More doubts on Tiu claim

Antonio Tiu. CONTRIBUTED PHOTO

MANILA, Philippines–Senators Alan Peter Cayetano, Antonio Trillanes IV and the blue ribbon subcommittee chair, Sen. Aquilino Pimentel III, continued to doubt Antonio Tiu’s claim of ownership, especially after he submitted Thursday a one-page memorandum of agreement (MOA) with Laureano Gregorio to back his testimony on his P400-million purchase of the property.

The agreement was not notarized.

Cayetano grilled Tiu on the documents from Gregorio to prove he was the legitimate owner of the property that he claimed he transformed into an agri-tourism park.

If businessman Tiu continues to insist he owns the sprawling agricultural estate in Rosario town, Batangas province, he faces a slew of possible violations of the agrarian reform law, tax evasion for nonpayment of the capital gains tax on the sale of the property and the lack of value-added tax registration for his so-called agri-tourism park.

His troubles may extend to his other companies. The Securities and Exchange Commission (SEC) has found adverse findings on the financial disclosures by Sunchamp’s related companies, including Greenergy Holdings, AgriNurture Inc. (ANI), Agrifortuna and Earthright Holdings.

Tiu’s culpabilities surfaced at the continuation on Thursday of the Senate inquiry into the alleged overpricing of the Makati City Hall Building II and other alleged corrupt practices in the city when Vice President Jejomar Binay was its mayor.

Tiu said he bought 145 hectares from Gregorio which, according to hi he transformed into Sunchamp Agri-Tourism Park.

But it was illegal for Gregorio to have consolidated the farm without informing the Department of Agrarian Reform (DAR), Secretary Virgilio de los Reyes said at the hearing.

“This can’t be done. This will violate Section 6 of RA (Republic Act No.) 6657 (Comprehensive Agrarian Reform Program, or CARP) that sets retention limits,” De los Reyes said, pointing out that the law prohibits a landowner from retaining land exceeding 5 hectares.

De los Reyes also said that consolidating the land titles, and then selling the land without clearing it with the Land Registration Authority (LRA) was also illegal.

Tiu maintained there was nothing illegal about this.

De los Reyes said a landowner could lease land not exceeding 5 hectares and not covered by CARP for agricultural purposes.

If the land is covered by CARP, a landowner should get a clearance from the DAR before leasing it, he said.

De los Reyes said the DAR had yet to determine what part of the property was covered by land reform.

After being awarded the land, a landowner could not convert the use of his land in five years and not sell it in 10 years, otherwise this would be illegal, the agrarian reform secretary said.

“If he wants to sell it, he must get a clearance from the DAR. That’s what he can do,” he said.

If the landowner sold the land without informing the DAR, this would be illegal, the award of title could be canceled, and the land would be returned to the government, he said.

‘Work in progress’

Tiu admitted that Sunchamp had not obtained a clearance for conversion of the land from the DAR. “We’re working on that. It’s a work in progress,” he said.

“There’s a two-year curing period for the seller for the conversion of the land title before the full payment can be executed,” he added.

Cayetano also raised the possibility of tax deficiencies in connection with the sale of the controversial Batangas property to Tiu, who said he owned it amid allegations that Binay was the true owner of the estate.

Gregorio has the deed of sale, but the tax declarations are not under his name.

Tiu said he had these checked as part of due diligence before buying the property.

Cayetano zeroed in on the date of the deed of sale held by Gregorio to prove he was the legitimate owner of the land that Tiu had bought from him.

Capital gains tax

Cayetano alleged that the land was sold 20 years ago but had not been transferred in Gregorio’s name, which is tax evasion on his part. Tiu bought it and it was still not under his name, the senator added.

Tiu said he had not looked at the date on the deed of sale, and his lawyer Martin Subido said the same.

But Cayetano said the date was a crucial detail because it would determine when and how much in capital gains taxes should have been paid for the sale of the land.

Capital gains tax refers to the tax imposed on gains presumed to have been realized by the seller from the sale, exchange, or other disposition of capital assets.

Tiu said it was the seller’s obligation to pay the tax.

But Cayetano said that if these taxes had not been paid, even if Tiu had bought the property, the government could still go after the land and auction it off. This means that if the buyer does not look at the date of the deed of sale, and the price of the property is already equal to the tax, including penalties and surcharges, then the government will get the property, he said.

“If there’s a problem with the land, your P400 million will go to waste because this will be depleted by paying the taxes alone, and you won’t even get the land,” he said.

Tiu said the title of the property would not be transferred to him if the taxes had not been paid, adding that this could not escape the attention of the Bureau of Internal Revenue.

But the senator said Tiu was allowing this because the deed of sale did not have a date.

Pimentel also asked whether it was in the interest of the buyer to ensure that the proper taxes had been paid arising out of the transaction.

Under the tax code and a revenue regulation, the obligation to pay the tax has shifted to the buyer because the BIR has a requirement that the buyer should withhold the tax and remit it to the BIR, according to BIR chief Kim Henares. It is also better to pay this at once, she said.

“It is to the interest of the buyer that he pay the taxes at the time of the sale because you have a surcharge of 25 percent, penalty interest of 20 percent, and it keeps on running. By the time we finish, you might not have any property anymore because we can attach the property as payment,” she said during the hearing.

Cayetano also said that if a property was sold twice, it is prohibited to make it appear that the original owner sold it directly to the third buyer.

Capital gains tax should be paid from the sale of the property by original owner to the second owner, and also from the sale of the property by the second owner to the third owner, he said.

He said if the deed of sale was blank, this could be used to evade taxes. He cited a TV interview where a Batangas resident said she sold her land to Binay, and the latter said the property would be transferred to him.

But Cayetano said the property was not transferred to Binay’s name but was transferred to a third person.

“So there’s tax evasion because they left out one transaction,” Cayetano said.

Attempt to evade taxes

Henares said in such a case, there was an attempt to evade taxes, particularly the capital gains tax and documentary stamp tax.

For a P400-million property, the capital gains tax is P24 million. If there is fraud, another P12-million charge would be collected. The tax could balloon to over P120 million if no taxes have been paid for 20 years, said Henares.

Tiu said there was no intention to avoid paying taxes.

Cayetano also said Gregorio apparently committed another anomaly because he registered in the name of Sunchamp the buildings on the Batangas property whose tax declarations were not under his name.

Gregorio did not have any written agreement with the holder of the tax declaration that the buildings belonged to him, the senator said. This was not allowed under the Civil Code.

“The assessor allowed it. So this is an anomaly,” he said.

Tiu said this was “not his problem,” but Cayetano said he was the owner.

“Actually, your honor, I’m the one that is correcting a mistake. I don’t understand what’s the anomaly in my case,” Tiu said.

But Cayetano insisted he was liable. “A mistake over a mistake over a mistake, that makes you a tax evader,” he said.

Tiu said he was ready to face any case from the BIR if there was any tax deficiency, and Cayetano retorted that Tiu had no choice but to face it if he had evaded taxes, whether he was ready or not.

“You said there was due diligence, but in your due diligence, it did not say the sale had taken place a long time ago and it was not registered,” he said.

MOA not notarized

The senators also questioned the fact that the MOA between Tiu and Gregorio for the purchase of the Batangas farm was not notarized.

Pimentel said he was expecting a more complicated document. He said he wanted to submit it to Henares to analyze its tax treatment.

Cayetano said the MOA had to be notarized and registered to be binding on third parties.

He said that while the MOA was binding between the two parties, the other parties who hold the title could actually sell the property to other people. The new sale would be valid if the new buyers were unaware that it had been sold to Tiu, he added.

Tiu’s lawyer Subido disagreed, saying that the MOA remained a valid document even without being notarized and that there was no weakness in the document.

He said registration and having the document notarized were not the means of transferring ownership. This could be done through delivery and, in this case, Sunchamp has possession and control of the property.

But Cayetano said that under the law, the exemption to this was real estate. Ultimately, the lack of notarization did not protect Subido’s client, he added.

Trillanes said that amid all this, it was clear there was no actual transfer of ownership of the Batangas property from Binay to Tiu.

He and Cayetano also castigated Tiu for changing his story every time he got caught.

It was also found out that Tiu had no VAT registration for Sunchamp Agri-Tourism Park, which the businessman said had accepted visitors to the farm, including students on field trips, before the controversy triggered by the Senate probe broke out.

SEC Chair Teresita Herbosa testified that the agency was reviewing and investigating the financial reports of the publicly listed Greenergy and ANI to find if these were accurate.

“We have found some adverse findings, or some incomplete disclosures. We will be issuing notices of clarificatory conferences to company officers as well as the auditors,” she told the committee.

In case of incomplete disclosures, outright misrepresentation or omission, the SEC would seek explanations from the concerned company, and without sufficient explanation, would impose administrative sanctions.

“We can impose a suspension, or in the case of ordinary corporations, even revoke the corporations,” she said.

Tiu earlier claimed Sunchamp made a down payment of P11 million for the purchase of the Batangas property. He said this would be charged against the shareholders.

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