AMENDING SECTION 16 OF THE NATIONAL INTERNAL REVENUE CODE BY AUTHORIZING THE COMMISSIONER OF INTERNAL REVENUE UNDER CERTAIN CONDITIONS TO PLACE NATURAL OR JURIDICAL PERSONS UNDER SURVEILLANCE FOR TWO MONTHS FOR THE PURPOSE OF ESTABLISHING A PRIMA FACIE BASIS FOR ASSESSING TAXES FOR THE OTHER MONTHS OF THE SAME OR DIFFERENT TAXABLE YEARS.

• Number: Presidential Decree No. 1356
• Sections: 4

Preamble

WHEREAS, the Bureau of Internal Revenue has conducted

surveillance of certain business enterprises for a period of one to two months

to determine their true and correct income and/or receipts;

WHEREAS, the findings indicate rampant and flagrant

nondeclarations and underdeclarations resulting in substantial loss of

revenue;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the

Philippines, by virtue of the powers in me vested by the Constitution, do hereby

decree:

Section 1

SECTION 1. Section 16 of the National Internal Revenue Code,

as amended, is hereby further amended to read as follows:

"SEC. 16. Power of Commissioner of Internal Revenue to

make assessments.—When a report required by law as a basis for the

assessment of any national internal revenue tax shall not be forthcoming within

the time fixed by law or regulation, or when there is reason to believe that any

such report is false, incomplete, or erroneous, the Commissioner of Internal

Revenue shall assess the proper tax on the best evidence obtainable.

"The Commissioner of Internal Revenue may place the business operations of

any person, natural or juridical, under observation or surveillance for a period

of two months to be determined under regulations to be proscribed by the

Secretary of Finance if there are reasons to believe that such person is not

declaring his correct income and receipts for internal revenue tax purposes. The

findings for this period may be used as a basis for assessing the taxes for the

other months of the same or different taxable years and such assessment shall be

considered prima facie correct.

"When it shall come to the knowledge of the Commissioner of Internal Revenue

that a taxpayer is retiring from the business subject to taxation, or intends to

leave the Philippines, or remove his property therefrom, or hide or conceal his

property, or perform any act tending to obstruct the proceedings for collecting

the tax for the past or current quarter or year, or render the same totally or

partly ineffective unless such proceedings are begun immediately, the

Commissioner of Internal Revenue shall declare the tax period of such taxpayer

terminated at any time and shall send the taxpayer a notice of such decision,

together with a request for the immediate payment of the tax for the tax period

so declared terminated and the tax for the preceding year or quarter, or such

portion thereof as may be unpaid, and said taxes shall be due and payable

immediately and shall be subject to all the penalties hereafter prescribed,

unless paid within the time fixed in the request of the Commissioner of Internal

Revenue."

Section 2

SEC. 2. The Secretary of Finance, upon recommendation of the

Commissioner of Internal Revenue, shall promulgate rules and regulations to

implement the provisions of this Decree.

Section 3

SEC. 3. This Decree shall take effect upon its approval.

DONE in the City of Manila, this 21st day of April, in the year of Our Lord,

nineteen hundred and seventy-eight.

(Sgd.) FERDINAND E. MARCOS

President of the

Philippines

By the President:

(Sgd.) JACOBO C. CLAVE

Presidential Executive

Assistant