BIR Ruling

August 27, 1970 Messrs. Ross, Salcedo, Del Rosario Bito & Misa Ramon Magsaysay Center Roxas Boulevard P. O Box 781 Manila Gentlemen : This refers to your letter dated January 19, 1970 requesting cancellation of the assessment under the Authority to Accept payment dated January 13, 1970 issued against your client, Manila Wine Merchants, Inc., in the amount of P25.00 covering deficiency privilege tax (B-8) as a wholesale dealer in fermented liquors. You alleged that the basis for the deficiency assessment was the increase of fixed tax of wholesale dealers in fermented liquors from P150.00 to P200.00 (not P250.00) under the Omnibus Tax Law (R.A. No. 6110) which took effect on September 1, 1969. You also alleged that your client is not liable for the payment of the sum of P25.00 (not P50.00) or 50% of such increase corresponding to the second semester of 1969, inasmuch as its payment in full of the sum of P150.00 in January, 1969 constituted a full satisfaction of, and extinguished, its fixed tax liability for the whole year. And in support thereof, you pointed out that (1) under the provisions of Section 180 of the Tax Code, your client's liability for the fixed tax as wholesale dealer in fermented liquors because due and payable on or before January 20, 1969 if it wished to pay the tax in full or on or before the 20th day of January and July, if in two (2) installments and therefore, the amount of tax which your client should pay is determined by the rate existing at the time the tax was due and payable, which is P150; (2) that the principle enunciated in the case of Lorenzo vs. Posadas (64 Phil. 353) wherein it was held that a transmission by inheritance is taxable at the time of the predecessor's death, notwithstanding the postponement of the actual possession or enjoyment of the estate by the beneficiary, and the tax measured by the value of the property transmitted at that time regardless of its appreciation or depreciation is perfectly applicable to the case. In reply, I regret to inform you that your request cannot be granted for lack of legal basis. While it is true that your client has exercised the option or paying its annual fixed tax of P150.00 in full, under Section 180 of the Tax Code, such payment, however, does not relieve it from the liability to the increased rate of fixed taxes under the Omnibus Tax Law. (R.A. No. 6110)] " Increase tax .The power of imposing an excise tax is not exhausted when once exercised, but the tax may be increased at any time before the expiration of the period for the enforcement of the tax although the tax as first fixed has been paid." (Cooley Taxation, Vol. 4, 4th Ed., Section 1715 p. 3434.) (Ruling BIR, March 20, 1957). Considering that said law took effect on September 1, 1969, the increased rate of fixed taxes prescribed therein shall be reckoned from the commencement of the second semester of 1969. This conclusion is in line with Section 181 of the Tax Code, which provides that when a business subject to a fixed tax is newly begun during any year the tax shall be reckoned from the commencement of the current semester. The case of Lorenzo vs. Posadas refers to inheritance or transfer taxes; hence, the same is not applicable to the instant case. In view of the foregoing, it is requested that you urge your client to pay the sum of P25.00 as deficiency fixed tax for the second semester of 1969 plus the sum of P6.25 or 25% surcharge, or a total of P31.25 in order that the case may be closed. Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue