SEN. JUAN Ponce Enrile yesterday said the chances of Finance Secretary Margarito Teves being confirmed by the powerful Commission on Appointments dimmed further due to Teves’ failure to discipline his erring subordinates who have cost government millions in tax losses.

Enrile, chairman of the CA committee on finance, said Teves, as DOF head, had usurped the authority of the Bureau of Internal Revenue when he reversed the BIR ruling on the classification of Pall Mall as Class B cigarettes. He said Teves failed to discipline his undersecretary Gaudencio Mendoza who issued the memorandum reversing the BIR classification of Pall Mall which effectively lowered the tax on the cigarettes from P26.06 to only P6.74 per pack.

The move is estimated to have cost government over P56 million in foregone revenues, assuming the manufacture of a minimum volume of 2.9 million packs per year. Pall Mall cigarettes are made by La Suerte Cigar and Cigarette Factory for UK-based British American Tobacco.

"Kung ako ang secretary ng finance, matagal ko nang sinipa iyon," Enrile said, referring to Mendoza. "Tingin ko, hindi nila naiintindihan kung paano palakarin yung Department of Finance, eh. Yung revenue regulation, dapat manggaling sa BIR pero hindi, ang ginagawa nung secretary of finance, siya mismo ang nag-iissue ng department order. Mali!"

Enrile said the interpretation of tax laws is the sole prerogative of the BIR. "Ngayon, kung yung decision ng BIR commissioner ay pabor sa taxpayer, dapat salungatin ng secretary of Finance kung mali. Dahil ang obligation of secretary of Finance is to guard the erosion of the tax of the government. Ngayon, kapag ang decision ng BIR ay kontra sa taxpayer, dapat suportahan ng DOF because yung taxpayer can go to the Court of Tax Appeals to question that ruling," Enrile, emerging from the CA hearing, said.

Enrile said Teves should have acted immediately on the matter since he could be found equally liable if it is proven that the Mendoza illegally signed the memorandum – by authority of Teves – for Pall Mall’s tax downgrade.

"If I were the prosecutor, I will charge them with graft. All of them," Enrile said. "My God! The secretary of Finance should discipline this people, including his undersecretary who was delegated, who signed by authority of the secretary. Why is (Mendoza) meddling with the BIR?"

Mendoza had also been linked to a Customs broker who allegedly facilitated the importation of an estimated $4.3 million of generators from Singapore last year, cheating government of some P300 million in unpaid taxes.

Enrile said Teves has to have a good explanation when he comes before the CA screening committee. "Kung hindi niya ma e-esplika (itong mga irregularities), hindi ko siya mairerecommend sa plenary (for confirmation)."

Bureau of Customs intelligence officer Ruben Anthony Tan Frogoso, an oppositor, appeared in yesterday’s hearing claiming that Mendoza has a brother at Customs who allegedly facilitated the importation of an estimated $4.3 million worth of generators from Singapore in February, March and May 2007. Frogoso claimed that unpaid duties for the 36 container vans of generators cost the government some P500 million in tax losses.

The consignee was identified as the National Petrochemical Corporation Alliance, an Iranian company allegedly connected with businessman William Gatchalian. – JP Lopez