Tomas sues firm for ‘tax fraud’

Payment 'understated' by P24M 

CEBU, Philippines - Cebu City Mayor Tomas Osmeña has filed criminal complaint for alleged tax fraud against a firm over a South Road Properties lot purchase.

 "It is respectfully prayed that SM Prime Holdings, Inc., through Henry Sy, Jr., as chairman of the board; Jose Cuisia, Jr., as Vice-chairman of the Board; Hans Sy, as Executive Director; Imelda Lim as its authorized representative, and any and all its pertinent officers, representatives and employees be held liable for "other deceits' under Art 318 paragraph of the Revised Penal Code," read the complaint filed before the City Prosecutor's Office yesterday afternoon.

He said the alleged tax fraud has affected the interest of the city government.

In 2009, SM Prime Holdings Inc. bought 30.4 hectares of the SRP for P2.7 billion, or P8,910 per square meter. SM Seaside now stands on the lot.

 "I ordered the Office of the City Assessor to conduct further review/reassessment of real properties for taxation purpo-ses are properly executed. Taking into consideration the vastness and complexities of the whole SM Seaside City premises," Osmeña said.

He said the Office of the City Assessor found out that SM has understated the size of the property, and allegedly failed to declare parts of the buildings, such as the basement, pavement and the roof deck.

"After a thorough review of all the records in support of the issuance of the tax declaration, it was found out that there were substantial and material misrepresentations between the floor areas and undeclared essential parts of the buildings (basement, pavement, and roof deck) declared in the tax declaration, compared to that provided in the building plans, building permit and certificate of occupancy, as per Office of the Building Official records," the mayor said.

After the findings, Osmeña said the Office of the City Assessor issued a Notice of New or Revised Assessment so that the office can conduct an ocular inspection of the property.

Last November 10, the office conducted a physical validation of all records like building permit and the certificate of occupancy.

After the ocular inspection, the Office of the City Assessor submitted a new or revised assessment report contained in its Real Property Field Appraisal and Assessment Sheet.

City Assessor Eleodoro Diaz said SM only paid P14 million but as assessed, the amount, including the undeclared parts of the buildings, should be P37.6 million this year.

"SMPHI paid only an amount of P14 million as assessed, when it should have been assessed for the amount of P37.6 million. Crunch the numbers and you get the difference of P23.5 million, the amount which the City of Cebu was not able to collect to its grave prejudice," read the complaint.

Osmeña said the city dug deeper into the transaction and found out that there were SM personnel who transacted with the city this year for the tax declaration.

"According to the handling personnel of the City Assessor's office, the subject tax declaration was issued without any ocular inspection conducted and only a list was presented in a sheet of paper without even considering the said building plans, building permit, and certificate of occupancy. The later requirements are mandated in new building transactions," he said.

The SM Seaside's building permit was issued on August 10, 2012 and its certificate of occupancy was issued on March 23, 2016.

Under the Real Property Tax Code, SM Prime Holdings, Inc., as the owner of SM Seaside City, has the duty to declare the true value of its real property for taxation.

 "Undoubtedly, this act of SMPHI was made precisely to defraud the City of Cebu from collecting the correct and exact taxes; an act clearly prejudicial to the latter," read the complaint.

In a press statement sent to THE FREEMAN, SM Seaside City Cebu said the management cannot comment on the case filed by the mayor.

"We cannot comment until we can refer the matter to our tax department who will have to review the details of the mayor's statement regarding the SRP real property taxes," read the statement.  (FREEMAN)