Facts:
In 1946, Limaco& De Guzman Co. was engaged in the importation of cigarettes. Toguarantee payment of revenue taxes, the company and the Visayan Surety and Insurance Corp. as surety, executed 2 importer bonds. On 27 June 1946, thecompany filed with the Bureau of Customs entry papers covering shipment of 2million “Spud” cigarettes it had imported from New York. the specific tax due thereonamounted to P6,000. The company, through its agent/broker J. O. Hiponia, paid theBureau of Customs the tax with P1000 in cash and P5,000 in a PNB Check on 15 July1946. The cigarettes were released to the company but the check bounced. On 17 June 1948, the Collector of Internal Revenue demanded the payment of thedeficiency specific tax. The amount remained unpaid. On 15 April 1951, the companyrequested that action be deferred as it intends to settle the matter amicably with theBIR. The Republic filed a complaint for the forfeiture of the bonds, and the paymentof the sum of P5,000 plus interest. The company invoked the defense of estoppel andprescription has the action prescribed on the ground that the assessment was madein beyond 5 years from July 15 1946.
Issue:
Whether or not the power of assessment prescribed
Ruling:
No. Theassessment in question has not yet prescribed. It was not issued on July 14, 1946, buton June 17, 1948. When the Collector of Internal Revenue received information fromthe Bureau of Customs that the said sum of P5,000.00 was not paid (for lack of funds), he immediately issued a letter dated June 17, 1948 addressed to thedefendant assessing and demanding from the latter the payment of the saidP5,000.00. It was then that the unpaid specific tax of P5,000.00 was deemed to havebeen assessed. When the tax was paid in cash and in check on July 15, 1946, theCollector had a right to rely, as it, in fact, relied that said payment fully settled thespecific taxes due on the imported cigarettes. The cigarettes would not have beenreleased, had Collector been aware that the payment did not fully settle the saidspecific taxes. It can not be said that July 15, 1946 (the date of payment) was thedate of assessment from which the period of collection should start. July 15, 1946was simply the date of tender of payment. The right to collect the amount of P5,000.00 began only after the P5,000.00 — rubber check was dishonored. Theaction to assess and collect the unpaid tax commenced anew on June 14, 1948, whena letter of demand for the amount of said rubber-check had been sent to thedefendant. This letter should be deemed to be an assessment because it declaredand fixed a tax to be payable against the party liable thereto, and demanded thesettlement thereof. Judicial action having been instituted on February 18, 1953, thefive-year period for collection had not then elapsed.
Even assuming that July 15, 1946 is the date of assessment, still the action to collectis not barred by the statute of limitations, because the statute was suspended when the rubber-check was dishonored and demand letters were sent by the commissioner. The defendant likewise wrote two letters to the Solicitor General onApril 15, and 25, 1951, respectively, requesting for the deferment of the judicialaction to be taken by the latter towards the collection of the obligation, so that theformer could make representations with the Collector to settle the matter amicably. This being the case, the prescriptive period to effect the collection of the tax whichallegedly commenced on July 15, 1946, was interrupted. "The prescription of actionsis interrupted when they are filed before the court, when there is any writtenextrajudicial demand by the creditors and when there is any written acknowledgment of the debt by the debtor " (Art. 1155, New Civil Code). "Taxpayers seeking to recoveroverpayment in income could not claim that collection by Commissioner was barredby limitations where procedure carried out which result in postponement of collectionwas that requested by taxpayers". Having acknowledged the debt in writing in April1951, and the complaint was filed in 1953, prescription had not set in. The full timefor the prescription must be reckoned from the cessation of the interruption (Saguciov. Bulos, G.R. Nos. L-17608-09, July 31, 1962, and cases cited therein). Had it notbeen for the filing of the complaint in 1953, the interruption would have ceased in April 1956.
In 1946, Limaco& De Guzman Co. was engaged in the importation of cigarettes. Toguarantee payment of revenue taxes, the company and the Visayan Surety and Insurance Corp. as surety, executed 2 importer bonds. On 27 June 1946, thecompany filed with the Bureau of Customs entry papers covering shipment of 2million “Spud” cigarettes it had imported from New York. the specific tax due thereonamounted to P6,000. The company, through its agent/broker J. O. Hiponia, paid theBureau of Customs the tax with P1000 in cash and P5,000 in a PNB Check on 15 July1946. The cigarettes were released to the company but the check bounced. On 17 June 1948, the Collector of Internal Revenue demanded the payment of thedeficiency specific tax. The amount remained unpaid. On 15 April 1951, the companyrequested that action be deferred as it intends to settle the matter amicably with theBIR. The Republic filed a complaint for the forfeiture of the bonds, and the paymentof the sum of P5,000 plus interest. The company invoked the defense of estoppel andprescription has the action prescribed on the ground that the assessment was madein beyond 5 years from July 15 1946.
Issue:
Whether or not the power of assessment prescribed
Ruling:
No. Theassessment in question has not yet prescribed. It was not issued on July 14, 1946, buton June 17, 1948. When the Collector of Internal Revenue received information fromthe Bureau of Customs that the said sum of P5,000.00 was not paid (for lack of funds), he immediately issued a letter dated June 17, 1948 addressed to thedefendant assessing and demanding from the latter the payment of the saidP5,000.00. It was then that the unpaid specific tax of P5,000.00 was deemed to havebeen assessed. When the tax was paid in cash and in check on July 15, 1946, theCollector had a right to rely, as it, in fact, relied that said payment fully settled thespecific taxes due on the imported cigarettes. The cigarettes would not have beenreleased, had Collector been aware that the payment did not fully settle the saidspecific taxes. It can not be said that July 15, 1946 (the date of payment) was thedate of assessment from which the period of collection should start. July 15, 1946was simply the date of tender of payment. The right to collect the amount of P5,000.00 began only after the P5,000.00 — rubber check was dishonored. Theaction to assess and collect the unpaid tax commenced anew on June 14, 1948, whena letter of demand for the amount of said rubber-check had been sent to thedefendant. This letter should be deemed to be an assessment because it declaredand fixed a tax to be payable against the party liable thereto, and demanded thesettlement thereof. Judicial action having been instituted on February 18, 1953, thefive-year period for collection had not then elapsed.
Even assuming that July 15, 1946 is the date of assessment, still the action to collectis not barred by the statute of limitations, because the statute was suspended when the rubber-check was dishonored and demand letters were sent by the commissioner. The defendant likewise wrote two letters to the Solicitor General onApril 15, and 25, 1951, respectively, requesting for the deferment of the judicialaction to be taken by the latter towards the collection of the obligation, so that theformer could make representations with the Collector to settle the matter amicably. This being the case, the prescriptive period to effect the collection of the tax whichallegedly commenced on July 15, 1946, was interrupted. "The prescription of actionsis interrupted when they are filed before the court, when there is any writtenextrajudicial demand by the creditors and when there is any written acknowledgment of the debt by the debtor " (Art. 1155, New Civil Code). "Taxpayers seeking to recoveroverpayment in income could not claim that collection by Commissioner was barredby limitations where procedure carried out which result in postponement of collectionwas that requested by taxpayers". Having acknowledged the debt in writing in April1951, and the complaint was filed in 1953, prescription had not set in. The full timefor the prescription must be reckoned from the cessation of the interruption (Saguciov. Bulos, G.R. Nos. L-17608-09, July 31, 1962, and cases cited therein). Had it notbeen for the filing of the complaint in 1953, the interruption would have ceased in April 1956.
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