Saturday, July 1, 2017

DOES PCGG INTENTIONALLY EVADE THE AL CAPONE (TAX EVASION) METHOD IN RECOVERING MARTIAL LAW ILL-GOTTEN WEALTH?


 
 
For:  PCGG Acting Chairman REYNOLD S. MUNSAYAC
 
Thank you for your January 13, 2017 email-reply to our appeal to Duterte administration dated October 20, 2016 on the particular subject:  Does PCGG intentionally evade the Al Capone (tax evasion) method in recovering martial law ill-gotten wealth?
 
Considering that almost half-year has already lapsed since your reply, may I know now what action has PCGG actually taken on my recommendation to it to follow the Al Capone method in the recovery of martial law untaxed wealth?  If the tax due remains unpaid, whether the wealth is ill-gotten or not, the crime of tax evasion is committed.    
 
Regarding your concern that the criminal offense of tax evasion might have already prescribed, please note that tax evasion appears to be a continuing crime. As such, for as long as the tax due is not paid, the crime of tax evasion continues to be committed. Its being a continuing crime is shown by the fact that for as long as the tax due is unpaid, for every reckoning period of delay in payment, interest is charged and added to the tax assessment.    
 
 
MARCELO  L. TECSON
A Concerned Citizen
 
C/o San Juan and Associates
27S Midland Manor 2
Ortigas Avenue
Greenhills, San Juan City 1500
June 30, 2017
 
========================================
 
 
----- Forwarded Message -----
From: Reynold Munsayac< rsmunsayac@pcgg.gov.ph>
To: martecson@yahoo.com
Cc: Francis Joves< franceneutral@gmail.com>
Sent: Friday, January 13, 2017 1:23 PM
Subject: Appeal to the Duterte Administration dated 20 October 2016
 
Dear Mr. Tecson:  
 
          The above-cited subject matter was forwarded to us by the National Economic and Development Authority (NEDA), including your proposal for the PCGG to apply the “Al Capone” method in pursuing ill-gotten wealth.   
 
          First of all, we would like to thank you for your passion and initiative in trying to help our country in addressing the issue of corruption.  Rest assured that we will evaluate the feasibility of said method and determine whether it will help the PCGG in performing its mandate.  We will also ask our lawyers to ascertain whether the issue of prescription of criminal offenses will not be a hindrance in pursuing criminal actions for tax evasion and consider the possible coordination with BIR and the DOJ since the initiation of such offenses are under their purview.  Thank you very much.
 
                                                      Sincerely yours,
 
                                                       REYNOLD S. MUNSAYAC
                                                        Acting Chairman, PCGG
 

===========================

----- Forwarded Message -----
From: Marcelo Tecson <martecson@yahoo.com>
To: PCGG Chairman Richard Amurao <richard.amurao@pcgg.gov.ph>; DOJ Sec Vitaliano Aguirre II <osec@doj.gov.ph>; DOF Sec Carlos Dominguez <helpdesk@dof.gov.ph>
Cc: Pres. Rodrigo Duterte c/o Sec Martin Andanar <mandanar_1@hotmail.com>; Senate President Koko Pimentel <kokopimenteloffice@yahoo.com>; DBM Sec Benjamin Diokno <bediokno@dbm.gov.ph>; DTI Sec Ramon Lopez <RamonLopez@dti.gov.ph>; DTI Secretary <Secretary@dti.gov.ph>; DOTC Sec Arthur Tugade <osec@dotc.gov.ph>; DA Sec Emmanuel Pinol <rose_yeng@yahoo.com>; DOE Sec Alfonso Cusi <sec@doe.gov.ph>; EcoPlanning Sec Ernesto Pernia <EMPernia@neda.gov.ph>; "os_frankdrilon@yahoo.com" <os_frankdrilon@yahoo.com>; "alanpetercayetano.media@gmail.com" <alanpetercayetano.media@gmail.com>; "senalanpetercayetano1028@gmail.com" <senalanpetercayetano1028@gmail.com>; "kiko@kikopangilinan.com" <kiko@kikopangilinan.com>; "andrew.decastro@pcgg.gov.ph" <andrew.decastro@pcgg.gov.ph>; "ronald.chua@pcgg.gov.ph" <ronald.chua@pcgg.gov.ph>; "benjie.gengos@pcgg.gov.ph" <benjie.gengos@pcgg.gov.ph>; "pcgg.legal@pcgg.gov.ph" <pcgg.legal@pcgg.gov.ph>; Ombudsman Conchita Carpio-Morales <ombudsman@ombudsman.gov.ph>; Ombudsman Public Assistance <pab@ombudsman.gov.ph>; COA Chairman Michael Aguinaldo <mgaguinaldo@coa.gov.ph>; COA Commissioner Jose Fabia <jafabia@yahoo.com>; COA Commissioner Isabel Dasalla-Agito <idagito@coa.gov.ph>; Neri Colmenares <nericolmenares@gmail.com>; Teddy Casino <teddy.casino@gmail.com>; Erick San Juan <culdesac2008@gmail.com>
Sent: Thursday, August 25, 2016 3:17 PM
Subject: DOES PCGG INTENTIONALLY EVADE THE AL CAPONE (TAX EVASION) METHOD IN RECOVERING MARTIAL LAW ILL-GOTTEN WEALTH?


DOES PCGG INTENTIONALLY EVADE
THE AL CAPONE (TAX EVASION) METHOD IN
RECOVERING MARTIAL LAW ILL-GOTTEN WEALTH?
 
 
INTRODUCTION:
PCGG’S SEEMING USE OF WRONG APPROACH
IN RUNNING AFTER MARTIAL LAW PERSONALITIES
AND THEIR ALLEGED ILL-GOTTEN WEALTH
 
In today’s newspaper, the latest disappointing and avoidable—but not avoided because intentional?—Presidential Commission on Good Government (PCGG) defeat in its forfeiture cases on what it tries to recover as martial law ill-gotten wealth:
 
“The government has lost its decades-old bid to recover from the two brothers of former First Lady Imelda Romualdez-Marcos more than 60 assets that were allegedly acquired illegally during the term of former President Ferdinand Marcos. The Sandiganbayan dismissed the P11-billion civil forfeiture case against Alfredo T. Rolmualdez, Armando T. Romualdez and his wife Vilma, after state lawyers failed to prove that the properties had been acquired unlawfully.” (DJ Yap, “Gov’t loses forfeiture case vs Imelda kin,” Philippine Daily Inquirer, August 25, 2016, page A4)   
 
Just what is disappointing and not right in PCGG’s method of recovering what it considers as martial law ill-gotten wealth?
 
PCGG has unwisely imposed upon itself the difficult role of proving that the wealth  is illegally acquired, which needs airtight evidences that are difficult to muster. It has wittingly or unwittingly failed to follow the approach where the difficult burden of proof is easily shifted to defendants.
 
Prosecution vs. Private
Defendants under the Tax Code
 
If the defendants are private persons, PCGG could have declared that the properties claimed as owned by them in their sworn written reply to the forfeiture cases, whether lawfully or unlawfully acquired, constitute UNTAXED INCOME or wealth—an assertion that can be readily proved by the Bureau of Internal Revenue if the properties are indeed ill-gotten. Thereafter, the defendants will have the burden of proving that the properties are tax paid—which obviously they cannot do in the case of ill-gotten wealth.
 
    
Prosecution vs. Government Officials
Under the Tax Code as Well as the Anti-Graft
and Corrupt Practices Act (RA 3019)
     
In the case of government officials, PCGG could have invoked RA 3019 in prosecuting them for unexplained wealth. If found guilty, they are subject to imprisonment and perpetual disqualification from office, while their unexplained wealth is subject to forfeiture. Thus, what PCGG needs to do is to simply present the suspected ill-gotten wealth as unexplained and manifestly out of proportion to the defendants’ legal income—and the difficult and impossible burden of proof that it was lawfully acquired will be shifted to the defendants.    
 
Government officials can also be prosecuted as tax evaders under the Tax Code on their ill-gotten wealth, which should be forfeited in payment of deficiency income tax, interest and penalties. If the wealth is indeed poison fruit of corruption, it will obviously be undeclared and untaxed. How to do the prosecution under the tax evasion method, successfully done in the United States to Al Capone in the 1930s, is treated at length in my herein forwarded email.    
 
PCGG’S LAMENT ON THE SUPPOSED
DIFFICULT PROCESS OF RECOVERING
MARTIAL LAW ILL-GOTTEN WEALTH
 
If the past Marcos martial law administration stole billions of precious public funds, PCGG should do everything to recover the huge stolen wealth, wherever it is and whoever are currently in enjoyment of it. If PCGG does not want to do whatever it takes to recover it, patriotic Filipinos, especially lawyers, should constrain PCGG officials to do so.     
 
The past PCGG Chairman, Andres Bautista (now COMELEC Chairman), recommended the abolition of PCGG owing to his frustration in pursuing the remaining ill-gotten cases, supposedly hampered by lack of needed witnesses and documentary evidences.
 
The present PCGG Chairman, RICHARD AMURAO, in effect echoed the same lament of then Chairman Bautista when he supposedly made the following statements quoted in an article in the Guardian, May 7, 2016, on the subject "The $10B question: What happened to the Marcos billions?" 
   
“Bongbong (Marcos) 58… recently denied any involvement in the legal moves that have blocked so much of the PCGG's work. In February, (PCGG chairman Richard) Amurao issued a tough response, saying his claim was "belied by court records which show his involvement." He listed cases in which Bongbong and his    mother are still laying claim to what the PCGG says is ill-gotten wealth….    ‘The work is not finished,’ Amurao says. ‘There is no statute of limitation on seeking justice. But the passing of time makes it more and more difficult to find new leads….’
 
 
WHAT NEW LEADS IS PCGG
TRYING TO LOOK FOR, WHEN THERE IS
A LEGAL APPROACH THAT DOES NOT NEED
BATALLION OF WITNESSES AND TRUCKLOADS
OF DOCUMENTARY EVIDENCES—THE EVIDENCE
IS RIGHT THERE IN THE WRITTEN OPPOSITION
TO THE GOVERNMENT’S FORFEITURE CASES—
THE OWNERSHIP CLAIM OVER THE ILL-GOTTTEN
WEALTH THAT CAN BE SUBJECT TO FORFEITURE
AS OBVIOUS UNTAXED ACCUMULATED INCOME,
WHETHER LEGALLY OR ILLEGALLY EARNED   
 
As a concerned citizen, I cannot understand why while the filing of tax evasion cases—not racketeering charges—enabled the US government to successfully   nail down and sent to jail Al Capone in 1931, the PCGG, from its very first Chairman during the Cory administration to the present Chairman Amurao, never wielded this legal weapon in the recovery of martial law ill-gotten wealth.
 
Under the Al Capone method, PCGG does not need new leads, new witnesses, and new documentary evidences that will prove the wealth emanated from corruption—because PCGG’s thrust will not be to prove that the wealth was unlawfully acquired. Instead, it will be to just show that the wealth is untaxed and its owners liable for tax evasion, through presenting the following evidences:
 
  1. Proof of taxable wealth, whether legally or illegally acquired is of no moment to PCGG’s prosecution thrust. That proof is right in the written opposition by claimants to PCGG’s forfeiture cases—which in essence states that the wealth is owned by claimants, legally acquired, and is not valid object of government forfeiture.       
 
  1. Proof that the taxable wealth is untaxed and subject to assessment for deficiency income tax, interest, and penalties—to be testified to by the BIR Commissioner. It is a fact that the wealth was hidden through a labyrinth of foundations, secret bank accounts and assets abroad, and dummy local businessmen, hence it is obvious that the concealment included non-payment of income tax, which made it untaxed wealth.         
 
 
PCGG HAS TO VALIDLY REFUTE THE VALIDITY
OF THE AL CAPONE METHOD IN RUNNING AFTER
REMAINING ILL-GOTTEN WEALTH, OTHERWISE
IT HAS TO PURSUE IT BEFORE EVERYTHING
BECOMES TOO LATE
 
In the case of martial law ill-gotten wealth acquired through corruption, some $4 billion of which was already recovered by PCGG, it is obvious that it was intricately hidden in the past and consequently not declared for income tax purposes. Thus, had PCGG promptly employed the Al Capone method upon the commission’s creation after EDSA I, when all the responsible martial law personalities were still alive, it could have created a monumental dilemma to them—either they go to jail for income tax evasion or plea bargain on bended knees and return the ill-gotten wealth.
 
Today, prosecution for income tax evasion should still apply to responsible martial law personalities who are still alive.
 
For those who are gone, their untaxed wealth—whether legally or illegally acquired—is subject to forfeiture for unpaid income tax, interest and penalties, the aggregate of which exceeds the value of the wealth, as explained in my past repeated emails to PCGG, the last of which is herein forwarded. In addition, their estate are liable for estate tax, and their executors, administrators, and heirs are responsible for the filing of estate tax returns and payment of estate tax—including interest and penalties. The heirs are ultimately responsible for the payment of estate tax to the extent of their respective inherited shares in the untaxed wealth. If those responsible did not file estate tax returns and failed to pay estate tax, they should likewise be criminally prosecuted for such violation of the Tax Code. 
 
 
IF THE AL CAPONE OR TAX EVASION METHOD
IS VALID IN THE PINNING DOWN AND PROSECUTION
OF WRONGDOERS, AS PROVEN IN THE UNITED STATES
IN THE CASE OF AL CAPONE, WHY IS IT NEVER PURSUED 
BY PCGG—HAS IT INTENTIONALLY EVADED USING IT
BECAUSE IT IS NOT SINCERE IN DOING ITS JOB AND
IS THEREBY BETRAYING THE PEOPLE’S TRUST?
 
 
The Question that the Present PCGG Chairman
Has to Answer to President Duterte and the People:
Is the PCGG Itself Corrupt Because it Seems Not Doing
Everything to Nail Down the Corrupt Martial Law
Personalities in the Recovery of Ill-gotten Wealth?
 
Brilliant Filipino lawyers have headed PCGG since day one of its existence up to this day, and yet PCGG never employed the more expedient Al Capone or tax evasion method in going after corrupt martial law personalities and their ill-gotten wealth. Is this method not applicable to Philippine conditions and if so why not, or PCGG itself is corrupt and actually betraying public trust by not intentionally running all-out after the culprits and their hidden but discovered wealth? This is the question that present PCGG Chairman Richard Amurao has to answer to President Rodrigo Duterte and the people.      
 
 
ROLE OF RESPONSIBLE DOJ,
DOF, AND PCGG OFFICIALS:
 
TO WORK TOGETHER TOWARD THE RECOVERY
OF ILL-GOTTEN WEALTH IN THE FORM OF COLLECTIBLE
DEFICIENCY INCOME AND ESTATE TAXES (INCLUDING
INTEREST AND PENALTIES) ON THE ILL-GOTTEN WEALTH
 
Herein forwarded is my latest email on the justification for the recovery of martial law ill-gotten wealth through the Al Capone method, together with backgrounder on how it was successfully employed by the US government in the conviction of Al Capone in 1931, sentenced to 11 years imprisonment not for racketeering but for tax evasion.   
 
The present Secretary of Justice and PCGG Chairman should decide whether the previously cited approach—prosecution under the Tax Code (Al Capone Method) and/or Anti-Graft and Corrupt Practices Act (RA 3019)—Is valid or not. If this prosecution option is valid, before everything becomes too late, PCGG should promptly employ it in the recovery of martial law ill-gotten wealth. Toward this end, PCGG should work with the Department of Justice (DOJ) which reviews tax cases before filing in court, as well as with the Department of Finance (DOF) which has jurisdiction over the Bureau of Internal Revenue and assessment and collection of deficiency taxes. If PCGG will still fail to follow it from hereon, and if DOJ and DOF will similarly do nothing about it, such failure may constitute betrayal of public trust by responsible DOJ, DOF, and PCGG officials.
 
 On the other hand, if DOJ and PCGG will find out that the cited prosecution scheme, especially the Al Capone method, is not valid, pursuant to Section 5 (a) of RA 6713, may I respectfully know (through reply by email within 15 working days) from PCGG Chairman Richard Amurao why it is not valid?
 
 
MARCELO  L. TECSON
A Concerned Citizen
 
San Miguel, Bulacan
August 25, 2016
 
Cc through separate letters/emails:
    Select executive and legislative government officials
    Select members of media, academe, and economic society
    Select civil society groups and concerned citizens, etc.
 

====================================


----- Forwarded Message -----
From: Marcelo Tecson <martecson@yahoo.com>
To: Pres. Rodrigo Duterte c/o Sec Martin Andanar <mandanar_1@hotmail.com>; DOF Sec Carlos Dominguez <helpdesk@dof.gov.ph>; DOJ Sec Vitaliano Aguirre II <osec@doj.gov.ph>; EcoPlanning Sec Ernesto Pernia <EMPernia@neda.gov.ph>; DOE Sec Alfonso Cusi <sec@doe.gov.ph>; DBM Sec Benjamin Diokno <bediokno@dbm.gov.ph>; DOTC Sec Arthur Tugade <osec@dotc.gov.ph>; DA Sec Emmanuel Pinol <rose_yeng@yahoo.com>; PCGG Chairman Richard Amurao <richard.amurao@pcgg.gov.ph>; PCGG Commissioner Andrew De Castro <andrew.decastro@pcgg.gov.ph>; PCGG Commissioner Ronald Chua <ronald.chua@pcgg.gov.ph>; PCGG Commissioner Vicente Gengos Jr <benjie.gengos@pcgg.gov.ph>; COA Chairman Michael Aguinaldo <mgaguinaldo@coa.gov.ph>; COA Commissioner Jose Fabia <jafabia@yahoo.com>; COA Commissioner Isabel Dasalla-Agito <idagito@coa.gov.ph>
Sent: Thursday, August 4, 2016 9:29 PM
Subject: Fw: Government Inaction on PCGG's Failure to Employ the AL CAPONE (Tax Evasion) Method in Running after Martial Law Ill-gotten wealth

I hope that what the Aquino administration miserably failed to do, the Duterte administration will do--have the PCGG run all-out against still unrecovered martial law ill-gotten wealth through the Al Capone (tax evasion) method, the proven effective method in the United States that in the Philippines was seemingly evaded in all past administrations by all past PCGG chairmen, bar none.  

Had PCGG employed the Al Capone method in past settlements with Marcos cronies, it would not have to haggle hard and agree to 75-25 sharing of ill-gotten wealth with them, with the 25% going to Marcos cronies still substantial because staggering total amounts were involved. 

MARCELO  L. TECSON
A Concerned Citizen

San Miguel, Bulacan
August 4, 2016

============================

----- Forwarded Message -----
From: Marcelo Tecson <martecson@yahoo.com>
To: President BENIGNO AQUINO III <op@president.gov.ph>; Senate President Franklin Drilon <fmdrilon@yahoo.com>; Speaker Feliciano Belmonte Jr <sonnybelmonte2011@yahoo.com>; Sen Ralph Recto <ralphgrecto@gmail.com>; Sen Sonny Angara <sensonnyangara@yahoo.com>; Rep Miro Quimbo <miro_quimbo@yahoo.com>; Rep Neri Colmenares <nericolmenares@gmail.com>; ExecSec Jojo Ochoa <jojo.ochoa@yahoo.com>; DOFSec Cesar Purisima <cvpurisima@yahoo.com>; DOJSec Leila de Lima <lmdelima.doj2@gmail.com>; EcoPlanningSec Arsenio Balisacan <ambalisacan@neda.gov.ph>; DBMSec Butch Abad <abad.dbm@gmail.com>; DPWHSec Rogelio Singson <singson.rogelio@dpwh.gov.ph>; DOTCSec Joseph Emilio Abaya <osec.dotc@gmail.com>; SecFrancis Pangilinan <kiko.pangilinan@gmail.com>; ...Florin Hilbay <secretariat.osg@gmail.com>; GCC Raoul Creencia <gcccreencia@ogcc.gov.ph>; Richard Amurao <administrator@pcgg.gov.ph>; Dean Andres Bautista <deanbautista@yahoo.com>; etc.... 
Cc: Ericksanjuan <culdesac0002@yahoo.com.ph>
Sent: Tuesday, September 15, 2015 5:48 PM
Subject: 2nd Email: Inaction on PCGG's Failure to Employ the AL CAPONE or Tax Evasion Method in Running after Martial Law Ill-gotten Wealth

                  2nd Email:

INACTION ON PCGG'S FAILURE 

TO EMPLOY THE AL CAPONE OR TAX

EVASION METHOD IN RUNNING AFTER

MARTIAL LAW ILL-GOTTEN WEALTH

 
 

“Why no reply when he was PCGG chief?”

 

Published Letter to the Editor

Philippine Daily Inquirer

July 27, 2015, page A16 

 
THIS IS in reaction to Edward Contreras’ letter titled “Tiangco ignorant of Guanzon’s character” (Opinion, 7/2/15).
 
I was of similar impression that newly appointed Commission on Elections Chair Andy Bautista has an impeccable record. Which is why I have been wondering why he has not responded point by point to my repeated e-mails and questions as to why the Presidential Commission on Good Government did not employ the “Al Capone method (tax evasion)” in running after ill-gotten wealth of the martial law era.
 
Using this method will solve his lamented problem of not having enough documentary evidence and witnesses, as shown in the forwarded e-mails.
 
 
—MARCELO L. TECSON,
  
====================================
  
SO THE PEOPLE MAY KNOW:
PCGG’S SEEMING BETRAYAL OF PUBLIC TRUST
 
From: Marcelo Tecson <martecson@yahoo.com>
To: "administrator@pcgg.gov.ph" <administrator@pcgg.gov.ph> 
Sent: Friday, April 5, 2013 7:19 AM
Subject:  Fw: 4th Follow Up: DID PCGG FAIL IN RECOVERING BULK
OF ILL-GOTTEN  WEALTH  BECAUSE  IT DID NOT DO WHAT ITS  U.S. COUNTERPARTS DID IN CONVICTING AL CAPONE?  IF SO, WHY? 
  
Copy pasted from PCGG Website:
*We are committed to responding to all legitimate queries and concerns that are sent to us via email. Should you not receive a reply to your email within five (5) working days, kindly forward a copy of your email to  administrator@pcgg.gov.ph.  You can rest assured that your email will be promptly acknowledged.”
  
In accordance with the above advice, I hereby forward to the cited PCGG email address my past emails to PCGG Chairman Andres Bautista, the first of which was issued way back on September 2, 2012 but remains unanswered to this day. I respectfully request from PCGG an appropriate official reply to my emails pursuant to Section 5 (a) of R.A. 6713.
 
Thank you.
  
MARCELO  L. TECSON 
A Concerned Citizen
 
San Miguel, Bulacan
April 5, 2013
 

===================================

 
----- Forwarded Message -----
From: Marcelo Tecson <martecson@yahoo.com>
To: President BENIGNO AQUINO III <titonoy@president.gov.ph>;
DBMSec Butch Abad <abad.dbm@gmail.com>; DOFSec Cesar Purisima <cvpurisima@yahoo.com>; DILGSec Mar Roxas <mar@marroxas.com>; DOJSec Leila de Lima <lmdelima.doj2@gmail.com>;
PCGGChair Andres Bautista <deanbautista@yahoo.com> 
Cc: Socio-EcoPlanningSec. Arsenio Balisacan <ambalisacan@neda.gov.ph>; DOTCSec Joseph Emilio Abaya <osec.dotc@gmail.com>; etc....
Sent: Tuesday, January 15, 2013  2:31 PM
Subject: (2nd Follow Up) DID PCGG FAIL BECAUSE IT DID NOT DO WHAT ITS U.S. COUNTERPARTS DID IN CONVICTING AL CAPONE?
 
For:  President BENIGNO AQUINO III  
        Cabinet Cluster on Good Governance & Anti-Corruption
        Presidential Commission on Good Government (PCGG)
  
DID PCGG FAIL
IN RECOVERING BULK OF
UNTAXED WEALTH BECAUSE IT DID NOT
DO WHAT ITS U.S. COUNTERPARTS DID
IN CONVICTING AL CAPONE?
  
1.  If PCGG is to wind down its affairs,
the people have to know if PCGG has
already done what it takes to recover
the martial law ill-gotten wealth
 
As reported by media (ANNEX A), the Presidential Commission on Good Government (PCGG) head Andres Bautista has recommended the abolition of PCGG, despite the fact that it has recovered just $4 billion of the $10 billion estimated total loot, with some 200 ill-gotten wealth cases still undergoing litigation before the anti-graft court Sandiganbayan. The PCGG head cited a litany of problems in the further prosecution of the pending cases, such as missing documentary evidences, lack of witnesses, more powerful adversaries, and a “measly” annual budget of roughly P100 million, thereby rendering the pursuit of the cases quite difficult and no longer cost effective.  
 
The PCGG head should not expect the people to simply accept at face value what he declared—doing that is unsound decision-making process, especially on wealth recovery cases that involve staggering amounts. The people have to be convinced that PCGG’s conclusion is correct, and that it is based on proper consideration of everything that matters in the wealth recovery effort.
 
The PCGG head has to dispel doubts on the soundness of his conclusion through showing that PCGG has done everything that can be done under the circumstances, but that it is really quite difficult and no longer cost effective to prosecute the pending cases.
  
For example, the PCGG head has to answer the following fundamental questions: 
 
Has PCGG exhausted all possible means of successfully recovering through the courts the already identified ill-gotten wealth,  objects of numerous litigation cases still pending before the Sandiganbayan?
 
As special government office primarily responsible in running after martial law ill-gotten wealth, to be done in coordination with other government offices—like the Bureau of Internal Revenue (BIR), Department of Justice, and Office of the Ombudsman—and in the face of difficulties in the prosecution of defendants who amassed/inherited ill-gotten wealth, has PCGG asked the Philippine government prosecutors to employ the legal strategy followed by US government prosecutors in successfully convicting Al Capone during the 1930s?
 
 
 
2.  Possible model in the recovery of ill-gotten wealth—the successful prosecution of TAX-EVASION charges against the wily Al Capone in the 1930s  
    
As shown in ANNEX B, Al Capone, head of the most profitable crime syndicate of the Prohibition Era, was successfully prosecuted and convicted not for murder, extortion, or bootlegging, but for failing to pay his income tax. Thus, the first lesson from the successful prosecution of Al Capone was the wise choice of charges against him—various counts of tax evasion, subject to criminal prosecution and civil suit. 
     
To prove tax evasion, the US government investigators and prosecutors doggedly pursued a twofold thrust consisting of the following: 
 
First, the easy and simple part—presentation of proof that Al Capone did not pay any income tax during the years he earned taxable income, which was done through the very first witness, the government tax collector who testified that Capone failed to file any tax return from 1924 through 1929.
 
Second—the difficult and elaborate part—presentation of proof of generated taxable income, by way of profits earned (whether already spent or still unspent) and assets acquired.     
 
  
3.  The Al Capone TAX-EVASION prosecution model
is easier to apply to Philippine martial law ill-gotten
wealth—it will NOT need truckloads of documentary
evidences and battalion of witnesses, and it is more
than enough to  claim  in full  as payment of  unpaid
taxes and penalties  whatever  is the  entire amount
of the ill-gotten wealth;  there is NO need for 
difficult-to-prove allegation that the wealth is
ILL-GOTTEN, just the easy-to-prove charge
that the wealth is UNTAXED     
 
In view of PCGG-admitted difficulties in the prosecution of numerous ill-gotten wealth cases, the filing of TAX-EVASION criminal and civil cases, patterned after the Al Capone prosecution model, should have been tried by Philippine government investigators and prosecutors since years ago.
 
 
a.  Under the Al Capone prosecution model, the twofold thrust of PCGG investigators and Office of the Ombudsman prosecutors would have consisted of the following:
 
First, the easy and simple part:
Presentation of proof that the various defendants in the ill-gotten wealth cases did not file any tax return during martial law years when the ill-gotten wealth was acquired, to be done through the testimony of  the first witness, the BIR official concerned. (NOTE: It can be safely assumed that as the ill-gotten wealth was previously hidden, hiding it included intentional failure to pay income tax on it.)   
 
Second, the similarly easy and simple part:
Presentation of proof that the defendants have taxable wealth—but it is  untaxed according to the first witness, the BIR official concerned. The taxable wealth refers to the ill-gotten assets object of the the government’s forfeiture cases before the Sandiganbayan. The ill-gotten assets could not be readily forfeited in favor of the government precisely because the defendants claimed legitimate OWNERSHIP over the assets and opposed the government’s criminal and civil complaints before the Office of the Ombudsman and Sandiganbayan.  
  
b.  In disputing the government’s forfeiture cases over the ill-gotten  wealth, in their COUNTER-AFFIDAVITS, the Marcos heirs and cronies have no alternative but to claim/profess valid OWNERSHIP of the unexplained wealth—otherwise the forfeiture cases would prosper—and because the wealth is UNTAXED, what remains to be done by the government, as should have been orchestrated and coordinated by PCGG, is to file TAX EVASION cases and subject the wealth to forfeiture as payment of deficiency income tax and penalties.  
  
In contesting PCGG’s ill-gotten-wealth forfeiture cases before the Office    of the Ombudsman and Sandiganbayan, the defendants’ declaration in their sworn COUNTER-AFFIDAVITS of legitimate OWNERSHIP over the existing untaxed wealth/assets is exactly the readily available admission and PROOF of their previously hidden TAXABLE INCOME, “earned” during martial law and used to acquire the now existing untaxed wealth.
  
If the martial law grafters did not admit ownership of the untaxed wealth, they would have automatically lost by default in the government’s forfeiture cases. With their admission of ownership as is actually the case, they exposed themselves to easy-to-prove TAX EVASION charges before Sandiganbayan. Clearly, the grafters were on the horns of a monumental DILEMMA—they were damned either way. It was a matter of PCGG taking advantage of the grafters’ dilemma through filing of tax evasion charges against them.
      
So, were PCGG lawyers dumb or just playing dumb? Why did they have to go through the tedious search for justification of sequestration, truckloads of evidences, battalion of witnesses, and prolonged NEGOTIATION with the ill-gotten wealth claimants—to the extent of ultimately agreeing to a 75:25 settlement ratio (25 for  the grafters) in the case of some cronies (like Roberto Benedicto?) as reported by media—when, after obtaining ADMISSION of OWNERSHIP of ill-gotten wealth by the Marcos heirs and cronies (or whoever came forward as owners), all PCGG had to do was to cause the filing by the Bureau of Internal Revenue (BIR) and Office of the Ombudsman of TAX-EVASION cases against whoever are the wealth claimants, under which cases the government will claim the entire untaxed ill-gotten wealth as mere PARTIAL payment of unpaid  TAXES and penalties.
  
c. Owing to much higher income tax rates during martial law years when the ill-gotten wealth was acquired out of hidden taxable income, the total TAX ASSESSMENT—had TAX-EVASION cases been pursued by the government—would have been much bigger than the entire amount of the ill-gotten wealth itself.     
 
The Marcos’ and cronies’ untaxed wealth is subject to income tax rates during martial law years, or the time the wealth was “earned” through legal or illegal means. During martial law, our income tax rates were very high. As of 1976, the top personal income tax rate for top personal income bracket of more than P500,000 was a whopping 70%, reduced to 60% by 1985, then adjusted further to 32% shortly after EDSA I.   
  
Following are calculations of total TAX ASSESSMENT for deficiency income tax and penalties based on applicable income tax and penalty rates during martial law period, when the hidden taxable income was “earned” and now exposed as untaxed ill-gotten wealth:
  
(1) In percent or relative terms:
 
Top personal income tax rate on income over P500,000 .............   70%
 
Add:  Penalties:
 
    Surcharge for willful neglect to file income tax returns 
        or for filing false and fraudulent returns, 
        50% x 70% income tax .......................................................  35%
   
     Interests at 14% per annum but not to exceed 3 years,
        or total of 42% x 70% income tax  ......................................  29%
 
     Total Percent of Deficiency Income Tax & Penalties,
       to be Claimed by PCGG against the Ill-Gotten Wealth  ....... 134%  
 
(Note: If the top income tax rate used is 60%, the total unpaid tax and penalties will be 115%, still more than enough for PCGG to claim the whole amount of ill-gotten wealth as assessed deficiency income tax, surcharge, and interests.)    
 
As can be seen, if the Tax Code is strictly followed, the government's total TAX ASSESSMENT would have been much bigger than the amount of ill-gotten wealth itself.  
 
  
(2) In absolute amount or absolute terms:
 
To illustrate, using hypothetical amount of ill-gotten wealth and applying the foregoing actual income tax and penalty rates during martial law, the TAX ASSESSMENT would be calculated as follows: 
 
If the ill-gotten wealth in excess of P500,000 is say 
$10 billion, then the income tax is:
70% X $10 billion……………………………..……. =   $7.0 billion
 
Add:  Surcharge for willful neglect to file
          income tax returns:   50% X $7 billion  ......  =     3.5 billion
 
         Interest charge at 14% per annum for
         maximum of 3 years (for conservatism
         in this example, interest calculation is
         based just on basic tax, exclusive of
         surcharge):  42% X $7 billion  ………...........  =     2.9 billion
 
 Total Deficiency Income Tax & Penalties (134%)... =  $13.4 billion         
 
Thus, the total TAX ASSESSMENT of $13.4 billion is much bigger than the UNTAXED WEALTH of $10 billion.
  
 
4. If it was not done, why didn’t PCGG cause the filing of TAX-EVASION cases—the legal strategy that nailed down Al Capone in the past—towards the recovery of martial law untaxed ill-gotten wealth?      
 
In pursuit of its mandate, has PCGG already caused the filing of TAX EVASION or TAX ASSESSMENT cases against the claimants of martial law ill-gotten wealth?
 
If yes, after 26 years, why has PCGG failed in its forfeiture of untaxed wealth/assets still pending with the Sandiganbayan, while its US counterparts succeeded in the tax evasion charges against Al Capone?  
 
If not, why didn’t PCGG cause the filing of the easier to prove TAX EVASION cases against still living Marcos cronies and TAX ASSESSMENT cases against the Marcos estate and heirs. The tax assessment cases should include any unpaid ESTATE TAXES on the ill-gotten wealth inherited from deceased grafters.   
 
 
                                                  * * *
 
In the end, if PCGG never caused the filing of TAX EVASION or TAX ASSESSMENT cases against martial law grafters, their estates, and their heirs, then PCGG’s difficulty and general failure in its ill-gotten-wealth recovery effort during the last 26 years is self-imposed—because, as just lengthily explained, there is an apparent easier and more feasible legal strategy successfully employed by US investigators and prosecutors in the Al Capone TAX-EVASION case, which PCGG should have pursued in coordination with the Bureau of Internal Revenue and Office of the Ombudsman—but did not.
 
May we have the PCGG Chairman’s response/reaction to the questions or issues raised herein?        
 
 
MARCELO  L. TECSON 
A Concerned Citizen
 
San Miguel, Bulacan
8-29-12,  9-2-12, 1-15-13, 3-7-13 
 
Cc through separate emails:
   Select executive and legislative government officials
   Select members of media, academe, civil society groups, etc.
   Coalition Against Corruption
 
  
===============================
 
ANNEX  A
 
MEDIA REPORTS ON RECOMMENDED PCGG
ABOLITION AND TRANSFER OF ITS WORK
TO THE DEPARTMENT OF JUSTICE: 
  
“The Philippine government is to wind down a near-30-year hunt for the embezzled wealth of late dictator Ferdinand Marcos, with more than half the supposed $10-billion fortune still missing…. With Marcos’ widow and children back in positions of political power, and the government tightening its belt, the cost of the pursuit has become prohibitive, said Andres Bautista, head of the Presidential Commission on Good Government (PCGG). The PCGG chair said he had recommended to President Aquino that the commission wind down its operations and transfer its work to the justice department…. ‘It has become a law of diminishing returns at this point….   It’s been 26 years and people you are after are back in power…. In order now to be able to get these monies back, you need to spend a lot,’ the PCGG chair said…. Long-term chronic mishandling of the PCGG led to an unmanageable paper trail and evidence went missing that led to bitter losses in litigation, Bautista said…. Since its creation, the agency has recovered P164 billion (about $4 billion), some invested in prime New York real estate, jewelry, and about $600 million stashed in secret numbered Swiss bank accounts…. ‘They (the Marcos family) have the resources to go head-to-head with us in respect to litigation. Why do you think forfeiture cases are still languishing 26 years after?’ Bautista said.” (“Hunt for Marcos loot to end,” Philippine Daily Inquirer, January 2, 2013, pages A1, A15)
  
“PCGG Chairman Andres Bautista earlier said that the government would wind down the 26-year hunt for the embezzled wealth of the former president, with more than half of the supposed $10-billion fortune still missing…. Bautista told reporters yesterday that the commission will no longer be filing new cases against the Marcoses. ‘Wala na, wala na kaming bagong ebidensya [we have no new evidence],’ Bautista said.” (Catherine Valente and Neil Alcober, “Hunt for Marcos wealth to continue, The Manila Times Online, January 3, 2013)
  
“The PCCG’s record of recovering lost assets and filing criminal cases of corruption related to the unexplained wealth case is far from impressive. Despite numerous criminal and civil cases filed against the Marcos heirs and cronies for plundering public wealth, none has so far been successfully prosecuted. About 200 ill-gotten wealth cases against the Marcoses and their cronies are pending in the antigraft court Sandiganbayan. Bautista said the PCGG would unlikely file new cases due to the difficulty of getting evidence and witnesses against the Marcoses and their cronies more than a quarter of a century after the overthrow of the dictatorship….Bautista blamed the resources available to the Marcoses to defend themselves in litigations for the languishing of the cases against them for 26 years. The unkindest cut of all is that the PCGG’s annual budget of less than P100 million was only enough to pay its staff of about 200 lawyers.” (Amando Doronila, “PCGG shows lack of will,” Philippine Daily Inquirer, January 7, 2013, pages A1, A12)
 
 

 

==================================
 
  
ANNEX  B
 
 
EXCERPTS FROM:
 
AL CAPONE TRIAL (1931):  AN ACCOUNT
By Douglas O. Linder (2011)
 
Al Capone, head of the most profitable crime syndicate of the Prohibition Era and mastermind of the notorious 1929 "Valentine's Day Massacre," seemed above the law.  In the end, however, Capone would be brought to justice not for murder, extortion, or bootlegging, but for failing to pay his income tax. 
 
Capone in 1929 might have been worth about $30 million, but no income tax return had ever been filed in his name…. While successful in tracking down evidence of expenses, investigators encountered considerable difficulty in finding direct evidence of income….  

The Trial of Alphonse Capone opened on the morning of October 5, 1931 at the federal courthouse in downtown Chicago …. After…Assistant U. S. Attorney Dwight Green outlined the 23 charges of tax evasion against Capone in the government's opening statement, (US Attorney) George Johnson called his first witness. Charles W. Arndt, a tax collector for the United States , told jurors that Al Capone failed to file any tax return at all for the years 1924 through 1929….
 
The prosecution presented evidence that Capone owned gambling halls and derived substantial profits from those businesses…. Leslie Shumway, the cashier at the Hawthorne Smoke Shop, presented the most damning evidence of the day.  Shumway described the accounting procedures used at the gambling hall and estimated that the profits for the two years he worked there were over $550,000…. 
 
A series of prosecution witnesses presented evidence of Capone's lavish lifestyle….  
 
Prosecutor Jacob Grossman noted in his summation that Capone… lived "like a bejeweled prince" and "spent thousands of dollars without thinking twice." (Prosecutor) Samuel Clawson… added that "even a child" could deduce from Capone's lavish lifestyle that he had a huge income. 

(In the end), Judge (James) Wilkerson imposed a prison sentence of eleven years, the longest term ever handed down for tax evasion….  
 
 
 
===========================
 
 
FIRST FOLLOW-UP EMAIL
 
 
----- Forwarded Message -----
From: Marcelo Tecson <martecson@yahoo.com>
To: PCGGChair Andres Bautista <deanbautista@yahoo.com> 
Cc: President BENIGNO AQUINO III <titonoy@president.gov.ph>; DBMSec Butch Abad <abad.dbm@gmail.com>; etc...
Sent: Tuesday, November 13, 2012 6:33 AM
Subject: 1st Follow Up: Fw: WHY DIDN'T PCGG RUN ALL-OUT
AFTER MARCOS' & CRONIES' ILL-GOTTEN WEALTH THROUGH BIGGER DEFICIENCY TAX ASSESSMENTS??? 
 
Pursuant to Section 5 (a) of RA No. 6713, this is to respectfully follow up PCGG's reply to the question raised in the herein forwarded email (dated September 2, 2012).  
 
Thank you.
 
MARCELO  L. TECSON  
A Concerned Citizen
 
San Miguel, Bulacan
November 13, 2012
 
NOTE:   The question raised in the cited September 2, 2012 email:  
WHY DIDN'T PCGG RUN ALL-OUT AFTER MARCOS' & CRONIES'  ILL-GOTTEN WEALTH THROUGH BIGGER DEFICIENCY TAX ASSESSMENTS? Said email is not shown here as it has been amplified by the herein January 15, 2013 email on the subject:  (2nd Follow Up)  DID PCGG FAIL BECAUSE IT DID NOT DO WHAT ITS U.S. COUNTERPARTS DID IN CONVICTING AL CAPONE?                        --M. L. Tecson, 3-7-13 
 
 .
  





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