MANILA – How the erstwhile tax agency chief Sixto Esquivias IV was eased out of his post is another case of how Philippine politics, business, and fiscal economics collide.

Weeks ago, Esquivias found out that the appointment papers of his temporary replacement, senior deputy commissioner Joel Tan-Torres, had already been signed, insiders and watchers at the Bureau of Internal Revenue (BIR) said.

He had no choice but to quit. He tendered his resignation as Commissioner of the BIR on October 30, a Friday.

On Monday, November 2, Malacañang formally accepted his resignation and named Tan-Torres as the officer-in-charge (OIC) of the agency.

In other words, Esquivias was forcibly taken out of his post.

His ouster was a plan that took some months of execution. It was a coup that was waiting to happen.

Esquivias fell from grace due a combination of factors: poor performance as BIR chief; his patron has allied himself with former President Estrada who is seeking another shot in the presidency; and, the scheduled elections.

Missed targets

Esquivias was vulnerable because he failed to perform his post’s basic requirement: meet the tax agency’s collection targets. (Read: Esquivias takes full responsibility for missed tax goals)

BIR missed collection targets in 8 out of the 12 months that Esquivias was Commissioner.

Missing collection targets was the common denominator in the replacement of his predecessors Jose Mario Buñag and Lilian Hefti.

In the case of Esquivias, the timing did not help. The government was hard-pressed to show-off fiscal discipline amid increasing expenses purportedly to help cushion the local economy against the impact of the global economic slowdown.

In the first 3 months of the year, the Philippines was on the brink of recession as the local economy grew by a dismal 0.4%. This was partly because the BIR collected only P241.8 billion, 6.2% less than the same period in 2008.

One of the worst indicators of failing on the job was the agency’s performance last April, a peak collection month for income taxes. The BIR under Esquivias did not only miss the target for the month; its collections fell by 4.2% to P87.1 billion. In the same month last year, the agency collected P91.3 billion.

Taxes collected by BIR account for about three-fourths the government's total tax revenues. The agency's poor collection has bloated the country's budget deficit, which is now expected to breach the P250-billion ceiling for 2009.

New positions

Malacañang had been creating positions at, or outside but related to, the tax agency that essentially undermined Esquivias.

In May, Malacañang created a new position for Narciso Santiago, the husband of Senator Miriam Santiago.

Mr. Santiago, a former Bureau of Customs official, was appointed as the Presidential Adviser on Revenue Enhancement. In essence, the position had something to do with the Large Taxpayers Services unit of the BIR.

That BIR unit randomly checks on the tax assessment of the country’s top 1,000 corporations, which account for over 70% of the BIR’s tax collections.

Santiago’s new position, however, has a Cabinet rank, which was peculiar since that Large Taxpayers Service unit is part of an agency headed by one who only has a Commissioner rank.

Initial reports said Esquivias was out of the loop on Santiago’s appointment. It was a sign of more foreboding to come.

In August, Malacanang created a new position in the BIR—senior deputy commissioner—to accommodate Joel Tan-Torres, a former partner of the top auditing firm SGV. (Read: Palace creates new BIR position for ex-SGV partner)  

Too many deputies

Santiago, Tan-Torres and a couple more names were in a shortlist reportedly submitted to Malacañang to replace Esquivias.

A business group had earlier complained about the appointment of Santiago since they feared that duplication of roles between the 2 groups—the BIR unit and Santiago’s—would be interruptive.

At the time, officials pushing for Esquivias’ replacement reportedly also had to get clearance from Senate President Juan Ponce Enrile.

Esquivias is a protégée of the senator. (Read: New BIR chief reportedly backed by Enrile, Recto)

The appointment of Tan-Torres as second-in-command to Esquivias eventually became the compromise.

However, Tan-Torres’ appointment just added to the excess positions for deputy commissioner at the BIR.

Under Sec. 3 of Republic Act 8424, or the Tax Reform Act of 1997, the agency should only have 4 assistant chiefs as deputy commissioners.

Tan-Torres, until his appointment as OIC, was already the sixth deputy commissioner.

Politics

Esquivias’ vulnerability became even more pronounced when his patron, Enrile, aligned himself yet again with President Estrada.

Enrile has defended Estrada from the attacks launched by Senator Panfilo Lacson and has been one of those that even urged the ousted president to join the presidential race in 2010.

The Senate president is now part of the senatorial slate of President Estrada.

When Esquivias was appointed to the BIR in October last year, Enrile was still allied with the administration.

Close ties

Why pick Tan-Torres when there were others eyeing the post?

One BIR source said Tan-Torres is close to Philippine Amusement and Gaming Corp. chief Efraim Genuino and Laguna Lake Development Authority head Edgar Manda, who was Mrs. Arroyo’s chief of staff when she was vice president.

Genuino and Manda are in turn close to First Gentleman Jose Miguel Arroyo.

Abs-cbnnews.com/Newsbreak sought Tan-Torres for comment but he replied through text that he is in Indonesia until November 16 for a conference.