BIR Ruling [DA-070-99]

February 5, 1999 BIR RULING [DA-070-99] A. P. Escueta, Inc. 81 Yale Street Cubao, Quezon City Attention: Ms . Adelaida P . Escueta President Gentlemen : This refers to your letter dated October 6, 1998 requesting for the waiver of the 25% surcharge imposed on the documentary stamps tax due on the Deed of Assignment executed on October 22, 1997. prcd It appears that the subject Deed of Assignment was executed for the transfer of the properties of Ms. Adelaida P. Escueta and Ms. Julieta E. Luat in exchange and as payment of their respective subscriptions in A. P. Escueta, Inc.; that the said deed could not be effected until and unless the Securities and Exchange Commission (SEC) approves such assignment; that the SEC approval was released only on June 30, 1998; that the transfer could not be effected until the question of the recognition of gain or loss is resolved by this Office; and that the approval from the Office was received by the corporation on September 14, 1998 as embodied in BIR Ruling No. S-40-192-98 dated September 14, 1998. In reply, please be informed that the payment of the surcharge is mandatory and this Office (Commissioner of Internal Revenue) is not vested with any authority to waive or dispense with the collection thereof. (Lim Co Chui vs. Posadas, 47 Phil. 460 Phil. 460; Republic Cement Co. vs. Commissioner; L-30660, dated June 13, 1968) Where, however, the taxpayer in good faith made a mistake in the interpretation of the application of the rules of procedures thereby resulting in delay in the payment of taxes, the 25% surcharge may be waived. (Connel Bros. Co., Inc. vs. CTA, L-22421, promulgated May 18, 1967) Such being the case, since there is good faith in your part in complying with the letters of the law, and there is no showing to defraud the government of its needed funds or lifeblood, this Office hereby grants your request for the waiver of the 25% surcharges on the documentary stamp tax due on the transfer of said properties to the corporation. However, the waiver does not include the 20% interest thereof which is imposed under Section 269 of the Tax Code of 1997. This ruling is being issued on the basis of the foregoing representations. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue