h. Formal Letter of Demand; Final Assessment Notice

Validity and Due Process in Tax Assessments

Under Philippine tax jurisprudence, a tax assessment is prima facie valid and lawful unless shown to be arbitrary or capricious (¹). Consequently, the affected taxpayer carries the burden of proving that the questioned assessment is erroneous or invalid (¹). In Level Up, Inc. v. CIR, G.R. No. 272354, 29 September 2025, the Supreme Court emphasized that an assessment will stand when the taxpayer fails to satisfy this burden of proof and demonstrate that the assessment lacks legal or factual justification (¹).

Procedural due process in the assessment process is safeguarded when the taxpayer is granted a fair opportunity to be heard and to present evidence to rebut the deficiency findings (¹). This requirement is satisfied when the tax authorities receive and duly consider the taxpayer's explanations and submitted evidence prior to rendering their determination (¹).

Furthermore, where an assessment involves the disallowance of claimed tax credits, strict substantiation requirements apply (¹). Specifically, creditable input taxes must be properly supported by value-added tax (VAT) invoices or official receipts compliant with Section 110(A)(1) of the National Internal Revenue Code; mere summary lists of purchases are legally insufficient to defeat the deficiency assessment and substantiate creditable input taxes against output tax liability (¹).