Proof of service of assessment notice

Under Section 228 of the Tax Code, when the Commissioner of Internal Revenue (CIR) or his duly authorized representative finds that the proper taxes should be assessed, the taxpayer must be notified of his liability for deficiency taxes through the sending of a Preliminary Assessment Notice (PAN).

In CIR vs. Metro Star Superama, Inc., cited by the CTA, the Supreme Court (SC) held that the sending of a PAN to a taxpayer to inform him of the assessment made is part of the due process requirement in the issuance of a deficiency tax assessment, the absence of which renders nugatory any assessment made by tax authorities.

In its argument against the assessment issued by the BIR, the taxpayer claimed that the BIR’s assessment did not become final, demandable and executory since the taxpayer did not receive the PAN. To prove receipt of PAN by the taxpayer, the BIR submitted the judicial affidavit and presented as witness the BIR personnel who was in charge of checking the mailing, among others, of assessment notices.

To prove service by registered mail, the CTA held that Sections 7 and 13 of 1997 Rules of Civil Procedure require that the following evidence be presented: (a) an affidavit from the BIR personnel stating, among others, that the notice was in a sealed envelope, the postage was fully prepaid, and there were instructions to the postmaster to return the mail to the sender after 10 days if the mail is delivered in compliance with Section 7 of 1997 Rules of Civil Procedure; (b) the registry receipt issued by the mailing office.

The CTA held that the judicial affidavit and testimony of the BIR personnel do not show compliance with the provisions of Section 7, Rule 13 of the 1997 Rules of Civil Procedure. According to the CTA, the judicial affidavit of the BIR personnel failed to state that the PAN was in a sealed envelope, the postage was fully prepaid, and there were instructions to the postmaster to return the mail to the sender after 10 days if the mail is undelivered. Moreover, there was no indication that the BIR presented the registry receipt issued by the mailing office for the PAN.

For failure to establish that the taxpayer received the PAN in accordance with the provisions of Section 13 in relation to Section 7, both of Rule 13 of the Rules of Court, the assessment made by the CIR is void.

(People of the Philippines v. Katherine M. Lim and Edelyn Coronacion, CTA EB Criminal Case No. 019, re CTA Criminal Case No. 0- 113, October 1, 2012

Tax Brief – November 2012

Punongbayan and Araullo