The Senate blue ribbon committee presented on Wednesday, October 27, documents obtained from the Bureau of Internal Revenue that showed possible tax liabilities by the companies and personalities involved in the anomalous pandemic purchases of government.
Key officials of Pharmally Pharmaceutical Corporation, its network of suppliers, along with ex-Presidential Michael Yang, and former chief of Procurement Service of the Department of Budget Management Lloyd Christopher Lao were flagged for failing to file proper income tax returns (ITRs) to the government throughout several years.
During the committee’s 13th hearing, Senate Minority Leader Franklin Drilon presented documents sourced from the BIR that revealed that in 2020, when multi-billion pandemic contracts were awarded by the PS-DBM to Pharmally and several other firms:
- Pharmally corporate secretary Mohit Dargani paid P97,241 in income tax, though the amount of taxable income in 2020 was “unreadable.”
- Pharmally co-owner Twinkle Dargani paid just P1,000 in income tax, though the amount of taxable income in 2020 was again “unreadable.”
- No records were found for Pharmally Chairman Huang Tzu Yen from 2019 until the present year.
- All of the income tax returns of Pharmally director Linconn Ong were “unreadable.”
- Yang, President Rodrigo Duterte’s former economic adviser and Pharmally’s financier and guarantor to Chinese suppliers, had income tax returns in 2019 and 2020 that were “unreadable.”
- Lao appeared to have no 2020 income tax return.
On the known tax returns of the Darganis, Drilon questioned the amounts paid, noting that they “appear to be very low, especially considering that they were able to buy luxury cars during the relevant periods.”
In the Senate committee’s September 17 hearing, committee chairperson Richard Gordon cited documents sourced from the Land Transportation Office which showed luxury cars like Porsches, a Lamborghini, and a Lexus were registered to the Darganis and Ong in 2020 and early 2021 – or months after the firm started wining contracts from the government.
Even more incredulous for lawmakers were findings from income tax returns of Pharmally officials and other key individuals, many of which were either incomplete, unreadable, or missing in previous years. This included the following:
- Mohit Dargani: “No information” on income taxes in 2018, “unreadable” taxable income in 2019 for a tax payment of P22,062.
- Twinkle Dargani: “Unreadable” taxable income in 2018 for a tax payment of P29,187 and “no information” on income taxes in 2019.
- Huang: No records found from 2019.
- Ong: “Unreadable” tax returns.
- Yang: No income tax return filed from 2014 to 2017 based on verification made by the district collection section of revenue region 19 in Davao City and revenue district office No.133-A in West Davao.
- Lao: P0 taxable income and tax paid in 2017, ITRs in 2018 and 2019 that could not be viewed by the BIR.
During the hearing, Drilon likewise questioned how Pharmally was able to claim a tax credit of some P96.089 million, which resulted in a supposed overpayment of P589,163.
“Note that Pharmally in their ITR (income tax return) claimed a tax credit of P96,089,213. They did not pay any tax,” Drilon said.
“This is something we have to look at. If this is correct, may refund claim pa po…. Yan po ang utang ng gobyerno sa Pharmally, sang ayon sa Pharmally (they’re even claiming a refund…. That is what the government owes Pharmally, according to Pharmally),” Drilon said in disbelief.
Gordon and Drilon said they wanted to question the BIR on some of its findings but could not because of Duterte’s standing order for officials of the executive to department to snub the blue ribbon probe.
“Since they are not allowed to appear, we have no choice but to make this presentation and its up to them to appear here and dispute what the BIR records indicate,” Drilon said.
No tax returns filed
Aside from this, Drilon noted how some of Pharmally’s suppliers, including TigerPhil Marketing Corporation may have under declared their income tax from 2017 to 2019, after the firm admitted to initially paying incorrect taxes in 2020. In a previous hearing, TigerPhil said it amended its tax returns on September 24, or when the Senate’s hearings were well underway after launching its probe in August.
Meanwhile, BIR records presented by Drilon showed that two other companies involved in supplying personal protective equipment to the PS-DBM did not file income taxes in 2020.
This included Chinese firm Xuzhou Consruction, the second biggest winner of the Philippine government’s pandemic contracts, and Greentrends Trading Int’l. Greentrends supplied face masks to TigerPhil that Pharmally later sold to the PS-DBM for P27.
To Senators, these findings point to the lack of due diligence from Lao and PS-DBM once more.
“Under the law and under the regulations, those who bid for the supply of medical PPE should submit a certification of the taxes paid. These again would indicate the need for us to closely review how the PS-DBM is able to get away with all of these apparent violations of our existing laws,” Drilon said.
Grounds for tax evasion
Asked to comment on the findings, the Senate panel’s resource person, tax expert Mon Abrea, said he did not have access to BIR documents sourced by Drilon but noted that failure to file any return and pay taxes due to the government could be grounds for tax evasion.
In recent hearings, senators have ramped up scrutiny of the tax records of Pharmally, its officials, and other suppliers of pandemic items to determine whether proper taxes were paid to the government.
On Tuesday, Drilon said an estimated P7.5. billion in taxes may be owed by contractors to the government.
Earlier in September, Senator Joel Villanueva presented records that showed Pharmally did not pay their employees’ withholding taxes and mandated contributions to the government.
Pharmally is the government’s most favored pandemic supplier, getting P10 billion in deals so far. The PS-DBM’s seeming preference for the firm came at the expense of shutting out local PPE producers who had difficulty accessing government pandemic deals and were forced to cut thousands of local jobs. – Rappler.com