Tax 2 • Respondent filed a Petition for Review with the CTA.
CTA ruled in favor of the
[28] CIR v Philippine Global Communication, Inc
GR No. 167146 | October 31, 2006 | J. Chico-Nazario
dpeb | 3
PETITIONERS/PROSECUTORS: COMMISSIONER OF INTERNAL REVENUE
RESPONDENTS/DEFENDANTS: PHILIPPINE GLOBAL COMMUNICATION, INC.
TOPIC: Remedies
CASE SUMMARY: PGC filed its Annual ITR for 1990 in April 1991. PGC filed formal
protest letters against CIR’s final assessment notice for deficiency income tax, asking fir the
cancellation of the latter’s assessment. More than eight years after the final assessment was
presumably issued, counsel of respondent finally received from the CIR a final decision dated
October 8, 2002 denying the respondent’s protest and affirming its assessment. SC held CIR’s
right to collect has prescribed: Assessment must be made within three years from the date the
return was actually filed or from the date prescribed by law for the filing of such return. If
there is fraud, ten years. After assessment, collection must be within three years therefrom.
DOCTRINE: The statute of limitations is to protect the Government and the taxpayer. For the
government: the prompt collection of taxes and prevent the agency from prejudicing the
government’s collection efforts. For the taxpayer: to be able to know his liability as soon as
possible while he still has his books and records, to prevent accumulation of interests, to guard
against harassment of tax agents, to protect the taxpayer from unreasonable investigations.
FACTS:
• Telecommunications corporation Phil Global Comm. Inc. filed its Annual Income Tax
Return for taxable year 1990 in April 1991.
• A year later, on April 13, 1992, BIR officials were authorized by the CIR to inspect books
of accounts of respondent in connection with respondent’s income tax liability for 1990.
• April 22, 1992, CIR sent a letter of request to respondent to present for examination
certain records and documents, but respondent failed to present any document.
• Two years later, April 21, 1994, respondent received a Preliminary Assessment Notice
dated April 13, 1994 for deficiency income tax.
• The next day, April 22, 1994, respondent received a Formal Assessment Notice dated
April 14, 1994 for P118M as deficiency income tax.
• On May 6, 1994 and May 23, 1994, respondent filed formal protest letters against the
Final Assessment Notice and asked for the cancellation of the tax assessment.
• More than eight years after the final assessment was presumably issued, on October 16,
2002, counsel of respondent finally received from the CIR a final decision dated October
8, 2002 denying the respondent’s protest and affirming its assessment.
respondent on the basis of prescription and ordered the assessment be cancelled.
• The CTA said that the “protest letters” cannot be considered as “requests for
reinvestigation” which would stop the running of the prescriptive period. Hence, since
three years have lapsed after the final assessment, the CIR’s right to collect has prescribed
in conformity to Sec. 269 of the Tax Code of 1977.
• A Petition for Review on Certiorari was filed by the CIR to the SC questioning the
decision and order of the CTA.
ISSUES and RULING:
• WON the protest letters were, by nature, requests for reinvestigation (as opposed to
reconsideration) which would toll the running of the prescriptive period? No, they were
not requests for reinvestigation. Running of period is not interrupted. — There are two
types of protest, a reconsideration and a reinvestigation. They are different from each
other.
o According to Revenue Regulations No. 12-85,
▪ Section 6: “The taxpayer may protest administratively an assessment by filing a
written request for reconsideration or reinvestigation xxx … “(a) Request for
reconsideration—refers to a plea for a re-evaluation of an assessment on the
basis of existing records without need of additional evidence. It may involve both
a question of fact or of law or both.
(b) Request for reinvestigation—refers to a plea for re-evaluation of an
assessment on the basis of newly-discovered evidence or additional evidence that
a taxpayer intends to present in the investigation. It may also involve a question
of fact or law or both.
o The main difference between these two types of protests lies in the records or
evidence to be examined by internal revenue officers, whether these are existing
records or newly discovered or additional evidence. A re-evaluation of existing
records which results from a request for reconsideration does not toll the running of
the prescription period for the collection of an assessed tax. Section 271 distinctly
limits the suspension of the running of the statute of limitations to instances when
reinvestigation is requested by a taxpayer and is granted by the CIR.
o BPI vs. CIR: Undoubtedly, a reinvestigation, which entails the reception and
evaluation of additional evidence, will take more time than a reconsideration of a tax
assessment, which will be limited to the evidence already at hand; this justifies why
the former can suspend the running of the statute of limitations on collection of the
assessed tax, while the latter cannot.
o In this case, the protest letters are mere requests for reconsideration which will not
toll the running of the prescriptive period.
• WON CIR’s right to collect has prescribed? — YES, CTA ruled correctly.
o Sec. 268 of the Tax Code provides the prescription for the assessment of an internal
revenue tax. General rule is assessment must be made within three years from the
 date the return was actually filed or from the date prescribed by law for the filing of
such return. Exception: When a false or fraudulent return was filed with intent of
evading the tax or when no return was filed at all, the prescriptive period to assess or
to begin a court proceeding for collection even without assessment is ten years from
the date of discovery by the BIR of the falsity, fraud or omission.
o Sec. 269 (c) of the Tax Code provides the prescription for the collection of the
internal revenue tax assessed. If assessment has been made, whether within the
three-year period or ten-year period, whichever is applicable, the BIR has three
years after the assessment for the collection of the taxes due through the
administrative process of distraint or levy or through judicial proceedings.
o The final assessment in this case was presumably issued on April 14, 1994.
Therefore, the BIR had until April 13, 1997 to collect. BIR only made attempts to
collect in 2003. Therefore, BIR is now prescribed from collecting.
o Rationale for the statute of limitations is to protect the Government and the
taxpayer. For the government: the prompt collection of taxes and prevent the
agency from prejudicing the government’s collection efforts. For the taxpayer:
to be able to know his liability as soon as possible while he still has his books
and records, to prevent accumulation of interests, to guard against harassment
of tax agents, to protect the taxpayer from unreasonable investigations.

DISPOSITIVE: IN VIEW OF THE FOREGOING, the instant Petition is DENIED. The

assailed en banc Decision of the CTA in CTA EB No. 37 dated 22 February 2005, cancelling
Assessment Notice No. 000688-80-7333 issued against Philippine GlobalCommunication, Inc.
for its 1990 income tax deficiency for the reason that it is barred by prescription, is hereby
AFFIRMED. No costs. SO ORDERED.