PDI Get Real 07.12.08 Questions raised on Ilocos Sur's adopted son (part 2 of 2)

Get Real
Questions raised on Ilocos Sur’s adopted son
By Solita Collas-Monsod
Philippine Daily Inquirer
First Posted 03:25:00 07/12/2008

(Conclusion)

(Elpidio Que, whose letter to the Ilocos Sur Provincial Board protesting its resolution to adopt the tobacco tycoon Lucio Tan as a son of the province I quoted extensively last week, has sent me several email with further information volunteered by other people regarding Tan. I will forward all of them to the Philippine Center for Investigative Journalism. More than 15 years ago, the late Raul Locsin’s Business Day newspaper published an investigative report on so-called “ghost companies” that “bought” the cigarette and beverage products at extremely low prices, thus depriving the government of tax revenues, because tax collections were—and still are—based on the manufacturer’s registered prices.)

MANILA, Philippines — Elpidio Que supports his statement that Vigan City is being shortchanged of taxes with two documents: an internal sales volume report by a branch accountant of the Vigan sales office and noted by the “Market Territory Manager” (Que was the regional sales manager until 2005), and a certification from the Vigan City Treasurer’s Office of the sales volume reported by Wellform Trading Corp. (the company handling Vigan) for the same period of time. The documents show the peso value of the sales of beer and distilled water in 1999 as over P33 million, while the gross sales reported by Wellform was P2 million. The next year, the Vigan sales office reported sales of P39 million, while Wellform reported sales revenues of P2.1 million. The same pattern was followed for 2004 showing sales of almost P50 million, and taxes paid on only the P4 million reported by the trading company.

Que was obviously aware of, and participated in, what he claims are the successful efforts, allegedly under the instructions of one Anthony Dy, to underdeclare sales (by more than 90 percent). He says that in the course of his career with the Tan company, he also handled North Metro Manila, Southern and Bicol Region, and Central Luzon—under similar instructions.

If Que’s assertions are correct, underdeclaration seems to be company policy, with declared yearly sales revenue of no more than 10 percent of actual sales. He claims that Mayor Delfin Ting of Tuguegarao City once padlocked the Asia Brewery sales office in his city when he became aware of such practices.Aside from the documentary, Que offers an indirect calculation of lost taxes as follows: “Consider the year 2005. It is public records (sic) that Philip Morris (PM) declared … a sales revenue of P29 billion. FTC [Fortune Tobacco Corp.] declared lower at P27 billion. FTC commands no less than 70 percent of the cigarette market while PM has about 25 percent, with the rest shared by … other small players.” He does a little arithmetic: If P29 billion represents a 25 percent market share, the total market must be P116 billion; and 70 percent of that would be about P81 billion. Thus, he estimates an underdeclaration of P54 billion (P81 billion minus P27 billion) for 2005. How much was the lost taxes on that?

The question that comes to mind, of course, is how come the Bureau of Internal Revenue cannot come to the same conclusions? And how come the BIR/government doesn’t grab Que, who seems to know where all the dead bodies are, and use him as their witness, or at least pick his brain and follow his leads?The government in its case against FTC (which it lost) cited as evidence of tax evasion such data as: the trading corporations having the same addresses, their articles of incorporation notarized by the same notary public, having the same auditor (who was also the auditor of the FTC, etc., etc. as listed in my column two years ago). Judge Alex Ruiz of the Marikina Trial Court ruled in 2006 that there was no evidence that the Tan companies had anything to do with those trading companies, and that there was no evidence that the 2000 or so individual “buyers” from FTC—none of whom, according to the government, had a tax identification number or even an address, and who would have had to carry on their persons P4 million to P6 million in cash for their transactions with FTC—were fictitious.

And of course, the next question that comes to mind is: How can the province of Ilocos Sur think of adopting as a son someone who is accused of exploiting Ilocano tobacco farmers, treating Ilocano laborers with contempt, and cheating on taxes to the provincial government (not to mention the national government)? That is, of course, if Elpidio Que is to be believed.

Is Que credible? One can only say that he would have to be insane to take on someone like Tan unless he is sure and can fully support his allegations. And he would have to be angry enough at what he says is the injustice to himself and his co-“provincianos.”

I don’t know how the Provincial Board of Ilocos Sur will respond to Que’s letter. Of course, it can cite the fact that it is not the only entity that has adopted Tan: reportedly Tan has also been adopted by Dagupan City in Pangasinan as well as Bacolod City in Negros Occidental. I am also told that a Lucio Tan Day is celebrated in Guam every year. And Tan has a foundation that reportedly makes numerous charitable contributions to needy groups.

In any case, it has to be easy to be generous when one has saved an estimated minimum of P11 billion in taxes (at 1991 prices up to that time), as calculated by the government. Even a small percentage of that amount would be a huge donation that can buy a lot of respectability.As a quarter-blooded Ilocano, I join Elpidio Que in his protest.


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