G.R. No. 130430 December 13, 1999
Republic of the Philippines, represented by the Commissioner of the Bureau of Internal Revenue (BIR), petitioner, vs. Salud V. Hizon, respondent.

FACTS

The BIR issued a deficiency income tax assessment against respondent Salud V. Hizon on July 18, 1986, for the fiscal year 1981-1982. The respondent did not contest this assessment. On January 12, 1989, the BIR served warrants of distraint and levy on Hizon’s properties to collect the tax but did not proceed to dispose of them. Over three years later, on November 3, 1992, Hizon requested a reconsideration of the assessment, which the BIR denied on August 11, 1994. The BIR filed a judicial collection case with the Regional Trial Court on January 1, 1997.
The respondent moved to dismiss the case on two grounds: first, that the complaint was filed without the prior approval of the BIR Commissioner as required by Section 221 of the National Internal Revenue Code (NIRC), and second, that the right to collect had already prescribed. The trial court granted the motion and dismissed the complaint, prompting the BIR’s petition for review.

ISSUE

The issues are: (1) whether the civil case for tax collection was instituted without the BIR Commissioner’s approval in violation of the NIRC, and (2) whether the action for collection had already prescribed.

RULING

On the first issue, the Supreme Court ruled that the complaint was validly filed. Section 221 of the NIRC requires the Commissioner’s approval to begin a collection action. However, Revenue Administrative Orders (RAO) Nos. 5-83 and 10-95, issued pursuant to the Commissioner’s rule-making authority under the NIRC, validly delegated the authority to sign pleadings and institute actions to Regional Directors and legal officers. The complaint, signed by the Chief of the Legal Division and verified by the Regional Director, complied with these valid administrative issuances, which have the force of law.
On the second issue, the Court held that the action had prescribed. Under Section 224 of the NIRC, the government must institute a judicial collection action within five years from the assessment date. The assessment was made on July 18, 1986, and the judicial complaint was filed on January 1, 1997, clearly beyond the five-year period. The BIR argued that the period was suspended by the service of warrants of distraint and levy in 1989 and by Hizon’s request for reconsideration in 1992. The Court rejected this. The service of warrants was a summary remedy that did not suspend the prescriptive period for filing a judicial action. Furthermore, Hizon’s request for reconsideration in 1992, made after the five-year period had already lapsed on July 18, 1991, could not have suspended or revived the already expired period. The petition was denied, but the BIR was not precluded from proceeding with the summary distraint and levy it had timely commenced.