Violation of Taxpayer’s Right to Due Process Vs. Taxpayer’s Failure to Properly Protest a Tax Assessment

By Atty. Fulvio D. Dawilan

"The Court noted that the principle that an assessment attains finality for failure to comply with protest requirements is not absolute. The Court emphasized that when an assessment is void from the beginning, it produces no legal effect and may be assailed at any time, even if no protest was filed. A void assessment, being a nullity, cannot attain finality. Between the taxpayer’s failure to properly protest a tax assessment and the violation of the taxpayer’s right to due process, the scale is tilted in favor of the taxpayer. In essence, the failure of a taxpayer to comply with the protest requirement is negated by the non-observance of the due process requirement on the part of the tax authority. A taxpayer may still escape the imposition of deficiency tax assessment when there are infirmities in the assessment issued by the BIR.” 

The Tax Code vests upon the Bureau of Internal Revenue (BIR) the powers to administer and enforce its provisions. One of these powers refers to the authority granted to the Commissioner of Internal Revenue (CIR) to make assessments – which, in most cases, are accomplished through duly authorized officials and revenue officers of the tax bureau. Indeed, after a return has been filed, the CIR or his duly authorized representative may authorize the examination of any taxpayer and the assessment of the correct amount of tax. The failure to file a tax return on the part of the taxpayer does not prevent the CIR from authorizing his examination.

In the exercise of this power, the CIR is clothed with sufficient authority and available remedies that would allow him to pursue his assessment and collection functions effectively and efficiently. Nonetheless, the Courts had repeatedly reminded us that these powers must be exercised reasonably and in accordance with the prescribed procedures. From the issuance of the letter of authority up to the collection of deficiency taxes, if any, the procedures and requirements prescribed in the Tax Code and its implementing regulations must be properly observed.

Similarly, the tax taxpayer has the corresponding responsibilities in relation to the conduct of an assessment. Remedies are also available to the taxpayer, when he believes that his rights are disregarded and the assessment and collection processes are carried out beyond the authority or without basis. And like the CIR, a taxpayer is also expected to follow the procedures required of him during tax reviews conducted by the tax authorities.

In essence, both the BIR and the taxpayer are expected to observe the prescribed procedures in the performance of their respective functions and obligations in an assessment process. On the part of the BIR, failure to comply with these requirements may affect the validity of the assessment and jeopardize the collection of deficiency taxes. On the other hand, non-observance of these requirements may affect the available remedies that the taxpayer may invoke in contesting the assessment.

What happens if both parties fail to the observe the proper procedures in the performance of their respective obligations or in availing or invoking the remedies available to them?

A recent decision (G.R. No. 278483, December 03, 2025) of the Supreme Court involves an assessment case where both the taxpayer and the BIR erred. In this case, the taxpayer failed to file a protest within the allowed time after the receipt of the Forma Letter of Demand (FLD), containing the final assessment. Ordinarily, if a taxpayer disagrees with the computed deficiency taxes indicated in an assessment notice, the taxpayer may protest administratively within thirty (30) days from date of receipt. If the taxpayer fails to file a valid protest against the FLD and assessment notice, the assessment becomes final, executory and demandable. That means the assessment is no longer contestable and the BIR may proceed in collecting the amount based on the FLD.

Unfortunately, in this specific case, the taxpayer missed that opportunity to contest the assessment. And according to the Court, tax assessment becomes final, executory, and demandable if the taxpayer fails to file a protest within the reglementary period. Once final, the assessment attains the character of a judgment that is final, immutable and enforceable. Regardless of the correctness of the assessment, the taxpayer may no longer question it even in the Courts.

Nonetheless, the Court still sided with the taxpayer and proceeded to cancel the assessment. Why? Fortunately for the taxpayer, the tax bureau failed to comply with the due process required to be observed in the conduct of an assessment – particularly the Tax Code requirement that the taxpayer shall be informed in writing of the law and the facts on which the assessment is made. This due process requirement is mandatory and goes into the very validity of the assessment itself. Accordingly, the assessment for deficiency taxes was declared void.

The Court noted that the principle that an assessment attains finality for failure to comply with protest requirements is not absolute. The Court emphasized that when an assessment is void from the beginning, it produces no legal effect and may be assailed at any time, even if no protest was filed. A void assessment, being a nullity, cannot attain finality. Between the taxpayer’s failure to properly protest a tax assessment and the violation of the taxpayer’s right to due process, the scale is tilted in favor of the taxpayer. In essence, the failure of a taxpayer to comply with the protest requirement is negated by the non-observance of the due process requirement on the part of the tax authority. A taxpayer may still escape the imposition of deficiency tax assessment when there are infirmities in the assessment issued by the BIR.

The message is loud and clear - when the defect in the assessment affects the validity of the assessment itself, the assessment should be set aside despite the taxpayer’s own flaws.

The article is for general information only and is not intended, nor should be construed as a substitute for tax, legal or financial advice on any specific matter. Applicability of this article to any actual or particular tax or legal issue should be supported therefore by a professional study or advice. If you have any comments or questions concerning the article, you may e-mail the author at This email address is being protected from spambots. You need JavaScript enabled to view it. or call 8403-2001 loc 310.