Page 1 of 3
TAX year 2009, this time from the National
REMEDIES
1. Mr. Abraham Eugenio, a pawnshop
operator, after having been requested
by the Revenue District Officer to pay
value added tax pursuant to a RMO
of the CIR, filed with the RTC an
action questioning the validity of the
RMO. Is you were the judge, will you
dismiss the case?
Yes. An RMO is in reality a ruling or an
opinion issued by the Comissioner in
implementing the provisions of the Tax
Code dealing with the taxability of
pawnshops. The power to review rulings
issued by the Commissioner is lodged
with the CTA and not with the RTC. A
ruling falls within the purview of “other
matters arising under the Tax Code,”
applicable only to the CTA (CIR vs
Leal).
2. In 2010, pursuant to a Letter of
Authority (LA) issued by the Regional
Director, Mr. Abcede was assessed
deficiency income taxes by the BIR
for the year 2009. He paid the
deficiency. In 2011, Mr. Abcede
received another LA for the same
Investigation Division, on the ground
that Mr. Abcede’s 2009 return was
fraudulent. Mr. Abcede contested the
LA on the ground that he can only be
investigated once in a taxable year.
Decide.
The contention of Mr. Abcede is not
tenable. While the general rule is to the
effect that for income tax purposes, a
taxpayer must be subject to examination
and inspection by internal revenue
officers only once in a taxable year, this
will not apply if there is fraud,
irregularity or mistakes as determined
by the Commissioner. In the instant
case, what triggered the second
examination are the findings by the BIR
that Mr. Abcede’s 2009 return was
fraudulent. Accordingly, the
examination is legally justified. (Sec.
235, NIRC)
3. “A” Co., a Philippine corporation, is a
big manufacturer of consumer goods
and has several suppliers of raw
materials. The BIR suspects that
some of the suppliers are not properly
reporting their income on the sales to
“A” Co. The CIR therefore:
a. Issued an access letter to a “A” Co.
to furnish the BIR information on
sales and payments to its suppliers.
b. Issued access letter to a bank (“X”
Bank) to furnish the BIR on
deposits of some suppliers of “A”
Co. on the alleged ground that the
suppliers are committing tax
evasion.
“A” Co., “X” Bank and the suppliers have
not been issued by the BIR letter of
authority to examine. “A” Co. and “X”
Bank believe that the BIR is on a “fishing
expedition” and come to you for counsel.
What is your advice?
I will advise “A” Co. and “X” Bank that the
BIR is justified only in getting information
from the former but not from the latter. The
BIR is authorized to obtain information from
other persons than those whose internal
revenue tax liability is subject to audit or
investigation. However, this power shall not be
construed as granting the Commissioner the
authority to inquire into bank deposits (Sec. 5,
NIRC)
4. Can the Commissioner of Internal
Revenue inquire into the bank

deposits of a taxpayer? If so, does this
power of the Commissioner conflict
with RA 1405, Secrecy of Bank
Deposits Law?
The CIR is authorized to inquire into the bank
deposits of:
(1) A decedent to determine his gross
estate;
(2) Any taxpayer who has filed an
application for compromise of his tax
liability by means of financial
incapacity to pay his tax liability (Sec.
6[f], NIRC)
The limited power of the Commissioner does
not conflict with RA 1405 because the
provisions of the Tax Code granting this
power is an exception to the Secrecy of Bank
Deposits Law as embodied in a later
legislation.
Furthermore, in case a taxpayer applies for an
application to compromise the payment of his
tax liabilities on his claim that his financial
position demonstrated a clear inability to pay
the tax assessed, his application shall not be
considered unless and until he waives in
writing his privilege under RA 1405, and such
waiver shall constitute the authority of the
Commissioner to inquire into the bank
deposits of the taxpayer.
5. X dies in year 2000 leaving a bank
deposit of P 2 million under joint
account with his associates in a law
firm. Learning of X’s death from the
newspapers, the Commissioner wrote
to every bank in the country asking
them to disclose to him the amount of
deposits that might be outstanding in
his name or jointly with others at the
date of his death. May the bank
holding the deposit refuse to comply
on the ground of Secrecy of Bank
Deposit Law? Explain.
No. The Commissioner has the authority to
inquire into bank deposit accounts of a
decedent to determine his gross estate
notwithstanding the provisions of the Bank
Secrecy Law. Hence, the banks holding the
deposits in question may not refuse to disclose
the amount of deposits on the grounds of
secrecy of bank deposits. The fact that the
deposit is a joint account will not preclude the
Commissioner from inquiring thereon because
the law mandates that is a bank has knowledge
of the death of a person, who maintained a
bank deposit account alone or jointly with
another, it shall not allow any withdrawal from
Page 2 of 3
the said deposit account, unless the
Commissioner has certified that the taxes
imposed thereon have been paid (Sec. 97
NIRC). Hence, to be able to give the required
certification, the inclusion of the deposit is
imperative.
6. A taxpayer is suspected not to have
declared his correct gross income in
his return filed for 1997. The
examiner requested the
Commissioner to authorize him to
inquire into the bank deposits of the
taxpayer so that he could proceed
with the net worth method of
investigation to establish fraud.
May the examiner be allowed to look
into the taxpayer’s bank deposits? In
what cases may the Commissioner or
his duly authorized representative be
allowed to inquire or look into the
bank deposits of a taxpayer?
No, as this would be violative of RA 1405, the
Bank Deposits Secrecy Law.
The Commissioner or his duly authorized
representatives may be allowed to inquire or
look into the bank deposits of a taxpayer in the
following cases:
 Page 3 of 3

A) For the purpose of determining the gross

estate of a decedent;

B) Where the taxpayer has filed an

application for compromise of his tax
liability by reason of financial
incapacity to pay such tax liability;

C) Where the taxpayer has signed a waiver

authorizing the Commissioner or his
duly authorized representatives to
inquire into the bank deposits.