Source of corruption

Getting rid of corruption in government, whether at the national or local level, should be the goal of each administration.

And why is that?

It is because every peso that goes into the wrong pocket could have been spent for basic services, public infrastructure, instead of enriching just a few corrupt public officials and employees.

In 2021, the Supreme Court emphasized that a tax settlement or compromise is an agreement whereby the taxpayer offers to pay something less than what is due and the government accepts it as full settlement of his liability. But since it effectively waives a part of the revenue belonging to the government, it must be done in accordance with law.

In its ruling, the SC pointed out that the settlement agreement entered into by the company involved and the city treasurer was in the nature of a tax relief as it resulted in a substantial diminution or decrease of the firm’s tax deficiency which must be duly approved by the Sanggunian through ordinances.

The court said the imposition of tax and the grant of tax reliefs are legislative functions which cannot be left to the discretion of the city mayor or city treasurer. To allow the latter, it added, would only make the agreement susceptible to corruption since the amount of settlement would rest entirely on their discretion.

This is at the local level.

At the national level, the Tax Code allows the Bureau of Internal Revenue to compromise tax liabilities. One ground for compromise is doubtful validity of assessment in which case the liability can be compromised to not less than 40 percent of the basic tax. Another ground is when the taxpayer is financially incapable in which case the taxpayer may only pay not less than 10 percent of the basic tax.

Sec. 7 and Sec. 204 the Tax Code provide that if the basic tax liability is P500,000 and below, the approval of the compromise is with the BIR’s regional evaluation board; if more than P500,000 and up to P1 million, with the BIR commissioner; and if more than P1 million, the national evaluation board.

But if the compromise involves paying less than the 40 percent minimum required by law, then it should be approved by the national evaluation board which is composed of the BIR commissioner and the four deputy commissioners.

However, in one case, the courts have said that the discretionary authority given to the BIR commissioner to compromise is not absolute, uncontrolled and unrestrained and can only be exercised within the parameters set by law.

Tax liability in the Philippines could be compromised in cases of delinquent accounts, cases under administrative protest after issuance of the final assessment notice to the taxpayer which are still pending, civil tax cases being disputed before the courts, collection cases filed in courts, and criminal violations.

There can be compromise based on doubtful validity of delinquent or disputed assessment or when there is reasonable doubt as to the validity of the assessment against the taxpayer, such as assessments which are arbitrary in nature, appearing to be based on presumptions, and there is reason to believe that it is lacking in legal and/or factual basis.

This however creates an opportunity for corrupt BIR personnel to make assessments with doubtful validity and encourage the taxpayer to apply for a compromise. But even cases already pending in court can be compromised by the BIR and they only need to inform the courts about it. Again, so much discretion leaving room for corruption.

What happens is that the taxpayer is given an amount that he or she should pay, which is lower than the tax liability but higher than the minimum required by law, such minimum payment being the amount reflected in the official receipt. The difference goes into the pocket of corrupt BIR people. The taxpayer is happy and someone at the BIR is equally happy. Who is going to complain?

It is about time that this power to compromise, whether at the national or local levels, be reviewed to make sure that the correct taxes are paid and that they go to the right pocket.

Another rich source of funds for unscrupulous public officials would be in the area of government infrastructure projects.

Just last October, the National Bureau of Investigation in Central Visayas filed graft charges with the Office of the Ombudsman Visayas against 11 personnel of the DPWH in Central Visayas and two private individuals for allegedly falsifying public documents to facilitate the release of the government budget for some infrastructure projects in Cebu.

The former district engineer of the DPWH Cebu 4th District Engineering Office claimed that the DPWH officials had forged his signature in the disbursement vouchers for all the infrastructure projects in the district.

Upon inspection by the NBI, it was discovered that the signatures were forged to make it appear that the projects had already been completed when in fact they were not.

Meanwhile, the Cebu City Prosecutor’s Office has filed graft charges against the chief of the DPWH district engineering office and five other ranking officials for their alleged involvement in anomalous multimillion-peso flood control projects.

RTC Cebu City Judge Grace Veloso-Fernandez has commanded the city’s chief of police and other government enforcement agencies to implement the arrest of Florida Pangilinan-Nuñez, now acting chief of Cebu 5th District Engineering Office, as well as the head and members of the bids and awards committee.

The graft charges stemmed from a criminal complaint filed by P.B. Obial Construction, on June 2022, against Pangilinan-Nuñez and her co-accused before the Cebu City Prosecutor’s Office. P.B. Obial Construction was post-disqualified from five government projects despite being declared as having the lowest bid.

Also, Cebu Gov. Gwendolyn Garcia recently said the provincial government has started building its case against some DPWH-7 executives who they blamed for causing great inconvenience to Cebuanos’ due to the stalled multi-million underpass project.

Plunder, graft and corruption charges, among others, have also been filed against a number of former and incumbent Cebu City government officials before the Office of the Ombudsman-Visayas over their alleged involvement in a garbage collection contract with Docast/JJ &J that resulted in over P239 million in damages to the government.

The charges were filed by the NBI in Central Visayas (NBI-7) due to overbilling, padding, and ghost garbage deliveries in carrying out the garbage collection deal which the private firm allegedly overcharging the Cebu City government a total of P239.7 million.

I’m pretty sure that Cebu’s problem is not unique.

There is so much that the government can turn to in terms of additional revenues. Instead of imposing new taxes, why not make sure first that whatever is due Caesar really goes to Caesar.

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