MANILA, Philippines—Justice department officials Thursday said they had found enough evidence to charge former Economic Planning Secretary Romulo Neri with tax evasion, even as they pursued similar tax dodging charges against the eldest son of former President Gloria Macapagal-Arroyo.
Department of Justice prosecutors said in a resolution that Neri—a key official under the Arroyo administration—owed the government at least P13.6 million for allegedly underdeclaring his earnings from his various posts in the government and in private companies in 2008 and 2009.
Neri sparked a controversy during a Senate probe in 2007 into alleged bribery in the aborted $329-million National Broadband Network deal with China’s ZTE Corp. when, despite risks of being cited in contempt, he refused to divulge what he and Arroyo had discussed on the matter.
The charges against Neri will be filed in the Court of Tax Appeals “today or tomorrow,” Justice Undersecretary Francisco Baraan III said in a press conference.
“After evaluating the conflicting evidence presented by both parties, we find probable cause to indict respondent (Neri) for tax evasion,” Assistant State Prosecutor Amor Robles said.
2 counts
Also Thursday, the DoJ convened a preliminary investigation of a P73.85-million tax evasion case against Ang Galing Pinoy party-list Rep. Juan Miguel Arroyo and his wife Angela, but the Arroyos did not show up.
The Arroyos’ lawyer asked for a postponement, saying the couple were on vacation in the United States.
In a 22-page resolution, Prosecutor Robles found probable cause to indict Neri on two counts of violation of Sec. 255 of the National Internal Revenue Code (NIRC), which penalizes taxpayers who fail to file their Income Tax Returns or give correct and accurate information in their ITRs.
There was a seeming discrepancy in the figures of the DoJ and the Bureau of Internal Revenue on the amount of taxes Neri owed. While the BIR put down the amount at P18.6 million, the DoJ figures added up to only P13.6 milion.
The BIR filed the tax complaint against Neri with the DoJ in November last year under its Run After Tax Evaders (RATE) program after he allegedly underdeclared his income as chair and president of the Social Security System and as a board member of Philex Mining and Unionbank, where the SSS had stock options.
Crime consummated
Neri was cleared of the separate charge of violating Sec. 254 of the Internal Revenue Code, which states that a taxpayer is liable if he willfully evades paying his taxes. Robles said “it is undisputed” that Neri filed his ITRs for 2008 and 2009.
However, he “underdeclared his correct and accurate income for said period, thus, respondent already consummated the crime of tax evasion,” Robles said.
Neri is facing separate charges of graft in the Sandiganbayan in connection with the NBN-ZTE deal.
In his counteraffidavit, Neri denied the BIR’s allegations, saying these were “wrong and baseless” because he honestly reported his income and paid income taxes to the BIR.
Neri assailed the BIR’s lack of official assessment of his tax liabilities and failure to officially inform him of his liabilities, adding this was a violation of his constitutional right to due process.
He said that “since there was no final assessment, the BIR has no authority to file the instant criminal complaint.”
Moreover, Neri said the BIR’s findings were based on “reckless and unverified assumptions.”
Not taxable
Neri claimed that there were discrepancies in the BIR claims of what he earned from SSS, Philex Mining and Unionbank.
Among others, he claimed that he did not receive the entire amounts as alleged by the BIR.
Neri also said that part of his earnings was not taxable as certified by the SSS.
Neri’s lawyer Paul Lentejas said Neri reported his income dutifully. He explained that there was a lag before Neri could report his earnings because Philex Mining and Unionbank, being corporate entities, assess earnings at the end of every year.
Thus, income received by Neri in January 2008 from Philex would be filed only in 2010, he said.
The DoJ, however, upheld the BIR’s arguments that he received a total gross income of P9.72 million from SSS, UnionBank, Philex Mining, the Commission on Higher Education (CHEd) and Philippine Health Insurance Corp. (PhilHealth) in 2008.
In his ITR for that year, he supposedly declared an income of only P1.3 million.
P32-M income
In 2009, Neri earned a total gross income of P32 million but supposedly declared only P14.1 million in his ITR.
“In conclusion and as correctly pointed out by the complainants, respondent underdeclared his gross income for years 2008 and 2009 by more than 30 percent of the income declared in his return … The same constitutes prima facie evidence of false and fraudulent return,” Robles said.
Commenting on the case against Neri, Internal Revenue Commissioner Kim Henares said the “BIR is happiest when we can no longer file a tax evasion case.”
“(We are) happy in the sense that the work is vindicated but of course sad that we have to reach this stage. We don’t want to do this every week,” she said.
US vacation
The Arroyo family lawyer, Ruy Rondain, appeared at Thursday’s hearing to request for a postponement of the proceedings until the couple return next month from their family vacation in the United States.
“Angela and Juan Miguel are still in the United States,” said Rondain, who entered “a special appearance” and not as their actual counsel in the hearing.
“I understand he is on congressional business and at the same time the family is taking a short vacation. They do that every summer. I was asked ultimately to ask for a resetting so they may act accordingly,” he said.
Rondain said he was asked to request for a postponement of 30 or 40 days to give time for the couple to prepare a counteraffidavit and answer the BIR allegation that Arroyo did not pay the correct taxes for three years, and his wife did not pay any tax at all for six years.
BIR lawyer Claro Ortiz said the agency did not object “provided that after the 40th day, the spouses should file their counteraffidavit.”
Refused subpoena
Arroyo had not received any subpoena to appear because according to panel chair, Senior Assistant State Prosecutor Lagrimas Agaran, his office at the House of Representatives and the household staff at his family’s La Vista Subdivision home in Quezon City refused to receive it.
The BIR said the case against the Arroyos, filed last month, was based on the congressman’s Statements of Assets, Liabilities and Net Worth (SALN). It showed that the former President’s son did not file his income tax returns for taxable years 2005, 2008 and 2009.
His wife got a Tax Identification Number for a “one-time transaction” but failed to file an income tax return from 2003 to 2009, prosecutors said.
Rondain told the Inquirer the Arroyos could not cut short their vacation because this was a time they had always set aside to spend as a family. With a report from Ronnel W. Domingo