SEPTEMBER 2023

BONA FIDE
OFFICIAL NEWSLETTER OF THE LEGAL GROUP
Bureau of Internal Revenue

Bona Fide is Latin for "good faith" it

signifies honesty, the "real thing".

Through this Newsletter, our goal is

to provide you with facts, law, and
jurisprudence so we can all do our
mandate in good faith.

For the second semester of 2023, our

slogan is;

LEGAL GROUP:
CREATING A CULTURE
OF INNOVATION
Your Legal Group is here to serve
beyond expectations, help the Bureau
reach better heights, and create a
culture of innovation with digital
transformation in the forefront.

What's Inside?

Procedural Defects
that Endanger the What’s Up with DIVING INTO THE NEW
Validity of EMMAC? SALN JURISPRUDENCE
Assessments
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SEPTEMBER 2023 | VOLUME 9

Procedural Defects that

Endanger the Validity of
Assessments
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SEPTEMBER 2023 | VOLUME 9

Procedural Defects that Endanger the Validity of Assessments

“Taxes are the lifeblood of the nation” – so it has been said, and
repeated, in a long line of cases. This doctrine has been cut deep and
ingrained into us, revenuers, that it has almost become our deus ex
machina, and not without a compelling reason.

As the agency tasked with the immense burden of collecting over 75%
of the total revenues of the government, the Bureau tackles its day-to-
day grind with the marching order to assess and collect internal
revenue taxes.

In performing its mandate, the Bureau is accorded the presumption

that its tax assessments are correct and made in good faith – and it is
the duty of the taxpayer to prove otherwise. Nevertheless, despite the
two-pronged defense of the lifeblood doctrine and presumption of
correctness , deficiency tax assessments are not immune to being
invalidated by the Court of Tax Appeals and the Supreme Court.

While cancellations of assessments on the ground of substantial issues

might make a dent in the collection target, cancellations based on
procedural grounds make more damage as the entirety of the
deficiency tax assessments are cancelled – inclusive of all tax types –
regardless of whether they are substantially valid or not.
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SEPTEMBER 2023 | VOLUME 9

Even more disconcerting, the procedural issues that cause the

cancellation of the deficiency tax assessments are non-compliances
with the set of parameters set by Bureau itself. In recent jurisprudence,
the Supreme Court and the Court of Tax Appeals have invalidated
deficiency tax assessments due to the following procedural defects:
Issuance of an assessment pursuant to a Letter Notice (LN), but without
the issuance of a Letter of Authority (LOA): Medicard Philippines, Inc. vs.
Commissioner of Internal Revenue, G.R. No. 222743, April 5, 2017

Reassignment of an audit examination to a different Revenue Officer

without the issuance of a new LOA: Commissioner of Internal Revenue vs.
McDonald’s Philippines Realty Corp., G.R. No. 242670, May 10, 2021

Issuance of assessment without a Notice of Informal Conference (NIC):

Pilipinas Shell Petroleum Corporation vs. Commissioner of Internal
Revenue, G.R. No. 172598, December 21, 2007; Commissioner of Internal
Revenue vs. IBM Plaza Condominium, Inc., Court of Tax Appeals En Banc
Case No. 2229, October 14, 2022 (Note: Assessments issued between
November 28, 2013 to January 21, 2018 do not require the issuance of NIC.

Personal service of notices to a security guard who is not an employee of

the taxpayer: Commissioner of Internal Revenue vs. Mannasoft
Technology Corporation, Court of Tax Appeals En Banc Case No. 1637, June
19, 2018 (Note: Service to security guard through registered mail is valid
pursuant to Land Bank of the Philippines vs. Heirs of Fernando Alsua, et.al.,
G.R. No. 167361, April 2, 2007)

Service of assessment notices through registered mail evidenced only

by registry receipts/return card with unidentifiable signature, when
denied by the taxpayer: Commissioner of Internal Revenue vs. T Shuttle
Services, Inc., G.R. 240729, August 24, 2020 (Note: When receipt of notices
is challenged by the taxpayer, the burden to prove service is shifted to the
Bureau, and registry receipt or registry return card is found insufficient to
prove actual receipt when the names therein are unidentifiable,
considering that under Revenue Memorandum Order (RMO) No. 40-2019,
the Chief of Assessment Division is required to maintain a record of all
assessments, including the name and designation of the person who
received the assessment)

Issuance of Final Assessment Notice before the lapse of the 15-day

period to file a reply to the Preliminary Assessment Notice: Prime Steel
Mill, Incorporated vs. Commissioner of Internal Revenue, G.R. No. 249153,
September 12, 2022; Commissioner of Internal Revenue vs. Yumex
Philippines Corporation, G.R. No. 222476, May 5, 2021
 BONA FIDE
SEPTEMBER 2023 | VOLUME 9

Aside from the above-listed procedural issues already decided by the

Courts, other common lapses can be seen in the assessment, which,
though not yet passed upon judicially, are likewise non-compliances
with the Bureau’s own set of rules, hence, also endanger the validity of
assessments, viz:
Non-sending of confirmation letters to third-party information
providers, contrary to the requirements of RMO No. 30-2003 and Revenue
Memorandum Circular (RMC) No. 46-04.

Non-revalidation of unserved LOA within 30 days from issuance and

non-revalidation of LOA after 120 days from service thereof, contrary to
the requirements of Revenue Audit Memorandum Order No. 1-00 and
RMC No. 40-06 (Note: The Supreme Court, in the case of AFP General
Insurance Corporation vs. Commissioner of Internal Revenue, G.R. No.
222133, November 4, 2020, held the non-revalidated LOA only
unenforceable and not void, subject to estoppel on the side of the
taxpayer who still agrees to be audited)

Disallowance of purchases from Cannot Be Located (CBL) taxpayers,

without the said taxpayers having been duly published in the CBL list,
pursuant to RMC No. 098-10

Outright denial of a request for reinvestigation on the sole ground of

failure of the taxpayer to execute a Waiver of the Defense of
Prescription, contrary to RMC No. 141-2019 stating that the waiver is a
“voluntary undertaking”, contrasted with the remedy of filing a request for
reinvestigation, which is a due process right of the taxpayer that does not
require the execution of a waiver under Revenue Regulations No. 12-99, as
amended by RR No. 18-2013

At the end of the day, the lawyers of the Bureau will fight tooth and nail
to uphold the validity of the assessments. In this battle, assessments
and notices that are issued following our very own parameters are
such nice things. However, when we, ourselves, break them, the Courts
take them away.
 BONA FIDE
SEPTEMBER 2023 | VOLUME

What’s Up with EMMAC?

 BONA FIDE
SEPTEMBER 2023 | VOLUME 9

What’s Up with EMMAC?

The Enhanced Monitoring and Managing Administrative Cases
(EMMAC) is a Digital Transformation (DX) Program of Internal Affairs
Service (IAS) that was recalibrated from the Monitoring and Managing
Administrative Cases (MMAC) which had its Bureau-wide Rollout on
June 30, 2022. Said DX Program aims to ensure the speedy disposition
of administrative cases and efficacy of offices handling the same as it
authorizes, allows, capacitates and enables the management in real
time to monitor the status update or progress of cases; manage the
workloads of case officers; reduce docket decongestion and case
disposition delay; take appropriate action to avoid recurrence of similar
problem; and establishment of centralized case repository.

Led by Atty. Daniel T. De Jesus, Assistant Commissioner, IAS, and

EMMAC Project Advisor, the Project Management Team per Revenue
Special Order (RSO) No. 817-2022, conducted their User Acceptance
Testing (UAT) on August 3-4, 2023, 8:00 AM-5:00 PM at Room 1, National
Training Center, BIR National Office.

It was attended by Thirty-Seven (37) EMMAC access users from the

Internal Investigation Division, Personnel Adjudication Division, and
Prosecution Division in the National Office, and the Regional
Investigation Division and Legal Division of Revenue Region Nos. 6
Manila and 7A Quezon City. Representatives from the Security
Development Division facilitated the UAT by explaining the new
features of EMMAC, and by allowing the access users to test the
enhancements, and to log issues in the discrepancy log matrix for
proper fixes. As there were issues gathered, a Re-UAT has been
scheduled on September 8 and 11, 2023 to be attended by the same
participants.

If no issue will be found, the Project Management Team is set to

conduct an EMMAC Functional Training, Pilot Rollout for the access
users who completed the series of UAT, and eventually a Bureau-wide
Rollout.
 BONA FIDE
SEPTEMBER 2023 | VOLUME

DIVING INTO THE NEW

SALN JURISPRUDENCE
 BONA FIDE
SEPTEMBER 2023 | VOLUME 9

Jose Javier Carlos vs DOF-RIPS and Office of the

Ombudsman
G.R. No. 225774 dated April 18, 2023
In this case, the Supreme Court ruled that the petitioner cannot be
held liable for omissions or errors in his SALNs for the government's
failure to comply with the review and compliance procedure in
Section 10 of Republic Act No. 6713 or the Code of Conduct and
Ethical Standards for Public Officials and Employees, which provides:
SECTION 10. Review and Compliance Procedure. –
(a) The designated Committees of both Houses of the
Congress shall establish procedures for the review of
statements to determine whether said statements which
have been submitted on time, are complete, and are in
proper form. In the event a determination is made that a
statement is not so filed, the appropriate Committee shall
so inform the reporting individual and direct him to take
the necessary corrective action.

(b) In order to carry out their responsibilities under this Act,

the designated Committees of both Houses of Congress
shall have the power within their respective jurisdictions, to
render any opinion interpreting this Act, in writing, to
persons covered by this Act, subject in each instance to the
approval by affirmative vote of the majority of the particular
House concerned.

The individual to whom an opinion is rendered, and any

other individual involved in a similar factual situation, and
who, after issuance of the opinion acts in good faith in
accordance with it shall not be subject to any sanction
provided in this Act.

(c) The heads of other offices shall perform the duties stated
in subsections (a) and (b) hereof insofar as their respective
offices are concerned, subject to the approval of the
Secretary of Justice, in the case of the Executive
Department and the Chief Justice of the Supreme Court, in
the case of the Judicial Department.
 BONA FIDE
SEPTEMBER 2023 | VOLUME

How does this ruling apply to revenuers?

The Bureau adopts the provision on Review and Compliance

Committee (RCC) thru Revenue Memorandum Order No. 43-2018
dated August 6, 2018, Re: "Guidelines and Procedures in the Filing and
Submission of Statement of Assets, Liabilities and Net Worth (SALN)
and the Establishment of RCC per office and Establishment of Over-all
RCC of the BIR”, to wit:

All BIR officials and employees shall file and submit their SALNs to
their RCC not later than March 15 of every Fiscal Year.

All offices are required to create their respective RCC through a

Memorandum issued by their Head of Office. The RCC shall be
composed of:

Chairman - Section Chief or its equivalent Members

Members - Two (2) rank and file employees selected by their Head of
Office who shall jointly evaluate, review and validate to determine
whether SALN was submitted on time, duly accomplished and in
proper form

The RCC shall issue a Certification that the submitted SALNs were
reviewed and found to be compliant. If found not compliant, the RCC
shall immediately return the SALN to the concerned employee. The
employee is given three (3) days from receipt to comply and re-submit
to the RCC.

References:
G.R. No. 225774, Jessie Javier Carlos vs Department of Finance – Revenue Integrity Protection
Service (DOF-RIPS) and Office of the Ombudsman, April 18, 2023.
 BONA FIDE
SEPTEMBER 2023 | VOLUME

What is the purpose of complying with the review and

compliance procedure outlined in Section 10 of Republic Act
No. 6713?
Strict compliance with Section 10 of Republic Act No. 6713 precisely
allows the government to weed out simple, correctible errors from
actually deliberate, sinister attempts to conceal ill-gotten wealth.

What is the effect of non-compliance with the review and

compliance procedure?
The foregoing review and compliance mechanism is mandatory.
Without compliance with it, liability for failure to file, or for omissions
or errors in SALNs will not attach. The reporting individual cannot be
subjected to disciplinary action without being informed of their errors
or omissions, and also being afforded an opportunity to comply.

When will liability attach?

If, after being given an opportunity to correct, complete, and submit
SALNs, government employees fail to comply, then they may be held
liable for errors or omissions in, or non-submission of, their SALNs.

What is the penalty for failure to file SALN?

In recognition of the principle that transparency and accountability in
public office should be observed, the filing of SALN, using the format
prescribed by the Civil Service Commission is mandatory1.

Failure to file SALN in the required manner; failure to disclose

business interest and financial connection; and failure to disclose
relatives in the government shall be considered as Neglect of Duty
and shall constitute a Less Grave Offense with the following
penalties2:

1st Offense – Suspension (1 month and 1 day to 6 months)

2nd Offense – Dismissal

References:
G.R. No. 225774, Jessie Javier Carlos vs Department of Finance – Revenue Integrity Protection
Service (DOF-RIPS) and Office of the Ombudsman, April 18, 2023.
 BONA FIDE TEAM
CORE TEAM
Krizia Marie R. Lee
Julia Mae F. Oliveros
Maria Mikhaela Barcena
LEGAL GROUP:
POINT PERSONS
Gee Colleen Babalcon
CREATING A
CULTURE
Vina Vrenelli S. Dangwa
Christine Joy R. Sajol
Louriene Yuki Abueva

OF INNOVATION
Karen Baquiran
Althea Angela Garcia
Anne Garcia Marquez
Lara Nicole Gonzales
Maica Pineda
Grandeureign Ortizo
Marione Joaquin

CONTRIBUTORS
(SEPTEMBER 2023)
Maricel C. Casison-Dungca

DO YOU WANT TO BE FEATURED ON OUR NEXT ISSUE?

The Legal Group is an inclusive, gender-friendly, no judgement Functional Group.
We aim to create an environment of trust and confidence not just for our team but
for the Bureau as a whole.

With that, we are opening our pages to every revenuer. For our next issue, share your
thoughts on this topic:

In a range of 1 to 10, how is your mental health? Can you share why you gave
that rating?
What kind of support do you need from your supervisors that would aid your
mental health?

Of course, you may only send in your name, office, and your photo for the feature
using your official BIR email.

Submissions may be submitted to the following emails at: legal.group@bir.gov.ph

and krizia.marie.redondo@bir.gov.ph

Let us collaborate.
Let us innovate.
Let us continue to create.

Your Legal Group is here to help.