BIR Ruling [DA-330-03]

June 10, 2003 BIR RULING [DA-330-03] Ernesto Q. Hiansen OIC, Deputy Executive Director One-Stop Shop Inter-Agency Tax Credit & Duty Drawback Center Roxas Boulevard Corner Vito Cruz Street M a n i l a S i r : This has reference to your letter dated June 4, 2002 seeking the opinion of this Office relative to the request for replacement of Tax Credit Certificates (TCC) allegedly filed after the 5-year revalidation period set by law. The tax credit certificates involved were all issued by the One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center (CENTER) to the following taxpayers: Taxpayer TCC No. Amount TCC Date 1. Babcock-Hitachi 005649 P3,345,290.95 02/01/95 (Phils.), Inc. 2. Fuji Cotton Mills 007804 134,854.10 08/23/96 Inc. 007805 105,007.77 08/23/96 007806 169,762.12 08/23/96 007807 53,787.90 08/23/96 007667 224,019.36 05/14/96 3. Center 008079 75,146.52 01/22/97 Commodities Inc. 4. Clark Prasser 005971 50,192.24 09/22/95 Golf Corp. 005970 58,325.00 09/22/95 005969 61,418.02 09/22/95 005968 77,705.28 09/22/95 After a careful scrutiny of the attached documents, this Office believes that only TCCs issued to Babcock-Hitachi (Phils.), Inc. (BHI), Fuji Cotton Mills, Inc. (FCMI) and Center Commodities, Inc. (CCI) may be replaced or be issued with a new ones even after the five (5) year revalidation period set by law. As borne out by the records of the case, the three (3) mentioned taxpayers requested for cash conversion of their issued TCCs as early as 1996 and 1997. For reasons unknown to the taxpayers, no action was made on these requests. Incidentally, the TCCs were at the custody of the Bureau of Internal Revenue. For this reason, the TCCs were not revalidated not because of their own fault but due to the negligence of the BIR office in charge of processing their request for conversion of said TCCs to cash. To mention, the TCCs of FCMI and CCI were returned to them after the prescribed 5-year period for revalidation. In the case of BHI, its TCC was allegedly lost while in the custody of the Bureau. These surrounding circumstances would justify our position that the request of Babcock-Hitachi, Fuji Cotton Mills, Inc. and Center Commodities, Inc. for replacement of their unutilized TCCs should be given due course. However, the request for replacement of the TCCs issued to Clark Prasser Golf Corp. should not be granted. The existing BIR regulations that prescribes the manner of the issuance of Tax Credit Certificates (TCC), and the conditions for their use, revalidation and transfer is Revenue Regulations No. 5-2000. Section 5(a) and (c) of Revenue Regulations 5-2000 provides: SECTION 5. PERIOD OF VALIDITY, CONVERSION AND REVALIDATION. a. Validity Period. Any Tax Credit Certificate issued in accordance with the pertinent provision of the Tax Code of 1997 which remains unutilized after five (5) years from date of issue shall, unless revalidated before the end of the fifth year , be considered invalid and shall not be allowed for use in payment of any of the taxpayer's internal revenue tax liability nor allowed to be transferred and the unutilized amount thereof shall revert to the General Fund of the National Government. The revalidated TCC shall be valid for a period of five years from the date of issue. b) . . . c) Revalidation Period. In general, a TCC may be revalidated prior to the expiration of its validity period. Provided, however, that any TCC issued prior to January 1, 1998 in which the grantee's holding period therefor as of said date is less than five (5) years counted from date of issue, may be submitted for revalidation by the holder within six (6) months prior to the end of the fifth year. . . It is clear from the aforequoted BIR regulations that TCCs issued under the pertinent provisions of the Tax Code may be used as payment of any internal revenue tax, except withholding tax, within five (5) years from date of issue. After which, the same may no longer be utilized except if it (TCC) has been revalidated within six (6) months prior to the expiration of the five year period. ITECSH Records show that the TCCs of CPGC were all issued on September 22, 1995 which has not been utilized. Based on this representation, said TCCs has a useful life until September 21, 2000. Considering that CPGC filed for revalidation on April 3, 2002 only or after the end of the fifth year, this Office believes that the foregoing TCCs are no longer eligible for revalidation in accordance with Section 5(c) of Revenue Regulations 5-2000. Finally, it must be emphasized that TCCs issued by the CENTER shall only be revalidated by the CENTER and not by the BIR. Very truly yours, (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group