From his own mouth: CJ Corona’s guidelines in the use of SALNs & ITRs to prove ill-gotten wealth

 

Read his formula for computing corruption

My exclusive

By Raïssa Robles

Prosecutors in the impeachment trial might not know they have a document they can refer to when they present ITRs and SALNs  as evidence. It’s a document written by someone who happens to be named Renato C. Corona.

The document is Chief Justice Corona’s landmark decision on  July 15, 2003 turning over the Marcoses’ loot stashed in Swiss banks to the Philippine government.

In that document, CJ Corona made some interesting points:

• He said the burden of proof lies with the person being accused of having amassed such wealth.
• He also said the court should disregard technicalities thrown by the defendant’s side.
• And he said it was enough to compare a respondent’s SALNs  (Statement of Assets, Liabilities and Net Worth) and ITRs  (Income Tax Return) with the wealth in question to determine the latter’s illegal origin. If disclosed income and assets were far less than the questioned wealth, then the latter is ill-gotten.

CJ Corona showed how to connect the dots using the SALN  and the ITR in his ruling entitled Republic of the Philippines vs. the Sandiganbayan and Ferdinand Marcos, as represented by his heirs: his wife Imelda and their children Senator Ferdinand “Bongbong” Marcos, Jr., Governor Imee Marcos, and Irene Marcos-Araneta.

In his very exhaustive ruling on this civil forfeiture case, CJ Corona concretely showed:

• How to use SALNs  and ITRs  to compute for the total assets of the respondent
• Then how to determine the amount of alleged ill-gotten wealth in comparison to the defendant’s total assets

About the three things that struck me about CJ Corona’s ruling that could prove relevant to his ongoing impeachment trial:

First, CJ Corona had this to say about technicalities that simply delayed the trial. He wrote:

A litigation is not a game of technicalities in which one, more deeply schooled and skilled in the subtle art of movement and position, entraps and destroys the other. It is rather a contest in which each contending party fully and fairly lays before the court the facts in issue and then, brushing aside as wholly trivial and indecisive all imperfections of form and technicalities of procedure, asks that justice be done upon the merits. Lawsuits, unlike duels, are not to be won by a rapier’s thrust.

Second, CJ Corona laid down the law insofar as proving what constitutes ill-gotten wealth. He wrote:

Section 2 of RA 1379 explicitly states that “whenever any public officer or employee has acquired during his incumbency an amount of property which is manifestly out of proportion to his salary as such public officer or employee and to his other lawful income and the income from legitimately acquired property, said property shall be presumed prima facie to have been unlawfully acquired. x x x”

The elements which must concur for this prima facie presumption to apply are:
(1) the offender is a public officer or employee;
(2)he must have acquired a considerable amount of money or property during his incumbency; and
(3)said amount is manifestly out of proportion to his salary as such public officer or employee and to his other lawful income and the income from legitimately acquired property.

And third, while adhering to the constitutional right of any accused to be presumed innocent, CJ  Corona placed the burden of proof, not on the prosecution but on the accused.  In other words, it is the person being accused who has to prove he or she has no ill-gotten wealth.

Thus, CJ Corona wrote that the defendant must deny each allegation:

In their answer, respondents failed to specifically deny each and every allegation contained in the petition for forfeiture in the manner required by the rules.  All they gave were stock answers like “they have no sufficient knowledge” or “they could not recall because it happened a long time ago,” and, as to Mrs. Marcos, “the funds were lawfully acquired,” without stating the basis of such assertions.

Section 10, Rule 8 of the 1997 Rules of Civil Procedure, provides:

A defendant must specify each material allegation of fact the truth of which he does not admit and, whenever practicable, shall set forth the substance of the matters upon which he relies to support his denial. Where a defendant desires to deny only a part of an averment, he shall specify so much of it as is true and material and shall deny the remainder. Where a defendant is without knowledge or information sufficient to form a belief as to the truth of a material averment made in the complaint, he shall so state, and this shall have the effect of a denial.[28]

The purpose of requiring respondents to make a specific denial is to make them disclose facts which will disprove the allegations of petitioner at the trial, together with the matters they rely upon in support of such denial. Our jurisdiction adheres to this rule to avoid and prevent unnecessary expenses and waste of time by compelling both parties to lay their cards on the table, thus reducing the controversy to its true terms.  As explained in Alonso vs. Villamor,[29]

CJ Corona also wrote that a defendant should be required to state the ultimate facts surrounding the law, manner or mode of acquisition of the subject funds:

On the part of Mrs. Marcos, she claimed that the funds were lawfully acquired. However, she failed to particularly state the ultimate facts surrounding the lawful manner or mode of acquisition of the subject funds. Simply put, she merely stated in her answer with the other respondents that the funds were “lawfully acquired” without detailing how exactly these funds were supposedly acquired legally by them. Even in this case before us, her assertion that the funds were lawfully acquired remains bare and unaccompanied by any factual support which can prove, by the presentation of evidence at a hearing, that indeed the funds were acquired legitimately by the Marcos family.

Respondents’ denials in their answer at the Sandiganbayan were based on their alleged lack of knowledge or information sufficient to form a belief as to the truth of the allegations of the petition.

It is true that one of the modes of specific denial under the rules is a denial through a statement that the defendant is without knowledge or information sufficient to form a belief as to the truth of the material averment in the complaint.  The question, however, is whether the kind of denial in respondents’ answer qualifies as the specific denial called for by the rules.  We do not think so.  In Morales vs. Court of Appeals,[30] this Court ruled that if an allegation directly and specifically charges a party with having done, performed or committed a particular act which the latter did not in fact do, perform or commit, a categorical and express denial must be made.

Here, despite the serious and specific allegations against them, the Marcoses responded by simply saying that they had no knowledge or information sufficient to form a belief as to the truth of such allegations.  Such a general, self-serving claim of ignorance of the facts alleged in the petition for forfeiture was insufficient to raise an issue. Respondent Marcoses should have positively stated how it was that they were supposedly ignorant of the facts alleged.[31]

In addition, CJ Corona wrote that pleading memory lapse is not an adequate defense for respondents:

Since 1991, when the petition for forfeiture was first filed, up to the present, all respondents (Cong. Imelda, Gov. Imee and Sen. Bongbong) have offered are foxy responses like “lack of sufficient knowledge or lack of privity” or “they cannot recall because it happened a long time ago” or, as to Mrs. Marcos, “the funds were lawfully acquired.”  But, whenever it suits them, they also claim ownership of 90% of the funds and allege that only 10% belongs to the Marcos estate.  It has been an incredible charade from beginning to end.

CJ Corona’s  formula for computing corruption

As I said at the beginning, CJ Corona – in this ruling – gave the formula for proving ill-gotten wealth.

Here’s how he arrived at his conclusion  that the Marcoses amassed loot, without the court having to determine how they did it.

CJ Corona wrote:

That spouses Ferdinand and Imelda Marcos were public officials during the time material to the instant case was never in dispute. Paragraph 4 of respondent Marcoses’ answer categorically admitted the allegations in paragraph 4 of the petition for forfeiture as to the personal circumstances of Ferdinand E. Marcos as a public official who served without interruption as Congressman, Senator, Senate President and President of the Republic of the Philippines from December 1, 1965 to February 25, 1986.[77] Likewise, respondents admitted in their answer the contents of paragraph 5 of the petition as to the personal circumstances of Imelda R. Marcos who once served as a member of the Interim Batasang Pambansa from 1978 to 1984 and as Metro Manila Governor, concurrently Minister of Human Settlements, from June 1976 to February 1986.[78]

Respondent Mrs. Marcos also admitted in paragraph 10 of her answer the allegations of paragraph 11 of the petition for forfeiture which referred to the accumulated salaries of respondents Ferdinand E. Marcos and Imelda R. Marcos.[79] The combined accumulated salaries of the Marcos couple were reflected in the Certification dated May 27, 1986 issued by then Minister of Budget and Management Alberto Romulo.[80] The Certification showed that, from 1966 to 1985, Ferdinand E. Marcos and Imelda R. Marcos had accumulated salaries in the amount of P1,570,000 and P718,750, respectively, or a total of P2,288,750:

Ferdinand E. Marcos, as President

1966-1976 at P60,000/year P660,000
1977-1984 at P100,000/year P800,000
1985 at P110,000/year 110,000

                                                                     P1,570,000

Imelda R. Marcos, as Minister

June 1976-1985 at P75,000/year – P718,000

In addition to their accumulated salaries from 1966 to 1985 are the Marcos couple’s combined salaries from January to February 1986 in the amount of P30,833.33.  Hence, their total accumulated salaries amounted to P2,319,583.33. Converted to U.S. dollars on the basis of the corresponding peso-dollar exchange rates prevailing during the applicable period when said salaries were received, the total amount had an equivalent value of $304,372.43.

The dollar equivalent was arrived at by using the official annual rates of exchange of the Philippine peso and the US dollar from 1965 to 1985 as well as the official monthly rates of exchange in January and February 1986 issued by the Center for Statistical Information of the Bangko Sentral ng Pilipinas.

Use of Statement of Assets and Liabilities

CJ Corona wrote:

The sum of $304,372.43 should be held as the only known lawful income of respondents since they did not file any Statement of Assets and Liabilities (SAL), as required by law, from which their net worth could be determined.  Besides, under the 1935 Constitution, Ferdinand E. Marcos as President could not receive “any other emolument from the Government or any of its subdivisions and instrumentalities”.[84] Likewise, under the 1973 Constitution, Ferdinand E. Marcos as President could “not receive during his tenure any other emolument from the Government or any other source.”[85]  In fact, his management of businesses, like the administration of foundations to accumulate funds, was expressly prohibited under the 1973 Constitution:

CJ Corona demonstrated a mastery of financial analysis

[NOTE: those in boldface are mine]:

To back up his conclusion that the Marcoses accumulated assets worth $304,372.43, CJ Corona dissected President Ferdinand Marcos’ financial status.

He wrote:

11.  At the outset, however, it must be pointed out that based on the Official Report of the Minister of Budget, the total salaries of former President Marcos as President form 1966 to 1976 was P60,000 a year and from 1977 to 1985, P100,000 a year; while that  of the former First Lady, Imelda R. Marcos, as Minister of Human Settlements from June 1976 to February 22-25, 1986 was P75,000 a year xxx.

ANALYSIS OF RESPONDENTS LEGITIMATE INCOME
x x x
12.  Based on available documents, the ITRs of the Marcoses for the years 1965-1975 were filed under Tax Identification No. 1365-055-1. For the years 1976 until 1984, the returns were filed under Tax Identification No. M 6221-J 1117-A-9.

13.  The data contained in the ITRs and Balance Sheet filed by the “Marcoses are summarized and attached to the reports in the following schedules:

Schedule A:
Schedule of Income (Annex “T” hereof);
Schedule B:
Schedule of Income Tax Paid (Annex “T-1” hereof);
Schedule C:
Schedule of Net Disposable Income (Annex “T-2” hereof);
Schedule D:
Schedule of Networth Analysis (Annex “T-3” hereof).

14.  As summarized in Schedule A (Annex “T” hereof), the Marcoses reported P16,408,442.00 or US$2,414,484.91 in total income over a period of 20 years from 1965 to 1984. The sources of income are as follows:

Official Salaries –       P2,627,581.00 – 16.01%
Legal Practice –          11,109,836.00 – 67.71%
Farm Income –       149,700.00 – .91%
Others –                         2,521,325.00 -15.37%
Total                         P16,408,442.00 -100.00%

15.  FM’s official salary pertains to his compensation as Senate President in 1965 in the amount of P15,935.00 and P1,420,000.00 as President of the Philippines during the period 1966 until 1984. On the other hand, Imelda reported salaries and allowances only for the years 1979 to 1984 in the amount of P1,191,646.00.  The records indicate that the reported income came from her salary from the Ministry of Human Settlements and allowances from Food Terminal, Inc., National Home Mortgage Finance Corporation, National Food Authority Council, Light Rail Transit Authority and Home Development Mutual Fund.

16.  Of the P11,109,836.00 in reported income from legal practice, the amount of P10,649,836.00 or 96% represents “receivables from prior years” during the period 1967 up to  1984.

17.  In the guise of reporting income using the cash method under Section 38 of the National Internal Revenue Code, FM made it appear that he had an extremely profitable legal practice before he became a President (FM being barred by law from practicing his law profession during his entire presidency) and that, incredibly, he was still receiving payments almost 20 years after. The only problem is that in his Balance Sheet attached to his 1965 ITR immediately preceeding his ascendancy to the presidency he did not show any Receivables from client at all, much less the P10,65-M that he decided to later recognize as income.  There are no documents showing any withholding tax certificates. Likewise, there is nothing on record that will show any known Marcos client as he has no known law office.  As previously stated, his networth was a mere P120,000.00 in December, 1965. The joint income tax returns of FM and Imelda cannot, therefore, conceal the skeletons of their kleptocracy.

18.  FM reported a total of P2,521,325.00 as Other Income for the years 1972 up to 1976 which he referred to in his return as “Miscellaneous Items” and “Various Corporations.”  There is no indication of any payor of the dividends or earnings.

19.  Spouses Ferdinand and Imelda did not declare any income from any deposits and placements which are subject to a 5% withholding tax. The Bureau of Internal Revenue attested that after a diligent search of pertinent records on file with the Records Division, they did not find any records involving the tax transactions of spouses Ferdinand and Imelda in Revenue Region No. 1, Baguio City, Revenue Region No.4A, Manila, Revenue Region No. 4B1, Quezon City and Revenue No. 8, Tacloban, Leyte.  Likewise, the Office of the Revenue Collector of Batac. Further, BIR attested that no records were found on any filing of capital gains tax return involving spouses FM and Imelda covering the years 1960 to 1965.

20.  In Schedule B, the taxable reported income over the twenty-year period was P14,463,595.00 which represents 88% of the gross income.  The Marcoses paid income taxes totaling P8,233,296.00 or US$1,220,667.59.  The business expenses in the amount of P861,748.00 represent expenses incurred for subscription, postage, stationeries and contributions while the other deductions in the amount of P567,097.00 represents interest charges, medicare fees, taxes and licenses. The total deductions in the amount of P1,994,845.00 represents 12% of the total gross income.

21.  In Schedule C, the net cumulative disposable income amounts to P6,756,301.00 or US$980,709.77.  This is the amount that represents that portion of the Marcoses income that is free for consumption, savings and investments.  The amount is arrived at by adding back to the net income after tax the personal and additional exemptions for the years 1965-1984, as well as the tax-exempt salary of the President for the years 1966 until 1972.

22.  Finally, the networth analysis in Schedule D, represents the total accumulated networth of spouses, Ferdinand and Imelda.  Respondent’s Balance Sheet attached to their 1965 ITR, covering the year immediately preceding their ascendancy to the presidency, indicates an ending networth of P120,000.00 which FM declared as Library and Miscellaneous assets.  In computing for the networth, the income approach was utilized.  Under this approach, the beginning capital is increased or decreased, as the case may be, depending upon the income earned or loss incurred.  Computations establish the total networth of spouses Ferdinand and Imelda, for the years 1965 until 1984 in the total amount of US$957,487.75, assuming the income from legal practice is real and valid x x x.

Thus, CJ Corona concluded that the Marcoses’ Net Worth was US$957,487.75 or under ONE MILLION DOLLARS. He then compared this amount to the US$356 million secreted by the Marcoses in five foundations which maintained various Swiss accounts.

CJ Corona wrote:

53.  All the five (5) group accounts (maintained by  Marcos foundations)  in the over-all flow chart have a total balance of about Three Hundred Fifty Six Million Dollars ($356,000,000.00) as shown by Annex “R-5” hereto attached as integral part hereof.

Otherwise stated, petitioner presented enough evidence to convince us that the Marcoses had dollar deposits amounting to US $356 million representing the balance of the Swiss accounts of the five foundations, an amount way, way beyond their aggregate legitimate income of only US$304,372.43 during their incumbency as government officials.

Because of all these, CJ Corona ruled that –

In the face of undeniable circumstances and the avalanche of documentary evidence against them, respondent Marcoses failed to justify the lawful nature of their acquisition of the said assets.  Hence, the Swiss deposits should be considered ill-gotten wealth and forfeited in favor of the State in accordance with Section 6 of RA 1379…

You can read CJ Corona’s entire landmark ruling by clicking here.

___________________________

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