BIR sues Corona, kin for tax evasion

MANILA, Philippines - The Bureau of Internal Revenue on Thursday filed tax evasion charges against ousted Chief Justice Renato, his daughter Carla Castillo and son-in-law Constantino Castillo III.

In a news conference at the Department of Justice, BIR Commissioner Kim Jacinto-Henares said the tax deficiency cases against Corona and the Castillos were filed following an investigation which compared their networth to the submitted statements of assets, liabilities and networth presented by Corona during his impeachment trial.

The charges for violation of the National Internal Revenue Code were filed with the DoJ.

Henares said the BIR probe found Corona's tax returns and SALNs reflecting a discrepancy of P161.5 million.

"Not yet included are some of his assets because his dollar accounts have not yet been [opened] because it seems like that former Chief Justice Corona, after executing a waiver [to allow the scrutiny of his foreign exchange accounts], is now revoking the waiver," Henares said.

In a statement, the BIR said Corona was charged for willful attempt to evade or defeat tax and for deliberate failure to file his Income Tax Returns (ITRs), for taxable years 2003 to 2005, 2007, 2008 and 2010, in violation of Section 254 and Section 255 of the NIRC of 1997 or the Tax Code.

Using copies of his SALNs, Certificates Authorizing Registration (CAR) and their corresponding Deeds of Sale, and Bank Accounts, the BIR said Corona undervalued three of his properties by P17.30 million, failed to declare two properties valued at P12.75 million, and underdeclared the value of his cash asset in his SALNs from 2003 to 2010 with the cash underdeclaration reaching P134.44 million in 2010.

An evaluation and comparison of the income earned by Corona as per Alphalists filed by the SC as against his true networth showed that he failed to declare his true income for taxable years 2003, 2004, 2005, 2007, 2008 and 2010, the BIR added.

The alphalists contain, among others, the names of employees, the amount of compensation income received, and the amount of taxes withheld.

The discrepancy between Corona's declared income per alphalists (P26.45 million) and the substantial increases in his true net worth (P161.15 million) revealed that he earned more than what was declared in the alphalists, the BIR said.

"In other words, this discrepancy implies that he earned income from other sources aside from his compensation as a public official," the BIR said.

As a government official receiving purely compensation income, Corona is exempted from filing an ITR under the “substituted filing” scheme of the BIR. But when Corona receives other income payments aside from his compensation income from the SC, he can no longer avail of the substituted filing scheme and is thus required to file an Annual ITR.

However, despite the receipt of substantial amounts of income as shown by the "significant increase in his networth, acquisition of numerous properties and bank accounts containing large sums of money," Corona repeatedly failed to file his annual ITRs.

Owing to this, the BIR is holding Corona liable for a total deficiency tax in the amount of P120.5 million, inclusive of surcharges and interests, covering taxable years 2003 to 2005, 2007, 2008 and 2010.

Meanwhile, the BIR said it also filed a complaint against Ma. Carla Beatriz Castillo for "willful attempt to evade or defeat tax and for deliberate failure to file her ITR, for taxable year 2010, in violation of Section 254 and Section 255 of the Tax Code.

Carla, daughter of Corona, is a registered taxpayer of Revenue District Office No. 39, South Quezon City.

Records of the BIR showed that Carla declared in her ITR for 2008 and 2009 a cumulative income amounting to P228,040.00.

However, information from documents gathered disclosed that Castillo acquired in 2010 a property located at 57 Maranao Street, La Vista, Quezon City for P18 million for which she paid Documentary Stamp Tax (DST) of P329,000.00.

"Investigation revealed that Castillo deliberately failed to file her ITR with the BIR in 2010 despite receipt of substantial amounts of income as manifested by her ability to acquire property and pay the amount of P18.33 million," the BIR said.

In filing the case, the BIR said its investigators used the expenditures method of tax investigation to find that Carla "substantially underdeclared her income."

"The method is based on the theory that if a subject taxpayer’s expenditures during a given year exceed her reported income and the source of the funds used to make the expenditures is unexplained, it may be inferred that such expenditures represent unreported income," the BIR said.

Under the method, Carla's cumulative income of P228,040.00 as declared in her ITRs for taxable years 2008 to 2009 compared with her expenditure of P18.33 million in 2010 clearly indicated a difference of P18.1 million or a 7,938-percent underdeclaration.

The difference constitutes substantial underdeclaration of more than 30 percent and is considered as prima facie evidence of fraud tantamount to tax evasion.

Carla was sued for a total income tax liability of P9.93 million, inclusive of increments, for taxable year 2010.

On the other hand, Carla's husband is also facing the same complaint for allegedly underdeclaring his income.

The BIR said Constantino filed his ITR from 2005 to 2009 with a total declared income of P1.93 million. On the other hand, information from documents gathered disclosed that Constantino acquired in 2003 a property in Molave Street, Project 3, Quezon City worth P10.5 million. In 2009, he bought another property located at No. 6 Kalayaan Avenue, Diliman, Quezon City with a selling price of P15 million for which he paid Documentary Stamp Tax (DST) of P240,800.00.

Investigation allegedly revealed that Constantino also failed to file his ITR for taxable year 2003 despite receipt of substantial amounts of income as "manifested by his ability to buy a property valued at P10.5 million in the same year."

"He likewise deliberately understated his income in his ITRs filed with the BIR despite receipt of substantial amounts of income as manifested by his ability to acquire a property worth P15.24 million in the year 2009," the BIR added.

Constantino was sued for a total income tax liability of P20.24 million, inclusive of increments, broken down into: P10.58 million - 2003; and P9.66 million - 2009.