The House justice committee on Monday issued a subpoena compelling the submission of the tax records of Chief Justice Maria Lourdes Sereno after the Bureau of Internal Revenue (BIR) revealed alleged discrepancies in her tax records.

BIR Deputy Commissioner Arnel Guballa said they have issued a letter of authority investigating Sereno. The letter was served February 9.

• House panel orders BIR to probe Sereno earnings

Guballa said that after accessing records and their database, they made some observations and findings on the declaration of the Statement of Assets, Liabilities, and Net Worth of the chief justice.

The BIR is still waiting for permission from the Office of the President to publicize the findings or risk violating Section 270 of the tax code.

Guballa said the only exception to the prohibition on divulging trade secrets is the waiver of the taxpayer, the order of the judicial court and an impeachment trial conducted by the Senate. The BIR official said he hopes the OP can issue the permission this week.

"We have made some observation regarding the declaration and there are some discrepancies but we cannot yet give the body to divulge the exact figures because of the prohibition under section 270," he said.

Misamis Occidental Rep. Henry Oaminal said the committee inquiry is not covered by the prohibition under the tax code.

Quezon City Rep. Vincent Crisologo argued that the House is part of the impeachment court and that if they don’t receive the information, they will not be able to prosecute.

“What if the president will not give permission then it would impair investigation of this committee," he said.

Guballa said the BIR believes it cannot just give information because there are regulations specifying exceptions.

“Under section 6F among the enumerations if there is waiver from the taxpayer, order of a judicial court, impeachment trial as conducted by the Senate acting as an impeachment court,” he said.

Vice Chair Vicente Veloso tried to get the BIR to divulge their observations citing the powers of the House, pursuant to the Constitution, and asked Guballa to reconsider his position because he might risk a citation for contempt.

“If you will not submit the required documents I fear that you will be treading the grounds of contempt,” he said.

Guballa explained that Article 270 delves into the unlawful revelation of trade secrets. The provision covers all operations and information regarding taxpayers.

Under Section 270 of the NIRC of 1997, as amended, BIR personnel cannot divulge information collected from taxpayers concerning the latter’s business, income or estate, as well as the secrets, operation, style or work, or apparatus of any manufacturer or producer, or confidential information regarding the business of any taxpayer. There are, however, exceptions, namely:

• disposition of income tax returns under Section 71 of the NIRC, as amended

• disclosure of income tax returns under Section 26 of RA 6388 (Election Code) in case of an individual who files a certificate of candidacy and executes a waiver for the examination of his returns

• information given by the BIR pursuant to a request by a foreign tax authority under an existing treaty pursuant to RA 10021

The Data Privacy Act of 2012 provided that personal data of an individual shall never be collected and processed without his or her consent, unless otherwise provided by law.

Guballa however said that in a previous meeting, they already submitted the documents and income tax records as required by the committee. What were not submitted are the observations from the ongoing investigation, as a matter of due process.

House Justice Committee Chair Reynaldo Umali told Guballa the committee does not have time while Vice Chair Henry Oaminal asked for a subpoena to be issued. With no objections, Umali issued the subpoena.

“I move that the subpoena duces tecum be issued to the BIR requiring that office to submit the results or the findings of the tax investigation their office had conducted against CJ Sereno.”

Guballa received the subpoena in the same hearing.

SALNs

Vice Chair Vicente Veloso recalled that Sereno, in her July 23, 2012 letter to the JBC, said that considering her 15 years in the government, it wouldn't be feasible for her to source all her SALNs.

However, UP told the committee that it only has the December 31, 2002 on file.

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“This was her explanation why she cannot submit her SALNs as required by the JBC but on record Mr. Chair, the committee is in receipt of a letter from UP dated 8 December 2017 to the effect that Ms. Sereno.. CJ Sereno had only 1 SALN on file at UP. SALN for 31 December 2002. This letter has badges of fraud when you say you cannot submit your SALNs for 10 years because it will take you 15 days or a long time to retrieve 15 years old record. She in effect was lying she only had 1 SALN on file at UP," Veloso said.

He also cited jurisprudence saying an appointment is void from the beginning because of fraud or issued in violation of law.

Veloso claimed that Sereno did not comply with the rule that all applicants for the position submit SALNs.

“GR 11471 Sept 26 1994 the SC speaking through then Justice Feliciano said an appointment may be void from the beginning due to fraud on the part of the appointee or because it was issued in violation of law. The appointment was issued in violation of law because as of June 5, 2012, all applicants were required to submit all SALNs they had for the years they served in government. JBC has only 1 SALN filed. JBC did not even receive the 2002 UP SALN of Ms. Sereno," he said.

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NO BREAKDOWN OF INCOME

Upon questioning by ABS party-list Rep. Eugene Michael de Vera, Guballa revealed Sereno’s earnings as a lawyer from 2004 to 2007. The income from 2004 and 2005 were not broken down.

Guballa said that for the year 2004, the gross revenue or sales declared by Mrs. Sereno was P7,207,513.56.

Asked if Sereno's salary as UP professor was included, the BIR officer said: "It would seem it is not included…There was no breakdown sa declaration niya."

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De Vera said Sereno erred in filing her 2004 income "kasi dineclare lang niya income from profession pero di niya dineclare yung income from UP."

Guballa said they wrote UP because it would seem "UP did not submit or supply information regarding compensation or earnings of the CJ then."

For 2005, Sereno declared P12,367,562.36 in income with a tax due of P3,512,390.62. With tax credits, she paid P1.383 million.

Guballa said there was also no breakdown where the income came from.

The BIR official said that based on tax records, Sereno received income from OSG beginning 2006. For 2006, Sereno declared gross income of P3,214,206.64 with tax due of P828,242.38.

Guballa said they have withholding tax certificates from the OSG for the years 2006, 2007 and 2008. For 2006 from the OSG P1,396,631 with withholding tax of P209,494.56. For 2007, the income from OSG is P3,633,076.42 with withholding tax of P544,961.46. For 2008 P4,559,308.24 with withholding tax of P683,896.24.

De Vera said that based on documents submitted, Sereno claimed to have paid P8.7 million in taxes. "However, pag ina-add mo itong withheld ng OSG…wala pa pong P1.5 million sa sinasabi niyang P8.7 million na binayaran niya," the lawmaker claimed.

DECEPTIVE ANSWER?

Umali said Sereno’s answers to the complaint are either misleading or to a certain extent, "deceptive".

"Napapansin namin dito in the many allegations in the charges of Atty. Gadon meron siyang sagot pero yung sagot niya are either misleading or in fact to a certain extent somewhat deceptive. Parang nililihis," he said.

De Vera added: "If you sum up the income of the OSG… that will sum up to only around P9.5 million. Ang kaniyang in-admit is P13 million sa kaniyang answer from OSG kasi from OSG lang naman yung PIATCO at withholding tax witheld ng OSG…the total to an estimate of P1.3 million."

Garcia said: "It is from 2006 to 2009 CJ declared an income from the PIATCO fees of P9.4 million…if we were to revisit what the CJ declared as income in 2004 and 2005…if we were to add this, if we were to be very liberal in the presentation of her income tax this would amount to about P19 million, which would be P28 million if we add P9 million from 2006-2009 and P19 million as declared in 2004 and 2005. Which still does not add up to P30 million."

"Presuming of course all income she declared in 2004 and all income she declared in in 2005…with this very liberal presumption, presuming all the income she declared in 2004 and 2005 were all coming from her PIATCO fees that's discounting all her other income which is hard to believe lest we now accuse her of evading taxes certainly by my mathematical computation this still does not add up to her claim in her verified answer…that she fully declared to the BIR the peso equivalent of her fees.”

Garcia was referring to Sereno’s answer where she claimed the peso equivalent of her fees as about P30 million.

Quoting Sereno’s answer, Umali said the government paid lawyer's fees to Sereno in the PIATCO case in the aggregate amount of $593,807.60 net of value added taxes before withholding tax, not $745,000. That translates to roughly over P30 million which she said is fully declared in the BIR.

Guballa said tax evasion carries a penalty of 2 to 4 years of imprisonment under previous laws and up to 10 years under the tax reform law. Fines are also imposed and perpetual disqualification from public office.

SERENO CAMP TWITS CONCLUSIONS WITHOUT EXPLANATION

Sereno legal team spokesperson Jojo Lacanilao denied the allegations that the chief magistrate failed to pay the correct taxes.

“Napakadali namang ma-verify kung nagbayad or di nagbayad si CJ ng kaniyang taxes. Transparent naman po siya. Lahat po ng taxes na kailangan bayaran binayaran po ni chief justice. Wala po siyang makikitang tax evasion o pagdadaya sa kaniyang tax evasion," he said.

"Yang pinag-uusapan na yan I think it's a non-starter and medyo ano lang kami due process involved din may mga conclusions na, di pa naman tapos," he added.

Lacanilao noted that in any investigation about a taxpayer's earnings, the taxpayer is always given a chance to explain any discrepancy found.

In the case of Sereno, he noted that a conclusion has already been formed even without giving her a chance to explain.

"Normally kailangan pagbigyan mo mag-explain. Eh yung iniimbestigahan mong taxpayer ngayon wala pa mang ding reply si CJ, may mga conclusions na about discrepancy about this and that. Ma e-explain lahat yun kung anuman mga tanong nila. Medyo nakakabahala ngayon pagkat meron na conclusions.”

Lacanilao added: “Baka yung BIR di naman nila naiintindihan 'yung binabasa nila. For example, may mga tanong sila na pwede naman explain ng taxpayer. Wala pang conclusions na malinaw. 'Di pa natatanong yung taxpayer, meron na conclusions. Nakakabahala yun."

The spokesperson maintained Sereno declared her true income and paid her taxes.

“Lahat ng income na kailangan i-declare, dineclare po niya yun….Sina-cite nilang answer, sinabi ni CJ nagbayad siya. Di naman namin sasabihin yun kung wala kaming pruweba at kung di namin pinag-aralan. Di naman yung chamba-chamba lang," he said.

"Meron po yung mga pruweba na yun po yung binayaran niya at nakikita ng BIR for some reason…everything she has to pay for she paid for," he said.

At the same time, Lacanilao said in a separate statement that the tax probe on Sereno was a mere afterthought because it is being done only after the matter was brought up in the impeachment proceedings before the House Justice Committee.

“During the tax years and the years after that, not once did the BIR issued a letter of authority or a letter of notice to the Chief Justice to open her books for possible discrepancy or any question regarding her tax payment for that matter,” he explained.

NOT PART OF IMPEACHMENT CASE

According to Lacanilao, the justice panel is using all the resources at its disposal to muddle the impeachment issue.

“Let it be known to the public that the tax filing of the Chief Justice is not part of the impeachment complaint filed by Atty. Larry Gadon,” he said.

He added: “This is yet another desperate attempt to prop up the baseless allegations because the justice committee knows very that they don’t have a solid case to warrant the Chief Justice’s removal from office.”

• READ: Gadon's impeachment complaint vs Sereno