P8.6-B SMC shares not part of Marcos estate, CTA rules
THE Court of Tax Appeals (CTA) ordered the Bureau of Internal Revenue (BIR) to stop enforcing a 1991 Marcos estate tax assessment against P8.6 billion worth of San Miguel Corp. (SMC) shares registered under the late tycoon Eduardo M. Cojuangco, Jr.
The tax court’s first division ruled the shares are Mr. Cojuangco’s exclusive property and not part of the Marcos estate, calling the BIR’s collection efforts “arbitrary, capricious, and whimsical.”
It added the Bureau’s attempt to seize the stock placed unrelated shareholders at risk of being held liable for a tax obligation owed by a different taxpayer.
“Respondent’s (BIR) unfounded persistence in pursuing collection against the Cojuangco SMC shares, despite their exclusion from the decedent’s estate, shows arbitrariness, capriciousness, and whimsicality, amounting to grave abuse of discretion,” the 60-page ruling released to the public on Aug. 14 read.
“The Court is constrained to intervene, as respondent’s actions place individuals who are not parties to the tax assessment, such as Cojuangco and other shareholders, at risk of being held liable for a deficiency estate tax owed by a different taxpayer,” the ruling penned by Justice Lanee S. Cui-David added.
“All told, there is no showing that the Marcos Estate owns the Cojuangco SMC Shares, or any shares in SMC for that matter. This is further bolstered by the fact that SMC’s corporate records show that no SMC share has ever been registered under the name of President [Ferdinand E.] Marcos, Sr.”
The court ruled that neither the Cojuangco SMC shares nor the Coconut Industry Investment Fund (CIIF) block of SMC shares can be used to settle the Marcos estate’s tax liabilities.
It explained that the Cojuangco shares were already declared in a 2001 case as the exclusive property of Mr. Cojuangco and his associates and therefore cannot be seized to pay the Marcos estate’s deficiency taxes.
Meanwhile, the CIIF block of SMC shares was affirmed by the Supreme Court in several rulings as public property, derived from the coconut levy funds, which are considered a form of tax.
Since public assets cannot be applied to the obligations of private individuals, the CIIF shares also cannot be used to cover the Marcos estate’s tax debts.
The decision stemmed from a Petition for Review filed by SMC on Dec. 19, 2024, challenging the BIR’s efforts to collect the long-standing estate tax liability of the late President Ferdinand E. Marcos, Sr. by targeting shares of stock in SMC.
The case traces its origin to an estate tax assessment issued against the Marcos Estate on July 26, 1991, totaling P23.29 billion, inclusive of interest and surcharges. This assessment included SMC shares valued at P8.61 billion, as part of the gross estate.
In November 2024, SMC received a letter from the BIR expressing intent to “hear SMC’s position on these various shares of stock” in relation to the 1991 assessment. It was later clarified that these referred to the “Cojuangco SMC Shares.”
SMC argued that its corporate records show no shares registered in President Marcos, Sr.’s name, and that the Cojuangco SMC shares are owned by Mr. Cojuangco and his associates, not the Marcos Estate.
SMC also contended that the assessment could not be enforced against it, as it was never a party to the original proceedings.
The BIR maintained that the 1991 Estate Tax Assessment had become final and unappealable, as affirmed by the Supreme Court in the 1997 Marcos II case, and that the SMC shares were included in the assessment, making them subject to collection.
Separate concurring opinions were also penned by Presiding Justice Roman G. Del Rosario and Justice Jean Marie A. Bacorro-Villena. — Chloe Mari A. Hufana
