Makati City Mayor Jejomar Binay, despite what he claims are attempts by the Arroyo administration to harass him, managed to post a landslide victory in last May’s mayoral race.
Binay said the attempts to harass him started months before the elections.
Last March 9, the Bureau of Internal Revenue (BIR) froze the properties of Binay and the city government, which allegedly failed to pay the more than P1.1 billion income taxes of some 8,000 employees of the Makati City Hall for three consecutive years.
Binay said the timing of the freeze order was highly questionable because the May 14 polls were drawing near.
BIR withholding tax division chief Marivic Galban had asked the Makati City government to pay P1.1 billion in alleged unremitted withholding taxes of city hall employees from 1999 to 2002.
“This amount (P1.1 billion) could go higher if the city government also failed to pay the withholding taxes of employees fro 2003 to 2007,” Galban said.
Galban said she gave Binay until March 31 to settle the tax obligation and avail of a special one-time administrative abatement program, but he failed to do so.
She said Binay failed to pay even the basic tax due to the BIR despite several letters to him.
Under BIR regulations, the remittance of withholding taxes is the duty of the city mayor and city treasurer and both are made equally liable under the criminal penalties provided for in the National Internal Revenue Code.
Withholding taxes should be paid to the BIR every quarter after the city government withholds it from the salaries of its employees.
Ghost employees
The BIR’s tax claim followed an allegation made by former Makati councilor Oscar Ibay in October last year that 80 percent of the city government’s employees have been working for the past eight years without a taxpayer identification number (TIN) – an indication that they could be “ghost employees.”
Ibay said that there were 9,792 government employees in Makati who were without a TIN in 2001; 7,597 in 2003 and 8,068 last year.
He said Elizabeth Sacramento, head of the document processing section and BIR revenue district officer Roberto Baquiran confirmed the figures.
Ibay said there are three possible explanations for the alleged irregularity: “Withholding taxes deducted by city hall are not remitted to the BIR; second, taxes are remitted to the BIR but are not properly claimed by employees in their annual income tax payments; or the names on the payroll are fictitious.”
If the roughly 8,000 “fictitious employees” each received an average monthly salary of P10,000, the residents of Makati could be losing more than P960 million a year in public funds over the last five years, according to Ibay.
Last May 2, or more than a week before the May 14 elections, Baquiran ordered the seizure of bank accounts of Binay and the city government from 34 commercial and government-owned banks in Makati, Manila, Pasig and Quezon City in an effort to collect the P1.1 billion tax deficiency.
“With the issuance of the warrants of garnishment, the money was seized already in favor of the BIR. If they (the banks) don’t follow they are subject to criminal liabilities. That is why we indicated in the warrant of garnishment that (the banks’) failure to honor this warrant shall make you criminally liable under Section 276 of the National Internal Revenue Code,” Baquiran said.
He said Binay has no other legal recourse but to pay the city government’s P1.1 billion tax obligation.
“Aside from the garnishments, the 1997 Tax Code and existing BIR regulations are very specific, that the remittance of withholding taxes are the duty of the city mayor and treasurer. And if they fail to do so, both are equally liable for criminal penalties as provided for under the law,” Baquiran said.
Baquiran said if proven guilty for tax evasion, Binay and the city treasurer could be meted lifetime prison terms for the P1.1 billion tax liability.
He said Binay cannot question the warrant of garnishment because it is part of the BIR’s collection process.
Binay assailed the Arroyo administration for allegedly pressuring the BIR officials to garnish his personal and the city government’s bank accounts from 34 commercial and government-owned banks in Makati, Pasig, Manila and Quezon City in the guise of collecting the alleged P1.1 billion unpaid withholding taxes of 8,000 City government employees.
In a press conference, Binay said he is still banking on the word of honor of Finance Secretary Margarito Teves, who facilitated a meeting between him and BIR officials to settle the issue last Dec. 28.
“We have been informed that Malacañang has been exerting pressure on BIR officials. This is very unfortunate. We have dealt with the BIR in good faith, and had expected a resolution of this issue. Our records show that the city government has no obligations with the national government. But as expected, the Arroyo administration is misusing the powers of government for their political ends. We will definitely go to court,” Binay said.
Binay said Malacañang’s action will adversely affect services to Makati residents.
“Makati residents will suffer from this mindless act of political harassment. We won’t be able to provide health services to our poor and elderly, we won’t be able to provide funds needed to maintain peace and order. (President) Arroyo and her candidates in Makati would have to explain this to the people of Makati,” he said.
Binay said that the city government will not have to pay the P1.1 billion because the BIR, through Regional Director Nelson Aspe, has acknowledged the P200 million it has received as a compromise amount.
Binay defeats GMA bet
The Department of Interior and Local Government (DILG) led by Secretary Ronaldo Puno attempted to serve a suspension order on Binay three days before the elections.
Learning of Binay’s impending suspension, residents trooped to the Makati City Hall to expressed their support and prevent the DILG from serving the order.
Puno was forced to recall Binay’s suspension to prevent a bloody confrontation with Binay’s supporters.
Even though he was hounded by the P1.1-billion tax liability issue, Binay’s ticket posted a landslide victory against the team led by administration candidate Sen. Lito Lapid.
Days after being declared the winner in Makati’s mayoral race, Binay said he received information that Malacañang was allegedly hatching a new strategy to suspend him.
He said the tip he received was confirmed by a statement made by Executive Secretary Eduardo Ermita that Ombudsman Merceditas Gutierrez would vigorously pursue the cases against him and re-elected opposition Pasay City Mayor Wenceslao Trinidad.
“This is more than just a clear indication that the administration is hell-bent on continuing its harassment of known political opposition leaders, even after the people had spoken loud and clear in support of them in the last election,” Binay said.
Binay said he agreed with Ermita’s explanation that the cases will have to be pursued, but this must be in accordance with legal procedure.
He said the administration must do something about the 350 cases filed against elected officials, whether from the opposition or administration, pending in the Office of the Ombudsman.
“If the administration is honest and sincere in invoking proper legal procedure, then they should do something about the more than 350 cases against elected officials which have remained pending and unacted upon for years in the Ombudsman,” Binay said.
Binay said this double standard has made it very obvious that the administration used the cases to serve its political agenda.
“The cheating that has been unearthed with both testimonial and documentary evidence has been allowed to go unpunished, with nothing more than clerical errors as the convenient excuse,” he said.
Binay vowed to file criminal charges against those involved in the cheating in the last election.
More alleged attacks
An explosion rocked the Glorietta 2 mall, owned by Ayala Land Inc., in Makati last Oct. 19, killing 12 people and injuring scores of others.
In the early days of the investigation, Philippine National Police (PNP) chief Director General Avelino Razon Jr. said the blast was caused by a bomb, while National Capital Region Police Office (NCRPO) head Chief Superintendent Geary Barias said it was a possible gas leak underneath the mall.
In its final report, the PNP said the blast was caused by methane gas produced by human waste, which originated from a septic tank underneath the basement of the mall. The PNP said Ayala Land Inc. and the city government may be held liable should there be evidence showing that the incident was a result of their negligence.
Binay said the PNP’s findings is part of the Arroyo administration’s effort to pin the blame on him and effect yet another suspension against him.