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REPUBLIC OF THE PHILIPPINES

HOUSE OF REPRESENTATIVES © owe: APR 19
Quezon City Time
SEVENTEENTH CONGRESS
First Regular Session

House Bill No. 5468

Introduced by MAGDALO Party-List Representative
HON. GARY C. ALEJANO

EXPLANATORY NOTE

Republic Act No. 2338, otherwise known as the Informer’s Reward Law, was enacted to help
the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) run after tax cheats,
tax evaders, and smugglers. This law awards fifteen percent (15%) of the amount recovered
to any person who voluntarily gives definite information to the BIR and BOC on any tax
fraud or smuggling case which results to the recovery of revenues, surcharges or fees and/or
conviction of the guilty party.

However, this law was modified when the Tax Reform Act of 197 (RA 8424) was enacted.
Section 282 thereof provides that only a mere ten percent (10%) reward or One Million pesos
(Php 1,000,000.00), whichever is lower, shall be given to any tax informer.

‘The new law effectively discourages tax informers to report fraud involving Ten Million
pesos (Php 10,000,000.00) or more because no matter how big the tax frauds and liabilities
are involved in a case, an informer would only get a maximum of One Million pesos
(Php1,000,000.00)

As a result, collection inefficiency or tax enforcement and administration by the BIR and
BOC have deteriorated. Meanwhile, collection goals and targets are not attained while the so-
called "vaunted drive" of the government to improve tax collections, administration and
enforcement has yet to bear fruit.

In view of the foregoing, the immediate passage of this bill is eamestly sought.



REPUBLIC OF THE PHILIPPINES
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
First Regular Session

House Bill No, 0468

Introduced by MAGDALO Party-List Representative
HON. GARY C. ALEJANO

AN ACT
CONSOLIDATING THE LAWS GRANTING REWARDS TO INFORMERS OF
VIOLATIONS OF INTERNAL REVENUE AND CUSTOMS LAWS, REPEALING
FOR THIS PURPOSE SECTION 282 OF THE NATIONAL INTERNAL REVENUE.
CODE OF 1997, SECTION 3513 OF THE TARIFF AND CUSTOMS CODE OF THE
PHILIPPINES, AND FOR OTHER PURPOSES

Be it enacted by the Senate and the House of Representatives of the Philippines in
Congress assembled:

SECTION 1. Any person, except internal revenue or customs officials or employees,
‘or any public official or employee or said officials’ or employees’ relative within the third
degree of consanguinity or affinity, who voluntarily gives definite and swom information, not
yet in the possession of the Bureau of Internal Revenue (BIR) or the Bureau of Customs
(BOC), stating facts personally known to him which could lead to the discovery of fraud
upon the internal revenue or customs laws, or violation of any provision thereof, thereby
resulting in the recovery of revenues, surcharges and fees and/or the conviction of the guilty
party and/or the imposition of any fine or penalty, shall be rewarded in a sum equivalent to
ten percent (10%) of the revenues, surcharges or fees actually recovered and/or fine penalty
imposed and actually collected. The same amount of reward shall also be given to informers
in cases where the violator has offered to compromise the violation of law committed by him
and his offer has been accepted by the Commissioner on Internal Revenue or the
Commissioner of Customs, as the case may be, and in such case, the ten percent (10%)
reward fixed herein shall be based on the amount agreed upon in the compromise and
actually collected from the violator: Provided, That should no revenues, surcharges or fees
and/or fine or penalty is actually recovered or collected in accordance with law, such persons
should not be entitled to a reward: Provided further, That the information required shall not
refer to a case already pending or previously investigated or examined by the Commissioner
of Internal Revenue or the Commissioner of Customs, or any of their deputies, agents or
examiners, as the case may be, and that the reward provided herein shall be paid under
regulations issued by the Secretary of Finance. The reward herein authorized shall be paid out
of revenues, surcharges or fees and/or fine or penalty actually recovered or collected and
accounted for in accordance with law as a result of the information furnished by the informer.

SEC. 2. (a) Applications for rewards granted herein amounting to One million pesos
(Php 1,000,000.00) and below shall be filed by the informer with the Office of the
Commissioner of the BIR or the Commissioner of the BOC, as the case may be, who shall
render a final disposition thereof.


(b) Applications for rewards granted herein amounting to more than One million
pesos (Php 1,000,000.00) shall, upon the approval of the reward, be automatically reviewed
by the Secretary of Finance

(©) In both cases, the rewards granted shall be paid to the informer only after
revenues, surcharges or fees and/or fine or penalty actually recovered or collected in
accordance with law, and afier all reports and documents required for the evaluation and
approval of the claim for informer’s reward, including the endorsement by the Commissioner
of the BIR of the Commissioner of the BOC, as the case may be, shall have been submitted to
the Department of Finance (DOF) in the appropriate cases

(d) The rewards of the informers shall be subject to income tax, collected as a final
withholding tax, at the rate of twenty percent (20%).

SEC. 3. It shall be unlawful for any official or employee of the BIR, the BOC or the
DOF to disclose or reveal the name of any informer. The identity of the informer shall not be
revealed except (a) when the informer has given his written consent; or (b) when the
information he has provided is proven to be malicious or false.

Disclosure of such confidential information shall be punished by a fine of not less
than Five hundred thousand pesos (Php 500,000.00) but not more than One million pesos
(Php 1,000,000,00) and suffer imprisonment of not less than ten (10) years but not more than
fifteen (15) years and shall likewise suffer an additional penalty of perpetual disqualification
to hold public office, to vote and to participate in any public election

Should the information later turn out or be proven to be false or have been made only
for the purpose of harassing, molesting or in any way prejudicing the person so denounced,
the person so denounced shall be entitled to any action, criminal or civil, as the facts may
warrant.

SEC. 4. The following laws or provisions of laws are hereby repealed:

a) Section 282 of Republic Act No. 8424, the National Internal Revenue Code of 1997,
as amended;

i)

Section 3513 of the Tariff and Customs Code of the Philippines, as amended;

¢

Republic Act No. 2338 entitled, "An Act to Provide for Reward to Informers of
Violations of the Internal Revenue and Customs Laws, as Amended"; and

d

All other laws, decrees, executive orders, issuances and rules and regulations or parts
thereof that are contrary to and inconsistent with any provision of this Act are hereby
repealed, amended or modified accordingly.

SEC. 5. If any part or provision of this Act is subsequently declared unconstitutional,
the validity of the remaining provisions hereof which shall remain in full force and effect.

SEC. 6. This Act shall take effect fifteen (15) days after its publication in the Official
Gazette or in at least two (2) newspaper of general circulation

Approved,