BIR Ruling [DA-562-99]

September 29, 1999 BIR RULING [DA-562-99] Office of the Provincial Accountant Republic of the Philippines Province of Cebu Attention: Mr . Marieto M . Ypil Provincial Accountant Gentlemen : This refers to your letter dated June 29, 1998 relative to your internal revenue tax case involving the total amount of P4,726,332.51 under Assessment Notice Nos. 81-WT-13-93-95-1-00105; 81-WT-13-93-95-1-00106; 81-WT-13-93-95-1-00107; 81-WT-13-93-95-1-00108 dated January 28, 1995 representing penalties for late remittance of the withholding tax on government money payments for 1993. prcd In a letter dated June 29, 1993 addressed to Dir. Akmadul J. Sarapuddin, Revenue Region No. 7, Cebu City, you alleged that you have gone over the assessment made but you cannot reconcile the same against your records as you have no details of the said Assessment Notice; that your records show that you have been religiously remitting the taxes withheld due for the BIR for the period stated, notwithstanding your problem of shortage in personnel complement: Month Remitted Amount 1993 January June 1, 1993 P46,471.12 February July 26, 1993 192,165.23 March Sept. 6, 1993 162,156.42 April Sept. 17, 1993 129,541.15 May Sept. 30, 1993 181,363.17 June Oct. 14, 1993 326,465.83 July Oct. 18, 1993 734,997.44 August Nov. 23, 1993 403,139.26 September Dec. 13, 1993 393,164.62 October Feb. 02, 1994 525,217.41 November Feb. 02, 1994 386,423.09 December May 11, 1994 1,100,142.19 Total P4,581,246.93 =========== that you are basing your remittances on liquidated vouchers and payrolls in accordance with existing accounting and auditing rules and regulations; that with enormous volume of transactions that you have to go over each month for this purpose, it makes it impossible for you to meet the 10 th day of the following month deadline, taking into consideration that the whole task was assigned to only one accounting staff; and that you are trying your best to address the gray areas in your system of remittances to the BIR. In connection therewith, you are requesting for a condonation of your aforesaid tax liabilities. In reply, please be informed that pursuant to Section 247(b) of the Tax Code, as amended [also Sec. 247(b) of the Tax Code of 1997] if the withholding agent is the Government or any of its agencies, political subdivisions or instrumentalities, or a government-owned or controlled corporation, the employee thereof responsible for the withholding and remittance of the tax shall be personally liable for the additions to the tax prescribed herein. Accordingly, as the Provincial Accountant, you are personally liable for the penalties prescribed for late payment and remittance of the withholding tax on government money payments for 1993 under Chapter I, Title X of the said Code. Such being the case, your request cannot be granted for lack of legal basis. Pursuant to Section 2 of Revenue Regulations No. 5-85, as amended by Revenue Regulations No. 2-98, taxes deducted and withheld on income payments subject to the creditable withholding taxes shall be remitted within ten (10) days after the end of each calendar month with the filing of the appropriate returns. Moreover, under Section 51 of the Tax Code, as amended [now Section 58 of the Tax Code of 1997] taxes deducted and withheld by the withholding agent shall be held as a special fund in trust for the Government until paid to the collecting officers. The imposition of surcharge and interest is but a just compensation to the State for the delay in paying the tax and for the concomitant use by the taxpayer of funds that rightfully should be in the hands of the Government. (Central Bank vs. Collector of Internal Revenue 6 SCRA 886) prcd This constitutes the final decision of this Office on the matter. Very truly yours, (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue