The Supreme Court recently confirmed that, when an addressee controverts and categorically denies the receipt of registered mail matter, specifically tax assessments, the sender bears the burden of proving actual receipt by the addressee.
In Commissioner of Internal Revenue v. T Shuttle Services, Inc., G.R. No. 240729 (24 August 2020), the Commissioner on Internal Revenue (“CIR”) issued a preliminary assessment notice (“PAN”) and a final assessment notice (“FAN”) against respondent T Shuttle Services, Inc. on different dates, assessing the latter with deficiency value added tax and deficiency income tax. Subsequently, the Revenue District Officer (“RDO”) issued a Preliminary Collection Letter requesting respondent to pay the assessed tax liability. Upon non-payment thereof, the RDO issued a Final Notice Before Seizure (“FNBS”). Respondent protested, claiming that it did not receive the PAN and FAN prior to the issuance of the FNBS.
Before the Court of Tax Appeals (“CTA”), the CIR alleged receipt of the notices by the respondent and presented registry receipts to prove the same. Despite this, the Court of Tax Appeals (“CTA”) Division and En Banc both ruled that respondent was denied due process as it was not validly served with the pertinent notices.
In turn, the Supreme Court affirmed the CTA’s ruling. Pursuant to Section 228 of the National Internal Revenue Code and Section 3 of Revenue Regulations 12-99, the Supreme Court noted that service of the PAN or the FAN may be made by registered mail. Under Section 3(v), Rule 131 of the Rules of Court, there is a disputable presumption that “a letter duly directed and mailed was received in the regular course of the mail.” However, this presumption is subject to controversion and direct denial. In such case, the burden is shifted to the party favored by the presumption to establish that the subject mailed letter was actually received by the addressee.
In view of respondent’s categorical denial of due receipt of the PAN and the FAN, the burden was shifted to the CIR to prove that the mailed assessment notices were indeed received by respondent or by its authorized representative.
The Supreme Court confirmed that the CIR’s mere presentation of registry receipts was insufficient to prove respondent’s receipt of the PAN and the FAN. It also upheld the CTA’s observation that the witnesses for the CIR failed to identify and authenticate the signatures appearing on the registry receipts. This meant that it cannot be ascertained whether the signatures appearing in the documents were those of respondent’s authorized representatives.
The Supreme Court also took note of Revenue Memorandum Order (“RMO”) 40-2019, which prescribes the procedures for the proper service of assessment notices. Under said RMO, a detailed record of all assessment notices issued by the CIR is required. Among the details to be recorded are the “name of taxpayer/person who received the assessment notice” and, more importantly, the “position/designation/relationship to the taxpayer, if not served to the taxpayer named in the assessment notice.” While RMO 40-2019 was not yet in force at the time the pertinent PAN and FAN were issued, the issuance of RMO 40-2019 gave the Supreme Court all the more reason to affirm, if only for consistency and uniformity, the CTA En Banc’s finding that the CIR failed to prove that the PAN and the FAN were properly and duly served upon and received by respondent.