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*
G.R. No. 152532. August 16, 2005.

PEOPLE OF THE PHILIPPINES, petitioner, vs.

SANDIGANBAYAN (Fourth Division) and BIENVENIDO
A. TAN, JR., respondents.

Taxation; Tax Assessments; Court of Tax Appeals; Appealable

to the Tax Court is a decision that refers not to the assessment
itself, but to one made on the protest against such assessment.—
After SMC’s request for reinvestigation, no other issuance
emanated from the BIR that could be considered a decision.
Therefore, no appeal to the Tax Court could have been made
under Section 229 of the NIRC, since the protest filed with the
BIR had not been acted upon. Appealable to the Tax Court is a
decision that refers not to the assessment itself, but to one made
on the protest against such assessment. The commissioner of
internal revenue’s action in response to a taxpayer’s request for
reconsideration or reinvestigation of the assessment constitutes
the decision, the receipt of which will start the 30-day period for
appeal. Section 229 does not prevent a taxpayer from exhausting
administrative remedies by filing a request for reconsideration,
then a request for reinvestigation. Furthermore, under Section
7(1) of RA 1125 as amended, the Tax Court exercised exclusive
appellate jurisdiction to review not the assessments themselves,
but the decisions involving disputed ones arising under the NIRC.
Same; Same; While an assessment is pending with the
Commissioner of Internal Revenue, it cannot yet serve as the basis
of collection by distraint or levy or by judicial action.—The
assessment was clearly not yet final, executory or demandable.
While it is pending with the commissioner of internal revenue, it
cannot yet serve as the basis of collection by distraint or levy or by
judicial action. No grave abuse of discretion can be attributed to
the SB for upholding private respondent’s act of reinvestigation
upon SMC’s request.
Same; Excise Taxes; Ad Valorem and Specific Taxes; Ad
valorem taxes and specific taxes are both excise taxes.—Ad valorem
taxes and specific taxes are both excise taxes on alcohol products.
The payment by installment of a portion of the total specific tax
defi-
_______________

* THIRD DIVISION.

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ciency of SMC, in addition to the application of its excess and

unused ad valorem tax deposits to the remaining portion, fully
covered the total net specific tax shortfall. BIR committed an
oversight in failing to credit the amount of deposits to the specific
tax deficiency, as well as an error in crediting the same amount to
a subsequent ad valorem tax liability. A confusion was thus
created when it issued a later assessment for the same specific tax
deficiency, this time inclusive of increments. Proper was the BIR
officials’ abatement or cancellation of the specific taxes of SMC,
after the amount of its ad valorem tax deposits had already been
credited to it.
Same; Same; A change in technology that would result in a
change in the manner of computing taxes is well within the realm
of tax administration, on which the Commissioner of Internal
Revenue has reasonable discretion to rule.—Such approval had the
concurrence of top tax officials within the Bureau. Not only was
there a presumption of regularity in the performance of official
functions; also, their collective conclusion was controlling.
Besides, the disclosure of the change in beer formulation was
timely and voluntary; no attribution of bad faith or fraud could be
made. A change in technology that would result in a change in the
manner of computing taxes was well within the realm of tax
administration, on which private respondent had reasonable
discretion to rule.
Same; Same; The law and revenue regulations allowed
prepayment schemes, whereby excise taxes on alcohol products
could be paid in advance of the dates they were due.—The law and
revenue regulations allowed pre-payment schemes, whereby
excise taxes on alcohol products could be paid in advance of the
dates they were due. Since the equivalent value of specific taxes
by way of advance ad valorem tax deposits had already been paid,
the government lost nothing. It was a simple request properly
granted for applying the advance deposits made on one type of
excise tax to another type. Granting such request was well within
private respondent’s authority to administer tax laws and
regulations. Again, the assessment was not final, demandable or
executory at the time.
 Same; Same; Ad Valorem Taxes; For the computation of ad
valorem tax, the gross selling price should be that which is
charged at the brewery prior to the removal of the fermented
liquor.—The price differential cannot be ascertained at the time
the fermented liquor is

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removed from the brewery, because such ascertainment will

involve amounts that cannot be determined with certainty in
advance, and that vary from one commercial outlet to another.
The price differential, according to SMC, represents the cost of
discounts, promotions, rebates, and transportation. To require the
inclusion of the price differential in, not its deduction from, the
tax base for purposes of computing the ad valorem tax would
certainly lead to the impossible situation of computing for such
tax, because the price differential itself cannot be determined
unless the fermented liquor is actually sold. Hence, no ad valorem
tax can ever be paid before the removal of the fermented liquor
from the place of production. This outcome cannot be
countenanced, for it would be contrary to what the law mandates
—payment before removal. It follows that the tax base to be used
should be net of the price differential. In other words, the gross
selling price should be that which is charged at the brewery prior
to the removal of the fermented liquor.
Same; Tax Pyramiding; Words and Phrases; A tax should not
be imposed upon another tax—this is tax pyramiding, which has
no basis either in fact or in law.—The taxable period covered in
this case is January 1, 1985 to March 31, 1986. Prior to the
amendment of the NIRC of 1977 by EO 22 on July 1, 1986, the ad
valorem tax was not excluded from the brewer’s wholesale price.
Does this mean that such tax cannot be deducted? The answer is
no. A tax should not be imposed upon another tax. This is tax
pyramiding, which has no basis either in fact or in law.
Same; Same; Tax pyramiding has since 1922 been rejected by
the Supreme Court, the legislature, and our tax authorities.—
Equally important, tax pyramiding has since 1922 been rejected
by this Court, the legislature, and our tax authorities. The intent
behind the law is clearly to obviate a tax imposed upon another
tax. Ratio legis est anima legis. The reason for the law is its spirit.
For instance, Regulations No. 27, promulgated March 1, 1923,
already excludes the specific tax on cigars and cigarettes from the
tax base upon which such tax is computed. This is reiterated in
the more recent amendments to our tax law, among which are
EOs 22 and 273, and their implementing rules. In fact,
Commissioner of Internal Revenue v. American Rubber Co. held
that a taxpayer cannot be “compelled to pay a x x x tax on the tax
itself.” Having shown the appropriateness of deducting the ad
valorem tax from the tax base upon which it is

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computed, private respondent has shown prudence in exercising

his power under Section 204(2) of the NIRC of 1977 to abate an
unjust, excessively assessed, and unreasonable tax; and to accept
the offer of P10 million, if only to avoid protracted and costly
litigation.
Same; Tax Compromises; Abatement; Words and Phrases;
Abatement is the “diminution or decrease in the amount of tax
imposed”—it refers to “the act of eliminating or nullifying; x x x of
lessening or moderating”; To cancel is “to obliterate, cross out, or
invalidate,” and “to strike out; x x x delete; x x x; erase; x x x make
void or invalid; x x x annul; x x x destroy; x x x revoke or recall”;
The BIR may abate or cancel the whole or any unpaid portion of a
tax liability, inclusive of increments, if its assessment is excessive
or erroneous; or if the administration costs involved do not justify
the collection of the amount due—no mutual concessions need be
made, because an excessive or erroneous tax is not compromised
but abated or canceled.—Although referred to in the pleadings as
a compromise, the matter at hand is actually an abatement or a
cancellation. Abatement is the “diminution or decrease in the
amount of tax imposed;” it refers to “the act of eliminating or
nullifying; x x x of lessening or moderating x x x.” To abate is “to
nullify or reduce in value or amount;” while to cancel is “to
obliterate, cross out, or invalidate;” and “to strike out; x x x delete;
x x x erase; x x x make void or invalid; x x x annul; x x x destroy; x
x x revoke or recall.” The BIR may therefore abate or cancel the
whole or any unpaid portion of a tax liability, inclusive of
increments, if its assessment is excessive or erroneous; or if the
administration costs involved do not justify the collection of the
amount due. No mutual concessions need be made, because an
excessive or erroneous tax is not compromised; it is abated or
canceled. Only correct taxes should be paid. Besides, as we have
discussed earlier, there was no finality in the assessment that
could be settled.
Same; Same; Actual, not presumed, fraud should be the bench
mark of liability.—Petitioner did not prove the alleged bad faith
attributed to private respondent, who simply relied upon his
subordinates. Mere assertion will not suffice. Even reference to
the approval by the Evaluation Board was misleading, for such
approval was inexistent at the time and was merely a product of
RA 8424 as amended. Actual, not presumed, fraud should be the
bench mark of liability.

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Criminal Law; Double Jeopardy; A judgment of acquittal

cannot be reopened, absent a grave abuse of discretion or a denial
of due process to the State.—Basic is the rule that no person shall
be twice put in jeopardy of punishment for the same offense. It is
a constitutional guarantee repeated in Section 7 of Rule 117 of the
Rules of Court. A judgment of acquittal cannot be reopened,
absent a grave abuse of discretion or a denial of due process to the
State. In this light, pertinent is the following excerpt, showing
how a similar attempt was made by the prosecution to overturn
an acquittal through a Petition for Certiorari in this Court: “The
rule against double jeopardy proscribes an appeal from a
judgment of acquittal. If said judgment is assailed in a petition for
certiorari under Rule 65 of the Rules of Court, x x x the petitioner
must prove that the lower court, in acquitting the accused,
committed not merely reversible errors, but grave abuse of
discretion amounting to lack or excess of jurisdiction. A judgment
rendered with grave abuse of discretion or without due process is
void, does not exist in legal contemplation and, thus, cannot be
the source of an acquittal. However, where the petition
demonstrate[s] mere errors in judgment not amounting to grave
abuse of discretion or deprivation of due process, the writ of
certiorari cannot issue. A review of the alleged errors of judgment
cannot be made without trampling upon the right of the accused
against double jeopardy.”
Taxation; Tax Assessments; After all, the purpose of tax
assessment is to collect only what is legally and justly due the
government, not to overburden, much less harass, the taxpayers.—
As can be seen from the foregoing discussions, Commissioner
Bienvenido A. Tan, Jr. acted fairly, honestly and in good faith in
discharging his functions. To compromise a tax liability of more
than P300 million for only P10 million may appear to be an
arbitrary action grossly disadvantageous to the government. The
fact remains, however, that the initial tax assessment of P300
million was correctly found by the SB to be overly excessive and
erroneous. Under the circumstances, the abatement of the
excessive and erroneous taxes was not only within the discretion
of respondent; it was just and fair to all concerned. After all, the
purpose of tax assessment is to collect only what is legally and
justly due the government; not to overburden, much less harass,
the taxpayers.
 142

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People vs. Sandiganbayan

SPECIAL CIVIL ACTION in the Supreme Court.

Certiorari.

The facts are stated in the opinion of the Court.

     Mario E. Ongkiko and Demetrio C. Custodio, Jr. for
private respondent.
          Kapunan, Migallos, Perez and Luna co-counsel for
private respondent.

PANGANIBAN, J.:

A judgment of acquittal made by a competent court on a

valid information after the accused has entered a plea bars
an appeal by the prosecution. Only a clear showing of grave
abuse of discretion or denial of due process to the State can
justify a review (through a petition for certiorari) of such
decision by this Court. In acquitting private respondent in
the present case, the Sandiganbayan has not been shown to
have acted arbitrarily or whimsically. Equally important,
the herein accused, Commissioner Bienvenido A. Tan, Jr.,
has not been proven to have exceeded his discretion in the
exercise of his functions. Taking into account the relevant
facts and applicable laws in this very perplexing subject of
taxation, this Court cannot fault him for abating an
excessive and erroneous tax assessment. Quite the
contrary, he has acted fairly and sensibly under the
circumstances.

The Case
1
Before us is a Petition for Certiorari under Rule 65 of the
Rules of Court, seeking2 to nullify and set aside the January
23, 2002 Resolution of the Sandiganbayan (SB) in
Criminal

_______________

1 Rollo, pp. 2-52.

2 Fourth Division. Penned by Associate Justice Narciso S. Nario
(chairman), with the concurrence of Justices Nicodemo T. Ferrer and
Raoul V. Victorino (members), the latter with a Separate Concurring
Opinion.

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 People vs. Sandiganbayan

Case No. 20685. The dispositive part of the Resolution

reads as follows:

“WHEREFORE, premises considered, the Decision dated 02

March 2001 is hereby RECONSIDERED and SET ASIDE, and
the accused is hereby ACQUITTED of the charge in the instant
case.
“The bailbond of the accused is hereby cancelled and the Hold
Departure order3
previously issued by the court is hereby lifted
and set aside.”

The Facts

The facts are narrated by the SB in its original Decision

dated March 2, 2001, as follows:

“Pursuant to Letter of Authority No. ATD-035-STO dated

January 2, 1986 and Memorandum of Authority dated March 3,
1986, an investigation was conducted by [Bureau of Internal
Revenue (BIR)] examiners on the ad valorem and specific tax
liabilities of [San Miguel Corp. (SMC)] covering the period from
January 1, 1985 to March 31, 1986. The result of the investigation
showed that [SMC] has a deficiency on specific and ad valorem
taxes totaling P342,616,217.88 broken down as follows:

  ‘Specific Tax P 33,817,613.21  

  Ad Valorem Tax P308,798,604.67’      

“On the basis of these findings, the BIR sent a letter dated July
13, 1987 to SMC demanding the payment of its deficiency tax in
the amount of P342,616,217.88. Apparently, the letter was
received by the SMC, as it protested the assessment in its letter
dated August 10, 1987 with the information: 1) that the alleged
specific tax deficiency was already paid when the BIR approved
SMC’s request that its excess ad valorem payments be applied to
its specific tax balance; 2) that the computation of the ad valorem
tax deficiency was erroneous since the BIR examiners disallowed
the deduction of the price differential (cost of freight from brewery
to warehouse) and ad valorem tax.

_______________

3 Sandiganbayan (SB) Resolution, p. 17; Rollo, p. 70. Uppercase in the

original.

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144 SUPREME COURT REPORTS ANNOTATED

 People vs. Sandiganbayan

“The protest was denied by the BIR thru a letter dated October
[8], 1987 signed by accused Commissioner Bienvenido Tan, Jr.,
but the original assessment of P342,616,217.88 was reduced to
P302,[0]51,048.93 due to the crediting of the taxpayer’s excess ad
valorem tax deposit of P21,805,409.10 with a reiteration of the
payment of the x x x assessed specific and ad valorem tax as
reduced.
“On October 27, 1987, herein accused referred the matter to
Jaime M. Maza, Assistant BIR Commissioner, Legal Service
Division and thereafter different BIR officials also reviewed the
case of SMC and rendered varying legal opinions on the issue x x
x
“On the part of Alicia P. Clemeno, Chief, Legislative Ruling
and Research Division, she recommended the reduction of SMC’s
tax liability, first to P21,856,985.29, and later to P22,000,000.00.
Balbino E. Gatdula, Jr., Assistant Revenue Service Chief, Legal
Service, supported the demand for ad valorem tax deficiency from
SMC. In a letter dated August 31, 1988, SMC, thru a certain
Avendano offered the amount of P10,000,000.00 for the settlement
of the assessment. This was concurred in by Juanito Urbi, Chief,
Prosecutor Division, BIR in a Memorandum dated December 20,
1988. Jaime Maza, Assistant Commissioner, Legal Service, BIR,
also gave his concurrence to the recommendation that the offer of
SMC for P10,000,000.00 in compromise settlement be accepted.
The recommendation was approved by accused Bienvenido Tan;
and accordingly, in a letter dated December 20, 1988, 4
SMC was
informed that its offer to compromise was accepted.”

Subsequently, the SB reversed its original March 2, 2001

Decision with its now assailed January 23, 2002
Resolution. The antecedents leading to the Petition before
this Court are narrated by the SB in this manner:

“In our Decision of March 2, 2001, herein accused Bienvenido A.

Tan, former Commissioner of the [BIR], was convicted for
violation of Section 3(e) of Republic Act [(RA)] No. 3019 as
amended,

_______________

4 SB Decision dated March 2, 2001, pp. 13-16; Rollo, pp. 222-225. Words in
[bracket] supplied. Fourth Division. Penned by Justice Rodolfo G. Palattao
(member), with the concurrence of Justices Narciso S. Nario (chairman) and
Nicodemo T. Ferrer (member).

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otherwise known as the Anti-Graft and Corrupt Practices Act, the
dispositive portion of which states as follows:

‘WHEREFORE, premises considered, judgment is hereby rendered

convicting the accused for Violation of Section 3(e) of [(RA)] 3019 as
amended, and appreciating in his favor the presence of the mitigating
circumstance of age, accused being over seventy (70) years old, and in the
absence of aggravating circumstances to offset the same, applying the
Indeterminate Sentence Law, he is hereby sentenced to suffer
imprisonment of six (6) years and one (1) month as minimum to fifteen
(15) years as maximum. He is further disqualified perpetually from
holding public office.
‘As the Court finds the compromise agreement to have been entered
into illegally, the [BIR] is hereby ordered to collect from [SMC] the
amount of P292,951,048.93 representing its tax liabilities covering the
period from January 1, 1985 to March 31, 1986.
‘SO ORDERED.’

“In his Motion for Reconsideration filed on March 12, 2001,

accused seeks to reconsider aforesaid Decision and posits the
following grounds: (1) the Court erred in holding that the
assessment contained in the letter of accused dated 08 October
1987 was final and executory; (2) corollarily, the Court erred in
holding that the referral of the 08 October 1987 assessment to the
Assistant Commissioner for further study was uncalled for, given
that there was no request for a reconsideration of the 08 October
1987 assessment; (3) the Court erred in not holding that the
specific tax assessment of [P]33,817,613.21 had been paid through
the application of SMC’s excess ad valorem tax deposits to its
unpaid specific tax; (4) the Court erred in not holding that the
abatement of SMC’s ad valorem tax was proper on the ground
that there exists a reasonable doubt as to the correctness of said
assessment; [(5)] the Court erred in holding that accused exercise
of his authority under Section 204 of the [National Internal
Revenue Code (NIRC)] to abate the assessment of ad valorem tax
was improper; and [(6)] the Court erred in holding that there was
a compromise of the SMC tax case which resulted in undue injury
to the government.
“In its Comment, the prosecution asserts that (1) the
assessment contained in the letter of SMC dated October 8, 1987
was final and executory; (2) the referral of the 08 October 1987
assessment to

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People vs. Sandiganbayan

the Assistant Commissioner for further study was uncalled for

given that there was no request for a reconsideration from SMC;
(3) SMC’s total tax due and collectible as Specific Tax of
[P]33,817,613.21 has not been settled; (4) the Court correctly held
that the abatement of SMC’s ad valorem taxes is improper; and
(5) the Court is correct in ruling that there was a compromise of
SMC’s tax which resulted in undue injury to the government.
“Thereafter, the accused and the prosecution made a further
exchange of pleadings elaborating on their respective positions on
the matter.
“The Motion is impressed with merit. After a careful and
exhaustive review of the pleadings, the records and the evidence,
we reconsider our Decision dated March 2, 20015 and hereby
acquit the accused of the charge in the instant case.”

Ruling of the Sandiganbayan

In acquitting herein private respondent, the SB adduced

several reasons.
First, the SB failed to give weight to the October 27,
1987 meeting between Commissioner Tan and SMC’s
representatives—a meeting which resulted in the referral
of the assessment to Tan’s subordinates for further review
and study. The referral showed that the disputed
assessment had not yet become final and executory.
Second, notwithstanding the prosecution’s observation
that the BIR rejected SMC’s protest against the inclusion of
the water component of beer, private respondent
unequivocally approved SMC’s application of its excess ad
valorem deposit to complete the payment of its specific tax
deficiency.
Third, the abatement of SMC’s ad valorem taxes is
proper. The tax base for computing them should not
include the ad valorem tax itself and the price differential.
Reliance upon Executive Order (EO) No. 273 is not
misplaced, because that law simply affirms general
principles of taxation as well as

_______________

5 SB Resolution, pp. 1-4; Rollo, pp. 54-57. Words in [bracket] supplied.

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BIR’s long-standing practice and policy not to impose a tax

on a tax. Moreover, nothing precludes private respondent
from applying EO 273 on an assessment made prior to its
effectivity, because that law was merely intended to
formalize such long-standing practice and policy.
Fourth, after inquiring into the discretionary
prerogative of private respondent to compromise, the SB
found no reason to conclude that he had acted contrary to
law or been impelled by any motive other than honest good
faith. The compromise he had entered into regarding
SMC’s tax did not result in any injury to the government.
No genuine compromise is impeccable, since the parties to
it must perforce give up something in exchange for
something else. No basis existed to hold him liable for
violation of Section 3(e)6 of RA 3019.
Hence, this Petition.

The Issues

Petitioner raises the following issues for our consideration:

“A.

“The respondent court acted with grave abuse of discretion

amounting to lack or excess of jurisdiction when, in upholding
private respondent’s act in ruling upon SMC’s Motion for
Reconsideration, it disregarded Section 228 (previously Section
246) of the NIRC.

“B.

“The respondent court acted with grave abuse of discretion

amounting to lack or excess of jurisdiction when, in upholding
private re-

_______________

6 The Petition was deemed submitted for decision on August 29, 2003, upon
receipt by the Court of private respondent’s Memorandum, signed by Attys. Mario
E. Ongkiko, Demetrio C. Custodio Jr., and Barbara Anne C. Migallos. Petitioner’s
Memorandum—signed by Special Prosecutor Dennis M. Villa-Ignacio, Deputy
Special Prosecutor Robert E. Kallos, Director (ASAB) Rodrigo V. Coquia, and
Special Prosecution Officer III Pilarita T. Lapitan—was filed on August 11, 2003.

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People vs. Sandiganbayan

spondent’s act in accepting SMC’s offer of compromise of

P10,000,000.00 for its tax liability of P302,051,048.93, it
disregarded Sections 124 and 228 of the NIRC.

“C.

“The respondent court acted with grave abuse of discretion

amounting to lack or excess of jurisdiction when it declared the
validity of private respondent’s act of approving SMC’s
application of the excess ad valorem to its specific tax deficiency
despite its being contrary to law.
 “D.

“The respondent court acted with grave abuse of discretion

amounting to lack or excess of jurisdiction when it acquitted
private respondent for violation of Sec. 3(e) of RA 3019 despite the
overwhelming
7
evidence proving his guilt beyond reasonable
doubt.”

We shall tackle the foregoing issues seriatim, with the

exception of the third issue that will be discussed ahead of
the second.

The Court’s Ruling

The Petition has no merit.

First Issue:
Viability of SMC’s Motion for Reconsideration
8
Section 229 of the NIRC provides thus:

“Sec. 229. Protesting of assessment.—When the Commissioner of

Internal Revenue or his duly authorized representative

_______________

7 Petitioner’s Memorandum, pp. 19-20; Rollo, pp. 384-385. Original in

uppercase.
8 NIRC refers to the National Internal Revenue Code or Tax Code of 1986, the
law prevailing when the BIR sent in 1987 its assessment of SMC’s deficiency in
specific and ad valorem taxes for the period January 1, 1985 to March 31, 1986.

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finds that proper taxes should be assessed, he shall first notify the
taxpayer of his findings. Within a period to be prescribed by
implementing regulations, the taxpayer shall be required to
respond to said notice. If the taxpayer fails to respond, the
Commissioner shall issue an assessment based on his findings.
“Such assessment may be protested administratively by filing a
request for reconsideration or reinvestigation in such form and
manner as may be prescribed by implementing regulation within
thirty (30) days from receipt of the assessment; otherwise, the
assessment shall become final and unappealable.
“If the protest is denied in whole or in part, the individual,
association or corporation adversely affected by the decision on
the protest may appeal to the Court of Tax Appeals within thirty
(30) days from receipt of the said decision; otherwise,
9
the decision
shall become final, executory and demandable.”
Petitioner argues that “on October 8, 1987, a final decision
was rendered by private respondent as to SMC’s tax
liability totaling P302,051,048.93 x x x.” Since SMC did not
appeal to the CTA, this decision became final and could no
longer be compromised by private respondent. We disagree.

_______________

9 §229 was originally found in the NIRC of 1977, which was codified by
and made an integral part of Presidential Decree (PD) No. 1158, otherwise
known as “A Decree to Consolidate and Codify all the Internal Revenue
Laws of the Philippines.”
When the NIRC of 1977 was amended by PD 1705 on August 1, 1980,
§229 was restated as §16(d). On January 16, 1981, PD 1773 further
amended §16 by eliminating paragraph (d) and inserting its contents
between §§319 and 320 as a new §319-A. PD 1994 then renumbered §319-
A as §270 on January 1, 1986; and on January 1, 1988, §270 was again
renumbered as §229 and rearranged to fall under Chapter 3 of Title VIII
of the NIRC by Executive Order (EO) No. 273, otherwise known as
“Adopting a Value-Added Tax, Amending for this Purpose Certain
Provisions of the National Internal Revenue Code, and for other
purposes.”
At present, §229 has been amended as §228 by RA 8424, otherwise
known as the “Tax Reform Act of 1997.”

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A careful reading of the quoted tax provision readily shows

that the “Motion for Reconsideration” filed by SMC was
aptly ruled upon by private respondent. Despite the use of
the phrase “finally decided,” his October 8, 1987 letter to
SMC did not constitute a final assessment.
First, the phrase “finally decided” referred not to the
total amount of deficiency specific and ad valorem taxes,
but to the reduction of such assessment. The reduction was
the result of SMC’s protest, by way of two requests for
reconsideration dated June 9, 1987 and August 10, 1987.
Contrary to petitioner’s assertion, the rules on statutory
construction did not apply; the October 8, 1987 letter was
not even a law. Grantia argumenti that the letter partook
of the nature of a final assessment, its finality was
suspended by private respondent’s handwritten note on the
bottom left of the second page, extending the tender of
payment for another 15 days from October 27, 1987,
because10of a referral of the assessment to the BIR’s Legal
Service.
Second, SMC filed on November 2, 1987 a timely request
for reinvestigation—technically not a motion for
reconsideration. Under Section 229 of the11 NIRC, this
request was a proper administrative protest done within
30 days from

_______________

10 If the commissioner of internal revenue makes changes in an

assessment, then the previous action is deemed abandoned, and the
modificatory action becomes the final decision upon receipt of which a new
30-day period for appeal shall be reckoned. See Paras, Taxation
Fundamentals (1966), pp. 215-216. See also Vitug and Acosta, Tax Law
and Jurisprudence (2nd ed., 2000), p. 312; (citing Ker & Co., Ltd. v. CTA,
114 Phil. 1220 [unreported], 4 SCRA 160, January 31, 1962).
Moreover, the commissioner should indicate to the taxpayer in clear
language what constitutes the final decision on a disputed assessment;
otherwise, the period for appeal cannot be deemed to have commenced to
run. De Leon, The Fundamentals of Taxation (12th ed., 1998), pp. 256-
257.
11 De Leon, The Fundamentals of Taxation, supra, p. 249.

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receipt
12
of the assessment and substantiated by facts and
law. The assessment was received by SMC only on
October 26, 1987. Its request for reinvestigation was in
turn received by the BIR on November 10, 1987, well
within the 30-day period allowed by Section 229; thus, the
assessment had not yet become final.
Moreover, a day after SMC’s receipt of the assessment,
the SB found that a meeting had indeed been held between
private respondent and the representatives of SMC,
resulting in the suspension of the alleged finality of the
assessment. The meeting partook of the nature of an oral,
in advance of the written, request for reinvestigation. In
both instances, the taxpayer’s request was not merely pro
forma; it had the effect of suspending—not
13
interrupting—
the 30-day period for appeal.
We do not agree with petitioner’s contention that,
contrary to the finding of the SB in its March 2, 2001
Decision, no conference had been held on that date. A
careful perusal of the Decision would, however, reveal that
the date of
14
the supposed conference was not indicated with
certainty. And even if it were, the conference was
supposed to have been held between SMC’s representatives
and BIR officials, other than private respondent, on the
computation (not the assessment) that was followed by
SMC and that bore the alleged approval by the BIR.
 Third, after SMC’s request for reinvestigation, no other
issuance emanated from the BIR that could be 15considered a
decision. Therefore, no appeal to the Tax Court could have

_______________

12 See Dayrit v. Cruz, 165 SCRA 571, 580, September 26, 1988; and
Vitug and Acosta, supra, p. 309.
13 See Dy Pac & Co., Inc. v. Court of Tax Appeals, 79 SCRA 442, 447,
October 18, 1977; Surigao Electric Co., Inc. v. Court of Tax Appeals, 57
SCRA 523, 527, June 28, 1974; and Vitug and Acosta, supra, p. 312.
14 SB Decision, p. 23; Rollo, p. 232.
15 This refers to the Court of Tax Appeals (CTA).

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been made under Section 229 of the NIRC, since the

protest filed with the BIR had not been acted upon.
Appealable to the Tax Court is a decision that refers not to
the assessment itself, but 16
to one made on the protest
against such assessment. The commissioner of internal
revenue’s action in response to a taxpayer’s request for
reconsideration or reinvestigation of the assessment
constitutes the decision, 17the receipt of which will start the
30-day period for appeal.
Section 229 does not prevent a taxpayer from exhausting
administrative remedies by filing a request for 18
reconsideration, then a request for reinvestigation.
19 20
Furthermore, under Section 7(1) of RA 1125 as amended,
the Tax Court exercised exclusive appellate jurisdiction to
review not the assessments themselves, but the 21
decisions
involving disputed ones arising under the NIRC.
Fourth, quite obviously, no decision could as yet be made
by the BIR, because the protest filed by SMC had been
referred by private respondent to several top BIR officials
for further review. In fact, various intra-office Memoranda
were issued in 1988 involving the chiefs of the (1)
Legislative Ruling and Research and (2) Prosecution
Divisions of the BIR, as well as its assistant commissioners
for legal service and excise tax. Had the assessment
already become final in 1987, there

_______________

16 Commissioner of Internal Revenue v. Villa, 130 Phil. 3, 7; 22 SCRA 3,

7, January 2, 1968; and St. Stephen’s Association v. Collector of Internal
Revenue, 104 Phil. 314, 317, August 21, 1958.
17 See Commissioner of Internal Revenue v. Villa, supra.
 18 De Leon, The Fundamentals of Taxation, supra, p. 249. See also
Deoferio Jr. & Tan Torres, Know Your CTRP: Comments on the
Amendments to the National Internal Revenue Code Under Republic Act
No. 8424 (1998), p. 131.
19 This was the law that created the CTA.
20 One of the amendatory laws to RA 1125 is RA 3457, which took effect
on January 1, 1962.
21 De Leon, supra, p. 281.

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People vs. Sandiganbayan

would then be no more reason to reinvestigate and study

the merits of SMC’s protest in 1988.
Fifth, totally misplaced is petitioner’s reference to the
180-day period from the submission of documents, within
which time the BIR should act upon the protest, followed
by a 30-day period of appeal to the Tax Court. This
provision did not exist in either 1987 or 1988. It appeared
only in a much later law, RA 8424, as Section 228—again
erroneously referred to by petitioner as the basis for the
present controversy.
Consequently, there was no legal impediment either to
the referral of the protest by private respondent to his
subordinates or to the action taken by them—a process
that lasted for more than 180 days. Neither was there a
need to make a 30-day appeal to the Tax Court due to the
BIR’s inaction on the protest within the 180-day period.
The assessment was clearly not yet final, executory or
demandable. While it is pending with the commissioner of
internal revenue, it cannot yet serve as the basis 22
of
collection by distraint or levy or by judicial action. No
grave abuse of discretion can be attributed to the SB for
upholding private respondent’s act of reinvestigation upon
SMC’s request.

Second Issue:
Application of the Ad Valorem Tax
to the Specific Tax Deficiency

In like manner, no grave abuse of discretion was committed

when the SB upheld private respondent’s approval of
SMC’s application of its excess ad valorem tax deposits to
its specific tax deficiency.

_______________

22 See Vitug and Acosta, supra, p. 310.

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154 SUPREME COURT REPORTS ANNOTATED

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First, the approval 23given by private respondent

24
was correct.
Ad valorem
25
taxes and specific
26
taxes are both excise
taxes on alcohol products. The payment by installment of
a portion of the total specific tax deficiency of SMC, in
addition to the application of its excess and unused ad
valorem tax deposits to the remaining portion, fully covered
the total net specific tax shortfall. BIR committed an
oversight in failing to credit the amount of deposits to the
specific tax deficiency, as well as an error in crediting the
same amount to a subsequent ad valorem tax liability. A
confusion was thus created when it issued a later
assessment for the same27 specific tax deficiency, this time
inclusive of increments. Proper was the BIR officials’
abatement or cancellation of the specific taxes of SMC, after
the amount of its ad valorem tax deposits had already been
credited to it.
To state that the balances of accounts pertaining to
different tax deposits could only be applied to cover certain
tax liabilities upon the approval of a request for tax credit
is to validate the proposition that the acceptance of
payment by installment of a portion of the specific tax
deficiency was in-

_______________

23 Ad valorem taxes refer to excise taxes that are based on the selling
price or other specific value of the article taxed. 2nd paragraph of §109 of
the NIRC of 1977, as amended and renumbered by PD 1994, and again
amended by EO 22.
24 Specific taxes refer to excise taxes that are based on the weight,
volume capacity, or any other physical unit of measurement of the article
taxed. 2nd paragraph of §109 of the NIRC of 1977, as amended and
renumbered by PD 1994, and again amended by EO 22.
25 These are taxes on articles manufactured or produced in the
Philippines for domestic sale or consumption or for any other disposition.
De Leon, The Law on Transfer and Business Taxation (12th ed., 1998), p.
251.
26 Both taxes fall under the same title in the NIRC of 1977.
27 These increments pertain to the surcharges and interest on the
amount of deficiency.

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People vs. Sandiganbayan
deed tantamount to the approval of the request. No law or
regulation prevented such approval.
Private respondent’s letter states a condition: should the
final computation of specific and ad valorem taxes yield a
different result, the difference plus penalties would be paid
in addition to them. Obviously, this condition referred
solely to the discrepancy, not to the application, and had
nothing to do with the approval that was given.
Second, such approval had the concurrence of top tax
officials within the Bureau. Not only was there a
presumption28
of regularity in the performance of official
functions; also, their collective conclusion was controlling.
Besides, the disclosure of the change in beer formulation
was timely and voluntary; no attribution of bad faith or
fraud could be made. A change in technology that would
result in a change in the manner of computing29 taxes was
well within the realm of tax administration, on which
private respondent had reasonable discretion to rule.
30
Third, the law and 31
revenue regulations allowed
prepayment schemes, whereby excise taxes on alcohol
products could be paid in advance of the dates they were
due. Since the equivalent value of specific taxes by way of
advance ad valorem tax deposits had already been paid, the
government lost nothing. It was a simple request properly
granted for applying the advance deposits made on one
type of excise tax to another type. Granting such request
was well within private respondent’s authority to
administer tax laws and regu-

_______________

28 §3(m) of Rule 131 of the Rules of Court.

29 Tax administration involves two functions: assessment and
collection. De Leon, The Fundamentals of Taxation, supra, p. 175.
30 See §§5 and 6 of Revenue Regulations (RR) No. 15-84, and §3 of RRs
6-86 and 8-86.
31 De Leon, The Law on Transfer and Business Taxation, supra, p. 288.

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156 SUPREME COURT REPORTS ANNOTATED

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32
lations. Again, the assessment was not final, demandable
or executory at the time.
Fourth, in a letter to the Blue Ribbon Committee of the
Senate, no less than the succeeding commissioner of
internal revenue declared that the abatement of the
specific tax deficiency through the proposed application was
proper. Even if the new commissioner had admittedly been
advised by private respondent, there remained the
unrebutted presumptions of good faith and regularity in
the performance of official functions.

Third Issue:
Acceptance of the P10 Million Alleged Compromise

The SB did not gravely abuse its discretion when it upheld

private respondent’s acceptance of SMC’s compromise offer
of P10 million.
In computing its ad valorem tax liabilities for the
taxable period involved in the present case, SMC deducted
from its brewer’s gross selling price the specific tax, price
differential, and ad valorem tax. The BIR allowed the
deduction of the specific tax, but not the deduction of the
price differential and ad valorem tax, thus increasing the
tax base and consequently the ad valorem tax liabilities of
SMC for the said period.
Prior to and during the taxable period involved in the
present case, several changes were made in the NIRC of
1977, particularly its provisions pertaining to fermented
liquor. We must therefore trace the NIRC’s pertinent
history to be able to rule properly on the validity of SMC’s
deduction of both the price differential and the ad valorem
tax from the brewer’s gross selling price.

_______________

32 Paras, supra, pp. 123-126. See also De Leon, The Fundamentals of

Taxation, supra, p. 179.

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People vs. Sandiganbayan

33
Section 147(A) of the NIRC, as amended by PD 1959 in
1984, provides for the collection of a specific tax on each
liter of the volume capacity of fermented liquor. In addition
to the provision on the specific tax, the first paragraph of
its Section 147(B) provides for the levying, assessment and
collection of an ad valorem tax. The latter tax is equivalent
to a certain percentage of the brewer’s gross selling price,
net of the specific tax, of the product to be removed from
the brewery or other place of manufacture. The ad valorem
tax shall be paid by the brewer at the same time as the
specific tax. 34
Added in 1984 were provisions of Section 186-A
governing the determination of the gross selling price of
cigarettes, as well as the administrative requirements and
penalties imposable. Such provisions shall apply to the
determination of the gross selling price of fermented
35
 35
liquor. Basically, this means that the amount of tax due
on the fermented liquor shall be determined by the price at
which it is sold either wholesale in the factory of SMC or
directly to the public through its sales agents. If the
fermented liquor is sold or allowed to be sold wholesale by
SMC in another establishment which it owns, the
wholesale price in that establishment shall determine the
tax applicable to the fermented liquor sold there. When the
price is less than the cost of manufacture plus all expenses
incurred, until the fermented liquor is finally sold by SMC,
such cost plus expenses shall be the basis for determining
the amount of tax to be collected.

_______________

33 This law took effect on October 15, 1984, with respect to the first 10%
ad valorem tax imposed on fermented liquor, and on January 1, 1985, with
respect to the next 10% ad valorem tax.
34 This section was added under a new Chapter IV of Title IV of the
NIRC of 1977 by §1 of EO 960, which had already taken effect on
September 1, 1984. Subsequently, the ad valorem tax on cigarettes was
revised effective September 3, 1984, while the specific tax rates were also
revised effective October 1, 1984. EO 978 effected both revisions, the dates
of effectivity of which are found in its §6.
35 2nd paragraph of §147(B) of the NIRC of 1977 as amended by PD
1959.

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158 SUPREME COURT REPORTS ANNOTATED

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In 1986, PD 1994 amended the NIRC of 1977 by 36

renumbering, among others, Section 147 as Section 124.
In the new Section 124, the provisions on the specific and
ad valorem taxes imposed on fermented liquors remained
substantially the same, except for the tax rates.
On July 1, 1986, Section 4 of EO 22 amended said
Section 124 by essentially providing that an ad valorem tax
equivalent to a certain percentage of the brewer’s
wholesale selling price—this time excluding the ad valorem
tax—shall be levied, assessed and collected on fermented
liquors. It was only in 1988 that EO 273 renumbered
Section 124 as Section 140, and thereby amended it further
to exclude also from such wholesale price the value-added
37
tax already imposed at the time upon the same articles.

Price Differential Deduction

Section 110 of the NIRC of 1977, as amended in 1986 by

PD 1994, explicitly provides that the excise taxes on
domestic products shall be paid by the manufacturer or
producer before the38 removal of those products from the
place of production. “It does not 39
matter to what use the
article[s] subject to tax is put”; the excise taxes are still
due, even though the articles are removed merely for
storage in 40some other place and are not actually sold or
consumed. The intent of 41the law is reiterated in several
implementing regulations. This means,

_______________

36 §45 of PD 1994, which took effect on January 1, 1986.

37 §11 of EO 273. See De Leon, The Law on Transfer and Business
Taxation with Illustrations, Problems, and Solutions (12th ed.), 1998, p.
278.
38 De Leon, The Law on Transfer and Business Taxation with
Illustrations, Problems, and Solutions, supra, p. 256.
39 Commissioner of Internal Revenue v. Abad, 132 Phil. 551; 23 SCRA
1132, June 27, 1968, per Castro, J. (later CJ).
40 De Leon, The Law on Transfer and Business Taxation with
Illustrations, Problems, and Solutions, supra, p. 257.
41 See §§5 and 6 of RR 15-84, and §3 of RRs 6-86 and 8-86.

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People vs. Sandiganbayan

therefore, that the price that should be used as the tax base
for computing the ad valorem tax on fermented liquor is the
price at the
42
brewery. After all, excise taxes are taxes on
property, not on the sale of the property.
Verily, the price differential cannot be ascertained at the
time the fermented liquor is removed from the brewery,
because such ascertainment will involve amounts that
cannot be determined with certainty in advance, and that
vary from one commercial outlet to another. The price
differential, according to SMC, represents the cost of
discounts, promotions, rebates, and transportation. To
require the inclusion of the price differential in, not its
deduction from, the tax base for purposes of computing the
ad valorem tax would certainly lead to the impossible
situation of computing for such tax, because the price
differential itself cannot be determined unless the
fermented liquor is actually sold.
Hence, no ad valorem tax can ever be paid before the
removal of the fermented liquor from the place of
production. This outcome cannot be countenanced, for it
would be contrary to what the law mandates—payment
before removal. It follows that the tax base to be used
should be net of the price differential. In other words, the
gross selling price should be that which is charged at the
brewery prior to the removal of the fermented liquor.

Ad Valorem Tax Deduction

The taxable period covered in this case is January 1, 1985

to March 31, 1986. Prior to the amendment of the NIRC of
1977 by EO 22 on July 1, 1986, the ad valorem tax was not
excluded from the brewer’s wholesale price. Does this mean
that such tax cannot be deducted? The answer is no. A tax
should not be imposed upon another tax. This is tax
pyramiding, which has no basis either in fact or in law.

_______________

42 De Leon, The Fundamentals of Taxation, supra, pp. 13-14 & 141.

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160 SUPREME COURT REPORTS ANNOTATED

People vs. Sandiganbayan

Private respondent has shown by mathematical analysis

that the inclusion of the ad valorem tax in the tax base
would only yield a circuitous manner of computation that
will never end in just one ad valorem tax figure properly
chargeable against a taxpayer. Quoted verbatim, his
presentation is as follows:

“If [SMC] wants to make P42.7269 on a case of beer and because

of price differential and specific taxes has to fix a price of
P51.2722 ex brewery, what would the ad valorem tax be?
“The prosecution’s method is to charge the 20% ad valorem on
the selling price ex brewery of P51.2722 and to tack that on the
SMC price as follows:

‘P51.2722 - price ex brewery

x .20  
P10.2544 - ad valorem tax
and 42.7269 - SMC price
P52.9813 - this should be the new
selling price ex brewery
but SMC only charged
P51.2722’

“Following the prosecution’s theory, since there is a new selling

price ex brewery, i.e., P52.9813, the ad valorem tax should be
adjusted to the new selling price or tax base or 20% of P52.9813,
resulting in:

  ‘P42.7269 - SMC price

      10.5962 - new ad valorem tax P53.3231
  P53.3231 - another new selling price ex brewery’

"Then following the prosecution's theory, the 20% ad volarem

tax is again changed on the new selling price ex brewery.
‘20% of P53.3231 the new tax base or
P10.6646 - the new ad valorem tax
Resulting in P42.7269 - SMC price
     10.6646 - new ad valorem tax
     P53.3915 - new selling price ex warehouse
“Therefore, the ad valorem tax is not P10.2544 or P10.5962 but
P10.6646 ad infinitum.

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People vs. Sandiganbayan

“The obvious untenability of the above situation is a clear enough

argument to prove that ad valorem tax should be excluded from
the tax base.
“The correct method is that used by the BIR and that is:

‘P51.2722 - original price to public

[1.20]       
43
= P42.726[8] - SMC warehouse price.’”

Expectedly, though, petitioner is unable to negate the

mathematics proffered by private respondent.
Equally important, tax pyramiding has since 1922 been
rejected by this Court, the legislature, and our tax
authorities. The intent behind the law is clearly to obviate
a tax imposed upon another tax. Ratio legis est anima legis.
The reason for the law is its spirit. 44
For instance, Regulations No. 27, promulgated March
1, 1923, already excludes the specific tax on cigars and
cigarettes 45from the tax base upon which such tax is
computed. This is reiterated in the more recent
amendments
46
to our tax law, among which are EOs 22 and
273, and their implementing rules. In fact, Commissioner
of Internal Revenue v. American Rubber Co. held that a
taxpayer47
cannot be “compelled to pay a x x x tax on the tax
itself.”

_______________

43 Respondent’s Memorandum, pp. 23-25; temporary Rollo, pp. 23-25.

44 This refers to the “Revised Regulations and Instructions Governing
the Business of Manufacturers of Cigars and Cigarettes and Chewing and
Smoking Tobacco” issued by Alberto Barretto, Secretary of Finance, on
August 10, 1922. XXI Official Gazette 26, p. 460.
45 §19(a) of Regulations No. 27, dated August 10, 1922.
 46 Mr. Jose Ong, BIR Commissioner, also referred to these two laws
before the Senate Blue Ribbon Committee.
47 124 Phil. 1471, 1483; 18 SCRA 842, November 29, 1966, per Reyes,
J.B.L., J.

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162 SUPREME COURT REPORTS ANNOTATED

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Having shown the appropriateness of deducting the ad

valorem tax from the tax base upon which it is computed,
private respondent has shown 48
prudence in exercising his
power under Section 204(2) of the NIRC of 1977 to abate
an unjust, excessively assessed, and unreasonable
49
tax; and
to accept the offer of P10 million, if only to avoid
protracted and costly litigation.

Abatement,
Not Compromise

Although referred to in the pleadings as a compromise, the

matter at hand is actually an abatement or a cancellation.
Abatement is the50
“diminution or decrease in the amount of
tax imposed”; it refers to “the act of eliminating 51
or
nullifying; x x x of lessening or moderating x 52x x.” To
abate is “to nullify or reduce in value or amount”; 53 while to
cancel is “to obliterate, cross out, or invalidate”; and “to
strike out; x x x delete; x x x erase; x x x make void54or
invalid; x x x annul; x x x destroy; x x x revoke or recall.”
The BIR may therefore abate or cancel the whole or any
unpaid portion of a tax liability, inclusive of increments, if
its

_______________

48 This section became §295 when amended by PD 1773, and later §245
when amended by PD 1994.
49 There was even a lower assessment at P8,001,977.97, as disclosed in
a Memorandum dated November 21, 1988, issued by Supervising Revenue
Enforcement Officer Jesus Q. Bundang; later confirmed and endorsed on
November 25, 1988 by Assistant Commissioner (on Excise Tax) Aquilino
T. Larin.
50 Statsky, Hussey, Diamond, and Nakamura, West’s Legal Desk
Reference (1991), p. 1.
51 Garner (ed. in chief), Black’s Law Dictionary (8th ed., 2004), p. 3.
52 Smith, West’s Tax Law Dictionary (1993), p. 1.
54 Moreno, Philippine Law Dictionary (3rd ed., 1988), p. 129.
53 Statsky, Hussey, Diamond, and Nakamura, supra, p. 46.

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People vs. Sandiganbayan

55
assessment is excessive or erroneous; or if the
administration costs
56
involved do not justify the collection of
57
the amount due. No mutual concessions need be made,
because an excessive or erroneous tax is not compromised; 58
it is abated or canceled. Only correct taxes should be paid.
Besides, as we have discussed earlier, there was no finality
in the assessment that could be settled.
Moreover, petitioner did not prove the alleged bad faith
attributed to private respondent, who simply relied upon
his subordinates. Mere assertion will not suffice. Even
reference to the approval by the Evaluation Board was
misleading, for such approval was inexistent at 59the time
and was merely a product of RA 8424 as amended. Actual,
not presumed, fraud should be the bench mark of liability.

Fourth Issue:
Violation of Section 3(e) of RA 3019

Clearly, the court a quo did not commit grave abuse of

discretion in upholding private respondent in his act of
ruling upon the request of SMC for reinvestigation,
leading, first, to his approval of its application of the excess
tax deposit to its tax deficiency; and, second, to his
acceptance of its offer to pay for its tax liability, which was
a little over the assessed amount, inclusive of increments.
It necessarily follows that his acquittal is proper and
inevitable.
Basic is the rule that no person shall be twice 60
put in
jeopardy of punishment for the same offense. It is a
constitutional guarantee repeated in Section 7 of Rule 117
of the Rules of Court. A judgment of acquittal cannot be
reopened,

_______________

55 De Leon, The Fundamentals of Taxation, supra, pp. 192-193.

56 §204(2) of the NIRC of 1977. See Vitug and Acosta, supra, pp. 292-
293.
57 De Leon, The Fundamentals of Taxation, supra, p. 216.
58 Paras, supra, pp. 147-148.
59 Last paragraph of §204(A) of RA 8424.
60 §21 or Article III of the 1987 Constitution.

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164 SUPREME COURT REPORTS ANNOTATED

People vs. Sandiganbayan
absent a grave61 abuse of discretion or a denial of due process
to the State. In this light, pertinent is the following
excerpt, showing how a similar attempt was made by the
prosecution to overturn an acquittal through a Petition for
Certiorari in this Court:

“The rule against double jeopardy proscribes an appeal from a

judgment of acquittal. If said judgment is assailed in a petition for
certiorari under Rule 65 of the Rules of Court, x x x the petitioner
must prove that the lower court, in acquitting the accused,
committed not merely reversible errors, but grave abuse of
discretion amounting to lack or excess of jurisdiction. A judgment
rendered with grave abuse of discretion or without due process is
void, does not exist in legal contemplation and, thus, cannot be
the source of an acquittal. However, where the petition
demonstrate[s] mere errors in judgment not amounting to grave
abuse of discretion or deprivation of due process, the writ of
certiorari cannot issue. A review of the alleged errors of judgment
cannot be made without 62trampling upon the right of the accused
against double jeopardy.”
As aptly put by private respondent, error in the exercise of
jurisdiction is not the same
63
as error in judgment. The latter is not
reviewable by certiorari, since evidence has been duly considered
and passed upon by the SB.

Epilogue

Former BIR Commissioner Bienvenido A. Tan, Jr. was

charged with “having willfully, unlawfully and criminally
cause[d] undue injury to the government by effecting a
compromise of the tax liabilities” of SMC amounting to
P302,051,048.93 for only P10,000,000, a “compromise [that]
is grossly disadvantageous to the government.” In no
uncertain

_______________

61 See Regalado, Remedial Law Compendium, Vol. II (8th rev. ed.,

2000), p. 422.
62 People v. Court of Appeals, 368 Phil. 169, 172; 308 SCRA 687, 690,
June 21, 1999, per Panganiban, J.
63 Jopillo, Jr. v. Court of Appeals, 167 SCRA 247, 254, November 9,
1988.

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People vs. Sandiganbayan
terms, the assailed Resolution of the Sandiganbayan
acquitted him of violating Section 3(e) of Republic Act No.
3019 (the Anti-Graft Law).
Under the Constitution, no person shall be twice put in
jeopardy of punishment for the same offense. To implement
64
this constitutional mandate, the Rules of Court bars an
appeal by the State from a judgment of acquittal, provided
the following requisites are present: (1) a valid complaint
or information was filed; (2) before a competent court; (3)
the defendant pleaded to the charge; and (4) the accused
was acquitted.
Petitioner alleges, however, that in acquitting the
accused, the Sandiganbayan acted in a “capricious,
whimsical, arbitrary or despotic manner” equivalent to lack
or excess of jurisdiction.
Indeed, the double jeopardy principle will not protect the
accused, if the prosecution can show that the court gravely
abused its discretion in rendering the judgment of
acquittal. The prosecution’s burden is heavy: to show grave
—not just ordinary—abuse of discretion equivalent to lack
or excess of jurisdiction.
This Court notes the tenacity of the Ombudsman and
the Office the Special Prosecutor in doggedly pursuing
what they believe is the public weal. But after a careful
review of the assailed judgment and the relevant facts and
laws, this Court cannot ascribe capricious or whimsical
conduct on the part of the Sandiganbayan. The SB
Resolution assessed the facts and applied the governing
laws and jurisprudence. It analyzed the arguments of both
the prosecution and the defense. It then concluded that the
elements of the crime charged had not been sufficiently
proven. Hence, it acquitted the accused.
Because of the importance of this case and the need to
assist the government in collecting the correct amount of
taxes, this Court even went further by inquiring whether
private

_______________

64 §1 of Rule 117 of the Rules of Court.

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166 SUPREME COURT REPORTS ANNOTATED

People vs. Sandiganbayan

respondent (not just the Sandiganbayan) acted within the

confines of his duties and prerogatives.
As can be seen from the foregoing discussions,
Commissioner Bienvenido A. Tan, Jr. acted fairly, honestly
and in good faith in discharging his functions. To
 compromise a tax liability of more than P300 million for
only P10 million may appear to be an arbitrary action
grossly disadvantageous to the government. The fact
remains, however, that the initial tax assessment of P300
million was correctly found by the SB to be overly excessive
and erroneous. Under the circumstances, the abatement of
the excessive and erroneous taxes was not only within the
discretion of respondent; it was just and fair to all
concerned. After all, the purpose of tax assessment is to
collect only what is legally and justly due the government;
not to overburden, much less harass, the taxpayers.
WHEREFORE, the Petition is DENIED, and the
assailed Resolution AFFIRMED. No pronouncement as to
costs.
SO ORDERED.

          Sandoval-Gutierrez, Corona, Carpio-Morales and

Garcia, JJ., concur.

Petition denied, assailed resolution affirmed.

Notes.—It is significant to note that among the goods

subject to ad valorem tax, the law—specifically Section
142(c) of the Tax Code—requires that the corresponding
tax on cigarettes shall be levied, assessed and collected at
the rates based on the “manufacturer’s registered
wholesale price.” (Commissioner of Internal Revenue vs.
Court of Appeals, 257 SCRA 200 [1996])
The presumption of regularity does not apply to
administrative proceedings resulting in the deprivation of a
citizen or a taxpayer of his property. (Requiron vs.
Sinaban, 398 SCRA 713 [2003])

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