Cedric Lee ordered arrested over P194M tax case

CEDRIC LEE. INQUIRER FILE PHOTO

THE Court of Tax Appeals (CTA) has ordered the arrest of businessman Cedric Lee and his estranged wife Judy Gutierrez in connection with the P194.47-million tax evasion case filed by the Department of Justice (DOJ) in July.

Their co-accused John K. Ong, chief operating officer of Lee’s firm Izumo Contractors Inc. surrendered but has been released after posting P80,000 bail for four counts of tax cases.

“This Court finds the existence of probable cause to issue a warrant of arrest against the accused,” the tax court said in a promulgated Sept. 16 but made public Monday.

“Let a Warrant of Arrest be issued against the remaining accused, Judy Gutierrez Lee and Cedric Lee, and the bail bond for their provisional liberty is set at Twenty Thousand Pesos for each accused,” the tax court said. Each of the accused are facing four counts of tax cases.

The DOJ last July approved the filing of tax cases against the three.

In its 13-page resolution, the DOJ said Lee’s company under declared its income by 1,602 percent from 2006 to 2009.

“The manifest underdeclaration is more than tenfold…thus, a prima facie case thereby exists against all the respondents,” the DOJ resolution stated.

Lee denied the allegation saying it was the company’s accountant who prepared its Income Tax Return (ITR).

But the DOJ said Lee’s “flimsy” defense “deserves minuscule if not nary a consideration.”

“No amount of delegation to an accountant or bookkeeper would extenuate any responsible officer of a corporation from the commission of any violation arising from such delegated act,” the DOJ said.

“Parenthetically, it is likewise quite ironic for the president of Izumo to merely feign personal knowledge of such important transactions involving the corporation in the guise that he is not an accountant,” the DOJ added.

On the other hand, the DOJ called as “lame” the defense of Gutierrez-Lee and Ong that their titles were “merely for purposes of incorporation of Izumo.”

The DOJ said their defense should best be threshed out in a full-blown trial.

“Their astute denial of any participation or involvement as responsible officers of Izumo, are at best, self-serving statements with no probative value,” the DOJ said.

Investigation against Izumo stemmed from a confidential information received by the BIR against tax evasion committed by Izumo. A letter of authority was issued by the BIR for the examination of its books of accounts and other accounting records.

Izumo declared P5.54 million in its ITR in 2006; P9.14 million in 2007; P21.34 million in 2008 and P40.20 million in 2009. Comparing it from the certifications from their clients, probers discovered that their income in 2006 is P94.33 million; P46.07 million in 2007; P30.83 million in 2008 and P131.49 million in 2009 with a total of P76,218-million.

But replies from clients of Izumo showed that Izumo received a total amount of P302.63 million in income payments.

Under Section 248 of the Tax Code, underdeclaration of taxable income by more than 30 percent is considered substantial and constitutes a prima facie case of fraud tantamount to tax evasion.

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