BIR Ruling [DA-596-04]

November 23, 2004 BIR RULING [DA-596-04] Sec. 282 (A) Hon. Juanita D. Amatong Secretary of Finance Manila M a d a m : We are forwarding herewith for your approval the herein claim for informer's reward of Mrs. CIPRIANA B. DELOS REYES under Section 281 (1) of the Tax Code, as amended [now Section 282 (A)] including the entire docket relative to the internal revenue tax case of JOSEFINA T. MANALON, et al. for taxable year 1988. The records show that on May 10, 1989, an affidavit, together with its supporting documents was filed with the Office of then Revenue District Officer Percival T. Salazar, RDO #27 (Puerto Princesa City), denouncing JOSEFINA T. MANALON, et al. for using two (2) Deeds of Sale over the same parcels of land thereby evading the correct payments of capital gains and documentary stamp taxes. On the basis of this affidavit, a preliminary 10-day notice was sent to the taxpayer on June 19, 1989, informing them of their capital gains tax and documentary stamp tax liabilities based on the true consideration, inclusive of the 50% surcharge and interest in the total amount of P156,589.73. However, the 10-day period lapsed without the subject taxpayer tendering any payment. Thus on July 12, 1989, the case was forwarded to the Special Investigation Division, Revenue Region 4(A) (Manila) docketed as Confidential Matter No. 233-89-S assigned to Sr. Revenue Intelligence Officer Rogelio Navarro, for investigation. In the investigation, it was ascertained that on September 3, 1988, subject taxpayers executed a Deed of Absolute Sale over a parcel of land covered by TCT No. 11776 in favor of MAXIMO RICOHERMOSO for P209,584.00 and paying the capital gains and documentary stamp taxes thereon in the amounts of P10,479.00 and P2,010.00, respectively. Further on May 8, 1989, subject taxpayers executed another Deed of Absolute Sale over another parcel of land covered by TCT No. 11775 likewise in favor of Maximo Ricohermoso for and in the amount of P202,804.00 and paid the capital gains and documentary stamp taxes thereon in the amounts of P16,742.77 and P4,000.00, respectively. However, before the Certificate Authorizing Registration (CAR) for the second sale could be issued sometime on May 9, 1989, a certain CIPRIANA DELOS REYES, the herein informer, reported to then Revenue District Office #27 (Puerto Princesa City) Revenue Region No. 4A, that the true and actual consideration for the sales of the two (2) properties is P2,061,940.00. In support of her allegations, she submitted the following documents, 1) sworn affidavit dated May 10, 1989; 2) actual Deed of Sale executed on August 2, 1988; 3) copies of the 3 receipts acknowledging partial payment of the consideration in the amount of P1,600,000.00; 4) letter authorizing Cipriana delos Reyes and Santos Sumayang as agents to sell the aforesaid lots and 5) letter-complaint for sum of money filed against Santos Sumayang. That on June 19, 1989, a preliminary 10-day notice was sent to the taxpayers informing them of their capital gains tax (CGT) and documentary stamp tax (DST) liabilities based on the true consideration, inclusive of the 50% surcharge and interest in the sum total of P156,589.73. The 10-day period lapsed without the tender of payment. That on July 12, 1989, the case was referred to the then Chief, Special Investigation Division, Revenue Region 4(A) Manila, for preliminary investigation and on October 25, 1989, Senior Revenue Enforcement Officer Jose Paulino of the SID submitted to the Chief, Special Investigation Division, finding the taxpayer liable for P134,674.73 CGT and P21,915.00 DST. A Final Assessment Notices (FAN) bearing FAN-1-88-91-000593 and FAN-5-88-91-000594 for CGT and DST, respectively, on February 4, 1991; In September 10, 1992, a memorandum for the Regional Director (RR #4-A) was issued by then CIR Jose U. Ong for the service of the Warrant of Distraint and/or Levy; On September 10, 1992, Notice of Tax Lien was served at the Register of Deeds of Puerto Princesa against the properties of the herein taxpayers, likewise the Warrant of Distraint and/or Levy was issued to enforce collection on December 10, 1992. However, on December 18, 1992, the taxpayer wrote a letter-request for the extension of time to settle their tax liabilities due to financial incapacity; That on January 14, 1997 the taxpayer paid their total tax liabilities for CGT and DST in the total amounts of P172,849.62 and P23,915.00 as per Authority to Cancel Assessment (ATCA) on even date. The records further show that the information furnished 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 this Bureau or by the Department of Finance; and 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. aHTcDA It appearing that the information furnished by CIPRIANA B. DELOS REYES 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 she be paid the amount equivalent to 15% of P196,764.62 or the amount of P29,514.70, as informer's reward pursuant to Section 281(1) of the National Internal Revenue Code, the law applicable herein. The said reward shall not be subject to the 10% final tax imposed under Section 2.57.1(K) of Revenue Regulations No. 2-98 as the information was filed prior to the effectivity of the Tax Code of 1997. Very truly yours, (SGD.) GUILLERMO L. PARAYNO, JR. Commissioner of Internal Revenue