BIR Ruling [DA-352-99]

June 16, 1999 BIR RULING [DA-352-99] Pilipinas Hino Inc. Retirement and Severance Benefit Plan E. delos Santos Avenue, corner Madison Street Mandaluyong City Metro Manila Attention: Ms . Teresita G . Casidsid Gentlemen : This refers to your letter dated February 8, 1999 requesting for a waiver of the corresponding surcharge and interest for your failure to remit on time the creditable withholding tax due on the sale of two (2) parcels of land together with the improvements thereon by Pilipinas Hino, Inc. LibLex It is represented that Pilipinas Hino, Inc. is the registered owner of two (2) parcels of land together with the improvements thereon located at Paso de Blas, Valenzuela (Bulacan), Metro Manila covered by TCT Nos. B-47542 and B-47543 issued by the Registry of Deeds for Caloocan City with a total land area of 16,789 square meters; that on December 29, 1998, a Deed of Absolute Sale was executed by Pilipinas Hino, Inc. and Pilipinas Hino, Inc. Retirement and Severance Benefit Plan whereby the former transferred to the latter the above-mentioned parcels of land for and in consideration of P62,100,000.00 and P2,900,000.00 for the improvements thereon or on aggregate amount of P65,000,000.00 payable as follows: P25,000,000.00 Upon the signing of this Deed of Sale P40,000,000.00 On or before January 28, 1999 that before remitting the creditable withholding tax due, you were informed by the Withholding Tax, Division of the National Office of the BIR that payments should be remitted to the Revenue District Office (RDO) where your principal place of business is located; that it is only when you were about to make the payment in Mandaluyong City, that you were told to pay the same at Valenzuela, where the properties are located pursuant to Revenue Regulations No. 8-98; that since it was already late in the afternoon you have no choice but to pay the tax in the early morning of the next day; and that on January 26, 1999, you paid the amount of P6,211,742.15 at the Land Bank of the Philippines-Valenzuela Branch as evidenced by Official Receipt No. 4695740 and BIR Form No. 1606. In reply, please be informed that the obligation to pay interest and surcharge under the Tax Code is mandatory. (Commissioner of Internal Revenue vs. Limpan Investment Corporation, L-28644 dated July 31, 1970) The surcharge and interest respectively imposed under Sections 248(A)(1) and 249 of the Tax Code of 1997, are but just compensation to the State for the delay in paying the tax and the concomitant use by the taxpayer of funds that rightfully should be in the lands of the Government. (Central Azucarera de San Pedro vs. Court of Tax Appeals, 20 SCRA 345, Castro vs. Collector of Internal Revenue, 6 SCRA 886) Such being the case, and considering the foregoing circumstances, your failure to remit on time the creditable withholding tax due is not entirely your fault and therefore legally justifiable. This Office has decided to forego the imposition of the corresponding surcharge and penalty but not the payment of interest as imposed under section 249 of the Tax Code of 1997. This will serve as an authority for the Revenue District Officer concerned to issue the corresponding Certificate Authorizing Registration (CAR) in favor of Pilipinas Hino, Inc. Retirement and Severance Benefit Plan. Very truly yours, (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue