SC upholds dismissal of Mikey Arroyo’s tax case

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The Supreme Court has junked for its procedural defects and substantive deficiencies the petition of the government assailing the decision of the Court of Tax Appeals (CTA) that acquitted former lawmaker Juan Miguel “Mikey” Arroyo of tax evasion.

Arroyo was accused by the Bureau of Internal Revenue of underdeclaring his 2004, 2006 and 2007 income resulting to a total tax deficiency of P27.305 million,
charges of attempting to evade or defeat tax liabilities for the taxable years from 2004 to 2009, and for failure to file their income tax returns and to pay income taxes for the taxable years 2005, 2008, and 2009.

In a 13-page resolution, the SC held that “the CTA did not act capriciously or whimsically in absolving [respondent Arroyo] of the charges.”

“The CTA in Division assiduously sifted the evidence and analysed the records; it explained the merits of the charges upon reviewing the elements of the offenses charged and determining whether or not the evidence adduced by the Prosecution established such elements. Also, the CTA in Division, noting that the [Bureau of Internal Revenue] did not discover the sources of Arroyo’s vaunted income, fully disclosed the various reasons why the State’s theory of the charges could not prosper, and how the chosen audit procedure known as the net worth method did not suffice to prove his criminal liability under the informations. In criminal cases, the quantum of evidence required is proof beyond reasonable doubt; hence, the Prosecution’s inability to identify the likely sources of the unreported or undeclared income of the taxpayer was a sure index of its failure to discharge the quantum,” the SC said.

The government assailed the CTA’s March 21, 2018 decision acquitting Arroyo of all the charges for failure of the state to prove his guilt beyond reasonable doubt, and dismissed the civil actions to collect the tax deficiencies deemed instituted on the basis that the acts or omissions from which the civil liability might arise did not transpire.

The Court also held that the state prematurely filed the petition because it did not first file a motion for reconsideration of the adverse ruling on the criminal aspect.

The omission, the Court held, “was a gross violation of Section 1, 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.

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