CIR V. BF GOODRICH PHILS. INC.G.R. NO. 104171. February 24, 1999Fact !

Private respondent BF Goodrich Philippines Inc. was an American corporation prior to July 3,19 !. As a
condition "or approvin# the manu"acture o" tires and other ru$$er products, private
respondentwas re%uired $y the &entral Ban' to develop a ru$$er plantation. In compliance therewith, p
rivaterespondent $ou#ht "rom the #overnment certain parcels o" land in (uma)u$on# Basilan, in 19*1
under thePu$lic +and Act and the Parity Amendment to the 193 constitution, and there developed a
ru$$er plantation.-n Au#ust , 19 3, the Justice /ecretary rendered an opinion that ownership ri#hts o"
Americans over Pu$lic a#ricultural lands, includin# the ri#ht to dispose or sell their real estate,
would $e lost upone0piration on July 3, 19 ! o" the Parity Amendment. (hus, private respondent sold its
Basilan landholdin# to /iltown ealty Phil. Inc., 2/iltown "or P 44,444 on January 1, 19 !. 5nder the
terms o" thesale, /iltown would lease the property to private respondent "or years with an e0tension
o" years atthe option o" private respondent.Private respondent $oo's o" accounts were e0amined $y
BI "or purposes o" determinin# its ta0 lia$ility"or 19 !. (his e0amination resulted in the April 3, 19
assessment o" private respondent "or de"iciencyincome ta0 which it duly paid. /iltown6s $oo's o"
accounts were also e0amined, and on the $asis thereo",on -cto$er 14, 1974, the &ollector o" Internal
evenue assessed de"iciency donor6s ta0 o" P1,4 4,7 4 inrelation to said sale o" the Basilan
landholdin#s.Private respondent contested this assessment on 8ovem$er !, 1974. Another assessment
dated arch1*, 1971, increasin# the amount demanded "or the alle#ed de"iciency donor6s ta0,
surchar#e, interest andcompromise penalty and was received $y private respondent on April 9, 1971. -n
appeal, &(A upheld theassessment. -n review, &A reversed the decision o" the court "indin# that the
assessment was made$eyond the :year prescriptive period in /ection 331 o" the (a0 &ode.

I ue!

;hether or not petitioner6s ri#ht to assess has prescri$ed.

He"#!

Applyin# then /ec. 331, 8I & 2now /ec. 43, 199 8I & which provides a 3:year prescriptiveperiod "or
ma'in# assessments , it is clean that the -cto$er 1*, 1974 and arch 1*, 1971 assessmentswere issued
$y the BI $eyond the :year statute o" limitations. (he court thorou#hly studied the recordso" this case
and "ound no $asis to disre#ard the :year period o" prescription, e0pressly set under /ec.331 o" the (a0
&ode, the law then in
"orce.For the purpose o" sa"e#uardin# ta0payers "rom any unreasona$le e0amination, investi#ation or
assessment, our ta0 law provides a statute o" limitations in the collection o" ta0es. (hus, the law
or prescription, $ein# a remedial measure, should $e li$erally construed in order to a""ord such
protection. As a corollary, the e0ceptions to the law on prescription should per"orce $e strictly
construed