Toyota Otis, Inc.

November 18, 2008 BIR RULING [DA-(C-134) 432-08) Section 203 Toyota Otis, Inc. 1770 Paz M. Guazon St. Paco, Manila Attention: Allan S. Jao Vice President-Corporate Affairs Gentlemen : This refers to your letter dated October 23, 2008, requesting a ruling to the effect that you can be issued a tax clearance certificate for bidding purposes by the Collection Enforcement Division in view of the fact that your alleged tax liability for taxable years 1994 and 1995 had prescribed pursuant to Section 203 of the Tax Code of 1997. cTIESD It appears that TOYOTA OTIS, INC. (TOYOTA OTIS, for short) was applying for a Tax Clearance Certificate (TCL) for bidding purposes at the Collection Enforcement Division, this Bureau, to be able to participate in biddings before the different government instrumentalities; that you were refused issuance of the permanent TCL due to alleged outstanding tax liabilities for taxable years 1994 and 1995, allegedly under Assessment No. 031-000028-94 as deficiency income tax amounting to P3,539,843.24 and Assessment No. 34-1-000044-95 as deficiency income, VAT, documentary stamp tax and expanded withholding tax, amounting to an aggregate amount of P100,997,340.60; that you allegedly were not aware of the said assessments issued since you have not received any assessment notice, and to clarify things, you requested for the records of the alleged deficiency taxes from Revenue District Office (RDO) No. 33, Ermita, Intramuros, Manila, the RDO having jurisdiction over your Office; that said RDO informed you that it has no record/docket of your case; that you now demand for the issuance of a permanent TCL for bidding purposes at the CED, however, CED was only issuing you a temporary TCL on a month to month basis; that it is your position that if the alleged assessment for taxable years 1994 and 1995 were true and correct, the same shall have prescribed inasmuch as the three (3) year period to assess had lapsed and the five (5)-year period within which to collect had equally prescribed; that the CED has no record of any issued Warrant of Distraint and Levy against your company; and that your inability to secure the TCL had caused you serious unrealized transaction. In reply, please be informed that Section 203 and 222, both of the Tax Code of 1997, provides as follows: SEC. 203. Period of Limitation Upon Assessment and Collection. Except as provided in Section 222, internal revenue taxes shall be assessed within three (3) years after the last day prescribed by law for the filing of the return, and no proceeding in court without assessment for the collection of such taxes shall be begun after the expiration of such period: Provided, That in a case where a return is filed beyond the period prescribed by law, the three (3)-year period shall be counted from the day the return was filed. For purposes of this Section, a return filed before the last day prescribed by law for the filing thereof shall be considered as filed on such last day. SEC. 222. Exception as to Period of Limitation of Assessment and Collection of Taxes. xxx xxx xxx (c) Any internal revenue tax which has been assessed within the period of limitation as prescribed in paragraph (a) hereof may be collected by distraint or levy or by a proceeding in court within five (5) years following the assessment of the tax. (d) Any internal revenue tax, which has been assessed within the period agreed upon as provided in paragraph (b) hereinabove, may be collected by distraint or levy by proceeding in court within the period agreed upon in writing before the expiration of the five (5)-year period. The period so agreed upon may be extended by subsequent written agreements made before the expiration of the period previously agreed upon. (e) Provided, however, That nothing in the immediately preceding Section and paragraph (a) hereof shall be construed to authorize the examination and investigation or inquiry into any tax return filed in accordance with the provision of any tax amnesty law or decree. Accordingly, for taxable year 1994, the three (3) year period within which to assessed had commenced on April 15, 1995, and had ended on April 15, 1998, and the 5-year period to collect lapsed after the 30th day from receipt of the taxpayer of the Final Assessment Notice, or at the most April 16, 2003. Likewise, for taxable year 1995, the 3-year period to assess had prescribed on April 16, 1999 and the 5-year period to collect prescribed on April 16, 2004. Collection of the tax may be collected by distraint or levy, or by a proceeding in court within five (5) years following the assessment of the tax. EHCcIT In the instant case, the deficiency tax was allegedly claimed to have been assessed within the 3-year period to assess, nevertheless, you claimed that you have not received any Final Assessment Notice (FAN). Moreover, you too have not been issued any Warrant of Distraint and Levy (WDL) to enforced the alleged tax deficiency. Inasmuch as the CED has no records of issued WDL against your company within the 5-year period to collect, the right of the government to collect had prescribed. Where the assessment of any internal revenue tax has been made within the time fixed by law, the tax could be collected by distraint or levy or by court proceeding, but only if begun within the five (5) years after the assessment of the tax. After the expiration of that period, collection of the tax by any of those methods would be without the authority of law. (The Collection of Internal Revenue vs. Anna Harriet Clement and David Hooker, G.R. No. L-12194, January 24, 1959) Accordingly, the Collection Enforcement Division of this Bureau, is hereby directed to issue the necessary Tax Clearance Certificate to enable you to participate in biddings before any government instrumentalities. Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service