G.R. No. L-11527; November 25, 1958
THE COLLECTOR OF INTERNAL REVENUE, petitioner, vs. SUYOC CONSOLIDATED MINING COMPANY, ET AL., respondents.

FACTS

Suyoc Consolidated Mining Company, unable to file its 1941 income tax return due to the war, was granted an extension until February 15, 1946, under Commonwealth Act No. 722 . The company filed a tentative return on February 12, 1946, a second final return on November 28, 1946, and an amended final return on February 6, 1947. Based on the second final return, the Collector assessed an income tax deficiency on February 11, 1947. The company requested extensions to pay and questioned the assessment, leading to multiple reinvestigations and appeals, including a hearing before the Bureau of Internal Revenue’s Conference Staff from September 2, 1953, to July 16, 1955. The Collector finally issued a reduced assessment on July 26, 1955. The company petitioned the Court of Tax Appeals, arguing the government’s right to collect had prescribed.

ISSUE

Whether the government’s right to collect the assessed deficiency income tax for 1941 had prescribed, considering the taxpayer’s repeated requests for reinvestigation and extensions which delayed collection action.

RULING

The Supreme Court reversed the Court of Tax Appeals. While a mere request for reinvestigation does not suspend the prescriptive period under Section 332(c) of the National Internal Revenue Code without a written agreement, the taxpayer is estopped from invoking the defense of prescription. By its repeated requests for reconsideration, reinvestigation, and extensions, the company induced the Collector to delay collection through distraint, levy, or court proceedings. The Court held it would be unfair and inequitable to allow the taxpayer to benefit from the delay it caused. Citing American jurisprudence, the Court applied the principle that a party who prevents an act from being done cannot take advantage of the non-performance. Therefore, the defense of prescription was not available to the respondent company.
DISSENTING OPINION (by Justice Labrador, concurred in by Justice Padilla):
The dissent argued that the prescriptive period for collection, having expired, barred the action. It emphasized that tax laws must be construed strictly against the government and liberally in favor of the taxpayer, except for exemptions. The dissent warned that accepting the majority’s view of estoppel would allow the government to indefinitely delay collection after the limitation period, undermining the statutory protection for taxpayers. It maintained that the requirement for a written agreement to extend the period under the tax code is clear and should be upheld.