Republic Philippines
HOUSE OF REPRESENTATIVES.
Quezon ‘Cy

FIFTEENTH CONGRESS
First Regular Session

HOUSE BILT. No.4695

Jotroduced by HON. RENE LOPEZ RELAMPAGOS
i. |, Bohel

EXeLANATORY NOTE

One of the remedies of tre Philippine Government for collection of delinquent taxes is
the institution of civil and/or criminai sctions with the approva: of the Commissioner of Intecnal
Re 2 Republic Act No. 8424 jing the Nationai Intemal Revenue Code
[NIRC)). ‘The remecy of criminal action is resorted to ao! only for collection of iaxes bv: also
for enforcement of steiutory penalties of all sorts. (Sec, 221, NIRC)

The author of this bill is aware of the follo\
in the Hous» of Representatives:

d by his distinguished colleagues

1) ouse Biti No. 294, sponsor
for the Bureau of I:temal Revenue (BI
cases and by dise:s..ageng referral of th

to che Department of Justice. In th. manner, the
people from the BIR, «me + o« the field, would solely handle tax caves 19 the
exclusion of others. Aside trom haste»in yrosecution of cases, it will encourage th 3IR itself
to broaden and expand depaament and previde th n relation
thereto. In bis Explar tory More, Rep. Suaccr is of the belief that despite the passage of
Republic Act No. 92's, which expanded the jurisdiction of the Covit of ‘Tax sppeals ead
mandated that civil ava criminal actives ied cases sisall be heard by the Court of

Appeals (CA), there have beer. impedimenis ir. “ce resolution of tax cases, These inapedients
have proved io be siumbiing blocks in the BIR’s effort to collect taxes by effectiveiy prosecuting
various tax-related cases, One such impediment pertains ‘o the time-honored practize cf the BIR
to refer to the Depertmen: of Justice (DOJ>, thro iv riou.. collection assessi
before the courts, This is quite understandable considering the limited in ahe legal
department of the BIR who will hoadle tax-relatec cases. This set-up, however. hus become a
breeding grcand for -»:aption a: concemed taxpayers wouid ium out conniving with the
prosecutors 2f the US. .o delay resolutio. 2" cases or in some instances, decide in the:

2) House ©)" Nv, 2692, also spons ‘red ty Rep. Suarez, seeks to address the impediments
in the resolution of tax cases filed by is.+ye:s of the BIR. It is not disputed that the current
procedure in filing tax cases suffers sro~ several problems which contribute it the delay of
resolving svch eases. Wh'e iu that the sroblem cannot 2e solved ovecaight, this
proposed me sure addresses o*~ specific prow!2n: which is the removal of an additional layer in
filing tax cases with the Court ©: 12x Appeals. In its Explanatory Note, Rep. Suaie:: claims that
one of the major stumbling blocks i+. our I system is the delay in the resolution of tax
cases. ‘This issue not oaly delays bringing tc ‘rstice known tax evaders, but iso adversely



affects the collection efforts of the government's main revenue generating agency ~ the BIR. For
every day a tax case remains unresolved, it costs the government millions of pesos, all of which
rightfully belong to our nation’s coffers. Data from the BIR show that as of 2009, a total of si
hundred seventy eight (678) refund and assessment cases are pending with the Court of Tax
Appeals and the DOJ. The totai amount due involved in refund cases amount to Php 26.43
billion, while the pending assessment cascs involve Php 77.15 billion. All in all, these cases
involve amounts reaching more than Php 100 billion, a very substantial amount that should
properly belong to the government. x x x The prosecution of tax cases can be best handled by
the tax lawyers themselves ~ those who have gathered, and have access to, sufficient evidence to
recover tax collection deficiencies. ‘The possibility of graft and corruption may also be reduced,
since the BIR lawyers, being attritable under the Attrition Act, would be motivated to recover
taxes which rightfully shouid be included in the tctal revenue coliection of the BIR. With this
bill, the BIR would be able to ‘ccus its resources in the litigation of tax cases invo!ving known
tax deficients and evaders to improve its collection. This bill, if approved, will shorten the
tedious process of filing tax cases. This would hasten the resolution of tax cases and therefore
improve the collection efforts of the BIR.

3) House Bill No. 1755, sponsored by Hon. Salvador H. Hscudero III, seeks (o mandate
the BIR to acquire and have exclusive jurisdiction over all tax-related cases, thereby doing away
with the participation of the DOS in the prosecution of said cases. In his Explanatory Note, he
maintains that the proposed measure is but apt considering the allegations of fraud in the
National Prosecution Service of the DOJ. Moreover, it hastens delineation of responsibilities in
the tax collection efforts of the governuient, making accountability solely in the hands of the
BIR. Lastly, it cerpl=ments Republic Act No. 9282 which expands the jurisdiction of the Court
of Appeals, by niandating all civil and cr:mnal actions in tax related cases cognizable by said
court.

4) House Bill No, 2868, sponsored by ion. Luis R. Villfuerte, also seeks to amend
Republic Act 8424 to enable, ev:nower and authorize unequivocally the legal office» of the BIR.
with the approval of the Commissioner of Internal Revenue, to exclusively investigate.
prosecute, file and handle all cases and issues related to tex and taxation. !1 also seeks to
simultaneously provide the Department of Finance (DOF) the power and right to review every
criminal complaint before proper cases are filed in the courts, in the Explonatory Note of this
bill, Rep. Villafuerte maintains the constitutional principle of exyeditious and timnety sesolution
of justifiable cases being always been one of the primary aspirations of any judicial sysiem. The
Government must endeavor to continuously seck avenues 1 further empower judicial entities
and quasi-judicial agencies with the end in view of providing the same with the necessary
legislative, budgetary and logisticai suppo-t to énsure that the conduct of judicial actions are not
delayed nor denied to anyone. Corolta: “y, the BIR has been mandated to be the lead agency in
the collection o} fe enaciments have been approved by previous Congresses of
the Philippines i functions that have been deemed essential for the
justiciable operations of t= BIR. Republic Act No. 8424, otherwise known as the “ax Reform
‘Act of 1997” stipulates that zivil and crim.nal actions and proceedings executed on behalf of the
Government of the Philippines in matters relating te saxes and taxation shali be conducted by the
legal officers of the BIR. Ir spite of the statutory directive of the said law, it has become
customary procedure to refer cases to the DOJ for the determination of probable cause and the
commencement of the appropriate legal actions. This is due to the lack of budgetary allocations
that provide for additional manpower ond logisiical support and the absence of a clear-cut
enabling provision of the law which vests exclusive jurisdiction of the BIR in the invesugation,
prosecution and menagement of tax-related cases, without need of referring such cases to the
DOJ before they are filed at the appropriate courts. Efforts by the BIR to pursue its mandate in



the collection of taxes by actively pursuing tax evaders and other tax-related cases have been
unceasingly hindered and troubled by ‘the “present processes currently operating in our
prosecution system. The practice of referring cases to the DOJ has allegedly given rise to
opportunities in the past to corrupt practices, Scheming taxpayers purportedly connive with
prosecutors of the DOJ to circumvent the law by delaying the resolution of cases pending before
them, or by favoring said taxpayers in their decisions. In order to avoid such accusations, this
bill has been presented for enactment as a remedial legislation. x x x With the end in view of
climinating alleged avenues for collusion and corruption and eradicate bureaucratic red tape, and
providing the appropriate agency of government the necessary assistance and support to further
improve on the delivery of its services and the performance of its obligations, the immediate
passage of this bill is earnestly requested.

5) House Bill No. 3113, sponsored by Hon. Giorgidi B. Aggabao, asserts that under the
obtaining set-up, exclusive jurisdiction is vested with the DOJ to conduct preliminary
investigation over all criminal cases arising from violations of the National Internal Revenue
Code and other laws administered by the BIR. Tax laws are indubitably difficult and complex,
requiring specialized knowledge, skills and experience. Without in any way diminishing the
competence of DOF prosecutors, devol xg the conduct of preliminary investigation with the
BIR and their prosecution of tax cases before the courts would ensure that cases for the
government are handled by those eminently qualified. Moreover, the DOJ is laboring under
obvious strain from all sort of cases referred te it for preliminary investigations. Shifting then the
burden and responsibility of conducting preliminary investigations for tax cases away from the
DOJ will definitely expedite the resolution of tax cases. This way, the skullduggery and
underhand dealings attendant in the interminable wait for resolutions would be eliminated. This
Dill seeks to alter and modify this set-up, by granting exclusive authority to the BIR firs', to
investigate cases involving violations of the NIRC and related laws; secerd, to conduct
preliminary investigations: third, to file the necessary complaint or information in court where
the evidence warrants; and finally, to prosecute them.

This representation fully agrees to the following reasonsiobservations advanced by the
distinguished sponsors, namely:

1) There may have been impediments in the resolution of tax cases which might be
stumbling blocks to the BIR’s effort to collect taxes effectively and prosecuting various tax-
related cases. These issues not only delays bringing to justice known tax evaders, but also
adversely affects the collection efforts of the BIR, the government's main reveaue generating
agency.

2) The Government must endeaver to continuously seek avenues to further empower
judicial entities and quasi-judicial agencies with the end in view of providing the same with the
necessary legislative, budgetary and logistical support to ensure that the conduct of judicial
actions are not delayed nor denied to anyone. ,

3) ‘Tax laws are indubitably difficult and complex, requiring specialized know'edge,
skills and experience.

While there might be some allegations or perceptions that the present set-up of the BIR
referring to the DOS through its prosecutors various tax-related cases has become a breeding
ground for corruption as concerned taxpayers would turn out conniving with the prosecutors of
the DOJ to delay resofution of case: oz in some cases or instances decide in their favor, such
allegations or perceptions of fraud, gra® and corruption on the part of the DO! prosecutors -



which is also true on the part of the BIR people — cannot be avoided. However, if there will be
synergy. ie. combined action and/or operation between the BIR lawyers and the DOJ
prosecutors specializing in handling tax-related cases and working together in handling these
cases with the legal officers of the BIR as co-counsel, and these tax-related cases may not be
dismissed singly or jointly by a DOS prosecutor and legal officer of the BIR without prior written
authority or approval of the BIR Commissioner in addition to the safeguard that the Department
of Finance has the power to review every crimina! complaint in tax-related cases before it is filed
in court , then these allegations and perceptions will be minimized.

This representation strongly believes that there must be joint and focused efforts on the
part of the BIR and DOJ in the handling and prosecuting of tax-related cases so that the
perceived stumbling blocks in the BIR’s effort to collect taxes will be effectively addressed.
Also. this representation is of the view that while the people from the BIR may be armed with
expertise in the field of taxation, making it mandatory for the BIR to take exclusive jurisdiction
in handling tax-related cases will not hasten the prosecution of tax-related cases because the
DO], before filing the necessary information in court with respect to the complaints filed by the
BIR, will still investigate, conduct preliminary investigation, and determine whether there is
probable cause against concerned taxpayer. Moreover, this representation believes that the DOJ
prosecutors, with their experience and training, have more investigative and litigation skills and
expertise in handling criminal cases.

Hence, this representation proposes that ALL the tax-related cases shall be referred by the
BIR to a specialized unit or office - with expertise in handling these cases - under the National
Prosecution Service of the DOJ with the legal officers of the BIR as co-counsel, for investigation
and prosecution, if warranted, under Section 220, Chapter I, Title VIII of Republic Act No.
8424. In other words. said tax-related cases must now be handied exclusively by prosecutors
with expert'se in handling these cases and lawyers of the BIR Legal Department, as co-counsel

This representation fully believes that the DOJ prosecutors and lawyers of the BIR, working
together, and handling tax-related cases exclusively, will hasten the resolution and disposition of
tax-related cases and thus improve the collection efforts of the BIR.

In view of the foregoing, the expeditious passage of this bill is earnestly sought.

¢

RENE LOPEZ RELAMPAGOS


Republic of the Philippines
HOUSE OF RE? RESENTATIVES
Quezon City

FIFTEENTH CONGRESS
First Regular Session

HOUSE BILL No. 469 5

Introduced by HON, RENE LOPEZ RELAMPAGOS
1* District, Bohol

AN ACT
AMENDING SECTION 220. CHAPTER IL, TITLE VIILOF
REPUBLIC ACT NO. 8424, OTHERWISE KNOWN AS THE “TAX REFORM
ACT OF 1997”, AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives in Congress assembled:

SE
known as the “Tax Reform Act of 1997,

[ON 1. - Section 220, Chapter II, Title VIII of Republic Act No. 8424, otherwise
is hereby amended to read as follows:

“Sec. 220. Form and Mode of Proceeding in Actions
Arising under this Code. — Civil and criminal actions and
proceedings instituted in behalf of the Government under the
authority of this Code or other law enforced by the Bureau of
Internal Revenue shall be brought in the name of the Government
of the Philippines and chall be conducted, INVESTIGATED,
PROSECUTED AND HANDLED EXCLUSIVELY BY THE
PROSECUTORS OF THE DEPARTMENT OF JUSTICE
AND by legal officers of the Bureau of Internal Revenue AS CO-
COUNSEL but no civil or criminal action for the recovery of
taxes or the enforcement of any fine, penalty or forfeiture under
this Code shal! be filed in Court without the approval of the
Commissioner. FOR THIS PURPC E
BUREAU OF INTERNAL RE’ © SHALL BE
ALLOWED IN CONNECTION WITH A CIVIL OR
CRIMINAL ACTION TO AN OFFICE OR UNIT WITH
EXPERTISE IN HANDLING TAX-RELATED CASES
UNDER THE NA’ SECUTION SERVICES OF
THE DEPARTME! PROVIDED THAT THE
BUREAU OF INTERNAL
BE CO-COUNSEL IN THIS CIVIL OR
CRIMINAL ACTION. THE PROSECUTORS WITH

<PERTIS! THE HANDLING OF TAX-RELATED
ONAL PROSECUTION SERVICES



AND THE LEGAL OFFICYRS OF THE BUREAU OF
INTERNAL REVENUE LLL HAVE EXCLUSIV
AUTHORITY TO FILE ANY CIVIL OR CRIMINAL CAs
DIRECTLY WiTH THE PROPER COURT OR THE
DEPARTMENT OF JUSTICE, AS THE CASE MAY BE,
FOR THE RECOVERY OF TAXES OR ENFORCEMENT
OF ANY FINE, PENALTY OR FORFEITURE UNDER THIS
CODE: PROVIDED THAT, NO COMPLAINT OR
INFORMATION MAY BE FILED OR DISMIS'

EN AUTHORITY OR APPROVAL OF
THE BUREAU OF IN NAL
NUE:  PROVID®D, FINALLY, THA TE
DEPARTMENT OF FINANCE SHALL HAVE THE POWER
TO REVIEW EVERY CRIMINAL COMPLAINT BEFORE
JT IS FILED IN COURT.

THE

SECTION 2. Repealing Clause. - All laws, decrees. orders, issuances, circulars, rules
and regulations or parts thereof, which are inconsistent with the provisions of this Act are
repealed or modified accordingly.

SECTION 3. Separability Clause. — If any provision of this Act is declared
unconstitutional or invalid, other parts or provisions not affected thereby shall continue in. full
force and effect.

SECTION 4. Effect
its publication in at least two (2

— This Act shall take effect after fifteen (15) days following
tional newspapers of general circulation.

Approved,