BIR files 2 tax evasion raps

MANILA, Philippines - The Bureau of International Revenue yesterday filed with the Department of Justice separate tax evasion cases against a property firm affiliated with Maybank Philippines Inc. as well as the husband of former actress/singer Donna Cruz for allegedly defrauding the government of P190.97 million in income taxes.

Charged for violation of the National Internal Revenue Code of 1997 were PhilMay Properties, its president Ong Seet Joon, treasurer Rafael Morales, legal department head and corporate secretary Jonathan Ong, sales marketing head Benjamin Lira and remedial accounting associate Michelle Reyes. They were accused of deliberately attempting to evade the payment of tax for fiscal year ending June 30, 2009.

Also implicated were three BIR’s officials – Vicente Velario, Joseph Macuha and Noradel Mendoza – for willful collusion with PhilMay officers in evading taxes and failure to supply the correct information in the real estate firm’s tax returns.

An investigation into the case showed that PhilMay’s deficiency taxes amounted to a total of P169.83 million, inclusive of surcharges and interests.

PhilMay claimed a deductible interest expense amounting to P47.6 million for a loan it secured from Maybank Philippines, Inc. (MPI), which investigators claimed was a “related transaction” since MPI is 99.99 percent owned by Malayan Banking Berhad (MBB) which also owns the property firm by almost 60 percent. As such, the interest expense should not be claimed as deductible expense.

The property developer also claimed P50.21 million in operating expenses in its ITR for that year that included salaries, allowances, fringe benefits and interest expenses that were not supported by any document.

In addition, PhilMay did not report P95.07 million of its real estate sales in its value added tax return nor did it pay the necessary documentary stamp taxes for the transactions or the expanded withholding tax.

Also accused of evading tax payments was Cebu-based ophthalmologist Dr. Potenciano Sto. Domingo Larrazabal (husband of Cruz).

Based on documents provided by the Philippine Health Insurance Corp., Larrazabal received a total of P29.14 million in professional fees from 2009 to 2011. He, however, declared a gross income of only of P4.72 million for the three-year period, resulting in an under-declaration of taxable income by more than 30 percent which makes him liable to criminal prosecution as provided under the Tax Code.