Forfeiture of Pogo properties

With the expected end of Philippine offshore gaming operators (Pogo) by the end of the year, the government is faced with a “pleasant” problem on the disposition of the parcels of land, buildings and other assets owned by Pogos that had been confiscated for alleged involvement in criminal activities.

Considering the high level of sophistication of those buildings and their amenities, plus the value of the land on which they are built, those assets would be worth billions of pesos.

The fact that Pogos were willing to spend tons of money for those structures shows that the proceeds of their operation were profitable many times over during the years they were allowed to operate.

Under our penal laws, when a penalty is imposed for the commission of a crime, its proceeds and the instruments or tools with which it was committed shall be confiscated and forfeited in favor the government, unless they belong to a party who is not liable for the offense.

Prior to the exercise of this action, the owner of or whoever is in possession of those items has to be convicted first of the crime.

In light of the slow pace of justice in our country, it may take three to four years before that requirement can be met. And while the case is winding its way in our judicial system, those assets could deteriorate or surreptitiously disappear.

Note that the crimes being attributed to Pogos are, among others, human trafficking, serious physical injuries and homicide, are not open-and-shut case. They require the participation of the alleged victims who are yet to be identified and even if they are, it would not be easy to locate them and, assuming they are found, may not be willing to testify in court.

Some lawmakers have suggested the enactment of a law that would facilitate the reversal of the ownership of Pogo assets to the government. Unless President Marcos certifies to the urgency of passing of that law, that approach may take years to bear fruit.

With time being of the essence in the disposition of those properties, the government could use the “Al Capone strategy” that the United States used effectively in going after that notorious 1900s gangster, i.e., use the tax system to put him behind bars.

Unable to nail him for the violent crimes that his group had allegedly committed, the US tax authorities charged him with income tax evasion that resulted in his incarceration.

The question is posed: Considering the billions of pesos that Pogos had earned from their operations in the Philippines, how much, if any, had they paid by way of income tax or other taxes payable for the other commercial activities within their premises?

If there are no records of their compliance with our tax laws, the Bureau of Internal Revenue (BIR) could file tax evasion charges against them and ask the court to issue the appropriate orders for the preservation of their properties while the case is being tried.

Unlike crimes against persons, e.g., human trafficking, tax evasion cases are primarily documentary in character. If a taxpayer claims that he or she has correctly and timely paid his or her taxes, all that’s needed to prove that is to show the proof of payment. If no such proof can be presented, the penalty for tax evasion would come as a matter of course.

This assumes that Pogo owners would come out in the open and fight it out with the BIR. If they choose not to expose themselves, the case would be a walk in the park for the BIR. But if they do, they could find themselves facing charges for more serious crimes. It would be case of damned-if-you-do and damned-if-you-don’t.

By and large, our courts tend to give the BIR a lot of slack in its tax enforcement activities in deference to the principle that taxes are the life blood of the government.

And when the BIR succeeds in proving its case, it can, under the Tax Code, effect “… the confiscation and forfeiture in favor of the proceeds of the crimes or the value of the goods, and the instruments or tools with which the crime was committed.”