Request for Condonation of Surcharges and Interests

September 20, 2001 BIR RULING NO. 042-01 248 & 249 121-97 Judge Rafael I. Belarmino (ret.) 5 Axtell St. North Fairview Quezon City S i r : This refers to your letter dated June 1, 2001 requesting for a waiver of penalties on the failure of your son to pay on behalf of his client, its income tax on time. It is represented that the Spettacolo Entertainment, Inc ., the client of your son, Danilo G. Belarmino, paid P177,737.65 on income tax; that the return was filed on April 18, 2001 but the check for payment was inadvertently left in the office; that you are enclosing papers on the income tax payment showing that an increment of P47,355.95 is due for payment and an affidavit of the worker of your son explaining that the check was inadvertently left in the office and praying that the increment be waived as this will be chargeable to him for his negligence; that there was complete good faith on the part of the taxpayer but the negligence of the employee of your son was the cause of the delay; that the twenty five percent (25%) penalty for late payment imposed by the BIR is rather onerous; that it is not in keeping with Sec. 19(1) of Article II of the Bill of Rights of our Constitution which reads: "Excessive fines shall not be imposed, nor cruel, degrading, or inhuman punishment inflicted."; and that the Honorable Commissioner has all the power to waive the increment of P47,355.95 on a taxpayer acting in good faith, with no intention to delay, but due to negligence of an innocent worker, receipt of the BIR Region 40, Cubao, Quezon City of the income tax due was delayed a few days. 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, 74 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 of the tax and for the concomitant use by the taxpayer of the funds that rightfully should be in the government's hands. ( Castro vs. Collector of Internal Revenue, 6 SCRA 886) Moreover, under Section 204(B) of the Tax Code of 1997, the Commissioner may abate or cancel tax liability only in two (2) cases, viz. : (a) the tax or any portion thereof appears to be unjustly or excessively assessed; or (b) the administration and collection costs involved do not justify the collection of the amount due. It has also been held that a voluntary relinquishment of a part of a tax lawfully assessed upon and due from a solvent person or corporation is not permitted by law. (16 Op. Atty. Gen. [U.S.] 249) Thus, in the matter of abatement of penalties, the Commissioner of Internal Revenue should not act from motives merely out of compassion or charity, but should consider the pecuniary interest of the government, justice and equity and public policy. In view of the foregoing, this Office regrets to deny your request for the condonation of the surcharges and interests amounting to P47,355.95 inasmuch as Spettacolo Entertainment, Inc.'s case does not fall under the grounds within which the Commissioner can grant abatement. 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