BIR Ruling [DA-475-98]

November 4, 1998 BIR RULING [DA-475-98] MEMORANDUM FOR: The Commissioner This refers to the claim for tax credit of UNIVERSAL ABOITIZ, INC. (UAI for short), 110 Legaspi St., Legaspi Village, Makati City, involving the amount of P5,483,909.00 representing excess income/withholding taxes covering the years 1995 and 1996. In a letter dated October 12, 1998, counsel for UAI requested that the ongoing investigation being conducted by Revenue District Office No. 47 (East Makati), Revenue Region No. 8, Makati City, on the aforestated claim for refund/tax credit be treated as an exception to the exclusive authority of the Special Team/Audit Team to conduct the investigation of conglomerates/interrelated taxpayers pursuant to RMO No. 61-98, and allow said investigation to be terminated by the region. It appears that on April 1, 1998, UAI, thru counsel, filed a claim for tax credit in the amount of P5,483,909.00 representing excess income/withholding taxes for the taxable years 1995 and 1996; that on August 20, 1998, the Regional Office (RR#8, Makati City) issued a Letter of Authority (LA No. 138104) for the purpose of conducting the examination on the said claims for tax credit; that the LA that was issued covers the period January to December of 1997 but considering that the taxpayer's claim has its source the 1995 and 1996 excess payments, the Revenue Officer assigned has completed and finalized the report of investigation covering the taxable years 1995, 1996 and 1997; that the Honorable Commissioner has issued an LA to the Audit Team to investigate UAI in accordance with the aforementioned RMO 61-98; that the LA was not received by the officers of UAI in view of a completed investigation already made by the Region of Makati; that the above request of UAI is made in order that a tedious litigation on the part of both parties (taxpayer and BIR) may be avoided should the claim is pursued in the Court of Tax Appeals; and that UAI manifested its conformity or non-objection if there is a need for the Audit Team of the National Office to examine other interrelated transactions with its parent company Aboitiz Equity Ventures. Upon a careful review of the case, it is believed that the request of UAI may be given due course considering that the taxpayer's claim for tax credit was taken/filed well ahead of the creation of the Audit Team to conduct investigation on large taxpayers and their related group of companies under the program envisioned in RMO 61-98. Moreover, the examination as to the veracity/correctness of said claim for tax credit for the taxable years 1995 to 1997 had already been made and completed by the region. In view of the foregoing, it is respectfully recommended that the aforementioned request of UAI be granted and that Revenue District Office No. 47 (East Makati), Revenue Region No. 8, Makati City, be allowed and authorized to continue and terminate the investigation of the subject claim for tax credit which covers the years 1995 to 1997. Respectfully submitted: (SGD.) JESUS C. SANDOVAL Chief, Law Division I CONCUR: (SGD.) ERLINDA O. MATIC Assistant Commissioner Legal Service RECOMMENDING APPROVAL: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal & Enforcement Group APPROVED: (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue