In a 78-page decision written by Justice Minita Chico-Nazario, the SC said the informer, Tirso Savellano, was entitled to 15 percent of the taxes that the BIR recovered using his information.
Savellano informed the BIR in a sworn statement on June 24, 1986 that the Philippine National Bank (PNB) had failed to deduct 15 percent from the earnings of deposits placed by the Philippine National Oil Co. (PNOC).
Acting on the information, the BIR demanded that the PNOC settle its liabilities and in October 1986 issued a tax assessment of P385,961,580.82 against the oil firm.
The court case arose from a compromise proposed in June 1987 by the PNOC for it to pay a reduced tax of P91,003,129.89.
The amount represents a mere 30 percent of its basic tax of P303,343,766.29 but was supposedly allowed by provisions of Executive Order (EO) No. 44.
The PNOC offer was accepted by then BIR Commissioner Bienvenido Tan.
But in 1991, his decision was reversed by his successor, Jose U. Ong, who ordered the payment of the full amount.
The BIR addressed a warrant of garnishment to the Central Bank that sought the transfer of P294,958,450.73 in deposits from the PNB to the BIR.
The Central Bank complied with the request.
Ong’s decision was later upheld by the Commission of Tax Appeals in May 1992.
The BIR had already paid Savellano a reward of P14,093,321.89 from the 15 percent it had collected from its compromise agreement with the PNOC.
But Savellano insisted he should be paid P57,894,237.12, which represents 15 percent of the amount that the BIR finally recovered from the PNOC.
The SC sided with Savellano and ordered that the BIR pay him the difference.
"The provision of the National Internal Revenue Code was clear and uncomplicated. An informer was entitled to a reward of 15 percent of the total amount actually recovered or collected by the BIR based on his information. The provision did not make any distinction as to the manner the tax liability was collected, whether it was through voluntary payment by the taxpayer or through garnishment of the taxpayer’s property," the SC said.