Flashcards Studio

Zenith Components, Inc., a domestic corporation subject to corporate income tax, is under BIR audit. The BIR issues a Letter of Authority naming Atty. Lila Navarro as Zenith's authorized representative for all tax years 2024–2026, authorizing her to file returns, respond to inquiries, and receive notices on Zenith's behalf. The LOA is signed by Zenith's Treasurer and attested by the Corporate Secretary, but Zenith's by-laws require the approval of the Board of Directors for any delegation of representation in tax matters; no board resolution authorizing this delegation exists. The BIR proceeds with the audit and issues a deficiency assessment addressed to Zenith Components, Inc. and to Atty. Navarro as recipient. Zenith contends the LOA is invalid; the BIR maintains the LOA is valid. (a) Identify the controlling doctrine governing representation before the BIR and the effect of a valid Power of Attorney on the BIR's jurisdiction to audit, assess, and collect. (b) Distinguish actual authority, apparent authority, and agency by estoppel as they relate to representation before the BIR, and indicate which applies to the facts. (c) Apply to the facts: if the LOA is invalid for lack of proper corporate authorization, what remedies, if any, does Zenith have, and how is the deficiency assessment affected? Is the BIR's action binding on Zenith and third parties?