Request for Waiver of Payment of Penalty Charges on Sale of Real Property

September 3, 2001 BIR RULING NO. 037-01 248 & 249 127-97-037-01 Dr. Leonardo S. Estrada, Jr. 1278-B Calixto Dyco Paco, Manila S i r : This refers to your letters dated February 3 and March 30, 2000 requesting in effect for waiver of payment of penalty charges on the sale to you of a real property located at No. 10 Scout Limbaga, Diliman, Quezon City by Antonio G. Santos. It is represented that the above-described property was acquired by Antonio G. Santos (seller) in his capacity as the highest winning bidder in a Sheriff's sale held by the Office of the Sheriff of Quezon City on April 27, 1987; that on December 1, 1994, you purchased the said property from Antonio G. Santos for a consideration of P2,300,000.00; that at the time of the execution of the Deed of Sale, there was no Owner's Duplicate of the Transfer Certificate of Title (TCT) No. 67856; that you were not able to pay the capital gains tax right away because the district office required you to submit a copy of the TCT No. 67856; that the said TCT which was still in the name of Virginia D. Tan was destroyed when the Quezon City Hall caught fire; that there was an attempt on the part of Virginia D. Tan to reconstitute the title in her name; that in December 1998, a case docketed as Case No. Q-98-79987 was filed against you and your spouse for alleged falsification of public document at the Quezon City RTC, Branch 216, involving the sale of the above-described property; that, however, an Order to Quash Information dated November 29, 1999 was issued by the same court which order became final and executory; that Antonio G. Santos is the legal owner of the above-described property by virtue of the Sheriff Sale, the Order of the RTC, Branch 220 dated November 8, 1994, placing him in possession of the property and the finality of the decision of the Regional Trial Court (RTC), Branch 97 dated October 20, 1989 under LRC Case No. Q-3992 (88) which ordered the Register of Deeds of Quezon City to cause the entry of a new certificate of title in favor of Antonio G. Santos and that the different cases led to the delay and the failure to pay on time the capital gains tax on the above transaction. In support of your request you attached a photocopy each of the following: (1) Transfer Certificate of Title; (2) Tax Declaration; (3) Deed of Absolute sale; (4) Order dated November 8, 1994; (5) Order dated June 21, 1995; (6) Memorandum dated April 15, 1996; (7) Letter to Register of Deeds dated July 15, 1996; (8) Notice of Lis Pendens; (9) Resolution dated July 13, 1993; (10) Resolution dated September 21, 1994; (11) Order dated November 29, 1999; (12) Certification dated February 7, 2000; (13) Certification from the Land Registration Commission; (14) Order dated April 24, 1990; and (15) Other pertinent documents. In reply thereto, please be informed that under Sections 248(a)(1) and (3) and 249, both of the Tax Code, as amended, 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, 7 Phil. 22). This is justified because the intention of the law is precisely to discourage delay in the payment of taxes due to the State and, in this sense, the surcharge and interest charged are not penal but compensatory in nature. They are compensation to the State for the delay in payment or for the concomitant use of the funds by the taxpayer beyond the date he is supposed to have paid them to the State. (Castro vs. Col., etc. Resolution on Motion for Reconsideration, G.R. No. L-12174, Dec. 1962) In view of the foregoing, your request for a waiver of payment of penalty charges on the sale to you of a real property located at No. 10 Scout Limbaga, Diliman, Quezon City by Antonio G. Santos is hereby denied for lack of legal basis. (BIR Ruling No. 121-97 dated November 7, 1997) Please note that being the seller, Antonio G. Santos is the party liable to pay the capital gains tax. 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.) RENE G. BAEZ Commissioner of Internal Revenue