The Bureau of Internal Revenue (BIR) today filed a criminal complaint with the Department of Justice against MAKATI ROTARY CLUB FOUNDATION, INC. (MRCFI) and JUAN J. CARLOS, JR., RICARDO G. LIBREA, ALFREDO B. PARUNGAO, ROBERT F. KUAN, J. ANTONIO M. QUILA, CONRADO G. MARTY, WELLINGTON C. SOONG, FEDERICO S. BORROMEO, JR., RAMON T. DIOKNO, JESUS F. TAMBUNTING, JOSE A.R. BENGZON III, LARRY A. BOYER, FELIX B. AMPARO, and TOMAS T. DE LEON for ten (10) counts of willful attempt to evade or defeat taxes for taxable years 2001 to 2010 and ten (10) counts of willful failure to supply correct and accurate information in its Income Tax Return (ITR) for the same taxable years, all in violation of Sections 254 and 255 of the National Internal Revenue Code of 1997, as amended (Tax Code).
MRCFI is denominated as a “service organization for business and professional people” and a non-stock corporation per General Information Sheet of the corporation.
The case against MRCFI arose from a confidential information from two complainants and a certain Wilson H. Sua containing allegations of the tax evasion scheme of MRCFI. In the course of the investigation, the BIR found that MRCFI was the recipient of a real property donated by Fedders Koppel, Inc. (Koppel) under the Laurel-Langley Agreement. MRCFI then entered into a lease agreement with Koppel over the said parcel of land in Barrio La Huerta, Parañaque City and with Rohm & Haas Philippines, Inc. (RHPI) over a manufacturing plant.
Investigators noted from lease agreements and court documents that MRCFI splits rental payments from both Koppel and RHPI into two parts: 1) lease portion; and 2) a substantial portion as donation. MRCFI denominated portions of the rental payments as donations and compelled its lessees to give rental payments under the guise of donation. MRCFI, in fact, demanded interest from the date of default of the rental and the purported donation, contrary to the nature of a donation where interest should not be charged.
The scheme of MRCFI of providing for an annual donation ranging from P0.60M to as high as P20.10M was for the purpose of evading payment of Income Tax and VAT. As a donee institution accredited by the Philippine Council of Non-Government Organizations, MRCFI’s income tax and VAT liabilities will be reduced given the reduced rentals through the donation scheme. On the other hand, as an accredited organization, no tax will be imposed on the donation.
As a result of MRCFI’s fraudulent scheme of splitting rental payments into rent income and donation, the government was deprived of taxes amounting to P47.05M from 2001 to 2010.
The case against MAKATI ROTARY CLUB FOUNDATION, INC. and its responsible corporate officers is the ninety-second (92nd) filed under the Run After Tax Evaders (RATE) program of the BIR under the leadership of Commissioner Kim S. Jacinto-Henares.
