Nature and Taxability of the Operations of Camarines Sur Watersports Complex

March 13, 2011 DOF OPINION Hon. Luis Raymund F. Villafuerte, Jr. Office of the Governor Cadlan, Pili, Camarines Sur Dear Governor Villafuerte : Based on your letters dated January 22, 2012, 1 we understand that the Camarines Sur Provincial Government had already requested Bureau of Internal Revenue (BIR) Commissioner Kim Jacinto-Henares for a ruling regarding the nature of the operations of Camarines Sur Watersports Complex (CWC). In BIR Ruling No. 369-2011 dated 5 October 2011, Commissioner Henares stated that the operation of CWC is proprietary in nature and thus subject to taxation. Hence, this appeal. Regrettably, we cannot as yet render the requested ruling. Section 4 of the National Internal Revenue Code of 1987 (NIRC) undeniably grants the Secretary of Finance the power to review the rulings of the BIR Commissioner concerning the interpretation of NIRC provisions and other tax laws. In seeking review of the BIR Commissioner's rulings relating to the interpretation of NIRC provisions and other tax laws, taxpayers are enjoined to comply with the requirements set out by Department Order No. 7-02, to wit: "Section 3. Rulings adverse to the taxpayer. A taxpayer who receives an adverse ruling from the Commissioner of Internal Revenue may, within thirty (30) days from the date of receipt of such ruling, seek its review by the Secretary of Finance. The request for review shall be in writing and under oath, and must: DSITEH a) be addressed to the Secretary of Finance and be filed with the Legal Office, Department of Finance, DOF Building, BSP Complex, Roxas Boulevard, corner Pablo Ocampo St., City of Manila; b) contain the heading "Request for review of BIR Ruling No. ___"; c) allege and show that the request was filed within the reglementary period; d) indicate the Tax Identification Number of the taxpayer; e) allege the material facts upon which the ruling was requested; f) state that exactly the same facts were presented to the BIR; g) define the issues sought to be resolved; h) contain the facts and the law relied upon to dispute the ruling of the Commissioner; i) be signed by or on behalf of the taxpayer filing the appeal; provided that, only lawyers engaged by the taxpayer and/or tax agents accredited by the BIR may sign on behalf of the taxpayer; j) be accompanied by a copy of the Commissioner's challenged ruling; k) contain a stamp of the Office of the Commissioner of Internal Revenue, indicating that a copy of the request to review the ruling was received by the Commissioner; and l) specifically state that the taxpayer does not have a pending assessment or case in a court of justice where the same issues are being considered. IDSEAH Furthermore, the taxpayer must, at the time of filing of the request for review, submit a duplicate copy of the records on file with the BIR pertaining to his request, which set of records must be authenticated and certified by the BIR. The Secretary of Finance may dismiss with prejudice a request for review that fails to comply with these requirements." In view of the foregoing, we are constrained to defer acting on this matter until such time as you are able to comply with the above-cited requirements. Please be guided accordingly. Very truly yours, (SGD.) CARLO A. CARAG Undersecretary Revenue Operations and Legal Affairs Group Footnotes 1. We received the letter on 30 January 2012.