Lack of Checks Abets Corruption in the BIR
by TESS BACALLA
IN HER 38 years at the Bureau of Internal Revenue, Rizalina Magalona, whose last post was that of assistant commissioner, had an unsullied reputation as a public official. Until her retirement in 1999, she lived in a modest apartment in Quezon City. She managed to buy a car only after she had left the bureau, using a portion of her retirement benefits.
Other than the car, the little property she calls her own she inherited from her parents, like the ancestral home in Iloilo, where she now lives. At the time of her retirement, Magalona’s net worth was considerably less than P1 million.
But BIR insiders themselves admit that Magalona is a rarity in one of the two government agencies that the public associates most with graft and corruption.
That corruption in the BIR remains unchecked may in part be due to the failure of its top officials to enforce established checks and balances. Another reason is the insidious system of “booty-sharing,” which, by keeping practically everyone happy, means lower risks of having whistleblowers.
In a study on the BIR published in the Philippine Journal of Public Administration in 1979, Leonor Magtolis-Briones wrote that “when an employee makes a killing,” he usually shares his loot with his “less enterprising officemates (and even with his bosses) through blowouts, celebrations and even direct dole outs.”
Two decades later, insiders say not much has changed — except perhaps the amounts involved. In the BIR’s regional office in Valenzuela, for instance, insiders say some of the personnel each get a weekly allowance ranging from P200 to P500 — sometimes even more.
To be sure, there could be a perfectly good reason for such generosity. But both Nestor S. Valeroso, acting regional director for Valenzuela and Corazon C. Pangcog, assistant regional director, deny they are showering their staff with cash. Valeroso said, “There is no such happening in my office.”
Yet BIR insiders also say that last December, Valeroso and Pangcog gave each member of their staff P1,000, contained in what looked like a pay envelope, but one made out of light yellow linen paper. The envelope also sported a traditional Christmas design, aside from the two officials’ pictures and signatures and their holiday greetings.
BIR officials, including RDOs and regional directors are also known to hold excessive celebrations, especially on their birthdays.
One insider says, however, that the parties nowadays are no longer as lavish as they were a few years ago. Yet judging from the latest birthday bash of Valeroso, who reportedly turned 51 last February 26, there is still little evidence of penny-pinching going on.
For almost the whole day, Valeroso was feted by friends and BIR employees, who feasted on a catered buffet lunch. Gifts also came pouring in, including at least four roasted pigs (down from about seven the previous year, said a member of Valeroso’s staff) and a big box of fruit from Caloocan City RDO Eduardo T. Bajador, who emceed a special show put together for the celebrator.
Aside from birthdays of officials, BIR employees also look forward to summer, when they not only get to go to the beach, but are also able to gorge themselves on an abundant supply of food and drink and vie for generous cash prizes in the games. At their office’s outing in Subic last year, for instance, Valeroso’s staff competed for prizes that ranged from P300 to P500.
Not one member of the staff was asked to contribute a single centavo. The government did not have to fork over any money for the outing either. The people who combine their “resources” to make extravagant celebrations in BIR’s premises possible took care of all the expenses.
Indications are that such festivities at the BIR may be curbed, if not stopped altogether, if only its chief made monitoring of the bureau’s own people among its top priorities.
One BIR official, however, echoes some observers’ sentiments in saying that current BIR Commissioner Guillermo Parayno is too “short-term” in his approach to the problems ailing the agency.
“Puro siya press release,” says the official, who also expressed dissatisfaction with Parayno’s seeming preoccupation with collection-related activities at the expense of other programs requiring his attention.
The BIR chief, however, told the PCIJ that he is putting in place programs that “although mainly intended to enhance revenues also address corruption through the use of information technology.” These include computerizing the data on large taxpayers, electronic transmission of tax payments and an automated tax verification system, which allows for easy validation of tax identification numbers or TINs.
The BIR, however, has yet to act on a draft memorandum that would authorize the post-audit or “revalida” after almost six years of its nonenforcement. The draft was submitted for approval in October 2002, but Parayno has yet to sign it. He said, however, that the revalida will be among the projects that will be implemented this year.
“As a management tool, revalida is the most feared, in fact the only, check-and-balance mechanism, to the wild and nefarious activities of Revenue Officers (ROs), supervisors, revenue district officers, and . . . need we mention the rest?” Magalona said in a 2002 report she prepared as the BIR consultant of Agile, a USAID-funded agency.
“Revalida and continuing management performance audits are strong deterrents to the proliferation of unreported and prescribed cases for which collections may no longer be effected,” she added. “Only through an in-depth review/audit of tax dockets submitted by ROs, as what is done in a ‘revalida,’ can one get the real picture of the quality or lack of it, of the field examinations conducted.”
“Clearly,” Magalona also observed, “revalida is unable to take off because it appears not to be among the priorities of the BIR-the Internal Audit Division where it is expected to be institutionalized is in total disarray due to gross mismanagement and in fact fails to perform even its simplest functions.”
The draft memorandum on the revalida, however, is not the only proposal gathering dust on Parayno’s desk. Similarly on the back burner is a draft revenue administrative order (RAO) authorizing the issuance of revenue bulletins that will regularly update taxpayers on tax-related laws, regulations and rulings that are inconsistent with, or have been superseded by, other issuances. A lack of knowledge of these laws and policies makes taxpayers vulnerable to harassment by BIR personnel.
Another is a draft memorandum order seeking to provide “no-ruling areas.” Such a memorandum will prevent unnecessary requests for rulings by providing taxpayers with appropriate guidelines. Tax rulings, say insiders and former bureau personnel, have been a source of tax leakages in the BIR, given the agency’s power to interpret tax laws, which has either been abused or applied improperly.
Both past and present BIR officials and personnel, however, agree that corruption in the agency could also be traced to a host of outside factors.
These include the failure of the Congressional oversight committee to fully exercise its functions, as mandated by the Tax Code of 1997. The committee has the power to monitor the BIR’s tax administration system, particularly the conduct of tax audits. It is composed of the chairpersons of the Committee on Ways and Means of the Senate and House of Representatives and four additional members from each house, who are designated by the House Speaker and the Senate President.
According to the Congressional and Planning and Budget Office (CPBO), a revenue audit would ensure that taxes are properly “assessed, collected, and accounted for.”
It describes the Committee’s function this way: “The oversight function stipulated in RA 8424 (or the 1997 Tax Reform Act) is an attempt by Congress to make a more conscious effort to monitor and ensure the proper implementation of tax reforms/programs.”
Another unused anti-corruption tool is the Commission on Audit (COA) Resolution No. 95-208, which asserts COA’s power to audit not only government expenditures but also revenues. Almost a decade after it was issued, the resolution remains unenforced. During his term, President Joseph Estrada signed Executive Order No. 38, which directed the BIR and the Department of Finance to work with COA to enforce the resolution.
Former Audit Commissioner Sofronio Ursal, the resolution’s proponent, clarified that COA would not audit the taxpayer but would review the procedures followed by the BIR’s assessing and collecting officers. This makes it very similar in principle to the proposed revalida.
Some BIR insiders believe the COA cannot conduct a review audit of the BIR because the commission does not have the capability to do so.
Former BIR Commissioner Efren I. Plana, who launched an anti-corruption campaign during his stint in the BIR in the 1970s, sees it differently. He points out that during his stint as BIR chief, “I even asked for the help of COA.”
“I do not believe,” he adds, “in the BIR being an independent republic.”