Manila Mayor Joseph Ejercito Estrada. EDWIN BACASMAS/INQUIRER FILE PHOTO
The Court of Tax Appeals (CTA) en banc has affirmed the 2015 ruling of its second division dismissing the P2.9-billion 2001 tax assessment against former president and now Manila Mayor Joseph “Erap” Estrada and his wife, former Senator Eloisa Ejercito.
In a 21-page decision, the CTA en banc denied the petition for review filed by the Bureau of Internal Revenue (BIR) which sought a reversal of the Tax Court’s 2015 decision and 2016 resolution.
The CTA second division said the tax assessment made by then Bureau of Internal Revenue Commissioner Lilia Hefti cannot be sustained because it merely used as basis the Sandiganbayan decision convicting Estrada of plunder.
Sandiganbayan, in its ruling declared Estrada as the real and beneficial owner of the bank accounts under the name “Jose Velarde.”
After Estrada was convicted, in 2008, the BIR issued a formal letter of demand (FLD) demanding payment of P2,905,048,539.58 as deficiency income taxes for taxable year 1999. The computation was based on the details of the Jose Velarde account.
Estrada and his wife then filed a protest against the assessment which was denied by the BIR prompting them to take the case to the CTA.
The CTA in 2015 had set aside the assessment made by the BIR. It also denied the motion for reconsideration filed by BIR.
The BIR then asked the CTA in full court to rule on the matter.
But the CTA, its recent ruling, said the BIR violated the due process rights of the Manila Mayor and his wife when it sent notices without any basis.
“The record is bereft of any indication which could at the very least give some hints that an actual audit or investigation was conducted by the assigned ROs (Revenue Officers) 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 accounts,” the CTA said.
It added that the BIR failed to present any documentary evidence to show that an independent audit was conducted to arrive at a deficiency tax amount. The CTA also noted that a BIR lawyer admitted that the assessment was merely based on the Sandiganbayan decision.
The Tax Court pointed out that it is a court of record and each party to a case must prove “every minute aspect of their cases.”
“Obviously, petitioner [BIR] failed to discharge this burden which is lethal to his case,” the court said.
“Thus, we concur with the [Tax] Court in Division that the absence of vital documents from which the court can verify the correctness of the subject deficiency income tax assessment, the same should be cancelled,” the CTA said.
The decision is written by Associate Justice Esperanza Fabon-Victorino and concurred in by Presiding Justice Roman G. Del Rosario and Associate Justices Juanito Castañeda Jr., Lovell R. Bautista, Erlinda P. Uy, Caesar A. Casanova, Ma. Belen M. Ringpis-Liban and Cathering T. Manahan. /je