The Bureau of Internal Revenue (BIR) today filed a criminal complaint with the Department of Justice against ATTY. ARNEL CORTEZ MANALOTO (ATTY. MANALOTO) for willful failure to supply correct and accurate information in his Income Tax Return (ITR), deliberate failure to file his Value-Added Tax (VAT) Returns and failure to register for VAT for Taxable Year (TY) 2011, in violation of Section 255 and Section 275 in relation to Section236 (G) of the National Internal Revenue Code of 1997, as amended (Tax Code).
Likewise charged was ERWIN SICANGCO CARREON (CARREON) in his capacity as the Independent Certified Public Accountant who examined and audited the books of accounts and other accounting records of ATTY. MANALOTO for TY 2011 for certifying the latter’s financial statements containing essential misstatement of facts.
ATTY. MANALOTO registered his addresses at 64B Sto. Entierro Street, Sto. Cristo, Angeles, Pampanga and 20 Don Luis, Panlilio St., Villa Dolores Subdivision, Sto. Domingo, Angeles City, Pampanga. CARREON, on the other hand, listed his address at Unit 6, 2nd Floor, Emerald Commercial Building, Brgy. Pandan, Magalang Road, Angeles City.
Investigation disclosed that ATTY. MANALOTO deliberately pegged his income for TY 2011 at P1.495 million when in fact he had earned substantially higher income for the said year. He labeled income earned of P17.50 million in his 2011 Financial Statements as Deferred Income so as not to pay the correct taxes due thereon, and failed to include in the same financial statements income he earned amounting to at least P20 million which he used to purchase eight (8) properties in Davao City from Andal Ampatuan, Jr.
Using the Expenditures Method of investigation, BIR investigators ascertained that ATTY. MANALOTO’s unreported income in 2011 amounted to P37.97 million. A comparison of the said figure with the income declaration of ATTY. MANALOTO in his 2011 ITR of P1.495 million showed he substantially underdeclared his income by 2,439.28%. Furthermore, despite his earnings of P37.97 million in his practice of the law profession, he failed to register as VAT taxpayer and as such also failed to file his VAT returns and pay the corresponding taxes due.
For his acts and omissions in violation of the Tax Code, ATTY. MANALOTO was sued for a total tax liability for TY 2011 amounting to P27.56 million, inclusive of surcharges and interests, broken down as follows: Income Tax – P19.88 million; and VAT – P7.68 million.
The case against ATTY. ARNEL CORTEZ MANALOTO and his CPA ERWIN SICANGCO CARREON is the 136th filed under the Run After Tax Evaders (RATE) program of the BIR under the leadership of Commissioner Kim S. Jacinto-Henares.