The National Internal Revenue Code of the Philippines [Tax Reform Act of

1997], Republic Act No. 8424, is cited as the Tax Reform Act of 1997 {Sec. 1,
Short Title, NIRC} but is also cited by some authorities and authors as the The
Tax Code of 1997. Thus, the NIRC, the Tax Reform Act of 1997 and the Tax
Code of 1997 will be used herein interchangeably.

Powers and Duties of the BIR

(Sec. 2, Title I, NIRC, as amended)

The BIR shall be under the control & supervisions of the Dept. of Finance and
the summary of its powers and duties are:

a. Assess and collect all internal revenue taxes, fees, charges;

b. Enforce all forfeiture, penalties, fines confiscated with the assessment
and collection of all internal revenue taxes, fees, charges;
c. Execute judgments in all cases decided in favor of the BIR by the Court
of Tax Appeals (CTA) and the ordinary courts; and
d. Effect and administer the supervisory and police powers conferred to it
by the 1997 Tax Code, as amended, or other laws.

Power of the CIR to obtain taxpayer information to ascertain the correctness of

tax returns
(Section 5 of the 1997 Tax Code)
Summary --
1. To examine any document relative to the inquiry;
2. To obtain information from third parties, including government agencies,
transaction records of a taxpayer
3. To summon any person to determine tax liability
4. To take testimony of any person relative to a tax inquiry
5. To cause revenue officers to make a canvass of tax liabilities

Note that the TRAIN amended Sec. 5 (B) of the 1997 Tax Code. What were the
amendments?

Revenue Memorandum Order No. 10-2013 (RMO 10-2013) – Provides the

guidelines for the issuances of a subpoena duces tecum to assist the CIR to
gather information in case of insufficient information provided by a taxpayer.

Note: What happens if you fail to obey a duly issued subpoena duces
tecum?

Power of the CIR to make assessments and prescribe additional requirements

for tax administration and enforcement. – Sec. 6 NIRC
Summary of CIR’s authority relative to assessments:
a. To examine returns and to determine tax due
b. To conduct inventory and surveillance
c. To prescribe presumptive gross sales and receipts
d. To terminate taxable periods
e. To prescribe real property values
f. To inquire into bank deposits and other related information held by
financial institutions
g. To authorize, to accredit and register tax agents
h. To prescribe additional procedural or documentary requirements

In its power to assess a taxpayer, the CIR may compel the taxpayer to produce
documents.
CASE: Medina v. CIR, 110 Phil. 912, at 916.

Settlement and payment of tax assessments; Sec. 56, NIRC.

Best evidence rule: any evidence obtained by an authorized revenue officer

from any person other than the assessed taxpayer.
CASE: Sy Po v. Court of Tax Appeals, 164 SCRA 524, 526-527

The CIR’s authority to prescribe real property values is incidental to its power
to assess taxpayers.
CASE: Capitol Steel v. PHIVIDEC, 510 SCRA 590

Authority of CIR to Inquire into bank deposit accounts and other related
financial information; Sec. 3 of Rep. Act No. 10021

Despite the provisions of the Bank Secrecy Law (Rep. Act 1405), the CIR is
authorized to inquire into bank deposit accounts and other related financial
information held by financial institutions. Basis: Section 6(F)(1) to (3), NIRC.

Power of the CIR to suspend the business operation of a taxpayer; Sec. 115,
NIRC.

When may the CIR delegate its powers? What are the non-delegable powers of
the CIR? Section 7, NIRC.

Non delegable:
a. To recommend the promulgation of rules and regulations to the SoF
b. To issue rulings of first impression, or to reverse, revoke, or modify any
existing CIR ruling
c. To compromise or abate tax liability, subject to certain exceptions
 d. To assign or re-assign internal revenue officers to establishments where
articles subject to excise tax are produced or kept.
The CIR may delegate the power to approve the filing of tax collection
cases to authorized internal revenue officers.
CASES: Arches v. Bellosillo, 20 SCRA 34; Republic v. Hizon, 320 SCRA
574, 577

Difference between compromise and abatement

CASE: People v. Sandiganbayan, 467 SCRA 137

Disclosure of taxpayer’s information and the limitations on the CIR to obtain

taxpayer’s information – Sec. 71 in relation to Sec. 270 of the NIRC (The 1997
Tax Code).

Power of the CIR to make assessments and prescribe additional requirements

for tax administration and enforcement – Sec. 6 of the NIRC

Distinguish the nature of the Commissioner of Internal Revenue’s ministerial

and discretionary power. – Meralco Securities v. Savellano, 117 SCRA 804.

Discuss the nature of the police power exercised by the CIR. -- Vera v. Cuevas,
90 SCRA 379.

Nature of the CIR’s power to interpret tax laws – Asia International v. Parayno,
G.R. No. 163445, Dec. 18, 2007.

Issue of whether an administrative issuance relating to excise taxes was valid;

it must be compliant with the 1997 Tax Code; -- CIR v. Fortune Tobacco, 559
SCRA 160.

Authority of the CIR to sign rulings granting and/or confirming tax incentives,
tax exemptions, and tax treaty relief through the ruling process is now
delegated to the Deputy Commissioner of the Legal and Inspection Group and
to the Assistant Commissioner of the Legal Service Group. All rulings of first
impressions, however, shall be signed by the CIR. The CIR is also empowered
motu propio to reverse, modify, or alter any such ruling issued by the Deputy
Commissioner or the Assistant Commissioner, subject to the rule on non-
retroactivity of the application of Rulings. – Revenue Memorandum Circular No.
37-07 (RMC 37-07)

RULE-MAKING AUTHORITY OF THE SECRETARY OF FINANCE (SoF)

 a. SoF has the power to reverse, revise or modify rulings issued by the CIR
that are adverse to the taxpayers.
b. SoF, upon recommendation of the CIR, shall promulgate all necessary
rules and regulations.

Guidelines on the exercise of the power of the SoF to review the rulings issued
by the CIR. – Department of Finance Order No. 07-02 (DOF Order No. 07-02)

In case a taxpayer’s appeal to the SoF is denied, a taxpayer may file a Petition
for Review with the Court of Tax Appeals. --- Philamlife v. Department of
Finance and Commissioner of Internal Revenue, 741 SCRA 578.

THE COMMISSIONER OF INTERNAL REVENUE’S POWER TO DECIDE TAX

CASES include:

a. Disputed assessments
b. Refunds of internal revenue taxes, fees, and other charges;
c. Penalties imposed
d. Other matters arising under the 1997 Tax Code, as amended.

DECISIONS OF THE CIR ARE SUBJECT TO THE EXCLUSIVE APPELLATE

JURISDICTION OF THE COURT OF TAX APPEALS ---An Act Creating the Court
of Tax Appeals, Republic Act No. 1125, Sec. 7, which was later amended by
Republic Act No. 3457, Republic Act No. 9282, and Republic Act No. 9503.

"Sec. 7. Jurisdiction. - The CTA shall exercise:

"a. Exclusive appellate jurisdiction to review by appeal, as herein provided:

"1. Decisions of the Commissioner of Internal Revenue in cases involving

disputed assessments, refunds of internal revenue taxes, fees or other
charges, penalties in relation thereto, or other matters arising under the
National Internal Revenue or other laws administered by the Bureau of
Internal Revenue;

"2. Inaction by the Commissioner of Internal Revenue in cases involving

disputed assessments, refunds of internal revenue taxes, fees or other
charges, penalties in relations thereto, or other matters arising under the
National Internal Revenue Code or other laws administered by the Bureau of
Internal Revenue, where the National Internal Revenue Code provides a
specific period of action, in which case the inaction shall be deemed a denial;
 "3. Decisions, orders or resolutions of the Regional Trial Courts in local tax
cases originally decided or resolved by them in the exercise of their original
or appellate jurisdiction;

"4. Decisions of the Commissioner of Customs in cases involving liability for

customs duties, fees or other money charges, seizure, detention or release of
property affected, fines, forfeitures or other penalties in relation thereto, or
other matters arising under the Customs Law or other laws administered by
the Bureau of Customs;

"5. Decisions of the Central Board of Assessment Appeals in the exercise of

its appellate jurisdiction over cases involving the assessment and taxation of
real property originally decided by the provincial or city board of assessment
appeals;

"6. Decisions of the Secretary of Finance on customs cases elevated to him

automatically for review from decisions of the Commissioner of Customs
which are adverse to the Government under Section 2315 of the Tariff and
Customs Code;

"7. Decisions of the Secretary of Trade and Industry, in the case of

nonagricultural product, commodity or article, and the Secretary of Agriculture
in the case of agricultural product, commodity or article, involving dumping
and countervailing duties under Section 301 and 302, respectively, of the
Tariff and Customs Code, and safeguard measures under Republic Act No.
8800, where either party may appeal the decision to impose or not to impose
said duties.

"b. Jurisdiction over cases involving criminal offenses as herein provided:

"1. Exclusive original jurisdiction over all criminal offenses arising from
violations of the National Internal Revenue Code or Tariff and Customs Code
and other laws administered by the Bureau of Internal Revenue or the
Bureau of Customs: Provided, however, That offenses or felonies mentioned
in this paragraph where the principal amount o taxes and fees, exclusive of
charges and penalties, claimed is less than One million pesos
(P1,000,000.00) or where there is no specified amount claimed shall be tried
by the regular Courts and the jurisdiction of the CTA shall be appellate. Any
provision of law or the Rules of Court to the contrary notwithstanding, the
criminal action and the corresponding civil action for the recovery of civil
liability for taxes and penalties shall at all times be simultaneously instituted
with, and jointly determined in the same proceeding by the CTA, the filing of
the criminal action being deemed to necessarily carry with it the filing of the
civil action, and no right to reserve the filling of such civil action separately
from the criminal action will be recognized.

"2. Exclusive appellate jurisdiction in criminal offenses:

"a. Over appeals from the judgments, resolutions or orders of the

Regional Trial Courts in tax cases originally decided by them, in their
respected territorial jurisdiction.
 "b. Over petitions for review of the judgments, resolutions or orders of
the Regional Trial Courts in the exercise of their appellate jurisdiction
over tax cases originally decided by the Metropolitan Trial Courts,
Municipal Trial Courts and Municipal Circuit Trial Courts in their
respective jurisdiction.

"c. Jurisdiction over tax collection cases as herein provided:

"1. Exclusive original jurisdiction in tax collection cases

involving final and executory assessments for taxes, fees,
charges and penalties: Provided, however, That collection
cases where the principal amount of taxes and fees,
exclusive of charges and penalties, claimed is less than One
million pesos (P1,000,000.00) shall be tried by the proper
Municipal Trial Court, Metropolitan Trial Court and Regional
Trial Court.

"2. Exclusive appellate jurisdiction in tax collection cases:

"a. Over appeals from the judgments, resolutions or

orders of the Regional Trial Courts in tax collection
cases originally decided by them, in their respective
territorial jurisdiction.

"b. Over petitions for review of the judgments,

resolutions or orders of the Regional Trial Courts in
the Exercise of their appellate jurisdiction over tax
collection cases originally decided by the Metropolitan
Trial Courts, Municipal Trial Courts and Municipal
Circuit Trial Courts, in their respective jurisdiction."

DECISIONS OF THE CTA en banc are directly appealable to the Supreme

Court.

Sections 18 & 19 of Republic Act No. 1125 were later amended by TRAIN as follows:

"SEC. 18. Appeal to the Court of Tax Appeals En Banc. - No civil proceeding involving matter
arising under the National Internal Revenue Code, the Tariff and Customs Code or the Local
Government Code shall be maintained, except as herein provided, until and unless an
appeal has been previously filed with the CTA and disposed of in accordance with the
provisions of this Act.

"A party adversely affected by a resolution of a Division of the CTA on a motion for
reconsideration or new trial, may file a petition for review with the CTA en banc."

"SEC. 19. Review by Certiorari. - A party adversely affected by a decision or ruling of the
CTA en banc may file with the Supreme Court a verified petition for review on certiorari
pursuant to Rule 45 of the 1997 Rules of Civil Procedure." (Republic Act No. 9282)
CASE WHICH HELD THAT THE CTA HAS NO JURISDICTION TO HEAR A CITY ASSESSOR’S
APPEAL. – Ursal v. Court of Tax Appeals, 101 Phil. 209.

CASE WHICH HELD THAT THE CTA HAS JURISDICTION TO REVIEW THE DECISION OF THE
COMMISSIONER OF INTERNAL REVENUE ON PROTESTS AGAINST ASSESSMENTS, BUT
NOT TO REVIEW THE ASSESSMENT ITSELF. - Commissioner v. Villa, 22 SCRA 3, at p. 6.

RECITATION
FOR ALL

Department of Finance Order No. 007-02

Philamlife v. Department of Finance, 741 SCRA 578
Amendments of TRAIN to Sec. 5(B), NIRC
Revenue Memorandum Order No. 10-2013 (RMO 10-2013)
Sec. 6(F)(I) – (3), NIRC
Revenue Memorandum Order 37-07 (RMO 37-07)

Group A

Meralco Securities v. Savellano, 117 SCRA 804

Sy Po v. Court of Tax Appeals, 164 SCRA 524, 526-527
Arches v. Bellosillo, 20 SCRA 34;
Republic v. Hizon, 320 SCRA 574, 577

Group B

Vera v. Cuevaz,
Capitol Steel v. PHIVIDEC, 510 SCRA 590
Commissioner v. Villa, 22 SCRA 3, at p. 6.
Banco de Oro v. Republic, 745 SCRA 361, 370-371 (MR pending before SC)

Group C

Medina v. CIR, 110 Phil. 912, at 916.

Ursal v. Court of Tax Appeals, 101 Phil. 209
Asia International v. Parayno, G.R. No. 163445, Dec. 18, 2007.
City of Manila v. Grecia-Cuerdo, 715 SCRA 182