CIR vs Phil. Global Communications, GR 167146, Oct. 31, 2006

CIR vs Phil. Global Communications, GR 167146, Oct. 31, 2006 Facts rs! rs!on on" "nt nt rci rciv v" " a Prl Prlim imin inar ar# # $ss $ssssm ssmnt nt %otic %otic  "at "at" " 13 $!ri $!rill 1&&4 'or "(cinc# incom ta) in th amount o' P11*,271,672.00 On th th 'oll 'ollo+ o+in in  "a# "a#, 22 $!ri $!rill 1&&4 1&&4,, rs! rs!on on" "nt nt rc rciv iv" " a Forma ormall  $ssssmnt %otic +ith $ssssmnt %otic %o. 0006**-*0-7333, "at" 14  $!ril 1&&4, 'or "(cinc# incom ta) in th total amount o' P11*,271,672.00. Rs!o s!on"nt nt, throu ouh its counsl Ponc nril il Ca#tano R#s an" /analastas a+ Oics, (l" a 'ormal !rotst. Rs!on"nt rust" 'or th cancllation o' th ta) assssmnt, +hich th# all" +as invali" 'or lac o' 'actual an" lal basis. 45 On 16 Octo Octob brr 2002 2002,, mor mor than than ih ihtt #ar #ars s a't a'trr th th ass assssm ssmn ntt +as +as !rsumabl# !rsumabl# issu", th Ponc Ponc nrilCa#t nrilCa#tano ano R#s an" /analasta /analastas s a+ Oic Oics s rci rciv v" " 'rom 'rom th th CIR CIR a Final Final ci cisio sion n "at "at" " * Octo Octobr br 2002 2002 "n#in th rs!on"nts !rotst . Rs!on"nt (l" a Ptition 'or Rvi+ +ith th C$. $'tr "u notic an" harin, th C$ rn"r" a cision in 'avor o' rs!on"nt on & 8un 2004.65  h C$ rul" on th !rimar# issu o' !rscri!tion an" 'oun" it unn unnc css ssar ar# # to "ci "ci" " th th issu issus s on th th vali vali"it "it# # an" an" !ro! !ro!ri rit# t# o' th th asss assssm smn nt. t. It "ci" "ci"" " that that th th !rot !rotst st ltt lttr rs s (l" (l" b# th th rs!o rs!on" n"n ntt cannot constitut a rust 'or rinvstiation, hnc, th# cannot toll th runnin o' th !rscri!tiv !rio" to collct th assss" "(cinc# incom ta). h assssmnt, in this cas, +as !rsumabl# issu" on 14 $!ril 1&&4 sinc th rs!on" rs!on"nt nt "i" not "is!ut "is!ut th CIRs CIRs claim. claim. hr'o hr'or, r, th 9IR ha" until 13 $!ril 1&&7. :o+vr, as thr +as no ;arrant o' istraint an"6* on & 8anuar# 2003 2003,, +h +hic ich h +as +as sv svra rall #ar #ars s b#o b#on" n" th th thr thr-# #ar ar !rs !rscr cri! i!ti tiv v !rio". hus, th CIR is no+ !rscrib" 'rom collctin th assss" ta).

Issu? ;O% th CIR can still collct th all" ta) "(cinc# 'rom rs!on"nt.

%O.

h la+ !rscrib" a !rio" o' thr #ars 'rom th "at th rturn +as actuall# (l" or 'rom th last "at !rscrib" b# la+ 'or th (lin o' such rturn, +hichvr cam latr, latr, +ithin +hich th 9IR ma# assss a national intrnal rvnu ta).

h assssmnt, in this cas, +as !rsumabl# issu" on 14 $!ril 1&&4 sinc th rs!on"nt "i" not "is!ut th CIRs claim. hr'or, th 9IR ha" until 13 $!ril 1&&7. :o+vr, as thr +as no ;arrant o' istraint an"6* on & 8anuar# 2003, +hich +as svral #ars b#on" th thr-#ar !rscri!tiv !rio". hus, th CIR is no+ !rscrib" 'rom collctin th assss" ta).

In th !rsnt cas, th s!arat lttrs o' !rotst "at" 6 /a# 1&&4 an" 23 /a# 1&&4 1&&4 ar rus rusts ts 'or rcons rconsi" i"rat ration ion.. h CIRs CIRs alla allatio tion n that that thr thr +as +as a rust rust 'or rinvstia rinvstiation tion is inconciva inconcivabl bl sinc rs!on"nt rs!on"nt consistn consistntl# tl# an" catoricall# r'us" to submit n+ vi"nc an" coo!rat in an# rinvstiation !roc"ins.

h "istinction bt+n a rust 'or rconsi"ration an" a rust 'or rin rinv vst sti iat atio ion n is sin sini( i(ca cant nt.. It bar bars s r! r!ti titi tion on that that a ru rus stt 'or 'or rconsi"ration, unli a rust 'or rinvstiation, cannot sus!n" th statut o' limitations on th collction o' an assss" ta). I' both t#!s o'  !rotst can ctivl# intrru!t th runnin o' th statut o' limitations, an rronous assssmnt ma# nvr !rscrib. I' th ta)!a#r 'ails to (l a !rotst, thn th rronous assssmnt +oul" bcom (n a l 2&5 an" una!!alabl.  On th othr han", i' th ta)!a#r "os (l th !rotst on a !at !atnt ntl# l# rro rrono nous us ass assssm ssmn nt, t, th th stat statut ut  o' limi limita tati tion ons s +o +oul ul" " automaticall# b sus!n"" an" th ta) thron ma# b collct" lon a'tr it +as +as ass assss ss" ".. /an /an+h +hil il  th th int intr rst st on th th "(c "(ci inc nci is s an" an" th th surcha surchar rs s contin continu u to accumu accumulat lat. . $n" 'or an unrst unrstric rict" t" numbr numbr o'   #ars, th ta)!a#rs rmain uncrtain an" ar bur"n" +ith th costs o'  !rsrvin thir boos an" rcor"s. his is th !r"icamnt that th la+ on th statut o' limitations ss to !rvnt. %ot?

In a numb numbr r o' cas cass, s, this this Cour Courtt has has also also clari clari( (" " that that th th stat statut ut  o'  limitations on th collction o' ta)s shoul" bn(t both th Govrnmnt an" th ta)!a#rs. ta)!a#rs. In ths cass, th Court 'urthr illustrat" illustrat" th harm'ul harm'ul cts that th "la# in th assssmnt an" collction o' ta)s in@icts u!on ta)!a#rs. In Republic of the Philippines v. Ablaza,1&5 this this Court Court m!hat m!hatica icall# ll# )!lain" that th statut o' limitations o' actions 'or th collction o' ta)s is =usti =usti( (" " b# th th n" n" to !rot !rotc ctt la+la+-ab abi" i"in in  citi citiA Ans ns 'rom 'rom !ossi !ossibl bl  harassmnt? h la+ !rscribin a limitation o' actions 'or th collction o'  th incom ta) is bn(cial both to th Govrnmnt an" to its citi citiA Ans nsBB to th th Govr Govrnm nmn ntt bca bcaus us  ta) ta) oic oicrs rs +o +oul ul" " b obli" to act !rom!tl# in th main o' assssmnt, an" to citiAns bcaus a'tr th la!s o' th !rio" o' !rscri!tion citiAns +oul" hav a 'lin o' scurit# aainst unscru!ulous ta) ants +ho +ill al+a#s (n" an )cus to ins!ct th boos o' ta)!a#rs, not to "trmin th lattrs ral liabilit#, but to ta a"vanta o' vr# o!!ortunit# to molst, !ac'ul, la+abi"in abi"in  citiA citiAns. ns. ;itho ;ithout ut such such lal lal "'ns "'ns ta)!a# ta)!a#rs rs +oul" +oul" 'urthrmor b un"r obliation to al+a#s ! thir boos an" ! ! thm thm o!n o!n 'or 'or ins! ins!c cti tion on sub= sub=c ctt to hara harass ssm mnt nt b# unsc unscru ru!u !ulo lous us ta) ta) an ants ts.. h h la+ la+ on !rs !rscr cri! i!ti tion on bin bin  a rm"ial masur shoul" b intr!rt" in a +a# con"uciv to brinin about th bn(cint !ur!os o' aor"in !rotction to th ta)!a#r +ithin th contm!lation o' th Commission +hich rcommn"" th a!!roval o' th la+. la+.  $n" aain in th rcnt cas Bank of the Philippine Islands v. v. Commissioner  205 this this Cour Court, t, in con( con(rm rmin in  ths ths arl arlir ir rulin rulins, s, of Int Intern ernal al Revenu Revenue e, !ronounc" that?

houh th statut o' limitations on assssmnt an" collction o' national intrnal rvnu ta)s bn(ts both th Govrnmnt an" th ta)!a#r, it !rinci!all# intn"s to aor" !rotction to th ta)!a#r aainst unrasonabl invstiation. h in"(nit )tnsion )tnsion o' th !rio" 'or assssmnt assssmnt is unrasonabl unrasonabl bcaus it "!rivs th sai" ta)!a#r o' th assuranc that h +ill no lonr b sub=ct" to 'urthr invstiation 'or ta)s a'tr th )!iration o' a rasonabl !rio" o' tim. hus, in Commissioner of Internal Revenue v. B.F. Goodrich ,215 this Court airm" that th la+ on !rscri!tion shoul" b librall# constru" in or"r to !rotct ta)!a#rs an" that, as a corollar#, th )c!tions to th la+ on !rscri!tion shoul" b strictl# constru".

h h a) Co" Co" o' 1&77, 1&77, as amn amn" "", ", !rov !rovi" i"s s inst instan anc cs s +h +hn n th th runnin o' th statut o' limitations on th assssmnt an" collction o'  national intrnal rvnu ta)s coul" b sus!n"", vn in th absnc o'  a +aivr, +aivr, un"r ction 271 thro' +hich ra"s?