Pacquiao petitions court to stop BIR's freeze order

MANILA, Philippines - World boxing champ and Saranggani Rep. Manny Pacquiao and his wife, Jinkee, have filed an urgent motion before the Court of Tax Appeals to lift the warrants of garnishment in a bid to stop the Bureau of Internal Revenue (BIR) from freezing their bank accounts.

The BIR assessed the Pacquiao couple of having deficiency income tax for the years 2008 and 2009 in the total amount of P2,229,020,905.50 (inclusive of 50 percent surcharge and 20 percent per annum interest).

The alleged tax deficiency has increased to P3.2-billion due to additional penalties imposed by the BIR.

Pacquiao's lawyers are disputing the statements of BIR chairperson Kim Henares that the tax fraud case against the boxing champ prospered because he ignored the bureau's notice.

His lawyer, however, said that Pacquiao protested the Preliminary Assessment Notice and Final Assessment Notice.

"It is not true he ignored the assessments. He submitted copies of his income tax returns for 2008 and 2009 during the course of the investigation conducted by BIR," they added.

Pacquiao's lawyers told The Star that they filed on October 18 this year an Urgent Motion to Lift Warrants of Distraint & Levy and Garnishment and for the Issuance of an Order to Suspend Collection of Tax (with a Prayer for the Issuance of a Temporary Restraining Order), ahead of the boxer's fight with Brandon Rios who lost to him in last Sunday's bout in Macau.

The motion was filed after the BIR served the Warrant of Distraint and Levy on October 17, the same day it served a letter increasing the assessments to P3.2 Billion due to the imposition of additional penalties and interest.

Pacquiao's lawyers argued that the BIR's move are void on the ground that it deprived the couple of their property "without due process of law as the properties of the Spouses were seized by the BIR even without giving them the opportunity to respond to the revised assessments."

The Pacquiao couple is being represented by the Romulo, Mabanta Buenaventura, Sayoc & De los Angeles law firm in the tax case.

Bloated assessments

In the motion obtained by The Star, the lawyers said there is evident purpose showing that the BIR issued "bloated assessments and subsequently increasing them further is not to collect taxes lawfully due from the Spouses but rather to destroy them."

"The BIR's act of issuing assessments in an amount beyond the reach of the Spouses undoubtedly made it difficult for Spouses to file an appeal with the CTA and then post a bond to suspend the collection of taxes," the lawyers said in the motion.

The Pacquiao legal team also noted that the case involves the income of Cong. Pacquiao from the legitimate practice of profession and not from illicit activities or ill-gotten wealth.

"Due consideration should be given to the fact that Cong. Pacquiao is perennially among the top contributors to the income tax collection of the BIR as he consistently ranks among the top 500 individual taxpayers in the Philippines as published by the BIR: 2008 (No. 1); 2009 (No. 113); 2010 (No. 135); 2011(No. 158) and 2012 (No. 36)," the lawyers said.

"What is astonishing is that the amount of income tax sought to be collected by BIR from the Spouses exceeds the combined amount of income tax paid by the top 70 individual taxpayers of 2012 recently published by the BIR – a list which includes the Taipans and Chief Executive Officers of the biggest Philippine corporations," the motion read.

"Surely, the questioned assessments cannot enjoy the presumption of correctness and deserves a thorough review by the Court," it added.

Taxes paid in US

Last August, Pacquiao and his lawyers filed a petition before the Court of Tax Appeals where they questioned the P2.2-billion in back taxes which the BIR was collecting from the boxing champion.
 
The lawyers stressed that Pacquiao "already paid income tax in the US totaling to US$8,414,531 (or approximately P395,500,000.00).

Pacquiao’s legal team also argued that Henares’ stance is "inconsistent with the provisions of the Philippines-United States Tax Treaty where under Article 17 provides that Pacquiao's income from boxing matches held in the US is “taxable in the United States."

On June last year, the BIR initially demanded that the Pacquiao couple pay a total of P2,200,310,745.23, which was subject of the formal letter of demand dated May 2, 2012 by the BIR  for taxable years 2008 and 2009.

Pacquiao's camp received on July 2 a copy of the final decision of disputed assessment dated May 14 this year.

In 2008, Pacquiao was charged for P762,515,263.48 in income tax with VAT amounting to P4,374,267.14. In 2009, the BIR is collecting P 1,406,715,144.03 with VAT pegged at P26,706,070.58.

“Petitioners have not decided to further contest the 2008 and 2009 VAT assessments and are currently arranging payment in the amount of P 32,196,534.42,” Pacquiao's camp said in the petition.

Pacquiao’s lawyers argued that the BIR has ignored the proof of taxes paid by the petitioners to the US government in 2009.