A losing streak of tax collection cases

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The general public can only regard with frustration—and suspicion—what seems to be the government’s losing streak of tax collection cases, the latest being the P59.7 million tax credit scam case filed against Faustino and Gloria Chingkoe, husband and wife, and their five co-accused.

A few days ago the Supreme Court affirmed the dismissal of the case.

The Manila Regional Court in 2006—yep that’s how long ago it was—dismissed the case for, hold your breath, the failure of the Solicitor-General to attend hearings.

After two years the Court of Appeals reinstated the cases, but the High Court ruled that the trial court was right.


Did the Sol-Gen ignore the court’s summons on purpose? If so, the reason could only be to absolve the accused of the responsibility to pay the taxes due the government.

Mercifully. the High Court also states in the decision that “the government may re-file them considering the importance of the tax cases.”

It’s just as well. This is not a simple tax evasion case, mind you. Rather it is an attempt to evade paying any tax at all, with the use of fraudulent tax certificates.

But the setback pales in comparison with the dismissal by the Marikina Metropolitan Trial Court in October 2006 of a tax evasion case against Lucio Tan, the beer and tobacco magnate.

The amount involved here was a whopping P25-billion tax deficiency, incurred over a two-year period, from 1990 to 1992.

Then as now, Tan controlled the Philippine Airlines and the Philippine National Bank. He is the second richest person in the Philippines, after Henry Sy, with a $1.7 net worth..

According to the Bureau of Internal Revenue (BIR), Fortune Tobacco Corp., which Tan also owned and controlled, had set up nine dummy corporations to act as buyers of the firm’s products at a price much lower than the actual price.

The judge, however, dismissed the case for insufficiency of evidence.

“The prosecution,” the honorable magistrate said, “failed to prove that Fortune owned even a single share of stock in what the BIR alleged were its dummy corporations.”

Oh, but the articles of incorporation, which the government submitted in evidence, showed that Fortune employees owned and ran all nine corporations.

No, the defense corrected, former employees. They were once part of Fortune, but they resigned and formed their own companies. It was this allegation that the judge chose to give credence to.

The judge “doubts whether any person, be rich or poor, can be criminally convicted on an extrapolation based on pure assumptions or an individual’s imagination, for otherwise, the presumption of innocence which is at the core of our criminal justice system would lose its sense of value and sensible attribute.”

Shouldn’t we commend the good judge for his adherence to the rule of law and passion to protect the freedom and liberty of the rich and poor alike?

It is better to let a hundred criminals go free than convict one innocent person, you know.

To go back to the Chingkoe couple’s tax credit scam case, the High Court ruled, as observed earlier, that the case could be re-filed despite the dismissal.

The public is well-advised not to get its hopes too high. After losing the Tan’s tax evasion case, the BIR announced it would confer with Sol-Gen to decide whether to file an appeal.

Nothing came out of it. The government had made the announcement merely to appease the public. In fact, there was no genuine interest on the part of the government to win the Tan’s tax evasion case or the Chingkoe’s tax credit scam case.

In the two cases, the government had all the resources to gather all the evidence necessary. It is therefore hard to accept the proposition that the government would file a case based only on flimsy evidence, or none at all. But that’s what it all amounted to.

Either government prosecutors are incompetent or the judges are corrupt, or both.

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