BIR Ruling [DA-018-01]

February 12, 2001 BIR RULING [DA-018-01] 248 & 249 121-97 F & A Corporation 2/F, Diamond Building 603 EDSA, Quezon City Attention: Mr . Felix V . Gonzalez, Jr . President Gentlemen : This refers to your letter dated May 17, 2000 indorsed to this Office by Asst. Regional Director Virginia P. Tomas on May 29, 2000 requesting for a waiver of penalties on your failure to pay the Documentary Stamp Tax on time. It is represented that you registered your company with the Securities and Exchange Commission (SEC); that right after the registration with the SEC, the economic crisis hit the Philippines; that you are in the real estate business and you were seriously affected; that you thought of not opening the company at all; that you had no operations for quite sometime; that you are now fixing all your papers and putting everything in order; that you are also starting your business; that you are trying your best to keep the company operational; and that the waiver of the penalties will go a long way in making your company survive. In reply thereto, please be informed that under Sections 248(a)(1) and (3) and 249, both of the Tax Code, as amended, the imposition of the surcharge and interest on delinquency is mandatory. Strong reasons of policy support a strict observance of the rule regarding the payment of tax. The laws imposing penalties for delinquencies are clearly intended to hasten tax payments or punish evasions or neglect of duty in respect thereof. If delays in tax payments are to be condoned for light reasons, the law imposing penalties for delinquencies would be rendered nugatory and the maintenance of the government and its multifarious activities would be as precarious as taxpayers are willing or unwilling to pay their obligations to the state on time (Jamora vs. Meer, 7 Phil. 22). This is justified because the intention of the law is precisely to discourage delay in the payment of taxes due to the State and, in this sense, the surcharge and interest charged are not penal but compensatory in nature. They are compensation to the State for the delay in payment or for the concomitant use of the funds by the taxpayer beyond the date he is supposed to have paid them to the State. (Castro vs. Col., etc. Resolution on Motion for Reconsideration, G.R. No. L-12174, Dec. 1962) In view of the foregoing, your request for a waiver of surcharges and interest on your deficiency taxes is hereby denied for lack of legal basis. (BIR Ruling No. 121-97 dated November 7, 1997) IaEACT Very truly yours, Commissioner of Internal Revenue (SGD.) LILIAN B. HEFTI Deputy Commissioner Legal & Inspection Group