Statement of Functions of the Legal Service Including the Divisions Under it Down to Section Level

January 14, 1988 REVENUE ADMINISTRATIVE ORDER NO. 03-88 SUBJECT : Statement of Functions of the Legal Service Including the Divisions Under it Down to Section Level TO : All Internal Revenue Officers and Others Concerned I. Objective : This Order aims to define the organization and functions of the Legal Service in accordance with the goal and thrust underlying the reorganization of the Bureau pursuant to Executive Order 127. It highlights a new feature regarding the role of the Legal Service in the effective implementation of the Value-Added Tax System . cdt II. Organization : To attain this objective, the Legal Service shall be composed of the four (4) Divisions already existing, with a change in nomenclature of the "Law Division" to "Legislative, Ruling and Research Division". These Divisions with their respective Sections are: A. Legislative, Ruling and Research Division 1. Direct Taxes Section 2. Indirect Taxes Section B. Litigation Division 1. Direct Taxes Section 2. Indirect Taxes Section C. Prosecution Division 1. Direct Taxes Section 2. Indirect Taxes Section 3. VAT Section aisa dc D. Appellate Division 1. Direct Taxes Section 2. Indirect Taxes Section III. Functions : The Legal Service shall have the following functions: 1. Perform staff, advisory and consultative functions with respect to the interpretation of revenue laws and regulations and other legal matters as well as to formulate and prepare for the Commissioners approval, rulings on all legal questions and/or matters within the jurisdiction of the Bureau of Internal Revenue; 2. Formulate and recommend policies, guidelines, standards and procedures on activities pertaining to legal work including the interpretation of the provisions of the National Internal Revenue Code (NIRC), tax treaties and other laws related thereto; cdt 3. Conduct studies and researches on matters relative to tax cases under the jurisdiction of the Legal Service; 4. Prepare for the Commissioner's approval, all rulings and opinions on legal questions which are of first impression. In all cases involving questions of first impression which originate from the Regional Offices, the same shall be referred for final resolution by the Commissioner thru the Legal Service which shall have exclusive jurisdiction thereon; 5. Review all pleadings to be filed in the Fiscal's Office and the Courts as well as enforce and supervise the prosecution of civil and criminal cases involving taxation and erring revenue personnel; 6. Review administrative decisions on contested tax cases and claims for tax refund/credit, except refund of withholding tax on wages, corporate quarterly income taxes and excess payment of value-added tax; 7. Evaluate actions of field offices referred to it pertaining to legal questions for adherence to law, facts, policies, procedures and standards; aisa dc 8. Recommend tax legislations and regulations on the basis of its operations and experience which shall serve as input to the tax planning and research efforts of the Planning and Research Service; 9. Formulate policies for the Commissioner's decisions on protests against assessments; evaluate requests for reconsideration of such assessments and recommend the reinvestigation of contested or disputed cases to the proper department or office if the evidence/arguments adduced by the parties so warrant; 10. Act on offers of taxpayers to compromise their tax liabilities on the ground of financial inability to pay and/or doubtful legality of the assessment; 11. Direct and review the activities and actions taken by the divisions under this Office; and 12. Perform such other related functions as may be assigned to it. A. The Legislative, Ruling and Research Division shall have the following functions : acd 1) Develop and recommend policies, work programs, standards, guidelines and procedures for the conduct of legal operations in the bureau, including the interpretation of the provisions of the National Internal Revenue Code (NIRC), tax treaties and other laws related thereto; 2) Prepare and render decisions on purely questions of law raised, involving interpretation of the NIRC, protested tax cases, tax treaties and other laws related thereto; 3) Prepare digest on rulings and opinions for public dissemination on all legal questions arising from the enforcement of internal revenue laws, regulations and tax treaties; 4) Coordinate the uniform application of tax laws, regulations and court decisions; 5) Review rulings issued by the regional offices and rectify errors, if any, on legal questions which are of first impression; 6) Act on requests for tax exemption, informers' reward cases and other legal matters referred to it; 7) Recommend rules and regulations for the proper implementation of the provisions of the NIRC, tax treaties and other laws related thereto; 8) Perform such other related functions as may be assigned to it. A-1 Direct Taxes Section a) Prepare decisions on protested direct tax cases where issues raised are questions of law; b) Prepare rulings, opinions or comments and disseminate digests of these rulings; c) Prepare and recommend laws on direct taxes as well as their implementing orders, regulations, circulars and other issuances; d) Prepare rules, regulations and other issuances as well as rulings or opinions on tax laws relative to tax treaties and provisions of the NIRC affecting international taxpayers; e) Act on protested tax cases on issues arising from the application of tax treaties; f) Recommend amendments and implementing regulations on existing tax treaties to be forwarded to the International Tax Affairs Division; cdt g) Act on requests for tax exemption and informers' reward cases involving direct taxes; h) Review rulings on direct taxes issued by the Regional Offices; and i) Perform such other related functions as may be assigned to it. A-2 Indirect Taxes Section a) Prepare decisions on protested indirect tax cases where issues raised are questions of law; b) Prepare rulings, opinions or comments on matters involving indirect taxes and disseminate digests of these rulings; c) Prepare and recommend laws on indirect taxes as well as their implementing orders, regulations, circulars and other issuances; d) Prepare rules, regulations and other issuances as well as rulings or opinions on tax laws relative to tax treaties and provisions of the NIRC affecting international taxpayers; e) Act on requests for tax exemption and informers' reward cases involving indirect taxes; f) Review rulings on indirect taxes issued by the Regional Offices; and g) Perform such other related functions as may be assigned to it. B. The Litigation Division shall have the following functions: 1) Develop policies, plans, work programs, standards, guidelines and procedures relating to litigation work on civil liability under the National Internal Revenue Code (NIRC)and other related laws and regulations; 2) Implement said policies, plans, work programs and procedures relating to litigation work; 3) Represent the Commissioner of Internal Revenue in the Supreme Court, Court of Appeals, Regional Trial Courts and Court of Tax Appeals in the trial or hearing of internal revenue civil cases as well as cases filed against erring employees of the Bureau of Internal Revenue and tax informers in collaboration with the Solicitor General; aisa dc 4) Prepare pleadings, briefs and memoranda to be filed with the said courts in connection with the cases pending before them; 5) Assist the Solicitor General in the preparation of pleadings in civil cases filed by the government against delinquent taxpayers; 6) Assist in the coordination and supervision of the activities of the legal branches in the regions with respect to litigation work; and 7) Perform such other related functions as may be assigned to it. B-1 Direct Taxes Section a) Institute civil actions to effect collection of delinquent income, estate and donor's taxes; b) Act as government counsel in the trial of all civil actions and file pleadings necessary for the prosecution of said direct tax cases; c) Interview witnesses, evaluate evidence and confer with the Solicitor General in connection with these cases; cd d) Act administratively on income, estate and donor's tax cases referred to the Section which are similar to or may be affected by cases pending in court preparatory to the institution of civil action for collection; and e) Perform such other related functions as may be assigned to it. B-2 Indirect Taxes Section a) Institute civil actions to effect collection of delinquent business, excise, documentary stamps, mining and miscellaneous taxes such as bank taxes, insurance premiums, amusement taxes and other fees; b) Act as government counsel in the trial of all civil actions and file pleadings necessary for the prosecution of said indirect tax cases; c) Interview witnesses, evaluate evidence and confer with the Solicitor General in connection with these cases; d) Act administratively on cases involving said indirect taxes which are similar to or may be affected by cases pending in court preparatory to the institution of civil action for collection; and e) Perform such other related functions as may be assigned to it. C. The Prosecution Division shall have the following functions: 1) Develop policies, work programs, standards, guidelines and procedures relating to criminal prosecution of violations of the NIRC and related statutes as well as cases of erring revenue officials and employees recommended for criminal prosecution; 2) Study and take proper action on cases referred to it for criminal prosecution of persons violating internal revenue and other laws administered by the Bureau and on cases involving erring revenue personnel recommended for criminal prosecution; 3) Represent the Commissioner and assist the fiscals and other prosecuting officials in the prosecution of criminal cases involving violations of internal revenue and other laws and regulations administered by the Bureau; 4) Recommend deportation of alien taxpayers and make necessary representation as government counsel before the Deportation Board; cd i 5) File administrative complaints against erring professionals with the Professional Regulations Commission for disciplinary action insofar as violations of internal revenue and other tax laws are concerned; 6) Assist in the supervision and coordination of the activities of the different legal branches in the regions with respect to criminal prosecution work; and 7) Perform such other related functions as may be assigned to it. C-1 Direct Taxes Section a) Study and act appropriately on direct tax cases referred to the Division for criminal prosecution of persons violating internal revenue laws and other laws administered by the Bureau of Internal Revenue; b) Represent the Commissioner of Internal Revenue and assist the fiscals and other prosecuting officers in the prosecution of criminal cases involving tax evasion and/or violations of internal revenue laws and regulations on direct taxes and of administrative cases against professionals before the PRC; c) Coordinate with the other units of the Bureau and other government agencies for the successful prosecution of violators of internal revenue laws and regulations; and d) Perform such other related functions as may be assigned to it. C-2 Indirect Taxes Section a) Study and act appropriately on indirect tax cases referred for criminal prosecution of persons violating internal revenue laws and other laws administered by the Bureau of Internal Revenue; b) Represent the Commissioner of Internal Revenue and assist the fiscals and other prosecuting officers in the prosecution of criminal cases involving tax evasion and/or violation of internal revenue laws and regulations in indirect taxes and of administrative cases against professionals before the PRC; c) Coordinate with the other units of the Bureau and other government agencies for the successful prosecution of violators of internal revenue laws and regulations; and d) Perform such other related functions as may be assigned to it. C-3 VAT Section a) Study and act appropriately on value-added tax cases referred to the Division for criminal prosecution of persons violating internal revenue laws and other laws administered by the Bureau of Internal Revenue; b) Represent the Commissioner of Internal Revenue and assist the fiscals and other prosecuting officers in the prosecution of criminal cases involving tax evasion and/or violation of internal revenue laws and regulations on value-added tax and of administrative cases against professional before the Professional Regulation Commission; cd c) Coordinate with the other units of the Bureau and other government agencies for the successful prosecution of violators of internal revenue laws and regulations; and d) Perform such other related functions as may be assigned to it. D. The Appellate Division shall have the following functions: 1) Develop and implement policies, work programs, standards, guidelines and procedures relating to appellate work in the Bureau; 2) Set up procedures for administrative appeals on protested tax cases and claims for tax refund/credit, except refund of withholding tax on wages, corporate quarterly income taxes and value-added tax; cd 3) Process appeals of taxpayers on protested tax cases; 4) Process claims for tax refund and credit involving erroneous or illegal payments of direct and indirect taxes whenever there are questions of law; 5) Refer to the appropriate audit division, claims for tax refund and credit which are immediately filed by the taxpayers with the Appellate Division prior to normal audit of the return; 6) Coordinate with the Tax Credit/Refund Division for the verification and investigation of facts and documents of claims for tax credit and refund of direct taxes; and 7) Perform such other related functions as may be assigned to it. cd i D-1 Direct Taxes Section a) Act on appeals and protests of taxpayers regarding assessments on direct taxes and conduct hearings on the appealed cases to arrive at a correct assessment of tax liabilities; b) Process claims for tax refund or credit involving erroneous or illegal payments of direct taxes only when there are questions of law; c) Review action taken by other units on all claims for tax refund/credit of direct taxes, except refund of withholding taxes and corporate quarterly income taxes; d) Coordinate with the Tax Credit/Refund Division claims for tax credit and refund of direct taxes for verification of facts and documents; and e) Perform such other related functions as may be assigned to it. D-2 Indirect Taxes Section a) Act on appeals and protests of taxpayers regarding assessments on indirect taxes and conduct hearings on these appealed cases to arrive at a correct assessment of tax liabilities; b) Process claims for tax refund or credit involving erroneous or illegal payments of indirect taxes only when there are questions of law; and c) Perform such other related functions as may be assigned to it. IV. Repealing Clause : This Order supersedes the provisions of Revenue Administrative Order Nos. 11-86 dated September 16, 1986, 3-82 dated March 29, 1982, and 2-80 dated October 2, 1980 insofar as it pertains to the abovementioned functions and all revenue issuances or portions thereof inconsistent with the provisions of this Order. V. Effectivity : This Order shall take effect immediately. cdt BIENVENIDO A. TAN, JR. Commissioner