TAXPAYER’S REMEDIES – Bagalanon

SERVICE OF ASSESSMENTS

Burden of Proof
 a duty of a party to present evidence on the facts in issue necessary to establish his claim or defense by the
amount of evidence required by law (Sec. 1, Rule 131, Revised Rules of Court.)

 If the taxpayer denies ever having received an assessment from the BIR, it is incumbent upon the BIR to prove by
competent evidence that such notice was indeed received by the addressee.

 While a mailed letter is deemed received by the addressee in the course of mail this is merely a disputable
presumption, subject to controversy and a direct denial thereof shifts the burden on the party favored by the
presumption to prove that the mailed letter was indeed received by the addressee. (Republic vs. CA, 149 SCRA
351)

 When a notice of assessment was sent to old office address and not to the new address, there was a failure to
affect a timely valid assessment. Therefore, the period for filing a criminal case for tax liabilities had prescribed
by the time BIR instituted the criminal cases. (CIR vs. Bank of the Philippine Islands, G.R. No. 135446, September
23, 2003)

 Section 228 of NIRC implies that prior to the finality of the assessment or the decision and while the matter is
pending either with the BIR Commissioner or the Tax Court, as the case may be, the assessment may not as yet
serve as the basis of collection by distraint or levy or by judicial action. (Central Cement Corp. vs. Commissioner,
CTA No. 4312, December 21, 1988)

ASSESSMENT - Not an Appealable Decision

 While an assessment by the BIR can become final and executory, it is not, however, the Commissioner’s decision
contemplated by Section 7 of R.A. 1125 from which a petition for review may forthwith be filed with the Court
of Tax Appeals (Commissioner vs. Villa, 22 SCRA 4)

 Rather, it is the action taken by the Commissioner in response to the taxpayer’s request for reconsideration of
the assessment or to his written claim for refund that would constitute the decision, the receipt of which will
start the 30-day period within which the taxpayer may appeal to the Court of Tax Appeals.

Commissioner vs. Villa 22 SCRA 4

FACTS:

Leonardo S. Villa, a doctor of medicine, and his wife filed joint income tax returns for the years 1951 to 1956. The BIR
determined the income of the Villa spouses by the use of networth method and accordingly issued assessments for
deficiency income tax for the years 1951 to 1956 and residence tax for 1951 to 1957.

Without contesting the said assessments in the BIR, Villa filed a petition for review in the Court of Tax Appeals.

ISSUE:

Whether or not the Court of Tax Appeals had jurisdiction to entertain the so-called appeal of the taxpayer in this case?

RULINGS: NO

The law conferring jurisdiction on the Court of Tax Appeals is found in Section 7 of Republic Act 1125, which states:

Sec. 7. Jurisdiction. — The Court of Tax Appeals shall exercise exclusive appellate jurisdiction to review by appeal as
herein provided —

(1) Decisions of the Collector of Internal Revenue in cases involving disputed assessments, refunds of internal revenue
taxes, fees or other charges, penalties imposed in relation thereto, or other matters arising under the National Internal
Revenue Code or other law or part of law administered by the Bureau of Internal Revenue;

The word "decisions", quoted above, has been interpreted to mean the decisions of the Commissioner of Internal
Revenue on the protest of the taxpayer against the assessments. Definitely, said word does not signify the assessment
itself.

 When the Commissioner, without categorically deciding the request for reconsideration or reinvestigation,
proceeds with distraint and levy or institutes an action in the ordinary courts, such action has been deemed an
 implied denial, and the taxpayer’s remedy is to appeal to the Court of Tax Appeals within 30 days from the date
that he is notified thereof. (Dayrit vs. Cruz, G.R. No. L-39910, September 26, 1988)

 While ordinarily, a warrant of distraint and levy, following a request for reconsideration of an assessment, is
considered the Commissioner’s final decision, the receipt of which by the taxpayer triggers the start of the 30-
day period of appeal.

 Where the warrant was issued without taking into account the request for reconsideration, the 30-day period
should start only after the Commissioner acts on the request for reconsideration. (Commissioner vs. Algue, Inc.,
158 SCRA 9)

 The Commissioner of Internal Revenue must categorically state that his action on a disputed assessment is final;
otherwise, the period to appeal will not commence to run. That final action cannot be implied from the mere
issuance of a warrant of distraint and levy. (Commissioner vs. Union Shipping Corporation, 185 SCRA 547)

Commissioner vs. Union Shipping Corporation 185 SCRA 547

FACTS:

 December 27, 1974 – CIR assessed against private respondent deficiency income tax of P583,155.22.

 January 4, 1975 – Assessment was received by private respondent.

 January 13, 1975 – Private respondent protested the assessment.

 November 25, 1976 – Without ruling on the protest, BIR issued a Warrant of Distraint and Levy.

 December 28, 1978 – BIR, without acting on the request for reinvestigation and reconsideration (protest) of the
Warrant of Distraint and Levy, filed a collection suit before the Court of First Instance of Manila against private
respondent.

 January 10, 1979 – Private respondent filed with the CTA its Petition for Review of the petitioner's assessment of
its deficiency income taxes.

ISSUE: Whether or not the Court of Tax Appeals has jurisdiction over this case?

1. Is the period to the BIR assessment has already prescribed? (Ans: No)

2. From what date will the filing of an appeal commence? (Ans: December 28, 1978)

RULINGS: Issuance of a warrant of distraint and levy is NOT a proof of the finality of an assessment. Commissioner
should always indicate to the taxpayer in clear and unequivocal language what constitutes his final determination of the
disputed assessment.

1. No.

2. Under the circumstances, the CIR, not having clearly signified his final action on the disputed assessment, legally the
period to appeal has not commenced to run. Thus, it was only when private respondent received the summons on the
civil suit on December 28, 1978 for collection of deficiency income that the period to appeal commenced to run.

The request for reinvestigation and reconsideration was in effect considered denied by petitioner when the latter filed a
civil suit for collection of deficiency income. So. that on January 10, 1979 when private respondent filed the appeal with
the Court of Tax Appeals, it consumed a total of only thirteen (13) days well within the thirty-day period to appeal.

 The appeal period, however, shall begin to run from the receipt of summons in a civil action for collection filed
by the Commissioner. The effect of an appeal to the Tax Court is to divest the ordinary court of its jurisdiction
over the case that may have earlier been filed by the Government. (San Juan vs. Vasquez, 3 SCRA 92)

 Within the said 30-day period for appeal, the taxpayer may opt to file another request for reconsideration with
the Commissioner, instead of at once filing his petition for review with the Court of Tax Appeals, and as long as
this new request for reconsideration is not pro forma, it would have the effect of suspending (not interrupting)
the 30-day period. (Dy Pac and Company vs. CTA, L-31369, 18 October 1977)

 If the Commissioner makes some changes on the assessment or on his earlier response to the taxpayer, then
such previous action or decision is deemed abandoned and the modificatory decision instead becomes the
Commissioner’s final decision from which receipt of a new 30-day period of appeal shall again be reckoned.