Tuesday, February 21, 2012

Penid vs. Virata (1983)

Facts: The petitioners through a sworn statement filed as Confidential Information No. 28 of the BIR informed the Commissioner of underpayment of the 2% common carriers percentage tax by 27 shipping companies and agents. It was alleged that the shipping companies had been declaring their gross dollars earnings on the basis of a P2.00 to US 1.00 parity rate in violation of the conversion rate set by the Central Bank. Because of the information, BIR ensued an investigation and BIR was eventually able to collect an amount of P4, 178, 167.54 corresponding to the period from 1957 to November 5, 1965. During the period where the companies are contesting the actions of BIR for collection, they maintained paying at the P2.00 to US 2.00 parity rate to maintain status quo. 

Thereafter, petitioners filed with the Commissioner a claim for 25% of the total revenue collected. The Commissioner endorsed the same to the Minister of Finance for approval. Notwithstanding the endorsement, however, limited the reward to 25% of the deficiency collected to the period covered by Confidential Information No. 28 (from 1960-1962). 

The Minister also deducted from the award those deficiency taxes collected from companies who were not listed in the Confidential Information No. 28 (that of Pan Fil Co. Inc.). The petitioners requested for a reconsideration of the decision but to no avail. The petitioners also appealed to the Office of the President but the result was the same. 

Issues
(1) Whether or not the petitioners are entitled to the 25% of the collection coming from those companies who were not listed in the Confidential Information No. 28. 

(2) Whether or not The petitioners are entitled to the 25% of the reward computed from 1957 to 1965. 

Held: 
(1) YES.  Sec 1 of RA 2338 and Sec 4 of the Finance Regulation No. 1 of the Ministry of Finance essentially grants reward if the information given had led to or had been instrumental in the discovery of the fraud upon or violation of any of the provisions of the Internal Revenue of Tariff and Customs Law and that discovery resulted in the recovery or collection of revenues, surcharges, and fees. The inclusion of the amount paid by Pan Fil. Co. Inc. in the computation of petitioners reward lies within the intendendment and scope of the law.  

Statutes offering reward must be liberally construed in favor of informers and with regard to the purpose for which they are intended, with mere technicality yielding to the substantive purpose of the law. Otherwise, the government would lose a positive and effective means of checking the anomalies that are committed to the detriment of the finances of the state. 

(2) NO. To allow petitioners a 25% of the revenue collected after 1962 is stretching the law too far. When the companies continued paying at the above mentioned parity rate, they did so not with the intent of breaking the law but to maintain the status quo.

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