BIR Ruling [DA-413-98]

September 10, 1998 BIR RULING [DA-413-98] Hon. Edgardo B. Espiritu Secretary of Finance Manila S i r : We are forwarding herewith for your approval the herein claim for additional informer's reward of Ms . Ma . Cecilia Uy Belarmino under then Section 281(1) of the Tax Code, as amended [now Section 282 (A) of the Tax Code of 1997], including some pertinent papers (xerox copies only) bearing on the internal revenue tax cases for gross receipts tax (GRT) of: (1) PNB Credit Card Corporation; (2) Security Diners International Corporation (DINERS); (3) Philippine Commercial Credit Inc. (BANKARD); and (4) Unibancard Corporation (UNIBANCARD), all for the years 1989, 1990 and 1991. casia The instant claim is a sequel of Confidential Information No. 9-92 dated February 10, 1992 filed by Ms . Belarmino against Equitable Card Network, Inc . (ECNI) which failed to pay the 5% gross receipts tax (GRT) on commissions earned from discounts granted by merchants/establishments and from fees paid by cardholders during the years 1990 and 1991. It will be recalled that on the basis of the recommendation of this office, that Department approved the payment to the informer of her corresponding reward out of the total taxes collected from ECNI. The informer was already paid the amount of P3,094,648.70 after deducting the amount of P343,849.00 which she voluntarily donated to the Philippine government. Counsel of the informer averred that on the basis of said confidential information, similar investigations were conducted by the Intelligence and Investigation Office (now Tax Fraud Division) against the other six (6) members of the Credit Card Association of the Philippines (CCAP), namely: (1) Security Diners International Corporation; (2) American Express International, Inc.; (3) Unibankard Corporation; (4) Phil. Commercial Credit Card, Inc.; (5) BPI Express Credit Corporation; and (6) PNB Credit Card Corporation. With the exception of American Express International, Inc. and BPI Express Credit Card Corporation, the remaining four (4) members of CCAP decided like ECNI, to settle their respective gross receipts tax liabilities on the condition that the increments be waived. Upon approval of their Application for Compromise Settlement/Abatement of Penalties under RMO No. 45-93, the credit card companies paid the following amounts as compromise settlement of their basic gross receipts tax, viz: Amount Paid Years Involved 1. PNB-CCC P3,490,722.81 1990-1991-1992 2. DINERS 12,167,729.94 1989-1990-1991 3. BANCARD 9,825,737.10 1989-1990-1991 4. UNIBANCARD 11,590,708.98 1989-1990-1991 Total P37,074,898.83 =========== All installment receipts covering the aforesaid total payments were sent to our Revenue Accounting Division for verification and it was ascertained that the said payments were remitted to the government. Citing the case of Penid, et. al. vs. Hon. Cesar Virata et. al., the informer's counsel contended that the confidential information of Ms. Belarmino against ECNI was instrumental in the discovery of the non-payment of the gross receipts tax by the abovenamed credit card companies; that the gross receipts tax cases of said companies have the same subject-matter, have committed the same kind of violation of the Tax Code as that committed by ECNI and covers almost the same period of time. We agree with the contention of the informer's counsel. It cannot be denied that the confidential information against ECNI triggered the investigation of the other credit card companies similarly situated as ECNI and in the eventual collection from the aforenamed taxpayers of the total amount of P37,074,898.83 representing 100% of the basic gross receipts tax assessed pursuant to RMO No. 45-93. In view of the foregoing, it is respectfully recommended that Ms. Ma. Cecilia Uy Belarmino be paid the additional gross amount of P5,561,234.70 which is equivalent to 15% of P37,074,898.83, the total amount of taxes collected from the aforenamed credit card companies, pursuant to then Section 281 (1) of the Tax Code, as amended [now Section 282 (A) of the Tax Code of 1997]. Very truly yours, (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue