BIR Ruling [DA-476-06]

August 4, 2006 BIR RULING [DA-476-06] National Printing Office EDSA cor. NIA Northside Road Diliman Quezon City Attention: Felipe P. Evardone Officer-in-Charge Gentlemen : This is with regard to your letter dated April 24, 2006 and referred to this Office by the BIR Financial and Administrative Service, concerning the printing of Community Tax Certificates by Eastland Printink Inc., a private printer. It is represented that members of the Bids and Awards Committee and Special Investigation Committee of the National Printing Office (NPO) conducted a spot inspection at the printing plant of Eastland Printink Inc. ("Eastland", for brevity) located at 6042 Sitio Tatalon, Barangay Ugong, Valenzuela City at around 2:25 pm on April 7, 2006. Upon arrival at the Eastland plant site, the NPO representatives were not immediately afforded entrance at the main gate of the former's premises despite showing their office ID'S and manifesting their purpose. After ten minutes of waiting, Eastland personnel finally allowed the NPO representatives in and the latter proceeded with inspecting the plant's machines together with the projects being done by Eastland. It is further represented that during the abovementioned inspection, the NPO representatives discovered the on-going printing by Eastland of, among other accountable forms, specialized Community Tax Certificates (CTCs) with. various logos of the local government units (LGUs) intended for Zambales, Caloocan, Pampanga and Muntinlupa. Despite the above representation, Eastland, in a letter dated May 5, 2006, denied that any such CTC's were printed in their plant's premises and instead accused the NPO of bad faith in conducting the inspection on April 7, 2006. Eastland labeled the said inspection as a retaliatory action for its filing a complaint against two (2) NPO personnel for violations of the Anti-Graft and Corrupt Practices Act. The NPO now would like to determine if the BIR authorized Eastland's printing of said CTCs so that it may determine the appropriate course of action to take against Eastland. In reply, please be informed that, Section 164 (a) of Republic Act (RA) No. 7160 (The Local Government Code of 1991) provides that: "Section 164. Printing of Community Tax Certificates and Distribution of Proceeds . (a) The Bureau of Internal Revenue shall cause the printing of community tax certificates and distribute the same to the cities and municipalities through the municipal treasurers in accordance with prescribed regulations . The proceeds of the tax shall accrue to the general funds of the cities, municipalities and barangays except a portion thereof which shall accrue to the general fund of the national government to cover the actual cost of printing and distribution of the forms and other related expenses. The city or municipal treasurer concerned shall remit to the national treasurer the said share of the national government in the proceeds of the tax within ten (10) days after the end of each quarter." From the above provision, it is clear that the BIR has the authority to cause the printing of CTCs and distribute the same to the cities and municipalities through the city and municipal treasurers in accordance with prescribed regulations. In this regard, APO Production Unit (APO) is the sole private printing agency that the BIR has authorized to print CTCs for the various local government units. This is evidenced by the attached CTC printing contract (PO-AFD LO No. 011-2006, dated May 5, 2006) between BIR and APO which states that the printing job shall be done solely by the latter and it shall not be farmed out to other printers. CSaITD As APO is the only agency permitted by the Bureau to print CTCs, it follows that Eastland has no authority to print CTCs for the LGUs of Zambales, Caloocan, Pampanga and Muntinlupa. Thus, any printing by Eastland of CTCs for these LGUs is in direct violation of Section 164(a) of RA 7160 and punishable under the law. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service