Suspension of Prescription Period

January 16, 1959 BIR RULING NO. 031-59 1st Indorsement Returned to the Regional Director, BIR Regional District No. 3, Manila, the entire record of the case of Mrs. Maria Marcelino, Opinion is requested on the following: LexLib 1. Whether or not partial payments on a tax obligation suspends the period of prescription; 2. Whether or not a written acknowledgment of the tax obligation likewise suspends the period of prescription. It appears that the first assessment was made against Mrs. Marcelino on June 5, 1951 for percentage tax liability in the sum of P2,561.80. This was based on an earlier report by our agent dated April 3, 1951. Subsequently, the assessment was reduced to P1,663.86 (Delinquency Form dated May 21, 1952). The taxpayer, however, failed to make settlement notwithstanding repeated demands upon her. Eventually, taxpayer offered to pay her tax liability in twelve (12) monthly installments, which was accepted. However, she was able to make actual payment of only P436.52, the last payment being on March 10, 1955, in the amount of P50.00. There is, therefore still a balance of P1,227.34. In a letter dated March 10, 1956, taxpayer again offered to pay the balance of P1,227.34 in twelve (12) monthly installments, which offer was accepted conditioned upon her filing of a bond. She, however, failed to file a bond. Neither did she execute a waiver of the period of limitation. On April 19, 1956, and on July 7, 1956, the personal properties of taxpayer which were constructively distrained on January 3, 1953 were advertised for sale but not bidder appeared. Such is the status of the case as of the present writing. The first factor to consider is, the time when prescription sets in. Under Section 332(c) our right to collect starts from the date of assessment which, in this case, was made on May 21, 1952. Prescription, therefore, ran on May 22, 1952, and the right of the Government to collect shall have prescribed five years thereafter, or on May 21, 1957. Partial payment on a tax obligation does not suspend the running of the period of prescription. The case of Veloso vs. Fontanosa, 13 Phil. 79 is not applicable. However, in case a taxpayer offers to pay his tax obligation by installment and the offer is accepted, the prescriptive period is suspended during such period agreed upon. (Manila Pencil Co. vs. Collector, CTA, BTA 178). Hence, from May 8, 1953 to May 8, 1954, when Mrs. Marcelino first offered to pay by installment, the running of the five-year period is deemed suspended. The same, however, does not hold true from March 10, 1956 to March 10, 1957, when taxpayer made her second offer because the latter offer was not perfected in view of the failure of taxpayer to file the bond which was the condition of the acceptance of her offer. (Sambrano vs. Collector, et. al., G.R. No. L-8652) From May 21, 1952 to date, more than 6 years and 6 months have elapsed. Clearly, the right to collect the tax has prescribed even if the one year suspension of the prescriptive period is deducted therefrom. A written acknowledgment of tax liability does not suspend the running of the prescriptive period for collection. The Sambrano case refers to a waiver of defense of prescription while the Solano case refers to suspension of the running of the period of limitation. Neither of said cases apply to the instant case. In the Sambrano case, the Court held that there was waiver because of the execution of the mortgage and not solely on the acknowledgment of the tax obligation. Hence, the Court said: "The sale of the vehicles in so far as those covered by the mortgage is concerned, was practically similar to the sale in foreclosure proceedings . . . However, as regards the sale of the other properties of petitioner disposed of at public auction by virtue of the warrants of distraint and levy, same was not sanctioned by law." cdpr It would appear, therefore, that a mere written acknowledgment of a tax obligation does not amount to a waiver. Neither does it suspend the running of the period of limitation. While the right to collect the tax had prescribed, appropriate court action should be instituted for the failure of the taxpayer to surrender the properties placed under constructive distraint upon demand. It should be noted that on September 22, 1956, the Regional Director of that District, has demanded the delivery of the properties constructively distraint, to the Committee on Confiscated Articles, Bureau of Internal Revenue within fifteen (15) days from receipt thereof. Nevertheless, the records show that this demand has not been complied with. Such failure is penalized under Section 351 of the Tax Code. It should also be determined whether the taxpayer can be prosecuted for violation of Section 350 of the Tax Code. It is observed also that the properties placed under constructive distraint were advertised for sale. This is irregular. The properties should have been placed under actual distraint and not merely under constructive distraint. The irregularity should be corrected. cdll (SGD.) MELECIO R. DOMINGO Acting Commissioner of Internal Revenue