The Philippine Bureau of Customs (BOC) has initiated a complaint against real estate developer New San Jose Builders Company and its three surety companies for failure to settle tax obligations related to the building of the Philippine Arena in Bocaue, Bulacan.
The bureau’s Legal Service transmitted the complaint on April 25 to the Office of the Solicitor General (OSG), BOC said in a statement.
According to the BOC, San Jose availed of tax and duties exemption under Republic Act (R.A.) No. 9593, or the Tourism Act of 2010, when it imported construction materials from 2012 to 2103 to build the Philippine Arena, as contracted by Iglesia ni Cristo.
R.A. No. 9593 ensures privileges to companies within the Tourism Enterprise Zone. Section 86 of the law provides that “subject to rules and regulations which properly define capital investments and equipment necessary for various kinds of tourism enterprises, registered enterprises shall be entitled to an exemption of 100% of all taxes and customs duties on importations of capital equipment.”
Since San Jose did not yet have the certificates of exemption from the Department of Finance (DOF) when it was building the Arena, the developer was required to post bonds amounting to P947.292 million to cover duties and taxes for shipments.
The bonds were issued by Centennial Guarantee Assurance Corp. (CGAC), Intra Strata Assurance Corp. (ISAC), and Philippine Fire and Marine Insurance Corp. (PFMIC), the three surety companies cited in the complaint.
The DOF, however, did not grant San Jose the exemption, obligating the builder to pay duties and taxes due on its importations. Demand letters were then sent by the district collector of the Port of Manila (POM) to San Jose, CGAC, ISAC and PFMIC in 2015.
The surety companies were sent a final demand letter by the district collector on July 28, 2015.
On December 1 of the same year, the acting chief of POM’s Bonds Division recommended the forfeiture of the bonds since San Jose and the surety companies failed to settle their obligations despite BOC’s repeated demands.
The POM’s Law Division in a memorandum dated September 20, 2016 likewise recommended the forfeiture of the matured bonds. The recommendation was forwarded by the division’s officer-in-charge to Customs Commissioner Nicanor Faeldon for approval.
Section 1132 of the Customs Modernization and Tariff Act provides civil remedies to BOC in case of difficulties collecting duties and taxes. Among these remedies are the distraint, or seizure, of goods and other personal property such as stocks and other securities, and the filing of civil or criminal suits against violators.