Defense vows ‘perfectly reasonable explanation’ for Davao City’s 2023 pay to Duterte

MANILA (UPDATE) — The defense panel in Vice President Sara Duterte’s impeachment case will provide a “perfectly reasonable explanation” for why she received compensation from the Davao City government in 2023 while serving as vice president, its spokesperson said Friday.

Michael Poa, a spokesperson and member of the defense panel, made the statement as questions arose over Duterte’s reported compensation from the Davao City government, which was touched on by the testimony of Anne Loraine Garcia-Marquez, chief of staff at the Bureau of Internal Revenue’s (BIR) Office of the Commissioner.

In the afternoon proceedings, Escudero sought clarification from Marquez about her answers and the tax documents shown to her during cross-examination.

The issue resurfaced during the afternoon session when Sen. Raffy Tulfo questioned Marquez about Duterte’s compensation. Marquez said Duterte received P82,327.45 from the Davao City government in 2023, but she could not tell what services the vice president offered.

“Atty. Anne, to clarify, ‘yong binabasa po ninyong taong 2023, filing po ‘yan?” Escudero asked.

“Attachment po siya sa filing ng kaniyang return,” Marquez responded.

“Ngayon kung attachment ‘yan sa filing ng 2023, ibig sabihin patungkol ‘yan sa kinita ng taong 2022?” Escudero asked.

“For the year 2023 na na-file noong 2024,” Marquez clarified.

Escudero then asked about an earlier reference to tax documents that were brought up during cross examination earlier in the day.

“Eh ano po ‘yong binabanggit ni Atty. Kristine [Ferrer] kanina na 2022?” he asked Marquez, referring to the defense counsel who conducted cross examination of the BIR official.

“That’s another year po. That’s for taxable year 2022,” said Marquez.

“Na finile noong 2023? So may isa pang finile ng 2024 tungkol sa compensation income ng 2023, correct?” Escudero clarified, which Marquez affirmed.

Poa said the defense panel would address the issue when it is their turn to present evidence.

“We just assure this court that we will address this issue and face this head on and give you a perfectly reasonable explanation during our presentation for evidence,” Poa said.

Escudero said he initially thought the issue of Duterte’s 2023 compensation from the Davao City government had been addressed during cross-examination.

“We will be presenting a witness for this particular issue. The relevant witness is supported by raw records and documents,” Poa said.

Toward the end of the cross-examination, Ferrer presented Marquez with two BIR Form 2316 attached to Duterte’s 2022 income tax return (ITR), which was filed in April 2023.

The first form was issued by the Davao City government and covered the period from January to June 2022, while the second was issued by the Office of the Vice President and covered June 30 to December 31 of the same year.

“You’re aware of course that from January to June 2022, the Vice President was still the mayor of Davao City, correct?” Ferrer asked Marquez, who nodded. “That’s why from January 1 to June 30, 2022, the employer [of Duterte] was still the city government of Davao.”

“Based po dito po, nakalagay ang employer ay city government of Davao,” Marquez responded, reading off one of the forms.

“These two BIR forms 2316 were attached to the 2022 annual ITR which was filed in April 2023, correct?” Ferrer asked, which Marquez affirmed.

This followed the direct examination, which revealed that Duterte had received compensation from the Davao City government in 2023, when she was already serving as vice president. The prosecution suggested that this could constitute a violation of the 1987 Constitution, which prohibits the president and vice president from practicing any other profession while in office.

Ferrer also pressed Marquez on whether she was certain that Duterte’s other income reported in 2024 and 2025 came from her law practice, as she had testified the previous day based on BIR records.

The BIR documents did not specify the exact source of the income. However, because Duterte’s registered business activity was listed as “legal activities,” the bureau presumed that the income came from her law practice, an interpretation Marquez reiterated during cross-examination.

“Based sa audited financial statements, wala pong breakdown or notes or explanation as to kung saan nanggaling ‘yong kanilang revenues. But based sa certificate of registration (COR) nila, ni Vice President Sara Duterte, nakalagay doon na practice of profession and then may line of business na legal activities,” Marquez said.

“So sa BIR po, for this, considering the documents, the income that were reported in the annual income tax return ay derived po doon,” she added.

But Ferrer pointed out that Duterte’s COR, which listed her profession, dated back to 2006, before she became a public official, and had never been amended.

Marquez, however, maintained that the BIR based its statement on its 2006 record, as well as a 2018 record listing Duterte’s registered primary activity as “legal activities.”

In response to a question from Escudero, Marquez said taxpayers who change professions should update their registration with the BIR.

Marquez also confirmed that the BIR had issued letters of authority (LOA) to Duterte and Carpio, authorizing the bureau to examine their books of accounts and other financial records. The letters were presented by the defense before the court.

Ferrer then asked whether the BIR had issued a notice of discrepancy to Duterte, but Marquez declined to answer, citing the confidentiality of such information under a revenue memorandum circular.

Marquez likewise declined to disclose whether the bureau had issued a preliminary assessment notice, final assessment notice or formal letter of demand.

Another point of the cross-examination was whether a taxpayer’s net taxable income reflected their net assets.

“Sa income tax return kasi, it pertains only to your business. ‘Yong SALN (Statement of Assets, Liabilities, and Net Worth) po is personal and business. So ibig sabihin, may portion dito sa business mo na dapat naka-include dito sa SALN,” Marquez explained.

Under questioning by Ferrer, Marquez also confirmed that, under the Revised Corporation Code of the Philippines, income earned by corporations or other juridical entities linked to Duterte and Carpio cannot automatically be considered the couple’s personal income.

The impeachment court is examining the tax and bank records of Duterte and Carpio as it hears allegations that the Vice President amassed unexplained wealth, failed to fully disclose her assets and did not divest herself of business interests while in office.