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PEOPLE V. CASTAEDA G.R. No.

180197 23 June 2009


People of the Philippines, petitioner v. Hon. Mariano Castaeda, Jr., Judge of the Court of First Instance of Pampanga, Branch III, Vicente Lee Teng, Priscilla Castillo vda. De Cura, and Francisco Valencia, respondents.

Feliciano, J. DOCTRINE: A tax amnesty, much like to a tax exemption, is never favored nor presumed in law and if granted by statute, the terms of the amnesty like that of a tax exemption must be construed strictly against the taxpayer and liberally in favor of the taxing authority. NATURE: Petition Mandamus FACTS: Sometime in 1971, 2 informants submitted sworn information under Republic Act No. 2338 ("An Act to Provide for Reward to Informers of Violations of the Internal Revenue and Customs Laws" to the BIR concerning alleged violations of provisions of the Internal Revenue Code committed by the private respondents Following an investigation and examination by the BIR, the State Prosecutor filed with the CFI of Pampanga several informations against private respondents Respondents were charged with various violations of the NIRC including possession of counterfeit internal revenue labels (170, par 2, NIRC), possession of liquors and spirits whose specific taxes have not been paid (174, (c)), and finally, manufacture of alcoholic products without paying the privilege tax therefor (178 in rel. 182 and 208, NIRC) After arraignment, accused Valencia filed a Motion to Quash upon the for Certiorari and

grounds that the informations had been filed without conducting the necessary preliminary investigation and that he was entitled to the benefits of the tax amnesty provided by P.D. No. 370 The State Prosecutor opposed saying that the lack of a preliminary investigation is not grounds for quashal. The prosecutor further argued that the accused Valencia was not entitled to avail himself of the benefits of P.D. No. 370 since his tax cases were the subject of valid information submitted under R.A. No. 2338 as of 31 December 1973 The trial court judge granted the Motion to Quash. Reconsideration by the People denied The co-accused also filed Motions to Quash on the theory that the dismissal of the action as to Valencia inured to their benefit. Such motions were also granted by the respondent judge Petitioner people now file a petition for certiorari and mandamus seeking the annulment of the order granting quashal

ISSUE: 1. W/N private respondents are entitled to the benefits of the tax amnesty? HELD/RATIO 1. NO PD 370 provides for a tax amnesty in broad terms:

A tax amnesty is hereby granted to any person, natural or juridical, xxx failed to include all that were required to be declared therein if he now voluntarily discloses under this decree all his previously untaxed income and/or wealth such as earnings, receipts, gifts, bequests or any other acquisitions from any source whatsoever which are or were previously taxable under the National Internal Revenue Code, realized here or abroad by condoning all internal revenue taxes including the increments or penalties on account of non-payment as well as all civil, criminal or administrative liabilities, under the National Internal Revenue Code, the Revised Penal Code, the Anti-Graft and Corrupt Practices Act, the Revised Administrative Code, the

Civil Service Laws and Regulations, laws and regulations on Immigration and Deportation, or any other applicable law or proclamation, as it is hereby condoned, provided a tax of fifteen (15%) per centum on such previously untaxed income and/or wealth is imposed subject to the following conditions: a. Such previously untaxed income and/or wealth must have been earned or realized prior to 1973, except the following: xxx e. Tax cases which are the subject of a valid information under Republic Act No. 2338 as of December 31, 1973; and xxx

reason of the sworn information or affidavit-complaints filed by informers with the BIR The information referred to in the PD refers to information provided by informants under PD 2338 which is the situation obtaining in this case Thus, it is clear from the provisions of the amnesty that the acts of the respondents, not having been voluntarily disclosed, are not subject to the benefits under the same Valencia further contends that the People were estopped from questioning his entitlement to the benefits of the tax amnesty, considering that agents of the BIR had already accepted his application for tax amnesty and his payment of the required fifteen percent (15%) special tax At the time he paid the special fifteen percent (15%) tax under P.D. No. 370, accused Francisco Valencia had in fact already been subjected by the BIR to extensive investigation such that the criminal charges against him could not be condoned under the provisions of the amnesty statute. Further, acceptance by the BIR agents of accused Valencia's application for tax amnesty and payment of the fifteen percent (15%) special tax was no more than a ministerial duty on the part of such agents It is also axiomatic that the State is not bound by the mistakes of its agents Still further, a tax amnesty, much like to a tax exemption, is never favored nor presumed in law and if granted by statute, the terms of the amnesty like that of a tax exemption must be construed strictly against the taxpayer

The amnesty provides for the extinction of ALL liability arising from such acts such as those of the respondents Thus the amnesty also eliminates the criminal liabilities attendant to the acts HOWEVER, to avail of the benefits of the amnesty, it is required that the claimant must have VOLUNTARILY disclosed of his untaxed income or wealth Where the disclosure of such previously untaxed income or wealth was not voluntary but rather the accompaniment or result of tax cases or tax assessments already pending as of 31 December 1973, the claimant is not entitled to the benefits of P.D. No. 370 Section 1 (a) (4) of P.D. No. 370, expressly excluded from the coverage of P.D. No. 370: "tax cases which are the subject of a valid information under R.A. No. 2338 as of December 31, 1973." In the instant case, the violations of the National Internal Revenue Code with which the respondent accused were charged, had already been discovered by the BIR when P.D. No. 370 took effect on 9 January 1974, by

and liberally in favor of the taxing authority. The corollary issue is whether or not, assuming arguendo that Valencia is entitled to an amnesty, the dismissal of his case redounded to the benefit of his co-accused The fact that conspiracy was alleged does not automatically free the coaccused from liability It must be shown that they themselves complied with requirements of the grant of amnesty The defense of the tax amnesty under P.D. No. 370 is, like insanity, a personal defense for that defense relates to the circumstances of a particular accused and not to the character of the acts charged in the criminal information The statute makes the defense of extinguishment of liability available only under very specific circumstances and on the basis of reciprocity, as it were: the claimant must disclose his previously untaxed income or wealth (which then may be effectively subjected to future taxation) and surrender to the Government fifteen percent (15%) of such income or wealth; then, and only then, would the claimant's liability be extinguished However, as was established, Valencia was not entitled to the benefits of the amnesty. Hence nothing could have inured to the benefit of his co-accused

DISPOSITION: Petition GRANTED, assailed orders SET ASIDE. Judge ordered to PROCEED with the criminal cases. Votes: Fernan, C.J., Gutierrez, Jr., Bidin, Cortes, JJ., concur