BIR: Chief Justice liable for P2M in back taxes

HOUSE PROBE Lawyer Sixto Dy Jr. of the Bureau of Internal Revenue and Deputy Revenue Commissioner for Operations Arnel S.D. Guballa explain the tax records of Chief Justice Maria Lourdes Sereno during the House hearing on Tuesday. —JOAN BONDOC

The Bureau of Internal Revenue (BIR) has disclosed that Chief Justice Maria Lourdes Sereno could be liable for at least P2.014 million in back taxes from 2004 to 2009, as the House of Representatives’ justice committee’s inquiry into the impeachment complaint wound down on Tuesday.

During the committee’s final clarificatory hearing, BIR Deputy Commissioner Arnel S.D. Guballa noted various discrepancies in the attorney’s fees earned by Sereno as legal counsel for the government in its case against Philippine International Air Terminals Co. Inc. (Piatco).

“The amount is P2,014,233.20 basic tax. If we put the deficiency surcharge and interest, it would go up even more,” Guballa said of Sereno’s basic deficiency taxes, arising from underdeclarations of her earnings.

The BIR official said these discrepancies had not been seen before because “she was not investigated before … the committee on justice instructed us to [do so].”

‘Six violations’

Guballa said he saw at least “six violations” on Sereno’s part, based on the discrepancies between the earnings she declared in her value-added tax (VAT) returns and records of the Office of the Solicitor General (OSG) of the fees she was paid.

These concerned the VAT returns she filed for the third and fourth quarters of 2005, the third quarter of 2006, the third and fourth quarters of 2007, and the fourth quarter of 2008—periods in which the discrepancies exceeded the 30-percent threshold for a prima facie case of fraud.

VAT returns

For these periods, Sereno reported in her VAT returns that she earned P3,896,125.33, even declaring zero for the third quarter of 2005, the third quarter of 2006 and the fourth quarter of 2007.

But OSG records showed she was paid a total of P20,370,113.94 for the six quarters, leading to a discrepancy of P16,473,988.62.

“If we use the law itself on how to compute the VAT quarterly, that’s where she incurs violations,” Guballa said.

Sereno’s income tax returns (ITRs) for 2007, 2008 and 2009 also showed discrepancies, but these were not as substantial as those in the VAT returns and would not reach the 30-percent threshold for fraud.

Although she declared in her ITRs a total of P9,388,229.29 in income for the three years, records of the OSG showed she was paid P10,541,548.38 in attorney’s fees. This meant her income was underdeclared by at least P1,153,319.09.

Increase in liabilities

Since this figure accounts only for her Piatco case attorney’s fees, Sereno’s possible tax liabilities could increase once the BIR receives records from her other sources of income.

Guballa said Sereno’s income sources, such as the University of the Philippines, where she was a professor of law, had yet to submit the requested records. The BIR’s tax audit investigation would thus continue.

Still, he said Sereno could potentially be liable for violations of Sections 254 and 255 of the National Internal Revenue Code, pertaining to tax evasion and failure to pay the correct taxes, respectively.