Commissioner of
Internal Revenue v BASF Coating + Ink Phil’s., Inc.
GR No. 198677 November
26, 2014
FACTS
Respondent was a corporation duly organized and
registered on August 1, 1990. Its BIR registered address was at 101 Marcos
Alvarez Avenue, Barrio Talon, Las Piñas City. On March 19, 2001, majority of
the members resolved to dissolve the said corporation by shortening its
corporate term to March 31, 2001.
Subsequently,
respondent moved its address in from Las Piñas City to Carmelray Industrial
Park, Canlubang, Calamba Laguna. Following the changes in address, taxpayer
sent two letters to the Revenue District office in Alabang Muntinlupa City,
which has jurisdiction over the taxpayers address in Las Piñas City. The first
letter was a notice of taxpayer’s dissolution and the second letter was a
manifestation indicating the submission of various documents supporting the
taxpayer’s dissolution, among which was BIR form No. 1905, which refers to an
update of information contained in taxpayer’s tax registration.
On
January 24, 2003, a Formal Assessment Notice was sent by BIR through registered
mail at the taxpayer’s former address in Las Piñas City, assessing the taxpayer’s
deficiency taxes for the year 1999. A First Notice Before Issuance of Warrant
of Distraint and Levy was sent to the residence of one of the taxpayer’s
directors on March 2004. On the same month, the taxpayer filed a protest letter
citing lack of due process and prescription as grounds.
Due
to the lack of action of BIR on the taxpayer’s protest, the latter filed a
Petition for Review with the Court of Tax Appeals (CTA).
ISSUE
Whether or not the suspension of the three-year period to
assess applies.
RULING
No. The running
of the three-year period to assess respondent was not suspended.
Under Section 223 of the Tax Reform Act of
1997, the running of the Statute of Limitations as provided under the provisions
of Sections 203 and 222 of the same Act shall be suspended when the taxpayer
cannot locate in the address given by him in the return filed upon which a tax
is being assessed or collected. Section 11 of Revenue Regulation No. 12-85
states that, in case of change of address, the taxpayer is required to give a
notice thereof to the Revenue District Officer or the district having
jurisdiction over his former legal residence and/or place of business.
In this case, petitioner by all indications, is well
aware that respondent had moved to its new address in Calamba, Laguna, as shown
by the following documents which form part of respondent’s records with BIR (e.g.
Checklist on Income Tax, General Information, Activity Report and etc.). Based
on records, the RDO also sent respondent a letter dated April 24, 2002 informing
the latter of the results of their investigation and inviting it to an informal
conference. Subsequently, the RDO also sent respondent another letter dated May
30, 2002, acknowledging receipt of the latter’s reply to his April 24, 2002
letter. These two letters were sent to respondent’s new address, he could not have
sent the said letters to the said address.
Prescription in the assessment and in the collection of
taxes is provided by the Legislature for the benefit of both the Government and
the taxpayer, for the Government for the purpose of expediting the collection
of taxes, so that the agency charged with the assessment and collection may not
tarry too long or indefinitely to the prejudice of the interests of the
Government, which needs taxes to run it; and for the taxpayer so that within a
reasonable time after filing his return, he may know the amount of the assessment
he is required to pay, whether or not such assessment is well founded and
reasonable so that he may either pay the amount of the assessment or contest
its validity in court.
It is true that taxes are the lifeblood of the
government. However, in spite of all its plenitude, the power to tax has its
limits. Thus, in Commissioner v. Algue, Inc., the court held:
Taxes are the lifeblood of the government and so should
be collected without unnecessary hindrance. On the other hand, such collection
should be made in accordance with law as any arbitrariness will negate the very
reason of government itself. It is therefore necessary to reconcile the
apparently conflicting interests of the authorities and the taxpayers so that
the real purpose of taxation, which is the promotion of the common good, may be
achieved.
It is said that taxes are
what we pay for civilized society. Without taxes, the government would be
paralyzed for the lack of the motive power to activate and operate it. Hence,
despite the natural reluctance to surrender part of one’s hard-earned income to
taxing authorities, every person who is able to must contribute his share in
the running of the government. The government for its parties expected to respond
in the form of tangible and intangible benefits intended to improve the lives
of the people and enhance their moral and material values. This symbiotic
relationship is the rationale of taxation and should dispel the erroneous
notion that it is an arbitrary method of exaction by those in the seat of power.
The
petition is denied. The Decision of CTA are affirmed.
Case digest by: Rose Mae L. Pango
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