CTA Case No. 4651 (Decision)

.) REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY PASEO INSURANCE AGENCY, INC., C.T.A. Case No. 4651 Petitioner, - -x - versus - COMMISSIONER OF INTERNAL REVENUE, Respondent. x- - - - DEC I s I oN This is an assessment case �or alleged deficiency income and business taxes for the years 1985 and 1986 in the total amount o� P51, 175.92. ,I Petitioner is an insurance agency corporation duly organized and existing as a corporation under and by virtue o� the laws of the Republic of the Philippines. On August 23, 1991, a Warrant o� Distraint and/or Levy <Exh. C) dated June 21, 1991 was served by the Respondent upon herein Petitione r to secure the payment of the sum of P51,175.92 for alleged deficiency income and business taxes for the ye a rs 1985 and 1986, to wit: AssesSJentiDe�and Ho. Date Issued Kind of Tax Year bount 001654-85 01-16-89 dtd.incow tax 1985 P17,834.60 06-460-858/868-89-82 -do- def.business tax 1985 5,287.13 -do- def.incow tax 1986 4,507.88 -do- -do- def.business tax 1986 23,546.31 001654-96 T 0 TAL P51,175.92

) DECISION - C.T.A. CASE NO. 4651 -2- Surprised by the issuance of the Warrant, Petitioner, in a l etter dated August 27, 1991 informed the BIR that it had never received and had no knowledge of the assessments until the warrant was served and thus requested and secured copies of the same only on the same date August 27, 1991. <see Exh. D> Thus, having secur d the copies of the said assessment, Petitioner, in a letter dated September 6, 1991 <Exh. H> imm~di tely protested the said assessment stating among others that th _ warrant wa�s void since the three- year prescriptive p riod provided for under Section 223 of the National Internal Revenue Code had alreacty lapsed_ wh n the P ti tioner was given a copy of the assessm nt only on August 27. 1991. The key is~u in the c e at bar is whether or not the assessment hQs already prescribed. Pertinent provisions of the 1986 Tax Code applicable to the ease are hereby reproduced, as follows: Sec. 80. (a) XXX XXX XXX (b) Ti�e of filing the inco�e tax return. The corporate quarterly declaration shall be filed within sixty (60) days following the close of each of the first three quarters of the taxable year. The f~~al adjustme nt return shall �' ~e filed on or b~fore the 15th day of A rii or on or bef,!)r�.' the 15th day of the 4th month :foll_gwi.ng,___j.he close of the fiscal yeart as the case may be <Emphasis supplied>

DECISION - C. T. A. CASE NO. 465.1 -3- (C) XXX XXX XXX and ) Sec. 268. Period of 1i�itation upon assessMent and collection. Except as provided in t he succeeding section, internal revenue taxes shal l be assessed within thr~-~ars aft!?r t he last day ~e s ~r ib ed by law for the filing of the retu~A, a nd no proc edi ng in co urt wit hout assessment for the collection of such taxes shall be begun after the _x p iration of such pe-riod. : PROVIDED, That in a case where a return is filed beyond the period prescribed by law, the three-year period shall be counted from the day the ret urn was filed. �For the purp oses of this section, a .return filed before the last day prescribed by law for the filing thereof shall be considered as filed on such last day. <As mende d by BP 700> <Emphasis supplied> Applying the foregoing sections to the instant petition, it can be gleaned t hat the prescriptive period for the assessment for the alleged deficiency income and bua ineaa taxes for FY 1985 an d 1986 commenc ed on January 15, 1986 and January 15, 1987 respectively. The law speaks that the three-year period for assessment commences to run "after the last day prescribed by law for t h fili ng of the return" which mea ns t~at if th ~ re turn is filed before such due date, t,he___P.rescripti ye Eeriod begins only after said due date . Hence, contrary to the belief of the Petitioner that "the deadline for the prescriptive period to lapse were on 13 November 1988 and 17

DECISION - C.T.A. CASE NO . 4651 -4- December 1989 respectively," the correct prescriptive period ended on January 15, 1989 and January 15, 1990. This should be the case, since, although the income tax returns were filed on November 13, 1985 and December 17, 1986 respectively, (see Exhs.A, A-1, B & B-1) and the point of reference in the commencement of the three-year period should be January 15, 1986 and January 15, 1987 respectively which is the "15th day of the 4th month following the close of the fiscal year" which in this case was on September 30, 1986 and 1987 respectively. Therefore, when the assessment was allegedly mailed on January 19, 1989, the assessment for FY 1985 has already lapsed. But the assessment for FY 1986 was well within the prescriptive period. The problem is, it cannot be proven by evidence that the Respondent really mailed the assessments on January 19, I� 1989. The alleged mailing was s upposed to be registered, yet the registry number was left blank, neither was there a registry return card which would prove service of assessment nor the Respondent's docket revealed that the Petitioner received the subject assessments. In fact on two occasions granted by this Court the Respondent failed to present evidence to support her case. This only shows that there was really failure of service, of the assessments in questions; hence, even th 1986 ease ement has been

DECISION - C.T.A. CASE NO. 4651 -5 - sent out of time and this Court has no other recourse but to consider the actual receipt of both assessments by the Petitioner only on August 27, 1991 as the point of reference in the computation of the prescriptive Code. period which is already well beyond the three-year prescriptive period under the Tax WHEREFORE, the assessments issued against the Petitioner for alleged deficiency income and business taxes for FY 1986 and 1987 in the total amount of P51,175.92 is hereby DECLARED null and void since they were already issued beyond the prescriptive period. Accordingly, the Warrant of Distraint and/or Levy and the Warrant of Garnishment issued against Petitioner is hereby LIFTED permanently. SO ORDERED. Quezon City, Metro Manila, December 21, 1993 GRUBA Associate Judge WE =~d-1:1~dge RAMON 0. DE V A Associate Ju e 1 q Ai "

DECISION - C.T.A. CASE NO. 4651 -6 - C ~ .R ._ ~-- I F I C A T I 0 N I hereby certify that the decision was reached after due consultation among the members of the Court of Tax Appeals in accordance with Section 13, Article VIII of the Constituti.on. ~o.~ ERNESTO D. ACOSTA Presiding Judge Court o� Tax Appeals