Penalty for the Late Filing

April 17, 1990 BIR RULING NO. 060-90 50 (b) 000-00 060-90 M a d a m : This refers to your letter dated February 9, 1990 stating that you executed with Rainbow Integrated Real Estate Corp. an agreement for the purchase of 2 lots, Lots 21 and 23, Block 34, situated at Rainbow Village 5, Deparo, Caloocan City, evidenced by a Contract to Sell dated October 15, 1984; that you have paid on December 26, 1989 the amount of P25,849.86 representing the balance of Lot 21, the total price of which is P95,625.00, evidenced by Official Receipt No. 0913; that as a consequence, you were issued a Deed of Absolute Sale on January 8, 1990 and filed the same with the BIR Caloocan Office on January 23, 1990 under File No. C-074-1; and that you were informed by said Office to settle the following taxes before the said sale could be registered with the Register of Deeds for the eventual transfer of title to said parcel of land in your name: cdtech 10% of Selling Price (withholding tax) P9,562.50 Documentary Stamp Zonal Evaluation 450 x 225 = P101,250.00 131,250.00 P232,500.00 (1%) 2,325.00 Surcharge (late filing) 581.25 Total P12,468.75 ======= ======= Based on the foregoing representations and considering that you have paid the balance of Lot 21 on December 26, 1989 and filed your papers with this Office relative to the aforementioned sale of the same on January 23, 1990 or within 30 days from the date of the execution of the Deed of Sale, you are now in effect requesting a ruling on the following queries: "a) Am I obliged to pay the penalty for the late filing? "b) Could the BIR penalized me now that the 30 days has passed on my processing of papers due to this inquiry? "c) Am I really covered by Revenue Regulations No. 12-89 which I understand was replaced by another Memorandum which took effect February 1990?" In reply, please be informed that the assessment of P581.25 represents the civil penalty of 25% for failure to pay the documentary stamp tax imposed under Section 196 of the Tax Code within the time prescribed under Section 173 of the same Code on the aforesaid Deed of Sale executed in your favor on January 8, 1990. Under said Section 173, documentary stamp tax shall be paid at the time the "act is done or transaction had." The implication is that the documentary stamp tax on the taxable document shall be paid at the time it is issued or executed. Accordingly, since the aforesaid Deed of Sale was executed on January 8, 1990, the documentary stamp tax should have been paid on or about said date. Such being the case, and inasmuch as there was in fact no payment of the tax at the time fixed by law, there was failure to pay the same, in which case, the 25% civil penalty should be paid, in addition to the documentary stamp tax due thereon, pursuant to Section 248(d) of the Tax Code. As regards your queries (b) and (c) which are interrelated, the same are hereby answered as follows: Under paragraph 6 of Revenue Memorandum Circular No. 7-90, in case of installment sales where the buyer is an individual not engaged in trade or business, like your case, only the last installment paid beginning January, 1990 shall be subject to the withholding tax. This is in consonance with the rule that regulations shall apply prospectively. Thus, past installment payments made before 1990 should not be subject to the expanded withholding tax provision because the requirement was imposed only in January 1990. Such being the case, and since you paid the last installment on said Lot 21 on December 26, 1989, the installment payments you made on said Lot 21 are not therefore, covered by Revenue Regulations No. 12-89, as amended by Revenue Regulations No. 1-90. Accordingly, you are not subject to the 10% withholding tax of P9,562.50 being assessed against you. cdta Very truly yours, (SGD.) JOSE U. ONG Commissioner