911 Alarm Inc.

July 24, 2007 BIR RULING [DA-408-07] E.O. 398; R.R. 3-2005; DA-613-2006 911 Alarm Inc. 2/F DPC Place Building 2322 Don Chino Roces Avenue 1231 Makati City Attention: Mr. Marcial P. Lichauco, Jr. President Gentlemen : This refers to your letter dated May 9, 2007 requesting for clarification regarding the implementation of Executive Order (EO) No. 398 as implemented by Revenue Regulations (RR) No. 3-2005, particularly on the following: 1. Does BIR Ruling No. DA-613-2006 dated October 12, 2006 which was issued to BFP-DILG supersede DA-004-2006 dated January 10, 2006 issued to SSS? 2. If so, then a bidder which has been registered for EFPS filing for more than six (6) months and eventually submits non-EFPS tax returns should be declared as an ineligible bidder. We reply, as follows: 1. BIR Ruling No. DA-613-2006 (BFP-DILG Ruling) does not supersede DA-004-2006 (SSS Ruling). BFP-DILG Ruling refers to a 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 RR No. 3-2005 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. In said Ruling, this Office held that 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. SSS Ruling, on the other hand, refers to bidders who have not enrolled with EFPS. Thus, this Office ruled 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. THIECD Furthermore, the ruling in SSS is applicable only to the former's published projects for the year 2005. 2. From the discussions made in BIR Ruling Nos. DA-004-2006 and DA-613-2006, it is clear that 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. Thus, a bidder which has been registered for EFPS filing for more than six (6) months and eventually submits non-EFPS tax returns should be declared as an ineligible bidder. Please be guided accordingly. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service