Grant of Request for Waiver of Surcharge and Penalty

January 8, 2001 BIR RULING NO. 001-01 204, 249 250 000-00 Philippine Appliance Corporation Bo. Maunong, Calamba Laguna Attention: Ms . Divina V. Castillo Senior Vice-President-Finance & Treasurer Gentlemen : This refers to your letters dated January 25, 2000 and February 3, 2000 in effect requesting for waiver of surcharge, interest and compromise penalty on the temporary deferment of payment by Philippine Appliance Corporation's (PHILACOR) of national taxes due to a labor strike. Documents show that on October 26, 1999, the rank and file union of Philacor filed a notice of strike due to a bargaining deadlock with the National Conciliation and Mediation Board (NCMB), Region IV, Calamba; that a series of conciliation meetings were held between the management and the union; that on December 2, 1999, after the conciliation meeting with the NCMB failed, the union started a strike; that on January 18, 2000, the rank and file union of Philacor launched a labor strike and barricaded the principal office and main plant of Philacor situated at Bo. Maunong, Calamba, Laguna and at the Washer Plant on Edison Avenue, Paraaque; and that the employees were prevented from entering the plant where all pertinent records and documents were kept. In reply thereto, please be informed that under Sections 248(A)(1) and (3) 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) The actions of Philacor show that there was no intention whatsoever on its part of not filing the corresponding returns and paying the taxes thereon. On the contrary, Philacor displayed zeal in fulfilling its duty under the law. Since Philacor notified this Office of its failure to file the returns and pay the taxes thereon within the prescribed period due to the labor strike which is beyond its control, your request for waiver of the payment of surcharge and penalty, in behalf of Philacor, is hereby granted but not the payment of interest imposed under Section 249 of the Tax Code of 1997, pursuant to Section 204 of the same Code which grants to the Commissioner the authority to abate or cancel a tax liability. aSCHIT 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.) DAKILA B. FONACIER Commissioner of Internal Revenue