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Not Wanting in Tax Collection Effort

(Article published in the Aug 3,2011 issue of Manila Standard Today) 

Last Monday, a broadsheet reported a certain Ernst Wanten, allegedly president of Total Philippines, expressing, purportedly on behalf of the oil industry in the country, disgust over the way the new government is seeking to raise revenue collections.

Wanten is quoted as saying “What we’ve seen in the drive of the new government to increase tax collection is that, to us, [meaning the players in the oil industry-RGG], it just looks like they are looking at [going after] the normal, legal companies.  There is a drive to collect more, but we [purporting thereby to speak for the other members of the oil industry-RGG] think the way they are doing it is not good at all.  They’re still not tackling the ones who are not paying taxes.”

Wanten, I must say, is want’n in his perception and judgment.  The exact contrary is true: the Bureau of Internal Revenue, which collects the greater portion of revenues for the government, is scoring, and scoring mightily, against those who are not paying taxes.  Under its Run After Tax Evaders (RATE) program, pursued with vigor by current Commissioner Kim Henares and her team, not a few have been caught and caught red handed not paying taxes.


Last 03 December 2010, the Court of Tax Appeals En Banc dismissed a Petition for Review filed by Gloria V. Kintanar who was convicted by the Second Division of that court in two cases, both for violation of Section 255 of Republic Act No. 8424, otherwise known as the Tax Reform Act of 1997.  Section 255 of R.A. 8424 is a provision in the law that makes it a criminal offense, among other acts, not to pay a tax that is required to be paid under the tax code.  Gloria Kintanar sought to escape responsibility for non-payment of taxes by blaming her husband, Benjamin.  She claimed  “that she has no personal knowledge of actual filing of said returns because it was her husband who filed their ITRs.”

The Court of Tax Appeals En Banc rejected Gloria Kintanar’s excuses.  It ruled that her “sole reliance on her husband to file their ITRs is not a valid reason to justify her non-filing, considering that she knew from the start that she and her husband were mandated to file their ITRS.”  Moreover, as an experienced business woman, she was expected to know and understand all matters about her business, including the tax obligations in connection thereto. She should have made sure that their ITRs had actually been filed.  In fact, she was found to have assumed “deliberate ignorance” or “conscious avoidance” of her obligation to pay taxes.  Finally, despite several notices of her own non-tax compliance, she did not bother to reply on time, taking her sweet time of one year before actually responding. 

Presently, because of her conviction at the level of the Court of Tax Appeals, her case is before the Supreme Court where she was constrained to bring it;  otherwise, her conviction would have become final.

Her husband Benjamin, too, was prosecuted by the Bureau and then convicted by the Court of Tax Appeals of not paying taxes on his own separate income.  He sought, to defend himself, not only by replaying the blame game earlier played out in Paradise (wherein Adam blamed Eve who blamed the serpent) but also by presenting evidence that was of “doubtful authenticity and materially flawed with irregularities.”

Just a sampling of such evidentiary flaws:  (a) The return that Mr. Kintanar produced said he was a resident of Block 73, Lot 24, Lagro Subdivision,  Novaliches, Q.C.; but in his own testimony he said he resided in Parañaque City for the period covered by the return; (b) His return claimed he was a registered taxpayer at RDO No. 028 in Novaliches, Q.C.,  but a duly authenticated certificate of registration showed him registered with RDO No. 052 in Parañaque.  He said he paid his taxes at Security Bank but was unable to present any receipt and neither did he make any attempt to present the same.

Benjamin Kintanar thus lost at the Court of Tax Appeals Division Level and has, I presume, gone up to the En Banc to argue his case.

Let it not also be said that the Bureau is picking only on small (without meaning any offense to the Kintanars) taxpayers.  The Bureau is also going after the likes of Wanten’s employer.

Now pending with the Court of Tax Appeals, in Cases Nos. 8004 and 8121, are cases against an oil company like Total.  The cases concern the assessment for excise tax and value-added tax on the importation of light catalytically cracked gas and catalytically cracked gas. The issue of their taxability has been the subject of studies and restudies by the Bureau, no doubt in due deference to the standing to the oil company involved.  Finally, on 15 December 2009, the Bureau, then under Joel L. Tan-Torres stated its final position that the said substances are subject to the excise tax.

The matter then went through the process of a PAN (preliminary assessment notice), then a FAN (final assessment notice), and, when the government and the taxpayer gave each other neither an inch, the case finally landed in the Court of Tax Appeals where the matter at the pre-trial stage. 

I am constrained, because the cases are still pending, to refrain from dealing with the issues on their respective merits.  However, the point I wish to make to Wanten, and those who are similarly uninformed, is that the Bureau is in fact going after all tax evaders, big and small, and at present is more than prepared to cross swords with the adamant tax evaders.

I should know.  I, together with other lecturers, was with them on the 28th and 29th last month, in the cool weather of Tagaytay, wherein I gave them, to the best I soberly could, a warm briefing on the developments in the law and jurisprudence in the legal process of ferreting out of tax evasion.