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Court clears Mikey Arroyo in P27.3-M tax evasion case

The Court of Tax Appeals (CTA) has acquitted former Ang Galing Pinoy party-list Representative Juan Miguel "Mikey" Arroyo of his P27.3-million tax evasion case due to the Department of Justice's (DOJ) failure in proving his alleged liability.

"Accused Juan Miguel M. Arroyo is hereby acquitted of the offenses charged for failure of the prosecution to prove his guilt beyond reasonable doubt," the First Division said in its 69-page decision dated March 21.

"The civil actions to collect the tax deficiencies that are deemed instituted with the aforestated criminal cases are likewise dismissed as the act or omission from which the civil liability might arise did not exist," it added.

In 2011, the Bureau of Internal Revenue (BIR), through the DOJ, accused Arroyo, son of former President and now Pampanga Representative Gloria Macapagal-Arroyo, of violation of the National Internal Revenue Code when he allegedly underdeclared his fortune in his income tax returns (ITRs) for years 2004, 2006, and 2007.

The BIR based its complaint on comparisons between Arroyo's ITRs and Statements of Assets, Liabilities, and Net Worth (SALN), saying the growth of his income and net worth were disproportional.

The CTA, however, said the BIR never considered looking into the book of accounts of Arroyo during their investigation.

"There is nothing in the joint Complaint-Affidavit which states that the BIR requested the accused to produce his books, and that despite such request, accused failed to produce his books, or that accused has no books at all, or that the books produced by the accused do not clearly reflect his income," the decision read.

The tax court also said the "net worth method' used by the BIR in its probe was unjustified and inaccurate since it did not prove that Arroyo's income increased not because of gifts, inheritances, or earnings received.

"Without evidence on the likely source of income and the corresponding income derived therefrom by the accused during the concerned taxable years, the Court casts a serious doubt as to the veracity of the offenses charged against the accused," the CTA said.

The CTA added its observation of what seemed to be a hastened complaint against Arroyo, citing the admission of BIR National Investigation Division assistant chief Aurora Flor that they disregarded the 10-day period for the former lawmaker to produce his books.

The BIR's letter of authority (LOA), a document which allows investigators to summon documents related to the accounts of Arroyo, was served on April 5, 2011 and brought to the DOJ three days later.

"The proximity of the dates from the issuance of the LOA up to the filing of the joint Complaint-Affidavit before the DOJ shows that the BIR failed to consider the books of the accused, which is a vital pre-requisite for the use of the net worth method," the CTA said.

Presiding Justice Roman Del Rosario penned the decision, with the concurrence of Associate Justices Erline Uy and Cielito Mindaro-Grulla. —KBK, GMA News