The Court of Tax Appeals (CTA) has acquitted lawyer Arnel Manaloto of P16.67-million tax evasion charges over the alleged undeclared income used to purchase eight Davao City properties from his client, Maguindanao massacre prime suspect Andal Ampatuan Jr.
In a decision dated Dec. 5, the CTA Second Division said the Bureau of Internal Revenue (BIR) did not follow the guidelines in order to properly audit the allegedly unpaid liabilities of the Angeles City-based lawyer.
Manaloto was accused of underreporting his income for the year 2011.
The BIR questioned his declaration of P1,495,200 in total income, because he was able to acquire Ampatuan’s properties for P20 million that year.
The Philippine Center for Investigative Journalism in November 2012 reported that the transaction began on May 19, 2011—barely two weeks before the Court of Appeals issued a freeze order on the Ampatuan family’s assets on June 6, 2011.
On top of this issue, another P17,501,500 in deferred revenue was disclosed in Manaloto’s financial statement but allegedly not reported for tax purposes.
In acquitting Manaloto, the tax court agreed with his argument that the BIR had “not aptly applied” the net worth or expenditure methods of computing undeclared income related to the purchase of the Ampatuan properties.
The court said the possibility of fraud was not established first before the audit was conducted. —Vince F. Nonato