CIR v. TuIio, GR No. 139858, 25 October.

2005
Facts:
O Tulio is engaged in the construction business. Tulio failed to file his tax returns for 1986 and
1987. n September 1989, the CR discovered Tulio's omission.
O n February 1991, CR sent him a demand letter with two final assessment requesting payment of
his deficiency percentage taxes. However, despite receipt, respondent failed to act on the
assessment notices. Hence, the same became final and executory.
O A civil action for the collection of the deficiency percentage taxes was filed by the BR. Tulio
responded by filing a motion to dismiss alleging that the complaint was filed beyond the three-
year prescriptive period provided by Section 203 of the NRC. RTC ruled in Tulio's favor.
Issue: Whether the complaint may be dismissed on the ground of prescription?

HeId: No.

O The lower court erroneously applied Section 203 of the same Code providing for the three-year
prescriptive period from the filing of the tax return within which internal revenue taxes shall be
assessed. However, as shown by the records, respondent 1aiIed to 1iIe a tax return, forcing
petitioner to invoke the powers of his office in tax administration and enforcement.
O Respondent's failure to file his tax returns is thus covered by Section 223 providing for a ten-year
prescriptive period within which a proceeding in court may be filed. Hence, the two assessments
were issued well within the ten-year prescriptive period.