City sues bank for ‘under-declared’ income

CEBU, Philippines - More than a month after he sued SM Prime Holdings for allegedly distorting the size of SM Seaside City to reduce its tax obligations, Mayor Tomas Osmeña is now training his gun at another SM Group-affiliate firm: BDO Unibank, Inc.

Assisted by City Legal Office Joseph Bernaldez, Osmeña filed a criminal complaint before the Office of the Cebu City Prosecutor against the BDO executives and Board of Directors.

Osmeña accused the bank officials of "other deceit," "falsification by private individuals," and for violation of the City Tax Ordinance.

"Tax evasion is a crime. I want to see how the criminal justice system works," he told reporters.

The bank's media affairs office has not issued a statement as of this writing.

Osmeña said BDO's branch in Magallanes Street in Cebu City allegedly under-declared and falsified its gross sales - at only P400,000 - when it renewed its business permit last year.

The numbers the bank declared in the documents it submitted to the city treasurer's office supposedly cover the salary, rent of building, electricity and water bills, and other utilities.

Osmeña said the numbers are not even enough to pay its manager.

The questioned gross sales are indicated in the business permit application of BDO-Magallanes branch last year.

Because of this, the mayor said the city government is eyeing at cancelling the business permit of the branch.

The mayor said the city treasurer shares his opinion that it is impossible for a private bank to have gross sales of only P400,000.

The mayor said the bank can be held liable for violating of Art. 318 of the Revised Penal Code (other deceits), falsification by a private individual, and the city tax ordinance.

Named respondents in the complaint are Teresita Sy-Coson, BDO Unibank chairwoman; Jesus Albert Jacinto, vice-chairman; Nestor Tan, president; Antonio Cotoco, Walter Wassmer, senior executive vice-presidents; the executive vice-presidents, senior vice-presidents and the bank's Board of Directors.

In his judicial affidavit, Osmeña said he directed City Treasurer Tessie Camarillo to evaluate the gross sales reports submitted by big tax payers in Cebu City for 2015.

He noticed that BDO-Magallanes branch "deliberately and maliciously under-declared and falsified" its gross sales last year amounting to only P400,057.

"For me, this was alarming because, by simple comparative analysis, it was highly unlikely for the government banks (DBP and Landbank) to have gross sales higher than private banks, like BDO," his affidavit reads.

This is the second criminal case for alleged tax fraud filed against businesses in the city. The first one was filed against SM Prime Holdings Inc.

Osmeña said SM and BDO have the same owners who are "tax cheats," admitting that he is going after SM.

"Why? Because they committed a crime. Why not?...What is at stake here is the criminal justice system because they can hire 5,000 lawyers. I just want to show to the people of Cebu that this is what they are doing to us," he said.

Last November 23, 2016, Osmeña also filed criminal charges against four officials of SM Prime Holdings, Inc. for allegedly misrepresenting the size of SM Seaside City to reduce its tax obligations to the City Government amounting to about P23 million.

Osmeña accused the officials of violating Art. 318 of the Revised Penal Code (other deceipt).

Named respondents in the complaint are Hans T. Sy, Jr., SM Prime Holdings chairman of the Board; Jose Cuisia, Jr., vice chairman of the Board; Hans Sy, executive director; and Imelda Lim, the firm's senior tax manager.

"It's there. The SM requested that they will file a counter affidavit. Fine. Let them file. We're going to fight this through. Sila ang alkanse. Dili ako. I can expect all the PR money going against me. Never mind. I will fight them out," he said.

Osmeña cited another instance of tax fraud committed by a stall owner in Carbon Market in the city.

"There's a stall in carbon market. In their business permit, they declared their revenues of over P1 million. This one in BDO in Magallanes is P400,000," he said.

Osmeña said the owner of the stall is still cheating.

"You know why, you don't have to be an expert. That means his daily sales is P3,000 a day or 20kilos of pork. When you look at the pork in his table, that's more than 20 kilos. But this guy declared more income than the entire BDO branch in Magallanes," he said.

He hopes that the cases will remind businessmen in the city to be truthful in paying taxes to the city government.

He said the taxes private companies aren't paying could have been used to pay for the city's garbage collection and completion of the Cebu City Medical Center hospital, among others.

Osmeña said he will not tolerate companies that do not pay taxes as mandated by law.

"This is just the start of the year. This would be a long year," he said.  —/JMO (FREEMAN)