Transparency & the new CJ : Will ‘Gods of Padre Faura’ bare SALNs at last?

By Malou Mangahas

Philippine Center for Investigative Journalism

First of Two Parts


THE FIRST WOMAN chief justice of the Supreme Court, Maria Lourdes P.A. Sereno, will have 18 years to roll our reforms in the judiciary, or nearly as long as the regime in power of strongman Ferdinand E. Marcos, who ruled without transparency and accountability.

It is too early to call a verdict: Will the courts open up under Sereno? Will she deliver “very good 18 years” or “very bad 18 years” in a judiciary long used to keeping the asset records of “the Gods of Padre Faura” under lock and key?

To lead by example, however, Sereno might have to start with herself. Thus far, she has disclosed only summaries of the data she enrolled in her Statement of Assets, Liabilities, and Net Worth (SALN) for the years 2009 and 2010. She did so in January 2012, at the start of the impeachment trial at the Senate of her predecessor Renato C. Corona – a trial triggered by the then chief justice’s failure to declare and disclose the true details of his wealth.

Being summaries, the data disclosed by Sereno barely honored the spirit of the SALN law, which stipulates the full and prompt disclosure of the asset records that all public officials and employees are required to file upon entry into office, every year within the April 30 deadline, and upon exit from public service.

Her declared net worth also left many wondering if it already included the payment for her expenses and services as a lawyer for the government in two international arbitration suits arising from the former administration’s decision in 2002 to nullify an allegedly disadvantageous contract of a Filipino-German joint venture to build the Ninoy Aquino International Airport Terminal 3.

The government was sued by the Philippine International Airport Terminals Co. (Piatco) in the International Chamber of Commerce (ICC) in Singapore, and by Fraport AG Frankfurt Airport Services Worldwide in the International Center for Settlement of Investment Disputes (ICSID) in Washington DC.

As of this writing, the new chief justice has yet to reply to PCIJ’s emailed and faxed queries regarding this and other matters.

In January 2012, Sereno released to the media a summary report on her SALN where she reported assets of P17,904,510.14, liabilities of P142,342.88, for a net worth of P17,762,167.26 in the year 2010.

This net worth was even slightly smaller than the P17,841,353.65 that she declared for the year 2009, when she listed assets of P17,996,810.82 and liabilities of P155,457.17.

Revised SALN?
But a number of Supreme Court personnel say that soon after she met with criticism and a congressman had threatened to impeach her for supposed failure to disclose her arbitration services payment in her SALN, Sereno “amended her SALN” and increased her declared net worth.

To be sure, revising one’s SALN is not illegal at all.  In fact, the so-called SALN Law – Republic Act No. 6713 or the Code of Conduct for Public Officials and Employees – allows SALN filers to amend their SALN within two years from date of filing.

One prominent lawyer, though, says Sereno’s reported revision of her SALN because she might have forgotten to include her arbitration service fees at the very least “raises a moral question – how could she have forgotten?”

Assuming she was paid in early 2011, Sereno would have been required in law to reflect this in her SALN for 2010, which had to be filed within the April 30, 2011 deadline. Besides, the payment should have been recognized in both her SALN and income tax declaration as income earned for the year 2010.

The facts thus far established in public records are these: The Manila International Airport Authority, which foot the bill of the lawyers, in its 2010 financial statement submitted to the Commission on Audit, said “cash advances/releases to the Office of the Solicitor General (OSG) for the T3 (Terminal 3) arbitration expenses aggregated to P2.4 billion as of December 31, 2010.”

Of course, the entire amount could not have gone to Sereno alone. This is even as over a dozen OSG disbursement vouchers had been issued for actual services and trips abroad that she took as research assistant of her mentor, retired Justice Florentino P. Feliciano, who was actually a lawyer on record in the arbitration cases.

The decision of the ICSID in Washington DC dated December 17, 2010 annulled for procedural lapses its 2007ruling rejecting the suit filed by Fraport AG against the Philippine government, for revoking the contract to build and operate NAIA 3 in 2002, paving the way for a fresh suit.

Listed as counsels for the government in the decision were: Ms. Agnes VST Devanadera, (until January 2010) Former Solicitor General Mr. Alberto Agra, (until June 2010) Former Solicitor General Mr. Jose Anselmo I. Cadiz Solicitor General (from August 2010), Justice Florentino P. Feliciano (Ret.) Sycip Salazar Hernandez & Gatmaitan, Ms. Carolyn Lamm, Ms. Abby Cohen Smutny, and Ms. Andrea Menaker White & Case LLP Washington, D.C.

PHL bill: P2.4B

It is not clear if the P2.4 billion in “aggregated” litigation expenses that the MIAA had incurred as of end-2010 already included the payment that the government had made earlier to White & Case LLP.  The international law firm had disclosed rendering “general legal representation” for the Philippine government in several reports to the Foreign Agents Registration Unit of the US Department of Justice.

In these reports, White & Case said it received payment from the Philippine government for “miscellaneous disbursements associated with legal work” and for “legal work” in these amounts: $108,241.92 on 11/08/04; $863.46 on 1/13/05; $125,220.21 on 7/20/05; $500,000 on 8/17/2005. These amounts add up to $734,325.59 or about P33 million only (at average exchange rate of $1 = P45).

White & Case has no recent reports with the U.S. Justice department to indicate if it had received further or final payment from the Philippine government, after December 2010.

JBC didn’t check

The matter about Sereno’s assets and liabilities would have been far clearer had the Judicial and Bar Council (JBC), in drawing up the shortlist of candidates for Corona’s vacated post at the Supreme Court, established with certitude two strategic matters about these individuals:

  • Their financial integrity, including the true value and sources of their real and other personal properties, and liabilities; and
  • The real, potential, and apparent conflicts-of-interest cases the candidates could face, once appointed to chief magistrate, vis-à-vis former clients or corporate entities in which they have business or financial interests or connections.

But Maria Milagros N. Fernan-Cayosa, a regular member of the JBC representing the Integrated Bar of the Philippines, says that most the Council managed to do was to “cross-check” the net worth declared in the SALNs of the candidates with the yearend balances of their bank accounts. The latter data came from certification letters issued by the banks, although a few reached the JBC close to the end of the selection process.

And while she says the JBC found “nothing that would alarm us,” she acknowledges the Council’s failure to investigate, validate, and determine the state of finances of the candidates.

The JBC would have wanted but failed to conduct a more rigorous financial integrity check on the candidates for chief justice, including the eight on the short list, Fernan-Cayosa says.  “If we really like a comprehensive determination of the fitness, which would include the financial background, financial integrity exactly, I will admit we have somewhat limited capabilities for that,” she admits.

This failure, she adds, derives from various reasons, including the tight deadline given to the JBC to select nominees “under unusual circumstances,” the lack of trained and capable JBC personnel in asset investigation, and the even, the fact that the JBC is so undermanned.

Out of 72 plantilla positions, the JBC presently has a 48-person staff. Because of “cost-cutting measures,” says Fernan-Cayosa, it was authorized to fill up just six of its 24 vacancies only recently.

Matrix sans analysis

JBC Executive Officer Annaliza S. Ty-Capacite, in a phone interview with the PCIJ, supports Cayosa’s explanation. Capacite, who has served with the JBC since 2005, says time, personnel, and personnel capability constraints prevented the JBC from probing into the details of the state of wealth of the nominees. “Our office made a matrix (of data enrolled in SALNs), submitted this to the council for their information,” she says, “but we didn’t have the luxury of time to do verification.”

The JBC executive officer is directly in charge of the JBC Office of Recruitment, Selection, and Nomination; Office of Policy and Development Research; and Office of Financial and Administrative Services.

The three-month selection process began on June 19, 2012, after the Senate voted to declare Corona guilty, prompting him to step down as chief justice. The process ended Friday, when President Benigno Simeon C. Aquino III chose Sereno from the short list of eight candidates that the JBC submitted last Aug.13.

From July 24 to 27, the JBC conducted public interviews with a long list of 20 qualified candidates, who were all required to submit their latest and prior years’ SALNs, personal data sheets, curriculum vitae, and certificates of waiver over their bank accounts. The selection process left the JBC staff all of two weeks to review the documents that the candidates submitted.

“The matrix had figures, data, but no analysis,” Ty-Capacite says. And while “the banks were cooperative,” she says, all that the JBC staff could do was this: “We made a report to the JBC members, gave them copies of the SALNs, copies of the bank statements.” The matrix did not offer an analysis of the net rise or fall in the candidates’ respective net worth, and how such could be justified.

According to Ty-Capacite, her staff had assumed that the JBC members “probably did their work also, and were not solely relying on our report.”

Gray matters

But it is work that can be daunting. To inquire into the financial estate of the candidates for chief justice, PCIJ conducted a reverse search of corporate records registered with the SEC, and mined the PCIJ’s databases and archives of SALNs, election spending reports, and other property and public records linked or related to the short-listed candidates.

PCIJ’s investigation was also hobbled by the JBC’s denial of its request for copies of the SALNs of all the 20 candidates, including six incumbent justices of the Supreme Court, on account of the guidelines on the disclosure of SALNs that the high court issued last July.

Still, PCIJ’s effort yielded a number of gray, unsettled, and possibly red-flag issues about some of the eight candidates, both the court insiders and the outsiders, on the JBC short list, including Sereno.

Because she had yet to disclose the full details of her SALNs for 2009, 2010, and the latest she filed for 2011 (within the April 30, 2012 deadline), Sereno might have to be asked to explain her business interest and financial connections, among other things.

Testing 8

PCIJ conducted a reverse search of the database of corporate records on file with the Securities and Exchange Commission and found that the name “Maria Lourdes A. Sereno” with Taxpayer Identification No. 110-833-917 remains listed as a board member, incorporator, or stockholder in at least three corporate entities.

SEC documents show that the Sereno listed in these companies has two different addresses:  Hardin ng Rosas in UP Diliman, and Filinvest East in Antipolo City.

But PCIJ does not have Sereno’s SALNs on file. Multiple PCIJ requests since 2006 for copies of the SALNs of the justices of the Supreme Court, Court of Appeals, and Court of Tax Appeals have not been granted, including the latest filed on August 17, 2012.

The SEC’s records though still list “Maria Lourdes A. Sereno” as either board member, incorporator, or stockholder in at least three corporate entities: AccessLaw Inc., SMETRIX Inc. and MRM Studios Inc.

In her latest press statements, Sereno has acknowledged only her association with AccessLaw where she had said she was president.

The General Information Sheet (GIS) that AccessLaw filed on Jan. 19, 2012 (for the year 2011), however, shows Sereno to be the majority or controlling shareholder of AccessLaw. To this day, she has15,840 shares or 27.55 percent of total common shares of AccessLaw, valued at P1,584,000. AccessLaw has total paid-up capital of P4,928,500

In AccessLaw’s GIS, Sereno is listed to be a resident of Filinvest East, Antipolo City with TIN 110-833-917.

AccessLaw’s latest GIS does not list Sereno as president but she remains a member of its Executive Committee. Three of her AccessLaw co-founders, two of them professors at the University of the Philippines College of Law, are named as officers in the GIS. Rachel P. Follosco is president, Susan P. D. Villanueva treasurer; and Jay L. Batongbacal is corporate secretary.

A stock corporation registered on April 4, 2000, AccessLaw declares its primary purpose to be: “To conduct legal research and surveys, provide skills development and training, and the production and distribution of legal multimedia materials.” Law professors say AccessLaw offers law schools and law firms subscription to digital databases of court rulings, similar to its rival entity, LexLibris.

AccessLaw’s GIS reports its “principal office address” at Unit B-4 Luisa Building 2 107 Maginhawa St. Teacher’s Village, Diliman, Quezon City, and its “business address” at 25th Floor, 88 Corporate Center, 141 Valero Street corner Sedeño St., Salcedo Village, Makati City.

Professor Batongbacal tells the PCIJ that soon after she was appointed associate justice in August 2010, Sereno “called for a meeting to say that she had to divest herself of her shares.” This has apparently not happened, because she remains enrolled as majority shareholder of AccessLaw in its 2011 GIS.

Batongbacal says AccessLaw was organized by “a bunch of idealistic law professors” who had wished to produce “quality digital legal products,” including court rulings with annotations. It is not fully operational anymore, and this may explain, he says, why Sereno’s divestment from AccessLaw has not been completed.

2 more entities

The same name “Ma. Lourdes A. Sereno” listed in the 2006 GIS of SMETRIX Inc. and 2011 GIS of MRM Studios Inc.

In these two entities, Sereno is said to be a resident of the Hardin ng Rosas, University of the Philippines Campus, Quezon City, but also with the same TIN, 110-833-917.

The second entity, SMETRIX Inc. was organized on April 27, 2001 to engage in the “business of consulting, business development and project management based on comprehensive understanding of front and backroom operations of the capital markets, international money markets and financial service industry, and transfer of funds, money and payment.” Sereno was last listed in the company’s GIS for 2006 and the SEC has no subsequent filings of SMETRIX.

The third entity in which “Maria Lourdes A. Sereno” with the same TIN is listed as a stockholder is MRM Studios, Inc.

It registered with the SEC on Sept. 21, 2001, to “provide music, news, & musical notes, etc thru electronic & wireless broadband.” Sereno remains listed in the firm’s 2011 GIS, albeit with just one nominal share.

And so this must be asked of the new chief justice: What is her amended or true net worth? And had she declared her business interest and financial connections in these three companies in her SALNs?

President Aquino appointed her to the Supreme Court in August 2010, the youngest ever to become associate justice. Last Friday, Sereno became the first woman chief justice, and also the youngest ever to assume to the post in the 100-odd years of the tribunal.

Will she also go for two other firsts: The first of the magistrates since 1989 to voluntarily disclose the full details of her SALNs?  And the first to acknowledge real, potential, and apparent conflict of interest situations she might get embroiled in? – With research by Karol Anne M. Ilagan and Rowena F. Caronan, PCIJ, August 2012