Alleged smuggler wins tax case in CA

MANILA, Philippines - The Bureau of Internal Revenue (BIR) has lost its tax evasion case in the Court of Appeals (CA) against businessman Samuel Lee.

In a two-page resolution, the CA’s eighth division upheld its earlier decision that affirmed the dismissal by the Department of Justice (DOJ) of tax evasion charges against Lee and other executives of Nitoka Industrial Corp.

Lee, a Chinese national, was included in a list of alleged big-time smugglers nationwide that the Bureau of Customs submitted to the Senate during an inquiry in 2004.

Senators then were investigating reports on rampant smuggling allegedly masterminded by businessmen who dropped the name of then First Gentleman Jose Miguel Arroyo.

In its ruling, penned by Associate Justice Agnes Reyes-Carpio, the CA said “it bears stressing that petitioner failed to advance any substantial or compelling reasons which would warrant the reversal of our assailed decision.”

Apart from Lee, Nitoka’s treasurer, the CA also cleared company president Thelma Lee, the businessman’s sister; vice president Daniel Lee; and secretary Maybelle Lim.

In its assailed Jan. 21 decision, the CA held that there was no grave abuse of discretion on the part of the DOJ when it junked the tax evasion complaint filed by the BIR.

The BIR alleged in its complaint that the respondents did not declare and pay taxes for their imports in 2002 and 2003, worth P451.6 million and P541.8 million, respectively.

The bureau charged Nitoka officers with documentary stamp tax liabilities of P8.9 million for 2002 and P9.3 million for 2003.

In their defense, respondents admitted that while they were the original incorporators of Nitoka in 1991, they transferred their respective shares through deeds of assignment as early as 1997 to a second group of stockholders.

They also admitted that they failed to pay the documentary stamp taxes (DST) due on each assignment but were able to pay the same, including penalties, in December 2005.

The CA sided with Lee and other respondents. It held that Section 201 of the National Internal Revenue Code states that the failure to pay the DST on time only results in the non-recording and inadmissibility in evidence of the document.

The CA noted that it never mentioned that non-payment of the DST results in the invalidation of the contract covered by the deeds of assignment. The appellate court added that the subsequent payment of the DST by the respondents cured any of their supposed liabilities. 

“Considering the foregoing, we find petitioner’s claim that non-payment of the DST rendered the subject deeds invalid to be baseless and unfounded,” the CA said.