Stop collecting P3.3-B tax from Pacquiao, BIR told

MANILA, Philippines — The Court of Tax Appeals (CTA) has directed the Bureau of Internal Revenue (BIR) to “cease and desist” from collecting the P3.29-billion alleged tax deficiency of Sen. Manny Pacquiao and wife Jinkee for years 2008 and 2009 pending decision on the senator’s petition questioning the BIR’s assessment.

In a 38-page resolution promulgated last July 27, the tax court’s First Division said the BIR committed “several violations and irregularities” when it issued its Final Decision on Disputed Assessment (FDDA) in which it said that Pacquiao and his wife have a total of P3.29 billion in unpaid tax obligations.

“(BIR) is hereby ordered to cease and desist from implementing the subject FDDA and from collecting the subject deficiency tax assessments issued against petitioners for taxable years 2008 and 2009 for lack of merit,” the resolution penned by presiding justice Roman del Rosario read.

Associate Justices Erlinda Uy and Cielito Mindaro-Grulla concurred with the ruling.

The First Division also ordered the lifting of the warrants of distraint and/or levy and garnishment that the BIR issued against the Pacquiao couple in 2013 “pending the final disposition of the case.”

The tax court also ordered the cancelation of the tax lien that the BIR issued on the Pacquiao couple’s properties in 2015. The BIR issued the tax lien to prevent the couple from selling or disposing of their properties until the supposed tax liability is paid.

It was in 2013 when then BIR commissioner Kim Henares issued a garnishment or freeze order on the Pacquiaos’ bank accounts and other assets, claiming that the boxer-turned-politician had a total of P2.26-billion underpayment in his taxes for 2008 and 2009, including those for his earnings in his boxing matches abroad.

In its final assessment, the BIR said the Pacquiaos’ total tax liabilities amounted to P3.29 billion, including penalties and surcharges.

The Pacquiaos had earlier questioned before the CTA the BIR’s tax assessment. After conducting several hearings, the tax court issued an order directing the couple to pay more than P3- billion cash bond or a surety bond of P4 billion to prevent the BIR from freezing their assets and properties.

This prompted the Pacquiaos to elevate the case before the Supreme Court.

The SC, in its April 6, 2016 ruling, directed the CTA to conduct another hearing to review the BIR’s computation and to assess if the cash or surety bond can already be waived.

In its new resolution, the CTA First Division said the cash or surety bond it earlier imposed against the Pacquiaos can be “dispensed with.”

The First Division said that after conducting another preliminary hearing, it found out that the BIR committed irregularities in its investigation on the Pacquiaos’ supposed tax defficiency.

For one, the court said the BIR failed to issue a Notice of Informal Conference informing a taxpayer of the discrepancies in his tax payments as against his tax obligations.

“Evidently, the taxpayer shall initially be informed in writing of the discrepancies in the payment of his international revenues taxes… In the instant case, however, an evaluation of the records of the case and evidence presented reveals that respondent (BIR) failed to prove that a NIC was issued and served to petitioner,” the First Division said.

The tax court said the BIR also failed to establish that the Pacquiaos committed fraud or tax evasion as well as to “lay the foundation” on how it arrived at its computation of the couple’s supposed tax deficiencies.

The court said the warrants of distraint and/or levy and garnishment were also prematurely issued by the BIR even before the Pacquiaos were furnished a copy of the FDDA.

“Taking all the foregoing into consideration, this Court therefore finds that the respondent, in its assessment of the petitioners’ tax liability, and its efforts of collecting the same, utterly failed to comply with necessary requirements under pertinent laws and issuances,” the CTA said.

The tax court set the pre-trial of the case filed by the Pacquiaos questioning the computation of the BIR on Aug. 30. Both parties are directed to submit their respective pretrial briefs containing the list of evidence and witnesses they intend to present during the trial proper.