GR 202695; (February, 2016) (Digest)
G.R. No. 202695 February 29, 2016
COMMISSIONER OF INTERNAL REVENUE, Petitioner, vs. GJM PHILIPPINES MANUFACTURING, INC., Respondent.
FACTS
Respondent GJM Philippines Manufacturing, Inc. filed its Annual Income Tax Return for 1999 on April 12, 2000. Following a change in corporate ownership, GJM informed the BIR of its address transfer from Makati to Cavite in August 2002, which was confirmed. On October 18, 2002, the BIR sent a letter of informal conference to GJM regarding a 1999 tax deficiency investigation. After exchanges, the BIR issued a Formal Assessment Notice (FAN) for deficiency income tax on April 14, 2003, which it sent by registered mail. GJM denied receiving this FAN. Subsequent collection letters, including a Warrant of Distraint and/or Levy received by GJM in December 2003, prompted GJM to file a protest and later a Petition for Review before the Court of Tax Appeals (CTA).
ISSUE
Whether the BIR’s right to assess GJM for deficiency income tax for taxable year 1999 had already prescribed.
RULING
The Supreme Court denied the petition and affirmed the CTA En Banc’s decision canceling the assessment. Under Section 203 of the 1997 National Internal Revenue Code, the Commissioner has three years from the last day prescribed for filing the return to assess internal revenue taxes. GJM filed its 1999 return on April 12, 2000, making the prescriptive period expire on April 15, 2003. The BIR issued and mailed the FAN on April 14, 2003, which was within the prescriptive period.
However, the Court emphasized that while an assessment must be made within the three-year period, the taxpayer must also actually receive the notice for it to be valid. When GJM directly denied receipt of the FAN, the burden of proof shifted to the BIR to prove by competent evidence that GJM indeed received it. The BIR failed to discharge this burden. The presumption that a mailed letter is received in the due course of mail is merely disputable. GJM’s denial, coupled with the BIR’s lack of conclusive proof like a registry receipt or a certification of mailing, meant the assessment was not properly served. Consequently, the right to assess had prescribed. The Court upheld the CTA’s factual findings, recognizing its expertise on tax matters, and found no reason to overturn its conclusion that the assessment was invalid.