Landbank rejects BIR garnishment order vs Makati

A state bank has rejected a Tax bureau order freezing the Makati City government’s bank account over unpaid taxes. Land Bank of the Philippines, in a letter to the Bureau of Internal Revenue (BIR), said garnishment of public funds — in this case Makati’s P1.147-billion account — was prohibited. The April 12 letter cited Commission on Audit (CoA) Circular 2001-002, which states that all money claims against the government must first be filed with the commission, which has to act upon it within 60 days. If the claim is rejected, the matter may be elevated to the Supreme Court. Landbank also cited a Supreme Court decision — involving Makati vs. the Court of Appeals — where it ruled that public funds may not be garnished unless the money had been set aside to settle the amount being claimed. "This is particularly true considering that public funds shall be available exclusively for the specific purpose for which they have been appropriated," the letter read. "In view of this, Landbank is left with no other recourse but to comply with substantive and jurisprudential laws prohibiting garnishment of public funds." BIR Commissioner Joel L. Tan-Torres said his office had yet to receive the bank’s letter. "We will address it when we get the letter," he said. He added that a bank can only reject a BIR garnishment order if the deposit is to be used for payroll. In a text message, Makati City legal officer Pio Kenneth I. Dasal said the funds in the bank account were general funds. The warrant of garnishment was issued, along with a lien on the Makati City Hall building, by the BIR last April 8 after the parties failed to reach a settlement on the local government’s unpaid taxes. The Court of Tax Appeals in December ordered Makati City to pay P1.05 billion in deficiency taxes for 1999 to 2000 and P217.8 million for 2002 to 2004. Last week, Tan-Torres said the BIR would move to seize the city government’s motor vehicles. As part of efforts to improve revenue collections and meet this year’s P830-billion target, the BIR is going after local government units and state agencies with unpaid taxes. — Louella D. Desiderio, BusinessWorld