Wednesday, December 18, 2013

Charity, Social Responsibility and the Ugly Side of Calamity

Haiyan or Yolanda as an “act of God” actually brought out some virtuous traits of mankind.

Charity was and continues to be the most dominant trait that was demonstrated towards the typhoon victims not just by Filipino countrymen but also by people and governments from other countries.  The amount of donations - financial and in-kind as well as services benefiting the victims proves to be invaluable even to this day.

Social Responsibility was also on display as citizens from all walks of life felt a sense of responsibility in helping the less fortunate in a given society devastated by calamity.  World organizations like the United Nations and the Red Cross, governments, non-governmental organizations, charitable and volunteer organizations, hometown associations, and individuals got involved in the relief and rescue operations.

As we saw the good and the beautiful side of people, we actually witnessed the ugly side as well.  Perhaps by necessity and self-preservation, theft and looting were committed amidst the devastation with all the aggravations.  This was the case in Tacloban City.  In fact, the Mayor, by his own admission, was a beneficiary of the loot because he was left with nothing.

It showed the helplessness of even the so-called first responders led by Mayor Alfred Romualdez whose primary responsibility was to prevent such things from happening.

It was understandable as I came to their defense in a previous article.  It was an inevitable, unavoidable, and unexpected event that no group of human beings could have countered it.

But to my disappointment, the ugly part was displayed for all to see.  Instead of showing some humility to obtain needed support for his people from the National Government, the Mayor started whining, complaining and even crying publicly before a Congressional hearing and the press.  He alleged that he was not getting the needed support from the Aquino administration being a Romualdez and for his refusal to sign a document.  He supported his allegation with a video of DILG Secretary Roxas making these comments.

It turned out that the 18 second-video which was uploaded by his father-in-law Jose Mari Gonzales, was spliced and doctored to suit Romualdez’ accusation.  The complete 43-minute video uploaded later on disputes it.

Romualdez never accounted for the alteration.  He never acknowledged that the alteration was made by someone without his consent, or was otherwise properly or innocently made.  The alteration was meant to change the meaning of the entire conversation.

It was obviously done in bad faith.  In the parliamentary words of Winston Churchill, Romualdez was “guilty of a deliberate attempt to commit a terminological inexactitude.”

Romualdez refused Roxas’ challenge that they both take the lie-detector test.

Sadly, even more ugly is that some Aquino critics – naysaying columnists who used to be the propagandists of Marcos and Arroyo wrote their articles referring to the doctored video as gospel truth.

Under the NDRRMC law (Section 15), the Tacloban City Government led by Mayor Alfred Romualdez has the primary responsibility as first responders.  The responsibility includes the “provision of emergency services and public assistance during or immediately after a disaster in order to save lives, reduce health impact, ensure public safety, and meet the basic subsistence needs of the people affected.”

The same law likewise states that the NDRRMC and LDRRMC shall ALWAYS act as support to LGUs in the performance of their primary responsibility as first responders.

This is consistent with the provisions of the Local Autonomy Code whose purpose is for the devolution of powers and responsibilities in providing basic services and facilities.

During emergencies such as disasters, the regional and/or national DRRMC are called upon to coordinate the affected localities, provinces, or regions as the case may be – thus, providing support.  But the primary responsibility as first responders providing the services enumerated above remains with the LGU or, in this case, with the Tacloban City government led by Mayor Romualdez.

Furthermore, the NDRRMC Law also provides prohibited acts that include “Dereliction of duties which leads to destruction, loss of lives, critical damage of facilities and misuse of funds.”

Aside from fine and/or imprisonment, the penalty could be perpetual disqualification from public office if the offender IS a public officer like a City Mayor.

The Aquino Administration has indicated that, after things get settled and the relief, rehabilitation, and recovery get underway, it might conduct a probe on how local officials and other public officers met their primary responsibilities before, during, and after the disaster.

Ironically, a formal declaration of his inability to fully fulfill his duties as Mayor and a written request for the National Government to fill the vacuum would have resolved any misunderstanding or any possible legal dispute.  Instead of totally rejecting to put in writing what he actually asked orally, he could have just added a sentence clearly stating that his action ”does not mean resignation.”

Wednesday, December 11, 2013


Vice President Jojo Binay represented the Philippines at the Funeral Memorial Services honoring Former President Nelson Mandela

A Filipino Ibanag (a Philippine cultural minority) customer who is obviously a supporter of Binay was showing the photo below at the barbershop:

The Three Kings  (AAA)
On Display


Republican Former Speaker and presidential candidate Newt Gingrich had this to say about the South African hero:

“President Nelson Mandela was one of the greatest leaders of our lifetime,” he wrote. “When he visited the Congress I was deeply impressed with the charisma and the calmness with which he could dominate a room. It was as if the rest of us grew smaller and he grew stronger and more dominant the longer the meeting continued.”

Some conservatives reacted to Gingrich’s comments.  One said: “Newt, I was rooting for you to win the primaries and become the next president; please tell me you’re joking!! Mandela was a commie murderer!!” 

On Facebook, I wrote the following status update: "In next Sunday's mass, I will reach out to Newt and shake his hand for his Mandela statements. We belong to the same Catholic Parish in McLean, Virginia.”

By the way, St. Luke’s Parish is also the parish of Republican conservative and former presidential candidate Pat Buchanan, Democrat liberals such as the Kennedy family, Governor-elect Terry Mcauliffe and Carter National Security Adviser Zbigniew Brzezinski.

We all follow the “Love Thy Neighbor” commandment; all want to go to Heaven, but obviously following different paths.

Gingrich and Mandela


My barber is thinking of adding another revenue center for his business in order to fund the college education of his children.   He is looking at husbands as target market.  See photo below:

Take it from my barber!

Wednesday, December 4, 2013

One More Take on Pacquiao’s Tax Case

JOE LOUIS – Former Heavyweight Boxing Champion of the World.  He was widely considered as one of the greatest and most beloved boxers in the sport’s history.  After the attacks on Pearl Harbor, he donated money to the government, and even provided entertainment and uniforms to thousands of army troops. 

However, Louis began accumulating tax liabilities.  He had to come out of retirement to help pay off tax debts.  I used to see him in Las Vegas welcoming guests on behalf of the Caesar’s Palace Hotel.  He died before he was able to fully repay the U.S. IRS (Internal Revenue Service).

MANNY PACQUIAO – First and only eight-division world boxing champion and the second highest paid athlete in the world. He was at a time rated as the best pound-for-pound boxer in the world by some sporting news and boxing websites, including ESPN, Sports Illustrated, Sporting Life, Yahoo! Sports,, BoxRec and the Ring.  He is adored by Filipinos and admired by boxing fans worldwide.  After his victory over Rios in Macau, he has been going around visiting the Visayan areas devastated by typhoon Yolanda and distributing relief goods to victims.

However, Pacquiao is now facing a battle with the BIR (Bureau of Internal Revenue) regarding some tax liabilities in 2008 and 2009.  Instead of negotiating and settling the alleged tax debts, he decided to convert it into a political and propaganda war where he thought he could win.  In fact, he attracted support from a few Anti-Aquino naysaying columnists and lately, Vice President Binay.

It is unfortunate that Pacquiao and VP Binay decided to follow this route.  If Pacquiao persists, he may have to suffer the consequences and feel the brunt of the law.  Binay who is only a breath away from being the country’s Chief law enforcer and tax collector, may just have mistakenly disqualified himself from ascending to be one.

Based on the facts known so far, and applying them to both the PHL and U.S. tax laws, this is my take.

In 2008 Pacquiao, who fought Marquez, Diaz, and De la Hoya that year, shared in HBO Pay-Per-View revenues, had numerous product endorsements, and paid P125 million in taxes.

In 2009, Pacquiao fought Hatton and Cotto plus again shared in HBO PPV revenues and had several more profitable endorsements.  For his declared income of P50 million, he paid only P7.4 million. The published purse earnings of Pacquiao on the Hatton and Cotton fights were $12 million and $35 million, respectively. That’s about P2 billion.

BIR noticed a couple of things: one, the sudden drop of tax liability (P125M vs. P7.4M); and two, a misdeclaration or under-declaration of income.  The law requires that ALL income from ALL sources should be declared.

This precipitated the BIR audit of Pacquiao’s income tax returns of 2008 and 2009.  A Letter of Authority dated July 27, 2010 was served on Pacquiao informing him that the taxman was coming.

Subsequently, Pacquiao and wife Jinkee were required to submit a list of documents that included the U.S. Income Tax Return (1040 NR) or Receipt – “either the original, duplicate original, or a duly certified or authenticated copy”.

The spouses submitted instead a certification from Top Rank that taxes were paid on Pacquiao’s behalf.  It is obviously unacceptable.  Certification must come from the IRS.  The claim of Top Rank’s Bob Arum that “Pacquiao’s tax payments are made in the form of withholding taxes and via electronic payments” will not hold either.

A certified or verified ITR from the IRS would help BIR determine: one, Pacquiao’s gross income from ALL sources in the U.S.; two, how much he ACTUALLY PAID as taxes claimable as Foreign Tax Credit; and three, whether the deductions or expenses claimed in the U.S. ITR (1040NR) were also claimed in PHL ITR (1701).
In Pacquiao’s PHL ITR in 2008, he was assessed an extra P400 million for failure to substantiate some expenses, and failure to pay VAT (Value-Added Taxes).

In his 2009 PHL ITR, it is very clear that he under-declared, did not pay VAT, and failed to prove any claim of a Foreign Tax Credit.  It is also possible that some expenses are disallowable.

Bob Arum could be telling the truth about paying Pacquiao’s Withholding Taxes via electronic payments.  I am familiar with the system.  I regularly use it for clients.  The problem is, according to the rules, “the amount of foreign tax that qualifies is not necessarily the amount of tax withheld by the foreign country. Only the legal and actual foreign tax liability that you paid or accrued during the year qualifies for the credit.  The amount of the deductible foreign tax must be reduced by any refunds of foreign tax made.”

This is why the IRS ITR is necessary.  It would show the ACTUAL amount paid as taxes creditable as Foreign Tax – NOT the taxes withheld.  It is even very probable that a refund was made but it did not necessarily go to Pacquiao.
Why the hesitation?  It should not take that long to obtain a certified copy of Pacquiao’s U.S. ITR from the IRS.  It is for the benefit of the Pacquiao couple.  They have had two years to deal with it.  It may not absolve them of 100% tax liability but it could certainly reduce it.

Pacquiao should realize that failure to deal with it sooner only compounds the problem because of the interest charges, penalties, and lack of legal options left for all parties.

Will the certified IRS ITR copy spell more trouble or worse for certain people?  I wonder.

Let me reiterate – politicizing and publicizing this tax case is a mistake for Pacquiao.  For VP Binay to ride on it is not wise either.  He is giving Pacquiao a false sense of security. Meanwhile, the current tax liability of P2.2 billion continues to grow.  And this is just the civil liability!

Politics and publicity will not give Pacquiao a tax and/or legal cover. There have been too many celebrities including high-earning athletes who have fallen victims to their own false sense of invincibility.

There are two things that we cannot avoid and/or evade: DEATH and TAXES!  Facing them would require deep senses of humility, inevitability, and mortality!

Tuesday, November 26, 2013

PACQUIAO: As Champion, Congressman, and Citizen-Taxpayer

As a boxer, Pacquiao had a job to do, and he did it well.  For his performance he got the adoration of Filipinos, the admiration of millions of boxing fans worldwide, and substantial compensation amounting to millions of dollars.

As a public official or Congressman, his job is to make laws and hold the “power of the purse”.  For this, he obtains a salary, allowances, perks and privileges, and until lately, “pork barrel” allocations amounting to millions of pesos

As both, he should prove to be not just an ordinary citizen but also a model one worthy of emulation.  Like most law-abiding citizens, he is expected to obey all laws, and pay all taxes.

Kim Henares, Commissioner of the BIR also has a job to do.  She has to collect taxes from all Filipino citizens who have taxable income from all sources.  This includes Pacquiao - the Congressman, the boxer, and the citizen-taxpayer.

Pacquiao has had substantial earnings from boxing over a period of time.  Henares, bound by her duty, determined that Pacquiao failed to pay taxes on his earnings.  He claims that he had paid taxes on those earnings to the Internal Revenue Service (IRS) of the United States.

Since there is a Tax Treaty between the U.S. and the Philippines and that both believe in the principle of “no double taxation”, any amount of tax paid by Pacquiao in the U.S. would be a “tax credit” deducted from whatever taxes that he owes to the Philippine government.

So, it is just a matter of proof.  Pacquiao should just show the taxes that he paid to the IRS during the period that is questioned by BIR, and it should substantially reduce if not totally eliminate the taxes due.

Henares says that Pacquiao had two years to show proof.  Like in administrative, legal, and judicial proceedings, there are deadlines for filing, responding, answering, replying, and other processes to meet.

Pacquiao, despite leniency that is not accorded to ordinary taxpayers, failed to show the required documentary evidence within the mandated period.  For this failure, he was assessed tax amounting to P2.2 billion pesos.  I assume it includes interest charges and penalties.

Using the remedies afforded the BIR by law, the bank accounts of Pacquiao were garnished.  According to Henares, the garnishment netted P1.1 million – way below what is due and payable.

For the garnishment, Pacquiao cries foul and “harassment”.  He just earned at least $30 million for his last bout.  He probably earned about the same if not more from each of his bouts in the last few years.

What kind of accountants and lawyers did or does he have?  He certainly could afford good ones.  Right now, they are just dealing with civil tax liabilities.  The case could reach criminal tax violations if not averted on time.

My friends and companeros in the Philippines tell me that the BIR today is very different from that of the past.  Presently, you have a fearless, smart and honest “straight-shooting with a straight arrow following a straight path” Commissioner.  

Be a boxing champion and in her you have an avid supporter!  Be a tax-evader, and in her you face an aggressive collector/fighter!  She could actually knock you out of your senses!

Pacquiao is a pride of the Philippines.  He has brought honor and admiration to our country.  He also brings joy and entertainment to our people and to the boxing world. 

Amidst the devastation brought about by the strong and powerful Yolanda, his latest winning fight against former World Lightweight Champion Rios lifted the spirits of the surviving victims and the sympathizing public.  He and the victims showed to the world that the “Filipino spirit is stronger than any tyPHoon.”

The Yolanda victims, who saw Pacquiao fall to unconsciousness like a fallen hero in an earlier fight, saw him rise again.  For them, they saw in him - hope, recovery, rehabilitation, and redemption.

Pacquiao has to realize that he is now more than just a champion boxer.  He is now a public servant who could be a “champion of the masses” – a situation that could propel him to higher glories. 

As a Congressman, he could actively participate in legislating programs that would uplift the conditions of the masses including the Yolanda victims.

But like the masses that he represents, he must settle his tax problems.  He has sufficient resources now, and definitely in the near future to solve them.  Visiting the Yolanda victims is a good gesture.  Donating part of his boxing earnings for Yolanda relief, recovery and rehabilitation would even be better.  In fact, doing so would actually have positive tax consequences.

He can check with his accountants and/or tax lawyers.  OOPS!