Tax evasion raps filed vs Erap lawyer, BF lawyer

by Ina Reformina, ABS-CBN News

Posted at Sep 15 2011 04:32 PM | Updated as of Sep 16 2011 12:32 AM

MANILA, Philippines - Tax evasion charges against 2 practicing lawyers were filed by the Bureau of Internal Revenue (BIR) before the Department of Justice (DOJ) today.

Charged were prominent election lawyer George Erwin Garcia and Banco Filipino lawyer Abelardo Aportadera Jr. for "willfull attempt to evade or defeat tax and deliberately failing to supply correct and accurate information" in their respective income tax returns (ITR).

BIR Commissioner Henares bared Garcia has an aggregate tax deficiency of P37.9 million, inclusive of increments, for underdeclaring his income for taxable year 2010.

Garcia lawyered last May 2010 elections for presidential candidate and former president Joseph Estrada, senatorial candidates Jinggoy Estrada, Ramon "Bong" Revilla, Jr., Loren Legarda and retired Brigadier General Danilo Lim. He also served as election lawyer for 32 congressional and 16 gubernatorial candidates. He is also election lawyer for Maguindanao Governor Esmael "Toto" Mangudadatu, Taguig City Mayor Lani Cayetano, and Pampanga Governor Baby Pineda.

A confidential informant told the BIR that Garcia purchased a condominium unit worth P53 million at The Shang Grand Tower Condominium at Legazpi Village, Makati City. This was confirmed in a Verified Answer Garcia submitted before a Makati City trial court on a civil case filed against him by the unit's previous owners.

Based on documents gathered by the BIR, Garcia made several payments on the unit from February 2010 to June 2010.

Despite acquisition of the unit, Garcia allegedly declared "minimal amounts of gross income in his Annual Income Tax Returns (ITR) for the years 2004 to 2010." The aggregate amount reportedly reached P4.4 million.

Deducting all non-taxable sources of funds and the reported taxable income from total expenditures, the BIR found that Garcia's reported income of P1.4 million for 2010 and his total expenditures for the same year amounting to P53.3 yielded a difference of P51.97 million or a reported underdeclaration of 30%.

Under the National Internal Revenue Code (NIRC), an underdeclaration of taxable income of more than 30% constitutes prima facie evidence of fraud tantamount to tax evasion.

'Still under litigation'

Speaking to ABS-CBN News, Garcia however said the purchase of the condominium unit in Makati City was declared in his ITR for 2010 except that there was a notation: "still under litigation."

"Ang problema sa BIR, hindi nila nire-review muna records nila. Pero dahil under litigation pa ang civil case, hindi pa ako nakakabayad ng capital gains tax and transfer tax. Wala pa rin sa akin yung transfer of title, the unit is still in the name of the previous owners who filed the civil case against me," he said.

The previous owners' agent did not remit his payments on time, Garcia said. He admitted the unit is already paid in full.

Meantime, the case against Aportadera was on the basis of failure to file his value-added tax (VAT) returns from 2008 to 2010, even as he filed his ITR's for said taxable years.

He is being sued for an aggregate tax liability of P26 million. His income tax deficiency was pegged at P5.5 million, inclusive of surcharges and interests; he was also assessed for VAT deficiency amounting to P20.5 million, inclusive of increments.

Henares said that based on an investigation conducted by the Philippine Deposit Insurance Corporation (PDIC) on the closure of troubled thrift bank Banco Filipino, Aportadera was listed as one of the "payees" to whom payment was made by the bank for legal services rendered for taxable years 2008, 2009 and 2010. 

On the basis of the PDIC list, it was found that Aportadera received P29.5 million, P37.2 million, and P37.9 million for the said taxable years. Manager's cheques, vouchers, billing statements, official receipts (OR), and BIR Form No. 1604E were offered as evidence.

In his ITR for 2008, Aportadera declared an income of P25 million, and P25 million for 2009. The BIR said this revealed he "substantially underdeclared" his income by P1.6 million or by 6.53% in 2008, and by P8.1 million or by 32.41% in 2009, constituting prima facie evidence for the filing of tax evasion raps under the tax code.

The complaints against Garcia and Aportadera are 2 of the 67 tax evasion cases filed by the BIR's Run After Tax Evaders (RATE) program under the Aquino administration.