CTA Case No. 3528 (Decision)

~EPUBLlC OF THE PHILIPPINES C )URT OF TAX APPEALS QUEZON CITY .. / WESTINGHOUSE I NTERNATIONAL PROJECTS COMPANY, Petitioner:, C.T.A. CASE NO. 3528 COMMISSIONER OF INTERNAL REVENUE, Re:s.ponden t. X- - - - - - -X DE C I S I 0 N I This. action involving a claim for refund or tax � cr e dit i s no t hin g more than a que~s: tion of the l e gality of an impo sition of the surcharge pres,cr i bed in Sect ion 51 (e) (_ 3) _of the National Int.e rnal Revenue Code, as amended, providing that - "Sur�charg1e. - If any amou n t of tax ,' shown on t.he return i s not paid in full on or before� the date� prescribed for its - payment under paragr:aph (a) of this section , or any amount of de ficiency, and any in tere~ st assess.ed in connection there- with, is not paid in full v1i thin the period prescribed in the as.seS.sment notice and demand require d under paragraph (b) of this section, there shall be collected fri addi t ion to the interes t prescribed herein and in parag raph (d) above and as par t of the t.ax a surcharge of t e n per centum o f the amou nt of tax unpaid." (As amended by P . D . No. 1705) �. Petitioner foreign co r porat.ion duly authorized to engage in trade or bu s iness in the Philipp ines filed on May 2.8, 1982 an amend ed income ta ~ return for the year 382

DECISION - CTA CASE NO. 3528 - 2- ended Dec:embe~: ll, 1981 and accord ingly paid the following: Basic corporate inc:ome tax ��� �14,539,438.00 Interest �������������������� 105,314.96 10% sur:chargje ��� ���� ���� ��� .'. 4.53,943.80 Compromise penalty ���������� 300.00 Total .. .. .............. . PS,098,996.76 On October 11, 1982 pe�titione:r filed with the respondent a written ~laim for refund or tax credit of the s;pecified amount of �1'453, 943.80 representin9 the 10% surch a rgje levied in the late paymen~ of the corporate income taK pursuant to Section 51 (e) (3) .of the Tax Code, supra , likewise, filed the instant petitiog for review on October 12, 1982 . The case was submitted for dec:is;ion on the basis of the pleadings and record. Petitioner alleges in substance that it filed the amende'd income . tax return and paid the corresponding ba~ic corpo rate' tax as so indic:ated plus inte r est penalties bu t it could rot have been liable muc:h less: comte.led to pay the 10% surcharge before a formal notice or d e mand for any de'fic ien c y is issue'd as pr.esc:ribed under the provision of Sec:tion 51 (e ) ( 3) �. Respondent all e ges that on th e c ontrary, p . ti t ioner's. failure to pay t h e tax as shown in its a mended return for the ye:ar ended Decembe r l1, 1981 on or .before April 15, 1982 the due dat e there�for , incurred the s.urcharge even without an 38~

DECISION - CTA CASE NO. 3528 - 3- ass.e:ss.m n t notic:e and demand as the s.ame acc rues where there is delay in the payment of the taxes due. It seems apparent that the quibble on t he proper application of the provision is a question of construction. Th e language thereof is not simply strung; with syntactical correctne s s but appears su ff ic:iently plain and obvious to cover petitioner's case. Mdreover , the pellucidity of the intendment requires no further exegesis. Quit.e evident from a reading of the provision a r e the instances .upon which a su.v.:charge may reach and apply, viz.: l) if any amount of tax shown on the r e turn is ndt paid in full on or before the date pres.cr ibed for its payment; or 2) _if any amount o~ deficiency is. not paid in full within the period p.v.: e scribed in the assessment notice a :ri demand. In either situation, "there shall be collected in additi on to "the interest prescr i bed herein and para- .' graph (d) _abov-e and as part of the tax a s.urcharge of ten e�r� centum of the amount of tax unpaid." It appears manifest that ins.of~r as the provision is brought t o bear upon the circumstances obt aining, peti tione~r' s cas.e readily slips into that. cubbyhole of t he situation contempla ted in the first. It's tax liability for the calendar year ended December 31, 1981 fell due on Ap1r il 15, 1982 (Sec. 46 (b) .of the Tax Code) but wa s paid only on May 28, 19'82 upon the filing of the 384

DECISION - CTA CASE NO . l528 - 4: - co:rre~cte~d inc:ome~ tax, re~ tuJrn. The~re~ is; nothin9 ambiguous. nor c:r.yptic: in t ,e: language' of the pr o~isi on as regards the time~ frame for. the ch i ps to fall in s;a tisf action of the le~gal pre~ sta tion. No more: should i t rna tte:r whether the payment of the bas�.ic: corporate tax and the cor.re'sponding. in t:e:r:e,s:t for. late~ payme nt. was. \mlun tary . The fact re- mains that p e~ ti tioner failed 'to meet its tax. obliga t ion on or before the date fixed by law as thus impelling the imposition of the' sur:c:harg1e mandated in Se�ction 5il(e) (3) of the Tax Code . "It is obvious that the intere�st and s:u r c:harge are in~ariably consider ed 'part. of the tax ' s o that. the rule go~e~rnin91 payment of tax:e~ s on the dates f i>c:ed by law wou l d apply, and would lea~e no room for discretion on the~ part of the Icevenue officials, or the Court of Tax Appe~als; for: that matter:." (Commissioner of Internal Revenue~ v. Abad, L-19627, June 27 , 1968) �. We hesitate to further fashion an issue into a satisfactor ily settled legal ~ituation. _. Petitioner. ' s: stanrelling agitation on the want of a formal notice and demand on a deficiency for t .he collection of any surcharge need not be a prerequisite. If we are rig1ht in our: unde r s-.tanding t~at peti t ioner's income tax return led not into the necessity of being subjected to a demanding wringer of a polyptych verification and/or � inv�estigation foJr. a finding of additional liabilities, 385

DECISION - CTA CASE NO. 3528 - 5- the absence of an as:sess.men t notic:e and demand is no accident, neither the issuance thereo� essential . The evident fact of late payment would have sufficed to assert the compel ling imporc and force of the pros- cr.iptions in Sec:tion 51 (e) (3) '� supra. Petitioner has clearly brought itself within t he rule that, "The S% (now 10%) surcharge f6r lat~ payment of tax is mandatory and automatic:ally due once the ta~' is not paid on time." (Republic v. Lim Tian Teng Sons & Co., 16 SCRA S86) �. And, by principle and authority "The inten~ion of th e law is pr:e�cisely to discourage delay in the payment of taxes due to the Stat~ and, in this s:ense, the surcharge and interest cha rged are not penal but compensatory in nature. They are compensation to the State for t he delay in payment, or for the concomitant use of the funds by the taxpayer beyond the dates he should have paid them to the State." (Commissioner of Inte rnal Revenue v. Limpan Investment Corporation, L-28571 and L-28644, July ...... 31, 1970; SCRA 148) �. All that we decide is that the 10% surcharge imposed in Section Sl(e) {3) ?f the Tax Code does apply to the case like the petitioner's. WHEREFORE, the instant petition is hereby dismissed with costs against the petitioner. 386

T . ' . ' DECISION - CTA CASE NO. 3528 - 6- SO ORDERED. Quezon City, Metro Manila, December 28, 1983,. WE CONCUR: C. ROAQUIN ~ssoci te Judge _. 38 t'