BIR Ruling [UN-435-95]

December 6, 1995 BIR RULING [UN-435-95] Hon. Frumencio A. Lagustan Assistant Executive Secretary Office of the President of the Philippines Malacaang, Manila S i r : This refers to your letter dated September 13, 1995, requesting our comments and recommendation on H.B. No. 3249, entitled: "AN ACT REQUIRING BANKS TO SECURE CERTIFICATION FROM THE BUREAU OF INTERNAL REVENUE (BIR) ON THE AUTHENTICITY OF DOCUMENTS REQUIRED FOR LOAN APPROVAL PRIOR TO GRANTING SUCH, AMENDING REPUBLIC ACT NO. 337, AS AMENDED, OTHERWISE KNOWN AS AN ACT REGULATING BANKS AND BANKING INSTITUTIONS AND FOR OTHER PURPOSES". In connection therewith, please be informed that the Bureau of Internal Revenue fully supports the proposed bill. As correctly pointed out in the Explanatory Note of the proponents of the bill, there is an ongoing practice of some unscrupulous borrowers to use two (2) sets of financial statements one, for loan purposes which is overstated and another, for tax purposes which is understated. This practice will be eliminated if the proposed measure is enacted, thus preventing borrowers from manipulating their financial declarations for the purpose of evading taxes. Moreover, it will further strengthen Executive Order No. 10 issued by President Fidel V. Ramos on August 4, 1992 requiring Government and private financial institutions to accept and use, as basis for evaluating the borrower's capacity to pay, the latter's financial statements and income tax returns duly filed with and verified by the Bureau of Internal Revenue. It may be stated herein that similar bills have been filed amending Section 76 of R. A. No. 337 bearing on the same subject-matter, i.e., S.B. No. 1091 and H. B. No. 3199. cd Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue