R.C. Tagala Construction

August 21, 2007 BIR RULING [DA-459-07] RMO 39-92 R.C. Tagala Construction 179 Australia Street, Upper Banlat Tandang Sora, Quezon City Attention: Mr. Rosanno C. Tagala Proprietor/General Manager Gentlemen : This refers to your letter dated October 21, 2005 requesting for information relative to the application of R.C. Tagala Construction for Contractor's Final Payment Release Certificate (BIR Form No. 2555, October, 1992). It is represented that the DPWH-Region IV-A has instructions that R.C. Tagala secure the signature of the Chief, VAT Division/Revenue District Officer of RDO 28-Novaliches, where the company is registered and have the above-cited form stamped received; and that unsure of what action to take, the VAT Division of BIR-Novaliches instructed R.C. Tagala to consult this Office on this old documentary procedure. In reply, please be informed that Revenue Memorandum Order No. 39-92 dated September 9, 1992 enumerated the procedures for the Implementation of the Memorandum of Agreement between the Department of Public Works and Highways and the Department of Finance, viz: "II. Procedures A. Revenue District Office (Except RDO's Listed in Annex A) 1. Monitor the withholding of taxes by respective DPWH Regional/Provincial/City Offices from payments to contractors engaged to construct infrastructures and other projects. The withholding of 1% creditable income tax from both VAT and Non-VAT contractors and the 2% percentage tax from Non-VAT contractors shall be based on gross payments of money or its equivalent representing the contract price, compensation or service fee, including the amount charged for materials supplied, mobilization fee, deposits and/or advance payments actually of constructively paid; 2. Receive 3 copies of Application for Contractor's Final Payment Release Certificate (BIR Form No. Annex B) from contractors whose principal place of business falls within the jurisdiction of RDO concerned; 3. Issue claim slip if the application could not be approved within the day of filing which in no case should exceed 3 days; 4. Fill-up the "Certification" portion of the application in triplicate for signature of the RDO to be distributed as follows: Original Contractor Duplicate VAT Division Triplicate RDO 5. Record approved application in a special logbook, serially numbered. Fill-up the corresponding log book number at the left lower portion of the Certificate as in the sample, to wit: Example: Date of Certification August 31, 1992 RDO Concerned Calamba, Laguna RDO 37A Number in the Logbook 1512 9 : 2 : - : 3 : 7 : A : -: 0 : 0 : 1 : 5 : 1 : 2 The numbering shall start with number one every year. 6. Prepare a duly certified monthly summary report of approved applications using the prescribed format (Annex C) which shall contain the following information: certificate number, name and principal place of business of contractor, TIN, project title, project location, date awarded, date terminated, contract price, amount collected, total taxes withheld by DPWH and collectible final payment; 7. Receive date of monthly transactions on or before the 20th day of the following month from the respective DPWH Regional/Provincial/City office using the prescribed format place of business of contractor, TIN, Project ID and title, project location, date awarded, date terminated, contract price, amount collected, total taxes withheld by DPWH, collectible final payment (see matching of BIR RDO's and DPWH OFFICES, Annex E); 8. Transmit the summary report of approved Application for Contractor's Final Payment Release Certificate (Annex C), duplicate copies of approved applications and photocopy of information report from the respective DPWH Regional/Provincial/City office to the VAT Division not later than the end of the following month. Copies of transmittal letter are to be distributed as follows: Original VAT Division Duplicate RDO 9. Collate the data gathered for income and VAT purposes and compare it with the returns filed by contractors with the Revenue District Office (RDO). Enclosed is a copy of the said Revenue Memorandum for further reference. ECSaAc Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service