MANILA, Philippines?The Bureau of Internal Revenue (BIR) yesterday filed with the Department of Justice a tax evasion case against a couple who run a construction firm that did not pay a tax in 2006 when an affiliate of real estate firm Megaworld Corp. paid it P80 million.

Named in the complaint were Dennis S. Masigan and his wife Natalie in their respective capacity as president and corporate secretary of DSM Construction & Development Corp. (DSM).

Also charged with tax evasion was Eldrin M. Masigan, DSM vice president for operations.

Internal Revenue Commissioner Kim S. Henares said DSM ?fail(ed) to supply correct and accurate information in [its] 2006 income tax return and pay the correct? amount.

Second case

The BIR also found that DSM failed to file value-added tax (VAT) returns and to pay the tax for that year.

As a result, the company owes the BIR P52.5 million in income tax and P16 million in VAT, Henares said.

This is the second tax evasion case that the BIR has filed with the justice department since the Aquino administration assumed power.

Earlier this month, the BIR filed a case against pawnshop owner William Villarica, who bought a Lamborghini for P26 million in a year that he paid no income tax.

Largest arbitration award

Henares said the charges stemmed from DMS not reporting to the BIR an P80-million compromise settlement it received in full from Megaworld Globus Asia Inc. in 2006.

?The settlement was, at that time, considered the construction industry?s ?largest arbitration award,?? Henares said.

Megaworld Globus Asia is a joint venture between Megaworld Corp. and Globus Asia Realty Holdings.

Salcedo Park

The joint venture was set up to develop the project dubbed ?The Salcedo Park,? a 47-story twin tower residential condominium in Makati City, for which Megaworld Globus contracted DSM.

Henares said the settlement was for unpaid billings on construction contracts claimed by DSM against the developer.

She said that based on BIR investigation, DSM ?deliberately failed to declare? the receipt of the settlement payment as part of its gross income or sales.

Tax return

?The 2006 income tax return filed by DSM only reflected a status of ?No Operation? and, hence, no income taxes were paid for 2006,? the BIR chief said.

Henares added that the P80-million settlement that DSM received from Megaworld Globus Asia was considered proceeds from a sale of service, which is subject to VAT.

?DSM should have filed VAT returns for the month of February 2006 and for the first quarter of that year, and pay the corresponding VAT,? she said.