BIR Ruling No. 218-61

May 31, 1961 BIR RULING NO. 218-61 Messrs. Sycip, Gorres, Velayo & Co. Certified Public Accountants P. O. Box 589, Manila Gentlemen : Reference is made to your letter dated May 18, 1961, requesting opinion as follows: cdt "Our client is engaged mainly in the warehousing business. It entered into a contract of lease involving a warehouse and the lot on which the warehouse is erected, together with an empty lot adjoining these premises and from which it receives a rental income of more than P4,000.00 per annum. Our client has included this rental income as part of its monthly gross income from its warehousing business and paid the 3% tax thereon. The 3% tax paid by our client on the rental income is more than the real estate dealer's fixed tax it should have paid as a real estate dealer. Based on the foregoing facts, we are requesting your opinion on the following questions: "1. Should the said rental income be included as part of the monthly gross receipts of a warehouseman subject to the 3% contractor's tax under Section 191 of the Tax Code, or should the said rental income be separated from the monthly gross receipts on the warehousing business and the taxpayer pays separately the corresponding taxes, i.e., as a warehousemen under Section 191 of the Tax Code and as a real estate dealer under Section 182(A)(3)(s), in relation to Section 194(s) of the same Code? cdll "2. Supposing the taxpayer failed to pay the real estate dealer's tax on the said rental income, can he be held liable for deficiency real estate dealer's fixed tax, surcharge and penalty even if he paid the 3% contractor's tax on such rental income, which is higher than the real estate dealer's fixed tax due thereon?" In answer thereto, I have the honor to inform you that under the circumstances, your client is engaged in two distinct businesses, the business of warehousing and that of real estate dealer. Such being the case, and considering that the former is subject to the fixed and percentage taxes prescribed in Sections 182(A)(1) and 191 of the Tax Code, while the latter to the real estate dealer's fixed tax under Section 182(A)(3)(s) of the same Code (no percentage tax is imposed on real estate dealers), the gross receipts delivered by your client as warehouseman should not be included with the rental income received by it as real estate dealer. llcd If the case be that, as claimed in your letter, the amount paid by your client as 3% contractor's tax on the rental income it realized from the lease in question is bigger that it should have paid as 3% tax may be credited against that due as real estate dealer's fixed tax, in which case your client will not be liable for any efficiency tax. For the purpose, however, it is necessary that a written claim for credit of the tax be filed in accordance with Section 309 of the Tax Code. Neither is your client liable for any surcharge, there being no surcharge imposed by law for failure to pay a privilege tax. However, being criminally liable for having failed to pay said tax, its penal liability may be settled extra judicially by paying a compromise penalty. LibLex Very truly yours, (SGD.) MISAEL P. VERA Acting Commissioner of Internal Revenue