Senate probe reveals some Pharmally execs failed to pay taxes

Job Manahan and Sherrie Ann Torres, ABS-CBN News

Posted at Oct 28 2021 03:25 PM | Updated as of Oct 29 2021 12:06 AM

MANILA (UPDATED)— Some key officers of the controversial firm under investigation over allegedly anomalous pandemic supply deals with government did not file their income tax returns (ITR) last year and the years prior, information provided by the Bureau of Internal Revenue (BIR) showed Thursday.

The Senate Blue Ribbon Committee continued its marathon hearings on the allegedly anomalous deals between Pharmally Pharmaceutical Corp. and the government, this time focusing on tax liabilities of some people involved. 

A presentation by Senate Minority Leader Franklin Drilon showed that most of the Pharmally officers' income tax returns were not filed, unreadable, or even incomplete. 

For example, Pharmally Secretary and Treasurer Mohit Dargani only paid P22,062 in 2019 and P97,241 in 2020. 

There was "no information" available regarding his taxable income and taxes paid in 2018, according to BIR.

His taxable income was also "unreadable," the bureau indicated. This could mean that the source could have submitted poor copy or the document was hard to read. 

His sister, Pharmally president Twinkle Dargani, paid P29,187 in taxes in 2018, and only P1,000 in 2020. 

Twinkle's information in 2019 was not available, the senator said, while her taxable income in 2018 and 2020 were also unreadable. 

Pharmally Chairperson Huang Tzu Yen, meanwhile, had "no records available for the taxable year 2019 up to present."

BIR Region No. 7 in South Quezon City also issued a certification that Huang "has no record available" for the said period in their database. 

"The aforementioned taxpayer has been registered... on Sept. 24, 2019," the document read. 

Pharmally also claimed a credit of P96.8 million even if its tax due was -P589.163. 

But Drilon said Pharmally "did not pay any tax."

"Mayroon pa pong reimbursement, refund claim, if this is correct. May refund claim pa po na P589 ng pamahalaan sa Pharmally, sang-ayon sa Pharmally," Drilon said. 

(They even have a refund claim, if this is correct. Pharmally has a refund claim of P589 against government, according to them.)

When Senate Blue Ribbon Committee Chairman Sen. Richard Gordon clarified to the lawmaker if the figure supposed to be reimbursed was in the thousands, the latter said "it is not clear." 

"The ITRs of the Darganis are incomplete and have several unreadable portions, but the taxable incomes and taxes paid appear to be very low, especially considering that they were able to buy luxury cars during relevant periods," Drilon noted. 

Per Land Transportation Office (LTO) records, Twinkle had a 2021 Lamborghini Urus registered under her name in December 2020, about 9 months since their first transaction with the Department of Budget and Management's Procurement Service. That vehicle is worth P25 million.

Five months later, her brother Mohit got a 2021 Porsche 911 Turbo S registered under his name. The car costs P8.5 million.

All of Pharmally Director Linconn Ong's ITRs, meanwhile, were unreadable.

Ong, senators said, also registered a 2021 Porsche Carrera 4S - worth P13.5 million - in February 2021, while his 2021 Lexus RCF - worth P5.9 million - was registered after 5 months.


Meanwhile, Davao-based businessman Michael Yang did not file his ITR from the year 2014 up to 2017, according to the bureau. 

This was "based on the verification made by the District's Collection Section," the presentation read. 

"The ITRs for 2014 to 2017 could not be found in the records (Document Processing Division)." 

But Yang paid P7,600 worth of taxes in 2018 from his taxable income P208,000. 

His records for 2018 and 2019, however, are "unreadable."

The Senate panel also showed two certifications issued by the BIR office in Davao City and West Davao that Yang did not file his ITR from 2014 to 2017.

In September, Huang admitted that they borrowed money from Yang for their deal with PS-DBM. 

The Chinese businessman was a former economic advisor of President Rodrigo Duterte, which senators said could be linked to why government favored the firm. 

Former Budget Undersecretary Christopher Lao also paid no taxes in 2017 for supposedly having no taxable income. 

While he filed his ITR in 2018 and 2019 through the eBIR platform, these "could not be viewed" by the BIR. 

Last year, Lao did not file his ITR. BIR Davao City certified this. 

Lao allegedly supervised the procurement of the supposedly overpriced face masks and face shields through Pharmally for the Department of Health (DOH).


Tigerphil Marketing Corporation, Pharmally's alleged medical supplier, meanwhile, paid P2,234 in taxes in 2017 from their taxable income P7,447. 


Despite this, however, Drilon said the firm's taxable income from 2017 to 2019 might be "under-declared." 

He pointed out that their taxable income in 2020 rose, considering that they amended it. 

Greentrends Trading International Inc., supposed supplier of Tigerphil, failed to file an ITR from 2015 to 2021, Senate records showed. 

A BIR certification also showed that Greentrends did not submit an ITR on the said years. 


Xuzhou Construction (also known as XCMG), yet another China-based company which bagged the second biggest pandemic deal with the government pegged at P1.9 billion, had "no income tax records available for the taxable periods 2017 up to present."

The Chinese firm later denied allegations that it avoided paying taxes to the Philippines.

"Xuzhou Construction Machinery Group Imp. & Exp. Co. Ltd. categorically denies these claims and declares that the reports are false. Our transaction of PPE sets with the Philippines is considered a form of international trade that rightfully complies with established international trade practices and Philippine national laws," XCMG said in a statement Thursday night shared by the Chinese embassy in Manila.

"Our company is only responsible for export delivery, not the import, sales, use, and links in the Philippines. Hence, the transaction is deemed completed once the goods are loaded at the Chinese port. In accordance with Philippine laws (National Internal Revenue Code Section 42(e), Section52 (A)) and relevant international regulations, exporters of international trade aren't required to register at their destination and shall pay no income tax to the destination country," it added.

The company said its PPE deals with the Duterte administration "were conducted on the CIF [cost, insurance, and freight] terms."

Drilon said it is up to the aforementioned officials to dispute the records of the BIR. 

Gordon also said the tax returns showed that the situation is "extremely bothersome" given the allegations that they bagged billions worth of pandemic deals that their taxes do not show.

"They got so much money and they are even demanding na may sukli pa ang gobyerno na babayaran pa sila... may utang pa ang gobyerno sa kanila," he said. 

(It seemed that the government owes them money)


Drilon believes the P42 billion COVID-19 funds given by the Department of Health (DOH) to the PS-DBM was already fully utilized.

In his own computation, the government is entitled to at least P7.2 billion worth tax collection from the figure alone.

“There is a potential tax intake or income of approximately P7.5 billion. I repeat, subject to further verification, potentially out of the P42 billion in supply contract awarded by PS-DBM, the supplier is supposed to have paid P7.5 billion income taxes,” Drilon said.


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“How did we arrive at that? P42 billion, if you deduct from P42 billion, 40 percent, which the optional standard deduction allowed by the BIR for corporations, you would have a presumptive taxable net or income of P25.2 billion to be more precise. And have a 30 percent income tax rate, 30 percent of P25 billion is 7.5 billion,” he added.

Drilon appealed to the BIR to investigate the matter and compel the firms to pay their taxes.

“Mr. President Duterte is always telling the public na hirap na hirap ang pamahalaan, wala pambayad, kaya ayuda di nabibigay, yung pambili ng bakuna na P45 billion nasa unprogrammed funds," according to the lawmaker. 

"Ibig sabihin walang pambili dun P45 billion para sa pambili ng bakuna na hindi ba tama lang na tingnan natin na sa magandang mga kontrata na P42 billion, magkano po ang binayaran nila income tax?” he said.

BIR representatives and other government officials did not attend the 13th day of the hearing due to an order from the President not to participate in the Senate investigation.

Certified Public Accountant Raymond Abrea said that tax evasion, as stated by Section 254 of the National Internal Revenue Code of 1997, include one’s failure to register to the BIR, non-filing of ITR and settling of tax obligations.

“Yung mga naga-under declare ng kanilang sales, o nagke-claim ng sobra-sobrang expenses ng walang supporting documents, lahat po iyan ay criminal violations of the Tax Code at grounds for tax evasion po,” Abrea explained.

Tax evaders face up to P10 million fine, imprisonment, and a criminal case, he added.

Pharmally’s outsourced accountant Jeff Mariano, meanwhile, noted that he is not fully aware of the company’s dealings.

“Lahat po ng original po ng original records at copies nasa client po, nasa Pharmally po… pag outsource po kasi we don’t lalo pag maramihan hindi po kami nagdu-duplicate," Mariano explained. 

"Kumbaga po punta lang kami dun, mag-record tapos when it’s done, everything is left there na po,” he added.


Before opening the hearing to questions, Gordon also criticized the President for allegedly protecting Pharmally executives and those behind the transactions.

Gordon’s reminder to Duterte: everything is temporary.

“Betrayal po of public trust iyan, at culpable violation of the Constitution na yang ginagawa ninyong iyan, Mr President. Siguro akala nyo habang-buhay na kayo dyan… Remember, all glory is temporary, is transitional,” Gordon said.

The lawmaker added that the hearings would continue despite the President’s non-stop verbal attacks.

The Senate panel investigated Pharmally after records showed that the PS-DBM awarded since last year billions-worth of contracts to the company that only had less than a million pesos in paid-up capital.

President Rodrigo Duterte defended the deals and said they were above board.

Gordon said public funds wasted on anomalous transactions could have been used to cover benefits of health workers who are battling COVID-19 in the frontlines.

The next Blue Ribbon Committee hearing will be on Nov. 4.

- With reports from Jess Fenol and Bruce Rodriguez, ABS-CBN News


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