REVENUE MEMORANDUM CIRCULAR NO.
048-90
Subject
To
All Internal Revenue Officials and Others Concerned.
Counting of the Three-year Prescriptive Period
Period in the Issuance of Notice of Assessment, or Warrants of Distraint, Levy &
Garnishment.
Every now and then, an assessment is issued on what appears to be the "last day"
of the prescriptive period prescribed by law, e.g., a 1989 Income Tax Return filed on
April 15, 1986 was assessed for deficiency income tax on April 15, 1989. Pursuant to
Sections 203 and 223 (c) of the Tax Code as amended by B.P. Blg. 700 which took
effect on April 5, 1984, except in the case of a false or fraudulent return or failure to
file a return, the period with which to make an assessment is three (3) years after
the return is filed. Such tax may be collected by distraint or levy or garnishment or
by a proceeding in court within (3) years after assessment of the tax. When a period
covers a leap year, the question is raised as to when the last day of the prescriptive
period shall have expired. Accordingly, in order to have a correct understanding of
the procedure in determining the period of limitation upon assessment and
collection when the period covers a leap year, it shall be understood that years are
of 365 days each as provided in Article 13 of the New Civil Code. Consequently, a 3year prescriptive period for assessment or collection purposes prescribed under
Sections 203 and 223(c) of the Tax Code shall have an aggregate number of 1,095
days (365 days x 3 years = 1,095 days), reckoned from the date of filing of the
return, or from the issuance of the assessment, as the case may be. In other words,
the 3-year prescriptive period expires on the 1,095th day, notwithstanding the fact
that within the period, there is a leap year which is of 366 days.
The Supreme Court in the case of the National Marketing Corporation (NAMARCO)
vs. Tecson, L-29131, August 27, 1969, 29 SCRA 70, explained the procedure in the
computation of the prescriptive period as follows: casia
"Civil law; Application of laws; Article 13 of the Civil Code explained; Term "year" as
used in our laws is limited to 365 days. - Prior to the approval of the Civil Code of
Spain, the Supreme Court thereof held, on March 30, 1887, that, when the law
spoke of months, it meant a "natural" month or "solar" month, in the absence of
express provision to the contrary. Such provision was incorporated into the Civil
Code of Spain, subsequently promulgated. Hence, the same Supreme Court
declared that, pursuant to Article 7 of said Code, "Whenever months are referred to
in the law, it shall be understood that the months are of 30 days", not the "natural",
"solar" or "Calendar" months, unless they are "designated by name", in which case
"they shall be computed by the actual number of days they have". This concept
was, later, modified in the Philippines, by Section 13 of the Revised Administrative
Code, pursuant to which, "month shall be understood to refer to a calendar month."
With the approval of the Civil Code of the Philippines (R.A. 386) we have reverted to
the provisions of the Spanish Civil Code in accordance with which a month is to be
considered as the regular 30-day month and not the solar or civil month with the
particularity that whereas the Spanish Civil Code merely mentioned "months, days
or nights", ours has added thereto the term "years" and explicitly ordains in Article
13 that it shall be understood that years are of three hundred sixty-five days."
In the aforementioned decision the Supreme Court, in interpreting the term "year",
referred to the explicit provision of Article 13 of the Civil Code of the Philippines
which states that "it shall be understood that years are of three hundred sixty five
days", and that when it is a leap year as in 1960 and 1964, there were twenty-nine
(29) days in the month of February for those years, so that, there were actually 366
days in each of the said years. In the light of the decision of NAMARCO case supra,
and also our law providing that in the computation of the period of time within
which an act is to be done, the first day should be excluded and the last day
included (Art. 13, New Civil Code; People vs. del Rosario, 97 Phil. 70-71), it is clear
that in the above example, from April 16, 1986 (the return was filed on April 15,
1986) to April 15, 1989 when the deficiency income tax assessment was issued and
mailed, a total of 1,096 days have already elapsed as there were 29 days in the
month of February, 1988, 1988 being a leap year. Accordingly, since the
Commissioner of Internal Revenue has only 1,095 days from the filing of the return
within which to make an assessment, said period has elapsed by one (1) day;
hence, the assessment was issued after the expiration of the period of limitation.
In order, therefore, to prevent future assessments from being time-barred by reason
of prescription, the assessment notice or warrants of distraint, levy, or garnishment
as the case may be, should be issued on or before the 1,095th day. However, in
order to make sure that prescription will not set in, all concerned are hereby
instructed to issue assessment notices and warrants not later than ninety (90) days
before the expiration of the 3-year prescriptive period. cda
All internal revenue officials and others concerned are hereby enjoined to give this
Revenue Memorandum Circular the widest publicity possible.
(SGD.) JOSE U. ONG
Commissioner of Internal Revenue
