BIR stops probe into assessment of Del Monte tax liabilities

The headquarters of the Bureau of Internal Revenue (BIR). (File photo AFP)

The Bureau of Internal Revenue has stopped its internal investigation into the alleged irregularities in the assessment of Del Monte Philippines, Inc.’s tax liabilities for the years 2011 to 2013, citing the need for impartiality.

Deputy Commissioner for Legal Jesus Clint Aranas, who has functional authority to conduct investigations, disclosed this to the House of Representatives ways and means committee on Monday.

Aranas told lawmakers he had already issued show-cause orders to 14 employees. But on July 10, Commissioner Caesar Dulay wrote him to stop the investigation because its parent agency, the Department of Finance, had convened a fact-finding body under Undersecretary Bayani Agabin.

Dulay confirmed Aranas’s disclosure, but said he found it to proper to “throw it to the Secretary of Finance for impartial investigation.”

“Even if he [Aranas] was investigating the employees and not me, the ultimate result is conspiracy and connivance. He will, in effect, be investigating me,” he said.

He also asked the committee to invite Danilo Lihaylihay, the “nuisance” presidential candidate who filed a plunder complaint at the Office of the Ombudsman, so the involved BIR employees could “confront” him on the basis of his case.

“We are now under investigation in aid of legislation, but then, the testimony we will be giving will eventually impact [the] Ombudsman case and we are subject to criminal liability,” he said.

Dulay asked that the testimony before Congress “should not incriminate us in other investigations being conducted.” In response, committee chairman Rep. Dakila Carlo Cua said: “If it’s self-incriminating, what can we really do about it? The hypothetical person will only be incriminated if there is wrongdoing.”

What was only supposed to be a briefing into the issue of how Del Monte managed to pay only P65.4 million out of the preliminary assessments reaching P30 billion was turned into a full-blown inquiry in aid of legislation.

Hasty settlement?

During the hearing, Del Monte explained during the hearing how come it settled its liabilities for the years 2011 to 2013 in one fell swoop on Feb. 1, 2017, when the assessment process had taken years.

Chief operating officer Luis Alejandro said Del Monte had to quickly pay its liabilities a day after the notices were issued to avoid disclosure issues at the Philippine and Singaporean stock exchanges.

“We cannot let that happen, because it would affect our share price and trigger certain provisions… We have no choice but to resolve it,” Alejandro said.

He also cited the closure of the Large Taxpayers Division Office in Makati, which would have forced it to repeat the process all over again, as well as the accumulation of more tax-related penalties.

According to the timeline provided by Assistant Commissioner for the Large Taxpayers’ Service Teresita Angeles, the BIR served on Jan. 31 this year notices of various stages for the three taxable years.

It issued a preliminary assessment notice (PAN) for the taxable year 2011, a final assessment notice (FAN) for 2012, and a final decision on disputed assessment (FDDA) for 2013. The next day, Del Monte paid its three-year liabilities under the said notices.

Cua questioned, howeverr, how for the year 2013, the Oct. 6, 2016 PAN and the Nov. 3, 2016 formal letter of demand (FLD) assessed substantially the same amounts of P5.25 billion and P5.28 billion, inclusive of penalties. Yet, by the time the BIR resolved Del Monte’s Oct. 25, 2016 protest and issued its Jan. 31 FDDA, the liabilities have been vastly reduced to P30.39 million.

“Is that process correct? Shouldn’t it be that between the preliminary and the final, there would be changes already? When the time comes to pay, is that really supposed to change? How can the final be different from the [actual] collected amount?” he said.

Deputy Speaker Sharon Garin also pointed out that PANs can be “exaggerated,” yet only 10 percent end up being collected.

“Is there any basis to the preliminary assessment notices?” she wondered.

Angeles cited that, at the protest stage, the BIR presents its basis for the findings and the taxpayer is allowed to present documents rebutting them.

“Some of the [BIR] findings are raw data because of the matching, and reconciliation of all the listings… put on record at the preliminary assessment stage,” she explained.

Asked later at the sidelines of the hearing, Cua told reporters he is yet to be satisfied with Del Monte’s explanation.

“We still haven’t seen the details. Del Monte has shown us a few and it seems they studied it well. But we have not heard the BIR yet what the basis for their assessments was,” Cua said in Tagalog.

He also floated the possibility of seeking liabilities on revenue officers whose assessments are irregular or attended by questionable discrepancies. For him, it was “one glaring example.”

“There is no RMC (BIR revenue memorandum circular) placing accountability on the personnel who assess. They can make any assessments, because there is no accountability. The taxpayer is at a disadvantage,” Cua said.

The inquiry is set to continue on Monday. /atm