Myline Cordial

Republic of the Philippines vs. Marsman Development Company and/or F. H. Burgess, in his capacity as Liquidator of the Marsman Development Company
G.R. No. L-18956, April 27, 1972
44 SCRA 418

FACTS:
The Bureau of Internal Revenue (BIR) made assessments against Marsman Development Company, a timber licensee holder, for deficiency sales taxes and forest charges due for its operation since 1947 on October 15, 1953, September 13, 1954 and November 3, 1954. The corporation was given considerable opportunity to comply but it remained unheeded so the BIR issued final tax notices to the corporation which protested said final notices. Finding no merit in the protests, the BIR issued a warrant of distraint and levy against it on July 3, 1956. The tax obligation remained unsettled so the BIR filed a complaint on September 5, 1958 and amended the complaint on August 26, 1959 to include the liquidator of the corporation, Mr. F. H. Burgess as the corporation had been extrajudicially dissolved on April 23, 1954. There is no claim that the affairs of the corporation had already been finally liquidated or settled.

ISSUES:
Is the action for collection of taxes barred by Sec. 77 of Corporation Law (now Section 139 of the Revised Corporation Code) where assessment was made while the corporatiom was not completely dissolved?

RULING:
No. The action for collection of tax assessments was not barred even after three years from the date of dissolution which can be considered incomplete because Extrajudicial dissolution is permitted only when it does not affect the rights of any creditor having a claim against the corporation. The Government by its assessment which became final and executory before the completion of its dissolution by the liquidation of its assets became the creditor of the corporation.

NOTES:

Taxation; Tax Assessment; Motion for reconsideration thereof not suspend running of period for collection of tax; Assessment considered final and executory.-The appellant corporation, by its own omission, made it impossible for the Bureau of Internal Revenue to act on its motion for reconsideration. It has been held that the mere filing of such a motion does not suspend the running of the period for the collection of the tax and this implies that any assessment made by the Bureau is supposed to be final and executory, insofar as the taxpayer is concerned, unless revised by the Bureau in accordance with law and regulations, but it is to be emphasized that a taxpayer cannot delay the collection of taxes by the simple expedient of barely asking for clarification or reconsideration, very often unnecessary and unwarranted, without doing anything to comply with the statutory and reglementary requirements for the reconsideration of the assessment made against him.

Prescription; Where taxpayer failed to file return.-Section 231 of the Revenue Code requires the Collector of Internal Revenue to assess the tax within the period of five years. Section 231 is not applicable inasmuch as defendant corporation did not file returns for the taxes in question. The pertinent provision applicable is section 332 (a) which provides that “in case of a false or fraudulent return or of a failure to file a return, the tax may be assessed … at any time within ten years after the discovery of the falsity, fraud or omission.”

Filing of complete returns.-In order that the filing of a return may serve as the starting point of the period for the making of an assessment, the return must be as substantially complete as to include the needed details on which the full assessment may be made.

Pleading Amendments practice; Admission retroacts to date of actual filing – An amended complaint must be considered as filed, for the purposes of such a substantive matter as prescription, on the date it is actually filed with the court, regardless of when it is ultimately formally admitted by the court.

Full Text: Republic v. Marsman Development Company G.R. No. L-18956, April 27, 1972