DEBIT CREDIT

Part One

MY simple google search disclosed that a Court of Tax Appeals (CTA) case presents intriguing insights on the “official receipts (Or) for sale” case that the national Bureau of investigation (nBi) and Bureau of internal revenue (Bir) recently unearthed after they raided the perpetrators’ offices in Eastwood City (Eastwood case). i did not even use the artificial intelligence engine ChatgPT for this purpose.

The googled information pertains to the CTA case 8592. This refers to the case decided in October 2015 by the CTA involving Tyco Information Solutions Inc., as petitioner, and the BIR as respondent (Tyco case). This Tyco case does not depart so much from the many other recurring BIR tax investigations and assessments of disallowing business expenses and input taxes claimed by taxpayers, who then routinely elevate the case to the CTA when these tax assessments become final. In this particular case, the BIR investigated the 2006 tax liabilities of Tyco and assessed the taxpayer deficiency income and value-added tax (VAT) amounting to about P42 million. Subsequently, Tyco filed a petition for review with the CTA in December 2012.

The BIR findings against Tyco were that its purchases “appeared to be excessive, implausible and fictitious as the suppliers were found to be fictitious.” Thus, the BIR disallowed the purchases it claimed as business deductions and input VAT credits from three specified suppliers, which the BIR alleged as “fictitious.” After perusing this, alarm bells immediately rang reminding me of its close similarity to the Eastwood case. The BIR and NBI were able to confiscate documents and pieces of evidence of “fictitious” official receipts that were being sold by the alleged mastermind of the Eastwood case.

Further reading the Tyco decision provided more surprising and revealing information. It appears that the suspected mastermind of the Eastwood case appeared as a witness for Tyco during the CTA hearings. I quote below the pertinent portion of the CTA decision, deleting the reference to the witness and the suspected mastermind in the Eastwood case.

“Petitioner’s [Tyco’s] second witness, xxxxxxxx, claimed that he is a businessman and Director of various businesses including World Balance Inc., Ultrasonic Broadcasting Corp., certain restaurants in Makati, and an animation studio in Timog Avenue, Quezon City. He testified that in 2006, he worked as a freelance middleman or one who scouts persons in need of certain products and looks for suppliers for that product. He earned a commission from the suppliers for every successful transaction. Petitioner was one of his clients, who, in 2006, needed IT products. Thus, he referred it to three suppliers, namely, Euro Sales Corporation, United Global Stylus Corporation, and ERRV Buy and Sell Trading. He is familiar with these three companies and vouched as to their existence but not as to their legiti- continued from A10 not just for these contractual riders and drivers, but for the entire freelancing community, including informal workers, gig workers, independent contractors, and synonyms of the same classification. It’s about time we recognize and address the needs of millions of our fellow Filipinos who are bringing a significant contribution to this country’s economy. n n n

On Saturday, February 25, the country celebrates the 37th anni- macy. He presumed that Petitioner and the three suppliers had several transactions because he was paid his referral commissions. However, being a mere middleman, he could not identify any documents pertaining to their transactions.”

Further reading the Tyco decision provided more surprising and revealing information. It appears that the suspected mastermind of the Eastwood case appeared as a witness for Tyco during the CTA hearings. I quote below the pertinent portion of the CTA decision, deleting the reference to the witness and the suspected mastermind in the Eastwood case.

It is indeed astonishing that the suspect in the “OR for sale” scam in the Eastwood case was directly or indirectly involved in similar cases as early as 2006. From the information gathered in the Tyco case, it would appear that this gentleman was directly involved in the transactions where Tyco was determined to have claimed “fictitious” purchases from “fictitious” companies. Was this a mere coincidence or is there something more sinister?

For your information, the Tyco case was resolved by the First Division of the Supreme Court on November 11, 2021, with its resolution on “GR 241422-23 (Commissioner of Internal Revenue v. Tyco Information Solutions Corp.). This resolves the Petition for Review on Certiorari filed under Rule 45 of the Rules of Court assailing the CTA En Banc’s decision dated April 3, 2018, and Resolution dated August 14, 2018, in CTA EB 1426 and 1436. The assailed issuances affirmed the CTA Division’s Decision 4 dated October 2, 2015, and Resolution 5 dated January 29, 2016, in CTA Case 8592….”

It is noteworthy that this case was filed by the BIR as a mere civil case rather than a tax fraud criminal complaint.

Read more interesting insights in next week’s column.

To be continued.

Joel L. Tan-Torres was the former Dean of the University of the Philippines Virata School of Business. Previously, he was the Commissioner of the Bureau of Internal Revenue, the chairman of the Professional Regulatory Board of Accountancy, and partner of Reyes Tacandong & Co. and the SyCip Gorres and Velayo & Co. He is a Certified Public Accountant who garnered No. 1 in the CPA Board Examination of May 1979. He is now back to his tax practice with his firm JL2T Consulting. He can be contacted at joeltantorress@yahoo.com versary of the People Power Revolution. We remember this important event that took place from February 22 to 25, 1986 that inspired many countries to adopt peaceful revolutions in their own societies.

Most importantly, we don’t forget the people who were part of this peaceful uprising, led by former senator Benigno Aquino Jr. and his wife, our former president Corazon Cojuangco Aquino. On this day, let us be thankful for the freedom and democracy that the event made possible for the Philippines. As devoted citizens of our beloved country, we must continue to protect the gains of Edsa.

Siegfred Bueno Mison, Esq.