Tax expert says Pharmally has P3.4 billion in undeclared purchases

Job Manahan and Sherrie Ann Torres, ABS-CBN News

Posted at Nov 04 2021 01:48 PM | Updated as of Nov 04 2021 11:49 PM

MANILA (UPDATE)— Embattled Pharmally Pharmaceutical Corp. has P3.4 billion worth of purchases undeclared to the tax bureau, a possible ground for tax evasion, a tax expert told a Senate hearing Thursday.

Mon Abrea, a Bureau of Internal Revenue (BIR) consultant, said out of the P7.2-billion purchases that the firm declared to the BIR, some P3.4 billion were supposedly undeclared. 

Abrea noted that their summary list of purchases is P3.2 billion, while their summary list of importation is only P600 million. 

Pharmally’s records on the other hand, has no Tigerphil Marketing on its list of suppliers. Tigerphil is the firm's alleged medical supplier. 

What appears instead, are the names of Evermore which bagged P2.9 billion worth of transactions and ACME Pinaccle with a P2.7 million contract. 

"Ibig sabihin, P3.4 billion ang hindi nakadeklara sa BIR pero dineklara nila sa kanilang audited [financial statement] bilang audited... kaya po siguro ang tanungin natin ang gumawa ng FS, saan nanggaling 'yung P3.4 billion?" Abrea said.

(This means that P3.4 billion was not declared to the BIR but they declared it to their audited financial statement. We should ask the one who made the financial statement, where did the P3.4 billion come from?"

It is also possible, he said, that the money was paid to the supplier but they were not issued a receipt. 

“Lumalabas po na mayroong material misstatements na hindi po ayon po sa sinabi ng ating auditor na unqualified opinion... dahil kailangan po ay required ang full disclosure… ang burden proof under po sa ating tax system na voluntary assessment, nasa tax payer,” he added.

(It turns out that there are material misstatements that are not in line with what our auditor classified as unqualified opinion. Full disclosure is required and the burden of proof in our tax system is with the tax payer)


All these questions, if remained unanswered, can be classified as tax evasion offenses, Abrea said.

He also warned that an over 30 percent over declaration of expenses or under declaration of income are also grounds for it. 

“Sa experience ko bilang dating BIR examiner, over statement po 'yan, ibig sabihin, hindi po talaga totoo yung expenses, wala talagang resibo. Ginagawa lang ng iba para makapandaya, o hindi magbayad, para mapababa ang babayaran nilang buwis,” Abrea pointed out.

(In my experience, that an overstatement. That means that the expenses are false or there's no receipt. They are just doing it to cheat or not to pay it at all so their taxes would be lower)


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As of September 2021, Pharmally has cornered 26.39 percent or P10.3 billion of the Department of Budget and Management's Procurement Service (PS-DBM) overall awarded contracts.

Eight other companies bagged billions worth of PS-DBM contracts.

Drilon said Pharmally's records could be considered as "false entries" which is punishable by imprisonment. Foreigners involved can also be deported. 

"The support documents for the financial statements should be produced... Dargani has refused to produce them because doon po lalabas ang kalokohan, kapag nakikita natin kung wala namang purchases na nagkakahalaga ng P3.4 billion," Drilon said, referring to Pharmally president Twinkle Dargani. 

(Dargani refused to produce them because that's where they could be caught, when we see there are no purchases worth P3.4 billion)

"Ibig sabihin, dinadaya nila 'yung kanilang income taxes, dinadaya nila ang taumbayan. Ang laki na nga ng nakuha nila... dadayain pa... kumita na nga sa overpricing, kumita pa sa [hindi] pagbabayad ng buwis," the lawmaker added.

(This means that they are cheating their income taxes and the Filipino people. They already got a huge amount of money and they still have the balls to cheat their taxes.)

Dargani, with brother Mohit, have been cited in contempt by the Senate panel for refusing to submit summoned documents. They have both claimed poor treatment by lawmakers at the investigation.

Sen. Richard Gordon, chairman of the Blue Ribbon Committee, meanwhile alleged that the Pharmally purchases were even faked. 

Drilon said that what is important for the lawmakers is to look into the firm's "cost of sales" worth P7.2 billion but pointed out that they cannot do so because they do not have the crucial documents from Pharmally.

Iluminada Sebial, the external accountant hired by Pharmally, previously admitted during the hearings that she was not able to screen the firm's transactions due to the absence of support documents. 

Sebial said she only "checked the list" as that was her primary role. 

The Senate panel has difficulty looking into this matter due to the absence of documents from Pharmally.


On the other hand, the Senate body has already sent a communique to the BIR, requesting for the creation of task force that would investigate the proceeds of the P42 billion COVID-19 response budget transferred from the Department of Health (DOH).

“The Committee unanimously approved that an urgent request be sent to the Bureau of Internal Revenue (BIR) form a Task Force with the special purpose to investigate the P42B DOH purchase of medical supplies and submit a periodic result of the investigation to the Committee for recommendation of possible law and legislation to be passed,” part of the panel’s October 29, 2021 letter to BIR, stated.

The Senate is investigating Pharmally after records showed that the Department of Budget and Management's Procurement Service (PS-DBM) awarded billions of pesos worth of contracts to the company that only had less than a million pesos in paid-up capital.

Some senators earlier said the PS-DBM bought allegedly overpriced face masks and RT-PCR test kits from the company whose executives are accused of fraudulent schemes in Taiwan, instead of procuring from local suppliers that were selling cheaper items.


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