Power of the Commissioner to Interpret Tax Laws and to Decide Tax Cases

Section 4

The power to interpret the provisions of this Code and other tax laws shall be under the exclusive and
original jurisdiction of the Commissioner, subject to review by the Secretary of Finance.

The power to decide disputed assessments, refunds of internal revenue taxes, fees or other charges,
penalties imposed in relation thereto, or other matters arising under this Code or other laws or
portions thereof administered by the Bureau of Internal Revenue is vested in the Commissioner,
subject to the exclusive appellate jurisdiction of the Court of Tax Appeals.

The authority to make laws and to alter or repeal them is conferred on the Legislative Department. The
implementation of laws is charged to the Executive Department. The power to interpret laws, to hear
and decide cases when disputes arise, lies with the Judiciary

As part of the Executive Department, the Bureau of Internal Revenue (BIR) is vested with powers to
assess and collect taxes. The Tax Code authorizes the Commissioner of Internal Revenue
(“Commissioner”) to interpret tax laws, subject to review by the Secretary of Finance. Government
agencies like the BIR also have the power of subordinate legislation to aid in the implementation of tax
laws. In exercising these functions, the Commissioner recommends the promulgation of Revenue
Regulations (RRs) and issues tax rulings and other revenue issuances such as Revenue Memorandum
Circulars (RMCs), Revenue Memorandum Orders (RMOs), Revenue Audit Memorandum Orders (RAMOs)
and Revenue Memorandum Rulings (RMRs), among others.

These issuances have different purposes and functions according to the BIR. RRs are issued by the
Secretary of Finance, upon the recommendation of the Commissioner. They prescribe or define rules
and regulations for the effective enforcement of the provisions of the Tax Code and related statutes. Tax
rulings on the other hand, are official positions of the BIR on inquiries of taxpayers who request
clarification on certain provisions of the Tax Code, other tax laws, or their implementing regulations,
usually to seek tax exemptions. RMCs contain pertinent and applicable portions, as well as amplification
of laws, rules, regulations and precedents issued by the BIR and other agencies/offices. RMOs provide
directives or instructions, prescribe guidelines and outline processes, operations, activities, workflows,
methods and procedures necessary in the implementation of stated policies, objectives, plans and
programs of the BIR in all areas of operations, except audit. Lastly, RMRs are rulings, opinions and
interpretations of the Commissioner with respect to the provisions of the Tax Code and other tax laws,
as applied to a specific set of facts, with or without established precedents, and which the Commissioner
may issue from time to time to inform taxpayers of the tax consequences on specific situations.

On the BIR’s power of subordinate legislation, the Supreme Court (SC) has explained that although the
power to legislate is non-delegable and belongs exclusively to Congress, such authority may be
delegated to implement laws and effectuate policies whenever Congress finds it impracticable, if not
impossible, to anticipate situations that may be met in carrying the law into effect. It is required,
however, that the regulations be germane to the objects and purposes of the law, and conform to the
prescribed standards of the law. Although courts usually accord these regulations with great respect,
such interpretation is not conclusive and will be ignored if judicially found to be erroneous.

Power of the Commissioner TO OBTAIN INFORMATION, AND TO SUMMON, EXAMINE, AND TAKE
TESTIMONY OF PERSON

In ascertaining the correctness of any return, or in making a return when none has been made, or in
determining the liability of any person for any internal revenue tax, or in collecting any such liability, or
in evaluating tax compliance, the Commissioner is authorized:

Section 5

 Section five

A. To examine any book, paper, record, or other data which may be relevant or material to such
inquiry

 Section five

B. To obtain on a regular basis from any person other than the person whose internal revenue tax
liability is subject to audit or investigation, or from any office or officer of the national and local
governments, government agencies and instrumentalities, including the Bangko Sentral ng
Pilipinas and government-owned or -controlled corporations, any information such as, but not
limited to:

 costs and volume of production

 receipts or sales and gross incomes of taxpayers

 names, addresses, and financial statements of corporations, mutual fund companies, insurance
companies, regional operating headquarters of multinational companies, joint accounts,
associations, joint ventures of consortia and registered partnerships, and their members;

C. To summon the person liable for tax or required to file a return, or any officer or employee of
such person, or any person having 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 any other person, to appear before the Commissioner or his duly authorized representative
at a time and place specified in the summons and to produce such books, papers, records, or
other data, and to give testimony;

D. To take such testimony of the person concerned, under oath, as may be relevant or material to
such inquiry; and
E. To cause revenue officers and employees to make a canvass from time to time of any revenue
district or region and inquire after and concerning all persons therein who may be liable to pay
any internal revenue tax, and all persons owning or having the care, management or possession
of any object with respect to which a tax is imposed.