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Prescriptive rules

Monaliza A. Herrero
Prescription, statute of limitations and
prescriptive periods
 Prescription is a mode of acquiring ownership and
other real rights through the lapse of time in the
manner under the conditions prescribed by law. In
the same way, rights and actions are lost by
 Prescriptive periods or periods of limitation
refer to the respective periods of time within
which various actions or proceedings in law must
be brought.
 A law prescribing the period within which a party
having a cause of action (i.e. ground for which an
action may be brought) should enforce a right or
resort to the courts for redress is called statue of
Prescriptive rules in general
 Under the Tax Code, the assessment and the
collection by the government of tax due and
payable must be made within the prescribed
period; otherwise, the right of the government to
collect will be barred.
 Prescription is a matter of defense, and it must be
proved or established by the party (taxpayer)
relying upon it.
 Sections 203 and 222 refer to a tax the basis by
which is required by law to be reported in a tax
return, like for example an income tax or sales
tax. If no return is required by law to be filed, the
prescriptive periods provided therein are not
Prescriptive periods for
General Rule:
 Where a return was filed, the period for
assessment is within three (3) days after the date
the return was due or was filed, whichever is
 Where there is a failure to file the required
return, the period is within ten (10) years after
the date of the discovery of the omission to file
 When there is a return filed but the same is false
or fraudulent and made with intent to evade the
tax, the period is also ten (10) years from the date
of the discovery of the falsity or fraud.
Prescriptive periods for
 Where the Commissioner of Internal Revenue and the
taxpayer before the expiration of the three (3) year period
of limitation have agreed in writing to the extension of the
period, the period so agreed upon may be extended by
subsequent agreements in writing made before the
expiration of the period previously agreed upon. The
Commissioner cannot validly agree to a reduction of the
prescriptive period prescribed by law to the detriment of
the State, since it diminishes the opportunities of collecting
taxes due to the government.
 Where there is a written waiver or renunciation of the
original three (3) year limitation signed by the taxpayer. The
Bureau of Internal Revenue requires that all requests for
reconsideration of a tax assessment must be accompanied
by a waiver of the statute of limitations duly accompanied
by the taxpayer.
Date of discovery of falsity or fraud or
failure to file return
 Itis essential that the discovery of the falsity or
fraud or of the failure to file must have been
made within the three (3) year period following
the general rule. The exceptions (a & b) refer to
the ten-year period when assessment may be
made from the date of such discovery. Obviously,
the discovery period cannot be without time limit.
 However, there is no time limit on the right of the
Commissioner to assess unpaid tax, the basis of
which is not required by law to be reported in a
return such as excise taxes on certain articles.
There is no law requiring the filing of return for
excise taxes.
Prescriptive periods for collection
General Rule:
 Where an assessment was made, the period
for collection by the government by distraint
or levy or by a proceeding in court is within
five years following the date of assessment .
 Where no assessment was made and a return
was filed and the same is not false or
fraudulent, the period for collection in court
is within three years after the return was due
or was filed, whichever is later.
Prescriptive periods for collection
 Any internal revenue tax which has been assessed within the
period agreed upon may be collected by distraint or levy or
by a proceeding in court within the period agreed upon in
writing before the expiration of five years following the
assessment of the tax. The period so agreed upon may be
extended by subsequent written agreements made before
the expiration of said period previously agreed upon.
 Where the government makes another assessment on the
basis of a reinvestigation requested by the taxpayer, the
prescriptive period for collection should be counted from
the last assessment. Where the taxpayer demands a
reinvestigation should be deducted from the total period of
Prescriptive periods for collection
 Where the assessment is revised because of an
amended return which is substantially different from
the original return or as a result of a reinvestigation
asked for by the taxpayer, the period is also counted
from the last revised assessment.
 Where the action is brought to enforce a compromise
entered into between the Commissioner and the
taxpayer, the prescriptive period is ten years from the
time the right of action accrues as fixed in the Civil
Code. Compromise is a contract.
 Where a tax obligation is secured by a surety bond, a
suit for the forfeiture of the bond is not an action for
collection of tax but one for the enforcement of
contractual obligation. Hence, the prescriptive period
is also ten years.
When period of limitations
 For the period during which the Commissioner of Internal
Revenue is prohibited from making the assessment or
beginning the distraint or levy or a proceeding in court and
for sixty days thereafter.
 When the taxpayer requests for a reinvestigation which is
granted by the Commissioner’
 When the taxpayer cannot be located in the address given
by him in the return filed upon which a tax is being assessed
or collected, but the statute will not be suspended if the
taxpayer informs the Commissioner of Internal Revenue of
ant change in address;
 When the warrant of distraint and levy is duly served upon
the taxpayer, his authorized representative, or with a
member of his household with sufficient discretion, and no
property could be located and
 When the taxpayer is out of the Philippines
When return considered as filed
In order that a tax return may be
considered as filed for purposes of
prescription, it is required that the return be
valid and appropriate. A defective return is
the same as if no return was filed at all.
When return valid

 ismade in good faith and is not false or

 covers the entire period involved
 contains information as to the various items of
income, deduction and credit with such
definiteness as to permit the computation and
assessment of the tax
When return appropriate
A return is appropriate if it a
return for the particular tax
required by law.
When the return is filed for one
kind of internal revenue tax, it
cannot be considered a return for
another and different kind of
internal revenue tax.
Purpose of statutes of limitations
 The periods of limitation relative to the
assessment and collection of taxes are designed to
secure the taxpayer against unreasonable
investigation after the lapse of the period
 The fixing of such periods is beneficial not only to
the citizens but also to the government; to the
citizens, because after the lapse of the
prescriptive period they would have a feeling of
security against unscrupulous tax agents who will
inspect books not to determine their real liability
but to take advantage of every opportunity to
molest peaceful, law-abiding citizens, and to the
government, because tax officers would be
obliged to act promptly.
Construction of statutes of
 The law on prescription, being a remedial
measure, should be interpreted liberally in
order to protect the taxpayer.
 Thus, it has been held that a letter requesting
the Commissioner of Internal Revenue that the
taxpayer be furnished a copy of the detailed
computation of his alleged tax liability did not
imply a demand or request for a
reinvestigation and therefore, it should not be
interpreted to authorize or justify the
suspension of the running of the period of