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BIR hot on heels of 12 tax evaders; celeb doc convicted

By Nikko Dizon
Philippine Daily Inquirer
First Posted 02:25:00 01/07/2011

Filed Under: State Budget & Taxes, Smuggling, Crime, Celebrities, Spas and Gyms and Fitness Clubs

MANILA, Philippines?Joel Mendez, who touts himself as a celebrity doctor, was sentenced by the Court of Tax Appeals (CTA) to two to four years in prison with a fine of P20,000 for two separate tax evasion cases filed by the Bureau of Internal Revenue (BIR) in 2006.

?This may appear to be a small case in the sense that there was only a low penalty. But the signal given here is more than enough. It?s worth the hard work if you really tell people you can?t get away with violation of the tax revenue code and the anti-smuggling laws,? Justice Secretary Leila de Lima said at a press conference.

Also at the news briefing were Finance Secretary Cesar Purisima, BIR Commissioner Kim Jacinto-Henares and Customs Commissioner Angelito Alvarez.

Purisima noted that the Mendez case was one of the first tax evasion cases filed after the Department of Finance launched the Run Against Tax Evaders (RATE) in 2005, when he was the finance secretary under the Arroyo administration.

Henares also said that she had written De Lima asking for the prioritization of 12 tax evasion cases pending at the justice department since 2005.

Richard Gomez

The list includes the tax evasion case against actor Richard Gomez, Royal Era Productions owned by actor Eddie Gutierrez, real estate broker Myra Santos-Brodett, Sun Motors Industries, Mitsuko Phil. Corp., PT&T, One World Multi Industries Inc. and Excellance Weaving.

De Lima said she had issued an internal policy in the Department of Justice meting out sanctions to prosecutors who would miss the deadlines for resolving the tax evasion and smuggling complaints filed by the finance department.

The sanctions include the deferment of payment of the erring prosecutor?s allowances and other benefits ?as an initial course of action,? De Lima said.

She said that she had given a Jan. 15 deadline for prosecutors handling the tax evasion and smuggling cases filed since last July, when President Benigno Aquino III announced a renewed campaign to go after tax evaders and smugglers to shore up the government?s measly coffers.

The CTA?s second division found Mendez ?guilty beyond reasonable doubt? for violation of Section 255 of the National Internal Revenue Code.

Mendez owns the Weigh Less Center, Mendez Body and Face and Salon Spa, and Mendez Body and Face Skin Clinic with principal office on Roces Avenue in Quezon City.

Schooled in Maryland, Mendez?s clinics offer various services such as anti-aging treatment, rhinoplasty, facelift, foot and body scrub, body wrap, waxing, eye bag removal, tummy tuck, tattoo removal and breast augmentation.

The Mendez Medical Group is endorsed by several celebrities like actresses Pauleen Luna and Melanie Marquez, among others.

The CTA decision was penned by Associate Justice Juanito Castañeda Jr. and was concurred in by Associate Justice Cielito Mindaro-Gulla. Associate Justice Caesar Casanova dissented.

The first case against Mendez involved his failure to file his income tax return in 2002. The second case stemmed from his failure to include the other branches of his popular beauty clinic when he filed his income tax return for his clinic?s Dagupan City branch in 2003.

In his defense, Mendez claimed that he did not earn any income in 2002. He also said that while he catered to celebrities, this was done for free in exchange for their endorsements of his clinic.

However, the CTA said that Mendez ?actually has unreported income earnings? for that year.

?His purchases and expenditures such as the ad placements, rents and purchase of vehicles undeniably prove that he has knowledge that he has substantial income which was actually used to spend on the said purchases and expenses,? the court said.

Habitual failure

The CTA said this implied Mendez?s attempt to ?conceal said income earnings by not filing his income tax return.?

The court said Mendez?s ?habitual failure? to file his income tax returns in 2001 and 2002 despite earning money during those years showed ?the willfulness of his nonfiling of tax return for taxable year 2002.?

Mendez claimed that he suffered a net income loss in 2003 when he filed the income tax return only from his Dagupan clinic branch, but the court noted that the prosecutors were able to prove otherwise.

Inquirer ads

BIR investigators were able to establish that Mendez also made significant purchases during that year, that also included advertisements with the Philippine Daily Inquirer.

The Inquirer had issued a certification that Mendez?s Weigh Less Center had advertising placements with the newspaper from 2001 to 2003 ?and all the gross sales amounting to P3.79 million from the said ad placements were reported with the BIR.?

Moreover, the court noted that Mendez himself admitted in his supplemental affidavit and his testimony during cross-examination that he put up several branches and spent P5 million for these in 2003.

De Lima said that 23 of the tax evasion cases filed since last July had been submitted for resolution while the others were in various stages of the preliminary investigation.

As for the smuggling cases, six were set to be resolved. With a report from Inquirer Research

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