TERESITA S.

ESPARTER0
Certified Public Accountant
Sto. Nio, South Cotabato
Email Address: teresitaespartero@yahoo.com
Telephone 083-235-1052/Mobile: 09289886436


Brief History
Mrs. Lydia S. Firmalino is 69 years old and a retired Deped District Supervisor. She
began her teaching profession in 1961 and retired in 2008 at the age of 65.
Mr. Roberto S. Firmalino is 72 years old and managing their 24 hectares farmland. The
four children are married and gainfully employed.

In 2009, after Mrs. Firmalinos retirement, the couple decided to put up a rice mill that will
cater the needs of their harvest as well as the surrounding farms most of which are rice land.
So, by the fourth quarter of 2008, clearing, filling and leveling of the site began. Construction of
the dryer and perimeter fence started, simultaneous with the construction of the rice mill
building and warehouse.

By May 2009, the rice mill machineries were ready though construction of the building
and warehouse is ongoing. Mrs. Firmalino, enthusiastic with the project prepared already the
different documents needed for the business, including mayors permit, DTI, NFA licenses and
etc., even though the business have not started. By July 2009, the rice mill machineries were
installed. Followed by the installation of the mechanical dryer.

They have started to mill their harvest. They also accepted milling their neighbors
harvests for milling for free as a form of dry run and testing the new machineries. Actual
business operations started on July 21, 2009. Being new in the business, customers were few
which is normal for a start-up business.

Mrs. Firmalino, consulted me if she will file the ITR for 2009. I even told her that for this
very short period: testing and dry run, it will be better if she files the ITR for next year so the
business has gone for a period of one year.

However, she insisted to file. She just file the 2009 ITR in her laymans interpretations.
As a teacher she was used to preparing ITR for a fixed compensation income of which taxes
were withheld at source. She just estimated the electricity used in the actual business, failing to
consider other factors which contributed to the huge electric bill. In your assessment, it
appeared that the electric consumption was for the rice milling alone, thus resulting to a huge
amount of undeclared income. For her at least, as a law abiding citizen, she have filed her
Income Tax Return for the year.

At any rate we are attaching herewith the breakdown of power usage as computed by a
licensed electrical engineer and the actual rice mill income for months of July-December 2009.


AND THIS STARTED THE PROBLEM




TERESITA S. ESPARTERO