Tax court clears Erap on ‘Jose Velarde’ case

Manila Mayor Joseph Estrada. AP FILE PHOTO

The Court of Tax Appeals (CTA) has affirmed the dismissal of the P2.905-billion unpaid tax case against former President Joseph Estrada and his wife, ex-Senator Luisa “Loi” Ejercito, on the ousted leader’s secret Jose Velarde bank account.

In a 21-page en banc decision dated Oct. 19, the CTA upheld its Second Division’s Nov. 23, 2015, ruling granting the Estradas’ petition to throw out the 2008 tax payment demanded by the Bureau of Internal Revenue (BIR).

The tax court ruled the BIR’s assessment was “void and without any legal effect” for failing to substantiate the basis of the tax assessment, violating the Estrada couple’s right to due process.

The Jose Velarde account in the now-defunct Equitable PCI Bank, which held P3.2 billion at one point, was a key evidence in the former President’s impeachment and plunder trials. Businessman Jaime Dichaves, Estrada’s friend, claimed the account was his.

The CTA said the BIR’s tax assessment was “anchored solely” on the Sandiganbayan’s Sept. 12, 2007,  decision finding the former President guilty of plunder.

It said the BIR’s own records did not support its insistence that a separate tax audit or investigation took place “to determine whether respondents indeed had undeclared income which must be assessed deficiency taxes and whether the said undeclared income pertain to the monies in the Velarde bank account.”

The court said the BIR did not even present the Sandiganbayan decision — which declared Estrada to be the true owner of the Jose Velarde account — as part of its evidence in the CTA case.

The BIR had insisted that the Estradas were bound by the plunder verdict, but the CTA said that the Sandiganbayan decision involved different issues.

Estrada was pardoned by then President Gloria Macapagal-Arroyo a month after he was convicted and sentenced to 20 to 40 years in prison.

The Sandiganbayan also ordered the forfeiture of P189 million in the Jose Velarde account.

The plunder case against Dichaves is still pending at the Sandiganbayan Fourth Division.