(UPDATE) THE Bureau of Internal Revenue (BIR) has filed multiple criminal complaints against contractor couple Cezarah Rowena “Sarah” Discaya and Pacifico “Curlee” Discaya II, and a corporate officer of St. Gerrard Construction General Contractor and Development Corp. for unpaid taxes amounting to P7.18 billion.
BIR Commissioner Romeo Lumagui Jr. said the P7.1-billion tax liability remains enforceable despite the possibility that the Discayas turn state witness in separate corruption cases, emphasizing that tax obligations cannot be waived, offset or settled through restitution agreements.
In an interview following the filing of the cases, Lumagui said the agency’s assessment against the Discayas stemmed from unpaid income, excise and documentary stamp taxes, as well as glaring inconsistencies between their declared income and their ownership of high-value properties and luxury vehicles.
“The declared income was very small compared to the value of their assets. Just from the land and vehicles we found, the deficiency was already significant,” Lumagui said. “As far as the BIR is concerned, these are taxes that must be paid. Apart from the criminal case, we will still collect the P7.1 billion plus penalties.”
The cases against the Discayas involve nonpayment of income taxes from 2018 to 2021, excise taxes on nine luxury vehicles and documentary stamp taxes related to their supposed divestment from four family-owned construction firms — St. Gerrard Construction General Contractor and Development Corp., St. Timothy, St. Matthew, and Alpha and Omega.
Lumagui said investigators found no evidence that the Discayas had paid the proper taxes or relinquished beneficial ownership of the companies. “The spouses Discaya never divested from St. Gerrard, St. Timothy, St. Matthew, and Alpha and Omega,” he said. “They failed to pay proper income taxes, excise taxes, even documentary stamp taxes.”
Lumagui described the charges as “merely the tip of the iceberg,” saying more complaints could follow as audits continue on the Discayas’ construction firms and other contractors allegedly linked to anomalous flood control projects.
“Expect more cases to be filed,” he said. “The BIR will make sure that the spouses Discaya and their corporate officers will be held accountable for violating our tax laws.”
The BIR chief clarified that the couple’s criminal prosecution does not erase their civil obligation to pay taxes. “Even if they face criminal conviction, they are still required to settle their tax liabilities,” he said. “Payment does not extinguish the criminal case because the crime of tax evasion has already been consummated.”
Lumagui also said the ongoing assessment currently covers taxable years up to 2021 but could expand as the bureau reviews additional records and related entities. “This is just the start,” he said. “We’re still auditing other years and other companies connected to them.”
“Once we have finished our audit of the Discaya-owned construction firms, we expect findings of billions of tax deficiencies,” Lumagui said.
“We will file more tax evasion cases as soon as we have all the information we need,” he added.
Lumagui recounted that the BIR had encountered delays due to the Discayas’ repeated noncompliance. “We had difficulty because they were uncooperative. We gave them due process, but they refused to accept our notices, so we had to resort to other legal means to serve them,” he said. “We even issued subpoenas, and when they ignored those, we filed criminal cases for failure to obey subpoenas.”
Asked about reports that the Discayas were seeking to become state witnesses in separate infrastructure-related corruption cases, Lumagui said that such status does not affect their tax obligations.
“The BIR has nothing to do with their being state witnesses. Taxes are separate from restitution in criminal trials,” he said. “Even if they become state witnesses, they still have to pay these taxes because these liabilities are based on law, not on plea agreements.”
Lumagui said the BIR has given the couple until June to settle their liabilities before additional penalties and interest continue to accrue. “We already have the assessment. If they don’t pay, the penalties will keep running,” he said.
He added that the BIR continues to coordinate with other government offices to obtain more data for ongoing audits of contractors and high-net-worth individuals suspected of large-scale tax evasion.
He also warned other government contractors and public officials linked to questionable flood control projects that they, too, could face similar charges if found violating tax laws.
More bank accounts frozen
Meanwhile, the Anti-Money Laundering Council (AMLC) secured a fifth freeze order from the Court of Appeals, adding 12 more bank accounts linked to individuals and entities under investigation for alleged irregularities in flood control projects.
The latest order, issued on Wednesday, expands the scope of assets frozen, with the new order including bank accounts connected to several persons of interest and an entity whose license was allegedly used to facilitate the implementation of nonexistent flood control projects.
“Every freeze order matters. Each freeze order secured strengthens the evidentiary trail, ensuring that illicit funds cannot be concealed or dissipated,” AMLC Executive Director Matthew David said in a statement.
Before the issuance of the fifth order, the AMLC had already frozen a total of 1,620 bank accounts, along with 54 insurance policies, 163 motor vehicles, 40 real properties and 12 e-wallet accounts.
The inclusion of the 12 additional bank accounts raises the total to 1,632 bank accounts now under restriction, bringing the total value of frozen assets to over P4.4 billion.
“With the issuance of this fifth freeze order, this figure is expected to rise,” the agency said.
It added that it will continue coordinating with law enforcement and regulatory agencies to ensure that funds intended for public infrastructure and welfare are not diverted for illicit gain.
“The AMLC assures the public that it will continue to work closely with relevant stakeholders and government agencies to pursue all leads and ensure that funds intended for public welfare are not diverted for unlawful gain,” it said.
Foreign assets
David on Monday said they expanded their investigation to include assets and financial transactions abroad.
He said that the AMLC was closely coordinating with its foreign counterparts to identify and verify whether the subjects of the investigation had engaged in financial transactions outside the country.
This was being conducted through mutual legal assistance treaties that allow the Philippines to request the filing of civil forfeiture petitions in foreign jurisdictions.
