Request for Reconsideration of BIR-Davao's Imposition of Surcharges for Payment of Taxes in the Wrong Venue

September 26, 2000 BIR RULING NO. 047-00 204, 248 & 249-000-00 Ambassador Bienvenido A. Tan, Jr. Trustee, Phil. Business for Social Progress Unit 7A, The Valero Tower Valero St., Salcedo Village Makati City S i r : This refers to your letter dated July 24, 2000 requesting for a reconsideration of the position of the Davao BIR Office imposing surcharges for paying taxes in the wrong venue. aSCDcH It is represented that last 1995, Modern Glass Distributors, Inc. (MGDI), the office of which is in Metro Manila, sold its Davao property to Philippine Business for Social Progress (PBSP), a non-profit social development foundation; that the selling price was P7,500,000.00; that since PBSP is a non-profit organization and did not have the funds to pay for the Davao property in cash, MGDI agreed to receive payment in five (5) yearly installments; that for every installment paid, the corresponding capital gains tax was paid to the Manila BIR Office; that the same procedure was followed in 1999 and 2000 when the 4 th and 5 th capital gains taxes were paid; that the Manila BIR Office continued to receive and issue the corresponding receipts for the said tax payments without informing the payor PBSP that the payment should be made at Davao BIR Office pursuant to the new regulation issued by the BIR; that it was only when PBSP applied for a Certificate Authorizing Registration that it was informed by Davao BIR Office that for paying taxes in the wrong venue, a 25% surcharge and 20% interest per annum will be imposed; that you paid your taxes based on the Tax Code, as amended when payment of taxes in the wrong venue was not subject to penalty; that the 1999 regulation imposing penalty for payment of taxes in the wrong venue is new; that the tax paying public is not effectively informed about the change in the rules; that even the Manila BIR Office does not seem to be aware of the new regulation since it continued to receive the 1999 and 2000 payments without informing PBSP that it should be paying at Davao BIR Office; that since there was neither failure to pay or delay in the payment of the taxes, no interest should be imposed as no damage was caused to the government; and that the failure to pay the said taxes in the wrong venue was not intentional but due to an honest mistake. In reply, please be informed that Section 204(B)(1) and (2) of the Tax Code of 1997, provides "Sec. 204. Authority of the Commissioner to Compromise, Abate and Refund or Credit Taxes . The Commissioner may "xxx xxx xxx "(B) Abate or cancel a tax liability, when: "(1) The tax or any portion thereof appears to be unjustly or excessively assessed; or "(2) The administration and collection costs involved do not justify the collection of the amount due." In view of the justifiable circumstance surrounding your case, your request for waiver of that portion of the tax liability representing the surcharge imposed under Section 248 of the Tax Code of 1997 is hereby granted, pursuant to Section 204(B)(1) of the same Code which grants to the Commissioner the authority to abate or cancel any portion of the tax liability when the same appears to be unjustly assessed. TCAHES 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 as null and void. Very truly yours, (SGD.) DAKILA B. FONACIER Commissioner of Internal Revenue