April 23, 1990 REVENUE MEMORANDUM CIRCULAR NO.

48-90 SUBJECT : Counting of the Three-year Prescriptive To : All Internal Revenue Officials and Others Concerned. 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 3-year 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, L29131, 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 C o p y r i g h t 2 0 0 2 C D T e c h n o l o g i e s A s i a, I n c.