4th Meeting

JURISDICTION

 What are the tax cases that can be compromised?

o As a general rule, the CIR does not have criminal jurisdiction over tax cases. Hence, the
CIR should endorse it to the Department of Justice (DOJ) and the DOJ will conduct a
preliminary investigation. Thereafter, the Fiscal will file the complaint over the taxpayer
if he reasonably believes that there is a violation of the tax code.

XPN: the CIR may act on a criminal liability of the taxpayer if

1. the case is still pending in his office;

2. the case has not been endorsed yet to the DOJ for preliminary investigation; and
3. the taxpayer is willing to pay the compromise penalty in lieu of criminal prosecution

In other words, the CIR may act on the criminal liability of the taxpayer if the case is still
pending in the administrative level.

What if the case was already forward to the DOJ or in the fiscal’s office? Is
compromise agreement still possible? - Yes, compromise agreement is still possible
provided that:

1. the taxpayer gets the consent of the fiscal;

2. no information yet is filed in the proper court; and
3. the issue does not involve fraud.

 When does the CIR cannot act upon the compromise agreement? In other words, what are the
restrictions/limitations on the power of the CIR on the compromise agreement of the
taxpayer?
o Civil Liability
 No compromise agreement in civil liability of the taxpayer when:
 The issue involves fraud
 The tax case has been decided by a competent court with finality.
o Criminal liability
 No compromise agreement when:
 The case is forwarded in the fiscal’s office; and
 The issue involves fraud.

INQUIRY OF THE CIR OF THE BANK DEPOSIT OF THE TAXPAYER

 Question: May the CIR look into the bank deposit of the taxpayer during a tax investigation
case?
o GR: the CIR cannot look into the bank deposit of the taxpayer during a tax investigation
case.
o XPN:
  When the taxpayer consented to it or made a waiver of his/her right
 When the issue involves an estate tax (deposits of the decedent)
 When the taxpayer submits a compromise agreement/proposal using the 10%
minimum compromise tax rate.
 Question: May the CIR freeze a bank deposit?
o Yes.
o What is the legal basis: Doctrine of Constructive Distraint, to protect the advance
interest of the government.