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BIR filed cases against Arroyo and wife; Brazilian model for tax evasion

Article by: Denn Reed B. Tuvera Jr.

April 7, 2011 – The Bureau of Internal Revenue (BIR) filed last April 7 tax evasion charges against Rep. Juan Miguel “Mikee” Arroyo and wife Angela for alleged non-payment of taxes worth P73.85 million.

BIR Commissioner Kim Henares said during the press conference at the DOJ the Arroyos bought real, personal and other properties worth millions from 2004 to 2009, including residential houses in the United States, Lubao, Pampanga, La Vista Subdivision in Quezon City, motor vehicles, stock shares, jewelries, clothes and other personal effects.

“If you report that you have an asset, you have a network, you should be able to say where it comes from and where it comes from always normally, there’s a tax consequence.”

“So if somebody donated it to you, there should be a donor’s tax. If you inherited it, you should have an estate tax. If you bought it, you should have income tax for you to buy this property.”

“They claim they have all these assets but no income tax return (ITR) ever been reported by Angela Montenegro-Arroyo. So that’s the basis of the Tax Evasion,” she explained.

The Arroyo couple was charged of violating sections 254 for attempting to evade taxes; and 255 for failure to submit their income tax return, of the National Internal Revenue Code of 1997.

Concerning the procedure, the BIR conducts a mini-trial among them on whether or not they have basis to file a case against a person, Henares said.

 “The cases that are filed are based on what we can prove. We must really study the case before we file them [to the DOJ]. It is our duty to seek…confidential information,” she explained.

The BIR investigation on the Arroyo couple’s case was patterned to the method used by the US government on gangster Al Capone and found out to be “substantial under declaration of income by 30 percent” in those three years.

“Under the Tax Code (NIRC), under declaration of taxable income of more than 30 percent is considered a prima facie evidence of fraudulent return,” Henares said.

In its complaint, the BIR said Arroyo did not file his tax returns in 2005, 2008 and 2009, while his wife Angela had no tax returns from 2003 to 2009.

“The act of non-filing of their ITRs is evident of their fraudulent scheme to defeat payment of taxes,” the BIR commissioner said.

Henares added it is important to declare taxes to avoid such cases.

If found guilty, the couple could face four years of imprisonment and fine of P30,000 for each count of under declaration of taxes and imprisonment of up to 10 years and P10,000 fine for each count of non-filing of ITR.

It was learned that Arroyo only paid taxes worth P2.4 million, P1.7 million and P375,000 in taxable years 2004, 2006 and 2007 respectively while in the taxable years 2005, 2008 and 2009, he did not pay his taxes nor his ITR.

Arroyo’s reaction: “They’re harassing me”

When sought for reaction, Arroyo told GMA 7 news that he was not given due process by the BIR when it filed the complaint before the DOJ.

 “First of all, due process dictates, that before a case is filed against you, you’re supposed to at least receive a letter from the BIR to notify me.”

“So I got the notice two days ago, notifying me to explain if I really indeed paid taxes. So I was given 10 days to show the documentation that I really indeed paid the taxes,” he said.

Furthermore, the BIR filed a case against him right away without giving him the chance to explain himself within 10 days. He declined the accusation that he did not file his income tax return (ITR). “They’re harassing me,” he concluded.

After he received the notice from the BIR on April 5 or the birthday of his mother, former President and Pampanga Rep. Gloria Macapagal-Arroyo asking him to explain the alleged discrepancy between his known assets and tax payments, he immediately consulted his lawyer, Ruy Rondain.

Rondain advised him to personally go to the BIR office with all his documentary evidence. But he said it was in “bad faith and in bad taste” that Henares sought his prosecution before the 10 days have lapsed.

On behalf of his wife, Arroyo defended that she was not even involved in this case. “My wife has no income. She’s a housewife.”

He pointed out that since his wife is but a housewife, taking care of their children “how can she be included in the case?”

Arroyo has a message to the BIR and DOJ: “There are no hard-feelings that they filed a case against me”. At least I will be given the chance to defend myself under the rules of court and evidences. I hope that they must have waited for 10 days to explain myself. I can defend myself.”

Due process

Justice Secretary Leila de Lima assured the respondents they would be treated with due process in the preliminary investigation of the complaint.

She said the complaint would be resolved expeditiously just like an ordinary case in the DOJ.

But De Lima disclosed that her office would evaluate if other possible charges could stem from the information gathered by BIR – considering that Rep. Arroyo is a public official.

Brazilian model, not paying taxes

Meanwhile, Brazilian model/actress Daiana Menezes also faced the same charges of tax evasion under sections 254 and 255 of NIRC of 1997, for an attempt to evade taxes and for failure to submit income tax return.

The estimated aggregate tax liabilities of Ms. Menezes amounted to P983, 658.07 for deficiency income and percentage taxes covering taxable years 2007 to 2009 inclusive of all surcharges and interests.

Menezes has been residing in the Philippines since 2007 with current address at Unit 4C Bright Place Condominium, Scout Bayoran St., Quezon City. She is a regular host of the noontime variety show “Eat Bulaga” of GMA 7 since 2007.

She registered with BIR under Executive Order (EO) No. 98 for the purpose of securing a Taxpayer Identification Number (TIN) as part of the requirements in all applications for a government permit, license, clearance, official paper or document.

Under the registration, her tax type is “not taxable”, that gave her the freedom to evade taxes due to the government.

The case against Menezes is the 38th case filed under the Run After Tax Evaders (RATE) program of BIR under Commissioner Kim Henares.

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About Administrator

Denn Reed Tuvera is the name of the greatest lawyer in the Philippines, my Dad. Since I also own his name, I would liken myself to him. His a man of his goals and I'm different from him. He maybe a good and brilliant lawyer but I am an aspiring journalist. About me? What can I say about me? My friends told me that I am a very religious person. Yeah right! It is true. Since the time I became a Christian, I felt how it is to be a child of God. I felt my importance in this life. I felt that even though some people would disregard me in this world, God is always there beside me. I would say that I'm a friendly person. I hate quarreling with one another person. It doesn't help me and my studies. It destroys friendship. Some say that I am a "snob" or "hindi namamansin". Hehehhehe... I am not like that. I would assure you that once you get to know me more, we will have a good relationship as friends and colleagues until this world ends.

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