BIR Ruling

April 24, 1970 Mr. Clemente F. Rodriguez Chairman, NASSCO Pre-Qualification and Bidding Committee National Shipyards & Steel Corporation Manila S i r : This refers to your letter dated April 20, 1970 requesting information regarding your compliance with the requirements of Administrative Order No. 66, series of 1967, the third paragraph of which states as follows: "Government offices, entities and instrumentalities and local governments shall impose this condition and shall require, in addition the latest certified copy of BIR Letter of Confirmation Form No. 19.65-E-1 and BIR Tax Clearance Form No. 17.61 as pre-requisites to participation in any public bidding or execution of any contract with them. Violation of this Order shall be a ground for administrative action". cdt You stated in your letter that almost all of the prospective bidders could not comply with the above rigid requirement of submitting a BIR Letter of Confirmation. However, some bidders managed to submit a certification from BIR Offices stating that no letter of confirmation could be issued as yet for the reason that no investigation of the taxpayers tax liability has been conducted or that said investigation has not yet been terminated. Hence, you now request information whether said certification would constitute substantial compliance with the above requirements of Administrative Order No. 66. The foregoing requirements regarding the presentation of the BIR Letter of Confirmation is clear and leaves no room for interpretation. It should be noted, however, that said letter of Confirmation is issued by the Bureau of Internal Revenue to a taxpayer only when the examination of his books of accounts by a BIR examiner for internal revenue purpose, pursuant to a Letter of Authority issued by the Regional Director or the Commissioner of Internal Revenue, has already been terminated. It contains, among others, a statement that the investigation for a specified period has been terminated and the corresponding report of the investigating examiner has been submitted to the Office which issued the Letter of Authority. It also contains a statement that the findings as reported are subject to review and final approval by the proper officials of the Bureau and final decision thereon will be communicated to the taxpayer. Such being the case, the bidders referred to in your letter cannot really be expected to comply with the requirement regarding submission of a BIR Letter of Confirmation, if they have not yet been investigated for internal revenue tax purposes, or that the investigation has not yet been terminated. Under such circumstances, it is believed that the certificate adverted to above may be accepted in lieu of the BIR Letter of Confirmation. acd However, it appears that Administrative Order No. 66 seeks to implement a government policy to award its contracts only to solvent or law-abiding taxpayers and to disqualify taxpayers with pending cases before the Bureau of Internal Revenue from participating in public bidding or in any kind of contract with the Government until the termination of their cases. It is believed that these purposes cannot be achieved by the requirement of a BIR Letter of Confirmation, since this letter merely certifies that a taxpayer has already been investigation for tax purpose and does not even definitely establish that a taxpayer has a pending tax liability as a result of the investigation. It is the BIR Tax Clearance certifying that a taxpayer has no pending tax case which is actually needed in achieving the purposes for which Administrative Order No. 66 was promulgated. Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue