DoJ upholds P102-M tax evasion case vs Caparas

MANILA, Philippines – The Department of Justice on Friday recommended the filing of tax evasion charges against movie producer-director Carlo J. Caparas for nonpayment of P102 million in taxes for his P1.3-billion contract with the Philippine Charity Sweepstakes Office to produce two television shows.

Prosecutor General Claro Arellano approved the recommendation of Senior Assistant State Prosecutor Rosanne Elepaño-Balauag to charge Caparas before the Court of Tax Appeals in Quezon City with four counts of violation of Section 108 in relation to Section 255 of the New Internal Revenue Code of 1997.

The Bureau of Internal Revenue (BIR) conducted investigation on Caparas after learning from a Senate hearing about the two PCSO-funded shows, “Ang Pangarap Kong Jackpot” and “Kroko,” featuring lotto winners, which Caparas produced after entering into a P1.3-billion contract with the charity agency.

BIR Commissioner Kim Jacinto-Henares said that Caparas had received from the PCSO a total of P850,951,388 as producers’ fees from 2006 to 2009.

But the BIR said Caparas, as a self-employed individual, did not file his income tax returns as well as the value-added tax on sale of services during the four-year period.

The BIR assessed Caparas for P101,819,722.19 in unpaid taxes, excluding surcharges and interests.

In October 2010, Caparas was slapped with a tax evasion case stemming from the P1.3-billion contract with PCSO.

The BIR originally filed 12 counts of failure to file quarterly ITRs, four counts of failure to file annual ITRs, and 48 counts of failure to file VAT returns against Caparas but the other cases were dismissed by the prosecutor.

In his defense, Caparas argued that the amount he received from the PCSO were all “net of taxes,” adding that the PSCO should have withheld the taxes due and remitted them to the BIR.

Caparas said the PCSO had agreed to take the responsibility for all tax and other legal obligations under the contracts. He also claimed that the PCSO had withheld substantial amounts from his compensation “which were in turn duly paid/remitted to the BIR.”

He also presented documentary evidence to prove that he filed his ITRs for the years 2006 to 2009.

Balauag, however, said there was probable cause to charge Caparas, adding that the movie director, in filing his ITRs, should have also known that he needed to file his VAT returns separately.

“Even respondent’s alleged lack of deliberate intent or bad motive would be of no moment because he is chargeable with the knowledge that being a seller of services obligated to pay the VAT, it behooves him to make due compliances,” the prosecutor said in her 12-page resolution.

Failure to pay taxes is penalized under Section 255 of the NIRC with fines of not less than P10,000 and imprisonment ranging from 1 to 10 years.

Caparas may still file a motion for reconsideration or appeal the indictment to Justice Secretary Leila de Lima.

Caparas was named in July 2009 a national artist under a new category, visual arts and film, by then President Gloria Macapagal-Arroyo.

But Caparas has yet to enjoy the rank and title because the following month, the Supreme Court blocked the conferment of the award on all seven national artists named by Arroyo, following a petition filed by five national artists, members of the Concerned Artists of the Philippines and other individuals questioning Malacañang’s process of choosing the national artists. (With Inquirer Archives)