Office of the Resident Ombudsman

October 18, 2007 BIR RULING [DA-546-07] Office of the Resident Ombudsman Bureau of Internal Revenue Ram. 103, National Office Building Diliman, Quezon City Attention: Paterno B. Alarcon, Jr. Resident Ombudsman, BIR S i r : This refers to your letter dated August 1, 2007, in connection with the letter of Danilo A. Lihaylihay, seeking assistance from your good Office, for the facilitation of his informer's reward in relation to the internal revenue tax case of the Estate of Benigno P. Toda, Jr. covered by Confidential Information (CI) No. 2458, especially inviting attention to his prior letters dated March 6, June 5 and 20, 2007. aCTADI In comment thereto, as per Confidential Records of this Office, please be informed that CI # 2458 dated September 15, 1990 and CI # 113-92 dated December 29, 1992, denouncing the anomalous sale of a building by Cibeles Insurance Company to Mr. Rafael Altonaga, of which the late Benigno P. Toda, Jr. was the president and the majority stockholder, and the subsequent transfer thereof from Mr. Altonaga, to Royal Match, Inc., all in one day, were registered in the name of the late NICOLAS Y. CERVANTES, alias RICK HERNANDEZ. Sections 2 and 6 of Finance Regulations No. 1 provide the manner by which a confidential information is made and rendered, thus: "SEC. 2. Form and Contents of the information . The information shall be in the form of a sworn statement given voluntarily and shall state definitely the facts or acts consisting the fraud upon or violation of the Internal Revenue or the Tariff and Customs Laws (as defined in Section 1, Republic Act No. 2338) . . . . "SEC. 6. Information to be recorded in an entry book . Any information received must be entered immediately in a confidential entry book provided for the purpose by the Official to whom the information is given directly, and the entire entries shall be consecutively numbered in order of time the information is received. The individual entries must indicate the day and time the information is received. . . . . In view of the foregoing, only the CI's filed by the late NICOLAS Y. CERVANTES alias RICK HERNANDEZ, are considered as the true and official confidential information filed with this Bureau, as the same were in the form of statements sworn before the Law Division and recorded in the Confidential Entry Book of this Bureau. Thus the position of Mr. Danilo A. Lihaylihay that he is a co-informer of the late Nicolas Y. Cervantes, and therefore entitled to receive informer's reward on the strength of the denunciation letter he filed with the defunct Tax Fraud Division cannot be sustained. The letter did not show any CI number nor was it recorded in the Confidential Entry Book. Moreover, the letter was submitted after the date of the CI filed by the late informer. Section 3 of Finance Regulations No. 1, categorically states that in order to be entitled to a reward, the information must not yet be in the possession of the BIR, nor shall it refer to a case of fraud or violation already pending or previously investigated or examined by the BIR and must lead to or be instrumental in the discovery of the fraud upon or violation of any of the provisions of the Internal Revenue Code. HDIaET Furthermore, Mr. Lihaylihay cannot claim to be a co-informer with the late NICK CERVANTES, as he failed to register his papers before CI #2458 and CI #113-92 were filed and registered with the Confidential Entry Book. Besides, the Confidential Information must be of personal knowledge of the informer. The late NICK CERVANTES was the Vice-President of the Cibeles Insurance Company. He, of no doubt, knew well the facts of the case. Mr. Lihaylihay, on the other hand, is not connected in any manner to CIC. Accordingly, it is the opinion of this Office that since the informer died before the claim for reward could be made, the estate of the decedent shall succeed to the right to claim. The heirs of the decedent are now claiming the reward in representation of the estate of the deceased. Mr. Lihaylihay's view that they are not entitled since the filing of information is a personal cause is misplaced because the reward, if ever, will be granted to the estate, not to the heirs. TADcCS Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service