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Explaining the estate tax issue, again

FIVE months after this charge was hurled against then candidate Ferdinand “Bongbong” Marcos Jr. to stop his presidential bid, it seems to be still circulating that Toni Gonzaga, a talk-show host friendly to the President, in a recent interview asked him to comment on it — the alleged unpaid estate or inheritance taxes on his late father’s properties.

Unfortunately, the President’s response was too short, saying mainly that his family “wants to reopen the case.”

Former justice Antonio Carpio, the architect of this canard, in an article yesterday in his sole propaganda venue now called Rappler (the Philippine Daily Inquirer it seems, had junked his column starting this year) jumped on Marcos’ response, pointing out how the Supreme Court’s Third Division in 1997 ruled as final its earlier 1993 decision upholding the BIR’s tax assessment.

Credit Carpio, really a skilled propagandist, for getting this non-issue off the ground, as it was he who concocted the figure of P203 billion last May during the election period as the candidate Marcos and his family’s alleged “unpaid taxes,” which he said they certainly would not pay if he won. It is a totally baseless figure though, perhaps because it’s a figure easily remembered (2, 0, 3) has gained some traction, with many even confusing “estate taxes” (i.e., inheritance taxes) with property taxes. It’s in fact an issue against Marcos often listed among his family’s crimes in social media by diehard Leni Robredo supporters.

I wrote in April when this issue was first raised by candidate Isko Moreno: “BIR Commissioner Cesar Dulay told me yesterday, ‘I merely issued the same tax deficiency assessment the BIR has been issuing through four administrations. I did not, repeat I did not, demand [from] the Marcos estate P203 billion. That P203 billion calculation is solely Carpio’s’.”

Carpio simplistically computed that if the 1991 tax deficiency was P23 billion, and that if it is unpaid, the huge interest and penalties would require the estate to pay a total of P203 billion. That is, the P203 billion is purely from Carpio’s mind.”

But does the Marcos family really owe P23 billion in estate taxes? Here are two facts that should shed light on the issue:

Satisfied

First, the Supreme Court’s June 5, 1997 (GR 120880) ruling reads:

“On February 22, 1993, the BIR commissioner issued twenty-two notices of levy on real property against certain parcels of land owned by the Marcoses — to satisfy the alleged estate tax and deficiency income taxes of spouses Marcos. On May 20, 1993, four more notices of levy on real property were issued for the purpose of satisfying the deficiency income taxes. On May 26, 1993, additional four notices of Levy on real property were again issued.”

The court ruled “satisfy” and “satisfying” the alleged deficiency inheritance tax, not “partially satisfy” or “partially satisfying” it. If the tax deficiency has been “satisfied,” i.e., paid, why has the BIR (Bureau of Internal Revenue) kept sending notices to the Marcos estate about its alleged tax deficiency? Important to debunk Carpio’s “P203 billion” fiction, this payment through the confiscation of 26 pieces of land automatically suspends any interest and penalty charges — if there is still anything to be paid.

Ironically, it is this Supreme Court ruling of 1997 that Carpio invoked to claim that the BIR’s tax deficiency claim is “final and executory,” which however says the properties were levied to satisfy the tax deficiencies.

The current Presidential Commission on Good Government (PCGG) in its March 11, 2022 letter to Moreno also emphasized this, saying that the “BIR already executed its final assessment when it levied and sold 11 properties in Tacloban City.”

Sequestered

Second, the alleged Marcos properties on whose total value the BIR in 1991 computed to require P23-billion estate taxes included many of the assets that the PCGG had sequestered starting right after Corazon Aquino seized power in 1986. This therefore had been in the state’s custody, and therefore beyond the Marcos family’s control or responsibility to pay estate taxes on.

My sources in the BIR also confirmed that many, if not all of the properties that the PCGG had sequestered starting in 1986, such as the San Miguel Corp. shares, PLDT shares, Philcomsat, the Manila Bulletin and over 400 lots owned by personalities close to Marcos, such as Roberto S. Benedicto and the late Cavite governor Juanito Remulla, were listed by the BIR as the properties Marcos left when he died in 1989.

This is what Marcos was referring to in his Gonzaga interview: “Iisa-isahin talaga namin ‘yung sinasabi naming property, kasi hindi maliwanag ang pag-aari ng mga property na sinasabi (We will clarify what are these properties, because it is not clear which ones are included).”

In fact, the current PCGG in its March 11, 2022 letter to the chairman of Moreno’s party explained that the BIR and the PCGG back in 2003 had reached an agreement to exclude in the enforcement of the 1991 inheritance tax assessment the alleged Marcos properties which are “sequestered or subject of a recovery case by the PCGG and the Swiss funds under escrow [with] the Philippine National Bank.”

Resolution

The PCGG letter explained firstly that pending resolution of the sequestration cases, such assets and properties cannot be made part of the Marcos estate, on which therefore estate taxes cannot be levied. The PCGG explained that, “By having sequestered them, the government had laid claim on them (and are in custodia legis) and should government’s claims be finally upheld by the courts, the BIR would have in effect satisfied the tax claim of the government with properties of the government itself instead of properties of the delinquent taxpayers.”

Some 19 years after the PCGG and the BIR had agreed to that chore, however, they haven’t done so. How could the BIR demand estate tax deficiencies when the two agencies haven’t decided which properties were owned by late Marcos, were sequestered or not, or were in fact owned by other people?

The PCGG letter even revealed that the Marcos Swiss bank deposits were included in the Marcos properties that were made subject to the P23-billion inheritance taxes. But those deposits had come to the PCGG’s control in 1987 when a Swiss court ordered these to be turned over to the Philippine government.

Plot

The demand for payment of the estate taxes, in reality, was the Corazon Aquino regime’s plot to ensure that the strongman’s death in 1989 would also mean his family’s total political execution. His heirs would not have afforded the P23 billion assessment on his properties. Not only would they be financially debilitated, unable to take control of any of the properties, but they wouldn’t have any finances to engage in political contests.

It turned out though that that scheme was too stupid — how could the Marcoses pay inheritance taxes on an asset sequestered by government or, as in the case of the Swiss bank deposits, on monies confiscated by government?

As a result, succeeding BIR commissioners under five presidents merely went to the motions of sending the tax deficiency letters (as failure to do so risks charges of technical corruption) knowing that these are absurd — legally, a “dead letter” that cannot be implemented. A good propagandist like Carpio, however, knew how to use for political purposes even a dead letter, a non-issue.


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