Philippine Normal University

June 1, 2007 BIR RULING [DA-322-07] GPPB 2-2005; RR 3-2005; DA-004-2006; DA-613-2006 Philippine Normal University Taft Avenue, Manila Attention: Ms. Susan D. Declaro Vice-President for Administration, Finance and Development Chair, Bids and Awards Committee Gentlemen : This refers to your letter dated May 23, 2007 requesting for opinion on whether the mere registration with EFPS and the corresponding manual filing and payment of tax return and the filing of tax return through EFPS without confirmation of payment may be considered as substantial compliance with GPPB 02-2005 Revenue Regulations (RR) No. 3-2005. It is represented that the Philippine Normal University (PNU) is currently conducting public bidding for the janitorial services and some contractual services; that pursuant to GPPB 2-2005 and RR 3-2005, prospective bidders are required to submit their returns filed through EFPS; and that in the process, PNU encountered certain issues, as follows: (1) some bidders are already registered with BIR for the EFPS but unable to file due to some difficulties in accessing the system; (2) one bidder had already filed and paid its income tax manually for 2007 prior to the bidding but subsequently filed another return through EFPS which was given a Reference Number but instead presented the Official Receipt obtained in manual filing as proof of payment. In reply, please be informed that Section 1 of E.O. 398 requires that all persons, natural or juridical, whether local or foreign, who desire to enter into or participate in any contract with the government, its departments, bureaus, offices and agencies, including state universities and colleges, government-owned and/or controlled corporations, government financial institutions and local government units, shall, as a pre-condition, submit along with their proposal and/or bid, a copy of their latest income and business tax returns duly stamped and received by the Bureau of Internal Revenue (BIR), and duly validated with the tax payment made thereon. In implementing this provision of E.O. 398, Section 4.1 of Revenue Regulations (RR) No. 3-2005 specifically mandates all prospective participants to any government procurement of goods and services to file their income and business tax returns and other required information electronically using the EFPS. Notwithstanding the provisions of RR No. 3-2005 providing for the mandatory EFPS filing of income and business tax returns, this Office believes that there is substantial compliance with EO 398 in cases where the taxpayer/participant/bidder submits manually filed tax returns when the following conditions are met: First, the taxpayer/participant/bidder should present his non-EFPS tax returns and payments to the appropriate Revenue District Office; second, the taxpayer/participant/bidder should secure the approval of the Head of the Agency in submitting manually filed tax returns; and third, the taxpayer/participant/bidder should enroll in the EFPS and submit the EFPS enrolment form along with his non-EFPS tax returns. Considering further that RR 3-2005 does not address the situation where a bidder is a new registrant under the EFPS and consequently, will not be able to comply with the requirement under Sec. 4.2.1 in relation to Sec. 3.3 of the same RR which provides that only EFPS returns for the last six months of operations may be accepted as required submission under Sec. 1 of EO 398, we recognize that to disqualify new EFPS registrants (less than six months) who simply cannot submit EFPS returns (but have manual returns to prove previous tax payments) would be detrimental to the government since the number of bidders may be unduly limited. Thus, in case the bidder has just registered under the EFPS (less than 6 months prior to the time of bidding), then necessarily non-EFPS or manual returns may be submitted as proof of timely and complete payment of VAT/Percentage Tax for the months prior to the EFPS registration. If the bidder has already been registered under the EFPS for six months or more, prior to the time of the bidding, then only EFPS returns may be submitted and accepted. ESAHca Lastly, the Bidding Committee should adopt/incorporate the above rule in the bid documents after due deliberation and resolution. Please be guided accordingly. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service