Prescription of the Collection of Tax

April 27, 1959 BIR RULING NO. 212-59 The Regional Director Regional District No. 6 Naga City S i r : Reference is made to your letter dated January 6, 1959, requesting opinion whether or not court action may still prosper in a case where the assessment notice for payment of transfer taxes was issued on February 10, 1949 but collection thereof was never effected up to the present time. In connection with said request, you posed the question of which case to follow under such circumstances the Solano case or that of the late Marciana C. Palanca de Santos, the latter being a court of first instance case but based on a decision of the Supreme Court (Gov't of the Phil. vs. Pamintuan, 55 Phil., 13) It will be noted that in Special Proceedings No. 1724 of the Court of First Instance of Rizal, entitled: "In the Matter of the Intestate Estate of the late Marciana C. Palanca de Santos, decided on January 29, 1958, as well as in the case of Government of the Philippines vs. Pamintuan, supra, the question of prescription under the provisions of section 332 of the Tax Code was never in issue, rather it was prescription under section 5, Rule 87 of the Rules of Court. It will be noted further that in both cases, the attempt to collect the assessments was made within five years from the respective dates of assessment. Thus, the principle enunciated in the Pamintuan case, which was later on made the basis of the decision of the Court of First Instance of Rizal in the case of Palanca de Santos, was to the effect that "income tax may be collected even after the distribution of the decedent's estate among his heirs, who shall be liable therefor in proportion to their share in the inheritance." It is believed that if the facts of the Pamintuan case were such that collection of the tax was enforced after the period of five years prescribed in section 332(c) of the Tax Code had already elapsed and the question of prescription put in issue, the government would have lost that case. In other words, this Office is of the opinion that while collection of income tax can be enforced even after the distribution of the decedent's estate among the heirs, collection thereof must be made within five years from the date of assessment of the tax. A different ruling would render nugatory the period of limitation prescribed in said section 332(c). In view of all the foregoing, this Office is of the opinion and so holds that under the facts of the case under consideration, court action for the collection of the tax is already barred by section 332(c) of the Tax Code, pursuant to the decision in the case of Collector vs. Solano et al., G.R. No. 11475, July 31, 1958. LLphil Very truly yours, (SGD.) JOSE ARAAS Commissioner of Internal Revenue