TOPIC: Consumer Champions in Congress: Cong. Bernadette Herrera-Dy
Guests: Rep. Bernadette Herrera-Dy, Bagong Henerasyon party-list and Butch Junia, Columnist of OpinYon
Sunday, October 23, 2011
A scam all the way
BACKBENCHER
Rod Kapunan
10/22-23/2011
Last Tuesday, the Supreme Court, with lightning speed, issued a temporary restraining order to stop the Bureau of Internal Revenue from implementing the 20 percent final withholding tax on the P35 billion Poverty Eradication and Alleviation Certificates bond. The petition questioned BIR Ruling No. 370-2011 issued by Commissioner Kim Henares reiterating the 2004 ruling reversing the three previous rulings exempting it from the payment of said tax amounting to P4.86 billion. Likewise, it ordered the Caucus of Development NGO Networks to pay the 30 percent capital gains tax from the P1.83 billion it earned to the tune of P549 million.
The 10-year bond was contracted on October 16, 2001, or barely a year after the corrupt Arroyo administration was installed to power with the help of those leading personalities of Code-NGO, many of whom were later appointed as officials with some still hanging on to their juicy positions under the present dispensation. Because of their influence, Code-NGO, in collaboration with Rizal Commercial Banking Corporation, cornered in whole the PEACe Bonds at a discounted rate but at a cost of P10.17 billion bearing an interest rate of 12.75 percent per annum such that the original amount has now ballooned to P35 billion. Despite that, RCBC failed to reciprocate by giving the government a discounted rate of interest, but instead exacted an onerous but illegal condition of being allowed not to pay taxes.
The eight commercial banks that filed the petition for certiorari and prohibition and/or mandamus – Bank of Commerce, China Banking Corp., Metropolitan Bank and Trust Co., Banco de Oro, Philippine Bank of Communications, Philippine National Bank, Philippine Veterans Bank, and Planters Development Bank—sought to stop the BIR from collecting the 20 percent final withholding tax, and the 30 percent capital gains tax from Code-NGO. Interestingly, the purported wholesale buyer Code-NGO, which turned over those bonds to RCBC known in the vernacular as “kaliwaan” after consummating the transaction with the Bureau of Treasury, uncannily did not join the petition. Adding suspicion is the failure of the eight banks to file a third party complaint against RCBC, Code-NGO, or to both of them if truly they were guided by “good faith.” As one lawyer-tax consultant quipped, it could have been a good defense for them to get their costly reimbursement.
As BIR Commissioner Henares pointed out, Code-NGO cannot question the retroactivity of the rulings revoking the tax exemptions because of “fatal legal infirmity of the 2001 rulings” issued by then BIR Commissioner Rene Banez. As the same lawyer-tax consultant pointed out, the ruling being null and void can never be used as basis to prevent the BIR from collecting the rightful taxes due the government. They should have known that BIR rulings can be revoked anytime, it not being a law but a mere opinion of the Commissioner. Considering the huge amount at stake, the best thing the banks, as secondary buyers, could have done was to secure a court judgment. Alas, they ignored the ominous warnings amplified by the 2004 and 2001 rulings revoking that exemption.
As the same lawyer-tax consultant explained, even if we take it that Code-NGO is tax-exempt, that specific transaction was at the outset illegal because Code-NGO, in the words of Commissioner Henares, was “ineligible to buy those debt instruments,” it not being a member or accredited as a government securities dealer (GSD). In that she could surmise there was a dilemma on how they could consummate their collusion to consummate the rip-off that is now developing into a more serious crime of tax evasion. As that shoddy ruling of Banez stated, there was only one lender: RCBC/Code-NGO. In that, one could deduce that Code-NGO fronted as the tax-shelter for the scam, while RCBC fronted to make the transaction legitimate. Now that they have profited much from it without a sweat, they want to add insult to injury by not paying their taxes. They are even playing possum by leaving it to the petitioning banks to argue for them.
As explained in the 2004 ruling made by then Commissioner Joel Tan-Torres, “the issuance and subsequent distribution (exchange and treading) of government debt instruments and securities in the secondary market to other market participants, specifically the investors, is in itself a public borrowing of the government. This makes it subject to the 20 percent final withholding tax. The number of lenders was immaterial.” Thus, should the eight banks fail in their defense of “good faith,” and having failed implead RCBC and Code-NGO, that then would deprive them the possibility of getting back their reimbursement. It is not even an excuse for Code-NGO to say that the P1.34 billion it profited was donated to another NGO identified as the Peace and Equity Foundation and given as endowments, and the remaining P400 million paid as fees and commissions to its financial advisers.
Finally, identifying those hustlers, one could say indeed there was in that instance a union of corrupt personalities from the public and private sectors, mostly made up of self-righteous and religious hypocrites. The alibi of DSWD Secretary Corazon “Dinky” Soliman that she already left Code-NGO before the scam was consummated is flimsy. Her husband, Atty. Hector Soliman, assumed the post of first corporate secretary of PEF and took charge in managing the proceeds from the bonds after she left. It was also an all-family affair because their son, Sandino Soliman, is the current project assistant of Code-NGO.
There was also Maria Socorro Camacho-Reyes, the sister of Arroyo’s former finance secretary Isidro Camacho. She actively pursued the consummation of the deal, and presided in the issuance of all the bonds. Among those suspected to have obtained their “rightful share” of the fees and commission for their role as financial advisers included Red Mayo of Capital Advisors for Private Enterprise Expansion (Capex), Inc., Bobby Guevarra and Juan Victor Tanjuatco of SEED Capital Ventures, and Danilo Songco, the former executive director of Code-NGO, and later appointed DBP board member. Finally, although Bureau of Treasury head Sergio Edeza “questioned” Code-NGO’s eligibility to bid, and even “rejected” its initial proposal to purchase those bonds on a negotiated sale, he however ended up employed by RCBC to head its treasury department.
In that, one could see how Code-NGO used its influence and saliva to exact concessions from a notoriously corrupt government. Nothing could amplify that than the truth that those bonds were issued just to allow it to generate huge profit without batting an eyelash that what it did was contrary to its objective, for in the end, it pushed the Filipino people a notch deeper into debt.
(rodkap@yahoo.com.ph)
Rod Kapunan
10/22-23/2011
Last Tuesday, the Supreme Court, with lightning speed, issued a temporary restraining order to stop the Bureau of Internal Revenue from implementing the 20 percent final withholding tax on the P35 billion Poverty Eradication and Alleviation Certificates bond. The petition questioned BIR Ruling No. 370-2011 issued by Commissioner Kim Henares reiterating the 2004 ruling reversing the three previous rulings exempting it from the payment of said tax amounting to P4.86 billion. Likewise, it ordered the Caucus of Development NGO Networks to pay the 30 percent capital gains tax from the P1.83 billion it earned to the tune of P549 million.
The 10-year bond was contracted on October 16, 2001, or barely a year after the corrupt Arroyo administration was installed to power with the help of those leading personalities of Code-NGO, many of whom were later appointed as officials with some still hanging on to their juicy positions under the present dispensation. Because of their influence, Code-NGO, in collaboration with Rizal Commercial Banking Corporation, cornered in whole the PEACe Bonds at a discounted rate but at a cost of P10.17 billion bearing an interest rate of 12.75 percent per annum such that the original amount has now ballooned to P35 billion. Despite that, RCBC failed to reciprocate by giving the government a discounted rate of interest, but instead exacted an onerous but illegal condition of being allowed not to pay taxes.
The eight commercial banks that filed the petition for certiorari and prohibition and/or mandamus – Bank of Commerce, China Banking Corp., Metropolitan Bank and Trust Co., Banco de Oro, Philippine Bank of Communications, Philippine National Bank, Philippine Veterans Bank, and Planters Development Bank—sought to stop the BIR from collecting the 20 percent final withholding tax, and the 30 percent capital gains tax from Code-NGO. Interestingly, the purported wholesale buyer Code-NGO, which turned over those bonds to RCBC known in the vernacular as “kaliwaan” after consummating the transaction with the Bureau of Treasury, uncannily did not join the petition. Adding suspicion is the failure of the eight banks to file a third party complaint against RCBC, Code-NGO, or to both of them if truly they were guided by “good faith.” As one lawyer-tax consultant quipped, it could have been a good defense for them to get their costly reimbursement.
As BIR Commissioner Henares pointed out, Code-NGO cannot question the retroactivity of the rulings revoking the tax exemptions because of “fatal legal infirmity of the 2001 rulings” issued by then BIR Commissioner Rene Banez. As the same lawyer-tax consultant pointed out, the ruling being null and void can never be used as basis to prevent the BIR from collecting the rightful taxes due the government. They should have known that BIR rulings can be revoked anytime, it not being a law but a mere opinion of the Commissioner. Considering the huge amount at stake, the best thing the banks, as secondary buyers, could have done was to secure a court judgment. Alas, they ignored the ominous warnings amplified by the 2004 and 2001 rulings revoking that exemption.
As the same lawyer-tax consultant explained, even if we take it that Code-NGO is tax-exempt, that specific transaction was at the outset illegal because Code-NGO, in the words of Commissioner Henares, was “ineligible to buy those debt instruments,” it not being a member or accredited as a government securities dealer (GSD). In that she could surmise there was a dilemma on how they could consummate their collusion to consummate the rip-off that is now developing into a more serious crime of tax evasion. As that shoddy ruling of Banez stated, there was only one lender: RCBC/Code-NGO. In that, one could deduce that Code-NGO fronted as the tax-shelter for the scam, while RCBC fronted to make the transaction legitimate. Now that they have profited much from it without a sweat, they want to add insult to injury by not paying their taxes. They are even playing possum by leaving it to the petitioning banks to argue for them.
As explained in the 2004 ruling made by then Commissioner Joel Tan-Torres, “the issuance and subsequent distribution (exchange and treading) of government debt instruments and securities in the secondary market to other market participants, specifically the investors, is in itself a public borrowing of the government. This makes it subject to the 20 percent final withholding tax. The number of lenders was immaterial.” Thus, should the eight banks fail in their defense of “good faith,” and having failed implead RCBC and Code-NGO, that then would deprive them the possibility of getting back their reimbursement. It is not even an excuse for Code-NGO to say that the P1.34 billion it profited was donated to another NGO identified as the Peace and Equity Foundation and given as endowments, and the remaining P400 million paid as fees and commissions to its financial advisers.
Finally, identifying those hustlers, one could say indeed there was in that instance a union of corrupt personalities from the public and private sectors, mostly made up of self-righteous and religious hypocrites. The alibi of DSWD Secretary Corazon “Dinky” Soliman that she already left Code-NGO before the scam was consummated is flimsy. Her husband, Atty. Hector Soliman, assumed the post of first corporate secretary of PEF and took charge in managing the proceeds from the bonds after she left. It was also an all-family affair because their son, Sandino Soliman, is the current project assistant of Code-NGO.
There was also Maria Socorro Camacho-Reyes, the sister of Arroyo’s former finance secretary Isidro Camacho. She actively pursued the consummation of the deal, and presided in the issuance of all the bonds. Among those suspected to have obtained their “rightful share” of the fees and commission for their role as financial advisers included Red Mayo of Capital Advisors for Private Enterprise Expansion (Capex), Inc., Bobby Guevarra and Juan Victor Tanjuatco of SEED Capital Ventures, and Danilo Songco, the former executive director of Code-NGO, and later appointed DBP board member. Finally, although Bureau of Treasury head Sergio Edeza “questioned” Code-NGO’s eligibility to bid, and even “rejected” its initial proposal to purchase those bonds on a negotiated sale, he however ended up employed by RCBC to head its treasury department.
In that, one could see how Code-NGO used its influence and saliva to exact concessions from a notoriously corrupt government. Nothing could amplify that than the truth that those bonds were issued just to allow it to generate huge profit without batting an eyelash that what it did was contrary to its objective, for in the end, it pushed the Filipino people a notch deeper into debt.
(rodkap@yahoo.com.ph)
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