A good (bully) revenue collector

If he were the commissioner of the Bureau of Internal Revenue (BIR) or of the Bureau of Customs (BOC), President Rodrigo Duterte would earn the biggest incentive pay for collecting beyond and above his revenue target. President Duterte chalked up the latest biggest revenue collection of almost P6 billion.

That is if the government fully implements the letter and spirit of the Lateral Attrition Law, or Republic Act (RA) 9335.

The Lateral Attrition Law was enacted in 2005 by former president Gloria Macapagal-Arroyo that mandated a system of rewards and penalties to officials of both the BIR and BOC, the two biggest tax collecting agencies under the Department of Finance (DOF).

However, the P6 billion had nothing to do with taxes and duties collected by the BIR and the BOC, respectively. Nonetheless, the collection would accrue to the National Treasury and entered into the books as additional funds for the government.

This was after the country’s flag carrier, the Philippine Airlines (PAL), settled its P6-billion unpaid navigational fees and other charges due to the government. This was announced last Friday in a joint statement of the Department of Transportation (DOTr), the Civil Aviation Authority of the Philippines (CAAP), and the Manila International Airport Authority (MIAA).

Clara de Castro, PAL vice president for legal affairs, brought the check payments to the CAAP office in Pasay City last Friday. A check for P5.68 billion was turned over to CAAP chief accountant Raul Eusebio, while a check for P258.59 million was given to Arlene Britanico, general manager for finance of the MIAA.

It was only last September when President Duterte threatened to shut down Terminal 2 of the Ninoy Aquino International Airport (NAIA) if PAL fails to settle its arrears to the government. The flag carrier has been exclusively using NAIA-2 since 1999.

PAL president and chief operating officer Jaime Bautista admitted late last month the flag carrier has to borrow to pay the P6 billion it owes the government. As a result, Bautista expects PAL’s cash flow to be affected and incur losses in the process.

It was a bitter pill than fight it out in court with no less than President Duterte as the collecting agent of the government. 

Through these years from 1999 to present, the collectibles from PAL grew this much as one administration to another failed to come to terms on the computation of the navigational fees and other charges. The collecting agents at the former agencies superseded by the CAAP and the MIAA went back and forth in talks with PAL management until the Duterte administration officials took over and finally settled how much the flag carrier truly owed the government.

Thus, it could not be said PAL tried to avoid payment of its dues to both CAAP and the MIAA. This is not the case of some other corporate entities that willfully skirted paying the correct amount, if not totally avoided their tax dues to the government.

In October, Department of Justice Secretary Vitaliano Aguirre II announced Mighty Corp. paid nearly P40 billion to settle tax deficiencies as part of a compromise deal that allowed the company to avoid prosecution. Initially, Mighty Corp. tried to fight off the alleged tax evasion complaints. Eventually, the company decided it was best to enter into a compromise settlement with the government.

It was a decision that prompted Mighty Corp. owner Alexander Wongchuking to sell their family cigarette business to Japan Tobacco Inc. in the amount of P46.8-billion ($936 million). Out of the sale, the Mighty Corp. paid its accumulated tax arrears to the BIR.

The tax payment came also after President Duterte demanded for it in many of his extemporaneous speeches. The chief executive said he would not countenance tax evasion even if Wongchuking has been closely identified with him as “mistah,” or adopted classmates of the Philippine Military Academy (PMA) Class 1967.

During a dinner with newspaper columnists hosted by President Duterte at Malacanang last Oct. 3 that I attended, Manila Times columnist Rigoberto Tiglao tried to insinuate Wongchuking is also allegedly involved in another wrongdoing. To which the President reacted with quick order to his executive assistant Christopher “Bong” Go to immediately call up Wongchuking so he could check the allegation and promised to berate him over phone call in front of us. Tiglao though backed out of the President’s dare to prove his allegation.

Also a favorite topic in extemporaneous speeches of President Duterte is the unpaid tax, rent and other dues to the government by a private company that has been leasing for so many years the Mile Long property in Makati City. The company happens to be owned by the Prieto’s who also is the majority owner of the Philippine Daily Inquirer (PDI).

In his repeated demands, the President warned he would encourage homeless Filipinos to take over the property if the company would refuse to pay its tax and rent dues to the government. By August, several tenants and occupants started to vacate the Mile Long premises.

But it was only last Oct. 11 when the Makati City regional trial court (RTC) ordered Sunvar Realty Development Corp. to pay the government P478.2 million in back rent for illegally occupying the Mile Long property since 2003. In a 22-page decision, Judge Maryann Corpus-Mañalac of RTC Branch 141 also told Sunvar to pay the National Power Corp. (NPC), which owns the property, a monthly rental of P3.2 million from June 2015 until it vacates the property. 

Through these years and one administration to another could not collect a single cent from these companies. It took President Duterte who came into office in June last year to finally collect these long overdue taxes and duties, rentals and other charges now going to the national coffers.

President Duterte is a good (bully) revenue collector for the government. However, he is not covered by the Lateral Attrition Law and therefore not also entitled to incentive pay for going above and beyond revenue collection target.