The Court of Tax Appeals (CTA) has reversed a ruling by the Bureau of Internal Revenue (BIR) requiring former President and now Manila Mayor Joseph Estrada and his wife, former Sen. Luisa “Loi” Ejercito Estrada, to pay P2.9 billion in income taxes for 1999.
In a 41-page decision promulgated on November 23, 2015 the tax court’s Second Division partially granted the petition filed by the spouses against the BIR and former BIR Commissioner Lilian Hefti.
However, the court denied the Estradas’ petition to hold the respondents liable for the cost of litigation.
Associate Justice Juanito Castañeda Jr. penned the decision that was concurred in by Associate Justices Caesar Casanova and Amelia Cotangco-Manalastas.
The BIR said the Estradas violated the Tax Code when they failed to declare the supposed taxable income computed using the credits of a Jose Velarde account alleged to have been owned by Estrada totaling P2.22 billion for year-end 1999.
But the tax court threw out this claim.
“Due process demands that petitioners are afforded ample opportunity to be heard before any judgment may be rendered against them. Part of this due process requirement is the reasonable opportunity to confront or rebut any evidence that may be presented against them. Thus, this Court cannot sustain the tax assessment against petitioners solely based on the Sandiganbayan decision,” it said.
The court was referring to the Sandiganbayan decision in the plunder case against the former president which the BIR adopted as basis for its tax assessment.
“Due to the absence of vital documents from which the Court can verify the correctness of assessment, the subject deficiency income tax assessment should be cancelled,” the tax court said.