Senate panel grills medical suppliers over failure to pay taxes, price discrepancies

Senators probing the use of COVID-19 funds had more questions for the medical suppliers which secured huge government contracts early into the pandemic.

10/19/2021 5:28:00 PM

Senators probing the use of COVID-19 funds had more questions for the medical suppliers which secured huge government contracts early into the pandemic.

Senators probing the use of COVID-19 funds on Tuesday had more questions for the medical suppliers which secured huge government contracts early into the pandemic.

Xuzhou Construction is the government's second top supplier of medical items amid the health crisis, next to Pharmally Pharmaceutical Corp., according to a list presented by lawmakers.However, company manager Robin Han said they did not pay income taxes in the Philippines since they are"a state-owned company in China" and would thus make the payments there.

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Drilon refuted Han’s statement:"You entered into a transaction in the Philippines where you made income, and therefore under Philippines laws, you are liable for income taxes."Tax expert Mon Abrea validated the point, agreeing that the company should have paid income taxes. Drilon later asked the Bureau of Internal Revenue to look into the payments it should collect from the firm.

During the hearing, Senator Richard Gordon also flagged TigerPhil Marketing Corporation's earlier failure to pay the correct amount of taxes to the Philippine government.He said TigerPhil, another Chinese firm that supplied Pharmally with face masks, only made the proper payments after its officials were called out by the committee regarding the matter.

Price discrepanciesSenator Risa Hontiveros also quizzed Pharmally over its two contracts with the Philippine National Railways in April and May 2020.Figures presented by the senator showed medical items sold by Pharmally to the PNR were more expensive compared to the prices indicated in the firm's catalogue in May.

For instance, infrared thermometers were offered to the PNR at ₱3,200 per unit, but the item was priced at a maximum of ₱2,200 in Pharmally's catalogue. Face shields were sold to the agency at ₱179 per piece, when it was worth ₱95 to ₱109 in the May price list.

"Ironically, mas mahal ang presyo na siningil niyo sa gobyerno kumpara dito sa price list which you gave around the same time sa mga private sector friends niyo," Hontiveros said."So, the only thing I can conclude is that sa gitna ng pandemya, you were offering supplies and prices grossly disadvantageous sa gobyerno natin," she continued.

[Translation: Ironically, you charged the government higher compared to the price list you gave around the same time to your private sector friends. So, the only thing I can conclude is that in the middle of the pandemic, you were offering supplies and prices grossly disadvantageous to the government.]

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But Pharmally treasurer Mohit Dargani said the lower prices in May were after the supply had already stabilized."I think at that time, the prices did change very quickly actually," he said.Drilon, however, was not convinced, saying this is the reason why the Senate should be able to secure the source documents pertaining to Pharmally's sales and purchases."That is where it will be shown there is indeed an overpricing," he stressed.

Read more: CNN Philippines »

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