Essentially inseparable

By Rachael U. Yap, 7 August 2014

AS KIDS, we may have persuaded our parents to hear us out before they lay down any punishments for any mischief we may have done. Though we, as children, may not yet know the term “due process,” even then, we already had the innate idea of the need to first be heard before judgment is rendered.

In our society, one may argue that due process is the essence of our justice system. In simple parlance, due process just means that a person must be informed of the claim against him and that he must be given the opportunity to be heard and to defend himself against such claim. This two-fold requirement of procedural due process must always go hand in hand; otherwise, the concept of due process is defeated.

Due process must be applied not only in judicial proceedings but also in administrative ones, though the application in the latter case is not as stringent as in the former. As often discussed by the Supreme Court (SC), due process in administrative proceedings is simply an opportunity to be heard or to explain one’s side, or an opportunity to seek reconsideration of an action or ruling.


The Tax Code and its implementing rules follow the twin requirement of due process. The taxpayer must be informed in writing of the legal and factual basis of any assessment and must be allowed to dispute it. Absence of either condition shall render the assessment void.


In tax assessments, due process requires that a taxpayer must actually receive the required tax assessment notices. Under existing tax rules, one mode of serving a tax assessment notice is through registered mail. Jurisprudence teaches us that a mailed letter is presumed to have been received by the addressee in the ordinary course of mail. However, this presumption may be refuted by a taxpayer’s direct denial, thus, shifting the burden to the Bureau of Internal Revenue (BIR) to prove that the notice of tax assessment was actually received by the taxpayer. How does one prove receipt of notice served through registered mail?

In one case where a taxpayer denied having received the tax assessment notice, the SC declared that, in proving the taxpayer’s receipt of notice, the BIR could have simply presented the registry receipt or the certification from the postmaster that it mailed the notice (CIR vs. Metro Star Superama, Inc., G. R. No. 185371 dated 8 December 2010). Having failed to do so made the entire assessment process void.

In a recent Court of Tax Appeals (CTA) case (Republic of the Philippines vs. Molinar, doing business under the name “Romac Marketing”, CTA OC No. 14 dated 6 June 2014), the taxpayer similarly claimed that the BIR failed to give him due notice of the tax assessment against him. However, the CTA found that there was due process after the BIR presented the registry receipts of the Letter Notice and Second Notice and the registry return receipts of the Amended Preliminary Assessment Notice (PAN) and the Formal Letter of Demand (FLD) and Final Assessment Notice (FAN), in addition to presenting revenue officers who prepared and mailed the notices.

As stated earlier, part of the due notice requirement is that the taxpayer must be informed in writing of the legal and factual basis on which he is being assessed, which would then allow the taxpayer to respond accordingly


Aside from due notice, the taxpayer should be given the chance to say his piece, so to speak. As explained by the SC in administrative proceedings, “to be heard” does not only mean verbal arguments in court; one may also be heard through pleadings. Where the opportunity to be heard, either through oral arguments or pleadings, is accorded, there is no denial of procedural due process (Vivo v. PAGCOR, G.R. No. 187854 dated 12 November 2013). In other words, administrative proceedings do not require a trial-type proceeding to comply with due process.

In a tax assessment, the opportunity to be heard comes in the form of a written protest. Under existing regulations, a taxpayer has 15 days from receipt of a PAN to file a written response, and 30 days from receipt of a FAN to submit a written protest. The written protest must contain specific information as provided under the regulations; otherwise, it shall be considered void and without force and effect. For instance, the protest letter should state the facts, and the applicable law, rules and regulations, or jurisprudence on which the protest is based. In addition, it must also state whether the protest is a request for reconsideration or reinvestigation, and in the latter case, must specify the newly discovered or additional evidence that will be presented.

In sum, basic compliance with the due notice and hearing requirements in administrative proceedings constitute observance of the minimum and essentially inseparable requirements of due process.

As earlier mentioned, even kids recognize the notion of due process. Thus, the need for due process may be considered a basic and widely accepted notion. In case of a tax examination, due process is indispensable. It must be observed so that a taxpayer would know not only the claim against him but also be able to apply the remedies that are available to him; so that he can intelligibly prepare his defenses that may help him avoid any sanctions or penalties; and, so that such defenses may be presented before the BIR for proper consideration. If you’re in this kind of situation, wouldn’t you want to be told of the claim against you and have the chance to defend yourself?

Rachael U. Yap is a Senior Consultant at the Tax Services Department of Isla Lipana & Co., the Philippine member firm of the PwC network.