Request for Exemption from Payment of Penalty Since the Necessary Taxes Have Been Voluntarily Paid

May 27, 1992 BIR RULING NO. 168-92 248 (a) (2) 000-00 168-92 Philippine Veterans Investment Development Corporation 3rd Floor, DAO 1 Bldg., Salcedo St. Legaspi Village, Makati, Metro Manila Attention: Col . Cesar L . Pio Roda (Ret . ) President Gentlemen : This refers to your letter dated January 13, 1992 stating that you are a government-owned and controlled corporation: that in connection with your financial rehabilitation, a Dacion en Pago Agreement was entered into between you and the secured creditors wherein your real estate property located in Naga City was assigned and transferred to the creditors; that as a matter of corporate policy, your Board of Directors had to confirm such an agreement prior to its implementation; that upon confirmation of said agreement on December 4, 1991, you paid this office thru the BIR Office at West (Makati), the corresponding creditable withholding tax amounting to P234,013.00 on December 11, 1991 under Confirmation Receipt No. 24279859; that when your staff was sent to the Register of Deeds, Naga City for annotation on the title, you were required a Certificate of Payment (Certificate Authorizing Registration) from the BIR but the BIR, Naga City declined to issue the said certificate unless you pay the penalties for filing the return in Makati which is not within the jurisdiction of Naga City; and that likewise, BIR-West (Makati) declined to issue a certificate of payment (Certificate Authorizing Registration) because the property is located in Naga City. Based on the foregoing representations, you now in effect request a ruling exempting you from the payment of penalty inasmuch as you have voluntarily paid the necessary taxes. In reply, please be informed that under Revenue Memorandum Circular No. 7-90, (Rationale) clarifying some pertinent provisions of Revenue Regulations No. 12-89 as amended by Revenue Regulations No. 1-90 implementing Section 50(b) of the Tax Code, as amended, it is stated that under existing issuances, sellers of real properties are required to file their capital gains tax returns within 30 days from date of sale/exchange at the Office of the Revenue District Officer where the property is located. This procedure is followed for all types of taxpayers, corporation or otherwise, whether taxable or exempt from the capital gains (final) tax. In this connection, Section 248(a)(2)and (c) and Section 249(a) provides as follows: "Sec. 248. Civil Penalties . (a) There shall be imposed , in addition to the tax required to be paid, a penalty equivalent to twenty-five percent (25%) of the amount due, in the following cases: (1) . . . (2) Filing a return with an internal revenue officer other than those with whom the return is required to be filed; or (3) . . . (4) . . . (b) . . . (c) The penalties imposed hereunder shall form part of the tax and the entire amount shall be subject to the interest prescribed in Section 249. Sec. 249. Interest . (a) In general . There shall be assessed and collected on any unpaid amount of tax, interest at the rate of twenty percent (20%) per annum , or such higher rate as may be prescribed by regulations, from the date prescribed for payment until the amount is fully paid." From the foregoing, it would appear that you are subject to the aforecited penalties. However, considering that in your desire to promptly pay the aforesaid tax due on the Dacion en Pago Agreement you entered into with your secured creditors, you effected the payment of the said tax with the Revenue District Office (Makati) other than where the property in question is located which in turn accepted the said payment despite the fact that it has no jurisdiction to receive such payment, this Office hereby waives the imposition of the 25% surcharge under Section 248(a)(2) of the Tax Code, thus granting your request relative to such penalty. Very truly yours, JOSE U. ONG Commissioner of Internal Revenue