BIR Ruling [DA-390-99]

July 8, 1999 BIR RULING [DA-390-99] Ms. Evelyn Uy Unit 2, No. 53 14th Street New Manila Quezon City M a d a m : This refers to your letter dated January 29, 1999 requesting on behalf of your client, Power Management Consultancy, Inc. for the waiver of surcharge and interest for its failure to pay on time the documentary stamp tax imposed on the original issuance of shares of stock under Section 175 of the Tax Code of 1997. It is represented that Power Management Consultancy, Inc. is a domestic corporation duly registered with the Securities and Exchange Commission (SEC); that as a practicing accountant, you applied on behalf of Power Management Corporation, Inc. for a mayor's permit and at the same time applied for Tax Identification Number (TIN) with the Bureau of Internal Revenue (BIR) in order to pay the documentary stamp tax imposed on subscribed capital by filing BIR Form No. 2000; that for some reasons or another, Revenue District Office (RDO)-San Juan Branch does not want to receive the application until the following requirements like BIR Form No. 1903 and the mayor's permit are complied with; that upon the issuance of the mayor's permit and the subsequent issuance of the TIN Card in favor of your client, Power Management Consultancy, Inc., you were informed that the RDO-San Juan cannot accept the payment for documentary stamp tax until the surcharge of 25% and other penalties are likewise paid. 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(A) 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 hands 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) cADTSH Such being the case, and since the delay in the payment of documentary stamp tax on the original issuance of the shares of stock imposed under Section 175 of the Tax Code of 1997, is not your fault and therefore legally justifiable, your request for waiver of surcharge and penalty is hereby granted but not the payment of interest imposed under Section 249 of the Tax Code of 1997. This ruling is being issued on the basis of the foregoing facts as represented. 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