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FOURTEENTH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session 
) 
SENATE 
Introduced by Senator Antonio “Sonny” F. Trillanes IV 
EXPLANATORY NOTE 
Republic Act Number 2338, of Informerr’s Reward Law was enacted to help the Bureau 
of Internal Revenue (BIR) and the Bureau of Customs (SOC) 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 
andor conviction of the guilty party. 
However, this law was modified when the Tax Reform Act of 1997 (RA 8424) was 
enacted. Section 282 thereof provides that only a mere ten percent (10%) reward or 
Plmillion, whichever is lower, shall be given to any tax informer. 
The new law effectively discourages tax informers to report fraud involving PlOmillion 
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 Plmillion. 
As a result, collection inefficiency or tax enforcement and administmtion 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. 
Rough estimates show that about 400 billion pesos is lost to corruption in the BIR every 
year. A World Bank study concluded that only half of annual potential revenues are 
collected and that an additional P2OObiIlion could easily be raised if corruption in the 
bureau is contained andor abated. 
From 1998 to 2001, the Department of Finance @OF) itself reported that tax leakages in 
the system are estimated at about P242billion. These leakages would, in fact, even double 
or triple if tax exemption privileges in the guise of rulings issued by the BIR to large or 
big time taxpayers are included and accounted for. 
If only the Office of the President would conduct a 111 blown audit or investigations on 
these d i g s ,  it would surely realize how a few unscrupulous officials of the BIR, me 
bleeding the government dry for so long a time. We are at the mercy of these crwks at 
the BIR as they are able to get away scot-free and collect for themselves the taxes due the 


government by simply issuing letters or rulings of tax exemptions to circumvent the 
provisions of tax laws and connive with tax cheats. 
In view of the foregoing, passage of this bill is earnestly sought. 
Senator 


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FOURTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PEJLIPPINES ) 
First Regular Session 
) 
SENATE 
Introduced by Senator Antonio "Sonny" F. Trillanes IV 
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 House of Representatives of the Philippines in 
Congress assemb€ed: 
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 voluntariiy gives definite and 
sworn information, not yet in the possession of the Bureau of Internal Revenue (SIR) or 
the Bureau of Customs (SOC), 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 Iaw committed by him and his offer has been accepted by 
the Commissioner of Internal Revenue or the Commissioner of Customs, as the case may 
be, and in such a case, the ten percent (10%) reward fixed herein shall be based on the 
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amount agreed upon in the compromise and actually collected from the violator, 
Provided further, That should no revenues, surcharges or fees and/or fme or penalty 
actually recovered or collected in accordance with law, such persons should not be 
entitled to a reward: Provided, flnuZZy, 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 Fmance. 
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 (Php1,000,000.00) and below shall be filed by the informer with the Ofice 
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 (Php1,000,000.00) shall, upon the approval of the reward, be automatidly 
reviewed by the Secretary of Finance. 
(c) 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 after 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%). 
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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 informaton shall be punished by a fine of not less 
than Five hundred thousand pesos (Php500,OOO.OO) but not more than One million pesos 
(Php1,000,000.00) 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 infomation 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. 
(a) 
The following laws or provisions of laws are hereby repealed 
Section 282 of Republic Act No. 8424, the National Internal Revenue 
Code of 1997, as amended; 
(b) 
Section 3513 of the Tarif€ and Customs Code of the Philippines, as 
amended; 
(c) 
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 
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full force and effect. 
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SEC. 6. 
This Act shall take effect fifteen (15) days after its publication in 
the Oflcial Gazefte or in a newspaper of general circulation, whichever comes first. 
Approved, 
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