The Bureau of Internal Revenue (BIR) today filed a criminal complaint with the Department of Justice against CONSTANTINO T. CASTILLO III (CASTILLO III) for willful attempt to evade or defeat tax for taxable years 2003 and 2009, for deliberate failure to file his Income Tax Return (ITR) for taxable year 2003, and for willful failure to supply correct and accurate information in his ITR for taxable year 2009, in violation of Section 254 and Section 255 of the National Internal Revenue Code of 1997, as amended (Tax Code).
CASTILLO III, husband of former Supreme Court Chief Justice Renato C. Corona’s daughter Ma. Carla Beatriz, is a registered taxpayer of Revenue District Office No. 39, South Quezon City with address at #20 Kalayaan Avenue, Diliman, Quezon City.
Records of the BIR showed that CASTILLO III filed his ITR from 2005 to 2009 with a total declared income of P1.93 million. On the other hand, information from documents gathered disclosed that CASTILLO III acquired in 2003 a property in Molave Street, Project 3, Quezon City worth P10.5 million. In 2009, he bought another property located at No. 6 Kalayaan Avenue, Diliman, Quezon City with a selling price of P15 million for which he paid Documentary Stamp Tax (DST) of P240,800.00.
Investigation revealed that CASTILLO III failed to file his ITR for taxable year 2003 despite receipt of substantial amounts of income as manifested by his ability to buy a property valued at P10.5 million in the same year.
He likewise deliberately understated his income in his ITRs filed with the BIR despite receipt of substantial amounts of income as manifested by his ability to acquire a property worth P15.24 million in the year 2009.
BIR investigators used the Expenditures Method of tax investigation to show that CASTILLO III substantially underdeclared his income. The method is based on the theory that if a subject taxpayer’s expenditures during a given year exceed his reported income and the source of the funds used to make the expenditures is unexplained, it may be inferred that such expenditures represent unreported income.
Under the said method, CASTILLO III’s cumulative income of P1.93 million as declared in his ITRs for taxable years 2005 to 2009 compared with his expenditure of P15.24 million in 2009 clearly indicated a difference of P13.31 million or a 688% underdeclaration. The said difference constitutes substantial underdeclaration of more than 30% and is considered as prima facie evidence of fraud tantamount to tax evasion.
CASTILLO III was sued for a total income tax liability of P20.24 million, inclusive of increments, broken down into: P10.58 million – 2003; and P9.66 million – 2009.
The case against CONSTANTINO T. CASTILLO III is the 122nd filed under the Run After Tax Evaders (RATE) program of the BIR under the leadership of Commissioner Kim S. Jacinto-Henares.