BIR Ruling No. 018-64

March 19, 1964 BIR RULING NO. 018-64 2nd Indorsement Returned to the Chief, Collection Agents Division, thru the Revenue Operations Head (Collection), his memorandum dated November 21, 1963 relative to the internal revenue case of Dr. FEDERICO V. GIMENEZ. It appears that on May 31, 1963, Abelardo C. Villaflor, Collection Clerk, Regional Office No. 4, Quezon City, was requested by Mrs. Teresita C. Dias of said office to assist her in the collection of internal revenue taxes. Because Mrs. Dias was absent on that day, Mr. Villaflor took his collections consisting of cash and several checks amounting to P7,839.00 with the intention of taking them home to Bocaue, Bulacan, where he resides. He lost said collections, however in the bus, while on his way home. He made good the cash lost with his own money while the checks lost were replaced by their owners except Check No. 68333, drawn against the Bank of the Philippine Island, dated May 31, 1963, by Dr. Federico V. Gimenez in the amount of P4,910.40 in payment of his taxes. The drawee-bank was immediately notified of the incident and advised by the Collection Agent to dishonor said check in case the same is presented for payment. On the other hand, Dr. Gimenez refused and still refuses to replace the check in question despite repeated requests made upon him by the Quezon City Collection. The question to be resolved in this case is whether or not, under the foregoing circumstances, Dr. Gimenez could be held liable for the payment of interests and other penalties imposed incident to delinquency, should demand be made upon him for the payment of the tax. It has been held that payment by check does not per se have the effect of actual payment (Gutierrez, v. Carpio, 53 Phil. 334, 336). Payment by check is not equivalent to payment of money. Checks are not money, but representatives of money; hence, they must be cashed in order to produce effect as payment. In other words, a "check" is merely a representation by the drawer that he has money on deposit with the drawee subject to his order (Vol. 29 Words & Phrases, p. 38) While it is true that the check would have produced the effect of payment had it been presented for payment and accepted by the drawee-bank, nevertheless, the fact that it was not presented because of loss and the taxpayer and the drawee-bank duly advised thereof, the taxpayer could not now be permitted to avoid the tax and increments thereto under the pretense that the tax had already been paid because upon receipt of the notice of loss and request for replacement of the lost check, he ought to know that his check could not have produced the effect of payment. The request for replacement of the lost check constitutes of itself a demand for payment and the refusal of the taxpayer to do so is equivalent to refusal to pay. The taxpayer may, therefore, be considered to be delinquent from the time the request for replacement is made and any demand now to be made upon him for the payment of the tax should include the statutory penalties incident to delinquency. However, before issuing a formal demand upon the taxpayer, he may be given another chance to replace the lost check, and, if after fifteen (15) days from his receipt of the corresponding advisement, he still failed to make replacement, then a formal demand shall be made upon him and the tax, including the statutory penalties collected in accordance with the remedies provided for by law. LexLib (SGD.) BENJAMIN N. TABIOS Acting Commissioner of Internal Revenue