BIR Ruling

September 19, 1996 Group Developers, Inc. 5th Floor Cattleya Condominium Salcedo Street, Legaspi Village Makati, Metro Manila Attention: Atty . Herminio R . Villaflor Counsel Gentlemen : This refers to your letter dated June 25, 1991 requesting that the Warrant of Distraint and/or Levy issued against you in connection with Assessment No. 32-06-482-007979-85 requiring you to pay the amount of P209,979.09 as surcharge, interest, and compromise penalty for the year 1985 be quashed or cancelled. cdtech The request is anchored on the contention that the assessment does not indicate the principal tax, the failure to pay of which caused the imposition of surcharge, interest and penalties. In reply, please be informed that records disclosed that the amount of P209,979.09 represents the unpaid surcharge, interest and compromise penalty due to the late remittance of the expanded withholding tax on rental, professional and director's fees for 1985. It is to be remembered, that the Tax Code (Secs. 248, 249) directs the imposition of surcharge and interest in case of late remittance of the withheld taxes. The imposition is mandatory and this is justified because the intention of the law is precisely to discourage delay in the payment of taxes due to the State. In this sense, the imposition of surcharge and interest charged are not penal in nature but just compensatory to the State for the delay in paying the tax and for the concomitant use by the taxpayer of funds that rightfully should be in government's hand beyond the date he is supposed to have paid them to the State (Rep. vs. Phil. Bank of Commerce, L-20951, July 31, 1970). With regard to your availment of tax amnesty, it is further informed that withholding taxes are not covered by the tax amnesty under Executive Order Nos. 41/64, as implemented by Revenue Regulation No. 14-86, dated August 27, 1986 and Revenue Memorandum Order 42-86 dated November 24, 1986. Therefore, we find no reason at all to grant your request for the lifting and/or cancellation of the Warrant of Distraint and/or Levy issued against you. In view thereof, you are hereby requested to pay the amount of P209,979.09 as surcharge, interest and compromise penalty for the year 1985 to the Revenue District Office nearest your place of business, within fifteen (15) days from your receipt hereof in order that this case may be closed and terminated. LLphil This constitutes the final decision of this Office on the matter. Very truly yours, (SGD.) LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue