MANILA— The rapid expansion of GenCorp Industries Inc. from a company with PHP28 million in business to one generating more than PHP520 million in annual revenue came under scrutiny during the Senate impeachment trial of Vice President Sara Duterte on Monday, as a forensic expert acknowledged that the company’s financial records did not establish the sources of its funding.

Financial forensic analyst Alexander Cabrera faced questions from senator-judges about GenCorp’s reported growth, a potential PHP250-million corporate tax deficiency, and an estimated PHP211 million attributed to Duterte’s alleged ownership interest in the company.

Sen. Francis Pangilinan questioned how GenCorp, which operates Jollibee franchises, financed its expansion from 2021 to 2025 despite having only PHP1.25 million in paid-in capital.

Citing Cabrera’s report, Pangilinan noted that the company acquired about PHP150 million in property and equipment while also financing inventories and daily operations.

Asked where the money came from, Cabrera said he could not determine its origin from the available records.

“I cannot explain po where the money came from. Wala po talaga ako idea kung saan po nanggaling yung pera. (I really have no idea where the money came from),” Cabrera said.

He explained that businesses typically finance their operations through capital contributions, loans and operating income. However, he said the records he examined showed substantial funds moving into and out of GenCorp without sufficient disclosures to establish their sources.

Cabrera said the company’s expansion and acquisition of restaurant franchises warranted further examination of its financing arrangements.

P250-M potential tax deficiency

Senate President Sherwin Gatchalian also questioned about PHP1 billion in bank inflows from 2022 to 2025 that Cabrera classified as undeclared after comparing the transactions with GenCorp’s financial statements.

Gatchalian asked whether the discrepancy could represent revenues that had not been reported for tax purposes.

Cabrera estimated a potential PHP250-million tax deficiency using a 25% corporate income tax rate. However, the amount has not been established through a final assessment by the Bureau of Internal Revenue.

Gatchalian also asked whether shareholders could be held personally liable for the alleged corporate tax liability under the doctrine of piercing the corporate veil.

“Can you give us an example or cite a case?” Gatchalian asked.

Cabrera said he had not prepared a list of relevant jurisprudence and agreed to provide the corresponding court decisions or case numbers later.

The analyst maintained that substantial underdeclaration could warrant an examination of whether a corporation’s separate legal personality had been abused. However, the attribution of corporate tax liabilities to shareholders requires a separate legal determination, and bank inflows do not automatically constitute taxable income.

PHP211-M GenCorp interest

Sen. Bam Aquino questioned the inclusion of an estimated PHP211 million linked to GenCorp in the PHP817.87-million alleged unexplained wealth attributed to Duterte and her husband, lawyer Manases Carpio.

Aquino established that the amount depended on an assumed 20% ownership interest in the company. Excluding that component would reduce the report’s computation to approximately PHP606 million.

Aquino also pointed out that the PHP211-million attribution could change depending on the ownership percentage ultimately established.

“Tama po (That’s correct),” Cabrera replied.

Cabrera said his 20% estimate drew from Duterte’s sworn Statement of Assets, Liabilities and Net Worth (SALN), which identified an interest in GenCorp, as well as her previous business arrangements with businessman Jaime T. Cruz.

However, Duterte was not listed as a shareholder in GenCorp’s General Information Sheet filed with the Securities and Exchange Commission.

Cabrera said he gave greater weight to the sworn SALN declaration in his analysis, while acknowledging that the ownership attribution involved professional judgment and assumptions based on available records.

Aquino also questioned the report’s treatment of corporate income, particularly the assumption that undeclared funds could be attributed to individual shareholders.

Cabrera explained that the computation involved the possible application of the doctrine of piercing the corporate veil, a legal issue that the senator-judges would ultimately have to assess.

Although excluding the disputed GenCorp ownership estimate leaves approximately PHP606 million in the report’s computation, other portions still involve accounting interpretations and the attribution of corporate financial interests.

The proceedings form part of the Senate impeachment court’s examination of Article II of the impeachment complaint, which includes allegations of unexplained wealth involving Duterte and Carpio.

The allegations and financial estimates remain subject to scrutiny in the proceedings.