THE government yesterday lost its P25-billion tax evasion case against the country’s second richest person, tobacco tycoon Lucio Tan, after the Marikina Metropolitan Trial Court dismissed the case for insufficient evidence.

The decision was a blow to the Bureau of Internal Revenue which has been trying since 1993 to go after the alleged tax liabilities of Tan, who made his fortune in cigarettes and beer during the dictatorship of the late dictator Ferdinand Marcos but has repeatedly denied that he was a Marcos crony or acquired several companies at preferential prices.

The Marikina court dismissed charges that Tan’s Fortune Tobacco Corp. and its executives evaded P25 billion in taxes by not paying the correct amount on cigarettes from 1990 to 1993.

In a decision penned by Presiding Judge Alex E. Ruiz, the court said the prosecution failed to prove that Fortune owned even a single share of stock in what the BIR alleged were its dummy corporations.

The court acquitted Tan and 54 other coaccused who were alleged to be officers of the alleged dummy companies.

The BIR accused Fortune of creating nine dummy corporations to act as buyers of Fortune’s cigarette products to make it appear that these were sold lower than the actual price.

By employing dummy corporations, Fortune and the nine companies committed evasion of value-added taxes and ad valorem taxes covering the period 1990 to 1992, the BIR alleged.

The tax evasion case was filed in 1993 when Liwayway Vinzons-Chato was internal revenue commissioner.

9 corporations

The nine corporations, which were also charged in the tax evasion case, include Townsman Commercial, Landmark Sales and Marketing, Crimson Croker Distributors, Dagupan Combined Commodities, First Union Trading Corp., Carl & Sons, Omar Distributors, Oriel & Co., and Mt. Matutum Marketing Corp.

“This court doubts whether any person, be rich or poor, can be criminally convicted on an extrapolation based on pure assumptions or an individual’s imagination, for otherwise, the presumption of innocence which is at the core of our criminal justice system would lose its sense of value and sensible attribute,” the court said.

The BIR, using articles of incorporation as evidence, said that officers of the alleged dummy corporations were employees of Fortune.

The defense, however, claimed that they were former employees who had formed their own companies.

‘Mother of all tax cases’

BIR assistant commissioner Estela Sales, who is in charge of the Tan case, said the revenue agency would confer with the Office of the Solicitor General and the Department of Justice on whether to continue to pursue what has be called “the mother of all tax cases.”

BIR Commissioner Jose Mario Buñag said the agency would consult its lawyers to study whether to file an appeal with the Court of Appeals or the Supreme Court.

Defense lawyer Estelito Mendoza said, however, that the BIR could no longer seek any other legal means to pursue the tax evasion case, as that would constitute double jeopardy.

“Under the Rules of Court, the judge’s decision to grant a demurrer is final and executory. The prosecution has no right to appeal, nor can they even move for a reconsideration of the order because it will violate the principle of double jeopardy,” he said.

Second dismissal

This is the second time that the Marikina Metropolitan Court has dismissed the case. It did so in 1999 but reopened it after the Supreme Court ordered a retrial.

“This tax case started 13 years ago. The road to justice took a long trip. Fortunately, the defense was able to show that the [prosecution’s] allegations do not have any factual or evidentiary basis,” Mendoza said.

Tan, who also controls Philippine Airlines and the Philippine National Bank, is the richest person in the Philippines after shopping mall magnate Henry Sy, with a worth estimated by Forbes magazine at $1.7 billion.

Other victories

Various governments since the Marcos regime have tried to punish him for his allegedly lucrative links to the dictator, but with little success.

The reclusive billionaire has won victories against the government in the lower courts, the Sandiganbayan anti-graft court and the Supreme Court.