INQUIRER CHAIR MARIXI PRIETO FIRM “DUNKIN’ DONUTS”, BIGTIME TAX CHEAT…/
It owes the FILIPINO people P1.56-B unpaid tax deficit; but Ex-BIR Chief Henares intentionally failed to either collect it or pursue tax evasion case against the company.
HENARES BETRAYED THE FILIPINO PEOPLE…/
1. SHE LIED WHEN SHE SAID THAT MY TAX ASSESSMENT AGAINST “DUNKIN’ DONUTS” SHOWED INACCURACIES.
On February 28, 2014, she told GMA-7 in a newscast that she had DD’s tax case re-investigated for several times (twice), allegedly because my tax assessment against the company showed inaccuracies. She was giving her side after the station interviewed me.
“Pinaimbestigahan natin ng ilang beses, at sa mga imbestigasyon na yan, lumalabas na hindi naman tama yung assessment ni Mr. Othello [Dalanon], Henares said.”
On March 17, 2014, I filed Formal Complaint against her and Estela Sales before the Office of the Ombudsman. In the said complaint, I clearly stated my audit findings which include, among other things, the following:
a. That DD’s duly-registered books of accounts (hardbound computer-generated) reflected a NET INCOME amounting to PhP 135.2 Million while its Annual Income Tax Return (AITR) showed a NET LOSS amounting to PhP 44.9 Million.
b. That DD’s sales as reflected in the said books was PhP 1.928 Billion while the total amount of sales reflected in its AITR was only PhP 1.031 Billion. This shows a huge discrepancy (substantial under-declaration) amounting to PhP 897 Million.
[According to the SUPREME COURT in the case of Paper Industries Corporation of the Philippines vs. Court of Appeals, et al., 250 SCRA 434 – the books of accounts prevail over tax return when they reflect higher sales, because they are kept and prepared under control and supervision of the taxpayer; and they embody what must appear to be admission against interest.]
c. That other independent relevant documents, such as but not limited to: Franchise Agreement, Technical Service Agreement, and Final Withholding Tax Returns, indicate that DD’s sales topped P2.366 Billion but the amount recorded in its registered books was only PhP 1.928 Billion. This again shows an unrecorded and undeclared sales amounting to PhP 438 Million.
According to Henares, these findings were flawed. However, she and Estela Sales, in their counter-affidavits, and even the supporting affidavits of ATTY. ROMMEL CURIBA and MR. WILFREDO REYES, both of BIR national office, did not give any justifications or explanations to dispute these glaring and crucial issues.
It is AMAZING that despite respondents’ failure to give rejoinders to the above vital accounts, the Ombudsman dismissed the case. Clearly, it did not conduct a thorough investigation as it did not even require respondents to submit DD’s tax case docket and copy of its actual “protest” which are very essential in the investigation.
The Ombudsman, in its dismissal resolution, did not discuss the merits of the case and did not state the facts and law upon which the conclusion given were drawn.
2. HENARES LIED WHEN SHE CLAIMED THAT THE FUNCTION TO DETERMINE FINALITY OF AN ASSESSMENT IS VESTED BY LAW UPON THE COMMISSIONER OF INTERNAL REVENUE OR HER DULY AUTHORIZED REPRESENTATIVES.
I expressed my firm stance that the PhP 1.56 Billion tax assessment against DD attained finality based on the following grounds:
a. That DD failed to file a VALID protest; and
b. That DD failed to submit the required documents within the period required by law.
Henares, in her counter-affidavit, states: “Mr. Dalanon, as then Revenue Officer, has no authority – and could not arrogate upon himself – to decide and declare that a certain assessment is already final, executory, and demandable. THIS IS A FUNCTION VESTED BY LAW UPON THE COMMISSIONER OF INTERNAL REVENUE OR HER DULY AUTHORIZED REPRESENTATIVES.”
Henares’s statement does not find basis in law. Her claim is erroneous, because it is the law that determines finality of an assessment as clearly provided under Revenue Regulations (RR) No. 12-99 in relation to Section 228 of the 1997 NIRC, as amended.
Either of the above-cited grounds, the assessment against DD attained finality. These were clearly stated and discussed in the Formal Complaint and Motion for Reconsideration I filed before the Ombudsman, but it dismissed the case without carefully scrutinizing tax assessment rules and regulations. SURPRISING!!!
In a meeting held sometime on April 2011 at BIR national office in connection with DD tax case which was attended to by Atty. Claro Ortiz, Atty. Sixto Dy, Atty. Abegail Gamboa, all of BIR national office, and myself, it was ascertained that the tax assessment has become final, executory and demandable, in view of DD’s failure to comply with the requirements as prescribed. “These are scraps of paper” – that’ Atty. Ortiz saying.
Atty. Ortiz knows so well that the PhP 1.56 Billion tax assessment against DD attained finality.
3. HENARES LIED WHEN SHE CLAIMED THAT SHE HAS NO KNOWLEDGE OF DD’S IRREGULARITIES.
Henares, in her counter-affidavit, denied knowledge of DD’s irregularities.
As I said, I personally reported DD’s omissions to Henares and recommended to her the criminal prosecution of DD for tax evasion under the much-vaunted Run After Tax Evaders (RATE) program of the Bureau.
Atty. Jethro M. Sabariaga who was then Henares’s Chief of Staff, knew so well that I personally talked to Henares about the case. Atty. Sabariaga first read my audit report before it was given to Henares.
“Othello, di ka ba natatakot sa ginagawa mo?” (Othello, are you not afraid of what you are doing?) – to which I replied – trabaho lang ho sir (just doing my job sir).
It was Henares who introduced me to Deputy Commissioner Estela Sales to whom she referred the case for evaluation by the RATE team to determine existence of fraud which resulted in the AFFIRMATIVE, as relayed to me by a BIR official who requested anonymity. My informant said that the RATE team was then already preparing the memorandum to recommend the criminal prosecution of DD for tax evasion, but discontinued upon instruction from a high-ranking official of the BIR whose name my informant did not disclose.
There are documents to prove that Henares was properly apprised of DD’s tax case. These were attached to my Formal Complaint filed before the Ombudsman and Petition for Review with the CA.
It is ASTONISHING that the Ombudsman dismissed the case without fairly conducting an investigation to arrive at a fair and reasonable resolution.
4. HENARES LIED WHEN SHE CLAIMED THAT SHE DID NOT ORDER “TWO RE-INVESTIGATIONS” OF DD TAX CASE.
Henares, in her counter-affidavit, denied that she ordered “two re-investigations”. However, on February 28, 2014, she told GMA-7 in a newscast that she had DD’s tax case re-investigated for several times (twice), as the company’s representatives complained to her that my tax assessment allegedly showed inaccuracies.
“Pinaimbestigahan natin ng ilang beses, at sa mga imbestigasyon na yan, lumalabas na hindi naman tama yung assessment ni Mr. Othello [Dalanon], Henares said.”
Clearly, the former Commissioner LIED.
Just to reiterate. The PhP 1.56-B deficiency tax assessment against DD attained finality; thus, re-investigations are no longer warranted.
Once the deficiency tax assessment attained finality, the right of the government to collect the deficiency tax becomes absolute; thus, it precludes the taxpayer from questioning the correctness of the assessment and from raising any justification or defense that would pave the way for a re-investigation.
There is no LAW that authorizes the Commissioner to order several re-investigations of a FINAL, EXECUTORY and DEMANDABLE assessment.
However, notwithstanding the ensuing finality of the afore-said deficiency tax assessment against DD, Henares had it re-investigated several times (twice).
The HOCUS-POCUS reinvestigations ordered by Henares.
a. The “first reinvestigation”, which is no longer warranted because my tax assessment which remained undisturbed after review and evaluation by high-ranking officers in the district and regional levels of the Bureau and already covered by FANs, all bearing Demand No. 41-B072-07 and all dated October 29, 2010, attained finality, was assigned to Revenue Officer STANLEY ONG under Group Supervisor GREGORIO S. TUMANGUIL, then both of RDO No. 42, Mandaluyong City. Mr. Ong was the same revenue officer who conducted the review of DD tax case and recommended for the issuance of the statutory notices of assessment (PAN and FANs) when he was yet with the Assessment Division of the Regional Office in Quezon City.
I am not a lawyer though I believe that revenue officer Ong who conducted the “first reinvestigation: could no longer disturb my tax assessment by himself for reasons of principle of estoppel. The equitable principle of estoppel forbids the revenue officer who conducted the “first reinvestigation” from taking inconsistent position against his concurrence to my original audit findings that culminated in the deficiency tax assessment amounting to PhP 1.56-B which is already FINAL, EXECUTORY and DEMANDABLE, but which was reinvestigated by no other than him.
The result of the “first reinvestigation” conducted by revenue officers Ong and Tumanguil was a HOCUS-POCUS. – this can be proven, if DD’s tax case docket which is under the custody of the BIR is presented if ever an investigation is conducted.
b. The “second reinvestigation”, which is also no longer necessary because my tax assessment attained finality, was referred to ATTY. GRACE CRUZ of the National Investigation Division, BIR national office. I strongly admire Atty. Cruz of her investigative expertise in administrative cases. Lest I be misconstrued. I am not saying that Atty. Cruz is short of proficiency in tax accounting and tax auditing. NO REPORT OF RE-INVESTIGATION WAS SUBMITTED BY ATTY. CRUZ.
So, how can former BIR Commissioner Henares claim that her groups of revenue officers who conducted to two (2) separate reinvestigations came up with the same findings that my tax assessment against DD was incorrect?
5. HENARES AND HER MINIONS MADE “PALUSOT” BY NOT EXPRESSING THE COMPLETE AND PRECISE INTERPRETATION OF TAX RULES AND REGULATIONS.
Henares and her minions used the CD which I submitted to the RATE team as scapegoat in not filing tax fraud case against DD.
The RATE coordinator, members, and Mr. Wilfredo Reyes, the pioneer CAATTs user, failed to consider and evaluate the documents attached to the docket of DD tax case and the findings for deficiency tax assessment which were based on entries per DD’s duly-registered books of accounts (hardbound computer-generated), as I have appropriately validated; and other independent relevant documents, such as but not limited to: Franchise Agreement, Technical Service Agreement, and other BIR returns filed by DD such as: VAT returns and Final Withholding Tax Remittance returns.
The CD, which was neither mentioned nor objected to by GDI in its INVALID protest, is used by Henares and her minions as scapegoat in not filing tax evasion case against DD by claiming that said CD is not compliant with the requirements prescribed under RMO No. 29-2002 – that it should be properly labeled with the name of the taxpayer, taxable year and serial no. and volume no. and signed by the taxpayer and RDO.
I pointed out that DD adopts a “computer-assisted accounting system” wherein it is still required to register a “hardbound computer-generated books of accounts” which were the bases of my audit findings. Thus, the CD, which they used as scapegoat in not filing fraud case against DD, need not be strictly compliant with the requirements provided under the aforesaid RMO in regards to the markings to be inscribed thereon.
RMO No. 29-2002 clearly provides that in case the taxpayer has no capability to submit in CD-ROM form, procedures under the MANUAL SYSTEM shall prevail. In other words, if the taxpayer adopts a computer system of accounting but has no capability to integrate the different components of accounting system (i.e., books of accounts and other related accounting records) in a CD-ROM form, it shall still be required to register a “hardbound computer-generated books of accounts”, as in the case of DD.
I suggested to the RATE team that they may recommend for the issuance of a Subpoena Duces Tecum (SDT) to compel DD produce its duly-registered hardbound computer-generated books of accounts, but the suggestion was just ignored.
What is crystal clear is that, HENARES deliberately DECEIVED the FILIPINO people by making excuses to CONCEAL THE REAL TRUTH about this BIGTIME TAX EVASION CASE.
I have been posting this issue on social media for almost two (2) years now. Every time I post this on my google account, I always share the same with Henares thru her official email address, and with the official emails of the Department of Finance and BIR’s contact center; but Henares, until the end of her term as BIR head, failed to give any satisfactory explanation or defense to clarify the issue. Not even one of her minions and also none from DD company has attempted to give any justifications or explanations to refute my postings.
They knew very well that my tax assessment against DD is SOLID AS THE ROCK OF GIBRALTAR!!!
IT’S MORE FUN IN THE PHILIPPINES!
Othello Dalanon
www.othelloedalanon.blogspot.com
THE CHRONOLOGY OF EVENTS AFFECTING MY CASE VS. HENARES AND ESTELA SALES:
March 17, 2014
I filed criminal and administrative charges against Henares and Sales before the Ombudsman for Grave Misconduct, Gross Neglect of Duty, and for violation of Sec. 3(e), (f) of R.A. 3019, and Sec. 269(e), (h) of the NIRC.
August 24, 2015
I received the Ombudsman resolution dated March 24, 2015 dismissing the criminal and administrative charges against the respondents.
September 1, 2015
I filed a Motion for Reconsideration which the Ombudsman denied in an order dated September 10, 2015 which I received on November 19, 2015.
December 4, 2015
I filed a Petition for Review before the Court of Appeals to seek the reversal of the Ombudsman’s decision dismissing the case against the respondents.
December 18, 2015
The Court of Appeals issued a Resolution dismissing the petition.
January 4, 2016
I filed a Motion for Reconsideration.
May 27, 2016
I received CA’s resolution dated May 17, 2016 denying my Motion for Reconsideration.
July 22, 2016
Within the 60-day period granted by law, I filed a Petition for Certiorari before the SUPREME COURT.
The P1.56-B deficiency tax assessment against GDI that remained undisturbed after review and evaluation conducted by the Assessment Division of the Bureau’s Regional Office in Quezon City, and already covered by FANs, were my very findings. Such findings were the product of days and nights of toil and hard work for almost two (2) years, not to mention the pressures that I had to endure from the outside and even from some of my superiors in the Bureau.
And for doing an out-of-the-box job, I was threatened with disciplinary action by my superiors; and for reporting irregularities, I was threatened with criminal action by no less than former BIR Commissioner Henares herself who was supposed to uphold an examiner’s tax assessment. MAY GOD HELP ME?
Othello Dalanon
www.othelloedalanon.blogspot.com
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