Zamboanga City Manufacturing Corporation “bartered” for tax evasion for using two identical sets of invoices to conceal its true income

Nestled in a place famous for its quintessential “barter trade,” a manufacturing company based in Zamboanga City may have found out that keeping and using two (2) identical sets of invoices for its sales transactions is a bane to a flourishing business when it was charged today by the Bureau of Internal Revenue (BIR) for tax evasion for substantially underdeclaring its sales for 2007 by 177.154%, in violation of Sections 254, 255, 257, 264 and 267 of the National Internal Revenue Code of 1997, as amended (Tax Code).

Charged at the Department of Justice was MINGATE MANUFACTURING CORPORATION (MINGATE), together with its responsible corporate officers: REMIE R. TALAVER (President) and DANIEL C. DE LOS SANTOS, JR. (Operations Manager). Included in the complaint was ANDREA G. TITULAR in her capacity as the Independent Certified Public Accountant (CPA) who certified the Audited Financial Statements of MINGATE.

MINGATE is a domestic corporation which was incorporated on September 29, 1995 at Zamboanga City. It is engaged in the business of buying and selling, distributing, marketing at wholesale and retail of all kinds of goods, commodities, wares and merchandise, among others.

Verification by the BIR after the service of the corresponding Letters of Authority and the requisite Notices showed that MINGATE declared in its Income Tax Return (ITR) for 2007 sales amounting to only P14.80 million. Per audit, however, sales of MINGATE was determined at P41.0 million resulting to an underdeclaration of P26.20 million, or by a whopping 177.154%. Moreover, MINGATE was discovered to have kept two (2) sets of Sales Invoices bearing identical serial numbers but issued to different customers, for different sales and on different dates, to conceal its true income.

Under the Tax Code, failure to report sales in an amount exceeding 30% of that declared per ITR is considered substantial underdeclaration and constitutes prima facie evidence of a false or fraudulent return.

Thus, MINGATE, TALAVER and DE LOS SANTOS, JR. are being held criminally liable for gross underdeclaration of income resulting to under-payment of Income and Value-Added Taxes, in violation of Sections 254 and 255 of the Tax Code. They are also being held responsible for issuing two (2) sets of Sales Invoices with the same control numbers under different dates, in violation of Section 264 (B)(2) of the same code. Additionally, TALAVER is being sued for Perjury for signing and certifying the ITR of MINGATE containing the understated sales in question, in violation of Section 267 of the Tax Code.

TITULAR, on the other hand, was in included in the complaint for issuing an unqualified opinion in her certification of the Audited Financial Statements of MINGATE despite the latter’s underdeclaration of its sales income which constitutes a breach of Section 257 of the Tax Code. 

Aside from its criminal liability, MINGATE is also being asked to pay the government P22.37 million in deficiency taxes for 2007, including surcharges and interests, broken down as follows: Income Tax – P16.46 million; and VAT - P5.91 million.

The case against MINGATE MANUFACTURING CORPORATION, its President REMIE R. TALAVER, Operations Manager DANIEL C. DE LOS SANTOS, JR. and CPA ANDREA G. TITULAR is the fifty-second (52nd) filed under the Run After Tax Evaders (RATE) program of the BIR under the leadership of Commissioner Kim S. Jacinto-Henares. It is likewise the first (1st) RATE case of Revenue Region No. 15, Zamboanga City. (reytdlc)