Whether the Proposal of a Private Group to Undertake the Construction of the Marikina Bridge and Access Road With an Estimated Cost of P450 M under the Condition that Payment Therefor Shall be Made by Way of a Direct Tax Deduction/Credit from Its BIR Tax Obligations Spread Over a Number of Years to be Agreed upon is Feasible

March 31, 1995 BIR RULING NO. 063-95 24 000-00 063-95 Office of the Mayor Municipality of Marikina Metro Manila Attention: Mr . Bayani F . Fernando Municipal Mayor Gentlemen : This refers to your letter dated January 20, 1995 to the Honorable Secretary, Roberto S. de Ocampo, Department of Finance, Manila stating that a commercial center is proposed for immediate construction and operation on a vacant lot adjacent to the Marcos Bridge and the proposed Marikina Bridge and access road project (C-5 related road); that a private group is set to commence the construction of the commercial center by the mid of 1995 and shall be operational one year after; that corollary to this, the private group has expressed interest to finance and undertake the construction of the Marikina Bridge and Access Road with an estimated cost of Four Hundred Fifty Million Pesos (P450 M) under the condition that payment therefor shall be made by way of a direct tax deduction/credit from its BIR tax obligations spread over a number of years to be agreed upon; that you feel that said arrangement shall be beneficial to both the national government and the municipality of Marikina in terms of cash inflow through taxes; that the municipality is receptive to the proposal inasmuch as it has no funds for the purpose; and that the municipality stands to benefit greatly from the proposed commercial center in terms of increase economic activities and employment opportunities for the people. In connection therewith, you are requesting opinion as to whether the aforementioned proposal of the private group to undertake the construction of the Marikina Bridge and Access Road with an estimated cost of P450 M under the condition that payment therefor shall be made by way of a direct tax deduction/credit from its BIR tax obligations spread over a number of years to be agreed upon is feasible. In reply thereto, please be informed that the proposal of a private group to undertake the construction of the Marikina Bridge and Access Road with an estimated cost of P450 Million under the condition that payment therefor shall be made by way of a direct tax deduction/credit from its BIR tax obligations spread over a number of years to be agreed upon has to be as it is hereby denied for lack of legal basis because it amounts to a direct application of the tax proceeds to satisfy a contractual obligation without a prior appropriation made by Congress. Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue