Bureau of Internal Revenue v. De Lima

FOURTH DIVISION [CA-G.R. SP NO. 129512. August 28, 2015.] BUREAU OF INTERNAL REVENUE represented by COMMISSIONER KIM S. JACINTO-HENARES , petitioner , vs. HON. LEILA M. DE LIMA, in her capacity as SECRETARY OF JUSTICE, JUAN MIGUEL V. ONGSIAKO and ROBERTO M. GUILLERMO , respondents. DECISION TIJAM , J p : Before Us is a Petition for Certiorari 1 under Rule 65 of the Rules of Court against the Honorable Leila M. De Lima, in her capacity as the Secretary of Justice (Public Respondent), Private Respondents Juan Miguel V. Ongsiako (Private Respondent Ongsiako) and Roberto M. Guillermo (Private Respondent Guillermo). Petitioner Bureau of Internal Revenue (BIR) filed the instant Petition seeking to annul and set aside the Resolutions dated May 24, 2012 2 and October 18, 2012 3 issued by Assistant State Prosecutor Stewart Allan A. Mariano (ASP Mariano) in the case entitled "Bureau of Internal Revenue vs. Juan Miguel V. Ongsiako and Robert M. Guillermo" docketed as NPS No. XVI-INV-11K-00440 which dismissed the criminal complaint against Private Respondents for violation of Sections 253, 254, 255 and 258 of the National Internal Revenue Code (NIRC). The antecedent facts are as follows: The BIR, through its revenue officers Cezar C. Cabrera, May F. Quiambao, Othello E. Dalanon and Jose Maria Y. Reyes conducted an investigation involving the estate of Oscar R. Ongsiako. The investigation revealed that Oscar Ongsiako and Nori V. Ongsiako (Spouses Ongsiako) were married on April 29, 1957. 4 Private Respondent Ongsiako is the son of the Spouses Ongsiako. 5 During their marriage, the Spouses Ongsiako acquired a parcel of land covered by Transfer Certificate of Title (TCT) No. 6075. 6 On May 22, 1995, Oscar Ongsiako died. On October 25, 2005, Nori Ongsiako sold the land covered by TCT No. 6075 to Private Respondent Ongsiako. BIR alleged that the transfer of the parcel of land to Private Respondent Ongsiako was part of a scheme to transfer assets of Oscar Ongsiako to evade payment of estate taxes. Further, even in the guise of the fictitious sale, no capital gains tax and documentary stamp tax were paid. Hence, on November 10, 2011, BIR filed a criminal complaint against Private Respondents with the Department of Justice (DOJ). On May 24, 2012, the DOJ, through ASP Mariano, issued a Resolution 7 dismissing the criminal complaint for insufficiency of evidence, the dispositive portion of which reads: " WHEREFORE , premises considered, it is respectfully recommended that the complaint against respondents Juan Miguel V. Ongsiako and Robert M. Guillermo for violation of Sections 253, 254, 255 and 258 of the National Internal Revenue Code of 1997, as amended, be DISMISSED for insufficiency of evidence. SO ORDERED . 8 BIR then filed a Motion for Reconsideration of the above Resolution, which was denied in a Resolution 9 dated October 18, 2012. Aggrieved, the BIR then comes before Us contending that: "I The Honorable Secretary of Justice committed grave abuse of discretion by way of dismissing the criminal complaint for violation of Sections 253, 254 and 255 of the NIRC of 1997 against Respondents allegedly for insufficiency of evidence. II The appellate courts have jurisdiction to look into whether the Department of Justice committed grave abuse of discretion in affirming the prosecutor's resolution on appeal. III There is no plain, speedy, and adequate remedy as contemplated under Rule 65 of the 1997 Rules of Civil Procedure available to Petitioner." 10 BIR alleged that Public Respondent committed grave abuse of discretion in dismissing the criminal complaint against Private Respondents due to insufficiency of evidence because there is sufficient evidence to support that Private Respondent Ongsiako employed fraudulent means to evade payment of taxes. Further, the BIR claimed that the property registered as TCT No. 6075 which forms part of the estate of Oscar Ongsiako was transferred to Private Respondent Ongsiako through a Deed of Sale to simulate the transfer of the property. Even in the guise of the fictitious sale, Private Respondent Ongsiako failed to pay any capital gains tax and documentary stamp tax. To counter the claims of BIR, Private Respondent Ongsiako alleged that the parcel of land subject of the controversy was paraphernal property of his mother, Nori Ongsiako. It was originally owned by Serafin Villanueva Sr. (Serafin Sr.) under TCT No. 5224 (43405). 11 Upon the death of Serafin Sr., his heirs partitioned his properties and the Project of Partition was duly approved by the Regional Trial Court (RTC) in the case entitled "In the matter of the Intestate Estate of the Deceased Serafin Villanueva, Sr., Anita Vda. de Villanueva, Administratix" docketed as SP PROC. No. 1389-P. 12 By virtue of the Project of Partition, TCT No. 5224 (43405) was inherited by Nori Ongsiako. As such, TCT No. 5224 (43405) was cancelled and TCT No. 6075 was issued in the name of Nori Ongsiako. Hence, no estate tax was due because the said property was never part of the estate of Oscar Ongsiako. Further, the required taxes due from the transfer of the property were duly paid for. To support the same, Private Respondent Ongsiako presented receipts to show that the capital gains tax and documentary stamp tax were paid and received by the BIR. The sole issue in the instant case is whether Public Respondent committed grave abuse of discretion in dismissing the criminal complaint against Private Respondents for violation of Sections 253, 254, 255 and 258 of the NIRC. We rule in the negative. At the outset, the present Petition for Certiorari is not the proper remedy to question the resolutions issued by ASP Mariano. A Petition for Certiorari under Rule 65 of the Rules of Court is a special civil action that may be resorted to only in the absence of an appeal or any plain, speedy, and adequate remedy in the ordinary course of law. 13 In the instant case, Department Circular No. 70, known as the 2000 NPS Rule on Appeal, provides for the remedy to question the resolutions rendered by the prosecutors, to wit: "Section 3. Period to Appeal . The appeal shall be taken within fifteen (15) days from receipt of the resolution, or of the denial of the motion for reconsideration/reinvestigation if one has been filed within fifteen (15) days from receipt of the assailed resolution. Only one motion for reconsideration shall be allowed. Section 4. How appeal taken . An aggrieved party may appeal by filing a verified petition for review with the Office of the Secretary, Department of Justice, and by furnishing copies thereof to the adverse party and the prosecution office issuing the appealed resolution." As provided in the 2000 NPS Rule on Appeal, the BIR should have first filed a Petition for Review with the Secretary of Justice to question the Resolutions dated May 24, 2012 and October 18, 2012 of ASP Mariano since that is the proper remedy provided for by the rules on appeal of the DOJ. To show that the instant Petition is the proper remedy, BIR alleged that the decision of the Secretary of Justice affirming, modifying, or reversing the resolution of the investigating prosecutor is final, hence there is no more appeal available under the law. While it is true that the decision of the Secretary of Justice in affirming, modifying, or reversing the resolution of the investigating prosecutor is final, it is however necessary that the aggrieved party should have first filed a Petition for Review with the Secretary of Justice to question the resolution of the investigating prosecutor. The said principle is consistent with the doctrine of exhaustion of administrative remedies. Review as an act of supervision and control by the Justice Secretary over the fiscals and prosecutors finds basis in the doctrine of exhaustion of administrative remedies which holds that mistakes, abuses or negligence committed in the initial steps of an administrative activity or by an administrative agency should be corrected by higher administrative authorities and not directly by the courts. 14 The case cited by the BIR, i.e., Arnel C. Alcaraz vs. Ramon C. Gonzalez 15 cannot support the instant Petition. In that case, the aggrieved party filed a Petition for Review with the Secretary of Justice to question the resolution of the investigating prosecutor denying the motion for reconsideration. In the present case, BIR directly filed a Petition for Certiorari with Us to question the resolution of the investigating prosecutor rather than file a Petition for Review with the Secretary of Justice. It bears stressing that the resolution of the investigating prosecutor is subject to appeal to the Justice Secretary who, under the Revised Administrative Code, exercises power of control and supervision over the said investigating prosecutor. 16 Nevertheless, even if the instant Petition for Certiorari is the proper remedy, the same is still without merit. It is settled that the determination of probable cause for purposes of filing of information in court is essentially an executive function that is lodged at the first instance with the public prosecutor and ultimately, to the Secretary of Justice. The prosecutor and the Secretary of Justice have wide latitude of discretion in the conduct of preliminary investigation and their findings with respect to the existence or non-existence of probable cause are generally not subject to review by the courts. 17 Consistent with this rule, the settled policy of non-interference in the prosecutor's exercise of discretion requires the courts to leave to the prosecutor and to the DOJ the determination of what constitutes sufficient evidence to establish probable cause. Courts can neither override their determination nor substitute their own judgment for that of the latter, they cannot likewise order the prosecution of the accused when the prosecutor has not found a prima facie case. 18 The exception to this rule is when such determination is tainted with grave abuse of discretion and perforce becomes correctible through the extraordinary writ of certiorari . It is fundamental that the concept of grave abuse of discretion transcends mere judgmental error as it properly pertains to a jurisdictional aberration. Corollary, the abuse of discretion must be so patent and gross so as to amount to an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law, or to act at all in contemplation of law. 19 Grave abuse of discretion taints a public prosecutor's resolution if he arbitrarily disregards the jurisprudential parameters of probable cause. In particular, case law states that probable cause, for the purpose of filing a criminal information, exists when the facts are sufficient to engender a well-founded belief that a crime has been committed and that the respondent is probably guilty thereof. Apropos thereto, for the public prosecutor to determine if there exists a well-founded belief that a crime has been committed, and that the suspect is probably guilty of the same, the elements of the crime charged should, in all reasonable likelihood, be present. This is based on the principle that every crime is defined by its elements, without which there should be, at most, no criminal offense. 20 As alleged by the BIR in its Joint Complaint-Affidavit, 21 the elements of the crime of tax evasion under Section 254 of the NIRC are: a) a tax is imposed under the NIRC; b) a person, natural or juridical is liable to pay that tax; c) such person willfully attempts in any manner to evade or defeat any tax imposed under the NIRC or the payment thereof. 22 In the present case, the elements of the crime of tax evasion are absent. BIR was not able to sufficiently state that Private Respondent Ongsiako was liable to pay estate taxes due on the property subject of the controversy. BIR was not able to rebut convincingly the Private Respondent's allegation that TCT No. 6075 was a paraphernal property of Nori Ongsiako, hence not part of Oscar Ongsiako's estate. It is undisputed that Oscar Ongsiako and Nori Ongsiako were married on 1957, during the effectivity of the Civil Code, hence, conjugal partnership of gains govern their property relations. However, with the enactment of the Family Code, the provisions on conjugal partnership of gains under the Family Code will be applicable, in determining the nature of TCT 6075, whether the same is paraphernal property of Nori Ongsiako or conjugal property, pursuant to Article 105 23 of the Family Code. 24 Under Article 109 25 of the Family Code, property which one spouse acquired during the marriage by gratuitous title shall be the exclusive property of that spouse. In this instance, there are sufficient evidence to establish that TCT No. 6075 is the exclusive property of Nori Ongsiako. TCT No. 6075 was originally registered under the name of Serafin Sr. Upon the death of Serafin Sr., his heirs executed a Project of Partition, which was duly approved by the RTC. By virtue of the same, TCT No. 5224 (43405) was cancelled and TCT 6075 was issued in favor of "Nori V. Ongsiako, married to Oscar Ongsiako" through gratuitous title as her inheritance from the estate of Serafin Sr. As such, TCT 6075 is the exclusive or paraphernal property of Nori Ongsiako. The phrase "married to Oscar Ongsiako" is merely descriptive of Nori Ongsiako's civil status and does not show that Oscar Ongsiako co-owned the property. Pursuant to Article 110 26 of the Family Code, Nori Ongsiako retained the ownership of the property. It cannot therefore be said that Private Respondent Ongsiako willfully evaded the payment of estate tax since the latter is under no obligation to pay estate tax on the property which was never part of Oscar Ongsiako's estate. BIR alleged that there was no Project of Partition executed by the heirs of Serafin Sr. The Certification 27 of the Office of the Clerk of Court of Pasay City stated that SP PROC. Case No. 1389-P was not among the cases reconstituted and/or retrieved after a fire of unknown origin razed on January 18, 1992, which destroyed all judicial records of the court. Such certification is however vague, it does not categorically state that SP PROC. Case No. 1389-P does not exist or was never filed with the trial court. It merely said that the case was not among those reconstituted and/or retrieved. As resolved by ASP Mariano in the Resolution dated May 24, 2012: "The Project of Partition was duly approved by the Court of First Instance of Pasay City in its Order dated 13 January 1958, a veritable thirty years or more before the fire in 1992. The onus probandi lies heavily on the shoulder of BIR to substantially show that the documents submitted by respondents were in fact indeed spurious, failing which the instant charge must fail." Since there is nothing in the records that will show that the Order of the trial court approving the Project of Partition was spurious, We see no cogent reason to disturb such finding by the investigating prosecutor. BIR further alleged that even in the guise of the sale, Private Respondents Ongsiako failed to pay the capital gains tax and documentary stamp tax due from the sale between Nori Ongsiako and Private Respondent Ongsiako. We hold that Private Respondent Ongsiako sufficiently proved that the required capital gains tax and documentary stamp tax were paid and received by the BIR. Private Respondent Ongsiako presented the Capital Gains Tax Return 28 and Documentary Stamp Tax Declaration/Return 29 and the corresponding deposit of the payment with United Coconut Planters Bank 30 (UCPB). Because of the payment of the required tax, the BIR RDO No. 051 of Pasay City issued a Certification Authorizing Registration 31 in favor of Private Respondent Ongsiako. With the above finding, Private Respondent Guillermo therefore acted within his duty when he cancelled TCT No. 6075 and issued TCT No. 147166 32 in favor of Private Respondent Ongsiako. BIR failed to show that the Secretary of Justice committed grave abuse of discretion in dismissing the criminal complaint against Private Respondents, because as We have stated above, BIR failed to first file a Petition for Review with the Secretary of Justice in order for her to review the resolution of ASP Mariano. Hence, the latter was not able to review the resolution issued by her subordinate. Nevertheless, BIR failed to establish the existence of probable cause to indict Private Respondents for violation of the NIRC. WHEREFORE , the foregoing considered, the instant Petition for Certiorari is DENIED . The Resolutions dated May 24, 2012 and October 18, 2012 of Assistant State Prosecutor Stewart Allan A. Mariano in NPS No. XVI-INV-11K-00440 are hereby AFFIRMED . SO ORDERED . Acosta and Peralta, Jr., JJ., concur. Footnotes 1. Rollo , pp. 3-23. 2. Rollo , pp. 30-38. 3. Rollo , pp. 27-28. 4. Rollo , p. 60. 5. Rollo , p. 65. 6. Rollo , pp. 61-62. 7. Rollo , pp. 30-38. 8. Rollo , p. 38. 9. Rollo , pp. 27-28. 10. Rollo , p. 13. 11. Rollo , p. 98. 12. Rollo , pp. 100-121. 13. Malayang Manggagawa sa Stayfast Phils., Inc. vs. National Labor Relations Commission, et al. , G.R. No. 155306, April 28, 2013. 14. Community Rural Bank of Guimba vs. Judge Tomas B. Talavera , A.M. No. RTJ-05-1909, April 16, 2005. 15. G.R. No. 164715, September 20, 2006. 16. Id. 17. Unilever Philippines, Inc. vs. Michael Tan, a.k.a. Paul D. Tan , G.R. No. 179367, January 29, 2014. 18. Id. 19. Eliseo V. Aguilaw vs. Department of Justice, et al. , G.R. No. 197522, September 11, 2013. 20. Id. 21. Rollo , pp. 43-56. 22. Rollo , pp. 51-52. 23. Art. 105. The provisions of this Chapter [conjugal partnership of gains] shall also apply to conjugal partnership of gains already established between spouses before the effectivity of this Code, without prejudice to vested rights already acquired in accordance with the Civil Code or other laws, as provided in Article 256. 24. Francisco Munoz, Jr. vs. Erlinda Ramirez, et al. , G.R. No. 156125, August 25, 2010. 25. Art. 109. The following shall be the exclusive property of each spouse: (1) That which is brought to the marriage as his or her own; (2) That which each acquires during the marriage by gratuitous title; (3) That which is acquired by right of redemption, by barter or by exchange with property belonging to only one of the spouses; and (4) That which is purchased with exclusive money of the wife or of the husband. 26. Art. 110. The spouses retain the ownership, possession, administration and enjoyment of their exclusive properties. Either spouse may, during the marriage, transfer the administration of his or her exclusive property to the other by means of a public instrument, which shall be recorded in the registry of property of the place the property is located. 27. Rollo , p. 163. 28. Rollo , pp. 127-128. 29. Rollo , pp. 130-131. 30. Rollo , pp. 129-132. 31. Rollo , p. 133. 32. Rollo , p. 73.