People v. Chu Tiong

[CA No. 12186-CR. May 28, 1974.] * THE PEOPLE OF THE PHILIPPINES , plaintiff and appellee , vs . CHU TIONG alias TE LIONG , accused and appellant . Unson & Delante for accused and appellant. Solicitor General Estelito P . Mendoza, Assistant Solicitor General Alicia V . Sempio-Diy and Solicitor Felix M . De Guzman for plaintiff and appellee. SYLLABUS 1. INDIRECT CONTEMPT; INCOME TAX RETURNS; REFUSAL TO PRODUCE RETURNS IN COURT AFTER PROMISING TO DO SO; CASE AT BAR. The accused failed to bring his income tax returns, as promised by him, to show that he had no funds with which to pay the judgment debt. Upon the suggestion of the creditor and over his counsel's objection, accused signed an authority for the creditor to secure his income tax returns from the Bureau of Internal Revenue. The creditor sought to obtain the income tax returns of accused but failed to do so as the Bureau required a court order, which he promptly secured. Afterwards, the accused, his lawyer and the creditor's representative went to the Bureau to secure the returns, but before the legal officer of the Bureau could comply with the request, the accused stated that he was only compelled to grant the authority and that he did not really want his income tax returns to be released. For this reason, the creditor failed to secure the income tax returns of accused as the Bureau refused to release, much less to divulge, the same in view of Sections 347 and 349 of the Internal Revenue Code. Ruling that the acts of accused were contumacious, the lower court, on motion of the creditor, found the accused guilty of contempt under par. d, Sec. 3, Rule 71, Rules of Court. Hence, this appeal, HELD: The refusal or change of heart of the accused to submit his income tax returns to the court for examination by his creditor after he had promised to do so cannot be considered as contempt. (1) The income tax returns sought was in no way connected in the interest of the government , and (2) the manner in which the income tax returns was sought to be produced in court was certainly not in the manner provided by law . (Cu Unjieng vs . Posadas, 58 Phil. 360; Arnaldo vs . Locsin, 69 Phil. 113). 2. ID.; ID.; LITIGANT MAY NOT BE COMPELLED TO PRODUCE HIS RETURNS. Under the very elemental principle that a man cannot be forced to submit evidence to incriminate himself, a litigant cannot be compelled by the court to produce his income tax returns to be used by his opponent against him (Arnaldo vs . Locsin, 69 Phil. 113). D E C I S I O N SAN DIEGO , J p : This is an appeal from the order dated August 31, 1970 of the Court of First Instance of Davao, finding the accused-appellant guilty of contempt of court, as follows: LexLib "Wherefore, the Court finds Chu Tiong alias Te Liong guilty of improper conduct which impeded and/or obstructed and degraded the administration of justice under paragraph d, Section 3, Rule 71 of the Rules of Court, and hereby sentences him to six (6) months imprisonment and to pay the fine of P1,000.00 with subsidiary imprisonment in case of insolvency." It appears that as judgment-debtor in Civil Case 4613, entitled "Sarmiento Enterprises, Inc., Plaintiff vs . Chu Tiong alias Te Liong", the accused-appellant, Chu Tiong alias Te Liong, was ordered to pay a certain sum of money to the plaintiff therein, Sarmiento Enterprises. The defendant, however, failed to pay the same, alleging that he had no money with which to satisfy the judgment. Convinced that Chu Tiong was solvent, the lawyers of the judgment-creditor required him to produce his income tax returns for the years from 1964 to 1968, for examination (Exh. L). On September 9, 1969, while the said accused-appellant was being examined relative to his assets and liabilities, he promised to bring to court the copies of his tax returns to show that he really had no sufficient income (Exh. "A"). During the hearing held on September 10 and 27, 1969, however, the said accused failed to bring the income tax returns on the ground that his bookkeeper had misplaced them. Due to this fact, the counsel of the judgment-creditor asked the accused-appellant, whether he was willing to authorize the Court Commissioner or the plaintiff to secure the said returns from the Office of the Bureau of Internal Revenue. In spite of his counsel's vigorous objection, appellant prepared the authorization in the presence of the Court Commissioner. As it happened, the counsel of the judgment-creditor afterwards requested the Court Commissioner to set a time-limit for the appellant to produce his income tax returns, whereupon the said Commissioner gave the appellant "one week from today to produce those copies of his income tax returns for the years 1965, 1966, 1967 and 1968, together with the certificate of the doctor as to the probable date of delivery of his wife on September" (Exhibit D and D-l). On the basis of the foregoing authorization, the plaintiff sought to obtain appellant's income tax returns from the Bureau of Internal Revenue but failed to do so as said office required a written court order, which was promptly secured by plaintiff on October 18, 1969 (Original Record, p. 23). On October 30, 1969, the appellant together with his lawyer, accompanied the plaintiff's representatives to the Bureau of Internal Revenue for the purpose of obtaining appellant's income tax returns; but before the legal officer of the Bureau of Internal Revenue could comply with the request, the appellant stated that he was only compelled to grant the authority and that he did not really want his income tax to be released since the same would only be used against him (P. 31, Record and Exh. L). For this reason, the plaintiff failed to secure any of the appellant's income tax returns as the Bureau of Internal Revenue refused to release, much less to divulge the same in view of the provisions of Sections 347 and 349 of the Internal Revenue Code (Exh. L). Believing the acts of Chu Tiong to be contumacious, the lower court on the motion of plaintiff Sarmiento Enterprises, Inc., found the said Chu Tiong guilty of contempt. Not satisfied with said judgment, the herein defendant interposed the present appeal, assigning the following errors: I "The lower court erred in finding the appellant guilty of improper conduct which impeded and/or obstructed and degraded the administration of justice, the evidence and circumstances of the case being insufficient to justify conviction. II "The court erred in imposing the maximum penalty of six (6) months imprisonment and a fine of one thousand (P1,000.00) pesos." Given the circumstances of the case as recited above, we are the considered opinion that there is no contempt committed. Be it remembered that income tax returns produceable in court only in conformity with regulations (No. 33, Relating to Inspection of Income Tax Returns, Cu Unjieng vs . Posadas 58 Phil. 360). In the Cu Unjieng case Section 11 of the Regulations (No. 33) relating to inspection of income tax returns, promulgated by the Secretary of Finance and approved by the Governor-General on October 13, 1962 was quoted as follows: "SECTION 11. Copies of returns furnished for use in legal proceedings . When it becomes necessary for the Bureau of Internal Revenue to furnish returns or copies thereof for use in legal proceedings, inspection of such returns or copies that necessarily results from such is permitted. "The original income tax return of an individual, corporation, joint-stock company, partnership, joint account (cuenta en participacion), association, insurance company, or fiduciary, or a copy thereof, may be furnished by the Collector of Internal Revenue for use as evidence in litigation in any court, where the Government of the Philippine Islands is interested in the result , or for use in the preparation for such litigation, to provincial or city fiscal or any attorney connected with the Bureau of Justice designated to handle such matters, upon written request of the Attorney-General, or as assistant attorney acting on his behalf. When an income tax return or copy thereof is thus furnished, it must be limited in use to the purpose for which it is furnished, and is under no conditions to be made public except where publicity necessarily results from such use . . . Neither the original nor a copy of an income tax return, desired for use in litigation in court where the Government of the Philippine Islands is not interested in the result and where such use might result in making public the information contained therein, will be furnished, except as otherwise provided in the next succeeding section." In the same case it was said: "Again, it is evident that the provisions of law quoted above place no restriction upon the divulgence of the information contained in income tax returns when the publication of such information is made in the manner provide by law ." . . . The provisions of the National Internal Revenue Code regarding production of income tax returns in court require: SECTION 81.01. Disposition of income tax returns . All income tax returns filed with the Commissioner to Internal Revenue constitute public records which shall be open to inspection under rules and regulations prescribed by the Secretary of Finance with the approval of the President of the Philippines. The circumstances under which income tax returns may be inspected by interested parties are dealt with under separate regulations. (Sec. 247, Rev. Reg. No. 2) SECTION 81.02. Income tax returns may be presented as evidence in court . It is evident that the law places no restriction upon the divulgence of the information contained in income tax returns when the publication of such information is made in the manner provided by law . It results that when the custodian of income tax returns is lawfully required to reveal them, he is protected from the penalties expressed in Sections 2716 and 2731 of the Administrative Code. (Now Secs. 347 & 349. NIRC). There was no intention to restrict the use of these documents, when their custodian is lawfully required to produce them or make their contents known . xxx xxx xxx SECTION 81.03. Can a litigant be compelled to produce the original of his income tax returns . A litigant may not be compelled through subpoena duces tecum, to produce the original of the income tax returns filed by him and recorded in the Bureau of Internal Revenue, nor an authenticated copy thereof which is not in his possession. (Arnaldo vs. Locsin 69 Phil. 113) It will be noted that in the case for US, it is clear that: cdll 1) the income tax returns sought was in no way connected in the interest of the government : 2) the manner in which the income tax returns was sought to be produced in court was certainly not in the manner provided by law . Even if for these two reasons alone the refusal of the appellant herein to commit his income tax returns to the court for examination by his creditor cannot be considered contempt. It might be argued that appellant had indicated in open court his willingness to present the income tax returns. Be that as it may, the change of heart of the appellant later, leading to his refusal to request from the legal custodian thereof for a copy of his income tax returns, after he had been advised by the legal officer of the Bureau that "he cannot be forced to produce his income tax returns" (p. 6, Appellant's Brief) is not a punishable act constituting contempt. 3) under the very elemental principle that a man cannot be forced to submit evidence to incriminate himself, appellant could not be compelled by the court to produce his income tax returns which was to be used by his opponent against him. 1. CERTIORARI; SUBPOENA DUCES TECUM. A litigant may not be compelled, through subpoena duces tecum , to produce the original of the income tax returns filed by him recorded in the Bureau of Internal Revenue, nor an authenticated copy thereof which is not in his possession. (Arnaldo vs . Locsin, et. al., Phil. Rep., vol. 69 p. 113). WHEREFORE, premises considered, the order appealed from is hereby reversed, and the accused is acquitted of the crime of contempt of court with costs de oficio . casia SO ORDERED. Reyes L. B . and Busran, JJ . , concur. Gancayco and Ramos, JJ., dissent. Separate Opinions GANCAYCO , J . , dissenting : The records of this case clearly show that the appellant led the trial court to believe that he was willing to produce his income tax returns any time. He made it appear that he exerted efforts to have the same located but to no avail and thereafter he manifested his willingness to produce his income tax returns and to secure it personally from the Bureau of Internal Revenue. He signed the written authority for its production even over the objection of his counsel. When the appellant thereafter reneged on his misrepresentations to the court and even imputed that he was forced to sign the authority, he obviously committed such improper conduct that impeded and degraded the administration of justice. He trifled with the faith of the court who was led into issuing the order for the production of his income tax returns by the Bureau of Internal Revenue. The question of whether the production of such income tax returns can be lawfully ordered for purposes of the examination of the asset of a judgment debtor even if resolved in the negative, will not relieve the appellant of his responsibility for the deception he foisted on the court a quo and his subsequent act tending to impute that he signed the authorization under duress before the court, which is not true and most insulting. Thus, I vote for the affirmance of his conviction, with costs against the appellant. RAMOS , J . , dissenting : In his brief, appellant Chu Tiong pointed out that he was forced to sign the letter of authorization, empowering the Court Commissioner or the plaintiff to obtain his income tax returns from the Bureau of Internal Revenue. To buttress his stand, he stated that he only consented to sign the letter after having been browbeaten and subjected to a barrage of questions. Thus, when he told the Bureau of Internal Revenue legal officer that he granted the letter of authorization under duress, "he was not lying for such was his honest belief" (page 9). LLcd Set against what actually happened, appellant's allegation cannot be given credence. For as found by the lower court (pp. 27-30, Original Record), when the appellant was asked if he was willing "to sign a request addressed to the Bureau of Internal Revenue" authorizing the surrender of the copies of his income tax returns for the years 1964 to 1968, he replied:' "There is no need to sign because I will go there personally." Asked again if he wanted to sign the written request, he finally answered: "I am willing." (Appellant's brief, p. 4 and p. 32, Tsn, September 27, 1969). And so, then and there, he signed the letter of authorization, empowering the plaintiff or the Court Commissioner to obtain the income tax returns. At it turned out, however, at the time when the plaintiff's representatives could have secured a copy thereof, Chu Tiong, who was also in the Office of the Bureau of Internal Revenue, objected on the ground already stated. Thus seen, although at first Chu Tiong refused to sign the said letter of authorization, he ultimately agreed to do so. What then made him change his mind? When he objected to the release of his income tax returns by claiming that he was forced to sign the letter of authorization, it could only be due to the fact that he wanted to suppress an evidence that would establish his capacity to satisfy the judgment rendered against him. It is therefore plain that in spite of the order in connection with the production of said returns, appellant did not really have the intention to comply therewith, resulting in delay in the administration of justice and the consequent inability of the court to enforce its inherent right of self-preservation and power to compel obedience to its commands (Commissioner of Immigration vs . Cloribel, L-24139, December 31, 1967, 20 SCRA 1241). For acting thus, the defendant also misled the court by pretending that he was willing to produce the said returns although he was really set against it. Such discourteous act is an affront against the dignity of the court constituting contempt under Section 3, Rule 71 of the Rules of Court. SO ORDERED. Footnotes * Vol. 19 C.A.R. (2s), p..