Commissioner of Internal Revenue v. Velasco

[CA-G.R. SP No. 33599. December 19, 1994.] COMMISSIONER OF INTERNAL REVENUE, et al. , petitioners , vs . HON. TIRSO D'C. VELASCO, etc., et al. , respondents . D E C I S I O N RAMIREZ , J p : The instant petition for certiorari and prohibition with application for issuance of temporary restraining order and writ of preliminary injunction must be dismissed for reasons herein stated. Taxes correctly due from its citizens being the lifeblood of government must be collected and paid. The parties and the court below are directed to proceed in the pending case with dispatch, eschewing unnecessary delay. Petitioners herein seek to annul four orders issued by the Regional Trial Court of the National Capital Judicial Region, Branch 88, Quezon City, Judge Tirso D'C. Velasco, presiding, in Civil Case No. Q-94-18790, Fortune Tobacco Corporation et al., petitioners -versus- Commissioner of Internal Revenue et al., respondents, to wit: 1. dated January 25, 1994, granting "petitioners' (herein respondents') application for preliminary injunction" and "upon filing by the petitioners (herein respondents) of the requisite injunction bond which is hereby fixed in the sum of P2,000,000.00 . . . directing the respondents (herein petitioners), and any person or persons acting upon their orders or their places or steads (sic), as well as those acting under their direction and control, to refrain and desist, directly or indirectly, from taking further cognizance of, and conducting preliminary investigation on I.S. NO. 93-508 of the Department of Justice entitled "Bureau of Internal Revenue vs. Lucio C. Tan, et al.", until further orders from this Court" (Annex A, petition); 2. dated January 31, 1994, admitting herein respondents' supplemental petitions, restraining petitioner prosecutors from continuing with the preliminary investigation of the cases bearing IS Nos. 93-17942 and 93-584, setting the hearing on the application for issuance of writ of preliminary injunction, and ordering issuance of summons and service thereof on herein petitioners (Annex B, petition); 3. dated February 7, 1994, denying herein petitioners' motion to dismiss Civil Case No. Q-94-18790 (Annex C, petition); and 4. dated February 14, 1994, granting herein respondents' application for issuance of writ of preliminary injunction prayed for in their supplemental petitions and denying herein petitioners' "oral motion for reconsideration" of the order of February 7, 1994 denying herein petitioners' motion to dismiss Civil Case No. Q-94-18790 (Annex D, petition). On January 4, 1994, herein respondents filed in the respondent Regional Trial Court a verified petition for certiorari and prohibition with application for issuance of restraining order and writ of preliminary injunction. Its principal purpose is to prohibit, alternatively to suspend, the preliminary investigation being conducted by herein petitioner prosecutors of the case for non-payment by herein petitioner Fortune Tobacco Corporation et al. of the correct amounts of income tax, ad valorem tax and value added tax due for the year 1992, filed against them by herein petitioner Commissioner of Internal Revenue. The prayer of the petition is: 1. Upon the filing of this petition, pending further proceedings, a temporary restraining order be issued enjoining respondent Prosecutors and any or all prosecutors similarly situated, from continuing with the preliminary investigation of the case entitled "Bureau of Internal Revenue vs. Lucio C. Tan, et al.", I.S. No. 91-508 of the Department of Justice, and from taking any further action on said case; 2. After notice and hearing, a writ of preliminary injunction be issued enjoining respondent Prosecutors and any or all prosecutors similarly situated, from continuing with the preliminary investigation of the complaint entitled "Bureau of Internal Revenue vs. Lucio C. Tan, et al", I.S. No. 93-508 of the Department of Justice, and from taking any further action on said case during the pendency of this petition; 3. After hearing on the merits: a. An order be issued prohibiting the respondent Prosecutors from taking cognizance of, and conducting preliminary investigation on, the aforementioned case entitled "Bureau of Internal Revenue vs. Lucio C. Tan, et al", I.S. No. 93-508 of the Department of Justice. b. An order be issued directing the dismissal of the complaint (Annex "B") filed by respondent Commissioner of Internal Revenue against the petitioners in I.S. 93-508 of the Department of Justice; c. An order be issued annulling the Order dated October 15, 1993 (Annex "E") of respondent Prosecutors and their Omnibus Order dated December 20, 1993 (Annex "O") as well as the subpoenas (Annexes "A" and "A-1") issued by them in I.S. No. 93-508; d. Alternatively, an order be issued suspending the proceedings on the preliminary investigation of the complaint entitled "Bureau of Internal Revenue vs. Lucio C. Tan, et al", I.S. No. 93-508 of the Department of Justice, pending final determination of the August 13, 1993 assessment of respondent Commissioner involving the same taxes. Petitioners pray for such other reliefs that are just and equitable in the premises (Annex F, petition). On January 17, 1994, herein petitioners filed a motion to dismiss herein respondents' petition for certiorari and prohibition on the following grounds: A. THIS HONORABLE COURT IS BEREFT OF JURISDICTION TO ENJOIN A CRIMINAL PROSECUTION UNDER PRELIMINARY INVESTIGATION; B. A CRIMINAL PROSECUTION FOR TAX FRAUD CAN PROCEED INDEPENDENTLY OF ANY CIVIL OR ADMINISTRATIVE ACTION; C. THERE IS NO PREJUDICIAL QUESTION TO JUSTIFY SUSPENSION OF THE PRELIMINARY INVESTIGATION; D. PETITIONERS' RIGHT TO DUE PROCESS WAS NOT VIOLATED; E. SELECTIVE PROSECUTION IS NOT A VALID DEFENSE IN THIS JURISDICTION (Annex G, petition). On January 19, 1994, at the hearing on the incident for issuance of writ of preliminary injunction sought in the original petition herein respondents offered in evidence their verified petition for certiorari and prohibition and its annexes. That done, herein petitioners prayed that their motion to dismiss the petition for certiorari and prohibition (Annex G, petition) be considered as their opposition to herein respondents' application for issuance of writ of preliminary injunction. On January 25, 1994, the respondent Court issued the first questioned order granting the writ of preliminary injunction applied for upon the filing of the required bond of P2,000,000 (Annex A, petition). On January 26 and 27, 1994, herein respondents filed in the respondent Court two separate motions seeking leave to admit supplemental petitions attached thereto alleging, among others, that subpoenas had been issued for their appearance on dates stated therein at the investigation of complaints against them for tax evasion for non-payment of income tax, ad valorem tax and value added tax for the years 1990 and 1991, docketed as IS No. 93-17942 and IS No. 93-584, before Assistant City Prosecutor Leopoldo E. Baraquia, by authority of City Prosecutor Candido V. Rivera of Quezon City, and Senior State Prosecutor Henrick F. Gingoyon, respectively. Embodied in the motions were applications for issuance of restraining order and writ of preliminary injunction similar to those in the original petition (Annexes H, H-1, I and I-1, petition). On January 31, 1994, the respondent Court issued the second questioned order restraining the City Prosecutor of Quezon City and his assistant and the State Prosecutors from continuing with the preliminary investigation of the cases bearing Nos. IS 93-17942 and 93-584, setting the hearing on herein respondents' application for issuance of writ of preliminary injunction to February 8, 1994, and ordering issuance of summons to be served upon herein petitioners named in the supplemental petitions (Annex B, petition). On February 1, 1994, herein petitioners filed a motion praying that the respondent Court resolve immediately their motion to dismiss the original petition (Annex J, petition). On February 4, 1994, herein petitioners filed a motion praying that the supplemental petitions be dismissed; that the temporary restraining orders earlier issued be lifted; and that the writ of preliminary injunction applied for be denied (Annex K, petition). On February 7, 1994, the respondent Court issued the third questioned order denying herein petitioners' motion to dismiss Civil Case No. Q-94-18790 (Annex C, petition). On February 14, 1994, the respondent Court issued the fourth questioned order granting herein respondents' application for issuance of writ of preliminary injunction and denying petitioners' motion to dismiss herein respondents' supplemental petitions (Annex D, petition). Hence, this petition for certiorari and prohibition filed in the Supreme Court but which by resolution of its First Division dated March 14, 1994, was referred to this Court for consideration and adjudication on the merits. Petitioners herein claim that THE RESPONDENT COURT COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION FOR HAVING ENJOINED A CRIMINAL PROSECUTION FOR FRAUDULENT TAX EVASION AND IN: (1) HOLDING THAT THERE IS A PREJUDICIAL AND/OR LEGAL QUESTION TO JUSTIFY THE SUSPENSION OF THE PRELIMINARY INVESTIGATION (2) HOLDING THAT PRIVATE RESPONDENTS' RIGHTS TO DUE PROCESS, EQUAL PROTECTION AND PRESUMPTION OF INNOCENCE WERE VIOLATED; ON THE CONTRARY, THE STATE ITSELF WAS DEPRIVED OF DUE PROCESS (3) ADMITTING PRIVATE RESPONDENTS' SUPPLEMENTAL PETITIONS (4) HOLDING THAT THERE WAS SELECTIVE PROSECUTION (5) CONSIDERING THE FACTUAL ALLEGATIONS IN THE PETITION AS HYPOTHETICALLY ADMITTED IN A MOTION TO DISMISS BASED ON JURISDICTIONAL GROUNDS (p. 23, petition). No such grave abuse of discretion amounting to lack or excess of jurisdiction may be attributed to the respondent Court in issuing the four orders complained of. While it is well settled that criminal prosecutions may not be restrained, either through a preliminary or final injunction or a writ or prohibition, still such rule provides as exceptions thereto the following instances: (1) To afford adequate protection to the constitutional rights of the accused; (2) When necessary for the orderly administration of justice or to avoid oppression or multiplicity of actions; (3) When there is a prejudicial question which is sub-judice;; (4) When the acts of the officer are without or in excess of authority; (5) Where the prosecution is under an invalid law, ordinance or regulation; (6) When double jeopardy is clearly apparent; (7) Where the court has no jurisdiction over the offense; (8) Where it is a case of persecution rather than prosecution; (9) Where the charges are manifestly false and motivated by lust for vengeance; (10) When there is clearly no prima facie case against the accused and a motion to quash on that ground has been denied; (11) Preliminary injunction has been issued by the Supreme Court to prevent the threatened unlawful arrest of petitioners (Broka vs. Enrile, 192 SCRA 183, 188-189; Ocampo, IV vs. Ombudsman, 225 SCRA 725, 729). In their original petition for certiorari and prohibition filed in the respondent Court (Annex F, petition) herein respondents allege, among others, that 1. On June 1, 1993, the President issued a Memorandum creating a task force to investigate the tax liabilities of manufacturers engaged in well-known task evasion schemes, such as selling products through dummy marketing companies to evade payment of correct internal revenue taxes; assess and collect from them any tax liability discovered from such investigation; and file the necessary criminal actions against those who may have violated the Tax Code. The task force is composed of the Commissioner of Internal Revenue as Chairman, a representative of the Department of Justice and a representative of the Executive Secretary; 2. On July 1, 1993, herein petitioner Commissioner issued Revenue Memorandum Circular No. 37-93 reclassifying best selling cigarettes bearing the brands "Hope," "More" and "Champion" as cigarettes of foreign brands, thereby imposing upon them a higher rate of tax which would price them out of the market. On August 3, 1993, respondent Fortune questioned the validity of the reclassification of said brands of cigarettes as violative of its right to due process and equal protection of the law. On September 8, 1993, the Court of Tax Appeals by resolution ruled that the reclassification made by petitioner Commissioner "is of doubtful legality' and enjoined its enforcement." 3. On September 7, 1993, herein petitioner Commissioner, apparently in consultation with the task force, filed with the Secretary of Justice, attention "The Chairman, Task Force on Revenue Cases created under Department Order No. 305 dated August 23, 1993," a complaint for tax evasion for alleged non-payment by herein respondent Fortune of the correct amounts of income tax, ad valorem tax and value added tax for the year 1992. Named in the complaint together with herein respondent Fortune were nine of its officers and nine corporations which sell cigarettes manufactured by said respondent Fortune and fifty-nine of its officers. 4. On September 8, 1993, herein petitioner Sr. State Prosecutor Aurora S. Lagman issued subpoena directing herein respondents Lucio C. Tan, Harry C. Tan, Carmen Kao Tan and Florencio C. Santos, against whom a complaint for violation of the National Internal Revenue Code has been filed by herein petitioner Commissioner, to appear before the task force on September 20, 1993 at 2:00 o'clock in the afternoon and then and there to submit their counter-affidavits to the complaint, copy of which was attached, with the warning that non-compliance therewith would be deemed a waiver of their right to submit evidence in their defense and the case against them would be resolved pursuant to Section 3(d), Rule 112 of the Revised Rules on Criminal Procedure; 5. On October 15, 1993, after the date (September 20, 1993) when they were to submit their counter-affidavits was moved over, herein respondents filed a verified motion to dismiss, alternatively, motion to suspend, based principally on the following: herein petitioner Commissioner's complaint follows a pattern of persecution against herein respondents, targeting them particularly but not others similarly situated, in violation of their right to due process and equal protection of the law; petitioner Commissioner and the Court of Tax Appeals still have to finally determine whether herein respondent Fortune has incurred any tax liability in regard to its 1992 ad valorem tax, value added tax and income tax payments; the Regional Trial Courts are without jurisdiction to make a determination of tax liability; exclusive jurisdiction to make such determination is vested in the Court of Tax Appeals; the Department of Justice, therefore, is without jurisdiction to conduct preliminary investigation; and respondent Commissioner's complaint is not supported by any evidence to serve as adequate basis for the issuance of subpoena to herein respondents and to put them to their defense; 6. At the scheduled preliminary investigation on October 15, 1993, herein respondents were asked by the panel of prosecutors to inform it of the aspects of their verified motion to dismiss, which counsel did so briefly. Counsel for herein petitioner Commissioner responded and then asked for fifteen days within which to file a reply in writing to herein petitioners' verified motion to dismiss. Thereupon, the panel of prosecutors declared a recess. Upon reconvening the panel of prosecutors announced that herein respondents' verified motion to dismiss would be regarded as their counter-affidavits, in effect denying it. 7. On October 20, 1993, herein respondents filed a motion for reconsideration of the foregoing order of the panel of prosecutors, praying that their motion to dismiss, alternatively, motion to suspend, be resolved. 8. On October 21, 1993, herein respondents filed a motion to require submission by the Bureau of Internal Revenue of certain documents in further support of their verified motion to dismiss, alternatively, motion to suspend; 9. On October 25, 1993, herein respondents received information aired over the program, "Mr. Expose," of Senator Ernesto Maceda, that specifically the Prosecution Division of the Department of Justice headed by the Chief State Prosecutor was consulted in regard to the investigation, preparation and institution of the complaint against herein respondent Fortune; 10. On October 26, 1993, herein respondents filed a motion to inhibit the panel of prosecutors from conducting the preliminary investigation against herein petitioners; 11. On December 20, 1993, petitioner prosecutors issued an omnibus order denying herein respondents' motion to suspend, in the alternative, motion to dismiss; motion for reconsideration; motion to require submission by the BIR of certain documents in further support of herein respondents' motion to dismiss; and motion to inhibit; 12. Petitioner prosecutors are not possessed of the "cold neutrality" or impartiality to conduct preliminary investigation of the complaint against herein respondents. In proceeding against them alone herein petitioners have violated their right to equal protection of the law. In conducting the preliminary investigation of herein petitioner Commissioner's complaint and in directing herein respondents to submit their defense to prove their innocence, herein petitioner prosecutors have violated their right to due process and to be presumed innocent of crime or wrongdoing. Petitioner prosecutors are without jurisdiction to conduct preliminary investigation of the complaint involving tax liabilities, the determination of which is vested exclusively in the Court of Tax Appeals and not in the Regional Trial Courts. 13. The steps taken by the government prior to the filing of the complaint against herein respondent Lucio C. Tan, to wit: the well-publicized announced plan of the Presidential Commission on Good Government (PCGG) that it would take over the various corporations associated with said respondent, followed by the reclassification by the BIR as cigarettes bearing foreign brands of the three best selling cigarettes being manufactured by herein respondent Fortune to enable the BIR to impose therein a higher rate of ad valorem tax, without prior and hearing, demonstrate that herein respondent Lucio C. Tan has been singled out for prosecution (Annex F, petition). In their supplemental petitions (Annexes H-1 and I-1, petition) herein respondents allege that subsequent to the filing of the original petition, complaints for tax evasion were filed against herein respondents docketed as IS No. 93-17942 for alleged deficiencies in the payment of income tax, ad valorem tax and value added tax for the year 1990 and IS No. 93-584 for the same alleged deficiencies for the year 1991, under the same circumstances as those filed against them in IS No. 93-508 subject to the original petition. A motion to dismiss a petition for certiorari and prohibition may be filed under Rule 16, on the grounds provided therein, in connection with Rule 62, of the Revised Rules of Court. A reading of herein petitioners' motion to dismiss herein respondents' petition for certiorari and prohibition (also their opposition to herein respondents' application for issuance of writ of preliminary injunction, Annex G, petition) shows that it is based on the ground that said petition states no cause of action (Section 1-g, Rule 16, Revised Rules of Court). The alleged lack of legal basis for the respondent Court to enjoin a criminal prosecution and absence of a prejudicial question alleged in herein petitioners' motion to dismiss herein respondents' petition do not go into its power and authority to issue writs of certiorari and prohibition in the exercise of its original jurisdiction under Section 21, Batas Pambansa Blg. 129. Jurisdiction is the authority of the respondent Court to hear and determine the case before it. Since it is the power to hear and determine, it does not depend either upon the regularity of the exercise of that power or upon the rightfulness of the orders issued by it (Herrera vs. Barretto, 25 Phil. 245). By their motion to dismiss herein petitioners are, therefore, deemed to have admitted hypothetically the facts pleaded in herein respondents' petition (Sunbeam Convenience Foods, Inc. vs. Court of Appeals, 181 SCRA 443; Sumalinog vs. Doronio, 184 SCRA 187; State Investment House, Inc. vs. Court of Appeals, 206 SCRA 348; Perpetual Savings Bank vs. Fajardo, 223 SCRA 720). Upon the facts alleged in the petition, deemed hypothetically admitted by herein petitioners, and absent any countervailing evidence adduced by herein petitioners at the hearing before the respondent Court, its issuance of the questioned orders, granting herein respondents' motion for writ of preliminary injunction and denying herein petitioners' motion to dismiss, is legally justified to afford adequate protection to herein respondents' constitutional rights and to avoid oppression. If only for that reason the questioned orders must be upheld. Herein petitioners in effect urge that the preliminary investigation being conducted is not a criminal prosecution that may be enjoined. Such assertion is incorrect. For ". . . A preliminary investigation has thus been called a judicial inquiry; it is a judicial proceeding. After all, an act becomes judicial when there is opportunity to be heard, and the production and weighing of evidence and a decision thereon. Importantly, because a preliminary investigation precedes and determines the filing of an information it has been regarded as the commencement of a criminal prosecution. In the words of Mr. Justice Makalintal, speaking for a unanimous court: "Prosecution does not begin with the trial of a case after it is filed in court; it includes the process of investigation leading to the formal charge (Arula vs. Espino, 28 SCRA 540, 592-593)." ". . . in order to satisfy the due process clause it is not enough that the preliminary investigation is conducted in the sense of making sure that a transgressor shall not escape with impunity. A preliminary investigation serves not only the purposes of the State. More important, it is a part of the guarantees of freedom and fair play which are birthrights of all who live in our country. It is, therefore, imperative upon the fiscal or the judge as the case may be, to relieve the accused from the pain of going through a trial once it is ascertained that the evidence is insufficient to sustain a prima facie case or that no probable cause exists to form a sufficient belief as to the guilt of the accused (Salonga vs. Cruz Pao, 134 SCRA 438, 461-462)." Herein respondents allege in their petition for certiorari and prohibition filed in the respondent Court that on September 7, 1993, petitioner Commissioner of Internal Revenue filed with the Secretary of Justice, attention of "The Chairman, Task Force on Revenue Cases created under Department Order No. 305 dated August 23, 1993," a complaint for tax evasion in regard to the alleged non-payment by herein respondent Fortune for the year 1992 of the correct amounts of income tax, ad valorem tax and value added tax; that the complaint consists of 14 pages, typewritten single space; that attached to the complaint is the joint affidavit of revenue officers consisting of 17 pages; that attached to the joint affidavit are 570 pages of annexes; that named therein as respondents are herein respondent Fortune and nine of its officers and nine corporations which sell cigarettes manufactured by herein respondent Fortune and 59 officers of the corporations; that the following day, September 8, 1993, petitioner prosecutors acting through their Chairman, Senior State Prosecutor Aurora S. Lagman, issued subpoena to all herein respondent commanding them to appear before them on September 20, 1993 and to submit their counter-affidavits and other supporting documents, if any they have in their defense; and that failure to comply with the subpoena would be deemed as a waiver on their part to submit evidence in their defense. As already said, such allegations are deemed hypothetically admitted upon the filing of herein petitioners' motion to dismiss on the ground of lack of cause of action. The obvious haste by which the subpoena was issued, just the day after the complaint was filed, hence without the investigating prosecutors being afforded material time to examine and study the voluminous documents appended to the complaint (at pp. 475 to 1077, rollo of this case) for them to determine if preliminary investigation should be conducted, justifies herein respondents' misgivings about the objectivity and neutrality that the preliminary investigation should be conducted. It need not be stressed that just to read, analyze and comprehend herein petitioner Commissioner's complaint of 14 pages (pp. 477-490, rollo of this case) and the eight revenue officers' joint affidavit of 17 pages (pp. 491-507, supra ) and the annexes thereto (pp. 508-1077, supra ) need more than a day's time for one to know what the matter treated therein is all about. Therefore, the grant of preliminary injunction by the respondent Court to afford adequate protection to herein respondents' constitutional rights and to avoid oppression does not constitute grave abuse of discretion amounting to lack of jurisdiction. Two requisites are necessary for the issuance of writ of preliminary injunction, namely, (1) the existence of the right to be protected; and (2) the facts against which the injunction is to be directed are violative of said right (Viray vs. Court of Appeals, 191 SCRA 308; Director of Forest Administration vs. Fernandez, 192 SCRA 121). Herein respondents are entitled to the constitutional right of due process and to protection against oppression. As heretofore demonstrated by the facts alleged in the petition filed with the respondent Court, hypothetically admitted upon the filing of herein petitioners' motion to dismiss, herein respondents' rights have been violated. It was upon the foregoing that the writ of preliminary injunction sought by herein respondents was granted. The grant or denial of an injunction rests upon the sound discretion of the respondent Court in the exercise of which, this Court will not interfere except on a clear case of grave abuse (S & A Gaisano, Inc. vs. Hidalgo, 192 SCRA 224). Petitioners herein charge the respondent Court with grave abuse of discretion in holding that there is a prejudicial and/or legal question to justify suspension of the preliminary investigation being conducted in the cases against herein respondents. While the respondent Court declared in its first order (Annex A, petition) "that there is no final determination yet by the Bureau of Internal Revenue of any tax liability to the 1992 ad valorem, value added and income taxes of petitioner Fortune Tobacco Corporation," hence "petitioners cannot be put to their defense and required to submit their counter-affidavits," as "the tax liabilities of petitioner Fortune Tobacco Corporation upon which the tax evasion charges are based have still to be finally determined by the respondent Commissioner and the Court of Tax Appeals," it did so "without in any way prejudging the merits of the petition." Indeed, it so declared not to decide the case on the merits before it but merely to resolve herein respondents' motion for issuance of writ of preliminary injunction and herein petitioners' motion to dismiss petition. Excerpts from the first questioned order (Annex A, petition) are to that effect: Atty. Rosendo Paug, Assistant Chief of the Prosecution Division, Bureau of Internal Revenue, who was allowed to participate during the hearing of this incident on January 19, 1994, pointed out that what is involved in I.S. No. 93-508 (BIR vs. Lucio Tan, et al.) is a LEGAL QUESTION, that is, which particular provision of the National Internal Revenue Code should be applied: whether it is Sec. 127 (b) or Sec. 142(c) thereof. Respondent BIR Commissioner Liwayway V. Chato, in assessing the tax deficiency against petitioner Fortune Tobacco Corporation, applied Sec. 127 (b), which provides: "Sec. 127. (b) Determination of gross selling price of goods subject to ad valorem tax . Unless otherwise provided, the price, excluding the value added tax, 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. If the manufacturer also sells or allows such goods to be sold at wholesale in another establishment of which he is the owner or in the profits at which he has an interest, the wholesale price in such establishment shall constitute the gross selling price. Should such price be less than the cost of manufacture plus expenses incurred until the goods are finally sold, then a proportionate margin of profit, not less than 10% of such manufacturing cost and expenses, shall be added to constitute the gross selling price." Whereas, it is the contention of petitioner Fortune Tobacco Corporation that the ad valorem tax for the year 1992 was levied, assessed and collected by the BIR on the basis of Sec. 142 (c) The manufacturer's registered wholesale price, the pertinent provision of which reads: "Sec. 142. Cigars and cigarettes . xxx xxx xxx "(c) Cigarettes packed in twenties . There shall be levied, assessed and collected on cigarettes packed in twenties an ad valorem tax at the rates prescribed below based on the manufacturer's registered wholesale price; (1) "(1) On locally manufactured cigarettes hearing a foreign brand, fifty-five percent (55%) Provided, . . ." (2) "(2) On the locally manufactured cigarettes, forty-five (45%)." (emphasis supplied) xxx xxx xxx Which of the above-quoted provisions of the National Revenue Code should be applied in assessing and collecting ad valorem taxes against cigars and cigarettes manufacturers? Will its interpretation be left at the discretion of the investigating State Prosecutors? What would happen if the Court of Tax Appeals and/or the Supreme Court finally decides for Sec. 142 (c)? Petitioners contend that until this issue is resolved, there can be no resulting tax liability which is an essential ingredient of tax evasion, or that at the very least, the correct interpretation of Sec. 142 (c) is a prejudicial civil question which must first be resolved before criminal proceedings for its violation may be pursued. xxx xxx xxx Another principal point emphasized by the petitioners in the petition as well as in the hearing is the interpretation and application of Sec. 142 (c) of the National Internal Revenue Code which refers to the ad valorem tax on cigarette. Petitioners contend that the ad valorem tax for the year 1992 was levied, assessed and collected by the Bureau of Internal Revenue on the basis of "the manufacturer's registered wholesale price". Among the annexes to the petition is Fortune's registered wholesale price duly approved by the Bureau of Internal Revenue. This fact is not disputed by the respondents. It is, however, respondents' contention that the ad valorem tax should be based at the wholesale price at which the manufacturer sold the cigarettes. It is respondents' contention that the actual wholesale price is the price at which distributors or marketing companies which sold Fortune's cigarettes actually sold the same. Petitioners moreover argue that from the time that Sec. 142(c) was enacted up to the time it was amended on July 3, 1993 by R.A. No. 7654, the BIR itself "levied, assessed and collected" the ad valorem tax on the basis of the manufacturer's registered wholesale price and that what respondent Commissioner now seeks to do is simply to reverse the standing interpretation and application of the law which has prevailed since its enactment. As a BIR lawyer admitted at the hearing, this involves a question of law. Thus, it is, petitioners' contention that this issue may only be properly resolved by the Court of Tax Appeals and that until that issue is resolved, there can be no resulting tax liability which is an essential ingredient of tax evasion, or that at the very least the correct interpretation of Sec. 142 (c) is a prejudicial civil question which must first be resolved before criminal proceedings for its violation may be pursued. From the record, it also appears that there is no final determination yet by the Bureau of Internal Revenue of any tax liability relative to the 1992 ad valorem, value added and income taxes of petitioner Fortune Tobacco Corporation. Under this situation, petitioners cannot be put to their defense and required to submit their counter-affidavits. As correctly stated by petitioners' counsel, if the correct amount of tax under Sec. 142 (c) has been paid by petitioner Fortune Tobacco Corporation, there can be no tax evasion, in the same manner that there can be no murder unless someone is killed and there can be no rape unless there is sexual intercourse with a woman. xxx xxx xxx The court likewise observes that the tax liabilities of petitioner Fortune Tobacco Corporation upon which the tax evasions charges are based have still to be finally determined by respondent Commissioner and the Court of Tax Appeals. Thus, the presence in this case of a prejudicial question which should first be resolved before the proceedings in I.S. No. 93-508 may continue, has been ignored. The case of "Saavedra vs. Department of Justice, et al.", G.R. No. 93173, September 15, 1993, quoted by petitioners on page 94 of their petition, and highlighted by their counsel during the hearing, is very much in point. At this juncture, the Court observes that even Atty. Paug of the Bureau of Internal Revenue has conceded that what is involved in I.S. No. 93-508 is a legal question, more particularly the correct interpretation of Sec. 142 (c) of the National Internal Revenue Code in relation to Sec. 127 (b) thereof, an issue that is within the competence of, and may better be resolved by, the Court of Tax Appeals. xxx xxx xxx In making such conclusion the respondent Court must have understood from herein petitioner Commissioner's letter-complaint of 14 pages (pp. 477-490, rollo of this case) and the joint affidavit of eight revenue officers of 17 pages attached thereto (pp. 491-507, supra ) and its annexes (pp. 508-1077, supra ), that the charge against herein respondents is for tax evasion for non-payment by herein respondent Fortune of the correct amounts of income tax, ad valorem tax and value added tax, not necessarily "fraudulent tax evasion". Hence, the need for previous assessment of the correct amount by herein petitioner Commissioner before herein respondents may be charged criminally. Certiorari will not be issued to cure errors in proceedings or correct erroneous conclusions of law or fact. As long as a Court acts within its jurisdiction, any alleged error 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 (Santos, Jr. vs. Court of Appeals, 152 SCRA 378; Gold City Integrated Port Services, Inc. vs. Intermediate Appellate Court, 171 SCRA 579). The questioned orders issued after hearing (Annexes A, B, C and D, petition) being but interlocutory, review thereof by this Court is inappropriate until final judgment is rendered, absent a showing of grave abuse of discretion on the part of the issuing court (See Van Dorn vs. Romillo, 139, 141; Newsweek, Inc. vs. IAC, 171, 177; Mendoza vs. Court of Appeals, 201 SCRA 343, 352). The factual and legal issues involved in the main case still before the respondent Court are best resolved after trial. Petitioners, therefore, instead of resorting to this petition for certiorari and prohibition should have failed an answer to the petition as ordained in Section 4, Rule 16, in connection with Rule 11 of the Revised Rules of Court, interposing as defense or defenses the objection or objections raised in their motion to dismiss, then proceed to trial in order that thereafter the case may be decided on the merits by the respondent Court. In case of an adverse decision, they may appeal therefrom by which the entire record of the case would be elevated for review (See Mendoza vs. Court of Appeals, supra ). Therefore, certiorari and prohibition resorted to by herein petitioners will not lie in view of the remedy open to them. Thus, the resulting delay in the final disposition of the case before the respondent Court would not have been incurred. 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, or where the power is exercised in an arbitrary or despotic manner by reason of passion, prejudice, or personal hostility, amounting to an evasion of positive duty or to a virtual refusal to perform the duty enjoined, or to act at all in contemplation of law (Confederation of Citizens Labor Union vs. NLRC, 60 SCRA 450, 461-462; Paredes vs. Commission on Audit, 192 SCRA 84; Bustamante vs. Commission on Audit,216 SCRA 134). For such writs to lie, there must be capricious, arbitrary and whimsical exercise of power, the very antithesis of the judicial prerogative in accordance with centuries of both civil law and common law traditions (Young vs. Sulit, 162 SCRA 659, 664; FCC vs. IAC, 166 SCRA 155; Purefoods Corp. vs. NLRC, 171 SCRA 45). Certiorari and prohibition are remedies narrow in scope and inflexible in character. They are not general utility tools in the legal workshop (Vda. de Guia vs. Veloso, 158 SCRA 340, 344). Their function is but limited to correction of defects to jurisdiction solely, not to be used for any other purpose (Garcia vs. Ranada, 166 SCRA 9), such as to cure errors in proceedings or to correct erroneous conclusions of law or fact (Gold City Integrated Ports Services vs. IAC, 171 SCRA 579). Due regard for the foregoing teachings enunciated in the decisions cited can not bring about a decision other than what has been reached herein. Needless to say, the case before the respondent Court involving those against herein respondents for alleged non-payment of the correct amounts due as income tax, ad valorem tax and value added tax for the years 1990, 1991 and 1992 (Civil Case No. Q-94-18790) is not ended by this decision. The respondent Court is still to try the case and decide it on the merits. All that is decided here is but the validity of the orders of the respondent Court granting herein respondents' application for preliminary injunction and denying herein petitioners' motion to dismiss. If upon the facts established after trial and the applicable law, 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, the respondent Court is duty bound to render judgment accordingly. WHEREFORE, the instant petition for certiorari and prohibition with application for issuance of restraining order and writ of preliminary injunction is DISMISSED. Costs de officio . SO ORDERED. Ramirez, Abad Santos, Jr . and Labitoria, JJ ., concur.