BIR Ruling [DA-385-98]

August 24, 1998 BIR RULING [DA-385-98] Romulo, Mabanta, Buenaventura Sayoc & Delos Angeles 30th Floor, Citibank Tower Citibank Plaza, 8741 Paseo de Roxas Makati City Attention: Attys . Edmundo P . Guevara Jayson L . Fernandez Manuel Alberto R . Colayco III Gentlemen : This refers to your letter dated May 19, 1998 requesting on behalf of your client, New Zealand Creamery, Inc. (New Zealand), for condonation of the surcharge, interest and compromise penalties for its alleged failure to pay its value-added tax liability for the month of June 1993 and its corporate income tax liability for the second quarter ending June 30, 1993. LLpr It is represented that on July 20, 1993, New Zealand issued Philippine Commercial International Bank (PCIB) Check No. 419023494B, crossed and for deposit to the order of the Commissioner of Internal Revenue for the amount of P572,218.00 in payment of its VAT liability for the month of June 1993; that the said check and the duly accomplished VAT return were delivered by New Zealand to the Makati Avenue Branch of the United Coconut Planters Bank (UCPB) as the duly accredited collecting bank of the BIR; that thereafter, on August 30, 1993, New Zealand issued PCIB Check No. 419023588 B which was also crossed and for deposit to the order of the Commissioner of Internal Revenue, for the sum of P992,948.00 in payment of its corporate income tax liability for the second quarter of 1993 which ended on June 30, 1993; that the said check and duly accomplished Quarterly Income Tax Return were also delivered to the same UCPB Branch for filing therein; that unfortunately, New Zealand subsequently learned that after its tax payments had been delivered to the Makati Avenue Branch of UCPB, members of the tax fraud syndicate intercepted and subsequently encashed the said checks; that on January 12, 1994, the Makati BIR Regional Office No. 8 issued a pre-assessment notice to New Zealand with respect to its value-added tax payment, that in addition to the value-added tax, New Zealand was also assessed the amounts of P143,054.50 as surcharge, P47,684.83 as interest and P25,000.00 as compromise penalty for late payment; that in order to protect itself, New Zealand commenced a civil action against PCIB, UCPB and PNB which was docketted as civil case No. 94-2167 and now pending before Branch 135 of the Regional Trial Court of Makati; that on April 4, 1997, the Chief of the Assessment Division of the Revenue Region No. 8, issued an assessment notice against New Zealand involving the said value-added tax liability, plus 25% surcharge in the amount of P143,054.50, compromise penalty for late payment in the amount of P25,000.00 and delinquency interest amounting to P527,635.07; that you have filed a protest with the Legal Division of Revenue Region No. 8 and the same still remains pending in said Office; and that up to the present date, New Zealand has not received either a pre-assessment notice or an assessment notice with respect to its corporate income tax liability for the second quarter of 1993. Based on the foregoing, you are requesting this Office for the issuance of Authorities to Accept payment (ATAPs) in the amounts of P572,218.00 and P992,948.00 representing VAT and basic corporate income tax liabilities of New Zealand for the month of June 1993 and for the second quarter ended June 30, 1993, respectively, and condonation of the surcharge, interest and compromise penalty attendant thereto. In reply, please be informed that on the basis of the evidence presented by you, i.e., newspaper clipping entitled "NBI tags husband of CB Official as brain of tax fraud syndicate" published in the October 20, 1993 issue of the Philippine Star showing that New Zealand was one of the victims of the tax fraud syndicate which defraud the government of billions of Pesos in tax money and consistent with the stand of this Office in BIR Ruling No. 125-95 involving the same factual situation as the instant case, we have decided to grant your aforesaid request. Accordingly, your client can now pay its VAT for the month of June 1993 and corporate income tax for the quarter ended June 30, 1993 in the respective amounts of P572,218.00 and P992,948.00 without the corresponding surcharge, interest and compromise penalty. This will therefore, serve as authority to the concerned revenue official of Revenue Region No. 8, Makati City, to issue the Authority to Accept Payment to your client, New Zealand Creamery, Inc., for the aforesaid amounts of P572,218.00 and P992,948.00. cdLL Very truly yours, (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue