Ex-BIR chief seeks reversal of Sandigan ruling

A former commissioner of the Bureau of Internal Revenue (BIR), who has been found guilty by a graft court of entering into an allegedly questionable tax deal with food and beverage giant San Miguel Corp. (SMC), insisted yesterday the compromise agreement was "legal and not disadvantageous to the government."

In a 27-page motion for reconsideration, former BIR chief Bienvenido Tan Jr. asked the Sandiganbayan’s fourth division to set aside its decision and render another one that acquits him of the charges.

Last March 2, the Sandiganbayan sentenced Tan to a maximum 15 years in prison for an "illegal" compromise deal with SMC that reduced the company’s tax liabilities from P302,951,040 to P10 million in 1988.

In a decision penned by Justice Rodolfo Palattao, the Sandiganbayan said the compromise agreement entered into by Tan and SMC executives Nazario Avendano and Jaime de la Cruz cost the government P292.2 million in lost revenue.

The indeterminate prison sentence ranges from a minimum of six years and one month to a maximum of 15 years. Tan, who served as BIR chief under the Aquino administration, was also perpetually disqualified from holding public office again.

The anti-graft court also ordered the BIR to immediately collect from SMC the total amount of P292,951,048.93 representing the tax debt covering the period from January 1985 to March 31, 1986.

The 78-year-old Tan argued that there was no damage done to the government when he reduced the tax liabilities because the tax deficiency assessments were "unreasonable and unjust."

He noted that the ad valorem deficiency was arbitrary and based on a wrong tax base and therefore without any legal basis.

"Law and fair play dictates that the taxpayer be given every opportunity to present his side of the dispute. The law imposes on the commissioner the obligation to collect correct taxes, and not what the BIR can force the taxpayer to pay," Tan said.

SMC officials said earlier they "entered into that agreement with the BIR in good faith" and were studying the possibility of filing a motion for reconsideration.

They claimed the tax debt was a case of a "tax on tax payment" that was without basis.

"The company was being assessed some P302 million which was without factual and legal basis. It was a case of a ‘tax on a tax payment.’ Thus we believe the compromise agreement was appropriate," SMC said in a statement.