Marcos family

[ANALYSIS] Inconvenient truth: The Marcos estate tax liability

Rene dG. Bañez

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[ANALYSIS] Inconvenient truth: The Marcos estate tax liability
He who cannot even follow a basic command of the law to pay tax has no business nor right to become the president of a republic where rule of law is the anchor of its existence

Various  comments, articles, discussions have been given on the unpaid Marcos estate tax liability without a clear understanding of how it came about. This article is intended to state and underscore the facts that transpired  which gave rise to this estate tax liability which remains unsettled. 

The facts of the Marcos estate tax liability remains uncontroverted as contained in the SC decision of F. R. Marcos II vs. CA, CIR, et al, G.R. No. 120880, June 5, 1997. 

A deficiency estate tax assessment was issued by the Bureau of Internal Revenue (BIR) against the estate of Marcos Sr. in the amount of P23,293,607,638. The notice of assessment was personally and constructively served on August 26, 1991 and September 12, 1991 upon Mrs. Imelda Marcos (through her caretaker Mr. Martinez) at her last known address at 204 Ortega St, San Juan, MM.

The assessment was not protested administratively by Mrs. Marcos and the other Marcos heirs within 30 days of said assessment. A protest is a basic requirement of the National Internal Revenue Code (NIRC) if one disagrees with the tax assessment which is  a remedy available to a taxpayer under the law. On February22, 1993, the then-BIR commissioner issued 22 notices of levy on real property against certain parcels of land owned by the Marcoses to satisfy the alleged estate tax liability of the Marcos estate. On May 26, 1993, additional four notices of Levy on real properties were issued. 

Notices of public auction were posted on May 26, 1993, at Tacloban City Hall. The 11 lots were forfeited in favor of the government as there was no bidder. 

On June 25, 1993, petitioner Marcos Jr filed the instant petition for certiorari and prohibition. 

The subject petition was filed to  assail the Court of Appeals (CA) decision dated November 29, 1994 in CA-G.R. SP No. 31363 where the appellate court ruled among others that the “deficiency estate tax is already final and unappealable. The subsequent levy of real properties is a tax remedy resorted to by the government, sanctioned by Sections 213 and 218 of the NIRC.” 

What is the decision of the Supreme Court (SC) on the petition filed by Marcos Jr? The SC “affirmed the decision of the CA in all respects.”

To provide light and clarity on the Marcos estate tax liability, it is worthwhile to reiterate the reasons articulated in the decision namely:

  1. The summary tax remedy is distinct from the other tax remedies and is not affected or precluded by the pendency of any other tax remedies instituted by the government.
  2. The fact that the decedent has pending cases involving ill-gotten wealth does not affect the enforcement of tax assessments over properties indubitably included in the estate of the late president. 
  3. It is the BIR and not the Department of Justice which is  task to determine the amount of tax due upon the subject estate and whose determinations and assessments are presumed correct and made in good faith.
  4. The taxpayer has the duty of proving that the tax assessment is erroneous. In the absence of proof of any irregularities in the performance of official duties, the assessment will not be disturbed. Even an assessment based on estimates is prima facie valid and lawful where it does not appear to have been arrived arbitrarily or capriciously. The burden of proof is upon the complaining party to show clearly that the assessment is erroneous. Failure to present proof or error in the assessment will justify judicial affirmance of the said assessment. In this case, Marcos Jr has not pointed one single error in the findings  which gave rise to the questioned assessment. 
  5. The objections to the assessments should have been raised with the BIR and Court of Tax Appeals. They cannot be raised now via a petition for certiorari, under the pretext of grave abuse of discretion. The course of action taken by  Marcos Jr. reflects his disregard or even repugnance of the established institutions for governance of a well-ordered society. The subject tax assessment having become final, executory and enforceable, the same can no longer be contested by means of a disguised protest. 

Undoubtedly, Marcos Jr as executor of the Marcos estate is legally obligated to have paid the corresponding estate tax on properties indubitably included in the Marcos Estate. The pendency of ill-gotten cases is not a valid ground to defer any tax payment. In addition to these properties, it should have  revised the composition of the Marcos Estate to include assets which form part of cases already resolved by the courts in their favor, recompute the estate tax and pay the additional tax thereon. To date, there is no showing of any partial estate tax payment. 

The inconvenient truth is that Marcos Jr.’s non-payment of the estate tax liability of the Marcos estate as executor is a deliberate disregard of our tax law. And he who cannot even follow a basic command of the law to pay tax has no business nor right to become the president of a republic where rule of law is the anchor of its existence. 

Finally, there are three options on this raging issue: Do nothing and allow the collection of the estate tax to prescribe; file a criminal or civil action, or both; and awaken the good senses of Marcos Jr. or any of the heirs to settle and pay the estate tax liability. Expect the first, do the second, and hope for the third. –

René dG. Bañez is former BIR commissioner and senior lecturer at Ateneo Law School.

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