CASE DIGEST: PROTECTOR'S SERVICES INC. vs. CIR. G.R. No. 118176. April 12, 2000

FACTS:

PSI, a contractor engaged as recruiting agency, was assessed by CIR for deficiency percentage taxes including surcharges, penalties and interest from 1983 to 1985. CIR sent to PSI a demand letter for payment which the latter received on December 10, 1987. PSI protested such assessment but was denied by the CIR. PSI then filed a petition for review with CTA which the latter likewise denied. 

TAXPAYER'S ARGUMENTS: 

Petitioner mainatains that the assessment only became final on date when the CIR denied the request for reinvestigation;  that the Government's right to assess and collect the 1983, 1984 and 1985 taxes had already prescribed pursuant to BP 700.

GOVERNMENT'S ARGUMENTS:

Respondent maintains on the other hand that the request for reinvestigation by the petitioner was filed out of time for it filed the same 33 days after the BIR send assessment to it. Thus, the assessment became final. Respondent further alleged that the collection of taxes was made within the period prescribed by law. Hence, it is not barred by prescription. 

ISSUES:

1. Whether the assessment made by BIR became final by failure of petitioner to file their protest within 30 days from receipt of BIR assessment. 

2. Whether collection of taxes for taxable years 1983-1985 has already barred by prescription. 

RULING:

1. Assessment made by BIR became final and unappealable. Under the law,  as provided in Sec. 270 of the NIRC,  assessment made by CIR or his duly authorized representatives may be protested administratively by filing a request for reconsideration or reinvestigation in such form and manner as may be prescribed by the implementing regulations within 30 days from receipt of the assessment,  otherwise, the assessment shall become final and unappealable. In this case, facts have shown that the petitioner filed their protest 33 days after the assessment was received by it. Hence, assessment is final and unappealable. 

2. The period for the collection of taxes for taxable years 1983-1985 was not prescribed. It was held that the tax period for 1983 was not covered by BP 700, an act reducing the prescriptive period for assessment and collection of IR taxes from 5 years to 3 years which took effect in 1984. Thus,  the December 10, 1987 assessment for the year 1983 was still covered by the 5 year statutory prescriptive period. 

PERSONAL END NOTE:

The taxpayer's are given by the law to protest whatever assessment done by BIR for 30 days from the receipt of such assessment.  Otherwise,  for failure to file protest within the said period, the assessment will become final and unappealable. 

Tax assessment made for years prior to 1984 are not covered by BP 700 which reduces the prescriptive period to collect taxes from 5 years to 3 years.