Serves you right!
TOP OF MIND - Mary Anjanette Mandawe (The Philippine Star) - February 18, 2020 - 12:00am

In a nutshell, the obligation of a taxpayer is to pay the right amount of tax at the right time. Nevertheless, some taxpayers, individuals and corporations alike, tend to have shortcomings in fulfilling this obligation. Consequently, such may lead to an assessment by the Bureau of Internal Revenue (BIR).

Fundamental to this is Section 228 of the Tax Code, as amended. It clearly requires that the taxpayer be notified in writing that he is liable for deficiency taxes through the issuance and delivery of notices –i.e. Preliminary Assessment Notice (PAN), Formal Letter of Demand and Final Assessment Notice (FLD/FAN). He must be informed of the facts and the law upon which the assessment is made. Otherwise, such issued notice shall be deemed void. The same provision requires that the decision of the commissioner of internal revenue (CIR) or his duly authorized representative on a disputed assessment state the facts, laws, and rules and regulations, or jurisprudence on which such decision is based. Failure to do so would invalidate the Final Decision on a Disputed Assessment (FDDA).

In May 2019, the BIR issued Revenue Memorandum Order (RMO) No. 40-2019 prescribing the procedures for the proper service of assessment notices with the provisions of Section 3.1.6 of Revenue Regulations (RR) No. 18-2013.

The issuance provides that the assessment notices (i.e. PAN, FLD/FAN, and FDDA) shall be served to the taxpayer by delivery of a notice through personal service to his registered or known address, or wherever he may be found.

Only in cases where personal service is not possible (e.g. when the taxpayer is not present at the registered or known address), the revenue officers (ROs) assigned to the case shall serve the notice either by substituted service or by mail. In a substituted service, the assessment notice may be left at the taxpayer’s registered address with his clerk or with a person having charge thereof. The same shall also apply if the known address is a place where the business activities of the taxpayer are conducted. However, if the known address is the place of residence, substituted service can be made by leaving the copy with a person of legal age residing therein.

In cases where no person is found at the party’s registered or known address, or a party is found but refuses to receive the assessment notice, the ROs may resort to constructive service by bringing a barangay official and two disinterested witnesses (i.e. persons of legal age other than employees of the BIR) so that they may personally observe and attest to such absence or refusal, as the case may be.

Lastly, assessment notices may be served by mail. This may be done by sending a copy of the assessment notice through registered mail by the Philippine Postal Corporation (PhlPost), through a reputable professional courier company (PCC), or through an ordinary mail, if no registry or reputable courier is available in the locality of the taxpayer.

Mary Anjanette V. Mandawe is an Associate from the Tax Group of KPMG R.G. Manabat & Co. (KPMG RGM&Co.), the Philippine member firm of KPMG International. KPMG RGM&Co. has been recognized as a Tier 1 tax practice and Tier 1 transfer pricing practice by the International Tax Review.

This article is for general information purposes only and should not be considered as professional advice to a specific issue or entity.

The views and opinions expressed herein are those of the author and do not necessarily represent the views and opinions of KPMG International or KPMG RGM&Co. For comments or inquiries, please email or

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