Bank execs aiding tax evaders liable - DOJ

MANILA, Philippines - The Bureau of Internal Revenue (BIR) may run after bank officials who assist tax evaders, including those who extend loans to taxpayers keeping multiple books of accounts, the Department of Justice (DOJ) has said.

In a legal opinion, Justice Secretary Leila de Lima said officials of banks and other lending or financial institutions who deliberately assist tax evaders in defrauding the government could be held criminally liable under the National Internal Revenue Code (NIRC) or the Tax Reform Act of 1997.

Section 253 of the NIRC states that any person who willfully assists in the commission of a crime penalized under the tax reform law “shall be liable in the same manner as the principal.”

“Thus, when a responsible banking, lending or financial institution officer grants loans to a person even as he fully knows that said person keeps multiple books of accounts, which is clearly prohibited by the NIRC, said officer is equally guilty of the crime committed by the loan grantee,” De Lima said.

De Lima also said that Republic Act 8791 (General Banking Law of 2000) prohibits officials and officers of any bank from engaging in any fraudulent transaction and bars borrowers from submitting false documents or resorting to misrepresentation in order to obtain, renew or increase a loan or other credit accommodation.

Finance Secretary Cesar Purisima earlier sought De Lima’s opinion on whether officers of banks and lending firms can be charged for being an accomplice in tax evasion for allowing borrowers to use a second set of financial books different from that presented to the BIR to reflect a more favorable financial condition of the company or borrower.

De Lima, however, refused to answer this issue, saying it should best be addressed to the prosecutors handling these specific cases, who under the law, have the duty to decide whether or not to file a complaint for violation of the law after conducting a preliminary investigation.

“Such opinion on my part would be misconstrued as undue interference in or intrusion into the exercise of the discretion by the prosecuting officer in making such determination, which discretion must be free from pressure and other irrelevant consideration,” she said.

De Lima said the DOJ cannot issue a legal opinion on the issue as it involves the rights of the private parties -- the taxpayers and the officers of the banking and lending institutions -- who may be adversely affected and contest the issue before the courts.

In his letter-request, Purisima expressed his intention to institute criminal actions not only against those maintaining multiple books of accounts but also against officers of banking and lending institutions that use these documents.

He noted that several banks and lending institutions have been extending loans to taxpayers who have been keeping two or more sets of books of accounts, which is prohibited under Section 257 (b) (5) of the NIRC.