Buenafe vs. Comelec, G.R. No. 260374. June 28, 2022 [Case Digest]

 

Buenafe vs. Comelec,

G.R. No. 260374. June 28, 2022

En Banc, ZALAMEDA, J.

Facts:

            On 2 November 2021, petitioners Buenafe, et al. filed before the COMELEC a Petition to Deny Due Course to or Cancel the COC of respondent Marcos, Jr. under Section 78, in relation to Section 74, Article IX of Batas Pambansa Blg. (BP) 881, or the Omnibus Election Code (OEC).

            Petitioners Buenafe, et al. and Ilagan, et al. referred to the same set of criminal cases for the violation of the National Internal Revenue Code of 1977, as amended (1977 NIRC), involving respondent Marcos, Jr.

            On 27 June 1990, the Special Tax Audit Team (audit team) created by then Commissioner of Internal Revenue Jose U. Ong (Commissioner Ong) commenced an investigation of the internal revenue tax and estate tax liabilities of the late President Ferdinand E. Marcos, his immediate family, as well as his alleged "associates and cronies." The audit sought to determine whether the taxpayer: (1) earned income; (2) filed the required income tax; and (3) made the corresponding tax payment. The audit team submitted its findings to Commissioner Ong, which prompted him to file a letter complaint dated 25 July 1991 with the Secretary of Justice.

            In Criminal Cases Nos. Q-91-24391, Q-92-29212, Q-92-29213, and Q-92-29217, respondent Marcos, Jr. was charged with violation of the 1977 NIRC for failure to file his income tax returns for the years 1982, 1983, 1984, and 1985. In Criminal Cases Nos. Q-92-29216, Q-92-29215, Q-92-29214, and Q-91-24390, respondent Marcos, Jr. was charged with violation of the 1977 NIRC for failure to pay income taxes due, exclusive of surcharges and interests, in the amounts of P107.80 for 1982, P3,911.00 for 1983, P1,828.48 for 1984, and P2,656.95 for 1985.

            RTC held that Ferdinand Marcos Jr guilty beyond reasonable doubt. CA agreed with respondent Marcos, Jr. that there was insufficient notice from the BIR. It further declared that respondent Marcos, Jr. should not have been held to answer for the criminal charges filed against him for non-payment of deficiency income tax liabilities.

            CA acquitted the accused-appellant of the charges for violation of Section 50 of the NIRC for non-payment of deficiency taxes for the taxable years 1982 to 1985 in Criminal Cases Nos. Q-02-29216, Q-92-29215, Q-92-29214, and Q-91-24390; and FINDING him guilty beyond reasonable doubt of violation of Section 45 of the NIRC for failure to file income tax returns for the taxable years 1982 to 1985 in Criminal Cases Nos. Q-91-24391, Q-92-29212, Q-92-29213, and Q-92-29217.

            CA ordered the appellant to pay a fine of P2,000.00 for each charge in Criminal Cases Nos. Q-92-29213, Q-92-29212 and Q-29217 for failure to file income tax returns for the years 1982, 1983, and 1984; and the fine of P30,000.00 in Criminal Case No. Q-91-24391 for failure to file income tax return for 1985, with surcharges.

            On 02 December 2021, the RTC released a certification stating that there is no record on file of respondent Marcos, Jr.'s compliance of payment or satisfaction of its Decision dated 27 July 1995 or that of the CA's Decision dated 31 October 1997. Neither was there any entry in the criminal docket of the RTC Decision dated 27 July 1995 as affirmed and modified by the CA.

            In SPA No. 21-156 (DC), petitioners Buenafe, et al. argued before the COMELEC that respondent Marcos, Jr. committed false material representation when he stated in his COC that he is eligible to run for President. They maintained that respondent Marcos, Jr.'s prior conviction carries with it the accessory penalty of perpetual disqualification from holding any public office, to vote, and to participate in any election.

            The COMELEC Second Division ruled that respondent Marcos, Jr.'s material representations are not false, i.e., that he is eligible for the position of President and that he is not perpetually disqualified from public office. It underscored that the CA Decision did not mete out the penalty of perpetual disqualification from holding public office. It also found, as a matter of judicial notice, that respondent Marcos, Jr. ceased to be a public officer when he and his family were forced to leave the Philippines on 25 February 1986. The penalty of perpetual disqualification from public office under Section 286 of Presidential Decree No. (PD) 1994, which amended Section 286(c) of the 1977 NIRC, thus cannot apply to respondent Marcos, Jr. since he was already a private individual when he failed to file his 1985 income tax return. The COMELEC Second Division also concluded that respondent Marcos, Jr. had no intention to deceive the electorate about his qualifications for public office.

            The COMELEC Second Division reiterated this Court's declaration in Republic v. Ferdinand Marcos II and Imelda R. Marcos that failure to file an income tax return is not a crime involving moral turpitude. Moreover, failure to file income tax returns is not tax evasion.

 

Issue 1:

            Whether the Supreme Court still has jurisdiction to rule upon the eligibility of [respondent Marcos, Jr.

 

Held:

            Yes; By the same token, the PET is not a separate and distinct entity from the Supreme Court, albeit it has functions peculiar only to the Tribunal. It is obvious that the PET was constituted in implementation of Section 4, Article VII of the Constitution, and it faithfully complies — not unlawfully defies — the constitutional directive. The adoption of a separate seal, as well as the change in the nomenclature of the Chief Justice and the Associate Justices into Chairman and Members of the Tribunal, respectively, was designed simply to highlight the singularity and exclusivity of the Tribunal's functions as a special electoral court.

            When the Court acts as the PET, it is not a separate and distinct body from the Court itself. The constitutional provision refers to the same "Supreme Court sitting en banc." However, it should be recognized that the proceedings before the PET require a distinct set of rules of procedure owing to the very specific nature of its functions. Thus, the exercise of jurisdiction of the Court En Banc as the PET is likened to the characterization of specialized courts in relation to the then Courts of First Instance. They are the same courts having the same jurisdiction, only that specialized courts are intended for practicality. Section 4, Article VII of the 1987 Constitution therefore should not be considered as a limitation on the jurisdiction of the Court over the pending petitions.

           

 

 

Issue 2:

            Whether the COMELEC committed grave abuse of discretion amounting to lack or excess of jurisdiction in refusing to cancel the subject COC of Respondent Marcos, Jr. and ruling that respondent Marcos, Jr.'s material representations, i.e., that he is eligible for the position of President and that he has not been convicted of a crime punished with the penalty of perpetual disqualification from public office, are not false.

 

Held:

            No; respondent Marcos, Jr. possesses all of the qualifications and does not possess any of the grounds for disqualification.

            We reiterate that the qualifications for President and Vice-President are prescribed in Section 2, Article VII of the 1987 Constitution. These qualifications are also found in Section 63 of the OEC.

            There is no question that respondent Marcos, Jr. has all the qualifications of a candidate for President as provided under the Constitution and the OEC. Notably, neither the Buenafe Petition nor the Ilagan Petition alleges that respondent Marcos, Jr. lacks any of these qualifications: natural-­born citizen of the Philippines, a registered voter, able to read and write at least forty years of age on the day of the election, and a resident of the Philippines for at least ten years immediately preceding such election.

            Petitioners Ilagan, et al. instead argue that respondent Marcos, Jr. has been convicted of a crime involving moral turpitude and is thus disqualified from being a candidate and holding any government office under Section 12 of the OEC.

            Respondent Marcos, Jr.'s failure to file income tax returns is not a crime involving moral turpitude.

            Not every criminal act involves moral turpitude, nor do they necessarily have to be heinous. Moral turpitude has been often understood to mean acts that are "contrary to justice, modesty, or good morals; an act of baseness, vileness or depravity in the private and social duties which a man owes his fellowmen, or to society in general." It does not include such acts as are not of themselves immoral but whose illegality lies in their being positively prohibited.

            Indeed, in Zari v. Flores, We said that tax evasion is a crime involving moral turpitude. On whether an act or omission constitutes tax evasion, We certainly agree that it depends on the totality of circumstances. As such, it must be clarified that failure to file income tax return does not always amount to tax evasion. Tax evasion connotes fraud through the use of pretenses and forbidden devices to lessen or defeat taxes. The fraud contemplated by law is actual and not constructive. It must be intentional fraud, consisting of deception willfully and deliberately done or resorted to in order to induce another to give up some legal right. Negligence, whether slight or gross, is not equivalent to the fraud with intent to evade the tax contemplated by law. It must amount to intentional wrong-doing with the sole object of avoiding the tax. Furthermore, tax evasion connotes the integration of three factors: (a) the end to be achieved, i.e., the payment of less than that known by the taxpayer to be legally due, or the non-payment of tax when it is shown that a tax is due; (b) an accompanying state of mind, which is described as being "evil," in "bad faith," "willful," or "deliberate and not accidental"; and (c) a course of action or failure of action that is unlawful.

            On the other hand, failure to file income tax return may be committed by neglect, without any fraudulent intent and/or willfulness. In fact, under Section 248 of the 1997 NIRC, the law treats "failure to file any return" differently from "willful neglect to file the return." The former is meted with a surcharge of 25%, while the latter, 50%. The 50% rate is referred to as the fraud penalty. Previously, under Section 72 of the 1939 NIRC, a taxpayer may be excused from the 25% surcharge if the taxpayer subsequently files the return despite absence of BIR notice and the earlier failure is due to a reasonable cause.

            As Associate Justice Amy C. Lazaro-Javier eloquently declared, taken in its proper context, the failure to file a compensation income tax return is far from being "everything which is done contrary to justice, modesty, or good morals; an act of baseness, vileness or depravity in the private and social duties which a man owes his fellowmen, or to society in general." [Teves vs. Comelec].

            The 'failure to file an income tax return' is not a crime involving moral turpitude as the mere omission is already a violation regardless of the fraudulent intent or willfulness of the individual. This conclusion is supported by the provisions of the NIRC as well as previous Court decisions which show that with regard to the filing of an income tax return, the NIRC considers three distinct violations: (1) a false return, (2) a fraudulent return with intent to evade tax, and (3) failure to file a return.

            This clarification starts with a distinction between taxpayers who are not required to file income tax returns from taxpayers who file tax returns under the substituted filing system. Under Section 51(A)(2) of the 1997 NIRC, as amended, a minimum wage earner is exempt from income tax and is not required to file an income tax return. On the other hand, an individual earning purely compensation income from a single employer whose income tax has been correctly withheld by said employer is not required to file an annual income tax return. Over the years, the BIR recognized the need to simplify the filing of individual income tax returns. It introduced the substituted filing system in Revenue Regulations (R.R.) No. 3-2002, which was further amended by R.R. No. 19-2002. Substituted filing took effect in taxable year 2001 and was made mandatory starting the taxable year 2002.

            The substituted filing system made it easier for pure compensation earners to file their income tax returns because the relevant information is more accessible to their employers. In substituted filing, the employer's annual return for the employee is considered as the employee's income tax return because they contain identical information. Employers, or other persons who are required to deduct and withhold the tax on compensation, furnish their employees with a Certificate of Income Tax Withheld on Compensation, or BIR Form No. 2316. After the issuance of a joint certification by the employer and the employee, the employee who is qualified for substituted filing is no longer required to file an Annual Income Tax Return, or BIR Form No. 1700.

            Under "substituted filing", an individual taxpayer although required under the law to file his income tax return, will no longer have to personally file his own income tax return but instead the employer's annual information return filed will be considered as the "substitute" income tax return of the employee inasmuch as the information in the employer's return is exactly the same information in the employee's return.

            Conviction for non-filing of income tax returns is not a ground for disqualification.  We agree with the COMELEC, that the introduction of the penalty of both imprisonment and fine in Section 254 only became effective in 1998 when the 1997 NIRC was passed. Consequently, this cannot be retroactively applied to the prejudice of respondent Marcos, Jr., who was convicted for failure to file the required tax returns for the years 1982 to 1985. Well-settled is the rule that penal laws cannot be given retroactive effect, unless favorable to the accused.

            Respondent Marcos, Jr.'s representations that are subject of the Petitions are material.  In Villafuerte v. COMELEC, We held that, for a representation to be material, it must "refer to an eligibility or qualification for the elective office the candidate seeks to hold." Thus, facts pertaining to a candidate's residency, age, citizenship, or any other legal qualification are considered material under Section 78 of the OEC.

            Further, in Salcedo II v. COMELEC, the Court explained the rationale behind the requirement of materiality, and concluded that the law should not be interpreted to cover innocuous mistakes: Therefore, it may be concluded that the material misrepresentation contemplated by section 78 of the Code refer to qualifications for elective office. This conclusion is strengthened by the fact that the consequences imposed upon a candidate guilty of having made a false representation in his [or her] certificate of candidacy are grave — to prevent the candidate from running or, if elected, from serving, or to prosecute him [or her] for violation of the election laws. It could not have been the intention of the law to deprive a person of such a basic and substantive political right to be voted for a public office upon just any innocuous mistake.

            In this case, petitioners Buenafe, et al. assert that respondent Marcos, Jr. made a false material representation when, in his COC, he certified under oath the statement, "I am eligible for the office I seek to be elected to." Respondent Marcos, Jr. also allegedly misrepresented his eligibility when he checked the box "No" in response to the question, "[have you ever been found liable for an offense which carries with it the accessory penalty of perpetual disqualification to hold public office, which has become final and executory?" Petitioners Buenafe, et al. claim that respondent Marcos, Jr.'s conviction for violation of the NIRC carried with it the penalty of perpetual disqualification, thereby rendering the two statements false.

            The assailed representations pass the test of materiality because they pertain to respondent. Marcos, Jr.'s eligibility to hold elective office. In Dimapilis v. COMELEC (Dimapilis), We ruled that perpetual disqualification is a material fact because it directly affects a person's capacity to be elected and to hold public office, thus:

A CoC is a formal requirement for eligibility to public office. Section 74 of the OEC provides that the CoC of the person filing it shall state, among others, that he is eligible for the office he seeks to run, and that the facts stated therein are true to the best of his knowledge. To be "eligible" relates to the capacity of holding, as well as that of being elected to an office. Conversely, "ineligibility" has been defined as a "disqualification or legal incapacity to be elected to an office or appointed to a particular position." In this relation, a person intending to run for public office must not only possess the required qualifications for the position for which he or she intends to run, but must also possess none of the grounds for disqualification under the law.

            In this case, petitioner had been found guilty of Grave Misconduct by a final judgment, and punished with dismissal from service with all its accessory penalties, including perpetual disqualification from holding public office. Verily, perpetual disqualification to hold public office is a material fact involving eligibility which rendered petitioner's CoC void from the start since he was not eligible to run for any public office at the time he filed the same. When respondent Marcos, Jr. declared that he has not been convicted of an offense that carries with it the accessory penalty of perpetual disqualification to hold office, he made a material representation regarding his eligibility to run for and hold elective office. This representation, if proved false, would fall within the ambit of Section 78 of the OEC.

            Similarly, respondent Marcos, Jr. made a material representation when he signed and subscribed to his COC, which states that, "I am eligible for the office I seek to be elected to." In Aratea v. COMELEC, the Court emphasized that disqualification to run for office is an ineligibility. Consequently, a statement in the COC that one is eligible, when such is not the case, is a false material representation constituting ground for the application of Section 78 of the OEC: Perpetual special disqualification is a ground for a petition under Section 78 of the Omnibus Election Code because this accessory penalty is an ineligibility, which means that the convict is not eligible to run for public office, contrary to the statement that Section 74 requires him to state under oath in his certificate of candidacy. As this Court held in Fermin v. Commission on Elections, the false material representation may refer to "qualifications or eligibility." One who suffers from perpetual special disqualification is ineligible to run for public office. If a person suffering from perpetual special disqualification files a certificate of candidacy stating under oath that "he is eligible to run for (public) office," as expressly required under Section 74, then he clearly makes a false material representation that is a ground for a petition under Section 78.

            Lest it be misunderstood, the denial of due course to or the cancellation of the CoC is not based on the lack of qualifications but on a finding that the candidate made a material representation that is false, which may relate to the qualifications required of the public office he/she is running for. It is noted that the candidate states in his/her CoC that he/she is eligible for the office he/she seeks. Section 78 of the OEC, therefore, is to be read in relation to the constitutional and statutory provisions on qualifications or eligibility for public office. If the candidate subsequently states a material representation in the CoC that is false, the COMELEC, following the law, is empowered to deny due course to or cancel such certificate. Indeed, the Court has already likened a proceeding under Section 78 to a quo warranto proceeding under Section 253 of the OEC since they both deal with the eligibility or qualification of candidate, with the distinction mainly in the fact that a "Section 78" petition is filed before proclamation, while a petition for quo warranto is filed after proclamation of the winning candidate.

Ultimately, however, a petition to deny due course to or to cancel COC and a petition for disqualification are "different remedies, based on different grounds, and resulting in different eventualities."

            First, the two remedies are anchored on distinct grounds: whereas an action under Section 78 of the OEC is concerned with the false representation by a candidate as to material information in the COC, a petition for disqualification relates to the declaration of a candidate as ineligible or lacking in quality or accomplishment fit for the elective position said candidate is seeking. To prosper, the former requires proof of deliberate attempt to mislead, misinform, or hide a fact relating to the candidate's requisite residency, age, citizenship, or any other legal qualification necessary to run for elective office; the latter, possession of a disqualification as declared by a final decision of a competent court, or as found by the Commission.

            Second, they have different prescriptive periods: a petition to deny due course to or cancel a COC may be filed within five days from the last day of filing of COCs, but not later than 25 days from the filing of the COC sought to be canceled; a petition for disqualification may be filed any day after the last day of the filing of COC, but not later than the date of the proclamation.

            Third, both have markedly distinct effects: a disqualified person is merely prohibited to continue as a candidate, while the person whose certificate is canceled or denied due course is not treated as a candidate at all. Moreover, a disqualified candidate may still be substituted if they had a valid COC in the first place. However, one whose COC was denied due course or canceled cannot be substituted because the law considers him or her to not have been a candidate at all.

            While the grounds for a petition for disqualification are limited to Sections 12 and 68 of the OEC, and, for local elective officials, Section 40 of the LGC, the same grounds may be invoked in a petition to deny due course to or cancel COC if these involve the representations required under Section 78.