BIR Ruling [DA-365-98]

August 13, 1998 BIR RULING [DA-365-98] Sycip Gorres Velayo and Co. 6760 Ayala Avenue Makati City Attention: Mr . Joel L . Tan-Torres Gentlemen : This refers to your letter dated January 8, 1998, requesting on behalf of your clients, 15th Floor Pacific Star Limited, 17th Floor Pacific Star Limited, 18th Floor Pacific Star Limited, for waiver of surcharges for late payment of the first quarter value-added tax (VAT) liabilities. cdti It is represented that the above-named companies are Hongkong-based corporations duly authorized to do business in the Philippines as lessors of real properties, all with office address at PHI Le Metropole, Sen. Gil Puyat Avenue corner Tordesillas Street, Makati; that they have designated an agent in the Philippines to handle all their administrative and compliance requirements; that these companies, since the implementation of the Expanded Value-Added Tax Law (EVAT Law), have been regularly paying VAT to the government; that when they changed their Philippine representative or agent during the latter part of 1996, they failed to pay their VAT liabilities, particularly for the months of January, February, and March 1997 because of the transitional problems caused by the change of agent; that after your clients hired a replacement for their previous representative or agent, they again were able to pay without fail their VAT liabilities starting April 1997 onwards; that your clients have no intention not to pay their first quarter VAT liabilities; and that upon learning that their designated (now resigned) agent was not able to pay the VAT due, your clients are now offering to pay their total VAT liabilities amounting to P1,021,759.53 broken down as follows: P284,721.12 for the 15th, P384,574.44 for the 17th, and P352,463.97 for the 18th floors including interest at the time of payment, but excluding the 25% surcharge for late payment. In reply thereto, please be informed that inasmuch as the failure of your clients to pay the VAT for the first quarter of 1997 was due to circumstances beyond their control, their aforesaid request to pay without the corresponding surcharges on their respective VAT liabilities, i.e., P284,721.12 for the 15th Floor, P384,574.44 for the 17th Floor and P352,463.97 for the 18th Floor, is hereby granted. The said VAT liabilities, however, are subject to the corresponding interests computed on a per annum basis until the same are paid and to the payment of compromise penalty pursuant to Sec. 204 of the Tax Code of 1997 (also Section 204 of then Tax Code, as amended). You are hereby directed to advise your clients to pay their VAT liabilities in the total amount of P1,021,759.53 plus the corresponding interest computed until the same are paid and compromise penalty within ten (10) days from receipt of this letter. However, this will not constitute a waiver of our right to investigate the VAT returns filed by your clients for the aforestated period, and consequently assess and collect the corresponding deficiency taxes, inclusive of the statutory penalties that may still be found due from the subject taxpayers. (BIR Ruling No. DA-47-97 dated January 30, 1997). casia Very truly yours, (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue