• Alphaland head could face tax probe

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    ALPHALAND President Mario Oreta may be held liable for tax evasion for his failure to declare shares he got for closing a land deal between his company and Boy Scouts of the Philippines (BSP) in 2008, the Bureau of Internal Revenue (BIR) said on Thursday.

    Speaking at the resumption of the Senate blue ribbon sub-committee hearing on the allegedly irregular transactions entered into by BSP under the leadership of Vice President Jejomar Binay, BIR Commissioner Kim Henares noted that Oreta’s failure to declare or file a return for the shares he got is already fraud.

    Henares was referring to the five-percent shares and other compensations received by Oreta from the property development deal between Alphaland and BSP.

    Alphaland and BSP entered into a joint venture agreement for the development of the property into a mixed-use (residential and commercial) facility.

    The agreement was negotiated and closed by Oreta for Alphaland and former Makati City Vice Mayor Ernesto Mercado for BSP.

    Mercado, who admitted signing the deal with Alphaland, said the deal was disadvantageous to BSP, which, according to him, should have gotten 20 percent instead of 15 percent shares from the development project.

    He added that the reason why BSP only got 15 percent is that the five percent was for the Vice President’s cut from the deal.

    Mercado said Binay used his earnings to fund his campaign in the 2010 national elections when he ran and won the race for Vice President under the ticket of former President Joseph Estrada.

    But Alphaland chairman Roberto Ongpin, during the last Senate committee hearing, said the 5 percent shares represented the equity interest of Oreta for closing the deal with BSP.

    Senator Alan Peter Cayetano, during Thursday’s hearing, said if the shares really belonged to Oreta, the Alphaland head should have paid the corresponding tax for them.

    Based on his computation, Cayetano added, Oreta owes the government P420 million in taxes.

    The semator, in his presentation earlier, explained that after the closing of the deal with BSP in 2008, Alphaland gave Oreta’s company 5.88 percent shares or equivalent to 2,031 shares of Silvertown (now Alphaland).

    Aside from the shares, Alphaland also lent Noble Care P100.4 million.

    Then in 2010, it bought back the 2,031 shares of Noble Care amounting to P189-million worth of Alphaland’s shares, erasing Noble Care’s P100.4-million loan.

    The P189 million is considered a taxable income and Oreta should have declared in his returns that it really went to his company, not to the Vice President.

    Lawyer Rodolfo Ponferrada, Alphaland counsel, during the hearing argued that Oreta could have not committed tax evasion because the Alphaland president was not given actual shares but only subscribed ones.

    But Henares pointed out that Noble Care cannot get the shares if not for the compensation
    package and whether Oreta subscribed, it is already compensation and subject to tax.

    “There is fraud. The penalty is 50 percent, then you are required to pay 20 percent of whatever amount is due every year until you get to pay it,” she told the Senate panel.

    Ponferrada said what Oreta was supposed to have committed was not tax evasion but tax avoidance, which, according to him is legitimate.

    “I could not divine what was in the mind of Mr. Ongpin at the time but I would surmise that compensation when he mentioned it, was in a loose sense, not in the sense as defined by the National Internal Revenue Code,” the lawyer added.

    But Henares said tax avoidance is being frowned upon and it is considered tax evasion.
    “If you did business and along the way it becomes efficient, then that’s tax avoidance. But to do it primarily to not pay taxes is tax evasion no matter what you say it is,” she added.

    The BIR chief said they will look into all taxes that were raised in the transactions to find out if proper taxes have been paid.

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