Punching One’s Way to Court

A dark cloud has settled above the life of the People’s Champ, Manny Pacquiao. In an unexpected turn of events, the harbinger of this misfortune was the government agency the boxing icon endorsed and supported; the Bureau of Internal Revenue (BIR).

Manny Pacquiao is currently facing criminal charges for allegedly failing to submit records of his earnings to the said agency.

“…the BIR filed a complaint with the city prosecutor’s office in Koronadal against the boxer for his alleged failure to submit complete tax records for the year 2010.

BIR Deputy Commissioner Lucita Rodriguez said Pacquiao ignored summons issued by the BIR office in Central Mindanao asking him to explain his failure to submit complete documents for taxation.”

(Source: Link)

Meanwhile, the President’s spokesperson, Edwin Lacierda, clarified that the case against the boxer is not tax evasion, but contempt. Also, he insisted that this case is not politically motivated.

“The case filed against Manny Pacquiao is not tax evasion. It was contempt. He was asked to submit documents and he failed twice,” Lacierda said.”

However, Pacquiao maintained that he is innocent of the charges, stating that he hasn’t “shortchanged the government for what it is due.” Furthermore, he questioned the legality of the case filed against him as he raised the notion that BIR violated its own policies.

“Pacquiao said the BIR violated its own rules when it served the subpoena to a person unknown to him. He also questioned why the BIR served the subpoena in General Santos City when he is now a resident of Sarangani.”

Unfortunately for our People’s Champ, having a case filed against you, whether you are innocent of or guilty, can cause lasting damage to your reputation, especially if you’re a celebrity. One of the boxer’s lawyers noted that this case caused Manny to lose possibly millions of dollars in endorsements after several companies were turned off by this recent turn of events.

“Pacquiao, who was flanked by no less than 10 lawyers led by New Era University College of Law Dean Abraham Espejo and former Justice Secretary Artemio Tuquero, noted that the case had cost him millions of dollars in endorsements.

We can’t reveal the names of the companies. What is certain is that Pacquiao lost and will lose endorsements amounting possibly to millions of dollars,” Remigio Roxas, one of Pacquiao’s lawyers, said.”

(Source: Link)

So what of the actions of the BIR against their old endorser Manny Pacquiao? We can only have the law to look into, if we are to determine their legitimacy:

REMEDIES OF THE BUREAU IN THE AUDIT PROCESS AND COLLECTION OF DELINQUENT ACCOUNTS

26. What means are available to the Bureau to compel a Taxpayer to produce his books of accounts and other records? A Taxpayer shall be requested, in writing, not more than two (2) times, to produce his books of accounts and other pertinent accounting records, for inspection. If, after the Taxpayer’s receipt of the second written request, he still fails to comply with the requirements of the notice, the Bureau shall then issue him a Subpoena Duces Tecum.

27. What course of action shall the Bureau take if the Taxpayer fails to comply with the Subpoena Duces Tecum?

If, after the Taxpayer fails, refuses, or neglects to comply with the requirements of the Subpoena Duces Tecum, the Bureau may:

File a criminal case against the Taxpayer for violation of Section 5 as it relates to Sections 14 and 266, of the NIRC, as amended; and/or

Initiate proceedings to cite the Taxpayer for contempt, under Section 3(f), Rule 71 of the Revised Rules of Court.

(Source: Link)

Taken at face value, it seems the BIR’s procedure in filing a case against Pacquiao is legitimate. However, if we also take into account Pacquiao’s accusations and hold it to be true, then we’ll find ourselves in an interesting dilemma.

As you can see, Section 26 of the Taxpayer’s Rights and Obligations explicitly states that the Bureau will issue the Subpoena Duces Tecum to the taxpayer in question, should he fail to comply with the requirements of the notice. If what the boxing icon said is true, that the BIR issued the subpoena to someone he didn’t know, to a place where he doesn’t live anymore, then we might arrive at an impasse.

No provision that specifies the action to be taken when the subpoena isn’t issued directly to the taxpayer in question exists in the procedure of the BIR. This produces at least two possible interpretations:

1. That Manny Pacquiao technically wasn’t issued a subpoena in the first place. This is if we hold Manny’s assertion to be true and if we stick rigidly to Section 26. Therefore, the BIR would have violated its rules, because it filed a criminal case against a taxpayer without first issuing him the Subpoena Duces Tecum. Manny Pacquiao is technically not guilty, while the punishment for the BIR is subject to the decision of the Court.

2. That no possible interpretation can be gathered from the procedure of BIR, and the job of making the rules will be left in the hands of the Supreme Court. In other words, the parties will arrive at an impasse and it is up to the judgment of the Court to make up for the ambiguity of the BIR.

So I guess we now have another trial to make Philippines more fun, eh? The impeachment trial of the Chief Justice, now we have a criminal trial of a Filipino icon… the plot thickens, as they say. Regardless of the outcome, this new trial showed us something important about the government; the flaws in their procedures, specifically of the BIR. To think that the “tax collector” of our country could have their procedures contested on legal grounds warrant a close scrutiny of the system, and, preferably, a rational change on how our tax system works.

Better start cleaning your own backyard, PNoy.