G.R. No. 167146 ; October 31, 2006
COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. PHILIPPINE GLOBAL COMMUNICATION, INC., respondent.

FACTS

Respondent Philippine Global Communication, Inc. filed its 1990 Income Tax Return on April 15, 1991. The Bureau of Internal Revenue (BIR) issued a Letter of Authority on April 13, 1992, to examine its books. After investigation, the BIR issued a Formal Assessment Notice (FAN) for deficiency income tax on April 14, 1994, which the respondent received on April 22, 1994. The respondent filed two formal protest letters on May 6 and 23, 1994, requesting the cancellation of the assessment. The Commissioner of Internal Revenue (CIR) issued a Final Decision denying the protest only on October 8, 2002, more than eight years later. The respondent then filed a Petition for Review with the Court of Tax Appeals (CTA).

ISSUE

Whether the right of the CIR to collect the assessed deficiency income tax for 1990 had prescribed.

RULING

Yes, the right to collect had prescribed. Under Section 269(c) of the 1977 Tax Code, an assessed tax must be collected by distraint, levy, or court proceeding within three years following the assessment. The three-year prescriptive period for collection commenced on the date the FAN was released, mailed, or sent to the taxpayer, which in this case was April 1994. The period can be suspended only if the taxpayer requests a reinvestigation, which requires the submission of supporting documents, not merely a reiterative request for cancellation. The Court, affirming the CTA, ruled that the respondent’s protest letters, while disputing the assessment’s basis, did not constitute a valid request for reinvestigation as they did not submit new evidence for the BIR to examine and evaluate. Consequently, the prescriptive period was not tolled. The CIR’s Final Decision in 2002 and subsequent collection efforts came after the three-year period had already lapsed in 1997. The assessment was therefore uncollectible. The Petition was denied for lack of merit.