G.R. No. 203057, June 06, 2016
BUREAU OF INTERNAL REVENUE AS REPRESENTED BY THE COMMISSIONER OF INTERNAL REVENUE, Petitioner, v. MANILA HOME TEXTILE, INC,*** THELMA LEE AND SAMUEL LE,E, Respondents.
D E C I S I O N
DEL CASTILLO, J.:
There is grave abuse of discretion when the determination of probable cause is exercised in an arbitrary or despotic manner due to passion or personal hostility, so patent and so gross as to amount to an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law.1ChanRoblesVirtualawlibrary
This Petition for Review on Certiorari under Rule 45 of the Rules of Court impugns the May 7, 2012 Decision2 and the July 25, 2012 Resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 112159.
This case started out as a criminal complaint for tax evasion and perjury against respondents herein. Docketed as I.S. No. 2006-372, the Bureau of Internal Revenue (BIR), represented herein by the Commissioner of Internal Revenue (CIR), accused respondents the Manila Home Textile, Inc. (MHI), its President Thelma Lee (Thelma), and its Vice-President Samuel Lee (Samuel), and certain unidentified John Does and/or Jane Does, with having violated Sections 254,4 255,5 2576 and 2677 of the National Internal Revenue Code (NIRC).
It is alleged that the MHI is a duly organized domestic corporation and registered with the Securities and Exchange Commission (SEC) under SEC Registration No, 140920; that its primary purpose is to engage in the business of manufacturing, buying, selling, exporting, importing and otherwise dealing in home textiles, apparels of all kinds, and their end-products, and any and all supplies, materials, tools, machines, appliances or apparatus employed in or related to the manufacture of said goods, for itself or as contractor, and to contract with third parties, natural or juridical persons, to supply the work, labor and materials for the manufacture and processing of such materials as independent contractors; that to facilitate importation, MHI was issued a license by the Garments and Textiles Export Board (GTEB) to operate a Customs Bonded Manufacturing Warehouse (CBMW); that as a rule, the CBMW operates by having imported raw materials stored at the warehouse; that these raw materials are duty-free provided that these are utilized and consumed for the manufacture of its final product, which are intended for export, as the same would have a different treatment in terms of "tax incentives" than the regular importations; that investigation of the MHI's importations documents revealed that for the taxable years 2001 and 2002, the said company made several importations of PVC (or polyvinyl chloride) materials, woven fabrics, PVC leather and other raw materials used in the manufacture of its end-products; that on January 14, 2005 BIR issued Letter of Authority (LOA) No. 000024628 to the MHI advising it that BIR agents under the National Investigation Division (NID) had been authorized to examine its books of accounts and other accounting records for all internal revenue taxes for taxable years 1997 to 2002 and unverified prior years; that several attempts to serve the LOA were made by the BIR but all these efforts proved futile because MHI could not be located at the address given in its Annual Income Tax Returns and other BIR records; that indeed on March 3, 2004, GTEB issued a certification to the effect that MHI, with address at De la Paz St., Manggahan, Pasig, Metro Manila, had been inactive since 1997; and, that the SEC issued a certification on November 3, 2003 that the MHI failed to file its General Information Sheet for the years 1998-2005 and financial statements for the period 1997-2002.
It is further alleged that based on the information gathered by the NED, the MHI, through its corporate officers, directors and/or employees understated its importations and/or purchases, to wit:
YEAR PURCHASES/IMPORTATION 2002 P 976,123.00 2001 P 3,355,853.00
YEAR PURCHASES/IMPORTATION 2002 P 555,778,491.00 2001 P 431,764,487.00
Truly, criminal intent is irrelevant in a special law, however the intent to commit the prohibited act must be established. (People vs. De Gratia, 233 SCRA 716) Obviously, respondents have not been shown to have intended to deliberately understate the importation and/or purchases in their income tax returns for the years 2001 and 2002 considering that the raw materials were imported duty-free and as clearly explained, respondents did not pay for the imported raw materials which were merely consigned to them to be used in the manufacture of finished products for re-export under CMT invoices. Thus, we cannot readily conclude that respondents intended to evade the payment of proper taxes on the mere basis of suspicion and speculation which cannot substitute for evidence. All told, this Office has not found any overt criminal act on the part of respondents which could be made the basis for a complaint for tax evasion.
WHEREFORE, premises considered, it is respectfully recommended that the complaint against respondents Thelma U. Lee and Samuel U. Lee for tax evasion and perjury be DISMISSED.20
Notably, [petitioner hastily concluded and attributed fraudulent intent on the part of herein [p]rivate [respondents solely by the apparent understatement of the amount of its purchases/importations, without at the very least offering proof that the amount withheld is subject to tax. To simply put it, what is there to evade when no tax is due at all? In contrast, [p]rivate [respondents were able to substantiate their claim that the amount they failed to include are not purchases/importations subject to tax but consignments exclusively used for the manufacture of its finished products for export, and hence duty-free. While it is true that no direct evidence was presented by [p]rivate [respondent to prove such fact, the records are however replete with strong circumstantial evidence inexorably leading to the same conclusion.
Ultimately, [petitioner cannot seek refuge from the adequacy or weight of the evidence of [p]rivate [respondents. Petitioner must be reminded that the burden is upon it as the complainant, to prove the cause of action and show to the satisfaction of the state prosecutor the facts and law upon which the claim is based.
WHEREFORE, the instant Petition for Certiorari is hereby DISMISSED for lack of merit.
*Per Special Order Mo. 2353 dated June 2,2016,
*** Also spelled as MANILA HOMETEXTILE, INC, in some parts of the records.
1Spouses Chua v. Hon, Ang, 614 Phil, 416, 432 (2009); Callo-Claridad v. Esteban, 707 Phil. 172. 186 (2013); Alberto v. Court of Appeals, 699 SGRA 104, 129 (2013).
2 CA rollo, pp. 271-283; penned by Presiding Justice Andres B, Reyes, Jr. and concurred in by Associate Justices Sesinando E. Villon and Amy C. Lazaro-Javier.
3 Id. at 315-322.
4 Sec. 254. Attempt to evade or Defeat Tax. - Any person who wilfully attempts in any manner to evade or defeat any tax imposed under this Code or the payment thereof shall, in addition to other penalties provided by law, upon conviction thereof, be punished by a fine not less than Thirty thousand pesos (P30,000.00) but not more than One hundred thousand pesos (PI 00,000.00) and suffer imprisonment of not less than two (2) years but not more than four (4) years: Provided, That the conviction or acquittal obtained under this Section shall not be a bar to the filing of a civil suit for the collection of taxes.
5 Sec. 255. Failure to File Return, Supply Correct and Accurate Information, Pay Tax Withhold and Remit Tax and Refund Excess Taxes Withheld on Compensation. - Any person required under this Code or by rules and regulations promulgated thereunder to pay any tax make a return, keep any record, or supply correct the accurate information, who willfully fails to pay such tax, make such return, keep such record, or supply correct and accurate information, or withhold or remit taxes withheld, or refund excess taxes withheld on compensation, at the time or times required by law or rules and regulations shall, in addition to other penalties provided by law, upon conviction thereof, be punished by a fine of not less than Ten thousand pesos (P10,000.00) and suffer imprisonment of not less than one (1) year but not more than ten (10) years.
Any person who attempts to make it appear for any reason that he or another has in fact filed a return or statement, or actually files a return or statement and subsequently withdraws the same return or statement after securing the official receiving seal or stamp of receipt of internal revenue office wherein the same was actually filed shall, upon conviction therefor, be punished by a fine of not less than Ten thousand pesos (P10,000.00) but not more than Twenty thousand pesos (P20,000.00) and suffer imprisonment of not less than one (1) year but not more than three (3) years.
6 Sec. 257. Penal Liability for Making False Entries, Records or Reports, or Using Falsified or Fake Accountable Forms. - x x x
(B) Any person who:
(1) Not being an independent Certified Public Accountant according to Section 232(B) or a financial officer, examines and audits books of accounts of taxpayers; or
(2) Offers to sign and certify financial statements without audit; or
(3) Offers any taxpayer the use of accounting bookkeeping records for internal revenue purposes not in conformity with the requirements prescribed in this Code or rules and regulations promulgated thereunder; or
(4) Knowingly makes any false entry or enters any false or fictitious name in the books of accounts or records mentioned in the preceding paragraphs; or
(5) Keeps two (2) or more sets of such records or books of accounts; or
(6) In any way commits an act or omission, in violation of the provisions of this Section; or
(7) Fails to keep the books of accounts or records mentioned in Section 232 in a native language, English or Spanish, or to make a true and complete translation as required in Section 234 of this Code, or whose books of accounts or records kept in a native language, English or Spanish, and found to be at material variance with books or records kept by him in another language; or
(8) Willfully attempts in any manner to evade or defeat any tax imposed under this Code, or knowingly uses fake of falsified revenue official receipts, Letters of Authority certificates authorizing registration, Tax Credit certificates, Tax Debit Memoranda and other accountable forms shall, upon conviction for each act or omission, be punished by a fine not less than Fifty thousand pesos (P50.000.00) but not more than One hundred pesos (PI00,000.00) and suffer imprisonment of not less than two (2) years but not more than six (6) years.
7 Sec. 267. Declaration under Penalties of Perjury. - Any declaration, return and other statement required under this Code, shall, in lieu of an oath, contain a written statement that they are made under the penalties of perjury. Any person who wilfully files a declaration, return or statement containing information which is not true and correct as to every material matter shall, upon conviction, be subject to the penalties prescribed for perjury under the Revised Penal Code.
8 CA rollo, pp. 147-148.
9 CA rollo, p. 14
10 Id. at 27-35; penned by State Prosecutor Ii Sebastian F, Caponong, Jr. with the recommending approval of Assistant Chief State Prosecutor Miguel F. Gudio, Jr. and approved by Chief State Prosecutor Jovencito R. Zuño.
11 Id. at. 28.
20 Id. at 34.
21 Id. at 282-283.
22Commissioner of Internal Revenue v, S.C. Johnson & Son, Inc., 368 Phil. 388 (1999); Paseo Realty and Development Corporation v. Court of Appeals, 483. Phil. 254 (2004).