BIR Ruling [DA-215-99]

April 8, 1999 BIR RULING [DA-215-99] MEMORANDUM TO: THE REGIONAL DIRECTOR REVENUE REGION NO. 19 SAN PEDRO ST., DAVAO CITY This refers to the internal revenue tax case of Mr. Manuel C. Del Rosario of GSIS, Matina, Davao City involving the following deficiency assessments inclusive of increments thereof in the total amount of P159,877.23 under Assessment Notices Nos. RR-19-384-97 and- 113-31-94-000745 all dated January 31, 1997 for the year 1994, viz: casia Assessment/ Kind of Tax Year Amount Demand No. 113-31-94-000745 Income 1994 P15,383.28 113-31-94-000745 Withholding 1994 4,179.73 RR-19-384-97 VAT 1994 119,314.22 P138,877.23 Compromise 21,000.00 P159,877.23 =========== Records of this case disclosed that on April 25, 1997, a Final Notice Before Seizure was issued by Ms. Erlinda M. Amoguis, OIC Chief, Assessment Division of Revenue Region No. 19, Davao City, giving Mr. Manuel C. Del Rosario to file any protest or reconsideration otherwise within ten (10) days from receipt thereof, the BIR will proceed with the collection in accordance with the pertinent provisions of the National Internal Revenue Code, which require immediate issuance of Warrant of Distraint and/or Levy and the Seizure of the property sufficient to satisfy the tax liability; that on June 30, 1997, a Notice of Tax Lien was issued by then Regional Director Percival T. Salazar informing the Register of Deeds of Davao City that Mr. Manuel C. Del Rosario is under obligation to pay to the Government of the Republic of the Philippines the sum of P159,877.23 representing deficiency income, withholding and value-added taxes for the year 1994 under Assessment Notice Nos. 113-31-94-000745 and RR-19-384-97 all dated January 31, 1997 inclusive of increments thereof and to register the said notice in the Record of Tax Liens pursuant to LRC No. 239 dated April 25, 1949; that on July 1, 1997, Ms. Florita S. Gernale served the Warrant of Distraint and/or Levy to the representative of Mr. Manuel C. Del Rosario and was acknowledged by Ms. Mila Louamar; that on September 9, 1997, a Notice of Sale was issued by Ms. Florita S. Gernale covering a parcel of residential lot located at Barrio Matina, Davao City containing an area of 330 square meters, covered by TCT No. T-153657 issued by the Registry of Deeds for Davao City and registered in the name of Spouses Manuel C. Del Rosario and Lorna Del Rosario; that the said Notice of Sale was published for three (3) consecutive weeks in a People's Daily Forum dated September 12, 19 and 26 1997; that the sale of the above-mentioned property was held on October 30, 1997 at the Office of the Collection Agent, Magallanes Street, Davao City, that since there was no bidder at the time of sale, a Declaration of Forfeiture of real property was issued on November 10, 1997 and Mr. Manuel C. Del Rosario was given a period of one (1) year to redeem his property from November 10, 1997; that on November 9, 1998, a notice was sent to Mr. Manuel C. Del Rosario informing him to redeem the property before the said date by paying the amount of P159,877.23 as well as the reimbursement cost of publication of P1,000.00 in order to prevent its absolute forfeiture in favor of the government; that on November 23, 1998, Mr. Armando C. Carino, representative of Mr. Manuel C. Del Rosario, requested for a reconsideration of the letter dated November 11, 1998 of Ms. Norma C. Rimorin, OIC-Chief, Collection Division of Revenue Region No. 19, Davao City that he be allowed to pay the amount of P159,877.23 inclusive of the increments thereof and to redeem the aforementioned property even after the period of redemption has expired. Based on the foregoing, this Office has finally resolved and hereby holds that under the broad power of the BIR Commissioner to compromise any tax liability in cases when the financial position of the taxpayer demonstrates a clear inability to pay the tax assessed, the Commissioner may consider not only the pecuniary interest of the government, but also considerations of justice and equity and of public policy. (17 Op. Atty. Gen. U.S. 213, cited in 3 Fed. Stat. Ann. 2d ed. 1039) In the instant case, since there was no bidder for the said property offered for sale, the internal revenue officer who conducted the sale had declared the aforementioned property forfeited in favor of the government in order to satisfy the claim in question. Although generally the property owner should not, after the statutory period from notice has lapsed, be allowed to redeem the same, however, justice and equity dictates that Mr. Manuel C. Del Rosario may be allowed to redeem the said property beyond the period of redemption as long as he is amenable to pay the deficiency tax, including the penalties and interest from the date of sale as well as the expenses incurred for the said sale. In view thereof, authority is hereby granted to that Office to allow Mr. Manuel C. Del Rosario to pay the amount of P159,877.23 representing the deficiency income, withholding and value-added taxes for the year 1994 together with the penalties and interest from the date of sale as well as expenses incurred for the said sale within fifteen (15) days from receipt hereof; otherwise the forfeiture of the above-mentioned property shall become absolute. This constitutes the final decision of this Office on this case. (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue