GR L 24624; (November, 1968) (Digest)
G.R. No. L-24624, November 27, 1968
SINFOROSA ALCA, petitioner, vs. HONORABLE COURT OF TAX APPEALS and THE COMMISSIONER OF INTERNAL REVENUE, respondents.
FACTS
Petitioner Sinforosa Alca, owner and operator of Pacific Industrial Manufacturing (Phil.), was assessed by the Commissioner of Internal Revenue for specific tax on rubbing alcohol manufactured and removed from her establishment between June 6, 1953, and August 24, 1960, following the Supreme Court’s decision in Commissioner of Internal Revenue vs. Central Azucarera Don Pedro (G.R. No. L-14015, May 31, 1960). The assessment, dated September 12, 1960, amounted to P43,359.40 plus a P1,000 compromise penalty. Alca protested, arguing prescription, among other grounds. The Court of Tax Appeals (CTA) sustained the assessment, ruling that the prescriptive period for assessment was ten years under Section 332(a) of the Tax Code, as Alca had not filed a tax return. Alca appealed to the Supreme Court, raising only the issue of prescription.
ISSUE
Whether the assessment for specific tax had prescribed.
RULING
The Supreme Court set aside the CTA decision and remanded the case for recomputation of tax liability. On prescription, the Court held that even assuming Alca’s transcript sheets (BIR Form 2.41) submitted to the provincial treasurer were considered returns, the assessment was timely due to a waiver she signed on December 9, 1959, which renounced the defense of prescription for periods beginning January 20, 1956. Such waiver is valid and enforceable. However, applying Abad vs. Court of Tax Appeals (G.R. Nos. L-20834 & L-20903, October 19, 1966), the Court ruled that Alca, as a producer of rubbing alcohol, was not liable for specific tax on denatured alcohol purchased and used after August 23, 1956 (the effectivity of Republic Act No. 1608 , which amended Section 133 of the Tax Code). For the period from June 6, 1953, to August 22, 1956, Alca could be held liable, but equity required that she be credited with any percentage sales tax she had already paid on the same goods, as goods subject to specific tax are exempt from percentage tax under the Tax Code. The case was remanded for rehearing and recomputation accordingly.