BIR Ruling [UN-066-95]

February 14, 1995 BIR RULING [UN-066-95] MEMORANDUM FOR The Commissioner This refers to the internal revenue tax case of Orient Pacific Capital Investment Corporation, involving the amount of P1,944,224.68 and P767,734.00 representing deficiency income and documentary stamp taxes, respectively, for the year 1989. cdtech Re: Deficiency income tax in the amount of P1,944,224.68 Subject-taxpayer, thru its counsel, made an offer on March 11, 1988 to compromise the case by paying 10% of the basic tax assessed pursuant to the provisions of Executive Order No. 44, as Implemented by Revenue Regulations No. 17-86 and Revenue Memorandum Order No. 39-86. The Evaluation Committee created for the purpose, approved the request of the taxpayer on January 4, 1989 but raised the compromise rate to 15% of the basic tax assessed or the amount of P184,286.70 in full and complete settlement of the case. The said amount was paid by subject-taxpayer on April 5, 1989 as evidenced by the attached xerox copies of Payment Order (PO) No. C 5063348 and Confirmation Receipt (CR) No. B 16496670. The said deficiency income tax assessment in the aforesaid amount of P1,944,224.68 should, therefore, be written-off from our list of delinquent accounts. Re: Deficiency documentary stamp tax in the amount of P767,734.00 It appears that Orient Pacific Capital Investment Corporation changed its name to Citytrust Investment Philippines Inc., by filing an amended Articles of Incorporation which was approved by the Securities & Exchange Commission (SEC) on March 11, 1987. As a member of the Investment House of the Philippines (IHAP), Citytrust (formerly Orient Pacific Capital Investment Corporation) participated in the Compromise Agreement entered into by and between the BIR and IHAP whereby the members of the latter were allowed to compromise their deficiency documentary stamp tax assessments relating to non-negotiable promissory notes issued prior to October 15, 1984 at the rate of POINT ZERO FOUR CENTAVOS (P0.04) per P200 of the total issuances of non-negotiable promissory notes. The deficiency documentary stamp tax assessments of Citytrust for the years 1979 and 1982 had compromise base of P131,592,104 and P187,494,951, respectively, and the documentary stamp tax due thereon in accordance with the agreed compromise rate amounted to P63,817.41 computed as follows: P319,087,055 x P0.04 = P63,817.41 200 The Compromise Agreement was accepted by former Commissioner Jose U. Ong on October 3, 1989 and on the same date, the taxpayer paid the aforesaid amount of P63,817.41 under Payment Order (PO) No. C 4870196 and Confirmation Receipt (CR) No. B 17978850, xerox copies of which are hereto attached for ready reference. Such being the case, our deficiency documentary stamp tax assessment against Orient Pacific Capital Investment Corporation (now Citytrust Investment Philippines) should likewise be cancelled. In view of the foregoing, it is respectfully recommended that Assessment Notice No. SART-IT/3779/85 1693 requiring Orient Pacific Capital Investment Corporation (now Citytrust Investment Philippines) to pay the amounts of P1,944,224.68 and P767,734.00 as deficiency income and documentary stamp taxes, respectively, for the year 1989 be withdrawn and cancelled and this case considered closed and terminated. Additionally, the Warrant of Garnishment No. NA-3924-90 should now be lifted. cdt Respectfully Submitted: MILAGROS V. REGALADO Chief, Law Division (Officer-In-Charge) I CONCUR: ALICIA P. CLEMENO Acting Assistant Commissioner (Legal Service) APPROVED: LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue