Barcelon, Roxas Securities Inc.

vs CIR
GR 157064, August 7, 2006

FACTS:  

Petitioner Barcelon, Roxas Securities Inc. (now known as UBP Securities,

Inc.) is a corporation engaged in the trading of securities.  On 14 April 1988,
petitioner filed its Annual Income Tax Return for taxable year 1987.  After an
audit investigation conducted by the Bureau of Internal Revenue (BIR),
respondent Commissioner of Internal Revenue (CIR) issued an assessment
for deficiency income tax in the amount of P826,698.31 arising from the
disallowance of the item on salaries, bonuses and allowances in the amount
of P1,219,093,93 as part of the deductible business expense since petitioner
failed to subject the salaries, bonuses and allowances to withholding taxes.
This assessment was covered by Formal Assessment Notice No. FAN-1-87-
91-000649 dated 1 February 1991, which, respondent alleges, was sent to
petitioner through registered mail on 6 February 1991.  However, petitioner
denies receiving the formal assessment notice.

ISSUE: Whether or not the period to make an assessment has prescribed due
to the failure of the BIR to send the assessment notice to the taxpayer on
time.

Held: Yes.  In deciding this question the SC has to rule first on the issue of
whether the burden of proving actual receipt is shifted to the CIR upon a
specific denial made by the taxpayer that the assessment was not received. 

Under Section 203 of the Tax Code, internal revenue taxes must be assessed
within three years from the last day for the filing of the return. An assessment
is made within the prescribed period if the notice is released, mailed or sent b
the CIR to the taxpayer within the prescriptive period.  Although there exists a
presumption that an assessment which was sent by registered mail is
received in the regular course of mail, a direct denial made by the taxpayer of
the receipt thereof shiftss the burden to the BIR to prove that the assessment
was indeed received by the taxpayer.

Under Rule 130 f the Rules of  Court, to be admissible, the entries in official
records must meet the following requisites: 1) that the entry was made by a
public officer of by another person specially enjoined by law to do so; (2) that
it was made by the public officer in the performance of his duties specially
enjoined by law; and (3) that the public officer or other person had sufficient
knowledge of the facts that must have been acquired by him personally or
through official information.  In the event that the BIR failed to present a
witness or sufficient proof that could attest to the fact that the report was
acquired by it from persons under a legal duty to submit the same, the official
records offered as evidence will be considered heresay and this shall be
deemed insufficient prood that the assessment notice was received before the
lapse of the prescriptive period. For failing to provide proof of actual receipt
and for failure to present proof to raise the disputable presumption, the court
held that the right of the government to assess and collect the alleged
deficiency tax is now barred by prescription.