December 28, 1999

BIR RULING NO. 205-99

Sec. 248 & 249, T/C-000-00-205-99 General Vehicle Parts Manufacturing and Rebuilding Center, Inc. Penthouse, Legaspi Towers 300 Roxas Boulevard Attention: Ms. Norma Cayton President Gentlemen: This refers to your letter dated August 20, 1999 requesting reconsideration of BIR Ruling No. 122-99 dated August 11, 1999 relative to your request for a waiver of the surcharges and interest on your deficiency taxes under Sections 248(a)(1) and (3) and 249, both of the Tax Code, as amended (also Section 248(A)(1) and (3) and 249, both of the Tax Code of 1997), wherein this Office held that:
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"In reply thereto, please be informed that under Sections 248(a)(1) and (3) and 249, both of the Tax Code, as amended, the imposition of the surcharge and interest on delinquency is mandatory. Strong reasons of policy support a strict observance of the rule regarding the payment of tax. The laws imposing penalties for delinquencies are clearly intended to hasten tax payments or punish evasions or neglect of duty in respect thereof. If 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 on time (Jamora vs. Meer. 7 Phil. 22). This is justified because the intention of the law is precisely to discourage delay in the payment of taxes due to the State and, in this sense, the surcharge and interest charged are not penal but compensatory in nature. They are compensation to the State for the delay in payment or for the
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concomitant use of the funds of the taxpayer beyond the date he is supposed to have paid them to the State. (Castro vs. Col., etc. Resolution on Motion for Reconsideration, G.R. no. L-12174, Dec. 1962) Accordingly, your request for a waiver of surcharges and interest on your deficiency taxes is hereby denied for lack of legal basis."
cdtai

You further represented that General Vehicle Parts Manufacturing and Rebuilding Center, Inc. ("Genmarc") suffered seriously in the last Asian Devaluation Crisis; that your sales in both 1997 and 1998 were in very, very low level; that said sales were not even enough to sustain your expenses and overhead; that to avoid further losses and considering that the economy will not recover in a very .short time the shareholders of Genmarc decided to reduce its operations, personnel and conduct public auction sales of its inventories and other assets in November 1998; that the public auction sales were not the right move though, but at least the company generated the cash needed to pay the personnel you laid off and due creditors; that since you knew in advance that you had no other source of funds to pay your income tax liabilities, on August 10, 1998 you submitted your Tax Credit Certificates (TCCs) for revalidation much earlier than its due date so that the same can be used to fulfill your obligation to pay your taxes on time; that you have exerted efforts to follow up the release of your TCCs, by letters, phone calls and personal visits to this Office to collect the revalidated TCCs; and that the revalidated TCCs were only released to you in May 1999. Your actions show that there was no intention whatsoever on your part of not filing and paying your income tax liability on time. On the contrary, you displayed your zeal in fulfilling your duty under the law despite Genmarc's financial predicament. In view of the justifiable circumstance surrounding your case your request for waiver of the payment of surcharge and penalty is hereby granted but not the payment of interest imposed under Section 249 of the Tax Code of 1997. The proper tax and interest shall be paid within ten (10) days from receipt of this latter. This modifies BIR Ruling No. 122-99 dated August 11, 1999 in so far as it subjects you to payment of surcharges and penalty.
cdasia

This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void.

Copyright 1994-2006

CD Technologies Asia, Inc.

Taxation 2005

Very truly yours,

(SGD.)BEETHOVEN L. RUALO Commissioner of Internal Revenue

Copyright 1994-2006

CD Technologies Asia, Inc.

Taxation 2005