BIR Ruling [DA-163-97]

April 14, 1997 BIR RULING [DA-163-97] Philippine Coconut Authority Elliptical Road Diliman, Quezon City Attention: Mr . Virgilio M . David Administrator Gentlemen : This refers to your 1st Indorsement dated October 10, 1996 wherein you referred to this Office the request of the Misamis Oriental Association of Coco Traders, Inc. (MOACT) for the condonation of the VAT liabilities of its members and requesting also if copra traders can be exempted from VAT on copra. At the outset, we wish to inform you that the liability to VAT of copra traders who are not the primary producers or owners of the land from which the same are produced has already been decided by the Supreme Court in the case of Misamis Oriental Association of Coco Traders, Inc. vs. Department of Finance, et. al., G.R. No. 108524 promulgated on November 10, 1994 wherein the High Court upheld the legality of Revenue Memorandum Circular No. 47-91 which implemented VAT Ruling No. 190-90. In CA G.R. SP No. 34559 entitled "JOEBON Marketing Corporation and the Court of Tax Appeals" promulgated on November 25, 1995, the Court of Appeals reversed and set aside an earlier decision of the Court of Tax Appeals in CTA Case No. 500 and upheld the deficiency VAT assessment issued to JOEBON Marketing Corporation. Similarly, the Court of Tax Appeals in CTA Case No. 5208 entitled "Eliezer Y. Lim vs. CIR" promulgated on November 18, 1995 also upheld the deficiency VAT assessment issued to petitioner Eliezer Lim, basing its decision in the Misamis Oriental Coco Traders case. Both cases (Joebon and Eliezer Lim) however, are on appeal and the possibility that the Supreme Court will reverse itself is unlikely. Hence, your question as to whether or not copra traders can be exempted from the payment of deficiency VAT liabilities during the previous years is answered in the negative. This Office may however, consider the request of MOACT to enter into compromise settlement of the respective VAT liabilities of its members provided that the acceptable offer is 100% of the total basic tax assessed, but the corresponding surcharge, interest and penalties arising from late payment of taxes are hereby condoned, pursuant to Section 204 of the Tax Code, as amended. Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue