Tax Liability of Acoje Mining Company, Inc.

No date supplied BIR RULING NO. 090-60 The Regional Director Regional District No. 3 M a n i l a S i r : Returned herewith are pertinent papers relative to the internal revenue tax case of the Acoje Mining Company, Inc., involving the sum of P17,228.77 as balance of the penalties due on account of its income tax liability for the year 1957, with the following information: Section 51 of the Tax Code before its amendment by Republic Act No. 2343 provides "xxx xxx xxx "(b) Time of payment . The total amount of tax imposed by this title shall be paid on or before the fifteenth day of May following the close of the calendar year , by the person subject to tax , and , in the case of a corporation , by the president , vice-president , or other responsible officer-thereof . If the return is made on the basis of a fiscal year, the total amount of the tax shall be paid on or before the fifteenth day of the fifth month following the close of the fiscal year. "(c) Installment payments . When the tax assessed against the taxpayer is in excess of ten pesos, the taxpayer may elect to pay the tax in two equal installments in which case the first installment shall be paid on or before the date prescribed in the preceding subsection, and the second installment, on or before the fifteenth day of August following the close of the calendar year, or on or before the fifteenth day of the eight month following the close of the fiscal year, as the case may be. If any installment is not paid on or before the date fixed for its payment, the whole amount of the tax unpaid shall be paid upon notice and demand from the Collector of Internal Revenue. "xxx xxx xxx "(c) Surcharge and interest in case of delinquency . To any sum or sums due and unpaid after the dates prescribed in subsection (b), (c) and (d) for the payment of the same, there shall be added the sum of five per centum on the amount of tax unpaid and interest at the rate of one per centum a month upon said tax from the time the same became due except from the estates of insane, deceased, or insolvent persons." (Emphasis supplied) The aforecited provision of law is explicit on the dates income taxes, whether paid by installment or otherwise, shall be deemed to be legally due. So that, applying the same law, a corporation must pay its income tax on or before May 15, following the close of the calendar year or in case it elects to pay the said tax in two equal installments, the first installment shall be legally due on or before May 15 and the second installment, on or before the 15th of August, both following the close of the calendar year; otherwise, there shall be added to the amount due and unpaid after the abovementioned dates a 5% surcharge and 1% monthly interest computed from the time the tax becomes legally due. Subsection (c) providing for the imposition of surcharge and interest in case of delinquency must be construed or understood in the light of subsections (b) and (c). In fact, the Deputy Commissioner of Internal Revenue in his letter dated February 25, 1958 granting the Acoje Mining Co., Inc. the extension requested by it for filing its income tax returns, made a condition precedent, which was surely received, understood and accepted by the subject taxpayer when the latter filed its income tax return on April 24, 1958 with a copy of the said letter attached thereto, that "50% of the tax due on each return is paid to the Cit y /Provincial/Deputy Provincial Treasurer of Manila on or before May 15, 1958, with or without assessment notice (s) from this Office; otherwise, there shall accrue on the whole tax due on each return the 5% surcharge and the 1% monthly interest from May 16, 1958, pursuant to section 51 (c) of the National Internal Revenue Code." By and large, that letter of the Deputy Commissioner of Internal Revenue even served the purpose of a notice and demand so issued by the Bureau to the taxpayer corporation. When the corporation filed its income tax return with a copy of the said letter attached and within the period covered by the extension granted, it is deemed to have accepted and abided by the terms and conditions embodied in the grant. For this reason, therefore, the contention of its counsel that the interest of 1% from May 15, 1958 to August 15, 1958 on one half of the income tax due is not legally due because there was no notice and demand sent to the corporation by the Bureau of Internal Revenue for the payment of the first installment, is untenable. In this connection, we agree with you in your contention that there is no necessity for an additional notice and demand in order that the 1% monthly interest can be imposed upon the taxpayer owing to his failure to pay the tax on time, it appearing that the "notice and demand" mentioned in section 51(c) were intended as a mere procedural follow-up to a previous assessment notice. The law imposing penalties for delinquencies are clearly intended to hasten tax payments or to punish evasions or neglect of duty in respect thereof. If surcharge and interest for 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 in time. (Jamora, et al., vs. Meer, 74 Phil. 22). In view of the foregoing, it is requested that proper steps be taken to effect immediate collection of the aforesaid amount of P17,228.77 from the Acoje Mining Company, Inc., so that this case may now be closed and terminated. cdtech Very truly yours, MELECIO R. DOMINGO Commissioner of Internal Revenue