Denial of Request for Waiver of Surcharge, Interest and Compromise Penalty

February 14, 2002 BIR RULING NO. 007-02 Sec. 204 (A) (2) 000-00 Ms. Teresita Santos, et al. c/o Ms. Potenciana Jabson 30 R. Jabson St., Brgy. Malinao Pasig City Gentlemen : This refers to your letter dated July 15, 1997 requesting for the waiver of the surcharge, interest and compromise penalty due to non-payment of Documentary Stamp Tax (DST) and Capital Gains Tax (CGT) assessed and issued by BIR - Quezon City Office, by reason of financial incapacity. It is represented that you and other buyers, namely: Name of Buyer Assessment DST CGT TCT # Area # (Basic) (Basic) Teresita Santos 11-176-96 P1,240.62 P5,334.34 PT-91591 45 Azucena Sunga 11-178-96 1,225.00 5,238.03 PT-91591 44 Alicia Basilio 11-143-96 1,121.87 4,753.99 PT-91591 39 Francisco Dizon 11-177-96 1,300.00 5,623.30 PT-91591 48 Josenido Ondevilla 11-469-96 681.25 3,504.29 PT-91591 26 Virginia Tiemsin 11-170-96 2,350.00 9,476.05 PT-91591 88 Milagros de Villa Octera 11-145-96 1,256.25 5,427.79 PT-91591 46 Brenda Petras 11-172-96 1,256.25 5,430.66 PT-91591 46 Rogelia Felipe 11-173-96 1,240.62 5,334.34 PT-91591 45 Reynaldo Bernate 11-107-96 1,150.00 4,849.00 PT-91591 40 Erlinda Robles 11-175-96 1,262.50 5,430.66 PT-91591 46 Jesus Briones 11-168-96 1,300.00 5,623.30 PT-91591 48 Ignacio Tabenas 11-171-96 1,450.00 6,393.85 PT-91591 56 were proven to be urban peasants and originally possessors in bad faith of various parcels of land owned by Potenciana Jabson as per actual investigation and ocular inspection made by our Regional Office, Quezon City; that in exchange for the easy terms afforded to you by the landowner, you agreed to shoulder all transfer taxes required by law; and that in keeping with the said agreement between you and the landowner, you are requesting this Office to allow you to settle your liabilities by way of paying only the basic tax due (DST and CGT), taking into consideration your financial status. In reply, please be informed that Section 2 of Revenue Regulations No. 13-85 implementing then Section 21(b) (now Section 24 (D) (1) of the Tax Code of 1997) provides that the person liable to pay the capital gains tax is the seller or the person who is presumed to have realized an income or gain from the transaction. This Office recognizes the validity of the agreement between the seller and the buyers whereby the latter assumed the payment of all transfer taxes as having the force of law between the parties. However, Section 204 (A) (2) of the Tax Code of 1997 is for the benefit of the person liable under the law to pay the tax. Under the law, it is the seller who is liable to pay the capital gains tax. It appears that the financial position of the seller does not demonstrate a clear inability to pay the assessed tax. Accordingly, there is no basis for compromise insofar as the seller is concerned. To rule otherwise would provide an opportunity for circumventing the law. In view of the foregoing, we regret to inform you that your request is hereby denied for lack of legal basis. 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. ETHCDS Very truly yours, (SGD.) REN G. BAEZ Commissioner of Internal Revenue