Because of OSG lapse, SC upholds Mikey Arroyo’s acquittal in tax case

Lian Buan
Because of OSG lapse, SC upholds Mikey Arroyo’s acquittal in tax case
The appeal is junked because the Office of the Solicitor General committed procedural lapses

MANILA, Philippines – Owing to procedural lapses on the part of the Office of the Solicitor General (OSG), the Supreme Court upheld the acquittal of former Pampanga 2nd District representative Juan Miguel “Mikey” Arroyo in his P27-million tax evasion case.

Arroyo was acquitted March this year by the Court of Tax Appeals, after which the OSG represented the State in appealing and asking for a reversal.

“The State prematurely filed the petition for certiorari because it did not first file a motion for reconsideration of the adverse ruling on the criminal aspect. This omission was a gross violation of Section I, Rule 65 of the Rules of Court, which authorizes the petition for certiorari to be filed only when there is no other plain, speedy, and adequate remedy in the ordinary course of law,” said the Court’s First Division in a resolution dated September 12 but released only to media on Wednesday, December 5.

What’s the case?  The Kim Henares-led Bureau of Internal Revenue (BIR) filed in 2011 three counts of tax evasion against Arroyo on the basis of unreported income.

The BIR said that for 2004, 2006, and 2007, Arroyo’s income declared in his Income Tax Return (ITR) had huge discrepancies with his net worth declared on his Statement of Assets, Liabilities and Net Worth (SALN).

Computing the total unreported income for the 3 years, the BIR said that Arroyo had evaded P27 million worth of taxes.

But in the March 2018 ruling, the CTA said the BIR and the prosecution were not able to identify the likely source of the unreported income.

Prosecution witness, BIR National Investigation Division Assistant Chief Aurora Flor, admitted to the court that she could not find any permits or licenses showing that Arroyo had other businesses.

The CTA said that without concrete evidence, it could be presumed that the increase in net worth was due to “donations, gifts, inheritance and/or from other items of income subjected to final tax, such as dividends, royalties, interests, capital gains.”

What did the SC say? The High Court dismissed the government appeal, filed through the OSG, mainly because of procedural defects.

The SC said the OSG should have filed a motion for reconsideration (MR) before the CTA first which was the “plain and adequate remedy in the ordinary course of law.”

The SC said the Arroyo case did not qualify for the exemptions to file an MR.

“We hold that procedural rules should be treated with utmost respect and due regard mainly because they have been crafted and designed to ensure the prompt adjudication of cases to remedy the worsening problem of delay in the resolution of rival claims and in the administration of justice,” the SC said.

The SC added that even if the appeal was proper, the OSG was not able to show grave abuse of discretion on the part of the CTA.

“The burden to prove not merely reversible error, but grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the public respondent issuing the impugned order, entirely rests on the petitioner. Mere abuse of discretion is not enough; it must be grave,” said the SC. 

Former first lady Imelda Marcos, convicted of graft by the Sandiganbayan, had expressed intent of also going directly to the Supreme Court to appeal her conviction. – Rappler.com

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Lian Buan

Lian Buan covers justice and corruption for Rappler. She is interested in decisions, pleadings, audits, contracts, and other documents that establish a trail. If you have leads, email lian.buan@rappler.com or tweet @lianbuan.