For not filing an income tax return for the year when the Local Water Utilities Administration bought a bankrupt thrift bank and with his net worth rising by close to P60 million, recently dismissed LWUA Administrator Prospero Pichay was charged on Thursday with tax evasion.
Commissioner Kim Henares of the Bureau of Internal Revenue (BIR) said Pichay, a former Surigao del Sur congressman and one of former President Gloria Macapagal-Arroyo’s staunchest allies, owed the government P32.73 million in income tax for 2009.
Pichay predictably said the tax evasion charge and his dismissal from LWUA were part of “political persecution” by the Aquino administration to “demonize” the previous administration and its supporters.
Addressing allies of Arroyo, Henares said: “If they did something wrong in the past, then they should be ready with the consequences. The time for them to pay for their sins will come. There’s always a day of reckoning.”
“What will the government do? We cannot stop exacting accountability from former government officials just because they are claiming that they are being singled out,” the BIR chief said.
“I file my income tax returns (ITR) religiously every year. I have a copy of my ITRs and I can give anyone concerned a copy,” said Pichay, the biggest TV ad spender in the 2007 senatorial elections.
Henares said the case filed in the Department of Justice (DoJ) against Pichay was not alleged political persecution directed against Arroyo, her family and their political supporters.
4th case
The BIR’s complaint for tax fraud was the fourth case the Aquino administration had filed against Pichay.
“I think the Filipino people are not blind, mute and deaf. I’m sure they know that many things happened during the past administration,” Henares said in a news briefing at the DOJ.
“If we’re really going to go with the tide of opinion, we would have filed many, many more. The only time we file cases is when we have evidence,” she said.
Express Savings Bank
Henares said the tax fraud case was prompted by LWUA’s acquisition of Express Savings Bank in Laguna province for more than P480 million. The Ombudsman said LWUA’s acquisition of the bankrupt bank was done without clearance from monetary officials.
Pichay was earlier charged with malversation of public funds and graft in the DOJ by the Department of Finance for the purchase of the bank.
LWUA employees also sued Pichay for graft in the Office of the Ombudsman. Based on the recommendation of the antigraft body, the Office of the President ordered Pichay’s dismissal as LWUA chair.
SALN
A copy of Pichay’s statement of assets, liabilities and net worth (SALN) that he submitted to LWUA showed that he failed to file an income tax return in 2009, according to the BIR chief.
Henares said the former lawmaker’s act “demonstrates his propensity and willful intent to evade the taxes due the government.”
“Based on the documents submitted by LWUA, the BIR discovered that Pichay was able to acquire real, personal and other properties in 2009 which are worth several millions,” Henares said.
Huge increase in net worth
A scrutiny of Pichay’s SALN “showed a substantial increase” of P58.5 million in his net worth from 2008 to 2009, Henares said.
“Isn’t it good that I did not hide it?” Pichay said. “Should I have not revealed the increase in my net worth? They are filing cases against me left and right. Next thing you know, the next case against me could be the murder of Jesus Christ.”
In 2008-2009, Pichay, a resident of Marikina Green Heights Subdivision, Marikina City, bought a residential lot in Las Piñas, a residential house in Marikina City, several vehicles and an airplane, according to Henares.
“The same document also revealed he is in possession of large sums of cash,” she said. “Despite the receipt of substantial amounts of income… Pichay failed to file any tax return and pay corresponding taxes.”
Henares said Pichay could not invoke the principle of “substituted filing” of income tax in his defense since he was hired by three different companies.
Other compensation
Aside from his salary as LWUA administrator, the former congressman also received compensation as a director of LWUA Consult Inc. and Express Savings Bank, Henares said.
“The regulation on substituted filing is only applicable for somebody who earns compensation from one employer. If you earn anything from more than one employer, you’re supposed to file an income tax return,” she said.
Pichay said he was denied due process in the filing of tax evasion charges. “When I filed my ITR (income tax return) in 2009, the BIR should have made an assessment and sent me an LOA, or Letter of Assessment, saying I only paid such and such tax and I should have paid ‘X’ amount. They did not write me a letter. Then suddenly this comes up.”
Henares said it was natural for Pichay and other Arroyo allies to cry political harassment over the cases filed against them “because it’s seldom that somebody who committed a wrongdoing admits his sin.”
MWSS exec charged
The DoJ has also recommended that charges be filed in court against a former board member of the Metropolitan Waterworks and Sewerage System (MWSS) who allegedly failed to file his ITRs in 2008 and 2009.
Former MWSS official Lorenzo Sulaik, who earned nearly P8 million in those two years, got away with being charged with tax evasion.
In a resolution, Assistant State Prosecutor Juan Pedro Navera recommended the filing of two separate complaints against Sulaik for his failure to file his ITRs in 2008 and 2009 in violation of Section 255 of the National Internal Revenue Code (NIRC).
In December last year, the BIR filed separate complaints against Sulaik and fellow MWSS board members Oscar Garcia and Ferdinand Mahusay, brother of Udong Mahusay, the whistle-blower in the 2003 Jose Pidal scandal.
Probable cause
But Navera said the BIR’s allegation that Sulaik also violated Section 254 of the NIRC, or the attempt to evade taxes, should be dismissed because the facts that the complaint relied upon to support the charge were the same facts arising from the failure to file income tax returns for 2008 and 2009.
“We find the charge for violation of Section 254 lacking in probable cause and thus, must be dismissed,” Navera said.
The resolution was dated June 1 but was made available only yesterday because it was reviewed and approved by higher authorities. The parties also have to be informed first before the resolution could be made public.
Navera’s recommendations were approved by Senior Deputy State Prosecutor Manuel Gudio Jr. and Prosecutor General Claro Arellano.
In its complaint, the BIR said Sulaik violated Sections 254 and 255 of the NIRC for his supposed “deliberate” failure to file his ITRs in 2008 and 2009 and failure to file the taxes due “despite knowledge of his obligation to do so.”
The BIR noted that Sulaik filed his ITRs in 2006 and 2007.
Taxable income
The tax agency said Sulaik earned taxable income of P3.21 million in 2008 and P4.51 million in 2009 as a member of the board of corporate and regulation offices of the MWSS.
The BIR claimed Sulaik failed to remit taxes of P1.7 million in 2008 and P2.2 million in 2009, for a total of P4.05 million, including surcharges and interest. With a report from Nikko Dizon