The Power to decide Tax Cases NIRC,

 NIRC, SEC. 4(1). Power of Sec. 4(2) such as:

the Commissioner to (1)disputed assessments,
Interpret Tax Laws - The refunds of internal revenue taxes,
power to interpret the
(2)fees or other charges,
provisions of this Code and other
tax laws shall be under the (3)penalties imposed in relation thereto,
exclusive and original
(4)or other matters arising under this Code
jurisdiction of the Commissioner, or other laws or portions thereof
subject to review by the administered by the Bureau of Internal
Secretary of Finance. Revenue is vested in the Commissioner.
 The phrase “Other Tax Laws” refers
These are subject to the exclusive
to special laws granting tax incentives appellate jurisdiction of the Court of
or exemptions to certain tax payers Tax Appeals
and to other laws administered by the
BIR(e.g. Omnibus Investment Code
of 1987, The Special Economic Zone
of 1995, and Bases Conversion and
Development Act of 1992).
 ❑ A taxpayer who receives an
 Note: A ruling by the BIR adverse ruling from the CIR
Commissioner shall be may, within thirty (30) days
presumed valid unless from the date of receipt of
modified, reversed or such ruling, seek its review
superseded by the Secretary of by the Secretary of Finance,
Finance either by himself/itself or
 A reversal or modification of though his/its duly
the BIR ruling shall terminate authorized representative.
its effectivity upon  The receipt by the taxpayer or
the BIR of written notice of
reversal or modification,
❖ The Secretary of Finance may whichever came earlier.
now also review the rulings
MOTU PROPRIO. (DOF
ORDER 7-02)
NON-RETROACTIVITY OF RULINGS
(Sec. 246, NIRC)
General Rule: No retroactive
application if the revocation,
modification or reversal of rules and
regulations, rulings or circulars will be
prejudicial to the taxpayers
Exceptions:
(a) Where the taxpayer deliberately
misstates or omits material facts
from his return or any document
required of him by the BIR;
(b) Where the facts subsequently
gathered by the BIR are materially
different from the facts on which
the ruling is based; or
(c) Where the taxpayer acted in bad
faith.
 BAR QUESTION/S  A: NO. Reversal of a ruling shall not
be given a retroactive application if
 Q: Due to an uncertainty whether or said reversal will be prejudicial to the
not a new tax law is applicable to taxpayer. Therefore, the BIR cannot
printing companies, DEF Printers assess DEF printers for back taxes
submitted a legal query to the BIR because it would be violative of the
on that issue. The BIR issued a ruling principle of non-retroactivity of
that printing companies are not rulings and doing so would result in
covered by the new law. Relying on grave injustice to the taxpayer who
this ruling, DEF Printers did not pay relied on the first ruling in good faith
said tax. Subsequently, however, (Sec. 246, NIRC; CIR v. Burroughs,
the BIR reversed the ruling and Inc., 142 SCRA 324[1986]).
issued a new one stating that the
tax covers printing companies.
Could the BIR now assess DEF
Printers for back taxes
corresponding to the years before
the new ruling? Reason briefly.
(2004 Bar)
 The purpose of the  Under the Third party
power: Information Program, the
BIR can access the records
1. ascertaining the of the taxpayer’s
correctness of any
return
customers or suppliers to
2. making a return when confirm accuracy of the
none has been made declared sales or purchases
3. determining the liability in the tax returns. This is an
of any person for any increasingly powerful and
internal revenue tax, or cost-effective way to
in discover many instances or
4. collecting any such underreporting (R.M.O 30-
liability from internal
revenue tax
2003; R.M.O. 34-2004;
5. evaluating tax R.M.O. 28-2007; R.M.O. 07-
compliance, 2010; R.M.O. 13-2012)
 Note: The lack of consent by
the taxpayer under
investigation does not imply
that the BIR obtained the
information from third
parties illegally or that
information received is false
or malicious. The BIR is not
precluded from assessing
deficiency taxes on the
taxpayer based on the
documents obtained from
third parties( CIR vs. Gonzales
G.R. no 177279, October 13,
2010)
 Extent of the Power:  (2) To obtain on a regular
basis from:
 (1) To cause revenue
officers and employees to  A. any person other than
make a canvass from time the person whose internal
to time of any revenue revenue tax liability is
district or region and inquire subject to audit or
after and concerning: investigation, or
 A. all persons therein who  B. from any office or officer
may be liable to pay any of the national and local
internal revenue tax, and governments, government
agencies and
 B. all persons owning or instrumentalities, including
having the care, the Bangko Sentral ng
management or possession Pilipinas and Government-
of any object with respect to Owned or -Controlled
which a tax is imposed. Corporations,
Such information such as, but (3) To take such testimony of
not limited to the following: the person concerned, under
oath, as may be relevant or
A. costs and volume of
material to such inquiry;
production,
(4) To examine any book,
B. Receipts or sales and gross
incomes of taxpayers, and paper, record, or other data
which may be relevant or
C. The names, addresses, and material to such inquiry;
financial statements of
corporations, mutual fund Note: The power to require
companies, insurance production of books, papers,
companies, regional operating records, or other data is subject to
headquarters of multinational the rule prescribing a period to
companies, joint accounts, preserve books and other records.
associations, joint ventures of Beyond such period, the documents
consortia and registered may no longer be covered by a
partnerships, and their supboena duces tecum( NIRC, SEC.
members. 235)
 (5) To summon the:  Note: The power of
examining and obtaining
a. Person liable for tax or information is full and
b. Person required to file a plenary, subject only to the
bank secrecy laws and other
return, or general or special laws
c. Any officer or employee granting confidentiality of
transactions and may not be
of such person, or
examined by regulatory
d. Any person having agencies, including the BIR.
possession, custody, or care of the
books of accounts and other
accounting records containing
entries relating to the business of
the person liable for tax, or
e. Any other person
 Extent of the Power:  (2) Authority to make
 (1) Examination of Returns assessments based on the
and Determination of Tax best evidence obtainable
Due.
 A. After a return has been
filed as required under the  Note: The rule on the best
provisions of this Code, the evidence obtainable applies
Commissioner or his duly when a tax report is required
authorized representative by law for the purpose of
may authorize the assessment and it is not
examination of any taxpayer available or when tax report
and the assessment of the is incomplete or fraudulent
correct amount of tax (Sy po vs. CTA, G.R. No.
 B. failure to file a return
shall not prevent the 81446, August 18, 1998)
Commissioner from
authorizing the examination
of any taxpayer.
(1) The CIR shall assess the proper
tax on the best evidence
obtainable when:
• The taxpayer fails to
submit the required
returns, statements reports
and other documents
• There is a reason to
believe that any such
report is false, incomplete
or erroneous
 (3) Authority to conduct
inventory-taking and
surveillance and to • Prescribe presumptive
prescribe presumptive gross sales and receipts
if:
gross sales and receipts
o It is found that
 When to make: the taxpayer has
failed to issue
a. Inventory-taking – at any receipts and
time during the taxable invoices, or
year, for the purpose of o When there is
determining the correct tax reason to believe
liabilities. that the books of
• Surveillance – done if there accounts or other
is reason to believe that the records do not
taxpayer is not declaring his correctly reflect
correct income, sales or the declarations
receipts for tax purposes.
made by the
taxpayer.
(1) (4) Terminate Taxable Period
Terminating taxable period and ❖ Effect of Termination of Tax period
ordering the immediate payment of ❖ The tax shall be due and payable
the tax for the terminated period and immediately and shall be subject to
any remaining tax that is unpaid, all the penalties prescribed unless
when the taxpayer is: it is paid within time fixed in the
demand made by the CIR. If no
• Retiring from business subject to such payment is made, tax liens
tax, or and other legal remedies that are
• Intending to leave the Philippines summary in nature maybe
or to remove his property implemented right away( NIRC,
therefrom or to hide or conceal Sec.6(d))
his property;
• Performing any act tending to
obstruct the proceedings for the
collection of the tax for the past
or current quarter or year or to
render the same totally or
partially ineffective unless such
proceedings are begun
immediately
(5) (5) Authority to Prescribe
Real Property Values
• Dividing the Philippines into different
zones or areas, and determining the
FMV of real properties in each zone
or area, upon consultation with
competent appraisers from private
and public sectors.
• For the purpose of computing any
internal revenue tax, the value of the
property shall be WHICHEVER IS
HIGHER OF:

o The FMV as determined

by the CIR, or
o The FMV as shown in
the schedule of
values of the
provincial and city
assessors
(5) (6) Authority to Inquire into  General Rule: The CIR cannot
Bank Deposit Accounts
(6) Notwithstanding any contrary inquire into the bank deposits of
provision of R.A. 1405 (Bank the taxpayer
Secrecy Law) and other general
or special laws, the CIR is
authorized to inquire into  Exceptions
bank deposits of:
a. A decedent to determine his
gross estate, and
b. Any taxpayer who has filed an
application for compromise of tax
liability by reason of financial
incapacity.
the taxpayer must waive in writing  Condition: Such waiver shall
his privilege under R.A. 1405 and constitute as authority of the
other relevant laws, before the CIR
may inquire into his bank CIR to inquire the bank
accounts. deposits(R.R. No. 30-2002, Sec.
3(2))
 A specific taxpayer or taxpayers  Conditions:
subject of a request for the supply a. The requesting foreign tax authority
of tax information from a foreign is able to demonstrate the foreseeable
tax authority pursuant to an relevance of certain information
international convention or required to be given to the request (R.A.
agreement on tax matters to which No. 10021, Sec. 3) and the request
the Philippines is a signatory or a should also include a statement that the
party of, upon the order of the requesting tax authority is also allowed
president of the Philippines under under its domestic laws to exchange or
rules & regulations as maybe furnish the information subject of the
prescribed by the SOF, upon the request ( R.R. 10-2010, Sec. 7(g))
recommendation of the CIR (R.A.
No. 10021, Sec. 3) b. That the information obtained from
the banks and other financial
 Note: The CIR Should notify the institutions may be used by the BIR for
taxpayer in writing that such tax assessment, verification, audit and
request has been made within 60 enforcement purposes
days from receipt of the request
(R.R. No. 10-2010, Sec. 10)
 BAR QUESTION/S  A: The Commissioner of
 Q: Can the Commissioner of Internal Revenue is authorized to
Internal Revenue inquire into inquire into the bank deposits of:
the bank deposits of a taxpayer? 1. any taxpayer upon his written
If so, does this power of the consent;
Commissioner conflict with RA 2. a decedent to determine his
1405 (Secrecy of Bank Deposits gross estate;
Law) (1998, 1999, 2000, 2003, 2012
BAR) 3. any taxpayer who has filed an
application for compromise of his
tax liability by means of financial
incapacity to pay his tax liability;
 4. A specific taxpayer or taxpayers  The limited power of the Commissioner
subject of a request for the supply of tax doesnot conflict with R.A. No. 1405 because
information from a foreign tax authority the provisions of the Tax Code granting this
pursuant to an international convention or power is an exception to the Secrecy of Bank
Deposits Law as embodied in a later
agreement on tax matters to which the
legislation. Furthermore, in case a taxpayer
Philippines is a signatory. [Sec. 6(F),
applies for anapplication to compromise the
NIRC]
payment of his tax liabilities on his claim that
his financial position demonstrates a clear
inability to pay the tax assessed, his application
shall not be considered unless and until he
waives in writing his privilege under R.A. No.
1405, and such waiver shall constitute the
authority of the Commissioner to inquire into
the bank deposits of the taxpayer.
 Q: X dies in year 2000 leaving a bank  A: No. The Commissioner of Internal
deposit of P2, 000,000.00 under joint Revenue has the authority to inquire into
account with his associates in a law bank deposit accounts of a decedent to
office. Learning of X’s death from the determine his gross estate notwithstanding
newspapers, the Commissioner of Internal the provisions of the Bank Secrecy Law.
Revenue wrote to every bank in the Hence, the banks holding the deposits in
country asking them to disclose to him question may not refuse to disclose the
the amount of deposits that might be amount of deposits on the ground of
outstanding in his name or jointly with secrecy of bank deposits. [Section 6(F) of
others at the date of his death. May the the 1997 Tax Code] The fact that the
bank holding the deposit refuse to comply deposit is a joint account will not preclude
on the ground of the Secrecy of Bank the Commissioner from inquiring thereon
Deposit Law? Explain. (2003 Bar) because the law mandates that if a bank
has knowledge of the death of a person,
who maintained a bank deposit account
alone, or jointly with
 another, it shall not allow any
withdrawal from the said deposit
account, unless the Commissioner
has certified that the taxes
imposed thereon have been paid.
(Sec. 97, 1997 Tax Code) Hence,
to be able to give the required
certification, the inclusion of the
deposit is imperative, which may
be made possible only through the
inquiry made by the
Commissioner.
(5) (7) Authority to Accredit and General Rule: The accreditation
register Tax Agents requirements are mandatory, only
those who have been issued with
 Persons qualified to be tax certificate of accreditation may
agents: transact with the BIR or be
allowed to represent a taxpayer
a. Individuals; and Exception:
b. General Professional a. Individual taxpayers acting
Partnerships and their on their own behalf, provided
representatives who prepare and they present satisfactory
file tax returns, statements, identificaton
b. Members of the philippine
reports, protests and other papers Bar not sufffering suspension
with or who appear before the BIR or disbarment
for taxpayers ( NIRC, Sec. 6(g)). c. Other individuals presenting
satisfactory proof of
identification or authority in
Criteria for accreditation of tax any one of the following
agents: circumstances of limited
• Professional competence practice or special
• Integrity apperances.
• Moral fitness
(5) (8) Prescribe additional
procedural or documentary
requirements
The CIR may prescribe the
manner of compliance with
documentary or procedural
requirements in connection
with the submission or
preparation of financial
statements accompanying
the tax returns. (NIRC,
Sec. 6(h)).
(a) The CIR or his authorized (i) Failure to file a value-added
representative is tax return as required under
Section 114; or
empowered to suspend (ii) Understatement of taxable
the business operations sales or receipts by thirty
and temporarily close the percent (30%) or more of his
business establishment of correct taxable sales or
any person for any of the receipts for the taxable
quarter
following violations:
(b) A. IN THE CASE OF A VAT-

REGISTERED
PERSON. -
(i) Failure to issue receipts or
invoices;
 B. FAILURE OF ANY
PERSON TO REGISTER AS
REQUIRED -

The temporary closure of

the establishment shall be
for the duration of not less
than five (5) days and shall
be lifted only upon
compliance with whatever
requirements prescribed by
the CIR in the closure order.
 The CIR, the Deputy  Note: This section sanction raids
Commissioners, the Revenue which gives internal revenue officers
Regional Directors, the Revenue the authority to make arrests and
District Officers and other
internal revenue officers shall seizures and does not require
have authority to make arrests warrant but it must be cover only
and seizures for the violation of violations committed within the
any penal law, rule or regulation view of the internal revenue officers
administered by the Bureau of and employees (1 DE LEON, supra
Internal Revenue. Any person so at 97), this does not violate the
arrested shall be forthwith Constitution since what is
brought before a court, there to prohibited is unreasonable search
be dealt with according to law
(NIRC, Sec. 15) and seizures. It is not unreasonable
to effect arrests and seizures
without warrants if violations are
done in the presence of revenue
officers (1987 Constitution, Art. III,
Sec. 2)
 General Rule: The  Example: Delegation of the
Commissioner may authority to sign the rulings
delegate the powers and/or confirming tax
vested in him under the exemptions, tax incentives, and
pertinent provisions of tax treaty relief through the
this Code to any or such ruling process to the deputy
subordinate officials with commissioner of the Legal and
the rank equivalent to a Inspection group, Assistant
division chief or higher, Commissioner of the Legal
subject to such limitations Service Group and Regional
and restrictions as may be Directors ( R.M.C. No. 37-2007,
imposed under rules and Sec. 2)
regulations to be
promulgated by the
Secretary of finance, upon
recommendation of the
Commissioner.
 Exceptions to the
general rule:

 (a) The power to

recommend the
promulgation of rules
and regulations by the
Secretary of Finance;
 (b) The power to issue
rulings of first impression
or to reverse, revoke or
modify any existing
ruling of the Bureau;
Exception to the rule:  (c) The power to compromise or abate, under
a. (less or equal to) Sec. 204 (A) and (B) of this Code, any tax
liability: Provided, however, That assessments
≤500k basic deficiency issued by the regional offices involving basic
deficiency taxes of Five hundred thousand pesos
taxes (P500,000) or less, and minor criminal violations,
b. & minor criminal as may be determined by rules and regulations to
be promulgated by the Secretary of finance, upon
violations recommendation of the Commissioner, discovered
by regional and district officials, may be
compromised by a regional evaluation board
Maybe compromised which shall be composed of the Regional Director
as Chairman, the Assistant Regional Director, the
by REB(Regional heads of the Legal, Assessment and Collection
Divisions and the Revenue District Officer having
Evaluation Board) jurisdiction over the taxpayer, as members; and
 (d) The power to  Note: None of the exceptions
assign or reassign relates to the CIR’’s power to
approve the filing of
internal revenue collection cases (Republic vs.
officers to CIR, G.R. No. 130430,
establishments December 13, 1999).
where articles  The power to issue rulings, if
subject to excise tax it does not involve the
exercise of the power to rule
are produced or on novel issues and those
kept. that merely implements
revenue regulation in force,
maybe delegated (Secretary
of Finance vs. La suerte Cigar,
G.R. No. 166498, June 11,
2009).
 Unless there is a certification from  D. to the Bank shall not allow any
the CIR that the tax due thereon withdrawal from the deposit
had been paid: account of a deceased depositor
 A. The Register of deeds shall not
register in the Register of Property  Other Duties
any document transferring real  The CIR has authority to enjoin to
property or real rights. furnish copies of such documents to
 B. A debtor of the deceased shall facilitate collection of taxes, on the
not pay his debts to the heirs, following persons:
legatee, executor or administrator  A. Any lawyer, notary public or any
of his creditor government officer with duty to
 C. To the Corporation shall not intervene in the preparation or
transfer to any owner of any share, acknowledgement of documents
obligation or right regarding partition or inheritance
 B. Individuals who sign important
documents with significant tax
consequences.