BIR Ruling [DA-249-98]

June 18, 1998 BIR RULING [DA-249-98] Hon. Salvador M. Enriquez, Jr. Secretary of Finance Manila S i r : We are forwarding herewith for your approval the herein claim for informer's reward of Ms . Priscilla M . Cailes of Apaya, Malasique, Pangasinan under then Section 281(1), as amended [now Section 282(A) of the Tax Code of 1997] including the dockets bearing on the internal revenue tax cases of the following hotels belonging to the Anito Group of Companies owned and operated by Mr. Angelo King, namely: (A) U-Belt Services Corporation ; (B) Binondo Tourist Development Corporation ; (C) Sta . Mesa Tourist Development Corporation ; (D) Quiapo Tourist Development Corporation ; and (E) Prince Town Development Corporation , all for the years 1993 and 1994. The records show that on June 9, 1994, the above-named informer executed an Affidavit which was denominated as Confidential Information No. 74-94 denouncing Wise-Hotel Avenida whose corporate name is Binondo Tourist Development Corporation for allegedly having " substantially under (declares its gross receipts from its hotel operations by declaring only pre-determined amount as its daily sales which is only a fraction of actual receipts . That being a former member of the hotel accounting staff, I have personal knowledge of the violation of existing tax laws by WISE-HOTEL-AVENIDA and all hotels and motels belonging to the ANITO GROUP ". On the basis of said confidential information and after conducting preliminary investigation, various Letters of Authority all dated June 9, 1995 were issued by this Office authorizing a group of Revenue Officers of the Tax Fraud Division to investigate the aforenamed taxpayers for all internal revenue taxes for the years 1993 and 1994. Although the allegation of the informer that subject taxpayers had been keeping two (2) sets of books were not proven in the ensuing investigation, it was however found out that the latter had indeed underdeclared their sales during the years 1993 and 1994, resulting in the deficiency assessments as follows: A) U-Belt Services Corporation Kind of Tax Year Involved Amount Total Income 1993 P172,079.74 1994 139,790.73 Percentage 1993 61,481.07 1994 50,361.63 Withholding 1993 22,771.81 P446,484.98 B) Binondo Tourist Dev. Corp. Income 1993 P253,158.31 1994 243,324.40 Percentage 1993 90,695.24 1994 87,414.05 674,592.00 C) Sta. Mesa Tourist Dev. Corp. Income 1993 P578,796.70 1994 536,883.63 Percentage 1993 207,056.25 1994 192,821.04 Withholding 1993 10,212.56 1,525,770.18 D) Quiapo Tourist Dev. Corp. Income 1993 P202,406.25 1994 198,325.00 Percentage 1993 74,491.73 1994 71,793.09 547,016.07 E. Prince Town Inn Corp. Income 1993 P184,260.24 Percentage 1993 64,710.44 1994 67,230.74 Withholding 1993 66,610.74 Grand Total 382,812.16 P3,576,675.39 =========== Per report of the Chief, Tax Fraud Division, subject-taxpayers had already paid their respective tax liabilities as aforestated. aisadc The records further show that Ms. Cailes is, as represented, neither an internal revenue officer/employee nor a public officer or that her relatives within the sixth degree of consanguinity are such; and that the information furnished by her was not yet in the possession of the Bureau of Internal Revenue or the Department of Finance nor are the aforesaid tax liabilities pending or have previously been the subject of investigation by an official or employee of this Bureau or by the Department of Finance. In view thereof, and it appearing that the information furnished by Ms. Priscilla M. Cailes was instrumental in the discovery of a violation of the internal revenue laws and in the recovery of taxes, it is respectfully recommended that she be paid the gross amount of P536,501.30 which is equivalent to 15% of P3,576,675.39, the total of all taxes collected from the Anito Group of Companies pursuant to Section 281(1) of the Tax Code, as amended [now Section 282(A) of the Tax Code of 1997]. Very truly yours, (SGD.) LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue