Tax raps filed vs Makati City Hall's cake supplier

by Ina Reformina, ABS-CBN News

Posted at Dec 18 2014 11:28 AM | Updated as of Dec 19 2014 05:47 AM

MANILA, Philippines (UPDATE) - The Bureau of Internal Revenue (BIR) on Thursday filed a P46.6 million criminal complaint before the Department of Justice against the birthday cake supplier and catering food service provider of the Ospital ng Makati and Makati City Hall.


The BIR filed the complaint against Cups & Mugs Kitchenette owner Kimtun Chong for willful attempt to evade tax and deliberate failure to supply correct information in his annual ITR for taxable years 2009, 2010 and 2011.


Cups and Mugs Kitchenette had supplied birthday cakes distributed by Makati City Hall for senior citizens, and also has a contract to manage the cafeteria at Makati City Hall and Ospital ng Makati from 2009 to 2011.


The birthday cakes were the subject of a controversy earlier this year, after it was alleged that the cakes were priced not lower than P1,000 and are linked to alleged corruption of the Binay family in Makati City.


Former Makati City Vice Mayor Ernesto Mercado had earlier said the incorporators of Cups and Mugs Kitchenette are fronts for the Binay family.


The BIR said a preliminary investigation showed that Cups & Mugs was paid by Makati City government a total of P107.64 million in the three year period -- 2009 - P35.94 million; 2010 - P42.11 million; and 2011 - P29.59 million.


However, despite earning millions, the BIR said Chong substantially underdeclared his correct income and deliberately failed to pay the correct taxes.


Based on BIR records, Chong declared a total gross income of only P43.23 million in his AITR for the three-year period -- 2009 - P14.17 million; 2010 - P12.97 million; and 2011 - P16.08 million.


"As a consequence of his acts and omissions, Chong was likewise sued for an aggregate income tax liability amounting to P46.60 million, inclusive of surcharges and interests," the BIR said.


While the case against Cups & Mugs comes after the BIR filed a tax evasion case against Binay campaign donors James and Ann Loraine Tiu, the BIR denied it was targeting the camp of the Vice President.