COMMISSIONER OF INTERNAL REVENUE VS COURT OF APPEALS

[G.R. No. 119322. June 4, 1996]

FACTS:

The Commissioner of Internal Revenue issued a Revenue Memorandum
Circular No. 37-93 reclassifying best selling cigarettes of foreign brands
subject to a higher rate of tax. Fortune questioned the validity of the
reclassification of said brands of cigarettes as violative of its right to due
process and equal protection of law. The CTA ruled that it is unconstitutional.

The CIR assessed against Fortune Corporation the total amount of
P7,685,942,221.66 representing deficiency income, ad valorem and value-
added tax for the year 1992 to which the company moved for reconsideration.
Later, the CIR filed a suit against Fortune for alleged fraudulent tax evasion for
supposed non-payment by Fortune of the correct amount of income tax, ad
valorem tax and value-added tax for the year 1992 due to the
underdeclaration of taxable sales and income.

It was referred to the Department of Justice Task Force for further
investigation. The task force issued a subpoena to the respondents to submit
counter-affidavits. However, they filed a motion to dismiss the case and
suspension of investigation but this was not granted.

Fortune filed a petition before RTC for

On January 4, 1994, private respondents filed a petition for certiorari and
prohibition with prayer for preliminary injunction with the Regional Trial Court,
Branch 88, Quezon City, docketed as Q-94-18790, praying that the complaint
of the Commissioner of Internal Revenue and the orders of the prosecutors in
I.S. No. 93-508 be dismissed or set aside, alternatively, the proceedings on
the preliminary investigation be suspended pending final determination by the

as a result of which. the trial court issued an order granting the prayer for the issuance of a preliminary injunction.372. the Daily Manufacturers Sworn Statements which. according to petitioners. assessed and collected by the BIR under Section 142(c) of the Tax Code on the basis of the manufacturers registered wholesale price duly approved by the BIR. (b) a criminal prosecution for tax fraud can proceed independently of criminal or administrative action. On January 19.24. (d) private respondents rights to due process was not violated. its taxable sales in 1992 were P 16. 1994.816. 1994. it is petitioners contention that Fortunes declaration was false and fraudulent because. The trial court rationalized its order in 14 this wise: a) It is private respondents claim that the ad valorem tax for the year 1992 was levied. at the hearing of the incident for the issuance of a writ of preliminary injunction in the petition. Fortunes taxable sales for 1992 was in the amount of P11. 1993 assessment of the taxes due. were submitted to the BIR by private respondents and made the basis of petitioner Commissioners . 1994.295. and (e) selective prosecution is not a valid defense in this jurisdiction. Fortune was able to evade the payment of ad valorem tax in the aggregate amount of P5.658. based on its daily manufacturers sworn statements submitted to the BIR.580. (c) there is no prejudicial question to justify suspension of the preliminary investigation. On January 17.686.736.Commissioner of Fortunes motion for reconsideration/reinvestigation of the August 13. On January 25. Petitioners responded by praying that their motion to dismiss the petition for certiorari and prohibition be considered as their opposition to private respondents application for the issuance of a writ of preliminary injunction.479.00. petitioners filed a motion to dismiss the petition on 13 the grounds that (a) the trial court is bereft of jurisdiction to enjoin a criminal prosecution under preliminary investigation. private respondents offered in evidence their verified petition for certiorari and prohibition and its annexes.00.792. b) On the other hand. c) At the hearing for preliminary investigation.

the correct interpretation of the law involved. 93-508. In fact. constitutes a prejudicial question which must first be resolved before criminal proceedings for tax evasion may be pursued.complaint that the total taxable sales of Fortune in 1992 amounted to P16. namely Hope. but the motion was denied.295.686. In other words. More. the ad valorem tax for the year 1992 should be based on the manufacturers registered wholesale price while. as alleged by private respondents.S. petitioner Commissioner issued Revenue Memorandum Circular No.372. 37-93 reclassifying Fortunes best selling cigarettes. the ad valorem taxes should be based on the wholesale price at which the manufacturer sold the cigarettes.00. which it has not. thereby imposing upon them a higher rate of tax that would price them out of the market. consisting of one hundred and thirty-five (135) pages. of Fortunes tax liability relative to its 1992 ad valorem. 295. private respondents had filed a motion to require petitioner Commissioner to submit the aforesaid daily manufacturers sworn statements before the DOJ panel of prosecutors to show that Fortunes actual taxable sales totaled P16. the BIR must first make a final determination. e) Since. which is Section 142(c) of the Tax Code. d) There is nothing on record in the preliminary investigation before the panel of investigators which supports the allegation that Fortune made a fraudulent declaration of its 1992 taxable sales.686. Prior to the filing of the complaint in I. and the precipitate denial by the panel of prosecutors. which is a legal issue as admitted by a BIR lawyer during the hearing for preliminary injunction. as claimed by petitioners. and Champion as cigarettes bearing a foreign brand.373. g) Private respondents had been especially targeted by the government for prosecution. on the very day following the filing of the complaint with the DOJ consisting of about 600 pages. after a recess of about twenty (20) minutes.00 were not produced as part of the evidence for petitioners. No. . f) There was a precipitate issuance by the panel of prosecutors of subpoenas to private respondents. value-added and income taxes before the taxpayer can be made liable for tax evasion. of private respondents motion to dismiss.

petitioners filed an Urgent Motion for 16 Immediate Resolution of petitioners motion to dismiss. 93-584. private respondents filed with the trial court a Motion to Admit Supplemental Petition and sought the issuance of a writ of preliminary injunction to enjoin the State Prosecutors from continuing with the preliminary investigation filed by them against private respondents with the Quezon City Prosecutors Office. 93-584. that the subpoena violates private respondents constitutional right to due process. for alleged fraudulent tax evasion.S. Also. 93-17942. she filed the criminal complaint for tax evasion before the period lapsed. On January 28. that no tax assessment has been issued by the Commission of Internal Revenue and considering that taxes paid have not been challenged. she gave Fortune a period of thirty (30) days from receipt thereof within which to pay the alleged tax deficiency assessments.S. docketed as I. 93-17942 and I. 1994. 1993.S. no tax liability exists. 93-17942. On January 31. which was the third complaint filed against private respondents with the DOJ for alleged fraudulent tax evasion for the taxable year 1991. that IS. the former cannot conduct the preliminary investigation in an impartial manner. i) Based on the foregoing. h) While in petitioner Commissioners letter of August 13. committed by private respondents for the taxable year 1990. the lower court admitted the two (2) supplemental petitions and issued a temporary restraining order in I. S. the criminal complaint against private respondents was filed prematurely and in violation of their constitutional right to equal protection of the laws. On January 26. . 1994. 93-508. Private respondents averred in their motion that no supporting documents or copies of the complaint were attached to the subpoena in I. also seeking to stay the preliminary 15 investigation in I. 1994. equal protection and presumption of innocence.S. and that since Assistant City Prosecutor Baraquia was a former classmate of Presidential Legal Counsel Antonio T. on the same day. Carpio. private respondents filed with the trial court a second supplemental petition. 93- 17942 is substantially the same as I.S.

the Court of Appeals said in part: In making such conclusion the respondent Court must have understood from herein petitioner Commissioners letter-complaint of 14 pages (pp. No. supra) and its annexes (pp.S. However. not necessarily fraudulent . In upholding the reasons and conclusions given by the trial court in its orders for the issuance of the questioned writs. 491-507. 1994. 93. the Court of Appeals in CA-G. ad valorem tax and value added tax. ruling that the issue of whether Sec. 508- 1077.S. for alleged tax evasion for the taxable years 1990 and 1991.S. 93-508. the trial court issued an order granting private respondents petition for a supplemental writ of preliminary injunction. 127(b) of the National Tax Revenue Code should be the basis of private respondents tax liability as contended by the Bureau of Internal Revenue. 477- 490. likewise enjoining the preliminary investigation of the two (2) other complaints filed with the Quezon City Prosecutors Office and the DOJ for fraudulent tax evasion. On March 7. 1994.R. On February 7. I.584. as argued by herein private respondents. should first be settled before any complaint for fraudulent tax evasion can be initiated. that the charge against herein respondents is for tax evasion for non-payment by herein respondent Fortune of the correct amounts of income tax. The Court of Appeals ruled that the trial court committed no grave abuse of discretion in ordering the issuance of writs of preliminary injunction and in denying petitioners motion to dismiss.S. SP-33599 rendered a decision denying the petition. 93-508. the petition was referred to the Court of Appeals for disposition by virtue of its original concurrent jurisdiction over the petition. On December 19. the trial court 18 stated that the two other complaints are the same as in I. 1994. except that the former refer to the taxable years 1990 and 1991. 93-17942 and I. the trial court issued an order denying petitioners motion to dismiss private respondents petition seeking to stay preliminary investigation in I. supra) . petitioners filed a petition for certiorari and prohibition with prayer forpreliminary injunction before this Court. rollo of this case) and the joint affidavit of eight revenue officers of 17 pages attached thereto (pp.17 On February 14. In granting the supplemental writ. 1994. respectively. or whether it is Section 142(c) of the same Code that applies.

supra). B. IAC. prejudice. Inc. therefore. the need for previous assessment of the correct amount by herein petitioner Commissioner before herein respondents may be charged criminally. 352). in connection with Rule 11 of the Revised Rules of Court. Newsweek. or personal hostility. they may appeal therefrom by which the entire record of the case would be elevated for review (See Mendoza vs. or to act at all in contemplation of law (Confederation of Citizens Labor Union vs. Court of Appeals.Therefore. NLRC. will amount to nothing more than errors of judgment which are reviewable by timely appeal and not by a special civil action of certiorari (Santos. 171. Mendoza vs. 177. 152 SCRA 378. Court of Appeals. vs. Hence. Petitioners. C and D. Court of Appeals. Certiorari will not be issued to cure errors in proceedings or correct erroneous conclusions of law or fact. certiorari and prohibition resorted to by herein petitioners will not lie in view of the remedy open to them. the resulting delay in the final disposition of the case before the respondent Court would not have been incurred. The factual and legal issues involved in the main case still before the respondent Court are best resolved after trial. absent a showing of grave abuse of discretion on the part of the issuing court (See Van Dom vs. 139 SCRA 139. amounting to an evasion of positive duty or to a virtual refusal to perform the duty enjoined. Jr. petition) being but interlocutory. Inc. review thereof by this Court is inappropriate until final judgment is rendered. Rule 16. Romillo. interposing as defense or defenses the objection or objections raised in their motion to dismiss. 171 SCRA 579).tax evasion. The questioned orders issued after hearing (Annexes A. vs. instead of resorting to this petition for certiorari and prohibition should have filed an answer to the petition as ordained in Section 4. or where the power is exercised in an arbitrary or despotic manner by reason of passion. In case of an adverse decision. any alleged error committed in the exercise of its jurisdiction. vs. Bustamante . 141. Thus. As long as a Court acts within its jurisdiction. 201 SCRA 343. 60 SCRA 84. Gold City Integrated Port Services. then proceed to trial in order that thereafter the case may be decided on the merits by the respondent Court. Grave abuse of discretion as a ground for issuance of writs of certiorari and prohibition implies capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction. Intermediate Appellate Court.

there must be capricious. the respondent Court is duty bound to render judgment accordingly. 344). 171 SCRA 45). petitioners filed the present petition for review based on the following grounds: ISSUE: . 162 SCRA 659. Certiorari and prohibition are remedies narrow in scope and inflexible in character. Ranada. All that is decided here is but the validity of the orders of the respondent Court granting herein respondents application for preliminary njunction and denying herein petitioners motion to dismiss. FCC vs. Veloso. Their function is but limited to correction of defects of jurisdiction solely. For such writs to lie. They are not general utility tools in the legal workshop (Vda. Sulit. Costs de officio. 166 SCRA 9). If upon the facts established after trial and the applicable law. Needless to say. 158 SCRA 340. Purefoods Corp. NLRC. The respondent Court is still to try the case and decide it on the merits. WHEREFORE. 664. the very antithesis of the judicial prerogative in accordance with centuries of both civil law and common law traditions (Young vs. vs. 1995. dissolution of the writ of preliminary injunction allowed to be issued by the respondent Court is called for and a judgment favorable to herein petitioners is demanded. 1991 and 1992 (Civil Case No. 166 SCRA 155. arbitrary and whimsical exercise of power. the case before the respondent court involving those against herein respondents for alleged non-payment of the correct amounts due as income tax. IAC. the instant petition for certiorari and prohibition with application for issuance of restraining order and writ of preliminary injunction is DISMISSED. 19 Their motion for reconsideration having been denied by respondent appellate court on February 23. 171 SCRA 579). Q-94-18790) is not ended by this decision.vs. Due regard for the foregoing teachings enunciated in the decisions cited can not bring about a decision other than what has been reached herein. IAC. ad valorem tax and value added tax for the years 1990. 216 SCRA 134). de Guia vs. Commission on Audit. not to be used for any other purpose (Garcia vs. such as to cure errors in proceedings or to correct erroneous conclusions of law or fact (Gold City Integrated Ports Services vs.

There shall be levied. 142. Should such price be less than the costs of manufacture plus expenses incurred until the goods are finally sold. Nos. assessed and collected on cigarettes packed in twenties an ad valorem tax at the rates prescribed below based on the manufacturers registered wholesale price: xxx xxx xxx .S. the wholesale price in such establishment shall constitute the gross selling price. the complaints in I. Sec. then a proportionate margin of profit.xxx (c) Cigarettes packed in twenties. In essence. ad valorem tax and value-added tax for the year 1992. If the manufacturer also sells or allows such goods to be sold at wholesale price in another establishment of which he is the owner or in the profits at which he has an interest.Is Deficiency assessment necessary before the taxpayer be prosecuted for tax evasion? RULING: The petition is bereft of merit. shall be added to constitute the gross selling price. excluding the value- added tax. 127. not less than 10% of such manufacturing costs and expenses. 93-584 and 93-17942 charged private respondents with fraudulent tax evasion or wilfully attempting to evade or defeat payment of income tax.xxx (b) Determination of gross selling price of goods subject to ad valorem tax. 93-508. as well as for the years 1990-1991. at which the goods are sold at wholesale in the place of production or through their sales agents to the public shall constitute the gross selling price. the price. -Unless otherwise provided. The pertinent provisions of law involved are Sections 127(b) and 142(c) of the National Internal Revenue Code which state: Sec.

686.805. Private respondents contend that per Fortunes VAT returns. petitioners claim that Fortune used the manufacturers registered wholesale price in selling the goods to alleged fictitious individuals and dummy corporations for the purpose of evading the payment of the correct ad valorem tax. petitioners allege.00 which was the manufacturers registered wholesale price in accordance with Section 142(c) of the Tax Code and paid the amount of P4. correct taxable sales for 1992 was in the amount of P11.479.372. However.816.523 as ad valorem tax. which is to ensure the payment of the correct taxes by the manufacturers of cigarettes through close supervision.S. as a result of which Fortune was able to evade the payment of ad valorem taxes in the aggregate amount of P5.254. the purchase and use of raw materials . On the other hand. it is the price.736. monitoring and checking of the business operations of the cigarette companies.580.658.295. that based on the daily manufacturers sworn statements submitted to the BIR by the Taxpayer (Fortunes) total taxable sales during the year 1992 is P16. Petitioners now argue that Section 127(b) lays down the rule that in determining the gross selling price of goods subject to ad valorem tax. 93 -508. Thus. Why does the wholesale price need to be registered and what is the purpose of the registration? The reason is self-evident. the law specifically Section 142(c) requires that the corresponding tax on cigarettes shall be levied. as specifically worded in the complaint in I. assessed and collected at the rates based on the manufacturers registered wholesale price. As pointed out by private respondents.792.24 xxx. There can be no question that under Section 127(b). No. at which goods are sold at wholesale in the place of production. It is significant to note that among the goods subject to ad valorem tax. The registered wholesale price shall then be used for computing the ad valorem tax which is imposable upon removal of the taxable goods from the place of production.00. the ad valorem tax should be based on the correct price excluding the value-added tax. excluding the value-added tax. at which the goods are sold at wholesale price in the place of production or through their sales agents to the public. no industry is as intensely supervised by the BIR and also by the National Tobacco Administration (NTA).

) Materials. (b) the total quantity produced according to brand. The data submitted therewith is verified by the Revenue Officers and approved by the Commission of Internal Revenue. For the purpose of determining the Manufacturers Registered Wholesale Price a cigarette manufacturer is required to file a Manufacturers Declaration (BIR Form No. 1994 granting private respondents prayer for the issuance of a writ of preliminary injunction. Revenue Enforcement Officers are detailed on a 24-hour basis in the premises of the manufacturer to secure production and removal of finished products. and utilization of the same. Fortunes registered wholesale price (was) duly approved by the BIR. as pointed to by private respondents. Every transfer of any raw material is not allowed unless.03) for each brand of cigarette manufactured. accompanied by Revenue Enforcement Officer. as observed by the trial court in its order of January 25. must be indicated in the sales and delivery invoices and together with the Manufacturers Sworn Declarations on (a) the quantity of raw materials used during the days operations. for purposes of closer supervision by the BIR over the production of cigarettes. in addition to the required permits. and the VAT paid thereon must be presented to the corresponding BIR representative for authentication before removal. and (c) the corresponding quantity removed during the day. Any change in the manufacturers registered wholesale price of any brand cannot be effected without submitting the corresponding Sworn Manufacturers Declaration and verified by the Revenue Officer and approved by the Commissioner on Internal Revenue. c) Overhead. Thus. sale. 23 Now.are subject to prior authorization and approval by the NTA. are subject to BIR supervision and approval 21 Moreover. which fact is not disputed by petitioners. The amount of ad valorem tax payments together with the 22 Payment Order and Confirmation Receipt Nos. the corresponding wholesale price thereof. b) Labor. d) Tax Burden and the Wholesale Price by Case. the manufacture. Importations of bobbins or cigarette paper. Composite Mobile Teams conduct counter-security on the business operations as well as the performance of the Revenue Enforcement Officers detailed thereat. if every step in the production of cigarettes was closely monitored and supervised by the BIR personnel specifically assigned to Fortunes . 31. stating: a.

But there is no allegation. under Section 229 of the Tax Code. much less evidence. and in the absence of contrary evidence. 1993. otherwise. omissions. 25 Fraud cannot be presumed. In the very least. excluding the value-added tax. In such case. and concealment involving a breach of legal or equitable duty. and considering that the Manufacturers Sworn Declarations on the data required to be submitted by the manufacturer were scrutinized and verified by the BIR and. of BIR personnels malfeasance. the fact that the deficiency income.685. Wilful means premeditated. or by which an undue and unconscionable advantage taken of another. it must have been with the connivance or cooperation of certain BIR officials and employees who supervised and monitored Fortunes production activities to see to it that the correct taxes were paid.06 on August 24. at which the goods are sold at wholesale in the place production. is deemed to 24 comprise anything calculated to deceive. the BIR would not have approved the registered wholesale price of the goods for purposes of imposing the ad valorem tax due. then it is presumed that such registered wholesale price is the same as.221. that before Fortune and the other private respondents could be prosecuted for tax evasion under Sections 253 and 255 of the Tax Code. including all acts. ad valorem and value-added taxes were due from Fortune for the year 1992 should first be established. further. 26 It is the opinion of both the trial court and respondent Court of Appeals. However. there is the presumption that the BIR personnel performed their duties in the regular course in ensuring that the correct taxes were paid by Fortune. or approximates the price.premises. or with bad motive or purpose.942. done with intent. resulting in the damage to another. trust or confidence justly reposed. the taxpayer has the right to move for . If there was fraud or wilful attempt to evade payment of ad valorem taxes by private respondents through the manipulation of the registered wholesale price of the cigarettes. or with indifference to the natural consequence x x x Fraud in its general sense. Fortune received from the Commissioner of Internal Revenue the deficiency assessment notices in the total amount of P7. it was precipitate and premature to conclude that private respondents made fraudulent returns or wilfully attempted to evade payment of taxes due. malicious. since the manufacturers wholesale price was duly approved by the BIR.

Reading Ungad carefully. In plain words. it may appeal to the Court of Appeals within thirty (30) days from receipt of the Commissioners decision. the Tax Code does not require such computation and assessment prior to criminal prosecution. Here. before one is prosecuted for willful attempt to evade or defeat any tax under Sections 253 and 255 of the Tax Code. Suppose the Commissioner eventually resolves Fortunes motion for reconsideration of the assessments by pronouncing that the taxpayer is not liable for any deficiency assessment. In plain words. it cannot be correctly asserted that private respondents have willfully attempted to evade or defeat the taxes sought to be collected from Fortune. 1993 asking for the payment of the deficiency taxes. In view of the foregoing reasons. the fact that a tax is due must first be proved. and that while a precise computation and assessment is required for a civil action to collect tax deficiencies. Within thirty (30) days from receipt thereof. there must be a prima. Ungad v. for criminal prosecution to proceed before assessment.reconsideration of the assessment issued by the Commissioner of Internal Revenue within thirty (30) days from receipt of the assessment. U. Fortune moved for reconsideration.: The 28 crime is complete when the violator has knowingly and wilfully filed a fraudulent return with intent to evade and defeat a part or all of the tax. There was a wilful attempt to evade tax in Ungad because of the taxpayers failure to .facie showing of a wilful attempt to evade taxes. the pronouncement therein that deficiency assessment is not necessary prior to prosecution is pointedly and deliberately qualified by the Court with following statement quoted from Guzik v. then. The Commissioner has not resolved the request for reconsideration up to the present. Cusi. we cannot subscribe to the petitioners thesis citing. 1993 on August 24. that the lack of a final determination of Fortunes 27 exact or correct tax liability is not a bar to criminal prosecution.S. the criminal complaints filed against private respondents will have no leg to stand on. Fortune received the Commissioners assessment notice dated August 13. We share with the view of both the trial court and Court of Appeals that before the tax liabilities of Fortune are first finally determined. and if the motion for reconsideration is denied.

therefore. This brings us to the erroneous disquisition that private respondents recourse to the trial court by way of special civil action of certiorari and prohibition was improper because: a) the proceedings before the state prosecutors (preliminary injunction) were far from terminated private respondents were merely subpoenaed and asked to submit counter affidavits. L-19272. there are recognized exceptions which. vs. approved by the BIR. b) it is only after the submission of private respondents counter affidavits that the prosecutors will determine whether or not there is enough evidence to file in court criminal charges for fraudulent tax evasion against private respondents. is presumed to be the actual wholesale price. To afford adequate protection to the constitutional rights of the accused (Hernandez vs. In the mind of the trial court and the Court of Appeals. and c) the proper procedure is to allow the prosecutors to conduct and finish the preliminary investigation and to render a resolution. not fraudulent and unless and until the BIR has made a final determination of what is supposed to be the correct taxes.. 304. et al. the taxpayer should not be placed in the crucible of criminal prosecution. 43 Phil. Fortunes situation is quite apart factually since the registered wholesale price of the goods. As a general rule. after which the aggrieved party can appeal the resolution to the Secretary of Justice.declare in his income tax return his income derived from banana saplings. . et al. matters that they should have appealed to the Secretary of Justice. Herein lies a whale of difference between Ungad and the case at bar. criminal prosecutions cannot be enjoined: However. 19 SCRA 95). We disagree. When necessary for the orderly administration of justice or to avoid oppression or multiplicity of actions (Dimayuga. b. 1967. Albano. as summarized in Brocka v. Enrile are: 29 a. January 25. Fernandez.

Mabanag. h. No.. 47 Phil. 1140). When the acts of the officer are without or in excess of authority (Planas vs. Gil. 33 Phil. Where it is a case of persecution rather than prosecution (Rustia vs. 18 L. February 18. particularly in reference to presumption of innocence. 1984. et al. L-60033. supra. CA-G. g. et al..R. due process and equal protection of the laws. 389). L-59524. 109 Phil. No. Trinidad. October 29. 556. 30720-R. c. When there is clearly no prima facie case against the accused and a motion to quash on that ground has been denied (Salonga vs. Rafferty. Cf. e. Fortun vs. 1960). Pano.R. i. d. 134 SCRA 438). In issuing the questioned orders granting the issuance of a writ of preliminary injunction. The trial court also found merit in private respondents contention that preliminary injunction should be issued to avoid oppression and because the acts of the state prosecutors were without or in excess of authority and for the reason that there was a prejudicial question. When double jeopardy is clearly apparent (Sangalang vs. City Fiscal. Castelo. 1985. Where the prosecution is under an invalid law. the trial court believed that said orders were warranted to afford private respondents adequate protection of their constitutional rights. and j. April 4. 128 SCRA 577). When there is a prejudicial question which is sub judice (De Leon vs. vs. Where the charges are manifestly false and motivated by the lust for vengeance (Recto vs. 1962. f. et al. 70 Phil. Labang. 104 SCRA 607). CA- G. 18 SCRA 616). City Judge.J. People and Alvendia. L- 25795. Alvenia. cited in Rano vs. October 8. May 27. 202). 385. 1966. Albano.Hernandez vs. 67 Phil. ordinance or regulation (Young vs. 1981. Where the court had no jurisdiction over the offense (Lopez vs. Guingona.. Yu Cong Eng vs. 4760. March 25. 62). . L-38383. Ocampo.

a notary public. state prosecutor or government official authorized to administer oath. to suspend the preliminary investigation on the grounds cited hereinbefore. the pertinent provisions of Rule 112 of the Rules of Court state: 32 SECTION. one of which is that the complaint of the Commissioner is not supported by any evidence to serve as adequate basis for the issuance of the subpoena to them and put them to their defense. . Except as provided for in Section 7 hereof. The said affidavits shall be sworn to before any fiscal. 3. the purpose of a preliminary injunction is to secure the innocent against hasty. who must certify that he personally examined the affiants and that he is satisfied that they voluntarily executed and understood their affidavits. Thus. preliminary investigation may be enjoined where exceptional circumstances so warrant. attaching thereto a copy of the complaint. or issue a subpoena to the respondent. In the case at bar. He shall have the right to examine all other evidence submitted by the complainant. in their absence or unavailability. Albano and Fortun v. Within ten (10) days from receipt thereof. private respondents filed a motion to dismiss the complaint against them before the prosecution and alternatively. Labang. expense and anxiety of a public trial and also to protect the state from useless and expensive trials. Indeed. plus two (2) copies for the official file. In Hernandez v. in such number of copies as there are respondents. the investigating officer shall either dismiss the same if he finds no ground to continue with the inquiry. Contrary to petitioners submission. affidavits and other supporting documents. malicious and oppressive prosecution and to protect him from an open and public accusation of crime. (b) Within ten (10) days after the filing of the complaint. no complaint or information for an offense cognizable by the Regional Trial Court shall be filed without a preliminary investigation having been first conducted in the following manner: (a) The complaint shall state the known address of the respondent and be accompanied by affidavits of the complainant and his witnesses as well as other supporting documents. or. injunction was issued to enjoin a preliminary 30 31 investigation. Procedure. from the trouble. the respondent shall submit counter-affidavits and other supporting documents.

and the investigating officer shall resolve the case within ten (10) days therefrom. without the investigating prosecutors being afforded material time to examine and study the voluminous documents appended to the complaint for them to determine if preliminary investigation should be conducted. there was obvious haste by which the subpoena was issued to private respondents. (f) Thereafter. the grant of preliminary investigation by the trial court to afford adequate protection to private respondents constitutional rights and to avoid oppression does not constitute grave abuse of discretion amounting to lack of jurisdiction. the investigating officer shall determine whether or not there is sufficient ground to hold the respondent for trial.736. The complaint filed by the Commissioner on Internal Revenue states itself that the primary evidence establishing the falsity of the declared taxable sales in 1992 in the amount of P 11.00 were the Daily Manufacturers . (d) If the respondent cannot be subpoenaed.580. Upon the evidence thus adduced. As found by the Court of Appeals. or if subpoenaed. The Court of Appeals further added that the precipitate haste in the issuance of the subpoena justified private respondents misgivings regarding the objectivity and neutrality of the prosecutors in the conduct of the preliminary investigation and so. the appellate court concluded. hence. just the day after the complaint was filed. during which the parties shall be afforded an opportunity to be present but without the right to examine or cross-examine. (c) Such counter-affidavits and other supporting evidence submitted by the respondent shall also be sworn to and certified as prescribed in paragraph (a) hereof and copies thereof shall be furnished by him to the complainant. (e) If the investigating officer believes that there are matters to be clarified. does not submit counter-affidavits within the ten (10) day period. the investigating officer shall base his resolution on the evidence presented by the complainant. he may set a hearing to propound clarificatory questions to the parties or their witnesses. they may submit questions to the investigating officer which the latter may propound to the parties or witnesses concerned. the investigation shall be deemed concluded. If the parties so desire.658.

In Borja v. to show that these companies which had paid the ad valorem taxes on the same basis and in the same manner as Fortune were not similarly criminally charged. Moreno. The trial court and the Court of Appeals maintained that at that stage of the preliminary investigation. the Commissioner did not present the Daily Manufacturers Sworn Statements supposedly submitted to the BIR by the taxpayer. There are factual and legal bases for the assailed orders. However. it was clear that there was no ground to continue with the inquiry. the Commissioner failed to produce the declarations. indicating that only Fortune was singled out for prosecution.686.00. instead of requiring private respondents to submit their counter affidavits under Section 3(b) of Rule 112. Still. which are interlocutory in nature. prompting private respondents to move for their production in order to verify the basis of petitioners computation. the trial court stressed that the prosecutors conducting the preliminary investigation should have allowed the production of the Daily Manufacturers Sworn Statements submitted by Fortune without which there was no valid basis for the allegation that private respondents wilfully attempted to evade payment of the correct taxes. The prosecutors should also have produced the Daily Manufacturers Sworn Statements by other cigarette companies. the prosecutors should have dismissed the complaint outright because of total lack of evidence. the burden is upon the petitioners to demonstrate that the questioned orders constitute a whimsical and capricious exercise of judgment. We believe that the trial court in issuing its questioned orders.295. On the other hand.Sworn Statements submitted by the taxpayer which would show that the total taxable sales in 1992 are in the amount of P 16. which they have not. it was held that the act of the investigator in 33 proceeding with the hearing without first acting on respondents motion to dismiss is a manifest disregard of the requirement of due process. committed no grave abuse of discretion amounting to lack of jurisdiction. On this point. where the complaint and the accompanying affidavits and supporting documents did not show any violation of the Tax Code providing penal sanctions. the investigating prosecutor was duty bound to dismiss the case. For certiorari will not be issued to cure errors in . Implicit in the opinion of the trial court and the Court of Appeals is that.372. But the investigating prosecutors denied private respondents motion. if upon the examination of the complaint. thus. as sought by private respondents.

What petitioners should have done was to file an answer to the petition filed in the trial court. SO ORDERED. . and as demanded by the facts and the law. As long as a court acts within its jurisdiction. the instant petition is hereby DISMISSED. WHEREFORE. proceed to the hearing and appeal the decision of the court if adverse to them. any alleged errors committed in the exercise of its jurisdiction will amount to nothing more than errors of judgment which are reviewable by timely appeal and not by a special civil action of certiorari. Consequently. in issuing the orders granting the writs of preliminary injunction. the Regional Trial Court acted correctly and 34 judiciously.proceedings or correct erroneous conclusions of law or fact. in denying petitioners motion to dismiss and in admitting the supplemental petitions.