Tax Evasion

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MANILA, Philippines (UPDATE) - The Bureau of Internal Revenue (BIR) has filed 4 tax evasion complaints before the Department of Justice today, 3 of which are against professionals, and one against a manufacturing company. The BIR charged a certain Engr. Norberto Elisterio Fedelicio, a contractor engaged in the construction business, for acts or omissions constituting willful attempt to evade or defeat tax and deliberate failure to supply correct and accurate information for taxable years 2009 and 2010, in violation of the National Internal Revenue Code (NIRC). He has been assessed with a total tax deficiency of P26.41 million. BIR Commissioner Kim Henares told reporters at a news conference that Fedelicio received income payments amounting to P46.43 million for 2009 and P28.73 million for 2010. This information was gathered with the cooperation of several government agencies, departments and local government units that transacted business with Fedelicio. "This is where cooperation and coordination with various government agencies is effective. When the government reports it to us, we expect this amount to be reflected by the contractor," Henares said. Upon verification, Fedelicio's income tax returns showed that he only declared sales, receipts, and income amounting to P12.89 million in 2009, and P10.09 million in 2010, Henares bared. Endocrinologist Ma. Leonora Del Rosario Capellan was charged with 55 counts of failure to issue official receipts (ORs) penalized under Section 264 of the NIRC. Capellan is a licensed medical doctor and renders services at the Makati Medical Center. Henares revealed Capellan is a diplomate of the Philippine Society of Endocrinology and Metabolism, and a diplomate and fellow of the Philippine College of Physicians. Capellan's Makati Medical Center business premises was put under surveillance by the BIR pursuant to a Mission Order authorized by Henares, a poseur-patient was also utilized for the operation. The poseur-patient reported to BIR investigators that she was not issued a receipt and was only issued one by Capellan's secretary upon demand by the investigators. An appointments book and a booklet of ORs were confiscated and subsequently compared. Henares said it was discovered that the physician failed to issue ORs to 55 of her patients from September 2011 to October 5, 2011. Dr. Robina Manianglung, a dentist, was slapped with one count of unlawful pursuit of business and one count of failure to issue receipts which stemmed from her alleged failure to pay with the BIR the annual registration fee of P500 for the practice of her dental medicine profession, and her failure to issue ORs for her professional services. A BIR special investigator again posed as a patient and paid the dentist P1,500 for teeth capping, but was not issued the corresponding receipt.

Commissioner Henares bared Manianglung also failed to pay the BIR the required annual registration fee for her business. Manianglung is the first dentist charged by the BIR under the Aquino administration. Asked why the BIR is filing these "small cases" instead of running after big-time corporations, Henares said: "Hindi sa maliit or malaki, the law has Section 264 and it does not distinguish whether maliit o malaki." She pointed out that filing cases against professionals and private practitioners is serving its purpose of deterring evasion of payment of taxes by the sector since the BIR posted a 25% increase in the payment of income tax as of April this year. Meantime, manufacturing firm Abante Industries Inc. and its responsible corporate officers -Charles Uy, president, and Rosita Uy, vice president and corporate treasurer -- were charged with 4 counts of willful attempt to evade or defeat tax, and 4 counts of willful failure to supply correct and accurate information in its quarterly value-added taxreturns for 2004 to 2007. Nelia Yulo Pasco, a certified public accountant (CPA), was also charged. Henares said that Abante's underdeclaration of sales amounted to P109.60 million, P378.77 million, P576.22 million, and P60.53 million in 2004, 2005, 2006 and 2007, respectively. Its assessed total tax deficiency is pegged at P1.28 billion, inclusive of surcharges and interests. The 4 news cases are the 73rd up to the 76th tax evasion cases filed by the BIR, through its Run After Tax Evaders or RATE program under the Aquino administration. MANILA, Philippines - The Bureau of Internal Revenue (BIR) filed P1.95 billion worth of tax evasion cases against a doctor, a lawyer and his accountant, and a packaging container manufacturer at the Department of Justice yesterday. BIR Commissioner Kim Henares filed the charges at the Justice department against Jedvam Manufacturing Corp. and its officers led by its president Henry Chua Yu. The BIR said the manufacturing firm failed to pay taxes in 2007 and 2008 even after the BIR had demanded payment. Jedvam, a manufacturer of packaging containers such as papers and corrugated boards including yarn, plastic resins among others, did not respond to several assessment notices issued by the BIR. In conducting its investigation, the BIR sought data from the Bureau of Import Services and the Bureau of Customs on the company’s activities. The agency found out that Jedvam imported a total of P4.99 billion of resins from 2007 to 2008.

The BIR said that based on the evidence it gathered, Jedvam had a tax deficiency of P1.93 billion for 2007 and 2008. The BIR also filed charges against Salvador Gundayao Austria, a medical doctor, for violating Sections 254 and 255 of the National Internal Revenue Code. According to the BIR, Austria owns several real properties in Olongapo City and along Tomas Morato in Quezon City and buys, sells and leases properties. However, the BIR said Austria is not registered as a VAT taxpayer. Based on the BIR’s investigation, Austria leased a property in Quezon City to HUBB Manufacturing Inc. for P180,000 a month from 1999 to 2009. However, the BIR said Austria did not file any income tax returns for 2002, 2003 and 2005 nor did he file value-added tax returns from 1999 to 2005. The BIR computed Austria’s total tax deficiency at P13.69 million, including surcharge and interest, from 1999 to 2005. The BIR also filed tax charges against Abelardo Luzano, a lawyer who allegedly violated Sections 254 and 255 of the NIRC in 2009 and 2010. According to the BIR, Luzano’s clients included big banks such as the Bank of Philippine Islands, Banco de Oro Unibank Inc., Asia United Bank Corp. and the Hong Kong and Shanghai Banking Corp. for 2009 and 2010. Data gathered by the BIR showed that the banks paid Luzano at least P14.65 million for his services in the two-year period but he declared only P8.09 million. Luzano also allegedly did not pay value-added tax for 2009 and in the first two quarters of 2010. According to BIR’s estimates, Luzano’s total deficiency tax for 2009 and 2010 is at P6.63 million including surcharge and interest. The BIR also charged Evangeline Padilla-Kho, a certified public accountant that certified Luzano’s financial statements for 2009 and 2010. In its case, the BIR alleged that Kho knew of the existence of income payments from the banks but still certified Luzano’s financial statements.

MANILA, Philippines (UPDATE) - A former member of the Board of Trustees of the Government Service Insurance System (GSIS), who used to be the lawyer of former First Gentleman Jose

Miguel "Mike" Arroyo, was charged with tax evasion by the Bureau of Internal Revenue (BIR) before the Department of Justice (DOJ) today. Jesus Santos was slapped with 4 counts of willful attempt to evade or defeat tax and 4 counts of willful failure to supply correct and accurate information in his income tax returns (ITR) and to pay the correct tax from 2006-2009. His alleged total tax deficiency amounts to P12.32 M, inclusive of surcharges and interests. BIR Commissioner Kim Henares bared that Santos "deliberately failed to declare his correct tax base by substantially underdeclaring his income" as evidenced by the results of a comparison between the income or revenues declared by Santos in his ITRs for the said years with the income payments he supposedly received from GSIS in the same years. "He received from GSIS P4.19 M in 2006, P4.90 M in 2007, P7.39 M in 2008, and P8.18 M in 2009 in his capacity as Board of Trustees [member], but he only declared P1.18 M, P1.28 M, P0.84 M, and P0.83 M in 2006, 2007, 2008, and 2009, respectively," Henares said. The BIR conducted an investigation on Santos following a Senate inquiry that looked into the alleged excessive and unwarranted bonuses of government-owned and controlled corporations (GOCC) and government financial institutions (GFIs). Other members of the GSIS Board were charged ahead of Santos. Santos has yet to receive a copy of the complaint. The case is the 90th filed under the Run After Tax Evaders (RATE) program of the BIR under the Aquino administration. Henares said the case against Santos had no political color. "Ito yung subject ng Senate hearing... may audit na nangyari.... yung ibang kasama niyang finilan namin ng kaso, hingi nagfile ng ITR. Siya nagfile but underdeclared," she said. Case vs. Makati Rotary Club Foundation The BIR also charged the Makati Rotary Club Foundation, Inc. (MRCFI) and its officers Juan J. Carlos, Jr., Ricardo G. Librea, Alfredo B. Parungao, Robert F. Kuan, Antonio M. Quila, Conrado G. Marty, Wellington C. Soong, Federico S. Borromeo, Jr., Ramon T. Diokno (REPORTER'S NOTE: I'm not sure if this is the same Ramon T. Diokno of Lepanto Consolidated Mining), Jesus F. Tambunting, Jose A.R. Bengzon III, Larry A. Boyer, Felix B. Amparo, and Tomas T. De Leon with tax evasion in connection with the lease of a donated lot. Respondents were charged with 10 counts of willful attempt to evade or defeat taxes for taxable years 2001-2010 and 10 counts of willful failure to supply correct and accurate information in their ITRs for the same taxable years.

Henares said respondents owed government P47.05 M in taxes from 2001-2010. The case, according to Henares, stemmed from confidential information from 2 complainants and a certain Wilson H. Sua alleging respondents were guilty of tax evasion. The BIR conducted an investigation and found, Henares said, that MRCFI was in receipt of a lot donation located in Barrio La Huerta, Paranaque City from Fedders Koppel, Inc. under the LaurelLangley Agreement. MRCFI then entered into a lease agreement with Koppel over the said parcel of land, and with Rohm & Haas Philippines, Inc. (RHPI) over a manufacturing plant. The BIR investigation showed that MRCFI splits rental payments from both Koppel and RHPI into 2 parts: 1)lease; and 2) a substantial portion as donation. MRCFI, according to the BIR, compelled its lessees to give rental payments "under the guise of donation" and 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. This alleged scheme by MRCFI providing for annual donation ranging from P0.60 M to P20.10 M was for the purpose of evading payment of income tax and value-added tax (VAT), the BIR said. The case is the 91st tax evasion case filed under the Aquino administration. MRCFI and respondent officers have yet to receive copies of the complaint. Case vs trading firm A third case, the 92nd under the current administration, was filed against Eagle's Fortune, Inc. (EFI) and its General Managers Whang Zhi Zin and Alex Ong for alleged willful failure to pay deficiency taxes. The charge covers taxable years 2004-2006 with the alleged total tax deficiency (income tax and VAT) amounting to P162.82 M. EFI is engaged in wholesale, buy and sell, and importation of papers, cartons, steel pulp, glass, pulp and other materials used in packaging. The case was triggered by a letter with attached receipts from a certain Larry Balmaceda who alleged that EFI issued fake receipts so it could cheat on its tax obligations. Henares said that upon verification, the alleged issuers of the receipts had no reported income in 2004, and neither were they in business. Third party information from United Pulp and Paper, Co. and Steel World Manufacturing Corp. "unearthed million of pesos worth of purchases from EFI," she added. EFI allegedly incurred discrepancies between its declaration of purchases in its financial statements of P62.03 M or 2,611% in 2004, P29.01 M or 858.24% in 2005 and P40.19 M or

7,529% in 2006, surpassing the 30% statutory fraud percentage of overdeclaration of purchases under the National Internal Revenue Code (NIRC). EFI has yet to receive a copy of the charge against it.

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