TANDUAY DISTILLERY, INC.
Elizalde & Co., Inc.
(SGD.) FAUSTO PREYSLER
Acting on said letter, Aquilino T. Larin, Assistant Commissioner and Chief of the then Specific Tax Office, now Excise Tax Service of the BIR, wrote a marginal note 2 on the letter instructing Teodoro Pareño head of the Alcohol Tax Division, to prepare a request to the Revenue Accounting Division (RAD) for confirmation of Tanduay’s payments.
On September 23, 1987, upon receipt of said letter, Teodoro Pareño immediately referred the same to Justino Galban, Chief of the Compounders, Repackers and Rectifiers Section, one of the sections under the Alcohol Tax Division, for the preparation of the request.
Galban, then prepared a memorandum to the Financial and Management Service, Attention: Chief, Revenue Accounting Division, requesting the desired authentication and verification. The memorandum reads as follows:chanrob1es virtual 1aw library
September 24, 1987
MEMORANDUM FOR:chanrob1es virtual 1aw library
The Assistant Commissioner
Financial and Management Service
Attention: Chief, Revenue Accounting Division
Sir:chanrob1es virtual 1aw library
There is forwarded to you for verification and authentication that the amounts represented by the Confirmation Receipts mentioned in the attached schedules in the amount of One Hundred Eighty million Seven Hundred One Thousand Six Hundred Eighty Two (P180,701,682.00) Pesos, were actually paid and received by our Bureau as Ad Valorem Tax Payments of Tanduay Distillery, Inc., No. 348 J. Nepomuceno St., Quiapo, Manila, during the period beginning January 1, 1986 to August 31 1987.
The Certification of your Office is requested as a requisite in the processing of the claim for Tax Credit filed by Tanduay Distillery, Inc. for alleged erroneously paid Ad Valorem Taxes on its compounded liquors.
Very truly yours,
(Sgd.) AQUILINO T. LARIN
For Specific Tax 3
Immediately thereafter, the aforesaid memorandum signed by Larin was forwarded to the Financial and Management Service, a co-equal unit of the Excise Tax Service, on September 24, 1987.
On September 25, 1987, Potenciana M. Evangelista, Chief of the Revenue Accounting Division (RAD) forwarded to Larin through the Assistant Commissioner for Financial and Management Service the following First Indorsement, certifying as requested, the Confirmation Receipts listed therein as verified from their records:chanrob1es virtual 1aw library
September 25, 1987
Respectfully forwarded to the Assistant Commissioner for Specific Tax, THRU: the Assistant Commissioner, Financial & Management, the memorandum dated September 24, 1987 relative to the alleged erroneous payment of Ad Valorem taxes on its compounded liquors paid by TANDUAY DISTILLERY, INC. for the period January 1, 1986 to August 31, 1987 in the amount of P180,701,682.00 with the information that the confirmation receipts listed hereunder were verified from the records of this Office, as follows:chanrob1es virtual 1aw library
Name of Taxpayer: TANDUAY DISTILLERY, INC.
CR NO. TNC DATE BNKC AMOUNT
7448215 3011-0001 1-06-86 021-002 P77,840.00
7448237 -do- 1-07-86 -do- -do-
7448265 -do- 1-08-86 -do- -do-
SOURCE: Abstract of Collections thru Bank
BIR Form No. 12.56
a) Phil. Trust Co.
(SGD.) POTENCIANA M. EVANGELISTA
Chief, Revenue Accounting Division
TAN-E 1526-E 1946-A-0 4
On October 13, 1987, Galban and Pareño prepared their respective memoranda describing the manufacturing process of Tanduay and stating that Tanduay was both a rectifier and compounder. The memorandum signed by Galban is quoted as follows:chanrob1es virtual 1aw library
October 14, 1987
The Assistant Commissioner for Specific Tax
Sir:chanrob1es virtual 1aw library
This is with reference to the tax credit claim of Tanduay Distillery Inc., for ad valorem taxes alleged to have been erroneously paid on its ESQ Rhum, Clubman’s Dry Gin, De Luxe and Cossach Vodka and other similar intoxicating beverages.
Submitted herewith is my report on the manufacturing process of Tanduay Distillery, Inc.. Tanduay Distillery, Inc. is a rectifier and at the same time a compounder bearing Assessment No. A-1-3 and A-1-3A, respectively, and has been in business since 1854.
The principal raw materials used in manufacture of these products is alcohol purchased either underbond or taxpaid from various distillers.
The underbond alcohol purchased and delivered are loaded in tankers from source covered by Official Tax Receipts (OTR) showing the total volume in gauge liters and proof liters. Each shipment of underbond alcohol are provided with samples which is tested and examined by the Quality Control Office of Tanduay Distillery for the purpose of determining if it meets the quality standard. It is therefore pumped into the underbond storage tanks of the rectifying plant of Tanduay Distillery, Inc., and undergoes rectification to remove turgidity, color, odor and other impurities for the purpose of bringing about improved quality of the alcohol for the specific use in the manufacture of liquors and wines. After sometime in the rectifying plant at time for several months of storage said underbond rectified alcohol are ready for compounding depending on the market demands in which case they are transferred to the compounding area after the payment of the corresponding specific tax. In the compounding tanks essences, oils, aromatics, coloring material and other ingredients are added to attain the desired premium quality brand of compound liquor to be produced. After all the materials were thoroughly mixed the resulting products which are ESQ Rhum, Clubman’s Dry Gin, De Luxe and Cossach Vodka and other similar intoxicating beverages are tested and examined again by the Quality Control Office and if found to possess the standard quality strictly set by the company they are stored for sometime bottled, packed and affixed with the requisite auxiliary labels. All of these processes are always under the supervision of revenue enforcement officers assigned on-premises supervision together with the quality control personnel or Tanduay Distillery to insure a sanitary output. These various stages of operations are done in one continuous uninterrupted integrated process. The bottled liquors are packed into cases which are affixed with BIR regular labels under the supervision of our revenue enforcement officer assigned thereat. The corresponding official tax receipts are then accomplished showing the brands of compound liquors produced, the total volume in gauge liters, grade, proof liters, serial number of regular and auxiliary labels and the amount of ad valorem taxes paid thereon which is the subject matter of the tax credit claim of Tanduay Distillery, Inc. The supervision and control of establishments manufacturing articles subject to excise taxes are extended for revenue purposes up to the factory’s warehouse for finished products.
Very truly yours,
(SGD.) JUSTINO E. GALBAN, JR.
Chief, Compounders, Repackers
& Rectifiers Section. 5
The other memorandum prepared and signed by Pareño was addressed to the Assistant Commissioner for Specific Tax reiterating essentially the manufacturing process of Tanduay and its status as a rectifier. Pareño recommended that the claim of Tanduay for tax credit for "alleged erroneous payment of ad valorem tax be given due course." The memorandum states:chanrob1es virtual 1aw library
October 13, 1987
MEMORANDUM FOR:chanrob1es virtual 1aw library
The Assistant Commissioner for Specific Tax
This refers to the tax credit claim of Tanduay Distillery, Inc., in the amount of P180,701,682.00 representing alleged erroneous payment of ad valorem taxes for the period January 1, 1986 to August 31, 1987 on its products namely ESQ Tanduay Rhum, Clubman’s Dry Gin, De Luxe and Cossach Vodka and other similar products as Amaretto de Tanduay, Creme de Chocolate, Creme de Menthol and Creme de Cacao.
Tanduay Distillery, Inc., has been engaged in the business as rectifier and in the manufacture and production of Rhum, whisky, gin, vodka and other similar alcohol products since 1854.
Tanduay Distillery, Inc., is a rectifier and the underbond alcohol it purchases from alcohol plants, undergoes one integrated continuous manufacturing process the end finished products of which are rhum, whisky, gin, vodka and other similar intoxicating beverages. The purpose of its being a rectifier is principally to produce the aforesaid products and the removal of any impurities or turgidity in the process of rectification is to bring about the desired quality of the alcohol for the specific use in liquor and wine manufacturing. Compounding is merely an adjunct or additional operation not a distinct independent process in the production of alcohol beverages.
Tanduay Distillery, Inc., becomes an extension of the distiller from which the alcohol is purchased and the liability in the payment of specific tax due on the alcohol is shifted and assumed by it. The finished products contemplated under Section 117 of the Tax Code on removal of spirits for rectification purposes subject to excise tax to be paid by the rectifier (Tanduay Distillery) are the very same products being manufactured by subject-taxpayer.
Section 121 of the Tax Code is hereby reproduced which has bearing in this particular case.
Section 121, Distilled Spirits
Spirits or distilled spirits is the substance known as ethyl alcohol, ethanol or spirits of wine, including all dilutions purifications and mixtures thereof, from whatever source by whatever process produced and shall include whisky, brandy, rum, gin and vodka, and other similar products or mixtures except compounded liquors taxed under Section 122 of this Code.
Because the law expressly considers whisky, brandy, rum, gin and vodka as distilled spirits it follows that the products manufactured by Tanduay Distillery, Inc., fall squarely within the statutory definition without qualifying or distinguishing from whatever source by whatever process they are produced.
Relevant to the instant case is Section 157. On words and Phrases Defined.’ which defines Compounder as every person who, without rectifying, purifying, or refining distilled spirits, shall by mixing such spirits, wines or other liquor with any material except water manufacture any intoxicating beverage whatever.
Herein taxpayer as a rectifier is an extension of the distiller the finished product of which is subject to the payment of the specific tax on distilled spirits. Taxpayer-claimant produces by rectifying ethyl alcohol and in continuous, uninterrupted process produces as its products whisky, rum, vodka and the like.
In view of the foregoing, it is respectfully recommended that the request of Tanduay Distillery, Inc., for tax credit in the amount of P180,701,682.00 for alleged erroneous payment of ad valorem tax be given due course.
Very truly yours,
(SGD.) TEODORO D. PAREÑO
Chief Alcohol Tax Division 6
Thus, Larin prepared a memorandum, addressed to Deputy Commissioner Eufracio D. Santos recommending that the claim of Tanduay for tax credit thereby be granted. Together with his memorandum, Larin also sent to Santos Tax Credit Memorandum No. 5177 (TCM) bearing his initial for Santos’ signature. The memorandum reads, as follows
October 13, 1987
MEMORANDUM FOR:chanrob1es virtual 1aw library
The Commissioner of Internal Revenue
This refers to the Tax Credit Claim of Tanduay Distillery, Inc., 243 Nepomuceno Street, Quiapo, Manila in the amount of P180,701,682.00 for alleged erroneous payment of ad valorem taxes for the period January 1, 1986 to August 31, 1987 on its alcoholic products namely ESQ Tanduay Rhum, Clubman’s Dry Gin, De Luxe and Cossach Vodka and other similar intoxicating beverages.
Tanduay Distillery, Inc., is engaged in the business as rectifier and manufacturer of rhum, gin, vodka and other similar products.
As a rectifier it purchases underbond alcohol from distillers without prepayment the specific tax and the same undergoes rectification for the purpose of bringing about the desired quality of the alcohol for the specific use in liquor and wine manufacturing of premium brands. This process is in the nature of a single integrated continuous process the final products of which are rum, gin, vodka and the like.
As a rectifier, Tanduay Distillery, Inc., under Section 121 of the Tax Code becomes an extension of the distiller from which the alcohol is purchased and accordingly since the transfer is without prepayment of the specific tax which should have been paid by the distiller before removal from the place of production, naturally in the execution of a joint bond between the distiller and rectifier, the burden of payment of the specific tax is shifted to and assumed by Tanduay Distillery, Inc. It is under this concept as provided for in the Tax Code that the rectifier pays the excise tax due on the finished products namely Tanduay ESQ Rhum, gin, vodka and the like.
The crux of the matter is premised on the definition of what is distilled spirits which is reproduced herein.
Section 121. Distilled Spirits.
‘Spirits or distilled spirits is the substance known as ethyl alcohol, ethanol or spirits of wine, including all dilutions, purifications and mixtures thereof from whatever source by whatever process produced and shall include whisky, brandy, rum, gin and vodka, and other similar products or mixtures, except compounded liquors taxed under Section 122 of this Code.’
From the foregoing, the law explicitly considers ‘whisky, rum, gin, etc.’ as distilled spirits and does not qualify whether by direct distillation or reverse fabrication. Suffice it to say that same may be produced from whatever source by whatever process produced. In other words, the business operation of Tanduay Distillery, Inc., in as far as the production of intoxicating liquors is concerned, is exactly the same as that of Destileria Limtuaco.
In view of the foregoing and considering that it has already been ruled that Destileria Limtuaco is entitled to a refund of its erroneously paid ad valorem taxes on its manufactured alcoholic products (approved memorandum for the Commissioner of the Chief, Appellate Division and concurred by the Chief, Revenue Service, Chief, Legal Office, copy attached for ready reference). It is recommended that the claim for tax credit erroneously paid by Tanduay Distillery, Inc., in the amount of P180,701,682.00 be also tax credited it appearing that the said erroneous payments have already been verified to have been remitted to the Bureau by the Revenue Accounting Division as per its 1st Indorsement dated September 25, 1987, hereto attached.
Very truly yours,
(SGD.) AQUILINO T. LARIN
for Specific Tax 7
On October 13, 1987, Santos approved the recommendation of Larin and signed Tax Credit Memo No. 5177. 8
Consequently, Tanduay availed of the tax credit to the extent of about P74 million, bearing an unused balance of about P34 million. 9
On June 22, 1988, one Ruperto Lim wrote to Commissioner Bienvenido A. Tan, Jr. denouncing an alleged "big Tax Swindle" to the effect that Tanduay got a very big amount of tax credit through fraud. A series of investigation was then conducted by the Intelligence and Investigation Office of the BIR with the help of the Department of Justice (DOJ) and the National Bureau of Investigation (NBI).
As a result of these investigations, two (2) information were filed with the Sandiganbayan charging (1) Aquilino T. Larin, Assistant Commissioner for Excise Taxes, (2) Potenciana Evangelista, Chief of the Revenue Accounting Division, (3) Teodoro Pareño, Chief of the Alcohol Tax Division and (4) Justino E. Galban, Section Chief Compounders, Rectifiers and Repackers Section, Alcohol Tax Division, for violation of the NIRC and R.A. 3019. The Information read as follows:chanrob1es virtual 1aw library
That during the period covering September 25, 1987 to October 13, 1087 and/or immediately subsequent thereto, in Quezon City, Philippines and within the jurisdiction of this Honorable Court, the above-named accused, all public officers being previously appointed to their above-stated positions at the Bureau of Internal Revenue (BIR) and having qualified to act as such, and who are all charged with the enforcement of the law and all rules and regulations pertaining to tax impositions and collections by the Government of revenues by then and there making and/or signing or causing the preparation and/or signing of false memoranda and certification regarding a claim for tax credit of Tanduay Distillery, Inc. previously filed by the latter with the BIR in the amount of P180,701,682.00 by stating in such memoranda and certification that Tanduay Distillery, Inc. was legally entitled to such tax credit in the afore-stated sum for the reason that such claimant-firm was not liable to pay ad valorem taxes as its products are distilled spirits on which specific taxes are paid for by it and that the amount of P180,701,682.00 claimed for tax credit was actually paid by it and received by the BIR, all the accused knowing fully well that such statements made by them in their memoranda and certification had no legal and factual bases as they all failed to verify the truth and validity of the claim of Tanduay Distillery, Inc., which was their official duty to do, and by reason of such false memoranda and certification, the BIR allowed a tax credit in the amount claimed by the said firm to be made in its favor which in truth and in fact, the latter had not actually paid such amount to the Government by way of specific taxes and only P73,614,287.20 of ad valorem taxes was paid by it, the crime having been committed by the accused in relation to their office.
Contrary to law.
That during the period covering September 25, 1987 until October 13, 1987, and/or immediately subsequent thereto, in Quezon City, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused, all public officers, holding the above-stated positions at the Bureau of Internal Revenue (BIR) and as such, are charged with the duty of enforcing the law and all rules and regulations administered by the BIR concerning tax impositions and collections made on the tax-payers by the Government, taking advantage of their public and official positions and collections made on the tax-payers by the government, taking advantage of their public and official position and conniving, conspiring and confederating with each other, and mutually helping one another, did the and there wilfully and unlawfully cause undue injury to the Government and give unwarranted benefits to the Tanduay Distillery, Inc., a duly registered domestic corporation engaged in the manufacture and sale of rum, gin, vodka and other similar products, in the discharge of their official and/or administrative functions through manifest partiality, evident bad faith and/or gross inexcusable negligence in the following manner, to wit: the above-named accused, who were called upon in their respective official capacities to verify and act on the validity and/or veracity of a claim for tax credit in the amount of ONE HUNDRED EIGHTY MILLION SEVEN HUNDRED ONE THOUSAND AND SIX HUNDRED EIGHTY TWO (P180,701,682.00) PESOS, Philippine Currency, filed with the BIR by the Tanduay Distillery, Inc. on the pretext that said claimant-firm had made erroneous payments of ad valorem taxes on the sales of its products since January 2, 1986 up to August 31, 1987, deliberately and without any justifiable reason failed to perform their assigned tasks of checking the truth and validity of such claim for tax credit and without sufficient legal and factual bases they all endorsed approval of the same claim by preparing, signing and submitting and or causing the preparation, signing and submission of memoranda, certification and/or official communications stating their findings thereon that the Tanduay Distillery, Inc. was not liable to pay ad valorem taxes because its products are distilled spirits on which specific taxes are paid and that the amount mentioned by said firm in its claim for tax credit was actually paid and received by the BIR, said (sic) having been made by the accused in order to give claimant-firm undue benefits in the form of tax credits approved in their favor, official record of the BIR, actually paid the amount of ONE HUNDRED EIGHTY MILLION SEVEN HUNDRED ONE THOUSAND SIX HUNDRED EIGHTY TWO PESOS, (P180,701,682.00), Philippine Currency, for specific taxes, and only P73,614,287.20 was paid by it as ad valorem taxes and by reason by (sic) such false memoranda, certification and/or communications submitted by the accused, BIR approved the claim for tax credit, thereby defrauding the Government of the sum of P107,087,394.80 which is the difference between the amount claimed as tax credit and the amount of ad valorem taxes paid by Tanduay Distillery, Inc., to the damage and prejudice of the Government in the aforestated sum.
Contrary to law. 10
Larin, Pareño and Galban filed separate motions for reinvestigation on various dates, all of which were denied by the Sandiganbayan.
On April 26, 1990, all the accused were arraigned where they all pleaded "Not Guilty" to the charges filed against them. After a pre-trial was conducted, trial finally commenced on January 7, 1991.
On September 18, 1992, the Sandiganbayan rendered a decision convicting Larin, Pareño, and Evangelista and acquitting Galban. The dispositive portion reads as follows:chanrob1es virtual 1aw library
WHEREFORE, judgment is now rendered in Criminal Cases No. 14208 & 14209 CONVICTING accused Assistant Commissioner for Specific Tax AQUILINO T. LARIN, Chief of the Alcohol Tax Division TEODORO D. PAREÑO, and Chief of Revenue Accounting Division POTENCIANA M.. EVANGELISTA,
1. in Criminal Case No. 14208 for the violation of Section 268(4) of the National Internal Revenue Code, and imposing upon each of them the penalty of imprisonment for an indeterminate period of 4 years, 8 months and one (1) day by way of minimum to 6 years and 8 months by way of maximum, and a fine of Twenty Thousand (P20,000.00) Pesos to be paid by each of them;
2. in Criminal Case No. 14209 for violation of Sec. 3(e) of R.A. 3019, and hereby imposing upon each of them the penalty of imprisonment for an indeterminate period ranging from a minimum of 9 years and one (1) month to a maximum of twelve (12) years.
Likewise imposed upon each of them is the penalty of perpetual disqualification from public office.
The allegations of the Information in the above Criminal Cases not having been proven beyond reasonable doubt as to the other accused, judgment is now rendered ACQUITTING accused JUSTINO E. GALBAN of the charges under Criminal Cases No. 14208 and No. 14209, since his only function and activity had been the preparation of the description of the technical aspects of Tanduay’s manufacturing process as a rectifier and compounder of liquors
Costs against the accused LARIN, PAREÑO and EVANGELISTA.
SO ORDERED. 11
On October 3, 1992, Larin filed a motion for reconsideration which was denied by the Sandiganbayan. Pareño opted not to file a motion for reconsideration and elevated his case directly to the Supreme Court.
Hence, these petitions.
The evidence for the prosecution mainly stems from the testimonies of the following witnesses: (1) Eufracio Santos, Deputy Commissioner of the BIR; (2) Brikcio Santos, Supervising Revenue Officer at the Intelligence and Investigation Office of the BIR; (3) Themistocles Montalban, Head Revenue Executive Assistant; and (4) Jeanet Segundo Aurelio, formerly the Revenue Clerk assigned at the Alcohol Tax Division under Teodoro Pareño.
Eufracio Santos testified that he was Deputy Commissioner of the BIR whose main duty was to assist the Commissioner in the administration of revenue laws and regulations being enforced by the BIR, its regional offices as well as the revenue district offices.chanroblesvirtuallawlibrary
He testified that on October 13, 1987, he signed Tax Credit Memo No. 5177 (TCM) in favor of Tanduay Distillery for the amount of P108,701,682.00 on the basis of the memorandum submitted by Larin, memorandum of Pareño and the First Indorsement dated September 25, 1987 prepared by Potenciana Evangelista.
Considering the voluminous paperwork attendant to his office, he had to rely mainly on the certifications, recommendations and memorandum of his subordinates which in this case were herein petitioners. His precise participation in this case was only to determine if Tanduay’s claim had legal and factual basis for the application of the decision of the Limtuaco case.
The legal basis in the Limtuaco ruling was used for the grant of the tax credit in favor of Tanduay considering that they are both rectifiers — meaning that they get untax-paid alcohol underbond and then rectify the alcohol after which they pay the specific tax, hence, no longer subject to ad valorem tax. 12
As to the factual basis, Santos had only to find out if Tanduay had indeed paid the taxes which can be determined through the endorsement of the Revenue Accounting Division (RAD) which is charged with the verification of the payments done. In this case, the fact that the papers passed through the RAD was sufficient proof that verification was made with regard to the tax payment of Tanduay.
His attention was drawn to this case only when an investigation was requested about an alleged tax swindle perpetrated on the bureau.
Santos would want to distinguish his position from that of the petitioners explaining that the Deputy Commissioners and the Commissioner do not perform investigative functions so they have to rely on their subordinates. The Office of the Assistant Commissioner, on the other hand, performs line functions and has investigatory powers. It is more in the position to determine if payments were indeed made. 13 Thus, Santos relied on the topmost document bearing Larin’s signature for the approval of the TCM.
In effect, therefore, liability was pinpointed on Larin and Pareño who were more in the position to make a proper determination if Tanduay was indeed entitled to a tax credit.
The second witness, Brikcio Santos testified that he was Senior Revenue Enforcement Officer in 1988, about that time when the case arose. His duty was to conduct investigation of tax liabilities of taxpayers, prepare necessary reports and do other jobs assigned to him.
On July 18, 1988, he was assigned to look into the Tanduay case by virtue of a letter of authority issued by one Benjamin D. Parungo, Assistant Commissioner of the Special Operations Service, addressed to Tanduay. Together with this, Santos also received the entire docket of TCM No. 5177.
Santos was commissioned to examine the entire tax position of Tanduay. In the course of his examination of all the documents presented to him, the financial statement of the company was the most significant. According to Santos, the financial statement did not reflect any sales tax payment which formed the basis of a tax refund or tax credit. His audit report contained the following findings as observed by the Sandiganbayan:chanrob1es virtual 1aw library
. . . After making the schedule of the Payment Orders and Confirmation Receipts, he rendered an Audit Report (Exhibit "G") (p. 53, id.). He agreed that in this report, he found that the total amount of Specific Taxes paid from January 6, 1986 to August 31, 1987 was P180,701,682.00 while the Ad Valorem Taxes paid for the period January 6 to December 31, 1986 and January 2 to August 31, 1987 came up to the total amount of P67,632,524.00 (p. 55, id.). Thus, the P180 million claimed by TANDUAY was not for specific taxes alone but excise taxes in general. Excise taxes are composed of specific taxes and ad valorem taxes. Included in the P180 million was P1 million for ad valorem taxes (p. 56, id.). His report also stated that he found out that there were receipts which were labeled ‘Specific Taxes’ but which were actually payments for ad valorem taxes (p. 57, id.). He confirmed his conclusion therein that the tax credit memo of P180,701,682.00 was incorrect. The amount of the TCM should only be P67,632,524.00. This already took into consideration the P l million that he found (p. 58, id.).
His report (Exhibit "G") also contained the observation, which he confirmed, that as of June 30, 1988, the total TCM of P180,701,682.00 had been fully applied (p. 50, id.). The memorandum for the Commissioner dated July 7, 1988 from Eliseo Pitargue, Chief, Intelligence and Investigation Office (Exhibit "X’) was the source of this statement in his report (Exhibit "G") (p. 59, id.). He verified the correctness of the observation made by Mr. Pitargue by resorting to the History Card of TCM No. 5177 (Exhibit "X") on file at the Receivables Account Division (p. 60, id). 14
The prosecution’s third witness, Themistocles Montalban who was the Revenue Executive Assistant for Collection merely testified that he came across TCM No. 5177 but did not actually sign all debit memos in application of TCM No. 5177. He stated that the amount of P180,701,682.00 was fully utilized in payment of Internal Revenue taxes due from Tanduay covering the period 1987 to 1988. This full availment was borne out by the records that they have compiled in the Accounts Receivable Billing Division. 15
The next witness to testify was Jeanet Segundo Aurelio, who was the Revenue Clerk-typist of petitioner Teodoro Pareño.
She recalled that on October 13, 1987, she typed a memorandum signed by Pareño with regard to the Tanduay request and a letter of Justino Galban also with regard to the request of Tanduay. While typing the memorandum, she noticed the presence of Juliet Galan, who was the secretary of petitioner Larin in their office.
She found this quite unusual since their offices are on different floors. She allegedly overheard that Juliet Galan was following up the memoranda she was typing on that day particularly that of Pareño. Except for that day, she never saw Galan again.
The defense, on the other hand, did not present testimonial evidence but only documentary evidence, adopting some of the exhibits of the prosecution.
Petitioners were charged for having violated the two (2) different laws, to wit:chanrob1es virtual 1aw library
1. "Exhibit "E"
2. Exhibit "9" (for Larin).
The handwritten annotation of Mr. A. T. Larin, 9/13 appearing on the upper left portion of the letter-request reads:jgc:chanrobles.com.ph
"Please cause the preparation for authentication of the Rev. Accounting Division for authentication of the CR covering the payment which is being sought to be refunded and/or to be credited."cralaw virtua1aw library
3. Exhibit "10" (for Larin).
4. Exhibit "D" .
1st Indorsement dated September 25, 1987 consist of five (5) pages.
5. Exhibit "13" (for Larin), erroneously dated October 14, 1987 which should be October 13, 1987.
6. Exhibit "C" .
7. Exhibit "B."cralaw virtua1aw library
8. Exhibit "A."cralaw virtua1aw library
9. Decision, p. 21.
10. Decision, pp. 31-34.
11. Decision, pp. 132-133 (G.R. No. 107119 at 162-163).
12. Decision, p. 23, G.R. No. 108037, p. 137.
13. G.R. No. 108037, p. 141
14. Id., at 147-148.
15. Id., at 162.
16. Id., at 57-59.
17. Cesar v. Sandiganbayan, 135 SCRA 15 (1985)
18. Under the Tax Code, an excise tax is a special levy on selected goods (such as alcohol, tobacco and petroleum products) manufactured in the Philippines for domestic corporation. (Sections 126 and 127).
There are two (2) kinds of exercise tax: specific tax, which is imposed and based on weight or volume capacity or any other physical unit or measurement; and ad valorem tax which is imposed and base on selling price or other specified value of the goods.
19. Decision, p. 80, G.R. No. 108037, p. 194.
20. Decision, p. 18.
21. Id., at 15.
22. Rollo, p. 136.
23. Records, Vol. V at pp. 13-14.
24. Decision, p. 19.
25. See testimony of Janet Aurelio.
26. Decision, p. 16.
27. 170 SCRA 308 (1989).
28. Orodeo n. Court of Appeals, 165 SCRA 316 (1988).
29. See Arias v. Sandiganbayan, 180 SCRA 309 (1989).