The complaint stems from Arroyo's non-filing of annual income tax returns (ITR) for taxable years 2005, 2008 and 2009, and Ma. Angela Arroyo's non-filing of ITRs from 2003 to 2009.
Basic tax due the couple amounts to P28,808,314.85; the rest of their liability corresponds to surcharges and interest.
BIR Commissioner Kim Henares told reporters in a news conference that an investigation conducted by the bureau showed the couple bought real, personal and other properties worth several millions of pesos from 2004 to 2009.
"The basis of the investigation is the SALN (Statement of Assets, Liabilities and Net Worth) that has been filed - this is a requirement for all government officials - and the income tax returns filed by the couple. The violation is for Section 254 and 255 (National Internal Revenue Code of 1997) - the attempt to evade taxes, and failure to file or submission of incomplete or false returns," Henares said.
Elected public officials are mandated under Republic Act (RA) 6713, otherwise known as the "Code of Conduct and Ethical Standards for Public Officials and Employees" to accomplish and annually submit declarations under oath of his SALN, including that of his spouse and children under 18 years old who are living in the family household.
The complaint also claimed the Arroyos filed their ITRs for taxable years 2004, 2006 and 2007 but substantially understated their income.
"As resident citizens of the Philippines, Mr. and Mrs. Arroyo are mandated by law to declare their estimated income for each taxable year as well as to file the required tax returns and to pay the corresponding taxes due," the complaint read.
"Despite the receipt of substantial amounts of income, as shown by their acquisition of numerous properties, Mr. and Mrs. Arroyo had repeatedly failed to file any Annual Income Tax Return (ITR) and to pay the corresponding taxes and for the years that Mr. and Mrs. Arroyo filed their ITRs, they understated their income," the complaint read.
Arroyo properties
Based on information and documents gathered by the BIR's National Investigation Division, the Arroyos were able to acquire the following properties from 2004 to 2009:
-residential houses in Lubao, Pampanga and La Vista Subdivision in Quezon City;
-motor vehicles;
-stock shares;
-jewelry;
-clothes; and,
-other personal effects as enumerated in the SALNs of Mr. Arroyo from 2002 to 2009.
"If you report that you have an asset, you have a net worth, you should be able to say where it comes from. And where it comes from, normally, there's a tax consequence," Henares said. The BIR used the Net Worth Method of tax investigation in validating Mr. Arroyo's underdeclaration of income from 2004 to 2009. This method is an indirect method of proof used in establishing taxable income in criminal tax cases, useful in reconstructing taxable income when the government is unable to establish income through direct evidence.
Through this method, the BIR found that there was substantial underdeclaration of taxable income of more than 30%. Under the Tax Code, an underdeclaration of income of more than 30% constitutes prima facie evidence of fraudulent return.
Henares said even in instances when a person receives donations, there is a corresponding donor's tax; when one inherits properties, there is a corresponding estate tax; and, in the case of acquisition of properties, is is assumed that there must be income for one to be able to purchase it.
No witch hunt
The BIR, meantime, denied there is a witch hunt out to get the Arroyo family and its allies with the filing of charges versus the Arroyo couple.
"We have been filing cases since July 15 (2010). It's only now that we are filing a case against Mikey Arroyo. If the argument is we are singling out anyone and not based on evidence, shouldn't we have filed a case long ago? The fact is, we do not do that. We file cases because of evidence, it is not because of any personality," Henares said.
"We get a lot of confidential information also and it is our duty to look into all confidential information because otherwise, people can lodge a complaint against us for not acting on a complaint," she added.
Henares bared that before the BIR files any complaint, there is a process of "filtering" or a "mini-trial" to make sure that the case can stand in court and secure a conviction.
Penalties
Apart from payment of the tax liability, violations of Section 254 of the Tax Code is punishable by a fine of not less than P30,000 but not more than P100,000 and imprisonment of not less than 2 years but not more than 4 years.
Violations of Section 255 of the Code is punishable by a fine of not less than P10,000 and imprisonment of not less than 1 year but not more than 10 years.
More possible charges vs Arroyo couple
The Justice Department will study if evidence presented by the BIR against the Arroyo couple will warrant the filing of additional complaints. De Lima, meantime, assured the Arroyos will be accorded due process.
"Everyone is given due process here at DOJ," she said.
Asked to react to a statement issued by Mr. Arroyo that he feels being harassed by the current administration, de Lima said, "I cannot give comment on that, my duty is just to accept those complaints."
Mikey surprised, in shock
Mikey's lawyer, Ruy Rondain, said the congressman was "surprised" upon hearing about the case against him in the news.
In an interview with ANC Dateline Philippines, Rondain said Arroyo was surprised when Henares announced the filing of the case in a press conference covered live.
"He's alright, but a bit surprised, in a bit of a shock," he said.
Rondain said that on April 5, Arroyo received an audit notice from the BIR, asking if the agency could check his tax records. The notice gave Arroyo 10 days to respond, he added.
"So he has an April 15 deadline and then we hear that the tax evasion case has been filed despite the pendency of his period to respond. The timing is suspect," Rondain said.
Rondain said the BIR move was "a violation of his (Arroyo's) due process rights at the minimum."
On Arroyo's alleged properties, Rondain said: "I thought this was clear already. They've always been in his SALN. But these are corporate [properties] not personal."
"So, I don't know where that figure (P73.85 million) was plucked out and I don't know how they arrived at that figure," Rondain said.
He added the Arroyo couple have been faithful in filing their ITRs. "They've always filed jointly."
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