For grossly understating the consideration in the sale of two (2) South Drive, Baguio City lots, BENGUET ELECITRC COOPERATIVE, INC. (BENECO) was charged today with tax evasion by the Bureau of Internal Revenue (BIR) at the Department of Justice for two (2) counts of willful attempt to evade or defeat withholding and documentary stamp taxes, two (2) counts of deliberate failure to supply correct and accurate information in the Withholding Tax Remittance Return and Documentary Stamp Tax (DST) Declaration/Return, and one (1) count of failure to withhold the correct amount of creditable withholding taxes (CWT), in violation of Sections 254 and 255 of the Tax Code of 1997, as amended.
BENECO is an electric cooperative duly organized and existing under Philippine laws. It is registered with BIR Revenue District Office No. 9, La Trinidad, Benguet with business address at Alapang, La Trinidad, Benguet.
Records show that BENECO purchased from Equitable PCI Bank (now known as Banco De Oro Unibank/BDO) two (2) parcels of land, with the improvements thereon, located at South Drive, Baguio City.
The transaction was covered by a Deed of Absolute Sale dated 02 December 2009 which indicated a consideration of P85 million on which CWT of P5.1 million and DST of P1.28 million were originally computed. Following a routine evaluation, additional CWT of P182,928.00 and DST of P45,810.18 were paid based on the zonal valuation of the properties pegged by the BIR at P88.05 million.
Third Party Information, however, showed that the selling price of the said properties had been significantly underdeclared. Transfer Certificates of Title and Deed of Absolute Sale from the Register of Deeds of Baguio City, BENECO Board Resolution, and Escrow Agreement entered into by BENECO, BDO, the Estate of Fernando and Bernardina Jacinto and Ramon P. Jacinto, obtained by the BIR all indicated a selling price of P183.45 million for the subject properties.
This was further corroborated by a full-page ad published by BENECO itself in the September 12, 2010 issue of the Baguio Midland Courier which stated, among others, that BENECO purchased the said properties for P183.45 million of which P85 million and P98.45 million were paid to BDO and Ramon Jacinto, respectively.
The discovery of such elaborate scheme to conceal and underdeclare the true selling price of the subject properties prompted the BIR to issue a Letter of Authority (LA) for the investigation of BENECO for tax fraud.
Investigation showed that after determining the actual consideration of the sale and after deducting the taxes previously paid, the estimated aggregate tax liability of BENECO related to the subject sale transaction is P14.59 million, inclusive of surcharges and interests, broken down into CWT of P11.67 million and DST of P2.92 million.
The case against BENGUET ELECTRIC COOPERATIVE, INC. is the forty-ninth (49th) filed under the Run After Tax Evaders (RATE) program of the BIR under the leadership of Commissioner Kim S. Jacinto-Henares. It is likewise the first RATE case of Revenue Region No. 2, Cordillera Administrative Region.