Pacquiao beats P3.3-B BIR suit at tax court

Senator Manny Pacquiao has won another fight following his knockout of Argentinian boxer Lucas Matthysse, this time against the Bureau of Internal Revenue on the collection of his alleged P3.3-billion worth of underpaid taxes pending at the Court of Tax Appeals.

The tax court's First Division ordered the BIR to stop its collection of the multi-billion-peso tax deficiency against Pacquiao and his wife, Jinkee, for years 2008 and 2009 while their civil case is still ongoing.

"Respondent is hereby ordered to cease and desist from implementing the subject FDDA (Final Decision on Disputed Assessment) and from collecting the subject deficiency tax assessments issued against petitioners for taxable years 2008 and 2009 for lack of merit," the CTA said in a resolution dated July 27.

The CTA also lifted the warrants of distraint and/or levy and garnishment on the disputed tax assessments pending the finality of the case.

In July 2013, then-BIR Commission Kim Jacinto-Henares issued a freeze order against the Pacquiaos earnings for their tax liability worth P2.26 billion. The amount reached P3.3 billion due to penalties and surcharges.

A tax lien is also issued against the couple. This prevents a respondent from selling or disposing of his properties to protect the interest of the State on which the BIR aims to recover.

The Pacquiaos appealed for the CTA to reduce the assailed tax deficiency and the surety bond of P4.9 billion but the court denied their motion for reconsideration, thus forcing the couple to raise the issue before the Supreme Court.

The SC, in a decision on April 6, 2016, ruled for the CTA to conduct a preliminary hearing on the case to determine whether the reduction of the required P3.3-billion cash deposit and the surety bond can restrain the collection of taxes against the Pacquiao couple.

Upon hearing the arguments of both parties, the CTA said the BIR can dispense with the bond requirement after it found irregularities in the investigation and collection of the Pacquiaos' deficient taxes.

The CTA said the defense received no notice of informal conference, a document informing a taxpayer of the discrepancies in the payment of his taxes. It said the BIR only presented a photocopy of the notice during court proceedings and there was no record the Pacquiaos responded.

"Clearly from the foregoing, respondents have not sufficiently shown that a NIC was validly served to petitioners or than an informal conference was conducted in the presence of petitioners or their authorized representative," the resolution read.

The tax court added the preliminary investigation of the BIR found failed to establish evidence that the Pacquiao and his wife committed fraud or tax evasion.

The CTA also chided the bureau on how it computed the bond requirement for the Pacquiaos in its formal letter of demand (FLD), saying the computation is "without sufficient foundation" since the letter did not even state where the figures originated.

The warrants of distraint and levy and garnishment against the Pacquiaos was also prematurely executed and the defense was not furnished a copy on the withholding of their bank accounts, according to the CTA.

"Taking all the foregoing into consideration, this Court therefore finds that respondent, in its assessment of 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.

Presiding Justice Roman Del Rosario penned the resolution, with the concurrence of Associate Justices Erlinda Uy and Cielito Mindaro-Grulla. —NB, GMA News