Juan Miguel “Mikey” Arroyo, son of former President Gloria Macapagal-Arroyo. File Photo

MANILA - The Court of Tax Appeals has acquitted former presidential son and former lawmaker Juan Miguel “Mikey” Arroyo, who allegedly underdeclared his income and did not pay his correct taxes for 3 years.

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.

The complaint was filed on April 7, 2011 before the Department of Justice by revenue officers Aurora Flor, Maria Lourdes Sante, Virma Clemente, Amelita Aquino, Ferdinand Malonzo, Leonesto Bernal and Sixto Dy who were assigned to conduct investigation on individuals and entities that may have committed violations of the National Internal Revenue Code.

The decision noted that the complainants said Arroyo and his wife Angela, were able to acquire real, personal and other properties from 2004 to 2009, including houses in Lubao, Pampanga and La Vista Subdivision in Quezon City, motor vehicles, stocks, jewelry, clothes and other personal effects as listed in their Statement of Assets, Liabilities and Net Worth for the years 2002 to 2009, but they repeatedly failed to file they annual income tax returns and pay their corresponding taxes.

The court however noted the counter-arguments of Arroyo who said the BIR failed to prove its case as not a single prosecution witness testified that he acquired other taxable income that he did not declare.

The court also said that the complainants based their conclusions on “very limited” information such as SALNs and ITRs.

“There is nothing in the joint complaint-affidavit which states that the BIR requested the accused to produce his books, or that accused has no books at all, or that the books produced by the acused do not clearly reflect his income,” the court said in its decision penned by Presiding Justice and 1st Division Chair Roman Del Rosario, with the concurrence of Associate Justices Erlinda Uy and Cielito Mindaro-Grulla.

The court also raised the possibility that the increase in net worth of Arroyo was not from ordinary income, but from gifts and donations.

“Truth to tell, the probability that the increase in accused’s net worth resulted from his receipt of an ordinary income, subject to regular income tax rates, is equal to the probability that the increase arose from donations, gifts, inheritance, and/or from passive or other income subjected to final tax, such as dividences, royalties, interests, capital gains,” the court said.

The court also said that since the assessment issued against Arroyo was based on “mere presumption and not on actual facts,” he cannot also be held civilly liable.

Because of his acquittal, the bail bond posted by Arroyo was cancelled by the court and ordered released.