NATIONAL TAXATION

1. TAXING AUTHORITY

JURISDICTION OF THE CIR

1. power to interpret the provisions of tax laws subject to the review by the SOF
- comes in the form of revenue issuances
-issuance of rulings- official position of the BIR on inquiries of taxpayers, who
request clarification on certain proviosions of the NIRC, or other tax laws
- ruling of first impression - non-delegable powers of the CIR
2. power to decide disputed assessments, refunds of internal revenue taxes, fees,
or other charges, penalties imposed in relation thereto, or other matters arisng
under the tax laws or portions thereof- subject to the exclusive appellate
jurisdiction of the CTA

Revenue Regulation v. Administrative ruling

Issuing body
RR- issued by the Sec of Finance, upon recommendation by the CIR
AR- issued by the Comm.IR (if ruling of first impression), or his subordinates (if
the ruling is not in the nature of a ruling of first impression.)

Nature
RR- implementing rule of tax laws
AR- official position of the commissioner concerning tax applications

Scope
RR- applicable to all taxpaters
AR- applicable only to taxpater who requested the ruling, except when the ruling is
in the nature of a general interpretative ruling

Effect
RR- binding upon courts for being a subordinate legislation
AR- not binding, but has great weight

Kinds of Administrative Issuances

1. legislative rule- subordinate legislation, designed to implement a primary
legislation by providing the details thereof
2. interpretative rule- designed to provide guidelines to the law which the admin
agency is enforcing.

Non-retroactivity of rulings- any revocation, modifications or reversals of any

rules and regulations including the rulings shall not be given retroactive effect
if it will be prejudicial to the taxpayer exc.
a/ taxpayer deliberately misstates or omits material facts from his return or any
doc required 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

- when a taxpayer disagrees with a ruling of the CIR or his duly authorized rep.
the taxpayer may within 30 days from date of ruling may seek its review by the SOF
- request shall be in writing and under oath

Decide D-R-O-P CASES

1. disputed assessment
2. refund
3. other matters
4. penalties imposed under the NIRC

-reviewable by the CTA

OTHER POWER OF THE CIR
1.Power of Commissioner to obtain info, and to summon, examine, and take testimony
of persons

-letter of authority- authority given to the appropriate revenue officer assigned

to perform assessment functions. It empowers or enables said revenue officer to
examine the books of account and other accounting records of a taxpayer for the
purpose of collectinf the correct amount of tax.
-LOA can include more than 1 taxable year.- TAXABLE YEARS COVERED MUST BE
CATEGORICALLY INDICATED IN THE LOA
-necessary for a valid FAN

- 3rd party verification rule- CIR would obtain information with other individuals
transacting with the taxpayer or other govt agencies
-power to inquire into bank deposits- applicable when
1. determine net estate
2. apply for compromise d/t inability to pay-waiver
3. request of a foreign tax authority made pursuant to a tax treaty where the Ph.
is a signatory
4. summon persons and take testimonies

2. Power of the commissioner to make assessments and prescribe additional

requirements for tax administration and enforcement
-best evidence obtainable rule- must be based on the best evidence the CIR can
obtain in the performance of its functions
-inventory taking, surveillance and to prescribe presumptive gross sales and
receipts- if the taxpayer did not issue official reciepts or if the CIR has a
reasonable belioef that the taxpayer did not indicate correct amount of gross
sales/receipts
-terminate taxable period
a. taxpayer hides any of its properties in the PH
b. taxpayer intends to leave the PH
c. taxpayer retires from its business
d. taxpayer removes any of his properties in the ph
e. taxpayer obstructs collection proceedings

Doctrine of willful of blindness- deliberate avoidance of a knowledge of a crime,

especially by failing to make a reasonable inquiry about a suspected wrongdoing
despite being aware that it is highly probable

-Prescribe Real Property Values(zonal valuation)

- mandatory consulatation with competent appraisers both from private and public
sectors
- with prior notice to affected taxpayers
-automatic adjustment once every three years
- adjustment must be published in a newspaper of general circulation and posted in
the provincial capitol, city, or minicipal hall and two other conspicuois public
places
- basis of any valuation, including the records of consultations done, shall be
public records open to the inquiry of any taxpayer

3. Power to delegate
exc.RICA
1. power to reccomend the issuance of Rev. Reg
2. power to issue rulings of first impression- includes revoke, modify or reverse
rulings.
3. power of the CIR to compromise or abate
4. power to assign and reassign rev officers detailed in establishment subject to
excise tax.- shall work in an establishment for a period of 2 years

COMPROMISE-
a resonable doubt as to the validty of the claim against the taxpayer exists - 40%
of the taxed assessed minimum rate
b. the fnancl\ial position of the taxpayer demonstrates a clear inability to pay
the assessed tax - 10% basic tax due minimum rate

-where the basic tax >1M pesos or where the settlement offered is less than the
prescribed minimum rates, the compromise shall be subject to the of the Evaluation
Board.
exc.
a. assessment was issued by the Regional office of the BIR
b. amount involved a basice deficiency tax of P500,000 or less, or those involving
minor criminal violations;
c. same was discovered by the regional and district officials
-Regional Evaluation Board may act on the application for compromise

- all taxe cases may be subj for compromise as long as sufficient grounds exist
except
1. those involving fraud
2. crim violation of the NIRC that are already filed in courts

Tax cases that cannot be compromised

1. withholding tax cases
2. criminal tax fraud cases
3. criminal violations already filed in court
4. delinquent accts with the duly approbed schedule of installment payments.

-not reviewable by the CA, if there is gadalej CTA may correct such abuse

ABATEMENT
1. tax or any portion thereof appears to be unjustly or excessively assessed; or
2. the administration and collection costs involved do not justify the collection
of the amount due

RULE MAKING POWER OF SOF

The SOF is granted the authority to promulgate the necessary rules and regulations
for the effective enforcement of the proviosion of the law. Such rules and
regulations, as well as admin opinions and rulings, ordinarily deserve to be given
weight and respect by the courts. Such authority, however is subject to the
limitation that the rules and regulations must not override, but must remain
consistent and in harmony with, the law they seek to apply and implement. Admin
agency vcannot amend an act of Congress