Tax appeals court delinks SMC from Marcos estate
The Court of Tax Appeals (CTA) has barred the Bureau of Internal Revenue (BIR) from seizing P8.6 billion worth of shares in San Miguel Corp. (SMC), as part of the settlement of a 34-year-old tax case involving the estate of deceased former President Ferdinand Marcos.
In a 59-page ruling, dated Aug. 14, the CTA’s First Division ruled that the BIR cannot distrain properties that are not part of the Marcos estate.
The ruling partially granted SMC’s petition and prohibited the BIR from further enforcing the estate tax assessment against SMC and the family of deceased tycoon Eduardo Cojuangco Jr.
The CTA in its ruling said that the SMC shares did not form part of the Marcos estate and that the BIR’s move to distrain them amounted to grave abuse of discretion, even as it upheld the finality of the 1991 assessment against the Marcos estate.
“To underscore, the validity of the assessment is one thing; the propriety of the BIR’s collection efforts is another. While the finality of the assessment may affect the legitimacy of collection proceedings, the reverse does not hold true,” the CTA said in the decision penned by Associate Justice Lanee Cui-David.
The case stemmed from the 1991 tax assessment issued against the Marcos estate that totaled P23.29 billion. Included in the gross estate of P36 billion are SMC stocks amounting to P8.6 billion.
But in 2011, the Supreme Court ruled in Republic v. Sandiganbayan that the SMC shares registered in the name of the late businessman Eduardo Cojuangco Jr. and others are their exclusive property, setting aside writs of sequestration earlier issued by the Presidential Commission on Good Government over the Cojuangco SMC Shares.
In filing the case before the CTA, SMC alleged that the BIR, through Commissioner Romeo Lumagui, acted without or in excess of jurisdiction and with grave abuse of discretion when, in computing the estate tax, he included in the gross estate properties not owned by the Marcoses.
While the CTA agreed that the 1991 Marcos estate tax assessment had long become final and executory, it ruled that the BIR cannot collect tax through the distraint of the Cojuangco SMC shares.
The bureau’s “unfounded persistence” to collect against the Cojuangco SMC share despite their exclusion from the Marcos estate showed “arbitrariness, capriciousness, and whimsicality, amounting to grave abuse of discretion,” the CTA said.
“The Court is constrained to intervene, as respondent’s actions place individuals who are not parties to the tax assessment, such as Cojuangco and other shareholders, at risk of being held liable for a deficiency estate tax owed by a different taxpayer,” it added.
