Facts: June 8, 1990, an information against accused Petronila C. Tupaz and her late husband Jose J. Tupaz, Jr., as corporate officers of El Oro Engravers Corp., was field for non-payment of deficiency corporate in come tax for the year 1979 in violation of Sec. 51(b) in relation to Sec. 73 of the 1977 Tax Code. The information was dismissed for the lack of jurisdiction by the MeTC of Q.C.
January 10, 1991, 2 information were filed before the RTC of Q.C. against spouses for the same alleged non-payment of deficiency corporate income tax for the year 1979.
Prior to this, petitioner was charged with nonpayment of deficiency corporate income tax for the year 1979, which tax return was filed in April 1980. On July 16, 1984, the BIR issued a notice of assessment. Petitioner contends that the July 16, 1984 assessment was made out of time.
Petitioner avers that while Sec. 318 and 319 of the 1977 NIRC provide a 5-year period of limitation for the assessment and collection of internal revenue taxes, BP700, enacted on February 22, 1984, amended the 2 sections and reduced the period to 3 years to assess the tax liability, counted from the last day of filing the return or from the date the return is filed, whichever comes later. Since the tax return was filed in April 1980, the assessment made on July 16, 1984 was beyond the 3-year prescriptive period.
Issue: Whether the government’s right to assess has prescribed.
Held: The shortened period of 3 years prescribed under BP700 is not applicable to petitioner. BP700, effective April 5, 1984, specifically states that the shortened period of 3 years shall apply to assessments and collections of internal revenue taxes beginning taxable year 1984. Assessments made on or after April 5, 1984 are governed by the 5-year period if the taxes assessed cover taxable years prior to January 1, 1984. The deficiency income tax under consideration is for taxable year 1979. Thus, the period of assessment is still 5 years, under the old law. The income tax return was filed in April 1980. Hence, the July 16, 1984 tax assessment was issued within the prescribed period of 5 years, from the last day of filing the return, or from the date the return is filed, whichever comes later.
At the outset, it must be stressed that “internal revenue taxes are self-assessing and no further assessment by the government is required to create the tax liability. An assessment, however, is not altogether inconsequential; it is relevant in the proper pursuit of judicial and extrajudicial remedies to enforce taxpayer liabilities and certain matters that relate to it, such as the imposition of surcharges and interest, and in the application of statute of limitations and in the establishment with tax liens.”
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