DOJ to file tax evasion suit vs. Rep. Mikey Arroyo, wife

UPDATED 1:33 p.m. - The Department of Justice (DOJ) will file a tax evasion case against "Ang Galing Pinoy" Rep. Juan Miguel "Mikey" Arroyo and his wife Angela. Mikey is the eldest son of former President and now Pampanga Rep. Gloria Macapagal-Arroyo, who is herself facing a string of plunder charges before the DOJ and the Office of the Ombudsman. In a 28-page resolution released Tuesday, the DOJ found probable cause to file a tax suit against the couple for multiple violations of the National Internal Revenue Code of 1997 when they allegedly under-declared their income and failed to file income tax returns (ITRs) for various years from 2003 to 2009. Based on the resolution, Mikey is facing three counts of failure to file ITRs for 2007, 2008, and 2009 and three counts of failure to supply correct and accurate information on his ITRs for 2004, 2005, and 2006. Angela, for her part, is facing seven counts of violation of failure to file ITRs for the years 2003 to 2009. The resolution was prepared by a panel of prosecutors led by Senior Assistant State Prosecutor Lagrimas Agaran and approved by Assistant Chief State Prosecutor Miguel Gudio and Prosecutor General Claro Arellano. Sought for comment, the couple's lawyer, Ruy Rondain said their camp is keen on filing a motion for reconsideration before the DOJ. While he said he has yet to see a copy of the resolution, Rondain said he is a "little surprised" at the DOJ's findings. "If you look at it [the case] from a cold and neutral perspective, there is really no probable cause. I need to know how they [DOJ] established that. I hope they didn't just repeat the BIR's charges," Rondain said in a phone-patch interview. Big fishes Meanwhile, Justice Secretary Leila de Lima said the DOJ's move proves that the DOJ is not sitting on cases lodged before it. "Akala kasi nila, hindi gumagalaw ang kaso. Lahat naman may proseso dito. Ang kasong ito dumaan sa proseso," said De Lima. Some officials, like Senators Panfilo Lacson and Antonio Trillanes IV, have been vocal in criticizing the Justice chief's alleged failure to bring to court the "big fishes" like the Arroyos. Mikey's mother is facing at least three plunder charges at the DOJ and two others at the Ombudsman. His father, Jose Miguel, is also facing plunder charges at the Ombudsman over the alleged anomalous sale of helicopters to the Philippine National Police. DOJ's probe into BIR's complaint The DOJ's resolution was part of the department's preliminary investigation into the tax evasion charges the Bureau of Internal Revenue (BIR) filed against Mikey and Angela. The BIR is suing the couple P73.85 million in aggregate tax liabilities accumulated from 2002 to 2009. Below is the BIR's computation of the couple's tax liabilities arising from their alleged non-filing of income tax returns and under-declaration of income, in violation of the Tax Code. Section 254 of the Tax Code refers to "the attempt to evade or defeat tax," while Section 255 pertains to "failure to File Return, Supply Correct and Accurate Information, Pay Tax Withhold and Remit Tax and Refund Excess Taxes Withheld on Compensation." BIR's Net Worth Method In investigating the couple's alleged tax evasion, the bureau used the Net Worth Method, where the change in a taxpayer's net worth is compared to reported taxable income. The bureau said a scrutiny of Mikey's Statements of Assets and Liabilities and Networth (SALN) from 2002 to 2009 shows that from 2004 to 2009, the lawmaker and his wife bought millions-worth of properties, including houses, vehicles, and shares of stock. The BIR noted: "Despite receipt of substantial amounts of income, the Arroyo spouses repeatedly failed to file any annual income tax return (ITR) and to pay the corresponding taxes due thereon." Mikey and Angela: No tax evasion While the tax evasion complaint was still under preliminary probe, the Arroyos submitted their joint counter-affidavit to dispute the BIR's computation. They said the complaint should be dismissed because "the charges have no basis in fact and in law." They likewise denied evading their duties to pay taxes and file their income tax returns. However, in its investigation, the DOJ said that the Mikey and Angela themselves admitted they have other sources of income which pushed up their net worth. These other sources of income include: bank deposits interest income, which are subjected to final tax; Mikey's income and other benefits exempt from tax like 13th month pay at the House of Representatives, and gits from relatives that are exempt from tax and that no longer have to be declared on the ITR. The couple likewise said that the BIR erred in applying the net worth method in the tax evasion complaint. They added that the BIR filed its complaint without an assessment of deficiency taxes. DOJ's findings However, the DOJ said that "there is no requiriement for the precise computation and assessment of the tax before there can be criminal prosecution under [the Tax Code]." "We agree with the BIR's position that an assessment of deficiency taxes is not a condition sine qua non or prerequisite for the filing of a criminal complaint for violation of the provisions of the NIRC of 1997," said the DOJ's resolution. The DOJ also said Mikey and Angela failed to substantiate their claim that their other sources of income are exempt from taxes. "Aside from their bare and self-serving allegations, respondents' miserably failed to present proofs or evidence that such other sources of income were already subjected to final tax or those gifts from relatives are tax exempt," said the DOJ. "The SALNs presented and submitted to the government agencies, are the best proof/evidence that respondent spouses have other sources of icome since it stated therein that they hold positions as officers, directors, and shareholders of different corporations which are likely sources of income," it added. - VVP/KBK, GMA News