5. Authority of Congress, Secretary of Finance, and Commissioner of Internal Revenue (CIR)

Non-Retroactivity of Rulings

General Rule: Any revocation, modification or reversal of (1) rules and regulations promulgated in accordance with the NIRC, or (2) any rulings or circulars promulgated by the CIR shall not be given retroactive application if the revocation, modification, or reversal is prejudicial to the taxpayers. (NIRC, Sec. 246)¹

Exceptions:

• Where the taxpayer deliberately misstates or omits material facts from his return or any document required of him by the BIR;
• Where the facts subsequently gathered by the BIR are materially different from the facts on which the ruling is based; or
• Where the taxpayer acted in bad faith

Rules and regulations promulgated by the Secretary of Finance upon the CIR’s recommendation, and rulings and circulars issued by the CIR, generally may not be revoked, modified, or reversed retroactively to taxpayers’ prejudice, subject to the exceptions in NIRC Section 246. (NIRC, Sections 244 and 246; CIR v. Court of Appeals, G.R. No. 117982, 6 February 1997)² Judicial nullification of a ruling, circular, or rules and regulations does not automatically erase the effects of prior good-faith reliance on it; whether reliance is protected depends on the issuance and the circumstances. (Philippine Bank of Communications v. CIR, G.R. No. 112024, 17 January 2000; CIR v. San Roque Power Corporation, G.R. No. 187485, 8 October 2013)³

A general interpretative rule issued by the CIR may be relied upon by taxpayers from the time the rule is issued up to its reversal by the Commissioner or this Court. (CIR v. San Roque Power Corporation, G.R. No. 187485, 8 October 2013)⁴

Government Remedies for Collection of Delinquent Taxes

• Requisites
• Prescriptive Periods