BIR Ruling [DA-050-05]

February 1, 2005 BIR RULING [DA-050-05] Mr . Nicolas Y. Cervantes PNL Condo, 28a R. Aquino Compound F. Ortigas St. Acacia Lane Mandaluyong City S i r : This refers to your letter dated January 14, 2005, in connection with your claim for informer's reward allegedly due from the payment of estate tax of Benigno Toda Jr. in the total amount of Seven Hundred Twelve Thousand, Two Hundred Seventy pesos and 86/100 (P712,270.86). In reply, please be informed that you are not entitled to a reward with respect to estate tax due from the Estate of Benigno Toda Jr. To be entitled to reward under Section 282 (A) of the Tax Code of 1997, the information given had led to or had been instrumental in the discovery of the frauds upon or violation of the internal revenue laws or any of the provisions thereof and that such discovery resulted in the recovery and collection of revenues, surcharges and fees and/or the conviction of the guilty party and the imposition of any fine or penalty. The confidential information you gave pertains only to the transaction, involving the two (2) interrelated sales of the Cibeles property in 1989 and the sale of the shares of stock by Mr. Toda in 1990 and therefore, could not have included the estate tax liability of the latter who died on January 16, 1994, long after you have filed the confidential information in question. In short, the payment by the Estate of the late Benigno P. Toda, Jr. of the amount of P3,288,160.22 as deficiency estate tax was not the direct, logical and necessary consequence of the information given by you to paraphrase the Supreme Court in the case of Penid vs . Hon . Cesar Virata and Hon . Efren Plana , G.R. No. L-44004 promulgated March 25, 1983. Finally, your reliance on the statement in the 2nd paragraph of a letter dated October 22, 1997, signed by former Commissioner Chato as basis of your claim for reward is not well-founded. The Chief, Appellate Division who prepared the said letter, has clarified the said statement as follows: aCTADI "To begin with, the Appellate Division has not acknowledged whether or not there is an existing estate tax case filed against the estate of Benigno P. Toda, Jr. of which Mr. Hernandez is the alleged confidential informer for no such case ever reached this division. If ever we stated in said letter that Mr. Hernandez is the confidential informer in the estate tax of the estate of Benigno P. Toda, Jr., it is just that we adopted Mr. Hernandez' allegation or claim, the truth of which this Division could not vouch. Such being the case, this statement could not be invoked as basis to any claim for reward as a confidential informer." In view of the foregoing, we regret to deny your claim for payment of the corresponding reward under Section 282 (A) of the Tax Code of 1997. Very truly yours, (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal and Inspection Group