BIR Ruling [DA-334-04]

June 21, 2004 BIR RULING [DA-334-04] Hon. Juanita D. Amatong Secretary of Finance Manila S i r : We are forwarding for your approval the herein claim for informer's reward of Mr. BENEDICTO DEL ROSARIO, under Sec. 282 (A) of the Tax Code of 1997, including the entire docket relative to the internal revenue tax case of BANK OF COMMERCE, of Bankers Center, Ayala Avenue, Makati City, for taxable year 1999. The records show that on November 7, 2000, the above-named informer filed a Confidential Information, denominated as CI #63-2000 and was referred to the Tax Fraud Division, of this Bureau, on November 13, 2000 denouncing the Bank of Commerce for evading the payment of the correct amount of Withholding and Documentary Stamp Taxes in its transaction with Sps. Manuel and Jacqueline E. Lopez over a parcel of land consisting of 3,000 sq.m. situated at Buendia Avenue, Forbes Park, Makati City; embraced under TCT #198667 (now TCT #216137) of the Register of Deeds for the City of Makati. On the basis of Memorandum of Assignment from the Asst. Chief, Tax Fraud Division, the case was assigned to Group Supervisor Teodoro Huelva, who conducted a Third Party Information (TPI) among the several agencies of the government concerned, to wit: the Register of Deeds of Makati City; the City Assessor's Office, Makati City; BIR Revenue District Office #50 (Makati City); the Notarial Registry Section, Makati City; and Bank of Commerce, Banker's Center, Ayala Avenue, Makati City. The facts as per memorandum report of the revenue officers on case obtained through the TPI, are quoted as follows: "1. That the mortgaged property was foreclosed by the mortgagee-Bank on October 15, 1999 as evidenced by the herein Certificate of Sale; "2. That after the foreclosure, the mortgagor assigned its right to redeem to Sps. Manuel and Jacqueline E. Lopez with the conformity of the mortgagee-bank as provided for in the Deed of Assignment of Redemption executed by them on November 17, 1999; "3. That as the statutory seller, the bank executed a Deed of Absolute Sale on said property in favor of Sps. Manuel and Jacqueline E. Lopez; "4. However, although it has been provided in the Deed of Absolute Sale, that internal revenue taxes are for the account of the mortgagee-bank (statutory-seller) no proof of payment was ever submitted; "5. That the mortgaged property was never redeemed by the mortgagor, thus it follows that Nepomuceno Productions, Inc. cannot donate the property without paying the redemption price of the aforesaid foreclosed property." Based on the above-mentioned Memorandum Report, the Revenue Officers-on-case issued a Proposed Assessment against herein Bank of Commerce, since the same is the statutory seller in the Deed of Sale it executed in favor of Sps. Manuel & Jacqueline Ejercito-Lopez. The Proposed Assessment in the amount of P16,792,920.00 for deficiency expanded withholding and documentary stamps taxes were paid in full under BIR Form 0605 through their own Bank on July 10, 2001 as shown hereunder, viz : BCS NO. DATE BANK CODE AMOUNT LIST OF TAX TYPE 12.58 VERIFIED A-00102 7/10/01 158-000 P13,994,100.00 7/01-11/01 WO-Withholding tax- Others(Transactions Not Subj. to CG) A-00102 7/10/01 158-000 P2,798,820.00 7/01-11/01 DS Documentary Stamp Tax The said payments were verified and remitted per Makati database, as per Memorandum dated February 6, 2004 issued by the Head, Makati Data Center this Bureau and further certified by the Chief, Revenue Accounting Division dated March 2, 2004. The records further show that the information given by the informer was in writing and under oath; that it was not yet in the possession of the Bureau of Internal Revenue nor is the aforesaid tax liability pending or previously investigated by any official or employee of the Bureau or by the Department of Finance; that the informer is, as represented, not related to any internal revenue official or employee or to any public officer within the sixth degree of consanguinity. It appearing therefore that the information furnished by Mr. Benedicto del Rosario was instrumental in the discovery of a violation of the internal revenue laws and in the recovery of taxes which otherwise would not have been effected, it is respectfully recommended that he be paid the amount equivalent to 10% of P16,792,920.00 but not to exceed ONE MILLION PESOS (P1,000,000.00) as informer's reward pursuant to Section 282 (A) of the Tax Code of 1997, the law applicable herein. The said reward shall be subject to the 10% final tax imposed under Sec. 2.57.1(K) of Revenue Regulations No. 2-98, as amended. EHTISC Very truly yours, (SGD.) GUILLERMO L. PARAYNO, JR. Commissioner of Internal Revenue