BIR Ruling [UN-218-95]

June 15, 1995 BIR RULING [UN-218-95] The Honorable The Secretary of Finance Manila S i r : There is forwarded to that Office for approval the claim for informer's reward of Messrs. Arthur C. Locsin, Jr., Marcial P. de Guzman and Jorge P. Santillan under Section 282(1) of the Tax Code, as amended, including the pertinent records of the internal revenue tax case of High-Desert Phils., Inc. (HDPI). aisadc The records show that on July 21, 1993, the abovenamed informers submitted an Affidavit denominated as Confidential Information No. 112-93 denouncing HDPI for allegedly not declaring the correct revenue for the taxable years 1990, 1991 and 1992. (p. 83) On the basis of said confidential information and after conducting preliminary investigation, Letter of Authority No. 0000194 C was issued to the revenue enforcement officers of the Tax Fraud Division to investigate HDPI for internal revenue tax purposes for the years 1990, 1991 and 1992. However, only the 1992 internal revenue tax case of HDPI was investigated it appearing that its 1989, 1990 and 1991 internal revenue tax cases had been previously investigated and the aggregate amount of P4,855,922.44 paid under various Authority To Accept Payment. (pp. 144-157) Initial investigation of the 1992 income tax return of HDPI shows that it is liable to pay the amount of P15,924,806.52 as income and value-added taxes on account of a substantial underdeclaration of sales. The taxpayer however, offered to settle by compromise its case under RMO No. 45-93 which offer was accepted by this Office by allowing the former to pay the total amount of P7,309,870.81 representing 100% of the basic income tax and VAT for 1992. Upon further investigation it was ascertained that HDPI is still liable to pay the additional amount of P6,001,283.14 as deficiency income tax, VAT and Expanded Tax (EWT) inclusive of surcharge and interest detailed as follows: 1. Income Tax P5,050,862.32 2. VAT 639,307.46 3. EWT 311,113.36 T o t a l P6,001,283.14 =========== Again, HDPI's Application No. 29930 for a Compromise Settlement/Abatement of Penalties under RMO No. 45-93 was accepted by this Office allowing by allowing it to pay the amount of P3,962,558.69 representing 100% of the total basic taxes assessed. It may be stated herein that a separate denunciation was filed by Mr. Romeo B. Bangcoc on February 1, 1994 against HDPI for its Bacolod operation (pp. 117-120). However, it was reported by the revenue officers concerned that "the informations given are identical in nature in both instances since both deal with the issue of sales of the same subject taxpayer for the same period . . ." and "the issue raised was already covered and taken up in our progress report of March 14, 1994". Hence, Mr. Bangcoc is not entitled to reward since his information, in the form of a denunciation letter, was submitted late after the filing of C.I. No. 113-93 and a preliminary investigation has been conducted thereon. In view of the foregoing and it appearing that the information furnished by Messrs. Arthur C. Locsin, Jr., Marcial P. de Guzman and Jorge P. Santillan was instrumental in the discovery of a violation of the internal revenue laws in the recovery of the total amount of P11,272,429.50 (P7,309,870.81 + P3,962,558.69) from High-Desert Phils., Inc. as compromise payment for its 1992 internal revenue tax liabilities, it is respectfully recommended that they be paid the amount equivalent to 15% thereof or P1,690,864.35 as informer's reward pursuant to Section 281(1) of the Tax Code, as amended. cdll Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue