Barcelon, Roxas Securities, Inc. vs. Commissioner of Internal Revenue

The presumption that a mailed letter was received in the regular course of mail is disputable; a direct denial of receipt by the addressee shifts the burden to the BIR to prove the fact of mailing, which cannot be satisfied by mere notations in internal BIR records made by a person without personal knowledge of the mailing.

Petitioner, a corporation engaged in trading securities, filed its 1987 Annual Income Tax Return on April 14, 1988. Following a BIR audit, a deficiency income tax assessment of ₱826,698.31 was issued, disallowing deductions for salaries, bonuses, and allowances due to failure to withhold taxes. The BIR alleged the formal assessment notice was mailed on February 6, 1991. Petitioner denied receiving the notice and asserted it only learned of the assessment when served a Warrant of Distraint and Levy on March 17, 1992.

• Nature of the Assessment: A deficiency income tax assessment of ₱826,698.31 was issued against petitioner for the taxable year 1987, arising from the disallowance of ₱1,219,093.93 in deductions for salaries, bonuses, and allowances due to petitioner's failure to subject the same to withholding taxes.
• Alleged Mailing of the Assessment: Respondent claimed that Formal Assessment Notice No. FAN-1-87-91-000649, dated February 1, 1991, was sent to petitioner through registered mail on February 6, 1991. Petitioner categorically denied receiving the assessment notice.
• Discovery and Protest: Petitioner first learned of the deficiency tax assessment on March 17, 1992, when it was served with a Warrant of Distraint and/or Levy. A formal protest requesting the cancellation of the warrant was filed by petitioner on March 25, 1992.
• Denial of Protest: On July 3, 1998, petitioner received a letter dated April 30, 1998, from the respondent denying the protest with finality.
• Evidence Presented by Respondent: To prove the fact of mailing, the respondent presented the BIR record book containing entries of the taxpayer's name, reference number, year, nature of tax, amount, registry receipt number, and date of mailing. The BIR records custodian, Ingrid Versola, testified that she made the entries therein.

• Prescription of Assessment: The BIR's right to assess had prescribed because the three-year period from the last day for filing the return (April 15, 1991) lapsed without a valid assessment being sent.
• Insufficiency of Evidence: The BIR failed to prove the fact of mailing; mere entries in the BIR record book are self-serving, inadmissible hearsay, and insufficient to trigger the presumption of receipt in the regular course of mail.
• Due Process: The assessment is void for violating due process because the taxpayer never received notice and was deprived of the opportunity to contest the assessment properly.

• Presumption of Mailing/Receipt: The BIR record book, containing the taxpayer's name, registry receipt number, and date of mailing, constitutes an entry in official records sufficient to prove mailing and trigger the presumption of receipt in the regular course of mail.
• Timely Assessment: The assessment was mailed on February 6, 1991, well within the three-year prescriptive period ending April 15, 1991, making the assessment valid and timely.

• Prescription of Assessment: Whether the BIR's right to assess the deficiency income tax for 1987 has prescribed.
• Prescription of Collection: Whether the BIR's right to collect the deficiency income tax for 1987 has prescribed.
• Sufficiency of Evidence: Whether entries in the BIR record book are sufficient to prove the fact of mailing and trigger the presumption of receipt in the regular course of mail.
• Due Process: Whether the assessment is violative of the petitioner's right to due process.

• Prescription of Assessment: The right to assess had prescribed. The three-year period under Section 203 of the NIRC ended on April 15, 1991. Because the BIR failed to prove the assessment was mailed before this date, no valid assessment was made within the prescriptive period.
• Prescription of Collection: The right to collect likewise prescribed, being entirely dependent on a valid and timely assessment.
• Sufficiency of Evidence: Entries in the BIR record book are insufficient to prove mailing. The record custodian who made the entries lacked personal knowledge of the actual mailing and did not acquire the information from persons under a legal duty to submit such reports. Consequently, the entries do not qualify as exceptions to the hearsay rule under Section 44, Rule 130 of the Rules of Court and cannot trigger the disputable presumption of receipt. The BIR should have presented the registry receipt, registry return card, or a certification from the Bureau of Posts.
• Due Process: The lack of actual notice and failure to prove mailing violated the taxpayer's right to due process. Mere notations without the taxpayer's intervention, notice, or control leave the taxpayer at the mercy of revenue offices without adequate protection or defense.

• Disputable Presumption of Receipt in the Regular Course of Mail — A letter properly addressed, with postage prepaid, and mailed is presumed received by the addressee as soon as it could have been transmitted in the ordinary course of mail. However, this is merely a disputable presumption; a direct denial of receipt by the addressee shifts the burden to the party favored by the presumption to prove that the mailed letter was indeed received. The facts required to raise this presumption are: (a) that the letter was properly addressed with postage prepaid; and (b) that it was mailed.
• Entries in Official Records — For entries made by a public officer in the performance of duty to be admissible as prima facie evidence under Section 44, Rule 130 of the Rules of Court, three requisites must concur: (a) the entry was made by a public officer or person specially enjoined by law; (b) it was made in the performance of duties; and (c) the officer had sufficient knowledge of the facts stated, acquired personally or through official information. Absent personal knowledge or acquisition from persons under a legal duty to submit reports, the entry is inadmissible hearsay.

• "While we have held that an assessment is made when sent within the prescribed period, even if received by the taxpayer after its expiration, this ruling makes it the more imperative that the release, mailing or sending of the notice be clearly and satisfactorily proved. Mere notations made without the taxpayer’s intervention, notice or control, without adequate supporting evidence cannot suffice; otherwise, the taxpayer would be at the mercy of the revenue offices, without adequate protection or defense."

• Nava v. Commissioner of Internal Revenue, 13 SCRA 104 (1965) — Followed. Held that mere notations by BIR personnel without supporting evidence are insufficient to prove mailing; registry receipts or post office certifications are required to prove the release, mailing, or sending of an assessment notice.
• Collector of Internal Revenue v. Bautista, 105 Phil. 1326 (1959) — Followed/Distinguished. Established that an assessment is made when sent within the prescribed period, even if received after expiration, but this rule makes it imperative to clearly prove the mailing.
• Republic v. Court of Appeals, 149 SCRA 351 (1987) — Followed. A direct denial of receipt of a mailed letter shifts the burden to the party favored by the presumption to prove the letter was indeed received.
• Africa v. Caltex (Phil.), Inc., 123 Phil. 272 (1966) — Followed. Defined the requisites for the admissibility of entries in official records, specifically requiring that the entrant must have personal knowledge of the facts or acquired them from reports made by persons under a legal duty to submit the same.

• Section 203, National Internal Revenue Code (NIRC) — Provides the three-year period of limitation upon assessment and collection from the last day prescribed by law for the filing of the return. Applied to determine that the BIR had until April 15, 1991, to send the assessment notice for the 1987 tax year.
• Section 3(v), Rule 131, Rules of Court — Disputable presumption that a letter duly directed and mailed was received in the regular course of the mail. Applied to emphasize that the presumption is disputable and requires proof of the facts of proper addressing and mailing.
• Section 44, Rule 130, Rules of Court — Entries in official records made by a public officer in the performance of duty are prima facie evidence of facts stated. Held inapplicable because the BIR record custodian lacked personal knowledge of the mailing.

Artemio V. Panganiban (CJ), Consuelo Ynares-Santiago, Ma. Alicia Austria-Martinez, Romeo J. Callejo, Sr.