BIR Ruling [DA-375-00]

October 30, 2000 BIR RULING [DA-375-00] Hon. Jose T. Pardo Secretary of Finance Manila S i r : We are forwarding for your approval the herein claim for informer's reward of Ms. Lolit Y. Eugenio under then Section 281(1) of the Tax Code, as amended (now Section 282(A) of the Tax Code of 1997) including the entire docket relative to the internal revenue tax case of Gonzales Village, Inc. for the year 1993. aTSEcA Records show that on May 18, 1994, the abovenamed informer submitted an affidavit which was denominated as Confidential Information No. 65-94 denouncing Gonzales Village, Inc., represented by its chairperson Francisca V. Gonzales, for having sold to Primex Corporation several parcels of land with a total area of 30,956 sq. meters at an agreed price of P395.00 per sq. meter and received an actual amount of P12,227,620.00 but the land area was reduced to 21,022 sq meters and valued only at P350.00 per sq. meter in the Deed of Absolute Sale with a total selling price of P7,357,700.00 thus cheating the government in the amount of P4,869,920.00; and that (2) taxpayer did not include road or street areas in the Deed of Sale. On the basis of said confidential information, revenue officers of the Tax Fraud Division conducted an investigation and subsequently reported that subject-taxpayer did not commit the acts complained of. However, in the same report of investigation the revenue officers revealed that for the year 1993, Gonzales Village, Inc. failed to file an income tax return and to pay the corresponding income tax on the gain realized on the aforesaid sale transaction. Consequently, an assessment notice was issued on November 18, 1999 requiring Gonzales Village, Inc. to pay the amount of P300,075.85 as deficiency income tax, inclusive of 50% surcharge and interest for the year 1993 which amount was paid by subject-taxpayer on December 14, 1999 under Authority To Accept Payment No. 00393263. Although the revenue officers negated the allegation of fraud committed by Gonzales Village, Inc., the fact remains that the information given by Ms. Eugenio led to the discovery of the deficiency income tax of subject-taxpayer and eventually come out with the deficiency income tax assessment. Moreover, the information was not in the possession of the Bureau of Internal Revenue nor is the aforesaid tax liability pending or previously investigation by an official or employee of the Bureau or by the Department of Finance; and that the informer is, as represented, not related to an internal revenue official or employee or to any public officer within the sixth degree of consanguinity. It appearing that the information furnished by Ms. Lolita Y. Eugenio was instrumental in the discovery of a violation of the internal revenue laws and in the recovery of deficiency income tax, surcharge and interest which otherwise would not have been effected, it is respectfully recommended that she be paid an amount equivalent to 10% of P300,075.85 or P30,007.58 as informer's reward pursuant to Section 282(A) of the Tax Code of 1997 which shall be subject to a final withholding tax at the rate of 10% pursuant to Sec. 2.57.1(K) of Revenue Regulations No. 2-98. Very truly yours, (SGD.) DAKILA B. FONACIER Commissioner of Internal Revenue