Tieza water unit fails to pay income taxes for 12 years

THE Tourism Infrastructure and Enterprise Zone Authority (Tieza) has failed to pay income taxes amounting to P69 million for 12 years. The Commission on Audit (COA) also could not validate various transactions made by Tieza entities amounting to at least some P15 million due to non-submission of reports, vouchers and/or supporting documents last year.

Tieza is a government firm overseen by the Department of Tourism and tasked to oversee the creation of tourism economic zones and build tourism-related infrastructure.

In its letter to Tieza’s board of directors in May, the COA said “the Tieza Regulatory Office (TRO), which was created to regulate the joint venture company—boracay Island Water Co. Inc. [BIWCI]…DID not pay taxes on its annual income paid by BIWCI for calendar years 2009 to 2021 estimated at P69 million inclusive of basic tax, interests, surcharges and compromise charges.”

The BIWCI was established pursuant to the concession agreement between Tieza and the water firm, a unit of the Manila Water Co., and failed to apply for a registration and a tax identification number with the Bureau of Internal Revenue.

Last year, Tieza assets like the Banaue Hotel and Youth Hostel could not submit documents to support IT consultancy services, procurement for food supplies and construction materials and payroll of job-order hotel workers, totaling P13.09 million.

Also unsupported were the payment of Covid hazard pay as well as repairs and maintenance at the Zamboanga golf Course and Beach Park amounting to P1.87 million. No financial reports were submitted covering the gardens of Malasag and Ecotourism Village and the Balicasag Island and Dive Resort, according to the COA.

Two-fold increase in net loss

THE Tieza also has an “unaccounted and unreconciled balance of P379.38 million [at cost] between the results of physical count against the balance recorded in the books of accounts,” which is why the COA rendered a “qualified opinion” on the government firm’s financial statements in 2021.

The Tieza’s net loss ballooned by 107 percent to P952.78 million in 2021, on a 47-percent plunge in income and higher expenses of P1.4 billion, compared to expenses of P1.31 billion in 2020.

Tieza, formerly the Philippine Tourism Authority, was marked with some P208.63 million in total audit suspensions, disallowances and charges as of December 31, 2021. Tieza will be continuing to privatize its assets but wants to retain the proceeds for its use.

(See, “Tieza eyes change in Tourism Act to keep asset sale proceeds,” in the July 11, 2022.)

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The COA found Tieza had acquired property, either through purchase or donation, amounting to some P114.24 million, but these “remained untitled to date, casting doubt whether [the firm] holds or controls the right to these properties. The state auditor suggested the government firm “consider filing necessary legal actions against individuals claiming over ownership of land acquired by Tieza if warranted.”

There were about P121.29 million in discrepancies due to unreconciled balances between the confirmed and booked amounts due from local government units (Lgus) and from national government agencies (Ngas). Tieza transfers funds to Lgus and Ngas to develop tourism-related projects. Tieza, however, failed to receive several liquidation reports from Lgus and Ngas, thus the discrepancies, despite the issuance of demand letters.

Charity is not firm’s mandate

THE COA found that Tieza units basically failed to consistently monitor the fund transfers. For instance, COA noted there were fund transfers made to Lgus amounting P748,000 that had been unutilized and should have been returned to Tieza, which could have used it for other projects.

The Tieza also did not recover made advance payments to contractors amounting to P2.88 million for four contracts, but whose projects were terminated from 2017 to 2019.

The firm extended P775,000 in “charitable donations/financial assistance” to several individuals, which was beyond the scope of its mandate to develop tourism infrastructure. The aid was meant to help individuals with death in their family, damages due to typhoons and Covid-related emergencies.

“These payees could have been referred to appropriate government agencies,” such as the Department of Social Welfare and Development or the Philippine Charity Sweepstakes Office,