BIR probers goofed in Rep. Mikey and wife’s tax evasion case, claims couple’s lawyer

MANILA, Philippines—The Bureau of Internal Revenue (BIR) erred “almost 100 percent” in determining the tax liabilities of Representative Juan Miguel Arroyo and his wife Ma. Angela, the couple’s lawyer said on Monday after the preliminary investigation on their tax evasion case.

In filing the complaint, the BIR said a comparison of the increase of their net worth with their reported taxable income, using the net worth method of investigation first used in the US against Al Capone in the 1930’s, revealed substantial under-declaration of income of more than 30 percent in taxable years 2004, 2006 and 2007.

The BIR said under the Tax Code, an under declaration of taxable income of more than 30 percent, is considered a prima facie evidence of fraudulent return.

But lawyer Rui Rondain, counsel for the Arroyos told reporters that “we used the computation forwarded by the BIR, and we concluded that they made a mistake in the computation. The error is almost 100 percent.”

Arroyo and his wife Angela Montenegro-Arroyo arrived at the Department of Justice (DOJ) on Monday to attend the preliminary hearing on the P73.85-million tax evasion case filed against them by the Bureau of Internal Revenue.
Arroyo and his wife personally appeared before the Department of Justice (DoJ) panel of prosecutors, led by Senior Assistant State Prosecutor Lagrimas Agaran, subscribed their joint counter-affidavit .
Last April 7, the BIR filed before the DoJ tax evasion cases against Arroyo and his wife for violating several provisions of the Tax Code, making their tax liability to at least P73.85 million inclusive of surcharges and interest.

BIR Commissioner Kim Jacinto-Henares said investigations conducted by the BIR showed that the lawmaker and his wife bought several real and personal properties from 2004 to 2009, but failed to file any annual Income Tax Return (ITR) and to pay the corresponding taxes due.

These properties allegedly include residential houses in the US, Lubao, Pampanga and La Vista Subdivision in Quezon City, motor vehicles, stock shares, jewelry, clothes and other personal effects mentioned in Arroyo’s Statement of Assets, Liabilities and Net Worth (SALN) for the years 2002 to 2009.

Henares said the lawmaker did not file his ITR for taxable years 2005, 2008 and 2009, while his wife did not file any return from 2003 to 2009.

With regards to the non-filing of ITR, Rondain said the couple filed their ITRs.

“The ITRs were filed through substitutive filing. That is allowed under the revenue regulations. Congress filed it for them,” Rondain said.

The BIR has up to July 7 to submit a reply to the counter-affidavit of the Arroyos.