Ex-BIR chief to the SC?

The Judicial and Bar Council (JBC) interviewed last week the 12 nominees aspiring to fill the vacancy soon at the Supreme Court with the retirement of associate justice Ruben Reyes on Jan. 3. I did not know that former Bureau of Internal Revenue (BIR) commissioner Jose Mario C. Buñag, who is our fellow Tuesday Club member, was among the nominees for the lone vacancy until it came out in the news. The self-effacing Buñag humbly admitted he really kept quiet about his nomination, but the JBC interview was open to the public and to media for coverage.

Incidentally, there will be 12 vacancies that will arise, one every month thereafter next year with the scheduled retirement of the other justices in the 15-man High Tribunal headed by SC chief justice Reynato Puno. This is why there have been so much fear and concern raised that the SC will entirely be filled by appointees of President Arroyo.

That’s a given. But it would be unfair to these individual nominees to accuse them this early that they won’t likely be independent if cases against her administration are elevated to the High Court just because the appointing authority is Mrs. Arroyo. A highly qualified and competent legal eagle like Buñag has shown his independence of mind when he served as BIR commissioner from July 2005 until June 2007. He left the BIR over issues of under collection of revenues, but Buñag’s name and integrity were never tainted by any corruption charges.

Buñag placed second during the 1968 bar exams after his graduation from Ateneo de Manila. He was a scholar at the New York University where he took up his post-graduate studies on comparative jurisprudence in 1973 and later a graduate course on taxation in 1984. He also passed as member of the NY bar in 1989. Thus, Buñag would certainly be an asset, especially in deliberations pertaining to fiscal and economic issues being brought before the High Tribunal. The ex-BIR chief will bring with him his impressive legal background and years of experience in corporate and criminal laws needed for comprehensive understanding of the cases appealed before the High Court.    

This reminds me of a case several months ago when the SC issued a temporary restraining order (TRO) that was being referred to rather unfairly as “issued in the nick of time.” That TRO, penned by SC associate justice Minita Chico-Nazario, pertains to the order slapped against a Court of Appeals injunction against a faction of the board of directors of the Philippine Racing Club, Inc. (PRCI) allegedly backed by Kuala Lumpur-based gaming firm Magnum Holdings.

The CA injunction had earlier stopped the Malaysian-backed faction from consummating a move to transfer the ownership of the P12-billion Sta. Ana racetrack to a P25-million holding firm with no earning asset called JTH Davies. The Malaysian-backed faction led by Chinese-Filipino businessman Santiago Cua Sr. of Wincorp fame, of course, owns JTH Davies.

By hitting the CA injunction in the head, the TRO immediately opened the door for the Cua group-dominated PRCI board to ratify the transfer of PRCI’s crown jewel to the Cua-owned corporate shell. And because the TRO was issued just days before the board meeting that would ratify the transfer, the SC order was unjustly dubbed as having been issued “in the nick of time.” But this is an unfair perception. We prefer to view what seemed to be a perfect timing of the issuance of this TRO as pure coincidence.

The SC could have viewed things differently had they known that the consummation of the transfer of the Sta. Ana racetrack to a corporate shell which their TRO facilitated depended on a plot to run away with close to P500 million in value added tax (VAT) exemptions. We share in the belief that no SC justice would play footsies with a scheme that would deprive the country of precious revenues enough to build 50,000 new school buildings.

The vigilant Finance Secretary Gary Teves caught that ploy and uncovered the plot following his discovery that the BIR had issued a resolution granting VAT exemption to the transfer of the Sta. Ana property to the Cuas’ corporate shell. Teves ordered then BIR chief Lilian Hefti to review the ruling after noting certain irregularities both in the process and in the ruling itself. Hefti subsequently made a turn-around and slapped the transfer with close to P500 million in VAT assessment.

Not surprisingly, the Cua faction, in its submission to the Securities and Exchange Commission (SEC) admitted to PRCI shareholders that it could not consummate the transfer of the racetrack to the Cuas’ holding firm because the tax exemption ploy was thwarted. In not so many words, the faction claimed they did not have the financial wherewithal to comply with Hefti’s hefty tax assessment.

Pompous press announcements, courtesy of a high-powered PR group hired by the Cua group bannered its move to “disengage” from the property transfer scheme. For a while, it looked like the vigilance of the Finance Secretary on the goings-on in his territory paid off.

But the Cua group has engaged the services of a powerful accounting firm that is now reportedly working to reverse BIR’s VAT assessment. The firm has reportedly written BIR an angry letter assailing the VAT assessment. Angry enough for newly-appointed BIR chief Sixto Esquivias IV to reverse the tax assessment.

The fear is that Hefti’s hasty departure from the BIR could just be the opportunity that the group is looking for. That sounds logical. It would have been difficult for Hefti to reverse herself twice. But it would be easier for the newly designated BIR chief to junk the wisdom of a predecessor. Esquivias actually is no stranger to the BIR. He was BIR deputy commissioner during the shortened term of former President Joseph Estrada. The funny part is it was Hefti who replaced Esquivias when the latter resigned from his post.

It is unfortunate that in multi-million-peso transactions such as the controversial transfer of the Sta. Ana racetrack to the Cuas’ holding firm could exact heavy toll on public welfare. We hope that the vigilance of the new BIR Commissioner and the High Court would prevent further collateral damage.

The appointment of ex-BIR chief Bunag to SC would hopefully enhance judicial vigilance needed in a corporate case like this.