Ex-lawyer of Mike A, businessmen face tax evasion raps

MANILA, Philippines - The Bureau of Internal Revenue (BIR) yesterday slapped tax evasion charges against prominent businessmen serving as directors of Makati Rotary Club Foundation Inc. (MRFI) as well as the lawyer of former first gentleman Jose Miguel Arroyo before the Department of Justice (DOJ).

Charged were Chowking Foods Corp. founder Robert Kuan, luxury car Jaguar and Range Rover distributor Wellington Soong, Jesus F. Tambunting, former health secretary Jose Bengzon III, Insular Life vice chairman Alfredo Parungao, and Insular Life director Ricardo Librea.

Also charged were Conrado Marty of Crown Equities Inc., Ramon Diokno of Lepanto Consolidated Mining, Tomas de Leon of Land Bank of the Philippines, Felix Amparo, Larry Boyer, Federico Borromeo Jr., Juan Carlos Jr., and former Philippine Deposit Insurance Corp. director Antonio Quila.

The BIR filed the charges against the businessmen for 10 counts of willful attempt to evade or defeat taxes for taxable years 2001 to 2010 and 10 counts of willful failure to supply correct and accurate information in its Income Tax Return (ITR) for the same taxable years.

The BIR accused the businessmen of having violated Sections 254 and 255 of the National Internal Revenue Code (NIRC).

The BIR also turned its guns on Arroyo’s lawyer Jesus Santos in a P12.32-million tax evasion case filed before the DOJ.

The BIR said Santos under-declared his income from 2006 to 2009 in violation of Section 254 of the NIRC.

The BIR alleged Santos earned a total of P24.66 million in those four years when he served as member of the Board of Trustees of the Government Service Insurance System (GSIS) but only declared income of P4.13 million.

Investigation showed Santos received P4.19 million in 2006, P4.90 million in 2007, P7.39 million in 2008, and P8.18 million in 2009 in his capacity as trustee of GSIS. 

However, Santos only declared P1.18 million, P1.28 million, P840,000, and P830,000 during the period.

This finding was based on mere comparison made by BIR investigators of the income and revenues declared by Santos in his income tax returns (ITRs) for those four years vis-a-vis records of his income from GSIS in the same years.

“An under-declaration of income or revenues of more than 30 percent under the Tax Code is considered substantial and constitutes prima facie evidence of a false or fraudulent return tantamount to tax evasion,” the BIR said.

Earlier, the Senate committee on finance conducted an inquiry on top executives of government-owned and controlled corporations (GOCCs) and government financial institutions after it became public that they received excessive and unwarranted bonuses and allowances.

Santos was among those covered by the Senate probe, prompting the BIR to conduct an investigation on him.

On the other hand, the BIR claimed the businessmen that were charged with P47-million tax evasion case are officers of the MRCFI who allegedly passed off as a donation part of its revenues from the lease of its 20,063-square meter property in Parañaque City.

The BIR said MRCFI is supposed to be a “service organization for business and professional people” and a non-stock corporation per General Information Sheet of the corporation.

The case against MRCFI stemmed from confidential information provided by two complainants and a certain Wilson Sua alleging the tax evasion scheme of MRCFI.

Tax investigators later discovered that MRCFI was the recipient of a real property donated by Fedders Koppel, Inc. (Koppel) under the Laurel-Langley Agreement.

The MRCFI then entered into a lease agreement with Koppel over the parcel of land in Barrio La Huerta, Parañaque City and with Rohm & Haas Philippines, Inc. (RHPI) over a manufacturing plant.

Lease agreements and court documents showed that MRCFI splits rental payments from both Koppel and RHPI into a lease portion and a substantial portion as donation.

MRCFI denominated portions of the rental payments as “donations” and compelled its lessees to give rental payments under the guise of donation. 

MRCFI, in fact, demanded interest from the date of default of the rental and the purported donation, contrary to the nature of a donation where interest should not be charged, the BIR said.

The BIR said the scheme of MRCFI of providing for an annual donation ranging from P600,000 to as high as P20.10 million was intended to evade payment of income tax and value added tax (VAT).

As a donee institution accredited by the Philippine Council of Non-Government Organizations, MRCFI’s income tax and VAT liabilities would be reduced, given the reduced rentals through the donation scheme.

On the other hand, as an accredited organization, no tax would be imposed on the donation.

As a result of MRCFI’s fraudulent scheme of splitting rental payments into rent income and donation, the government was deprived of taxes amounting to P47.05 million from 2001 to 2010, the BIR explained.

The BIR also filed a P162.82-million case against a wholesaler of paper and paper products, Eagle’s Fortune Inc., for violating Section 255 of the NIRC for willfully failing to pay taxes.      

The BIR found Eagle’s Fortune to be faking purchases to claim input value added tax and faking some sales to claim output VAT. – With Edu Punay