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Tax court, BIR hand another win to Pacquiao

SC stops CTA from collecting over P3-B bond
/ 05:20 PM April 20, 2016

BAGUIO CITY—After his successful fight against Timothy Bradley, boxing champ and senatorial aspirant Manny Pacquiao wins another battle, but this time against the Bureau of Internal Revenue (BIR) and Court of Tax Appeals (CTA).

This was after the Supreme Court (SC) second division issued a resolution on Wednesday stating that the injunction it issued in 2014 stopping the tax court from collecting over P3-billion cash bond or P4-billion surety bond from Pacquiao would stay.

It also ordered the tax court’s first division to conduct a preliminary hearing to determine whether the amount would be reduced or dispensed with.

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The high court said it could not make its own determination whether to dispense or reduce the bond because “the CTA had not made even a preliminary (determination) of whether the [BIR] had acted patently in violation of the law in its tax collection efforts,” adding “the CTA would be in a better position to make this finding.”

It said if the tax court determined that a bond must be paid, there should be a recomputation of its amount, taking into consideration the P32,196,534.40 already paid by Pacquiao as well as AM NO. 15-92-01 CTA, which states that the term “amount claimed” should exclude penalties, interests and surcharges.

The Supreme Court said despite payment by the Pacquiaos, the tax court still issued the couple a bond for P3.2 billion.

“These should be deducted from the amount of the bond to be computed and required … the CTA must balance the scales between the power of the state to tax and its inherent right to prosecute perceived transgressors of the law on one side, and the constitutional rights of a citizen to due process of law and the equal protection of the laws on the other.”

It said in case of doubt, the tax court must remember “that as in all tax cases, such scale should favor the taxpayer, for a citizen’s right to due process and equal protection of the law is amply protected by the Bill of Rights under the Constitution.”

“After the posting of the required bond, or if the Court of Tax Appeals First Division determines that no bond is necessary, it shall proceed to hear and resolve the petition for review pending before it,” the Supreme Court said.

Manny Pacquiao and his wife Jinkee said the tax court committed grave abuse of discretion when it issued a resolution requiring them to deposit P3,298,514,894.35 or post a bond of P4,947,772,341.53 to stop the BIR from collecting tax liabilities worth P3.29 billion.

The Pacquiaos said the assessment and collection process employed by the BIR violated their right to due process of law.

The couple, in their petition, said they could not afford the bond, given that their net worth was only P1,185,984,697 as of July 1, 2013.

Pacquiao said the government should no longer run after him, citing documents from the United States Internal Revenue Service that he paid $8.35 million in taxes from his fight purses in 2008 and 2009.

The government is open to a compromise agreement with Pacquiao, but BIR Commissioner Kim Henares said the boxer should make the first move since he was the one seeking tax credit. The Philippines and the US have a treaty against double taxation.

Pacquiao’s original tax liability was P2.26 billion but it ballooned to P3.29 billion due to surcharges and penalties.

The BIR had issued a warrant of distraint and levy against his bank accounts, which the eight-division champion challenged before the CTA.

The tax court, however, directed the Pacquiao couple to deposit a cash or surety bond to stop the BIR from collecting back taxes. RC

TAGS: Bureau of Internal Revenue, court of tax appeals, Jinkee Pacquiao, kim henares, Manny Pacquiao, Supreme Court, Taxes
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