SC deals gov’t another setback in tax case

The Supreme Court (SC) rejected a motion by the Office of the Solicitor General (OSG) seeking the transfer of the P25-billion tax evasion cases against taipan Lucio Tan to the Court of Tax Appeals (CTA).

In a one-page resolution dated Aug. 17, the SC found "no substantial arguments’ to warrant the transfer.

On July 26 the OSG asked the SC in a motion for partial modification to let the CTA, instead of the Marikina Metropolitan Trial Court (MTC), hear the cases against Tan.

The OSG argued that the cases could still be transferred because the Marikina court had not acquired full jurisdiction over Tan.

The OSG based its assertion on the fact that Tan had not been arrested nor had he posted bail before the Marikina court for the nine counts of tax evasion filed against him.

But the SC ruled that "jurisdiction over the person is acquired upon his arrest or upon his voluntary appearance" in court.

With the passage of Republic Act (RA) 9282 on March 30, 2004, the CTA was granted exclusive jurisdiction over violations of the country’s tax laws.

RA 9282 gives the CTA "exclusive original jurisdiction over all criminal offenses arising from violations of the National Internal Revenue Code or Tariff and Customs Code and other laws administered by the Bureau of Internal Revenue (BIR)."

In an en banc session last July 13, the SC unanimously voted for the reinstatement of the cases against Tan and several officials of Fortune Tobacco Corp., which had been dismissed by the Marikina MTC in 1999.

The SC noted that the Marikina MTC failed to decide on the merit of the cases and ordered the MTC to continue hearing the cases even if the BIR decided in 1998 not to pursue them.

The SC reversed the rulings of the Court of Appeals and the Marikina Regional Trial Court, which both affirmed the March 1999 decision of the Marikina MTC.

Former BIR commissioner Liwayway Vinzons-Chato initiated the cases against Tan in September 1993 in the Department of Justice (DoJ) after Fortune Tobacco allegedly failed to pay its ad valorem, income and value-added taxes for the years 1990, 1991 and 1992.

After five years of legal maneuverings, the DoJ filed the cases in the Marikina MTC in December 1998.

But MTC Judge Alex Ruiz dismissed the cases in March 1998 after BIR legal chief Osias Baldovino and assistant chief for prosecution Romeo Buan told the court than the BIR had reviewed records of Fortune Tobacco and found no evidence of tax fraud.

The findings were approved by then BIR commissioner Beethoven Rualo.

But the SC said that Ruiz should not have ruled on the case based only on the BIR’s position.