Income Tax Case of Mr. Feliciano E. Santiago

May 10, 1960 BIR RULING NO. 233-60 2nd Indorsement Returned to the Chief, Investigation Division, Bureau of Internal Revenue, Manila, the papers bearing on the income tax case of Mr. Feliciano E. Santiago, 2334 F.B. Harrison, Pasay City. cdtech The records of the case show that the amount of P5,414.00 as income tax for 1954 was assessed against Mr. Feliciano E. Santiago on June 10, 1959, but that said taxpayer requested a reinvestigation of the case claiming that some of the items requested to be reinvestigated refer to his interest and profits in Bulakea Restaurant & Caterer which are supposed to have been assumed by the spouses Anastacio Garcia and Consuelo S. de Garcia in an affidavit executed on February 12, 1959 by said spouses and in the deed of sale dated December 30, 1954 wherein Mr. Santiago sold all his rights to the restaurant to Mr. & Mrs. Garcia. The pertinent provision in said affidavit executed by Mr. & Mrs. Garcia is quoted below: "That after the sale on December 30, 1954 of the share of Feliciano Santiago, we assume all tax liabilities and other government charges arising out of and/or pertaining to the business operations of the Bulakea Restaurant and Caterer on or before said date December 30, 1954 ." (Emphasis supplied) The pertinent provision of the deed of sale is also quoted below: "2. That in view of this sale, ownership of the business referred to has been consolidated in the person of the purchaser Consuelo S. Garcia who is now the sole owner thereof; the partnership aforementioned is therefore hereby ended, dissolved, and otherwise terminated as of the end of December, 1954, and in accordance therewith, all rights and obligations, income, expenses and other incidents of the business shall hence forth be for the sole account of the single proprietor, Consuelo S . Garcia ." (Emphasis supplied). A person's personal tax liability cannot be assigned to another. While the assignment may have force as between the parties, nevertheless, in case of the failure of the assignee to satisfy the tax liability of the assignor, the latter shall remain liable thereto. In their affidavit, Mr. & Mrs. Garcia assumed only the tax liabilities and other government charges arising out of the business of the Bulakea Restaurant & Caterer and not the personal income tax liabilities of Mr. Santiago. As a matter of fact, there was actually no assignment of tax liability, because the restaurant itself is the taxpayer and not the individual partner. When Mr. Santiago sold his interest in the business to his partner, any existing tax liability of the business shall have remained the direct liability of the restaurant regardless of whether or not there was assumption of any such liability by the remaining partner. cdt (SGD.) MELECIO R. DOMINGO Commissioner of Internal Revenue