BIR Ruling [UN-270-95]

July 24, 1995 BIR RULING [UN-270-95] Hon. Roberto F. de Ocampo Secretary of Finance and Chairman Committee on Privatization Department of Finance Manila S i r : This refers to your letter dated April 17, 1995, requesting the assistance of this Office relative to the disposition of the Calinog-Lambunao Sugar Mill and Refinery, one of the assets of the Government for privatization. lexlib It appears that the Sugar Mill is held by the Asset Privatization Trust (APT), while the Refinery is owned by the National Sugar Refineries Corporation (NASUREFCO), one of the GOCCs approved by the President for privatization; that the Committee on Privatization (COP) has approved in its meeting of April 12, 1995, the proposed sale of said sugar mill and refinery to Terrener Development Corporation for P380.2 million but the proposed sale is being hindered by the purported enforcement of the constructive embargo imposed by this Office against those properties; hence, this request. In connection therewith, please be informed that under Section 35, second paragraph of Proclamation No. 50, the sale or transfer of the corporations or assets held by APT shall not be hindered or enjoined by the existence of any liens by way of taxes, charges or other assessments in favor of the government at the time of sale or transfer, subject to the condition that the proceeds from such sale or transfer shall be subject to a tax lien and first be applied to satisfy the obligation secured by the liens. Such being the case, this Office may lift the constructive embargo imposed against the refineries of NASUREFCO and allow the sale thereof, but the proceeds to be realized therefrom shall be subject to a lien and first be applied to satisfy the outstanding tax liabilities of the taxpayer. It is informed herein that out of the amount of P463,802,164.44 originally assessed against NASUREFCO as deficiency withholding tax for the years 1984 to 1988, only P51,248,767.63 was paid by the taxpayer leaving a balance of P412,953,396.81 still collectible from it. The amount of P380.2 million expected to be realized on the sale of the assets of NASUREFCO to Terrener Development Corporation is a tax lien to be applied in partial settlement of the aforesaid balance of P412,953,396.81. Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue