the Warrant of Distraint and/or Levy faced with judicial action.
is also null and void for having been issued pursuant to an invalid 5. FMF filed a petition for review with the Court of Tax
Appeals challenging the validity of the assessment. The
CTA granted the petition and cancelled the assessment, the waiver because (1) it was not signed by the Commissioner
ruling that FMF’s waiver did not extend the three-year despite the fact that the assessment involves an amount of more
prescriptive period within which BIR could make the than Php 1 Million; (2) there is no stated date of acceptance by the
assessment. CTA did not give validity to the waiver Commissioner or his duly authorized representative; and (3) it
because first, it did not state the dates of its execution and was not furnished a copy of the BIR-accepted waiver. Respondent
acceptance; second, FMF was not furnished a copy of the also cites Philippine Journalists, Inc. vs Commissioner of Internal
waiver signed by Zambarrano; and third, the amount of Revenue (447 SCRA 214 (2004)) and contends that the
tax involved was more than Php1 million, and the period to procedures in RMO No. 20-90 are mandatory in character,
assess was yet about to prescribe, hence it should have precisely to give full effect to Section 222 (b) of the NIRC.
been accepted and signed by the Commissioner of Internal Moreover, a waiver of the statute of limitations is not a waiver of
Revenue, not a mere RDO. BIR moved for reconsideration the right to invoke the defense of prescription.
of the CTA decision but its motion was denied. It then
sought recourse with the Court of Appeals but said court After considering the issues and the submissions of the parties in
denied its petition and affirmed the CTA decision. the light of the facts of this case, we are in agreement that the
petition lacks merit.
ISSUE: Petitioner Commissioner of Internal Revenue
presents these basic questions for resolution: (1) Is the waiver Under Section 203 of the NIRC, internal revenue taxes must be
valid? And (2) Did the three-year period to assess internal revenue assessed within years of counted from the period fixed by law for
taxes prescribe? the filing of the tax return or the actual date of filing, whichever is
later. This mandate governs the question of prescription of the
HELD: government’s right to assess internal revenue taxes primarily to
(1) Three-year period within which to asses internal safeguard the interests of taxpayers from unreasonable
revenue taxes; Extension by means of waiver; Requisites.- investigation. Accordingly, the government must assess internal
Petitioner contends that the waiver was validly executed mainly revenue taxes on time so as not to extend indefinitely the period
because it complied with Section 222(b) of the National Internal of assessment and deprive the taxpayer of the assurance that it
Revenue Code (NIRC). Petitioner points out that the waiver was in will no longer be subjected to further investigation for taxes after
writing, signed by the taxpayer and the Commissioner, and the expiration of reasonable period of time.
executed within the three-year prescriptive period. Petitioner also
argues that the requirements in RMO No. 20-90 are merely An exception to the three-year prescriptive period on the
directory; thus, the indication of the dates of execution and assessment of taxes is Section 222 (b) of the NIRC, which
acceptance of the waiver, by the taxpayer and the BIR, provides:
respectively, are not required by law. Petitioner adds that there is (b) if before the expiration of the time prescribed in
no provision in RMO No. 20-90 stating that a waiver may be Section 203 for the assessment of the tax, both the Commissioner
invalidated upon failure of the BIR to furnish the taxpayer a copy and the taxpayer have agreed in writing to its assessment after
of the waiver. Further, it contends that respondent’s execution of such time, the tax may be assessed within the period agreed upon.
the waiver was a renunciation of its right to invoke prescription. The period so agreed upon may be extended by subsequent
Petitioner also argues that the government cannot be estopped by written agreement made before the expiration of the period
the mistakes committed by its revenue officer in the enforcement previously agreed upon.
of RMO No. 20-90.
The above provision authorizes the extension of the original three-
On the other hand, respondent counters that the waiver is void year period by the execution of a valid waiver, where the taxpayer
because it did not comply with RMO No. 20-90. Respondent assails and the BIR agreed in writing that the period to issue an
assessment and collect the taxes due is extended to an agreed waiver. Secondly, the waiver was signed only by a revenue district
date. Under RMO No. 20-90, which implements Section 203 and officer, when it should have been signed by the Commissioner as
222 (b), the following procedures should be followed: mandated by the NIRC and RMO no. 20-90, considering that the
1. The waiver must be in the form identified as Annex “A” case involves an amount of more than Php 1 Million, and the
hereof… period to assess is not yet about to prescribe. Lastly, it did not
2. The waiver shall be signed by the taxpayer himself or contain the date of acceptance by the Commissioner of Internal
his duly authorized representative. In the case of a corporation, Revenue, a requisite necessary to determine whether the waiver
the waiver must be signed by any of its responsible officials. was validly accepted before the expiration of the original three-
year period. Bear in mind that the waiver in question is a bilateral
Soon after the waiver is signed by the taxpayer, the Commissioner agreement, thus necessitating the very signatures of both the
of Internal Revenue or the revenue official authorized by him, as Commissioner and taxpayer to give birth to a valid agreement.
hereinafter provided, shall sign the waiver indicating that the
Bureau has accepted and agreed to the waiver. The date of such Petitioner contends that the procedures in RMO No. 20-90 are
acceptance by the Bureau should be indicated. Both the date of merely directory and that the execution of a waiver was a
execution by the taxpayer and date of acceptance by the bureau renunciation of respondent’s right to invoke prescription. We do
should be before the expiration of the period of prescription or not agree. RMO No. 20-90 must be strictly followed. In Philippine
before the lapse of the period agreed upon in case a subsequent Journalists, Inc. vs. Commissioner of Internal Revenue, we ruled
agreement is executed. that a waiver of the statute of limitations under the NIRC, to a
certain extent being a derogation of the taxpayer’s right to
3. The following revenue officials are authorized to sign the waiver. security against prolonged and unscrupulous investigations, must
A. In the National Office be carefully and strictly construed. The waiver of the statute of
3. Commissioner For tax cases involving limitations does not mean that the taxpayer relinquishes the right
more than Php1M to invoke prescription unequivocally, particularly where the
B. In the Regional Offices language of the document is equivocal. Notably, in this case, the
1. The Revenue District Officer with respect to tax waiver became unlimited in time because it did not specify a
cases still pending investigation and the period to assess is about definite date, agreed upon between the BIR and respondent,
to prescribe regardless amount. within which the former may assess and collect taxes. It also had
4. The waiver must be executed in three (3) copies, the no binding effect on respondent because there was no consent by
original copy to be attached to the docket of the case, the second the Commissioner. On this basis, no implied consent can be
copy for the taxpayer and the third copy for the Office accepting presumed, nor can it be contented that the concurrence to such
the waiver. The fact of receipt by the taxpayer of his/her file copy waiver is a mere formality.
shall be indicated in the original copy.
5. The foregoing procedures shall be strictly followed. Any Consequently, petitioner cannot rely on its invocation of the rule
revenue official found not to have complied with this Order that the government cannot be estopped by the mistakes of its
resulting in prescription of the right to assess/collect shall be revenue officers in the enforcement of RMO No. 20-90 because the
administratively dealt with. law on prescriptions should be interpreted in a way conducive to
(2) Waiver and extension of three-year prescriptive bringing about the beneficent purpose of affording protection to
period; The waiver in this case is defective and invalid, hence the the taxpayer within the contemplation of the Commissioner which
tax assessment is time-barred.- Applying RMO No. 20-90, the recommended the approval of the law. To the Government, its tax
waiver in question here was defective and did not validly extend officers are obliged to act promptly in the making of assessment so
the original three-year prescriptive period. Firstly, it was not that taxpayers, after the lapse of the period of prescription, would
proven that respondent was furnished a copy of the BIR-accepted have a feeling of security against unscrupulous tax agents who will
always try to find an excuse to inspect the books of taxpayers, not BPI V. CIR, G.R. NO 139736 (2005)
to determine the latter’s real liability but to take advantage of a FACTS: On two separate occasions, particularly on 06 June 1985
possible opportunity to harass even law-abiding businessmen. and 14 June 1985, BPI sold United States (US) $500,000.00 to the
Without such legal defense, taxpayers would be open season to Central Bank of the Philippines (Central Bank), for the total sales
harassment by unscrupulous tax agents. amount of US$1,000,000.00. On 10 October 1989, the Bureau of
In fine, Assessment Notice No. 33-1-00487-95 dated Internal Revenue (BIR) issued Assessment No. FAS-5-85-89-
October 25, 1999, was issued beyond the three-year prescriptive 002054,[3] finding petitioner BPI liable for deficiency DST on its
period. The waiver was incomplete and defective and thus, the afore-mentioned sales of foreign bills of exchange to the Central
three-year prescriptive period was not tolled nor extended and Bank,
continued to run until April 15, 1999. Even if the three-year period
be counted from May 8, 1996, the date of filing of the amended Petitioner BPI received the Assessment, together with the attached
return, assuming the amended return was substantially different Assessment Notice,[4] on 20 October 1989. Petitioner BPI, through
from the original return, a case which affects the reckoning point its counsel, protested the Assessment in a letter dated 16
of the prescriptive period, still the subject assessment is definitely November 1989, and filed with the BIR on 17 November 1989.
considered time-barred.
Petitioner BPI did not receive any immediate reply to its protest
letter. However, on 15 October 1992, the BIR issued a Warrant of
Distraint and/or Levy[6] against petitioner BPI for the assessed
deficiency DST for taxable year 1985, in the amount of P27,720.00
(excluding the compromise penalty of P300.00). It served the
Warrant on petitioner BPI only on 23 October 1992. [7]
Then again, petitioner BPI did not hear from the BIR until 11
September 1997, when its counsel received a letter, dated 13
August 1997, signed by then BIR Commissioner LiwaywayVinzons-
Chato, denying its “request for reconsideration
Upon receipt of the above-cited letter from the BIR,
petitioner BPI proceeded to file a Petition for Review with
the CTA on 10 October 1997;[9]
EMILIO S. LIM V. CA, 190 SCTA 616 BPI (FEBTC) V. CIR, G.R. NO 17492 (2008)
FACTS: The CIR thru the Revenue Service Chief issued to BPI a
pre-assessment notice dated November 26, 1986.
1. BPI requested for the details of the amounts alleged as
1982-1986 deficiency taxes mentioned in the November
26, 1986 PAN.
2. On April 7, 1989, respondent issued to the petitioner, pertaining to its SWAP transactions in support of its
assessment/demand notices for deficiency withholding tax request for reinvestigation.
at source (Swap Transactions) and DST for the years 1982 12. Thus, it was only upon BPI’s receipt on 13 January 2003 of
to 1986. the 9 August 2002 Decision that the period to collect
3. On April 20, 1989, petitioner filed a protest on the commenced to run again.
demand/assessment notices. On May 8, 1989, petitioner
filed a supplemental protest. ISSUE: WON the collection of the deficiency DST is barred by
4. On March 12, 1993, petitioner requested for an prescription and whether BPI is liable for DST on its SWAP loan
opportunity to present or submit additional documentation transactions.
on the Swap Transactions with the Central Bank. Attached
to the letter dated June 17, 1994, in connection with the HELD: We grant the petition.
reinvestigation of the assessment, petitioner submitted to The statute of limitations on assessment and collection of national
the BIR, Swap Contracts with the Central Bank. internal revenue taxes was shortened from 5 years to 3 years by
5. Petitioner executed several Waivers of the Statutes of Batas PambansaBlg. 700. Thus, the CIR has 3 years from the date
Limitations, the last of which was effective until December of actual filing of the tax return to assess a national internal
31, 1994. revenue tax or to commence court proceedings for the collection
6. On August 9, 2002, respondent issued a final decision on thereof without an assessment.
petitioner’s protest ordering the withdrawal and
cancellation of the deficiency withholding tax assessment When it validly issues an assessment within the 3-year period, it
and considered the same as closed and terminated. has another 3 years within which to collect the tax due by
7. On the other hand, the deficiency DST assessment was distraint, levy, or court proceeding. The assessment of the tax is
reiterated and the petitioner was ordered to pay the said deemed made and the 3-year period for collection of the assessed
amount within 30 days from receipt of such order. tax begins to run on the date the assessment notice had been
8. The tax court, ruled that BPI’s protest and supplemental released, mailed or sent to the taxpayer.
protest should be considered requests for reinvestigation
which tolled the prescriptive period to collect a tax As applied to the present case, the CIR had 3 years from the time
deficiency by distraint, levy, or court proceeding. he issued assessment notices to BPI on 7 April 1989 or until 6 April
9. In its Petition for Review dated 24 November 2006, BPI 1992 within which to collect the deficiency DST. However, it was
argues that the government’s right to collect the DST had only on 9 August 2002 that the CIR ordered BPI to pay the
already prescribed because the CIR failed to issue any deficiency.
reply granting BPI’s request for reinvestigation manifested
in the protest letters dated 20 April and 8 May 1989. In order to determine whether the prescriptive period for collecting
10. It was only through the 9 August 2002 Decision ordering the tax deficiency was effectively tolled by BPI’s filing of the
BPI to pay deficiency DST, or after the lapse of more than protest letters dated 20 April and 8 May 1989 as claimed by the
13 years that the CIR acted on the request for CIR, Section 320 is plainly worded. In order to suspend the
reinvestigation, warranting the conclusion that prescription running of the prescriptive periods for assessment and collection,
had already set in. the request for reinvestigation must be granted by the CIR. The
11. The OSG filed a Commenton behalf of the CIR, asserting act of requesting a reinvestigation alone does not suspend
that the prescriptive period was tolled by the protest the period. The request should first be granted, in order to
letters filed by BPI which were granted and acted upon by effect suspension.
the CIR. Such action was allegedly communicated to BPI
as, in fact, the latter submitted additional documents
The Court went on to declare that the burden of proof that the
request for reinvestigation had been actually granted shall be on
the CIR. Such grant may be expressed in its communications with
the taxpayer or implied from the action of the CIR or his
authorized representative in response to the request for
reinvestigation.
ISSUE: WON the CIR’s right to collect the tax under said Thus, in Commissioner of Internal Revenue v. B.F. Goodrich, 21 this
Assessment notice has prescribed. Court affirmed that the law on prescription should be liberally
construed in order to protect taxpayers and that, as a corollary,
HELD: YES the exceptions to the law on prescription should be strictly
Sec. 269 provides for the exceptions as to the period of limitation construed.
where, Any internal revenue tax which has been assessed within
the period of limitation above-prescribed may be collected by The Tax Code of 1977, as amended, provides instances when the
running of the statute of limitations on the assessment and
collection of national internal revenue taxes could be suspended, the running of the statute of limitations to instances when
even in the absence of a waiver, when the taxpayer requests reinvestigation is requested by a taxpayer and is granted by
for a reinvestigation which is granted by the Commissioner; the CIR.
when the taxpayer cannot be located in the address given by him
in the return filed upon which a tax is being assessed or collected x The Court provided a clear-cut rationale in the case of Bank of the
xx. (Emphasis supplied.) Philippine Islands v. Commissioner of Internal Revenue explaining
Among the exceptions provided by the aforecited section, and why a request for reinvestigation, and not a request for
invoked by the CIR as a ground for this petition, is the instance reconsideration, interrupts the running of the statute of limitations
when the taxpayer requests for a reinvestigation which is granted on the collection of the assessed tax:
by the Commissioner. However, this exception does not apply Undoubtedly, a reinvestigation, which entails the reception
to this case since the respondent never requested for a and evaluation of additional evidence, will take more time
reinvestigation. More importantly, the CIR could not have than a reconsideration of a tax assessment, which will be
conducted a reinvestigation where, as admitted by the CIR limited to the evidence already at hand; this justifies why
in its Petition, the respondent refused to submit any new the former can suspend the running of the statute of
evidence. limitations on collection of the assessed tax, while the
latter cannot.
Revenue Regulations No. 12-85, the Procedure Governing In the present case, the separate letters of protest dated 6
Administrative Protests of Assessment of the Bureau of Internal May 1994 and 23 May 1994 are requests for
Revenue, issued on 27 November 1985, defines the two types reconsideration. The CIR’s allegation that there was a
of protest, the request for reconsideration and the request request for reinvestigation is inconceivable since
for reinvestigation, and distinguishes one from the other in respondent consistently and categorically refused to submit
this manner: new evidence and cooperate in any reinvestigation
proceedings.
Section 6.Protest. - The taxpayer may protest administratively an
assessment by filing a written request for reconsideration or The distinction between a request for reconsideration and a
reinvestigation specifying the following particulars:xxx request for reinvestigation is significant. It bears repetition
For the purpose of protest herein— that a request for reconsideration, unlike a request for
(a) Request for reconsideration-- refers to a plea for a re- reinvestigation, cannot suspend the statute of limitations on the
evaluation of an assessment on the basis of existing records collection of an assessed tax. If both types of protest can
without need of additional evidence. It may involve both a effectively interrupt the running of the statute of limitations, an
question of fact or of law or both. erroneous assessment may never prescribe. If the taxpayer fails to
(b) Request for reinvestigation—refers to a plea for re-evaluation file a protest, then the erroneous assessment would become final
of an assessment on the basis of newly-discovered evidence or and unappealable. On the other hand, if the taxpayer does file the
additional evidence that a taxpayer intends to present in the protest on a patently erroneous assessment, the statute of
investigation. It may also involve a question of fact or law or both. limitations would automatically be suspended and the tax thereon
The main difference between these two types of protests lies in the may be collected long after it was assessed. Meanwhile the
records or evidence to be examined by internal revenue officers, interest on the deficiencies and the surcharges continue to
whether these are existing records or newly discovered or accumulate. And for an unrestricted number of years, the
additional evidence. A re-evaluation of existing records which taxpayers remain uncertain and are burdened with the costs of
results from a request for reconsideration does not toll the preserving their books and records. This is the predicament that
running of the prescription period for the collection of an the law on the statute of limitations seeks to prevent.
assessed tax. Section 271 distinctly limits the suspension of
In the present case the respondent did nothing to prevent
the BIR from collecting the tax. It did not present to the BIR
any new evidence for its re-evaluation. At the earliest opportunity,
respondent insisted that the assessment was invalid and made
clear to the BIR its refusal to produce documents that the BIR
requested. On the other hand, the BIR also communicated to the
respondent its unwavering stance that its assessment is correct.
Given that both parties were at a deadlock, the next logical step
would have been for the BIR to issue a Decision denying the
respondent’s protest and to initiate proceedings for the collection
of the assessed tax and, thus, allow the respondent, should it so
choose, to contest the assessment before the CTA. Postponing the
collection for eight long years could not possibly make the
taxpayer feel that the demand was not unreasonable or that no
harassment or injustice is meant by the Government.