BIR Ruling [DA-411-99]

July 19, 1999 BIR RULING [DA-411-99] Mr. Felicisimo O. Joson, Jr . Acting Secretary Department of Labor and Employment Intramuros, Manila S i r : This refers to your letter dated June 8, 1999 stating that the late Aproniano Sosa and Juana Ramos Sosa were the lawful owners of two (2) adjoining. parcels of land located at Barrio Calibuyo, Tanza, Cavite covered by TCT No. T-97296 issued by the Registry of Deeds for the Province of Cavite containing an area of 31,214 square meters; that Ms. Nilda I. Ramos being the attorney-in-fact of the heirs of the late Aproniano Sosa and Juana Ramos Sosa executed on December 19, 1995, a Special Power of Attorney in favor of Glenn Solis; that a Contract to Sell was executed by and between Glenn Solis (Vendor) and National Maritime Polytechnic (Vendee) represented by their Executive Director, Renato B. Palomo whereby the Vendor have offered for sale to the Vendee a portion of the above-mentioned properties containing an area of 22,296 square meters for and in consideration of P7,803,600.00 or at P350.00 per square meter; that the Vendor agrees to shoulder the expenses for Extra-Judicial Partition of Estates, publication, 50% capital gains tax and any fees incident thereof while National Maritime Polytechnic agreed to shoulder the payment of the other 50% of the said capital gains tax because to do otherwise would mean no consummation of the sale transaction; that on December 27, 1996, a Deed of Absolute Sale was executed by and between Glenn Solis and National Maritime Polytechnic involving the above-mentioned parcels of land; and that the capital gains tax has not yet been paid because the seller/vendor who has to shoulder the fifty percent (50%) of the capital gains tax is missing and cannot be located inspite of National Maritime Polytechnic's efforts to find him. In connection therewith, the Board of Trustees of National Maritime Polytechnic during its meeting held last June 1, 1999 request for the waiver of the corresponding surcharge, penalties and interest for the late payment of capital gains tax and documentary stamp tax relative to the above-mentioned sale. In reply, please be informed that under Sections 248(A)(1) and 249 both of the Tax Code of 1997, the imposition of the surcharge and interest on delinquency is mandatory. Strong reasons of policy support a strict observance of the rule regarding the payment of tax. The laws imposing penalties for delinquencies are clearly intended to hasten tax payments or punish evasions or neglect of duty in respect thereof. If delays in tax payments are to be condoned for light reasons, the law imposing penalties for delinquencies would be rendered nugatory and the maintenance of the government and its multifarious activities would be as precarious as taxpayers are willing or unwilling to pay their obligations to the State on time. ( Jamora vs. Meer , 74 Phil. 22) DcITaC However, in view of the exceptional circumstances which justifies its late payment of capital gains tax and documentary stamp tax respectively imposed under Sections Section 24(D) and 196 both of the Tax Code of 1997 within the time specified in Revenue Regulations No. 8-98 and Revenue Regulations No. 1-98, respectively, your request for the waiver of the surcharge is hereby granted but not the payment of interest imposed under Section 249 of the Tax Code of 1997. Very truly yours, (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue