PHILIPPINES's INTERNAL REVENUE CHIEF KIM HENARES DELIBERATELY DECEIVED THE FILIPINO PEOPLE.
PHILIPPINES’s INTERNAL REVENUE CHIEF KIM HENARES
COMMITTED CRIMINAL AND ADMINISTRATIVE OFFENSES AGAINST THE REPUBLIC OF THE
PHILIPPINES WHEN SHE REFUSED TO COLLECT A FINAL TAX ASSESSMENT DUE FROM LARGE
TAXPAYER.
Philippine Daily
Inquirer chairperson Marixi Rufino-Prieto firm GOLDEN DONUTS, INC. (GDI), the
exclusive Philippine Franchisee of the global brand “Dunkin’ Donuts” owes the
Filipino people P1.56 billion unpaid tax deficit; but Bureau of Internal
Revenue Commissioner Kim S. Jacinto-Henares intentionally failed to collect it
or pursue tax evasion case against the company for deliberately perpetrating
fraudulent acts or criminal tax violations to evade payment of correct taxes.
On March 17,
2014, I filed criminal and administrative charges against Henares and her Deputy
Commissioner Estela Sales before the Office of the Ombudsman, but it dismissed
the case without conducting a thorough investigation and without requiring
Henares and Sales to submit GDI’s tax case docket and copy of its actual “protest”
which are very necessary 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.
I feel in my
layman’s understanding that the Ombudsman gravely erred in dismissing the case;
so, on December 4, 2015 within the period to file an appeal, I filed a Petition
for Review before the Court of Appeals. The CA required Henares and Sales to
submit their respective comments/opposition which they complied. I am just
awaiting for the CA’s resolution.
THE FACTS:
In 2008, as
then Revenue Officer of the Bureau of Internal Revenue, I was tasked to conduct
an investigation of the 2007 financial records of GDI for internal revenue tax
purposes.
My investigation
revealed several irregulaties which include, among others, the following:
1.
GDI’s duly-registered books of
accounts (hardbound computer-generated) reflected a Net Income amounting to
P135.2-M while its Annual Income Tax Return (AITR) reflected a Net Loss of
P44.9-M;
2.
GDI’s sales as reflected in the
said books was P1.928-B while the total sales reflected in its AITR was only
P1.031-B. This shows a huge discrepancy (under-declaration) amounting to
P897-M;
According
to the SUPREME COURT in the case of Paper Industries Corporation of the
Philippines v. 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.
3.
Other independent relevant
documents, such as but not limited to: Franchise Agreement, Technical Service
Agreement, and Final Withholding Tax Returns, indicate that GDI’s sales topped
P2.366-B but the amount recorded in its books was only P1.928-B. This shows an
unrecorded and undeclared sales amounting to P438-M.
I personally
reported GDI’s omissions to Kim Henares and recommended to her the criminal
prosecution of GDI for tax evasion under the much-vaunted Run After Tax Evaders
(RATE) Program of the Bureau. However, she intentionally failed to
appropriately act on the case, so I filed criminal and administrative charges
against her and Deputy Commissioner Estela Sales before the Office of the
Ombudsman.
The
above-enumerated issues were clearly stated in my formal complaint. All these,
including those discrepancies enumerated in my audit report, culminated in the
P1.56-B deficiency tax assessment against GDI.
Henares and
Sales, in their counter-affidavits, and even the supporting affidavits of Atty.
Rommel Curiba, RATE team leader, and Wilfredo Reyes, the Pioneer CAATTs user,
did not give any justifications or explanations to dispute the above-enumerated
glaring and crucial issues.
THE AFORESAID P1.56-B TAX ASSESSMENT ATTAINED
FINALITY; BUT HENARES INTENTIONALLY FAILED TO ENFORCE COLLECTION THEREOF.
Kim 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.”
The
foregoing statement does not find basis in law. I submit that Henares’s 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 National Internal Revenue Code (1997 NIRC), as amended.
The afore-said
deficiency tax assessment attained finality based on the following facts and
law, and regulations:
A. GDI
FAILED TO FILE A VALID PROTEST.
GDI’s
alleged letter of protest merely stated “protest against PAN [Preliminary
Assessment Notice] adopted in toto”. It did not state the facts, the applicable
law, rules and regulations, or jurisprudence on which the protest was based. It
is neither a request for reconsideration nor reinvestigation.
What GDI
filed instead was a Request for Cancellation and Withdrawal of the tax
assessment. A request for cancellation or withdrawal is significantly different
from a request for reconsideration or reinvestigation which is what the law
requires.
The rules on
protesting an assessment is found in Section 3 subsection 3.1.5 of RR No.
12-99, that reads:
“Disputed
Assessment. – The taxpayer or his duly authorized representative may protest
administratively against the aforesaid formal letter of demand and assessment
notice within thirty (30) days from date of receipt thereof.”
“The
taxpayer shall state the FACTS, applicable LAW, RULES and REGULATIONS, or
JURISPRUDENCE on which his protest is based, otherwise, his protest shall be
considered VOID and WITHOUT FORCE and EFFECT.”
“If the
taxpayer fails to file a VALID PROTEST against the formal letter of demand and
assessment notice within thirty (30) days from date of receipt thereof, the
assessment shall become FINAL, EXECUTORY and DEMANDABLE.”
The said
Regulations must be taken in relation to Section 228 of the 1997 NIRC, which
reads:
“Protesting
an Assessment. – Such assessment may be protested administratively by filing a
REQUEST FOR RECONSIDERATION or REINVESTIGATION within thirty (30) days from
receipt of the assessment in such form and manner as may be prescribed by
implementing rules and regulations. x x x otherwise, the assessment shall
become FINAL.”
Clearly,
what the law demands is a VALID administrative protest against the formal
letter of demand and assessment notice which required the taxpayer to comply
with the following:
1.
The protest must be through a
request for reconsideration or reinvestigation;
2.
The protest must be in the form
and manner as prescribed under RR No. 12-99, which provides that said protest
must state the facts, the law, rules and regulations, or jurisprudence on which
the protest is based; and
3.
Must be filed within thirty
(30) days from receipt of the assessment.
The COURT OF
TAX APPEALS in the case of Allied Banking Corporation vs. Commissioner of
Internal Revenue (CTA Case No. 4581, March 25, 1992, cited that, “failure to
comply with any or all of these requirements results in the assessment against
the taxpayer becoming final and unappealable.”
The letter
should not just state “protest against PAN adopted in toto”, because the
administrative protest required to be filed as an answer to the formal letter
of demand and assessment notice is distinct and not the same as the protest
filed against the PAN.
The COURT OF
TAX APPEALS emphasized in the case of Security Bank Corporation vs.
Commissioner of Internal Revenue (CTA Case No. 6564, November 28, 2006 and
further accentuated in the case of Bank of the Philippine Islands vs.
Commissioner of Internal Revenue (CTA Case No. 7397, April 9, 2008) that:
“A
protest to the preliminary assessment notice is not the same as the protest
required to be filed as an answer to the final assessment notice. In fact, a
preliminary assessment notice may or may not even be protested to by the
taxpayer, and the fact of non-protest shall not in any way make the preliminary
assessment notice final and unappealable. What is clear from 319-A of the Tax
Code of 1977, as amended, is that failure on the part of the taxpayer to
protest or reply to a preliminary assessment notice paves the way for the
issuance of a final assessment notice. However, evident under said Section (now
Section 228 of the 1997 Tax Code) is that failure on the part of the taxpayer
to file a valid administrative protest through a request for reconsideration or
reinvestigation on the final assessment notice, shall result in the finality of
the said FAN.” (Annotation supplied)
The
SUPREME COURT in the case of Allied
Banking Corporation vs. Commissioner
of Internal Revenue (G.R. No. 175097, February 5, 2010)
heightened that:
“It
is the Formal Letter of Demand and Assessment Notice that must be
administratively protested or disputed within 30 days, and not the PAN.”
B. GDI FAILED TO SUBMIT THE REQUIRED DOCUMENTS WITHIN THE
PERIOD REQUIRED BY LAW.
That
GDI filed its invalid protest against the Formal Letter of Demand and
Assessment Notices (FANs) on November 30, 2010 but it submitted documents only
on March 24, 2011. Hence, it was already 114 days after the date of its filing
of the protest.
Section
228 of the 1997 National Internal Revenue Code (1997 NIRC), as amended,
provides:
“Within
sixty (60) days from filing of the protest, all relevant supporting documents
shall have been submitted; otherwise, the assessment shall become final.”
In
the instant case, when GDI submitted documents in support of its protest, it
was already beyond the sixty (60)-day period in violation of the above-cited
provisions of the 1997 NIRC.
Either
of the above-cited grounds, the assessment against GDI attained finality. These
grounds were clearly stated in my Formal Complaint and Motion for
Reconsideration filed with the Ombudsman to justify the reversal of its
dismissal resolution, but were disregarded.
In a meeting
held sometime on April, 2011 at the National Office in connection with the
instant case which was attended to by Atty. Claro Ortiz, Head Revenue Executive
Assistant (now ACIR); Atty. Sixto Dy, Chief, National Investigation Division;
Atty. Abegail Gamboa, Chief of Staff of DCIR Estela Sales; and myself, it was
ascertained that the tax assessment has become final, executory and demandable,
in view of GDI’s failure to comply with the requirements as prescribed. “These
are scraps of paper”, that’s Atty. Ortiz saying.
Atty. Ortiz
knows so well that the P1.56-B tax assessment against GDI has become final,
executory and demandable. And here is Kim Henares, the Philippines’s internal
revenue head tagged as the “unyielding tax collector”, lawyering for GDI
“Dunkin’ Donuts” – a bigtime tax cheat!!!
Once the deficiency tax assessment attained
finality, it is no longer appealable; and there is now no reason why the bir
cannot continue with the collection of the said tax.
THE HOCUS-POCUS RE-INVESTIGATION.
Henares, in a telecast interview by GMA-7, said that
representatives of GDI complained to her that my tax assessment against the
company was faulty, that is why she had it re-investigated for several times (twice),
conducted by different groups of revenue officers who supposedly arrived at the
same results, purportedly finding my tax assessment to be incorrect. SHE
LIED!!!
Just to reiterate. The PhP 1.56 billion deficiency tax assessment against GDI 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 GDI, Henares had it re-investigated for several times (twice).
The “first re-investigation”, 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 Final Assessment Notices (FANs) bearing Demand No. 41-B072-07 and all dated October 29, 2010 obtained finality, was assigned to Revenue Officer STANLEY ONG, under Group Supervisor GREGORIO S. TUMANGUIL. Mr. Stanley Ong was the same revenue officer who conducted the review of the 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 Stanley Ong who conducted the “first re-investigation” 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 re-investigation” from taking inconsistent position against his concurrence to my original audit findings that culminated in the deficiency tax assessment amounting to P1.56 billion which is already FINAL, EXECUTORY and DEMANDABLE but which was re-investigated by no other than him.
The result of the “first re-investigation” conducted by Revenue Officers Stanley Ong and Gregorio Tumanguil, both of BIR Revenue District Office (RDO) No. 41, Mandaluyong City, was a HOCUS-POCUS.
The “second re-investigation”, which again is no longer necessary because my tax assessment obtained finality, was referred to Atty. GRACE CRUZ of the National Investigation Division, BIR National Office in Diliman, Quezon City. 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 result of re-investigation was submitted by Atty. Cruz.
So, how can BIR Commissioner Kim Henares claim that her groups of revenue officers who conducted the two (2) separate re-investigations came up with the same findings that my tax assessment against GDI was incorrect?
ANOTHER “PALUSOT” OF KIM HENARES.
Henares and her minions claimed that the compact disc (CD), which I presented to the RATE “Run after Tax Evaders” team, was allegedly not compliant with the requirements prescribed under Revenue Memorandum Order (RMO) No. 29-2002.
The RATE coordinator, members, and Mr. Wilfredo Reyes, the pioneer CAATTs (Computer-Assisted Audit Tools and Techniques) user, failed to consider and evaluate the documents attached to the docket of GDI case and the findings for deficiency tax assessment which were based on entries per 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 GDI, 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 GDI 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 GDI 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 GDI, 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 GDI.
I suggested to the RATE team that they may recommend for the issuance of a Subpoena Duces Tecum (SDT) to compel GDI 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.
ATTY. KIM HENARES, JUST SPEAK THE WHOLE TRUTH AND NOTHING BUT THE TRUTH.
DONUT LIE.
DONUT EAT
YOUR WORDS.
DONUT BETRAY
THE FILIPINO PEOPLE.
www.othelloedalanon.blogspot.com
Othello
Dalanon
BIR, DOF, Department of Finance, Tax Watch,
Golden Donuts, Inc., Dunkin’ Donuts, Dunkin’ Brands, Inc., Daang Matuwid, Tax
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