Sub Poena Jurisprudence

39 Phil. 60

G.R. No. 13463, November 09, 1918

H. C. LIEBENOW, PLAINTIFF AND APPELLANT, VS. THE PHILIPPINE

VEGETABLE OIL COMPANY, DEFENDANT AND APPELLEE.

DECISION

STREET, J.:

This action was instituted by the plaintiff, H. C. Liebenow, on May 11, 1917, in the Court of First
Instance of the city of Manila against the defendant, the Philippine Vegetable Oil Company, a
corporation engaged in the manufacture of coconut oil in the city of Manila. The purpose of the
proceeding is to recover a sum of money to which the plaintiff considers himself entitled by way of
a bonus in addition to the salary earned by him while in the employment of the defendant company
as superintendent of its factory in the district of Nagtahan, city of Manila. At the hearing in the
Court of First Instance judgment was entered against the plaintiff, absolving the defendant from the
complaint, and the plaintiff has appealed.

The contract under which the plaintiff rendered the service to which reference has been made is
expressed in a letter of March 17, 1914, written by the president of the Philippine Vegetable Oil
Company to Liebenow as follows:

"We hereby confirm conversation had on yesterday by our Mr. Vorster and yourself to the effect
that this company engages your services as superintendent of its factory at Nagtahan for the period
of one year from April 1st, 1914, at a monthly compensation of P500 (five hundred pesos) and
living quarters and such further amount in the way of bonus as the board of directors may see fit to
grant you."

In conformity with this agreement, the plaintiff entered upon the discharge of his duties as
superintendent of the factory aforesaid on April 1, 1914, and continued to render service in this
capacity not only for the- period of one year specified in the contract, but for an additional period of
four months, or until August 1, 1916, when his services terminated. At some time during the course
of this employment, the exact date of which does not appear, the monthly salary of P500 was raised
to P750, but the contract was not otherwise changed. After the employment ceased the defendant
company continued to deliver to the plaintiff each month a check for P750, the equivalent of the
salary he had been receiving. These payments were continued until the total sum of P4,500 had been
thus paid.
The plaintiff alleges in his complaint that by reason of his skill and ability the defendant's plant was
made much more productive and its profits thereby enormously increased. It is not denied that the
service rendered was satisfactory to the company, and the court found that during the time the
plaintiff was employed as superintendent the output of the plant had increased and the cost of
operation had diminished, with consequent profit to the defendant company.

It is the plaintiffs contention that the stipulation contained in the letter of March 17, 1914, to the
effect that the plaintiff should receive such further amount in the way of bonus, over and above
salary, as the board of directors might see fit to grant has not been satisfied. The P4,500, which he
received in the form of a monthly check of P750 for six successive months after the termination of
his services, seems to be considered by the plaintiff purely in the light of a free gift, and it is insisted
that this money was not paid to him in satisfaction, in whole or in part, of the stipulated bonus. We
cannot concur in this suggestion. It is true that the directors did not by anticipation declare that
these payments should be considered in the light of a "bonus;" and a resolution to this effect was
not adopted by them until after the trial in the Court of First Instance had commenced. This
circumstance we consider unimportant. The money thus paid was in addition to salary; and it came
from the same source and was paid by the same authority as any bonus that might have been
awarded to him. The fact that the money was not so labelled is immaterial.

The plaintiff, however, contends that he is entitled to a bonus to be fixed by the court as a
reasonable participation in the increased profits of the factory under his care, taking into
consideration his technical skill and the greater output resulting therefrom. He believes that the
increased profits of the enterprise due directly to his efficiency amounted to at least P100,000; and
he suggests, as the lowest proper minimum that he should be awarded an amount sufficient to raise
his salary for the whole period to the sum of P12,000 per annum, the amount supposedly paid to his
predecessor. This last suggestion is based on the circumstance that, upon a certain occasion, he
talked to the company's manager about the amount of the bonus which he would expect to receive
and informed the manager that he would not be satisfied with less than his predecessor had been
accustomed to receive. The manager, so the plaintiff says, expressed his conformity with this idea.

The solution of the case makes it necessary to consider the legal effect of the stipulation inserted in
the contract in question to the effect that the plaintiff should be entitled to such further amount in
the way of bonus as the board of directors might see fit to grant.

We see no reason to doubt that a promise of this character creates a legal obligation binding upon
the promisor, although in its actual results it may not infrequently prove to be illusory. Such a
promise is not, in our opinion, nugatory, under article 1115 of the Civil Code, as embodying a
condition dependent exclusively upon the will of the obligor. Nor can it be held invalid under article
1256 of the same Code, which declares that the validity and performance of a contract cannot be left
to the will of one of the contracting parties. The uncertainty of the amount to be paid by way of
bonus is also no obstacle to the validity of the contract (article 1273, Civil Code); since the contract
itself specifies the manner in which the amount payable is to be determined, namely, by the exercise
of the judgment and discretion of the employer.
The validity of the promise being conceded, the question which arises next is: What is necessary to
satisfy it? Upon this point it must be obvious that the obligation can only be satisfied when
something has been paid as a bonus by or with the approval of the board of directors. In the case
before us the promise to pay a bonus is absolute and unconditional. The payment is not conditioned
upon satisfactory service, nor upon the duration of the service, nor upon the profits which may
accrue to the employer from the efficiency of the employee. All these elements might and naturally
would operate upon the minds and discretion of the directors in fixing the amount of the bonus, but
they are wholly unconnected with the legal right of the plaintiff to receive something as a bonus.

The amount of the bonus, it will be observed, is left by the contract to the discretion of the board of
directors. Now, when that discretion has once been exercised and a bonus has been paid by the
directors or by the officers of the company, with the approval, express or implied, of the directors,
can that discretion be judicially reviewed? We are of the opinion that it cannnot. The parties
stipulated that the discretion to be exercised was the discretion of the directors; and there would be
a very manifest infringement of the contract, if we were to substitute in place of the discretion of the
directors the discretion of any other person or body whomsoever.

Practical considerations point to the same conclusion. An employer, in determining what amount to
award as a bonus, naturally and properly considers many things a court could not well take into
account, as for instance, the personal peculiarities which make one man more acceptable or more
serviceable in the employment than another. In the complex enterprises of modern industry,
especially, would it be difficult for a court to undertake to say just what any particular employee
might be entitled to. The best course, we think, in such a case as this, is to recognize that the
contracting parties have placed the discretion to determine the amount of the bonus in the hands of
the employer, and to hold them bound by that.

But it is suggested that where a contract of service provides for a salary in a fixed sum and an
additional sum to be paid by way of bonus, the whole contract is to be taken together, and it is to be
`considered as having about the same effect as if the parties, recognizing the inadequacy of
the amount fixed as salary, had agreed that a further bonus should be paid sufficient to raise the
amount to what should be considered adequate upon the basis of a quantum meruit. A more
reasonable construction—and in our opinion one which approximates more closely to the evident
intention of the parties—is to hold that the fixed salary was adjusted with a view to compensate the
employee so far as those elements are concerned which could properly be taken into consideration
in fixing a quantum meruit and that the bonus was intended to be a mere gratuity the amount of which
should be determined exclusively in the discretion of the employer.

If, as supposed, the contracting parties are really bound by the stipulation which leaves the
determination of the amount of the bonus to the employer, two consequences necessarily follow.
The first is that where something or other is paid by way of a bonus upon such a contract, even
though only a nominal amount, the obligation is satisfied. The other is that, if nothing at all is paid,
the employee can recover in a legal action only nominal damages. Such a contract contains nothing
which could serve as the basis of a title to special damages and affords no measure by which the
amount of such damages could be ascertained.

It therefore becomes a matter of little or no practical importance whether the sum of P4,500, which
was paid to the plaintiff after he quit work for the defendant, was paid as a bonus or not; for even if
it were not so paid, the plaintiff could in this action recover no more than mere nominal damages.

A question which we consider of much importance is presented in an assignment of error directed

to the action of the trial court with reference to a subpoena duces tecum which the plaintiff caused to
be issued a few days prior to th£ hearing in the Court of First Instance. Said subpoena was directed
to the managing director of the Philippine Vegetable Oil Company and commanded him to produce
in court upon the day set for the hearing of the cause the following documents, records, and papers
relative to the company's business, to wit:

"(1) All Daily Mill reports showing daily output of oil and cake and consumption of copra of the P.
V. O. Co., from April 1, 1913, to March 31, 1915, both inclusive.

"(2) All shipping reports of oil of said company for the same period.

"(3) All records showing cost of all shipments of oil made by said company, both in bulk and barrels
for the same period.

"(4) All records of all demurrage charges on said shipments for the same period.

"(5) All records of receipts, expenses and profits from operation of the company's mill and all
operating charges and costs of said mill for the same period.

"(6) All records and vouchers showing the salary and all other sums paid to Mr. Thompson, the
company's mill superintendent, or mill manager, during the entire period of his employment as well
as all sums paid to him thereafter."

When the case was called for hearing the attorney for the defendant moved the court to vacate this
subpoena on the ground that the plaintiff was not entitled to require the production of the
documents called for. The court reserved the matter for later determination and in the end ruled that
the evidence which the plaintiff sought to elicit was irrelevant. The witness was therefore excused
from producing the papers mentioned in the subpoena duces tecum and the plaintiff duly excepted.

According to the plaintiff's theory of the case, he was entitled to a bonus the amount of which
should be determined by the court with a view to the usefulness and efficiency which he had
exhibited in the course of his employment; and he insists that the profits earned by the defendant
during the time he was employed as superintendent of the Nagtahan factory are relevant in
determining the amount to be thus awarded. For reasons already stated, this contention is untenable;
and we are of the opinion that the court committed no error in refusing to compel the production of
the documents and records in question. The right to the bonus was wholly independent of the
profits, and the amount of the profits could not properly be taken into consideration by the court at
all.

The subpoena duces tecum is, in all respects, like the ordinary subpoena ad testificandum, with the
exception that it concludes with an injunction that the witness shall bring with him and produce at
the examination the books, documents, or things described in the subpoena. It is issued in the same
manner as the ordinary subpoena, and is procurable from the clerk as of course without application
to the court. Section 402 of the Code of Civil Procedure says that the subpoena duces tecum may be
used to compel the witness to bring any book, document, or other thing under his control, which he
is bound by law to produce in evidence. The words "which he is bound by law to produce in
evidence" indicate a limitation upon the exigency of the writ; and it is evident that there is this
difference between the ordinary subpoena to testify and the subpoena duces tecum, namely, that while
the person to whom the subpoena to testify is directed is bound absolutely and without qualification
to appear in response to the subpoena, the person to whom the subpoena duces tecum is directed is
bound only in so far as he is required by law to produce the documents in evidence.

It results therefore that, if the case is such as to make it doubtful whether the documents to be
produced are such that the witness is bound by law to produce them, the witness is entitled to have
the court pass upon this question; and where a subpoena duces tecum is improperly issued to enforce
the production of documents which the witness is not bound to produce, a proper remedy is by
motion to vacate or set aside the subpoena. Such was the procedure adopted in this case.

The power to require the production of books, documents, and papers by means of the subpoena
duces tecum is one which is undoubtedly capable of abuse and one which, if improperly used, causes
great annoyance, not to say, expense to the person against whom it is directed. If the use of the
subpoena duces tecum were in practice confined to the office of compelling the production of
documents and papers which are directly related to the issues in a case, occasions for complaint
would be infrequent. However, in modern business it is sometimes necessary for litigants to have
access to voluminous materials. Journals, ledgers, cashbooks, invoice books, and account books
pertaining to the business of large enterprises may have to be examined. To enforce the production
of these great piles of material unconditionally in court would in many cases operate with
unreasonable hardship on the party against whom the subpoena is issued and not infrequently the
step would be barren of results to the person seeking to examine them. Such procedure is not to be
encouraged; and it is the duty of the court, in such a situation, to control the process so as to make it
conformable to law and justice. (Subsection 7, section 11, Code of Civil Procedure.) The motfon to
vacate or set aside the subpoena gives the court the requisite opportunity to examine the issues
raised by the pleadings in the cause and to consider not only the relevancy of the evidence which is
to be elicited but also to consider whether an order for the production of the document would
constitute an unlawful invasion of privacy.

In determining whether the production of the documents described in a subpoena duces tecum should
be enforced by the court, it is proper to consider, first, whether the subpoena calls for the
production of specific documents, or rather for specific proof, and secondly, whether that proof is
prima facie sufficiently relevant to justify enforcing its production. A general inquisitorial examination
of all the books, papers, and documents of an adversary, conducted with a view to ascertain whether
something of value may not show up, will not be enforced. (Street, Federal Equity Practice, vol. 2,
sec. 1844.) No court, it is needless to say, would punish a witness for contempt in refusing to obey a
subpoena duces tecum the issuance of which has been procured with such end in view.

We observe in conclusion that where a party has any legitimate reason for inspecting the voluminous
documents of an adversary, it is usually more to the purpose to ask the court, before the hearing, for
an order requiring such adversary to submit his books and records for examination under such
reasonable condition as the court may specify. If necessary, an expert can then be set to work; and
the result of his examination can be submitted to the court in a form at once intelligible and helpful.
In the case before us if the documents called for had been produced in the court room, both the
court and the attorneys alike would have been helpless to discover from the unsystematized mass
the particular facts intended to be proved by them; and in the end it would have been necessary to
adjourn the hearing and call in an accountant to make the needed examination. While we do not
wish to be understood as attempting to lay down any hard and fast rule upon such a matter, we
merely suggest that it is an abuse of legal process to use the subpoena duces tecum to produce in court
material which cannot be properly utilized by the court in determining the issues of the case; and in
cases of this kind the litigant should be required to resort to some other procedure in order properly
to place before the court the evidence upon which the case should be decided.

The judgment is affirmed, with costs. So ordered.

Torres, Johnson, Malcolm, Avanceña, and Fisher, JJ., concur.

59 Phil. 244

G.R. No. 38375, December 22, 1933

JOSE SY JONG CHUY, MANAGER OF HOA HIN & CO., INC., PLAINTIFF AND
APPELLEE, VS. PABLO C. REYES, SPECIAL DEPUTY OF THE COLLECTOR OF
INTERNAL REVENUE, DEFENDANT AND APPELLANT.

DECISION

MALCOLM, J.:

This case was submitted for the trial court's decision on the legal issues arising from the following:

"STIPULATION OF FACTS

"I
"The plaintiff is the manager of Hoa Hin & Co., Inc., a large shipbuilding concern with offices in
Cebu, which corporation had average annual gross receipts of P900,000 for the years 1925, 1926,
1927, and 1928, and the defendant is a duly appointed special deputy of the Collector of Internal
Revenue especially assigned to income tax investigation. At all times mentioned in this case, and for
all purposes of this case, both the plaintiff and the defendant have acted, and do act, in their
respective capacities of manager of Hoa Hin & Co., Inc., and special deputy of the Collector of
Internal Revenue.

"II

"Prior to July 14, 1930, the defendant, at various times requested the plaintiff to bring the Chinese
books of account of Hoa Hin & Co., Inc., for the years 1925, 1926, 1927, and 1928 to the office of
the defendant at the provincial building of Cebu, Cebu, for income tax and other Internal Revenue
Tax investigation, but the plaintiff refused to do so, and advised the defendant that the said Chinese
books of account were at his disposition in the offices of Hoa Hin & Co., Inc., where a suitable
room and all necessary conveniences would be given the defendant for making any tax inspection or
tax investigation.

"III

"Consequently, on July 14, 1930, the defendant issued the attached subpoena duces tecum, marked
Exhibit A directed to the plaintiff commanding him to appear at the Internal Revenue Office in the
provincial building of Cebu, at 9 a. m., on July 16, 1930, bringing with him 'all the commercial
BOOKS OR OTHER PAPERS OF HOA HIN & CO., INC., ON WHICH ARE RECORDED
YOUR TRANSACTIONS SHOWING INCOME AND EXPENSES FOR THE YEARS 1925,
1926, 1927, AND 1928, INCLUSIVE which said subpoena duces tecum was received by the plaintiff on
July 14, 1930, and is in words and figures as follows:

" 'UNITED STATES OF AMERICA

" 'PHILIPPINE ISLANDS

" 'BUREAU OF INTERNAL REVENUE

" 'SUBPOENA DUCES TECUM
" 'CEBU, CEBU, P. I.

" ' To Mr. JOSE SY HUNG

CHUY
" 'Manager of Hoa Hin & Co., Inc.
"Morga, Cebu

" 'GREETING:
" 'By authority vested in me under the provisions of sections 580 and 1436 of the Administrative
Code, you are hereby commanded to appear before me at Bureau of Internal Revenue, provincial
building, Cebu, Cebu, Philippine Islands, on the 16th day of July, 1930, at 9 a. m., and bring with
you the following: all the commercial books or any OTHER PAPERS OF HOA HIN & CO., INC.,
ON WHICH ARE RECORDED YOUR TRANSACTIONS SHOWING INCOME AND
EXPENSES FOR THE YEARS 1925, 1926, 1927, AND 1928 INCLUSIVE, it being necessary to
use them in an investigation now pending under the Income Tax and Internal Revenue Laws.
Hereof FAIL NOT UNDER PENALTY OF THE LAW. This 14th day of July, 1930.

"(Sgd.) 'PABLO C. REYES

"''Special Deputy Authorized to administer
oaths and to take testimony under the provisions
of section 1436, of the Administrative Code

" 'I certify that I have this........day of............................, 192 , been served with the original of this
subpoena duces tecum.

"(Sgd.) 'JOSE SY JONG CHUY'

"IV

"The defendant refused to comply with this subpoena duces tecum and reiterated that these Chinese
books of account could only be legally inspected and investigated at the offices of Hoa Hin & Co.,
Inc., in the municipality of Cebu, Province of Cebu.

"V

"Subsequently, on September 8, 1930, to make the issue more definite, the parties agreed to an
amendment to the complaint by which the defendant agreed that the bringing to the offices of the
Internal Revenue in the provincial building at Cebu, of the following Chinese books of account of
Hoa Hin & Co., Inc., would be a sufficient compliance with the afore-mentioned subpoena duces tecum
issued on July 14, 1930, which Chinese books, fifty-three (53) in number, measure per book, ten (10)
inches by nine and one-half (9.5) inches by two (2) inches of two hundred (200) pages each, to wit:

1925 1926 1927 1928

Journal 3 3 3 3
Ledger 8 8 8 8
Purchase 1 1 1 2
Sales 1 1 1 1
_____ _____ _____ _____
13 13 13 14
__________________________________________
 Total 53

"VI

"As the plaintiff still insisted on his original contention that the inspection and investigation of the
books of account of Hoa Hin & Co., Inc., must be made in the offices of Hoa Hin & Co., Inc., the
defendant, threatened to bring contempt proceedings against the plaintiff with the result that this
action was filed.

"VII

"The defendant does not specify in the subpoena duces tecum any specific document required or set
forth any specific indication of any fact to be verified, but asks for the general production of the
fifty-three (53) Chinese books of account of Hoa Hin & Co., Inc., for the years 1925, 1926, 1927,
and 1928, to use them in an investigation now pending under the Income Tax and Internal Revenue
Laws.

"VIII

"The said fifty-three (53) Chinese books of account of Hoa Hin & Co., Inc., form the principal
accounts of Hoa Hin & Co., Inc., for the years 1925, 1926, 1927, and 1928, and are at times needed
for checking the transactions of the company for the years mentioned.

"IX

"That the defendant has informed the plaintiff that at any time while the said fifty-three (53) Chinese
books of account are being examined at the office of the Bureau of Internal Revenue, Cebu, Cebu,
the said plaintiff, or any of his representatives, may consult the same during office hours."

Judgment was rendered by Judge Borromeo Veloso in favor of the plaintiff, and from the same the
defendant has appealed to this court and assigns as error that "the trial court erred in declaring that
the issuance of subpoena duces tecum was improperly made and not in accordance with law." In this
connection it is conceded that the defendant, as a special deputy of the Collector of Internal
Revenue, is authorized to administer oaths, to take testimony in any official matter or investigation
conducted by him within the jurisdiction of the Bureau of Internal Revenue, and to issue a subpoena
duces tecum. The question centers on whether or not the subpoena duces tecum Exhibit A, served on the
plaintiff by the special deputy, has been properly issued in accordance with the laws of the
Philippine Islands.

As before indicated, the parties have agreed upon the facts. It is accordingly unavailing to spend any
time in a consideration of the pleadings and in suppositions not supported by any of the stipulated
facts. It is only appropriate to direct attention to a few points evidenced by the stipulation. Thus it is
shown that Hoa Hin & Co., Inc., the plaintiff, is a corporation, a shipbuilding concern, which does
an annual gross business of P900,000 although the same principles which govern the case of this
comparatively large firm would likewise govern the case of a small merchant. When the manager of
the plaintiff corporation was requested by the defendant to bring the Chinese books of account of
the corporation for the years 1925, 1926, 1927, and 1928, to the office of the defendant for an
income tax and other internal revenue tax investigation, the plaintiff refused to do so, but instead
advised the defendant that the said Chinese books of account were at his disposition in the offices
of the corporation, where a suitable room and all necessary conveniences would be given the
defendant for making any tax inspection or investigation. The subpoena duces tecum Exhibit A, as
pointed out by the trial judge, is an ordinary mimeographed form on cheap paper without official
insignia. The Chinese books mentioned in the subpoena were fifty-three in number of two hundred
pages each. It is admitted that the defendant did "not specify in the subpoena duces tecum any specific
document required or set forth any specific indication of any fact to be verified", but asked "for the
general production of the fifty-three (53) Chinese books of account of Hoa Hin & Co., Inc., for the
years 1925, 1926, 1927, and 1928, to use them in an investigation now pending under the Income
Tax and Internal Revenue Laws." It is further admitted that "the said fifty-three (53) Chinese books
of account of Hoa Hin & Co., Inc., form the principal accounts of Hoa Hin & Co., Inc., for the
years 1925, 1926, 1927, and 1928, and are at times needed for checking the transactions of the
company for the years mentioned."

Act No. 3292 provides that all the books of account of corporations of the character of the plaintiff
shall be subject to inspection and examination at any time by internal revenue officers. It is
accordingly self-evident that the defendant had the right to go into the offices of the plaintiff and
there conduct such an investigation of the business done by the plaintiff as seemed desirable, and
that the consent given to such examination by the plaintiff did not add anything to the legal powers
conferred by law upon the defendant.

Further, as provided in section 1436 of the Administrative Code:

"The Collector of Internal Revenue, the Deputy Collector of Internal Revenue, special deputies of
the Collector, internal-revenue agents, provincial treasurers and their deputies, and any other
employee of the Bureau thereunto especially deputed by the Collector shall have power to
administer oaths and to take testimony in any official matter or investigation conducted by them
touching any matter within the jurisdiction of the Bureau." The extent of such authority is delimited
by section 580 of the same Code, wherein it is provided:

"When authority to take testimony or evidence is conferred upon an administrative officer or upon
any nonjudicial person, committee, or other body, such authority shall be understood to
comprehend the right to administer oaths and summon witnesses and shall include authority to
require the production of documents under a subpoena duces tecum or otherwise, subject in all respects
to the same restrictions and qualifications as apply in judicial proceedings of a similar character,"
The above provisions contained in the Administrative Code accordingly expressly empowered the
defendant to issue a subpoena duces tecum, the act being subject in all respects to the same restrictions
and qualifications as apply in judicial proceedings of a similar character. The Code of Civil
Procedure is, therefore, made applicable, which brings into view a portion of codal section 402
recognizing a writ called a subpoena duces tecum, requiring a witness "to bring with him any books,
documents, or other things under his control, which he is bound by law to produce in evidence."

The use of the subpoena duces tecum by the courts was considered in the case of Liebenow vs.
Philippine Vegetable Oil Co. ([1918], 39 Phil., 60), and observations were there made intended to
guide the litigant who desired to avail himself of the writ. Speaking of section 402 of the Code of
Civil Procedure, it was said that, "The words 'which he is bound by law to produce in evidence'
indicate a limitation upon the exigency of the writ; and it is evident that there is this difference
between the ordinary subpoena to testify and the subpoena duces tecum, namely, that while the person
to whom the subpoena to testify is directed is bound absolutely and without qualification to appear
in response to the subpoena, the person to whom the subpoena duces tecum is directed is bound only in
so far as he is required by law to produce the documents in evidence." It is the consensus of opinion
here that the decision in Liebenow vs. Philippine Vegetable Oil Co., supra, is in point, and that the
trial judge was right in making use of the authority to reach the conclusion that the subpoena duces
tecum Exhibit A was improperly issued.

Section 402 of the Philippine Code of Civil Procedure found its origin in the statutes of California,
and accordingly it is wise to look to the decisions of California for assistance in solving the problem
before us. The doctrines announced by the California courts are summarized in the following
language: "In order to entitle a party to the issuance of such a subpoena, it must appear, by clear and
unequivocal proof, that the book or document sought to be produced contains evidence relevant
and material to the issue before the court, and that the precise book, paper or document containing
such evidence has been so designated or described that it may be identified. It follows that a witness
may not be punished for disobedience of a subpoena which requires him to produce irrelevant
documents, or a subpoena which is too broad in its scope." (27 Cal. Jur., pp. 15, 16.)

The United States internal revenue laws are not as helpful as they might be because of frequent
amendment and because phrased in a different and more extensive manner than are the Philippine
laws on the subject. (26 U. S. Code Annotated, pp. 59, 60.) Nevertheless the scattered decisions
construing the internal revenue laws of the United States furnish some information. The Federal
courts have taken the attitude that since the American law confers upon the collectors of internal
revenue an extraordinary inquisitorial power, it ought to be most strictly construed. In other words,
the power should be limited to books and papers concerning the subject of investigation which
should be mentioned with reasonable certainty. (33 C. J., pp. 356, 357; In re Brown [1866], Fed. Cas.
No. 1,977.)

With reference to the cases before-cited and those which will be cited in a moment, it should be
recalled that the Philippine law makes the production of documents under a subpoena duces tecum
subject in all respects to the same restrictions and qualifications as apply in judicial proceedings of a
similar character. Therefore, it is interesting to note that even where the state or federal government
conducts investigations of corporations pursuant to grand jury process for the purpose of
establishing a crime or under an act like that creating the Federal Trade Commission, the United
States Supreme Court has nevertheless set a limit to the use of the power and has done so in a most
emphatic manner. We propose to refer to two decisions of the United States Supreme Court.

Hale vs. Henkel ([1906], 201 U. S., 43), is a leading case on the subject of search and seizure. The
subpoena duces tecum issued in this case commanded the plaintiff to appear before the grand jury and to
bring with him:

"1. All understandings, agreements, arrangements, or contracts, whether evidenced by

correspondence, memoranda, formal agreements, or other writings, between MacAndrews & Forbes
Company and six other firms and corporations named, from the date of the organization of the said
MacAndrews & Forbes Company.

"2. All correspondence by letter or telegram between MacAndrews & Forbes Company and six
other firms and corporations.

"3. All reports made or accounts rendered by these six companies or corporations to the principal
company.

"4. Any agreements or contracts or arrangements, however evidenced, between MacAndrews &
Forbes Company and the Amsterdam Supply Company or the American Tobacco Company or the
Continental Company or the Consolidated Tobacco Company.

"5. All letters received by the MacAndrews & Forbes Company since the date of its organization
from thirteen other companies named, located in different parts of the United States, and also
copies of all correspondence with such companies." The court, while conceding that the search and
seizure clause of the Fourth Amendment to the United States Constitution was not intended to
interfere with the power of the courts to compel the production upon a trial of documentary
evidence through a subpoena duces tecum, nevertheless found the particular subpoena duces tecum in this
case to be too broad in its requisition. The court, speaking through Justice Brown, in part said:

"We are also of opinion that an order for the production of books and papers may constitute an
unreasonable search and seizure within the Fourth Amendment. While a search ordinarily implies a
quest by an officer of the law, and a seizure contemplates a forcible dispossession of the owner, still,
as was held in the Boyd case, the substance of the offense is the compulsory production of private
papers, whether under a search warrant or a subpoena duces tecum, against which the person, be he
individual or corporation, is entitled to protection. Applying the test of reasonableness to the
present case, we think the subpoena duces tecum is far too sweeping in its terms to be regarded as
reasonable. It does not require the production of a single contract, or of contracts with a particular
corporation, or a limited number of documents, but all understandings, contracts, or
correspondence between the MacAndrews & Forbes Company, and no less than six different
companies, as well as all reports made and accounts rendered by such companies from the date of
the organization of the MacAndrews & Forbes Company, as well as all letters received by that
company since its organization from more than a dozen different companies, situated in seven
different States in the Union.

"If the writ had required the production of all the books, papers, and documents found in the office
of the MacAndrews & Forbes Company, it would scarcely be more universal in its operation or
more completely put a stop to the business of that company. Indeed, it is difficult to say how its
business could be carried on after it had been denuded of this mass of material, which is not shown
to be necessary in the prosecution of this case, and is clearly in violation of the general principle of
law with regard to the particularity required in the description of documents necessary to a search
warrant or subpoena. Doubtless many, if not all, of these documents may ultimately be required, but
some necessity should be shown, either from an examination of the witnesses orally, or from the
known transactions of these companies with the other companies implicated, or some evidence of
their materiality produced, to justify an order for the production of such a mass of papers. A general
subpoena of this description is equally indefensible as a search warrant would be if couched in
similar terms."

In the more recent case of Federal Trade Commission vs. American Tobacco Co. ([1924], 264 U. S.,
298), it appeared that the law authorized the Federal Trade Commission to investigate and report
facts as to alleged violations of the Anti-Trust Acts, and for this purpose granted the commission
access to any documentary evidence of any corporation being investigated. The purpose of the
particular petitions for mandamus sued out by the Federal Trade Commission was to require the
production of records, contracts, memoranda, and correspondence for inspection and making
copies. The United States Supreme Court denied the Federal Trade Commission this right, Justice
Holmes saying:

"* * * Anyone who respects the spirit as well as the letter of the Fourth Amendment would be loath
to believe that Congress intended to authorize one of its subordinate agencies to sweep all our
traditions into the fire (Interstate Commerce Commission vs. Brimson, 154 U. S., 447, 479), and to
direct fishing expeditions into private papers on the possibility that they may disclose evidence of
crime. We do not discuss the question whether it could do so if it tried, as nothing short of the most
explicit language would induce us to attribute to Congress that intent. The interruption of business,
the possible revelation of trade secrets, and the expense that compliance with the commission's
wholesale demand would cause, are the least considerations. It is contrary to the first principles of
justice to allow a search through all the respondents' records, relevant or irrelevant, in the hope that
something will turn up. * * *

"The right of access given by the statute is to documentary evidence,—not to all documents, but to
such documents as are evidence. The analogies of the law do not allow the party wanting evidence
to call for all documents in order to see if they do not contain it. Some ground must be shown for
supposing that the documents called for do contain it. Formerly in equity the ground must be found
in admissions in the answer, (Wigram, Discovery [2d ed.], sec. 293.) We assume that the rule to be
applied here is more liberal, but still a ground must be laid, and the ground and the demand must be
reasonable. (Essgee Co. vs. United States, 262 U. S., 151, 156, 157.) A general subpoena in the form
of these petitions would be bad. Some evidence of the materiality of the papers demanded must be
produced. (Hale vs. Henkel, 201 U. S., 43, 77.)

"* * * We cannot attribute to Congress an intent to defy the Fourth Amendment, or even to come
so near to doing so as to raise a serious question of constitutional law. * * *"

The foregoing discussion will disclose that there are two factors involved in the correct solution of
the question before us. The first fact which must be made to appear by clear and unequivocal proof,
as a condition precedent to the right of a court, and, by analogy, an internal revenue officer, to
require a person to deliver up for examination by the court or an internal revenue officer his private
books and papers, is their relevancy; and the second fact which must be established in the same
manner is the specification of documents and an indication of them with as much precision as is fair
and feasible (Liebenow vs. Philippine Vegetable Oil Co., supra; Kullman, Salz & Co. vs. Superior
Court [1911], 114 Pac., 589).

Speaking to the fact of relevancy, there is absolutely no showing of the nature of any official
investigation which is being conducted by the Bureau of Internal Revenue, and this is a prerequisite
to the use of the power granted by section 436 of the Administrative Code. Moreover, when the
production under a subpoena duces tecum is contested on the ground of irrelevancy, it is for the movant
or the internal revenue officer to show facts sufficient to enable the court to determine whether the
desired documents are material to the issues. And here, all that we have to justify relevancy is the
typewritten part of a mimeographed form reading: "it being necessary to use them (referring to the
books) in an investigation now pending under the Income Tax and Internal Revenue Laws." This is
insufficient.

But it is in the second respect that the subpoena is most fatally defective. It will be recalled that it
required the production of "all the commercial books or any other papers on which are recorded
your transactions showing income and expenses for the years 1925, 1926, 1927, 1928 inclusive", that
these books numbered fifty-three in all, and that they are needed in the business of the corporation.
In the parlance of equity, the subpoena before us savored of a fishing bill, and such bills are to be
condemned. That this is so is shown by the phraseology of the subpoena which is a general
command to produce all the books of account for four years. This, it seems to us, made the
subpoena unreasonably broad in scope. The internal revenue officer had it within his power to
examine any or all of the books of the corporation in the offices of the corporation and then having
ascertained what particular books were necessary for an official investigation had it likewise within
his power to issue a subpoena duces tecum sufficiently explicit to be understood and sufficiently
reasonable not to interfere with the ordinary course of business. But this method was not followed.
Obviously, if the special deputy could in 1930 call for the production of the books of the
corporation for 1925, 1926, 1927, and 1928, the officer could have called for the production of the
books for the year just previous, or 1929, and for the books of the current year, and if this could be
done, the intrusion into private affairs with disastrous paralyzation of business can easily be
visualized.
Generally speaking, there are two readily understandable points of view on the question at issue. The
first is the viewpoint of the tax collecting officials. Taxation is a necessity as all must agree. It is for
the officials who have to enforce the revenue laws to see to it that there is no evasion of those laws
and that there is an equal distribution of the tax burden. To accomplish their duty it will often be
incumbent upon the internal revenue officers, for the efficient administration of the service, to
inspect the books of merchants and even require the production of those books in the offices of the
inspecting officials. The right of a citizen to his property becomes subservient to the public welfare.
All this we are the first to concede. In proper cases, the officers of the Bureau of Internal Revenue
should receive the support of the courts when these officers attempt to perform in a conscientious
and lawful manner the duties imposed upon them by law. The trouble is that the particular subpoena
under scrutiny neither shows its relevancy nor specifies with the particularity required by law the
books which are to be produced.

The second viewpoint is not that of the government on which is imposed the duty to collect taxes,
but is the viewpoint of the merchant. A citizen goes into business, and in so doing provides himself
with the necessary books of account. He cannot have government officials on a mere whim or a
mere suspicion taking his books from his offices to the offices of the government for inspection. To
permit that would be to place a weapon in the hands of a miscellaneous number of government
employees some of whom might use it properly and others of whom might use it improperly. With
an understanding of the obligations of the government to protect the citizen, the constitution and
the organic law have done so by throwing around him a wall which makes his home and his private
papers his castle. It should be our constant purpose to keep a subpoena duces tecum from being of such
a broad and sweeping character as to clash with the constitutional prohibition against unreasonable
searches and seizures.

Answering the question at issue, we do so without vacillation by holding that the subpoena duces tecum
was not properly issued in accordance with law because the showing of relevancy was not sufficient
to justify enforcing the production of the Chinese books; because the subpoena duces tecum failed to
specify the particular books desired, and because a ruling should be avoided which in any manner
appears to sanction an unreasonable search and seizure. In the absence of a showing of materiality,
and in the absence of all particularity in specifying what is wanted by a subpoena duces tecum, the refusal
of a merchant to obey a subpoena, commanding him to produce his commercial books, will be
sustained. The courts function to protect the individual citizen of whatever class or nationality
against an unjust inquisition of his books and papers. As a result, we fully agree with the trial judge,
and accordingly must overrule the assignment of error made by the Government. Judgment
affirmed, without special pronouncement as to costs in this instance.

Avanceña, C. J., Street, Villa-Real, Abad Santos, Hull, and Diaz, JJ., concur.
DISSENTING

IMPERIAL, J.:

To my mind the subpoena duces tecum objected to by plaintiff corporation is not Exhibit A but its
amendment restricting the scope of the subpoena to the production of 53 books of account, to wit:

1925 1926 1927 1928

Journal 3 3 3 3
Ledger 8 8 8 8
Purchase 1 1 1 2
Sales 1 1 1 1
_____ _____ _____ _____
13 13 13 14
__________________________________________
Total 53

(Paragraphs V of the stipulation of facts and 7-A and 9 of the amended complaint.)

So it is a misapprehension to say that defendant, as Special Deputy Collector of Internal Revenue,

called for the production in his office of "all the commercial books or any other papers of Hoa Hin
& Co., Inc., on which are recorded your transactions showing income and expenses for the years
1925, 1926, 1927 and 1928 inclusive."

The defendant was assigned by the Collector of Internal Revenue as special deputy for the purpose
of verifying the income tax returns filed by the plaintiff corporation. His power to conduct said
verification and investigation is based on the provisions of sections 580 and 1436 of the
Administrative Code which read as follows:

"Sec. 580. Powers incidental to taking of testimony.— When authority to take testimony or evidence is
conferred upon an administrative officer or upon any nonjudicial person, committee, or other body,
such authority shall be understood to comprehend the right to administer oaths and summon
witnesses and shall include authority to require the production of documents under a subpoena duces
tecum or otherwise, subject in all respects to the same restrictions and qualifications as apply in
judicial proceedings of a similar character."

"SEC. 1436. Authority of officers to administer oaths and take testimony.—The Collector of Internal
Revenue, the Deputy Collector of Internal Revenue, special deputies of the Collector, internal-
revenue agents, provincial treasurers and their deputies, and any other employee of the Bureau
thereunto especially deputed by the Collector shall have power to administer oaths and to take
testimony in any official matter or investigation conducted by them touching any matter within the
jurisdiction of the Bureau."

As the stipulation of facts and the amended complaint show, plaintiff did not base its objection on
the lack of relevancy and certainty of the subpoena. Materiality and sufficiency in the description of
the books of account above quoted were impliedly admitted by plaintiff. In fact both elements are
covered by the pleadings since it is admitted that the books were to be used to verify the income tax
returns filed by the plaintiff for the four years above stated and since the description of said books
as given is sufficiently specific as to enable the officers of the corporation to identify all and each of
them.

From the outset plaintiff's contention was that the law does not compel it to produce the required
books in the defendant's office and that this officer should go to its premises for that purpose where
he could examine all of said books. This contention is untenable. Sections 580 and 1436 of the
Administrative Code, above-cited, expressly empower the Collector of Internal Revenue and his
deputies to make such inquiries and to issue subpoena duces tecum for the production of books and
documents material and necessary to any investigation.

"While the rights of a corporation are to be protected from unreasonable searches and seizures of
their books and papers, still the right to inquire into the condition of a corporation exists, as does
the right, by subpoena duces tecum, to secure its books and papers, and, if necessary for the purpose of
enforcing a law, there is the right to compel the production of all books, letters, and records without
violating the Fourth Amendment. Hence, statutes requiring corporations to produce their books and
papers, or to submit to an examination of their books and papers for certain purposes, have been
held not to be violative of the constitutional immunity from unreasonable searches and seizures.
Therefore, despite the guaranty, a corporation may be compelled to produce its books and papers
even though they tend to incriminate an officer thereof; and the protection of the immunity cannot
be invoked ordinarily to justify the refusal of an officer to produce its books and papers in
obedience to a subpoena duces tecum in an action against the corporation to recover a statutory penalty.
Where a copartnership, illegally masquerading as a corporation, is, before the discovery of its status,
compelled by a subpoena duces tecum to produce its books and papers, such production is no violation
of the Fourth Amendment." (56 C. J., 1171.)

In Standard Home Co. vs. Davis (217 Federal Reporter, 904, 916), wherein the State law authorizing
an inquiry into the condition of corporations doing business in the State and requiring them to
submit to an examination in respect thereto was challenged, as unconstitutional, the court said;

"The act is also attacked upon the ground that it authorizes the bank commissioner, his clerks,
accountants, and examiners, to examine the business of such investment company, and may require
it to divulge any and all facts in connection with said business, whether or not the same relates in
any way to securities proposed to be sold in Arkansas. The plaintiff is a corporation, and it is now
well settled by the decisions of the Supreme Court of the United States that the right to inquire into
the condition of corporations exists, and, if necessary for the purpose of enforcing a law, to compel
the production of all books, letters, and other records, without violating the provisions of the fourth
and fifth amendments to the Constitution of the United States. (Hale vs. Henkel, 201 U. S., 43, 74,
75; 26 Sup. Ct., 370; 50 L. ed., 652; Consolidated Rendering Co. vs. Vermont, 207 U. S., 541; 28 Sup.
Ct., 178; 52 L. ed., 327; 12 Ann. Cas., 658; Hammond Packing Co. vs. State of Arkansas, 212 U. S.,
322, 348, 349; 29 Sup. Ct., 370; 53 L. ed., 530; 15 Ann. Cas., 645; Wilson vs. United States, 221 U. S.,
361, 383; 31 Sup. Ct., 538; 55 L. ed., 771; Ann. Cas. 1912D, 558.)"

Neither could the amended subpoena duces tecum be successfully challenged as unreasonable for
according to the description given in the stipulation of facts the books of account could easily be
taken to the defendant's office. To say that the production of these 53 books of account
corresponding to the past four years is unreasonable because it creates great embarrassment to the
plaintiff corporation is equivalent, in my opinion, to nullify the power granted by law to the officers
of the Bureau of Internal Revenue and to defeat the authority of the Government of the Philippine
Islands to collect revenue taxes. It is argued that in the instant case the defendant could avail himself
of the offer made by the manager of plaintiff corporation and proceed to its office where he could
make a thorough examination of the books, instead of requiring the production of the same, which
might be used by it during the ordinary course of business. This remark may be readily answered
that in this case we do not aim to serve the convenience of the plaintiff corporation or its officers
but to enforce the provisions of the law which are not challenged by anybody as being illegal or
unconstitutional. This is not the first time this court has denied the right of the tribunals and public
officers, duly authorized to conduct investigations, to call for the production of books and
documents needed in connection with a judicial proceeding or an administrative investigation; and if
this policy is not discontinued or abandoned I fear time will come when no court or public officer
could issue regular and legal subpoena duces tecum without being challenged as unreasonable and
unconstitutional, thus defeating absolutely the purpose of the law.

Before closing it might not be amiss to say that according to the stipulation of facts and pleadings no
one could foretell how long the examination of the books would last. The defendant might perform
his duties in 2 or 3 hours, or, say, one-half day, in which event the plaintiff corporation would not be
deprived of the use of said books but for only a few hours.

For the foregoing reasons, I dissent from the majority opinion and the appealed decision should be
reversed and the subpoena duces tecum, as amended, upheld, with costs against the appellee.

Butte, J.: I concur in the dissent of Justice Imperial.

87 Phil. 100

G.R. No. L-3779, July 25, 1950

 ANDRES FRANCIA, AS AUDITOR FOR THE CITY OF MANILA, PETITIONER, VS.
POTENCIANO PECSON, JUDGE OF THE COURT OF FIRST INSTANCE OF
MANILA, AND ABELARDO SUBIDO, CHIEF, DIVISION OF INVESTIGATION,
OFFICE OF THE MAYOR, CITY OF MANILA, RESPONDENTS.

OZAETA, J.:

In the early part of February, 1950, an attempt was made to defraud the City of Manila of P5,300.75
through falsification of official documents. A fictitious voucher covering withdrawal of a supposed
cash bond deposit in the said amount was presented to the assistant city treasurer, who issued the
corresponding check against the Philippine National Bank, payable to one Jose D. Garcia. City
Auditor Andres Francia countersigned the check after the papers had passed through and had been
initialed by his subordinates. It turned out that there was no such cash bond deposit and that the
signatures of Chief Deputy Sheriff J. Garcia and Sheriff Macario M. Ofilada on said voucher were
forged. Fortunately, the forgeries were discovered and the check was cancelled before it could be
delivered to the payee.

On March 17, 1950, Abelardo Subido, as Chief of the Division of Investigation of the Office of the
Mayor, wrote to City Auditor Andres Francia as follows:
"Mr. Andres Francia
"City Auditor
"City Hall, Manila

"Sir:

"This has reference to the fraudulent issuance of PNB check No. 1047282, dated February 7, 1950,
in favor of Jose D. Garcia, in the amount of P5,300.75 as a refund of indemnity bond in the alleged
civil case No. 10546 filed with the Manila Court of First Instance.

"It appears that the voucher allegedly prepared in the Office of the Sheriff, City of Manila, was a
forgery and the same was able to pass approval in the Office of the City Treasurer as well as in the
Office of the City Auditor. I have compared your signature appearing in the above-mentioned check
with your signature on file in this office and I have found the same to be your genuine signature.

"Under the facts of the case, explanation is requested why no criminal action in connection with the
case should be taken against you along with Mr. Jose L. Reyes, Assistant City Auditor, Mr. Aquilino
Calixto, Assistant City Treasurer, Mr. Alfonso Concepcion, Administrative Officer of the Office of
the City Treasurer, Mr. Lazaro Cruz, clerk in the Office of the City Treasurer, and John Doe, the
unidentified person who presented the voucher in question for payment. "It is desired that your
explanation be given within forty-eight (48) hours from your receipt hereof.

"By authority of the Mayor:

"Very respectfully,

(Sgd.) "ABELARDO SUBIDO"

Chief, Division of Investigation"
That peremptory demand for explanation was apparently ignored by the city auditor; for on March
20, 1950, Subido again wrote to Francia as follows:
"Mr. Andres Francia
"City Auditor
"City Hall, Manila

"Sir:

"In addition to my capacity as Chief of the Division of Investigation, Office of the Mayor, I have
been appointed by the Secretary of Justice as Special Counsel for the City of Manila under the
provisions of section 1686, Revised Administrative Code. Under the said appointment, I am
authorized to institute criminal action against any City Government officer or employee should
circumstances warrant such action.

"In view of the foregoing, it is requested that you comply with my letter dated March 17, 1950, and
should you fail to submit your reply in writing within twenty-four hours from your receipt hereof I
shall take it to mean that you have waived your right to explain your part in the fraudulent issuance
of PNB Check No. 1047282 in favor of Jose D. Garcia, and I shall proceed with the necessary
action in the premises which might include the filing of a criminal action against you.

"By authority of the Mayor:

"Very respectfully,

(Sgd.) "ABELARDO SUBIDO

"Chief, Division of Investigation
and Special Counsel"
In the meantime, on March 29, the Auditor General instituted an administrative investigation of the
city auditor by requiring the latter to show cause why no administrative action should be taken
against him for gross negligence in the performance of duty. City Auditor Francia submitted his
explanation to the Auditor General on April 1, claiming in effect that he acted with due deligence
and in good faith in countersigning the check.

City Auditor Francia refused to recognize the authority of Subido to investigate him and ignored
Subido's two letters above quoted.

Having thus failed to obtain the explanation demanded by him from Francia, Subido issued the
following:
 "SUBPæNA DUCES TECUM

"Mr. Andres Francia

"City Auditor
"City Hall, Manila

"To bring three vouchers for refund of indemnity bond submitted on or before February 19, 1950,
wherein the initials of Jaime Bonto and Juan Callanta appear.

"Under and by virtue of the authority vested in me by section 1686 of the Revised Administrative
Code, you are hereby commanded and required to appear at the Office of the Special Counsel and
Chief, Division of Investigation, Office of the Mayor, City of Manila, Philippines, on the 1st day of
April, 1950, at the hour of 9 a. m. of said day, then and there to give your evidence in a certain
administrative and/or criminal investigation to be held at that time and place, conducted by the
undersigned Special Counsel.

"Hereof fail not at your peril.

"Witness my hand this 31st day of March, 1950.

(Sgd.) "ABELARDO SUBIDO

"Special Counsel and
Chief, Division of Investigation
Office of the Mayor"
Francia replied that the vouchers called for in the subpoena duce tecum were still in the hands of the
city treasurer and that therefore he could not produce them. Thereupon Subido wrote to Francia
the following intemperate and threatening letter:
"April 1, 1950
"Mr. Andres Francia
"City Auditor
"City Hall, Manila

"Sir:

"This refers to your letter of even date wherein you state that the vouchers required in my subpoena
duces tecum are still in the hands of the City Treasurer and, therefore, cannot be brought by you. This
statement is a dirty lie and I interpret it as a futile excuse on your part to disobey my subpoena.

"For your information, I had a previous talk with Atty. Graciano Candelaria of that Office and I
requested him to locate accomplished vouchers for comparison of the initials of the clerks in your
Office which initials were forged in the questioned documents in connection with the fraudulent
issuance of the P5,300 check in favor of Jose D. Garcia. Atty. Candelaria informed me that the said
sample vouchers were ready for inspection and he advised me to prepare the necessary letter of
request. I told him that it was not necessary inasmuch as I have already issued a subpæna to you to
bring the said documents so that I may interrogate you in connection therewith.

"In view of the foregoing considerations, I am giving you a second chance to appear in my office at
9 o'clock in the morning this coming Monday, April 3, 1950. The corresponding subpoena for this
purpose is hereto attached. In the event that you choose to disobey this subpoena again, I shall be compelled to
use my police power and have you picked up and brought to the Division of Investigation for the desired
interrogation. (Italics ours.)

"By authority of the Mayor:

"Very respectfully,

(Sgd.) "ABELARDO SUBIDO

"Chief, Division of Investigation
and Special Counsel"
Thereafter City Auditor Francia applied in the court of first instance for a writ of prohibition and
preliminary injunction against Subido to enjoin the latter "from proceeding with the administrative
investigation of petitioner, which is clearly beyond his jurisdiction and authority, and for such other
remedy as he may be entitled to in the premises," alleging that Subido, as chief of the division of
investigation, office of the mayor, or as special counsel, or as both, had no authority under section
11 (k) of the Revised Charter of the City of Manila, or under any other provision of law, to conduct
an administrative investigation of petitioner, as auditor of the City of Manila. Judge Potenciano
Pecson denied the petition for preliminary injunction, thereby giving the green light to Subido to
proceed with the investigation of the petitioner. Thereupon the petitioner filed the present petition
for certiorari and mandamus with preliminary injunction in this court. The Auditor General, with
leave of this court, intervened alleging that he "is the superior officer of the petitioner and, as such,
is already conducting the administrative investigation of petitioner for the same act subject of
respondent Abelardo Subido's investigation; that aside from the duplication of investigation that
would result if respondent Abelardo Subido were to be permitted to conduct his own, the
Constitution and the laws vest in intervenor exclusive direction and control over the personnel of
the General Auditing Office, among whom is petitioner City Auditor for Manila." On April 19,
1950, this court issued a writ of preliminary injunction "restraining respondent Abelardo Subido
from enforcing subpoena issued against the petitioner in connection with the administrative
investigation said respondent is conducting."

It is deplorable that the valuable time of the parties and of the courts, belonging to the Government,
had to be spent in litigation of this nature, which could have been avoided with a little self-restraint
and sobriety, let alone courtesy, on the part of respondent Subido. There was no need or
justification for the latter to humiliate the city auditor by demanding from him an explanation within
48 hours why criminal action should not be taken against him, considering that the city auditor is a
responsible official of a higher category, who in the performance of his duties is responsible directly
to the Auditor General and not to the city mayor. If the said respondent had the power to file a
criminal action against the city auditor and had proofs against him,1 he should have filed it without
subjecting the city auditor to unnecessary humiliation. The city fiscal himself, who under the law
had the sole power to prosecute, could not have written such peremptory demands for explanation
as Subido wrote to the city auditor.

But did the respondent Subido have legal authority to conduct a criminal or administrative
investigation of the city auditor or of any officer or employee of the city? Is he empowered by law to
issue subpoenas and to administer oaths? To answer these questions it is necessary first to determine
Subido's official and legal status.

Republic Act No. 409, known as the Revised Charter of the City of Manila, provides in its Article II,
sections 9-12, for the offices of the mayor, the vice-mayor and a secretary to the mayor. There is no
provision for the office or division of investigation. Section 10 provides that the vice-mayor shall
perform the duties of the mayor in the absence or other temporary incapacity of the latter and "shall
perform such other duties as may be assigned to him by the mayor or prescribed by law or
ordinance." Section 12 provides among other things that the secretary to the mayor "shall also
perform such duties as are required of the heads of departments of the city government by section
twenty-one, and for the purposes of said section, the secretary will be considered the head of a
department." Section 25 provides: "The Auditor General shall receive and audit all accounts of the
city, in accordance with the provisions of law relating to government accounts and accounting. The
City Auditor shall be paid from the funds of the city at the rate of eight thousand pesos per
annum." Section 38, creating the law department, provides among other things: "The law
department shall consist of the city fiscal as head of the department with the rank of a district judge,
an assistant city fiscal as assistant head, and thirty-six assistant fiscals, who shall discharge their
duties under the general supervision of the Secretary of Justice. The fiscal of the city shall be the
chief legal adviser of the city and all offices and departments thereof; * * * shall, whenever it is
brought to his knowledge that any city officer or employee is guilty of neglect or misconduct in
office, * * * investigate the same and report to the Mayor; * * * and shall prosecute and defend all
civil actions related to or connected with any city office or interest. He shall also have charge of the
prosecution of all crimes, misdemeanors, and violations of the city ordinances, in the court of first
instance and the municipal courts of the city, and shall discharge all the duties in respect to the
criminal prosecution enjoined by law upon provincial fiscals.

"The fiscal of the city shall cause to be investigated all charges of crimes, misdemeanors, and
violations of ordinances and have the necessary informations or complaints prepared or made
against the persons accused. He or any of his assistants may conduct such investigations by taking
oral evidence of reputed witnesses, and for this purpose may issue subpoena, summon witnesses', to
appear and testify under oath before him, and the attendance or evidence of an absent or recalcitrant
witness may be enforced by application to the municipal court or the court of first instance. No
witness summoned to testify under this section shall be under obligation to give any testimony
tending to incriminate himself."
There is no provision in the Revise Charter of the City of Manila—and our attention has not been
called to nor have we found any other statute—creating or authorizing the creation of a division of
investigation in the office of the mayor. Our attention has not been called to any ordinance passed
by the Municipal Board of the City of Manila, and we have found none, creating the position of
chief, division of investigation, and prescribing his powers and duties. All that we have found is
Ordinance No. 3209, entitled "An Ordinance appropriating funds for the necessary expenses of the
government of the City of Manila for the fiscal year from July 1, 1948, to June 30, 1949, and for
other purposes." This ordinance provides among other things, under the heading Office of the
Mayor and subheading Investigation Division, Item 33: "One chief of division ----------------------------
P5,400.00."

We are not called upon here to determine the validity of said municipal ordinance in so far as it
appropriates P5,400 to pay the salary of one chief of the division of investigation. What we are after
is to determine the powers and duties vested in that office. The appropriation ordinance is silent as
to that. Respondent Subido's appointment to that office is not in evidence before us. We can only
assume that he was appointed by the mayor to the composition of chief, division of investigation,
with compensation at the rate of P5,400 per annum, without specifying his powers and duties.

Assuming that the creation in an appropriation ordinance of a division of investigation in the office
of the mayor is valid—a question which we do not decide now,—the mayor may delegate to the
chief of that division such ministerial duties incumbent upon the mayor as he may wish to delegate.
2
But we are certain that the mayor cannot confer upon the respondent Subido as chief of said
division any power which the Charter of the City of Manila expressly vests in some other specified
officer. For instance, the mayor cannot divest the city fiscal of any portion of the powers and duties
expressly vested by law in said officer and confer it on one of his subordinates. The point is that the
respondent Subido cannot exercise the powers and prerogatives' expressly vested by law in the city
fiscal.

We have seen that section 38 of the Revised Charter of the City of Manila expressly vests in the city
fiscal the power and the duty to investigate "any city officer or employee" who may be guilty of
neglect or misconduct in office. (And we note in this connection that the city auditor is not an
officer or employee of the city but of the General Auditing Office, although, like the city fiscal's, his
salary is paid from the funds of the city.) The same section also vests expressly in the city fiscal and
his assistants the power to conduct "investigation by taking oral evidence of reputed witnesses," and
to "issue subpoena, summon witnesses, to appear and testify under oath before him." These are
precisely the same powers which the respondent Subido attempted to exercise in this case. We are
of the opinion and so hold that whatever the powers the mayor may have attempted to delegate to
the respondent Subido, the latter cannot exercise those powers which the law expressly vests in the
city fiscal. The mayor himself cannot exercise the powers of the city fiscal. It stands to reason that
the mayor cannot delegate a power he does' not possess.

The respondent Subido is not even authorized by law to administer oaths. Section 21 of the Revised
Administrative Code specifies the officers who have general authority to administer oaths, to wit:
"Notaries public; judges, justices of the peace, and auxiliary justices of the peace; clerks of courts; the
secretaries of the (National Assembly) Senate and House of Representatives; bureau directors;
registers of deeds; provincial governors and lieutenant governor; mayors; any other officer in the
Philippine service whose appointment is vested in the President of the Philippines. * * *"

Respondent Subido invokes as authority in his favor his appointment by the Secretary of Justice,
dated November 2, 1949, which reads as follows:
"Atty. Abelardo Subido
"Chief, Division of Investigation
"Office of the Mayor
"City of Manila

"Sir:

"In the interest of the public service and pursuant to the provisions of section 1686 of the Revised
Administrative Code, you are hereby appointed Special Counsel to assist the City Fiscal of Manila
only in those cases of City Government officials or employees you have investigated and in which
cases criminal action may lie, without additional compensation.

"Respectfully,

(s) "Ricardo Nepomuceno

(t) "RICARDO NEPOMUCENO
"Secretary of Justice"
Assuming that said appointment is authorized by law, 3 it will be noted that the authority therein
conferred is limited to assisting the city fiscal of Manila "only in those cases of city government officials
or employees you have investigated and in which criminal action may lie." That authority is
irrelevant here because, as we have seen, the city auditor is not a city government official or
employee, but an officer of the General Auditing Office, under the direct supervision and control of
the Auditor General. Moreover, that appointment assumes that Subido, as chief of the investigation
division of the office of the mayor, was authorized to investigate any city officer or employee who
may be guilty of neglect or misconduct in office—an assumption which is not correct because, as we
have seen, such authority is expressly conferred by law upon the city fiscal and could not be vested
by the mayor in any subordinate of his.

Respondent Subido also invokes section 580 of the Revised Administrative Code, which reads as
follows:
"SEC. 580. Powers incidental to taking of testimony.—When authority to take testimony or evidence is
conferred upon an administrative officer or upon any nonjudicial person, committee, or other body,
such authority shall be understood to comprehend the right to administer oaths and summon
witnesses and shall include authority to require the production of documents under a subpoena duces
tecum or otherwise, subject in all respects to the same restriction and qualifications as apply in judicial
proceedings of a similar character.
"Saving the provisions of section one hundred and two of this Act, any one who, without lawful
excuse, fails to appear upon summons issued under the authority of the preceding paragraph or
who, appearing before any individual or body exercising the power therein defined, refuses to make
oath, give testimony, or produce documents for inspection, when thereunto lawfully required, shall
be subject to discipline as in case of contempt of court and upon application of the individual or
body exercising the power in question shall be dealt with by the judge of first instance having
jurisdiction of the case in the manner provided by law."
But, in order that he may invoke that section, Subido must show that he has "authority to take
testimony or evidence." There is no law giving him such authority. We have seen that he is not even
one of those authorized by law to administer oaths. We do not think the mayor can delegate or
confer the powers to administer oaths, to take testimony, and to issue subpoenas. 4 All that
respondent Subido may lawfully do as investigator for the mayor is to gather proofs and present
them to the city fiscal, who may subpoena witnesses if he finds it necessary to do so.

The temerity and excesses of the respondent Subido are emphasized by his issuance of subpoenas to
the petitioner Francia in his own name and authority and by his threat "to use my police power" to
have the petitioner Francia arrested, without applying to the court for the issuance of a warrant of
arrest.

We conclude from all the foregoing that the orders and processes issued by the respondent Subido
are without authority in law and that therefore the petitioner is not bound to obey them. Ours is a
government of laws and not of men. We cannot, however, issue the writ of mandamus to compel
the respondent judge to grant the writ of preliminary injunction applied for by the petitioner because
such act is judicial and not ministerial; but we think the writ of certiorari lies to annul the order of
the respondent judge of April 10, 1950, in so far as it recognizes the authority of 'the respondent
Subido to compel the petitioner to obey the subpoena issued by the said respondent Subido without
authority in law. The issuance of such an order, in our opinion, constituted an abuse of discretion
amounting to an excess of jurisdiction.

The order complained of is set aside and the writ of preliminary injunction heretofore issued by this
court is made permanent, with costs.

Paras, Pablo, Bengzon, Tuason, Montemayor, and Reyes, JJ., concur.

Order set aside and preliminary injunction made permanent.

1
He alleges in his answer: "Respondents has already interrogated twenty persons in connection with
this anomally—twelve from the Office of the City Treasurer, five from the Office of the City
Auditor, and three from the Office of the Sheriff of Manila."
2
Section 4 of the Revised Administrative Code provides as follows:

"SEC. 4. Authority of officer to act through deputy.—A ministerial act which may be lawfully done by any
officer may be performed by him through any deputy or agent lawfully created or appointed."

3
Section 1686 authorizes the Secretary of Justice to appoint "any lawyer, being either a subordinate from
his office or a competent person not in the public service, temporarily to assist a fiscal.

4
Non-judicial officers who are authorized to administer oaths and issue subpoenas are expressly so
empowered by law. See sec. 91, C. A. No. 141 (Director of Lands); sec. 1, C. A. No. 172 (Public
Defenders); C. A. 294 (Board of Mechanical Engineering Examiners) ; sec. 116, Rep. Act No. 180
(Board of Election Inspectors); sec. 4, Rep. Act No. 367 (Commissioner, Bureau of Industrial
Safety); and sec. 3, Rep. Act No. 417 (Board of Dental Examiners).
160-A Phil. 753

EN BANC

G.R. No. L-29274, November 27, 1975

SEC. QUIRICO P. EVANGELISTA, IN HIS CAPACITY AS SECRETARY OF THE

PRESIDENTIAL AGENCY ON REFORMS AND GOVERNMENT OPERATIONS,
AND THE PRESIDENTIAL AGENCY ON REFORMS AND GOVERNMENT
OPERATIONS (PARGO), PETITIONERS VS. HON. HILARION U. JARENCIO, AS
PRESIDING JUDGE, COURT OF FIRST INSTANCE OF MANILA, BRANCH XXIII,
AND FERNANDO MANALASTAS, ASSISTANT CITY PUBLIC SERVICE OFFICER
OF MANILA, AND ALL OTHER CITY OFFICIALS AND EMPLOYEES SIMILARLY
SITUATED, RESPONDENTS.

DECISION

MARTIN, J.:

This is an original action for certiorari and prohibition with preliminary injunction, under Rule 65 of
the Rules of Court, seeking to annul and set aside the order of respondent Judge, the Honorable
Hilarion U. Jarencio, Presiding Judge of the Court of First Instance of Manila, dated July 1, 1968, in
Civil Case No. 73305, entitled "Fernando Manalastas vs. Sec. Ramon D. Bagatsing, etc.", which reads as
follows:

"IT IS ORDERED that, upon the filing of a bond in the amount of P5,000.00, let the writ of
preliminary injunction prayed for by the petitioner [private respondent] be issued restraining the
respondents [petitioners], their agents, representatives, attorneys and/or other persons acting in their
behalf from further issuing subpoenas in connection with the fact-finding investigations to the
petitioner [private respondents] and from instituting contempt proceedings against the petitioner
[private respondent] under Section 580 of the Revised Administrative Code.] (Italics supplied).

Pursuant to his special powers and duties under Section 64 of the Revised Administrative Code,[1]
the President of the Philippines created the Presidential Agency on Reforms and Government
Operations (PARGO) under Executive Order No. 4 of January 7, 1966.[2] Purposedly, he charged
the Agency with the following functions and responsibilities:[3]

"b. To investigate all activities involving or affecting immoral practices, graft and corruptions,
smuggling (physical or technical), lawlessness, subversion, and all other activities which are
prejudicial to the government and the public interests, and to submit proper recommendations to
the President of the Philippines.

"e. To investigate cases of graft and corruption and violations of Republic Acts Nos. 1379 and 3019,
and gather necessary evidence to establish prima facie, acts of graft and acquisition of unlawfully
amassed wealth . . .

"h. To receive and evaluate, and to conduct fact-finding investigations of sworn complaints against
the acts, conduct or behavior of any public official or employee and to file and prosecute the proper
charges with the appropriate agency."

For a realistic performance of these functions, the President vested in the Agency all the powers of
an investigating committee under Sections 71 and 580 of the Revised Administrative Code, including
the power to summon witnesses by subpoena or subpoena duces tecum, administer oaths, take
testimony or evidence relevant to the investigation.[4]

Whereupon, on June 7, 1968, petitioner Quirico Evangelista, as Undersecretary of the Agency,

issued to respondent Fernando Manalastas, then Acting City Public Service Officer of Manila, a
subpoena ad testificandum commanding him "to be and appear as witness at the Office of the
PRESIDENTIAL AGENCY ON REFORMS AND GOVERNMENT OPERATIONS * * * then
and there to declare and testify in a certain investigation pending therein."

Instead of obeying the subpoena, respondent Fernando Manalastas filed on June 25, 1968 with the
Court of First Instance of Manila an Amended Petition for prohibition, certiorari and/or injunction
with preliminary injunction and/or restraining order docketed as Civil Case No. 73305 and assailed
its legality.

On July 1, 1968, respondent Judge issued the aforementioned Order:

"IT IS ORDERED that, upon the filing of a bond in the amount of P5,000.00, let the writ of
preliminary injunction prayed for by the petitioner [private respondent] be issued restraining the
respondents [petitioners], their agents, representatives, attorneys and/or other persons acting in their
behalf from further issuing subpoenas in connection with the fact-finding investigations to the
petitioner [private respondent] and from instituting contempt proceedings against the petitioner
[private respondent] under Section 530 of the Revised Administrative Code." (Italics supplied).

Because of this, petitioners[5] elevated the matter direct to Us without a motion for reconsideration
first filed on the fundamental submission that the Order is a patent nullity.[6]

As unfurled, the dominant issue in this case is whether the Agency, acting thru its officials enjoys the
authority to issue subpoenas in its conduct of fact-finding investigations.

It has been essayed that the life blood of the administrative process is the flow of fact, the gathering,
the organization and the analysis of evidence.[7] Investigations are useful for all administrative
functions, not only for rule making, adjudication, and licensing, but also for prosecuting, for
supervising and directing, for determining general policy, for recommending, legislation, and for
purposes no more specific than illuminating obscure areas to find out what if anything should he
done.[8] An administrative agency may be authorized to make investigations, not only in proceedings
of a legislative or judicial nature, but also in proceedings whose sole purpose is to obtain
information upon which future action of a legislative or judicial nature may he taken[9] and may
require the attendance of witnesses in proceedings of a purely investigatory nature. It may conduct
general inquiries into evils calling for correction, and to report findings to appropriate bodies and
make recommendations for actions.[10]

We recognize that in the case before Us, petitioner Agency draws its subpoena power from
Executive Order No. 4 para. 5 which, in an effectuating mood, empowered it to "summon
witnesses, administer oaths, and take testimony relevant to the investigation"[11] with the authority
"to require the production of documents under a subpoena duces tecum or otherwise, subject in all
respects to the same restrictions and qualifications as apply in judicial proceedings of a similar
character."[12] Such subpoena power operates in extenso to all the functions of the Agency as laid out
in the aforequoted sub-paragraphs (b), (e), and (h). It is not bordered by nor is it merely exercisable,
as respondents would have it, in quasi-judicial or adjudicatory function under sub-paragraph
(b). The functions enumerated in all these sub-paragraphs (b), (e), and (h) interlink or intertwine
with one another with the principal aim of meeting the very purpose of the creation of the Agency,
which is to forestall and erode nefarious activities and anomalies in the civil service. To hold that
the subpoena power of the Agency is confined to mere quasi-judicial or adjudicatory function would
therefore imperil it or inactivate the Agency in its investigatory functions under sub-paragraphs (e)
and (h). More than that, the enabling authority itself (Executive Order No. 4, para. 5) fixes no
distinction when and in what function should the subpoena power be exercised. Similarly, We see
no reason to depart from the established rule that forbids differentiation when the law itself makes
none.

Nor could We impress upon this subpoena power the alleged strictures of a subpoena issued under
the Rules of Court[13] to abridge its application. The seeming proviso in Section 580 of the Revised
Administrative Code that the right to summon witnesses and the authority to require the production
of documents under a subpoena duces tecum or otherwise shall be "subject in all respects to the same
restrictions and qualifications as apply in judicial proceedings of a similar character" cannot be
validly seized upon to require, in respondents' formulation, that, as in a subpoena under the Rules, a
specific case must be pending before a court for hearing or trial and that the hearing or trial must be
in connection with the exercise of the court's judicial or adjudicatory functions[14] before a non-
judicial subpoena can be issued by an administrative agency like petitioner Agency. It must be
emphasized, however, that an administrative subpoena differs in essence from a judicial
subpoena. Clearly, what the Rules speaks of is a judicial subpoena, one procurable from and
issuable by a competent court, and not an administrative subpoena. To an extent, therefore, the
"restrictions and qualifications" referred to in Section 580 of the Revised Administrative Code could
mean the restraints against infringement of constitutional rights or when the subpoena is
unreasonable or oppressive and when the relevancy of the books, documents or things does not
appear.[15]

Rightly, administrative agencies may enforce subpoenas issued in the course of investigations,
whether or not adjudication is involved, and whether or not probable cause is shown[16] and even
before the issuance of a complaint.[17] It is not necessary, as in the case of a warrant, that a specific
charge or complaint of violation of law be pending or that the order be made pursuant to one. It is
enough that the investigation be for a lawfully authorized purpose.[18] The purpose of the subpoena
is to discover evidence, not to prove a pending charge, but upon which to make one if the
discovered evidence so justifies.[19] Its obligation cannot rest on a trial of the value of testimony
sought; it is enough that the proposed investigation be for a lawfully authorized purpose, and that
the proposed witness be claimed to have information that might shed some helpful light.[20] Because
judicial power is reluctant if not unable to summon evidence until it is shown to be relevant to issues
on litigations it does not follow that an administrative agency charged with seeing that the laws are
enforced may not have and exercise powers of original inquiry. The administrative agency has the
power of inquisition which is not dependent upon a case or controversy in order to get evidence,
but can investigate merely on suspicion that the law is being violated or even just because it wants
assurance that it is not. When investigative and accusatory duties are delegated by statute to an
administrative body, it, too may take steps to inform itself as to whether there is probable violation
of law.[21] In sum, it may be stated that a subpoena meets the requirements for enforcement if the
inquiry is (1) within the authority of the agency; (2) the demand is not too indefinite; and (3) the
information is reasonably relevant.[22]

There is no doubt that the fact-finding investigations being conducted by the Agency upon sworn
statements implicating certain public officials of the City Government of Manila in anomalous
transactions[23] fall within the Agency's sphere of authority and that the information sought to be
elicited from respondent Fernando Manalastas, of which he is claimed to be in possession,[24] is
reasonably relevant to the investigations.

We are mindful that the privilege against self-incrimination extends in administrative investigations,
generally, in scope similar to adversary proceedings.[25] In Cabal vs. Kapunan, Jr.,[26] the Court ruled
that since the administrative charge of unexplained wealth against the respondent therein may result
in the forfeiture of the property under the Anti-Graft and Corrupt Practices Act, a proceeding
criminal or penal in nature, the complainant cannot call the respondent to the witness stand without
encroaching upon his Constitutional privilege against self-incrimination. Later, in Pascual, Jr. vs.
Board of Medical Examiners,[27] the same approach was followed in the administrative proceedings
against a medical practitioner that could possibly result in the loss of his privilege to practice the
medical profession. Nevertheless, in the present case, We find that respondent Fernando
Manalastas is not facing any administrative charge.[28] He is merely cited as a witness in connection
with the fact-finding investigation of anomalies and irregularities in the City Government of Manila
with the object of submitting the assembled facts to the President of the Philippines or to file the
corresponding charges.[29] Since the only purpose of investigation is to discover facts as a basis of
future action, any unnecessary extension of the privilege would thus be unwise.[30] Anyway, by all
means, respondent Fernando Manalastas may contest any attempt in the investigation that tends to
disregard his privilege against self-incrimination.

A question of constitutional dimension is raised by respondents on the inherent power of the

President of the Philippines to issue subpoena.[31] More tersely stated, respondents would now
challenge, in a collateral way, the validity of the basic authority, Executive Order No. 4, as amended
in part by Executive Order No. 88. Unfortunately, for reasons of public policy, the constitutionality
of executive orders, which are commonly said to have the force and effect of statutes,[32] cannot be
collaterally impeached.[33] Much more when the issue was not duly pleaded in the court below as to
be acceptable for adjudication now.[34] The settled rule is that the Court will not anticipate a question
of constitutional law in advance of the necessity of deciding it.[35]

Nothing then appears conclusive than that the disputed subpoena issued by petitioner Quirico
Evangelista to respondent Fernando Manalastas is well within the legal competence of the Agency to
issue.

WHEREFORE, the aforequoted order of respondent Judge, dated July 1, 1968, is hereby set aside
and declared of no force and effect.

Without pronouncement as to costs.

SO ORDERED.

Castro, Antonio, Esguerra, Muñoz Palma, and Aquino, JJ., concur.

Makalintal, C.J., concurs in the result.

Fernando, J., concurs and adds a brief separate opinion.

Barredo, Makasiar, and Concepcion Jr., JJ., took no part.

Teehankee, J., dissents in a separate opinion.

[1]
"Sec. 64(c). To order, when in his opinion the good of the public service so requires, an
investigation of any action or the conduct of any person in the Government service, and in
connection therewith to designate the official, committee, or person by whom such investigation
shall be conducted."

[2]
Executive Order No. 208, dated February 9, 1967, converted the Agency into a division under the
Executive Office and is now known as "Complaints and Investigating Office".

[3]
Executive Order No. 88, dated September 25, 1967, amending in part Executive Order No. 4.

[4]
Executive Order No. 4, para. (5). "The Agency is hereby vested with all the powers of an
investigating committee under Sections 71 and 580 of the Revised Administrative Code including
the power to summon witnesses by subpoena or subpoena duces tecum, administer oaths, take
testimony or evidence relevant to the investigation."

[5]
Resolution of the Court on November 28, 1969 excluded Ramon D. Bagatsing as petitioner in the
case.

[6]
See Matute vs. Court of Appeals, 31 Jan. 1969, 26 SCRA 799, 800 Central Bank vs. Cloribel, L-26971,
11 April 1972, 44 SCRA 314.

[7]
Administrative Law, Jaffe and Nathanson, 1961 ed. 491.

[8]
Pope& Talbot, Inc. vs. Smith, 340 P 2d 964, citing 1 Davis Administrative Law Treatise, 160.

[9]
See Notes on 27 ALR 2d 1208, 1209, and cases cited.

[10]
Marchitto vs. Waterfront Commission of New York Harbor, 160 A 2d 832.

[11]
Section 71, Revised Administrative Code.

[12]
Section 580, Revised Administrative Code.

[13]
See Sections 1 and 3, Rule 23, Rules of Court.

[14]
Answer, Respondents, at 43, 45 Case Records.

[15]
See Section 4, Rule 23, Rules of Court.
[16]
1 Davis, Administrative Law Treatise, 171.

[17]
NLRB vs. Anchor Rome Mills, Inc., 197 F. 2d 447 (5th Cir. 1952).

[18]
Oklahoma Press Pub. Co. vs. Walling, 327 US 185 (1946).

[19]
SEC vs. Vacuum Can Co., 157 F. 2d 530, cert den 330 US 820 (1947).

[20]
See Marchitto, ante.

[21]
United States vs. Morton Salt Co., 338 US 632 (1950), abandoning the Harriman, 211 US 407; (1908)
and American Tobacco, 264 US 298; (1924) doctrine against "fishing expedition".

[22]
Adams vs. FTC, 296 F. 2d 861, cert den 369 US 864 (1962).

[23]
Petition, at 6, Case Records; See Annexes B, B-1, Petition; at 17-24, Case Records.

[24]
Petition, at 7, Case Records.

[25]
Rights of Witnesses in Administrative Investigations, 54 Harv. L. Rev. 1214.

[26]
L-19052, 29 Dec. 1962, 6 SCRA 1064, per Concepcion, J.

[27]
L-25018, 26 May 1969, 28 SCRA 345, per Fernando, J.

[28]
Memorandum, Petitioners, at 154, Case Records.

[29]
Idem; Petition, at 8, Case Records.

[30]
Rights of Witnesses in Administrative Investigations, ante.

[31]
Memorandum, Respondents, at 160, 161, Case Records.

[32]
US vs. Borja, 191 F. Supp 563, 566; Farkas vs. Texas Instrument, Inc., 375 F. 2d 629, 632, cert den
389 US 977.

[33]
San Miguel Brewery, Inc. vs. Magno, L-21879, 29 Sept. 1967, 21 SCRA 297.

[34]
Idem; also 2 Modern Constitutional Law, Antieau, 1969 ed., 648.

[35]
Petite vs. United States, 361 US 529 (1960).
 CONCURRING OPINION

FERNANDO, J.:

The opinion of the Court, ably penned by Justice Martin, is both learned and comprehensive. It
reflects the current state of doctrinal pronouncements in American Administrative Law, which up to
now possesses worth in this jurisdiction. It is in accordance with the views expressed in two
authoritative American treatises, that of Davis[1] and that of Jaffe.[2] The compact but highly useful
text of Parker yields the same conclusion.[3] A similar approach may be discerned in the casebooks of
Katz,[4] and McFarland and Vanderbilt.[5] A concurrence is thus called for. That for me does not
conclude matters though. The constitutional rights of a person who may be involved in such
administrative investigation, call for respect. A recognition of the expanded reach of the
administrative process in order to assure that the objectives of a regulatory statute be attained cannot
obscure the protection that the Constitution affords a person who may find himself in the position
of a respondent. It is worthwhile to my mind that there be a reference, even if far from detailed, to
such an aspect. Hence this separate opinion.

1. The right to be protected against unreasonable search and seizure should not fall by the
wayside.[6] The broad sweep of the administrative power of investigation cannot, consistently with
the Constitution, go so far as to render it meaningless. It is with such a reading in mind that I view
the pronouncement in United States vs. Morton Salt Co.,[7] on which reliance is placed in the opinion of
Justice Martin. The doctrine formulated in such American case by Justice Jackson reads thus: "Of
course a governmental investigation into corporate matters may be of such a sweeping nature and so
unrelated to the matter properly under inquiry as to exceed the investigatory power. Federal Trade
Comm. vs. American Tobacco Co., …. But it is sufficient if the inquiry is within the authority of the
agency, the demand is not too indefinite and the information sought is reasonably relevant. 'The gist
of the protection is in the requirement, expressed in terms, that the disclosure sought shall not be
unreasonable.'"[8] It has been given approval in an impressive number of subsequent adjudications.[9]
It suffices, however, to call attention to the words of Justice Jackson in the two paragraphs
preceding the excerpts cited to remove any doubt as to its lending itself to the construction that an
inroad into the right of search and seizure is now permissible: "The Commission's order is criticized
upon grounds that the order transgresses the Fourth Amendment's proscription of unreasonable
searches and seizures and the Fifth Amendment's due process of law clause. It is unnecessary here
to examine the question of whether a corporation is entitled to the protection of the Fourth
Amendment, . . . Although the 'right to be let alone the most comprehensive of rights and the right
most valued by civilized men,' ... is not confined literally to searches and seizures as such, but
extends as well to the orderly taking under compulsion of process, . . . neither incorporated nor
unincorporated associations can plead an unqualified right to conduct their affairs in secret.... While
they may and should have protection from unlawful demands made in the name of public
investigation, ... corporations can claim no equality with individuals in the enjoyment of a right to
privacy. . . . They are endowed with public attributes. They have a collective impact upon society,
from which they derive the privilege of acting as artificial entities. The Federal Government allows
them the privilege of engaging in interstate commerce. Favors from government often carry with
them an enhanced measure of regulation. . . . Even if one were to regard the request for information
in this case as caused by nothing more than official curiosity, nevertheless law-enforcing agencies
have a legitimate right to satisfy themselves that corporate behavior is consistent with the law and
the public interest."[10] Thus is rendered clear that the landmark Boyd decision which warned against
the use of the subpoena power to trench upon this guarantee still speaks authoritatively. This Court
has spoken to the same effect, Boyd having been cited in a number of cases.[11] I would, therefore,
read the opinion of my brethren as not departing from but precisely adhering to its
command. Whatever relaxation of its compelling force may be allowable in case of corporations
should not apply where an individual is concerned. That should reassure respondent Manalastas
that if he could demonstrate a failure to abide by the constitutional mandate on search and seizure,
he is not without a remedy.

2. Nor can I fully reconcile myself to the implications lurking in this observation in the opinion of
the Court: "Since the only purpose of investigation is to discover facts as a basis of future action,
any unnecessary extension of the privilege would thus be unwise."[12] The right not to incriminate
oneself[13] is equally deserving of the utmost deference and respect. What is more, the present
Constitution by the adoption of the Miranda doctrine has vitalized it even further.[14] There is,
happily, the last sentence of such paragraph: "Anyway, by all means, respondent Fernando
Manalastas may contest any attempt in the investigation that tends to disregard his privilege against
self-incrimination."[15] When read in connection with the earlier reference to the fact that the
respondent is called as a witness not as the party proceeded against, it cannot be said, in the light of
the ruling in Planas vs. GiI,[16] that it offends against this constitutional guarantee. As of now then,
with the question of any modification of the Planas doctrine not being properly before us, I can
yield my concurrence. Candor compels the statement, however, that for me a reexamination of such
a pronouncement is desirable. A distinction between a witness and a respondent may be too
tenuous if the realities of the situation be fully considered. I am bothered by the thought that the
force of the Cabal[17] and the Pascual, Jr. decisions[18] may be eroded if the prospective respondent is
first called as a witness and is thus compelled to testify. For the present, it may suffice if I express
my misgivings. At any rate, concurrence is not ruled out in view of the aforementioned caveat in the
able opinion of Justice Martin.

[1]
Cf. 1 Davis, Administrative Law Treatise, 159-232 (1958).
[2]
Cf. Jaffe, Judicial Control of Administrative Action, 115-119 (1965).

[3]
Cf. Parker, Administrative Law, 135-143 (1952).

[4]
Cf. Katz, Cases and Materials in Administrative Law, 175-221 (1947).

[5]
Cf. McFarland and Vanderbilt, Administrative Law: Cases and Materials, 83-86 (1952).

[6]
According to Article IV, Section 3 of the present Constitution: "The right of the people to be
secure in their persons, houses, papers, and effects against unreasonable searches and seizures of
whatever nature and for any purpose shall not be violated, and no search warrant or warrant of
arrest shall issue except upon probable cause to be determined by the judge, or such other
responsible officer as may be authorized by law, after examination under oath or affirmation of the
complainant and the witnesses he may produce, and particularly describing the place to be searched,
and the persons or things to be seized."

[7]
338 US 632 (1950).

[8]
Ibid, 652-653.

[9]
Cf. F.T.C. vs. Browning, 435 F2d 96 (1970); Local No. 104, Sheet Metal Worker's International Association
vs. Equal Employment Opportunity Commission, 439 F2d 237 (1971); United States vs. Newman, 441 F2d
165 (1971); Securities and Exchange Commission vs. First Security Bank of Utah, 447 F2d 166 (1971); Modine
Manufacturing Company vs. National Labor Relations, 453 F2d 292 (1971); United States vs. Litton Industries,
Inc., 462 F2d 14 (1972); Burlington Northern Inc. vs. Interstate Commerce Commission, 462 F2d 280 (1972);
Wilmoth vs. Hansel, 25 A 86 (1892) Flanagan vs. New York, L.E. & W.R. Co., 32 S 84 (1895); Mobil Oil
Corporation vs. Durkin, 278 A2d 477 (1971); Fred Depkin & Son, Inc vs. Director, New Jersey Division of
Taxation, 276 A2d 161 (1971); Appeal of Ohio Radio, Inc., 266 NE 2d 575 (1970); McKay vs. Stewart &
Cecire vs. Stewart, 272 NE 2d 837 (1971); McKay vs. Cecire 324 S2d 302 (1971); Koch vs. Kosydar, 290 NE
2d 847 (1971); State Real Estate Commission vs. Roberts, 271 A2d 246 (1970).

[10]
338 US 632, 651 652 (1950).

[11]
Cf. U.S. vs. Navarro, 3 Phil. 143 (1904); Ocampo vs. Jenkins, 14 Phil. 681 (1909); Worcester vs. Ocampo,
22 Phil. 42 (1912); U.S. vs. Ipil, 27 Phil. 530 (1914); Uy Kheytin vs. Villareal, 42 Phil. 886 (1920); People
vs. Carlos 47 Phil. 626 (1925); Alvarez vs. Court of First Instance, 64 Phil. 33 (1937); Rodriguez vs. Villamiel,
65 Phil. 230 (1937); Yee Sue Kay vs. Almeda, 70 Phil. 141 (1940); Moncado vs. Peoples Court, 80 Phil. 1
(1948).

[12]
At. 9.

[13]
According to Article IV, Section 20 of the present Constitution: "No person shall be compelled
to be a witness against himself. Any person under investigation for the commission of an offense
shall have the right to remain silent and to counsel, and to be informed of such right. No force,
violence, threat, intimidation, or any other means which vitiates the free will shall be used against
him. Any confession obtained in violation of this section shall be inadmissible in evidence."

[14]
Cf. Magtoto vs. Manguera, L-37021, March 3, 1975, 63 SCRA 4.

[15]
At 9.

[16]
67 Phil. 62 (1939).

[17]
Cabal vs. Kapunan, Jr., L-19052, December 29, 1962, 6 SCRA 1064.

[18]
Pascual, Jr. vs. Board of Medical Examiners, L-25018, May 26, 1969, 28 SCRA 345.

DISSENTING OPINION

TEEHANKEE, J.:

I am constrained to dissent from the main opinion of Mr. Justice Martin which grants the petition
and sets aside respondent court's order and writ of preliminary injunction of July 1, 1968 and would
therefore require respondent Fernando Manalastas as assistant city public service officer of Manila
(and all other city officials similarly situated) to comply with the PARGO subpoena "to testify to
matters relevant to the investigation of anomalies and sworn statements involving or implicating
certain City officials or other public officers."[1]

While the subpoena commands respondent Manalastas to appear as witness before the PARGO,[2] on
the basis whereof the main opinion finds that said respondent "is not facing any administrative
charge" and that "he is merely cited as witness in connection with the fact-finding investigation of
anomalies and irregularities in the City Government of Manila with the object of submitting the
assembled facts to the President of the Philippines or to file the corresponding charges",[3] it is a fact
shown by the very petition at bar itself and its Annexes B and B-1 that respondent Manalastas is in
fact and for all intents and purposes subpoenaed as a respondent or one directly implicated with alleged
bribery and graft in the said sworn statements that concededly as per the petition itself initiated the
PARGO's alleged "fact-finding investigation."[4]

Thus Annex B of the petition which is a sworn statement of one Edilberto Arguelles, investigated by
the PARGO on the overpricing of eight steam cleaners sold through him as commission agent to
the City of Manila, sets forth the detailed allegations of said declarant that respondent Manalastas
and a number of other city officials named and unnamed got the lion's share of the
overpricing. Annex B-1 of the petition is the sworn statement of one Carlos Monta?ez with
reference to some overpriced equipment sold by him to the City of Manila wherein he likewise
narrated in detail the modus operandi and specifically named respondent Manalastas and five other
officials to whom he allegedly gave "due monetary consideration."

All claims of PARGO to the contrary notwithstanding, the very petition and said annexed sworn
statements (which were not shown to respondent judge in spite of his expressly asking for them
during the course of the hearing[5]) show that respondent Manalastas (and others similarly situated)
are indeed not merely witnesses but in reality respondents (subject to administrative and criminal charges.).

Respondent has therefore correctly invoked Cabal vs. Kapunan,[6] wherein the Court through then
Chief Justice Roberto Concepcion held that therein petitioner rightfully refused to take the witness
stand as against the order of the Presidential Committee investigating the complaint against him for
alleged unexplained wealth (since such proceedings were in substance and effect a criminal one and
his position was virtually that of an accused on trial and he therefore had the right to remain silent
and invoke the privilege against self-incrimination in support of a blanket refusal to answer any and all
questions) and ordered the dismissal of the criminal contempt charge against him.

Pascual, Jr. vs. Bd. of Examiners[7] is equally in point, wherein the Court sustained the lower court's writ
of injunction against the respondent board's order compelling therein petitioner to take the witness
stand in a malpractice case (wherein he was respondent) in view of the penal nature of the
proceedings and the right of the accused to refuse "not only to answer incriminatory questions, but
also to take the witness stand."[8] The Court therein stressed that "the constitutional guarantee, along
with other rights granted an accused, stands for a belief that while crime should not go, unpunished
and that the truth must be revealed, such desirable objectives should not be accomplished according to
means or methods offensive to the high sense of respect accorded the human personality. More and more in line
with the democratic creed, the deference accorded an individual even those suspected of the most
heinous crimes is given due weight. To quote from Chief Justice Warren, 'the constitutional
foundation underlying the privilege is the respect a government x x x must accord to the dignity and integrity of
its citizens,'" and that "while earlier decisions stressed the principle of humanity on which this right is
predicated, precluding as it does all resort to force or compulsion, whether physical or mental,
current judicial opinion places equal emphasis on its identification with the right to privacy. Thus
according to Justice Douglas: 'The Fifth Amendment in its Self-Incrimination clause enables the
citizen to create a zone of privacy which government may not force to surrender to his detriment.'"

That petitioner's investigation and subpoena against respondent Manalastas were in substance and
effect criminal in nature against him as a respondent (and not merely as witness) as indicated above, is
borne out by the fact of record in Sugay vs. Pamaran[9] (of which the Court can well take judicial
notice) that on July 22, 1971 respondent Manalastas as well as Carlos Monta?ez the trader (affiant in
Annex B-1, petition, supra,[10]) and a number of other city officials were charged by the city fiscal in
the Circuit Criminal Court of Manila for violations of Republic Act 3019 (Anti-Graft Law) in
connection with the alleged gross overpricing of the same equipment (steam cleaners and air
compressor) purchased for the City.

The main opinion's justification for upholding the subpoena; viz, that "since the only purpose of
investigation is to discover facts as a basis of future action, any unnecessary extension of the
privilege (against self-incrimination) would thus be unnecessary"[11] thus appears to be flawed in fact
and in law: respondent was in fact being investigated as respondent-suspect and without submitting
to the investigation was actually criminally charged in court; as a pure matter of legal principle, the
1973 Constitution has recognized the necessity of strengthening (and extending) the privilege against
self-incrimination by expressly providing as a constitutional mandate in the Bill of Rights that "Any
person under investigation for the commission of an offense shall have the right to remain silent and
to counsel, and to be informed of such right" (Article IV, section 20) and outlawing the use of any
confession obtained in violation of said section by declaring its inadmissibility in evidence.

Respondent Manalastas was therefore justified in invoking the privilege against self-incrimination
and in securing the respondent court's injunction against enforcement of petitioner's
subpoena. Respondent was unquestionably a party respondent who under the doctrine of Cabal and
Pascual, supra, had the right to remain silent and invoke the privilege against self-incrimination and
refuse to take the witness stand. This legal and constitutional right may not be defeated by the
transparent expedient of citing respondent as a supposed witness in what was avowed to be a general
fact-finding investigation but obviously was a fishing expedition to ensnare respondent as a prime
suspect, as borne out by the sworn statements withheld from respondent court and now annexed to
the very petition at bar and petitioner's contention that "In effect, the injunction issued by the lower
court is one to restrain criminal prosecutions." This contention has of course been proven baseless
by the events already cited above that such criminal prosecutions were in fact filed in court against
respondent and others without the need of petitioner's "fact-finding investigation" and subpoenas.

The thrust of all this is that the State with its overwhelming and vast powers and resources can and
must ferret out and investigate wrongdoing, graft and corruption and at the same time respect the
constitutional guarantees of the individual's right to privacy, silence and due process and against self-
incrimination and unreasonable search and seizure. This means that leads and charges must be
investigated and followed up through the assistance of the corresponding police and law
enforcement agencies as provided in the petitioner's executive charter[12] and the evidence secured by
proper applications for search warrants, and as conceded in the petition itself, after the
corresponding report to the President "to file the corresponding charges against the persons who
may appear responsible or merely refer them to other appropriate offices such as the Fiscal's office,
like what was done in other cases."[13]

There appears to be validity in respondent's contention that the subpoena power granted petitioner
in its executive charter does not apply to general fact-finding investigations conducted by it.[14] I find
no need, however, of going further into this issue, since this dissent is based directly on the
fundamental tenet that respondent Manalastas was unquestionably being investigated by petitioner
as respondent and a prime suspect (and not as a mere witness) and accordingly, under settled
doctrine, he had every right to remain silent and to invoke his right against self-incrimination and to
refuse to take the witness stand.

I therefore vote for upholding respondent court's injunction against enforcement of petitioner's
subpoena.

[1]
Petition, p. 11, prayer (b).

[2]
Now known as Complaints and Investigating Office (CIO) under Ex. Order No. 208, dated Feb.
9, 1967.

[3]
Main opinion at p. 9 thereof, citing petitioners' Memorandum at p. 154, Rollo, emphasis supplied.

[4]
Petition, p. 3, par. 5.

[5]
Answer, Rollo, p. 40.

[6]
6 SCRA 1064.

[7]
28 SCRA 344, per Fernando J.; emphasis supplied.

[8]
Idem, at p. 348; citing Chavez vs. CA, 24 SCRA 663.

[9]
L-33877-79, 41 SCRA 260 (Sept. 30, 1971).

[10]
At page 2 hereof.

[11]
At page 9.

[12]
Ex. Order No. 88, dated Sept. 25,1967, amending Ex. Order No. 8 which created petitioner "as
the executive instrumentality in the Office of the President" thus provides that petitioner shall
"receive and evaluate, and (to) conduct fact-finding investigations of sworn complaints against the
acts, conduct or behavior of any public official or employee and (to) file and prosecute the proper charges
with the appropriate agency." Petition, Annexes A and A-I. (Emphasis supplied.).

[13]
Petition, at page 8.

[14]
Vide Harriman vs. Interstate Commerce Commission, 211 U.S. 407 and Federal Trade Commission vs.
American Tobacco Co., 264 U.S. 298, where Justice Holmes in the first case ruled out a federal
commission's application to require witnesses to testify before it except in connection with specific
complaints for violation of the Interstate Commerce Act or with its investigation of specific subjects
that might have been the object of complaint. In the second case, Justice Holmes likewise ruled
against a federal commission’s fishing expeditions into private papers on the mere possibility that they
may disclose evidence of crime in view of the Constitutional provision against unreasonable searches
and seizures.

430 Phil. 223

SECOND DIVISION

G.R. No. 115103, April 11, 2002

BUREAU OF INTERNAL REVENUE, REPRESENTED BY THE COMMISSIONER

OF INTERNAL REVENUE, PETITIONER, VS. OFFICE OF THE OMBUDSMAN,
RESPONDENT.

DECISION

DE LEON, JR., J.:

Graft Investigation Officer II Christopher S. Soquilon of the Office of the Ombudsman

(OMBUDSMAN, for brevity) received information from an “informer-for-reward” regarding
allegedly anomalous grant of tax refunds to Distillera Limtuaco & Co., Inc. (Limtuaco, for brevity)
and La Tondeña Distilleries, Inc. Upon receipt of the information, Soquilon recommended[1] to
then Ombudsman Conrado M. Vasquez that the “case” be docketed and subsequently assigned to
him for investigation.[2]

On November 29, 1993, the Ombudsman issued a subpoena duces tecum[3] addressed to Atty. Millard
Mansequiao of the Legal Department of the Bureau of Internal Revenue (BIR) ordering him to
appear before the Ombudsman and to bring the complete original case dockets of the refunds
granted to Limtuaco and La Tondeña.

The BIR, through Assistant Commissioner for Legal Service Jaime M. Maza, asked that it be
excused from complying with the subpoena duces tecum because (a) the Limtuaco case was pending
investigation by Graft Investigation Officer II Napoleon S. Baldrias; and (b) the investigation
thereof and that of La Tondeña was mooted when the Sandiganbayan ruled in People v. Larin[4] that
“the legal issue was no longer in question since the BIR had ruled that the ad valorem taxes were
erroneously paid and could therefore be the proper subject of a claim for tax credit.”[5]
Without resolving the issues raised by the BIR, the Ombudsman issued another subpoena duces
tecum, dated December 9, 1993, addressed to BIR Commissioner Liwayway Vinzons-Chato ordering
her to appear before the Ombudsman and to bring the complete original case dockets of the refunds
granted to Limtuaco and La Tondeña.[6]

The BIR moved to vacate the subpoena duces tecum arguing that (a) the second subpoena duces tecum
was issued without first resolving the issues raised in its Manifestation and Motion dated December
8, 1993; (b) the documents required to be produced were already submitted to Graft Investigation
Officer II Baldrias; (c) the issue of the tax credit of ad valorem taxes has already been resolved as
proper by the Sandiganbayan; (d) the subpoena duces tecum partook of the nature of an omnibus
subpoena because it did not specifically described the particular documents to be produced; (e) there
was no clear showing that the tax case dockets sought to be produced contained evidence material
to the inquiry; (f) compliance with the subpoena duces tecum would violate Sec. 269[7] of the National
Internal Revenue Code (NLRC) on unlawful divulgence of trade secrets and Sec. 277[8] on
procuring unlawful divulgence of trade secrets; and (g) Limtuaco and La Tondeña had the right to
rely on the correctness and conclusiveness of the decisions of the Commissioner of Internal
Revenue.[9]

The Ombudsman denied[10] the Motion to Vacate the Subpoena Duces Tecum, pointing out that the
Limtuaco tax refund case then assigned to Baldrias was already referred to the Fact-Finding and
Investigation Bureau of the Ombudsman for consolidation with Case No. OMB-0-93-3248. The
Ombudsman also claimed that the documents submitted by the BIR to Baldrias were incomplete
and not certified. It insisted that the issuance of the subpoena duces tecum was not a “fishing
expedition” considering that the documents required for production were clearly and particularly
specified.

The BIR moved to reconsider[11] the respondent’s Order dated February 15, 1994 alleging that (a)
the matter subject of the investigation was beyond the scope of the jurisdiction of the Ombudsman;
(b) the subpoena duces tecum was not properly issued in accordance with law; and (c) non-compliance
thereto was justifiable. The BIR averred it had the exclusive authority whether to grant a tax credit
and that the jurisdiction to review the same was lodged with the Court of Tax Appeals and not with
the Ombudsman.

According to the BIR, for a subpoena duces tecum to be properly issued in accordance with law, there
must first be a pending action because the power to issue a subpoena duces tecum is not an
independent proceeding. The BIR noted that the Ombudsman issued the assailed subpoena duces
tecum based only on the information obtained from an “informer-for-reward” and the report of Asst.
Comm. Imelda L. Reyes. The BIR added that the subpoena duces tecum suffered from a legal
infirmity for not specifically describing the documents sought to be produced.

Finding no valid reason to reverse its Order dated February 15, 1994, the Ombudsman denied the
motion for reconsideration and reiterated its directive to the BIR to produce the documents.[12]
Instead of complying, the BIR manifested its intention to elevate the case on certiorari to this
Court.[13] The Ombudsman thus ordered Asst. Comm. Maza to show cause why he should not be
cited for contempt for contumacious refusal to comply with the subpoena duces tecum.[14]

However, before the expiration of the period within which Asst. Comm. Maza was required to file a
reply to the show cause order of the Ombudsman, the BIR filed before this Court the instant
Petition for Certiorari, Prohibition and Preliminary Injunction and Temporary Restraining Order.[15]

Petitioner BIR insists that the investigative power of the Ombudsman is not unbridled. Particularly
on the issue of tax refunds, the BIR maintains that the Ombudsman could validly exercise its power
to investigate only when there exists an appropriate case and subject to the limitations provided by
law.[16] Petitioner opines that the fact-finding investigation by the Ombudsman is not the proper case
as it is only a step preliminary to the filing of recovery actions on the tax refunds granted to
Limtuaco and La Tondeña.

This Court is not persuaded. No less than the 1987 Constitution enjoins that the “Ombudsman and
his Deputies, as protectors of the people, shall act promptly on complaints filed in any form or manner
against public officials or employees of the government, or any subdivision, agency or
instrumentality thereof, including government-owned or controlled corporations, and shall, in
appropriate case, notify the complainants of the action taken and the result thereof.”[17]

Clearly, there is no requirement of a pending action before the Ombudsman could wield its
investigative power. The Ombudsman could resort to its investigative prerogative on its own[18] or
upon a complaint filed in any form or manner. Even when the complaint is verbal or written,
unsigned or unverified, the Ombudsman could, on its own, initiate the investigation.[19] Thus –
There can be no objection to this procedure in the Office of the Ombudsman where anonymous
letters suffice to start an investigation because it is provided in the Constitution itself. In the second
place, it is apparent that in permitting the filing of complaints “in any form and manner,” the
framers of the Constitution took into account the well-known reticence of the people which keep
them from complaining against official wrongdoings. As this Court had occasion to point out, the
Office of the Ombudsman is different from other investigatory and prosecutory agencies of the
government because those subject to its jurisdiction are public officials who, through official
pressure and influence, can quash, delay or dismiss investigations held against them. On the other
hand complainants are more often than not poor and simple folk who cannot afford to hire
lawyers.[20]
The term “in an appropriate case” has already been clarified by this Court in Almonte v. Vasquez,[21]
thus –
Rather than referring to the form of complaints, therefore, the phrase “in an appropriate case” in
Art. XI, §12 means any case concerning official act or omission which is alleged to be “illegal, unjust,
improper, or inefficient,” The phrase “subject to such limitations as may be provided by law” refers
to such limitations as may be provided by Congress or, in the absence thereof, to such limitations as
may be imposed by courts.
Plainly, the pendency of an action is not a prerequisite before the Ombudsman can start its own
investigation.

Petitioner next avers that the determination of granting tax refunds falls within its exclusive expertise
and jurisdiction and that its findings could no longer be disturbed by the Ombudsman purportedly
through its investigative power as it was a valid exercise of discretion. Petitioner suggests that what
respondent should have done was to appeal its decision of granting tax credits to Limtuaco and La
Tondeña to the Court of Tax Appeals since it is the proper forum to review the decisions of the
Commissioner of Internal Revenue.

This contention of the BIR is baseless. The power to investigate and to prosecute which was
granted by law to the Ombudsman is plenary and unqualified.[22] The Ombudsman Act makes it
perfectly clear that the jurisdiction of the Ombudsman encompasses “all kinds of malfeasance,
misfeasance and nonfeasance that have been committed by any officer or employee xxx during his
tenure of office.[23]

Concededly, the determination of whether to grant a tax refund falls within the exclusive expertise
of the BIR. Nonetheless, when there is a suspicion of even just a tinge of impropriety in the grant
of the same, the Ombudsman could rightfully ascertain whether the determination was done in
accordance with law and identify the persons who may be held responsible thereto. In that sense,
the Ombudsman could not be accused of unlawfully intruding into and intervening with the
BIR’s exercise of discretion.

As correctly posited by the Office of the Solicitor General –

xxx (T)he Ombudsman undertook the investigation “not as an appellate body exercising the power
to review decisions or rulings rendered by a subordinate body, with the end view of affirming or
reversing the same, but as an investigative agency tasked to discharge the role as ‘protector of the
people’[24] pursuant to his authority ‘to investigate xxx any act or omission of any public official,
employee, office or agency, when such act or omission appears to be illegal, unjust, improper or
inefficient.”[25] The OSG insists that the “mere finality of petitioner’s ruling on the subject of tax
refund cases is not a legal impediment to the exercise of respondent’s investigative authority under
the Constitution and its Charter (RA 6770) which xxx is so encompassing as to include ‘all kinds of
malfeasance, misfeasance and nonfeasance that have been committed by any officer or employee
during his tenure of office.’”[26]
Indeed, the clause “any [illegal] act or omission of any public official” is broad enough to embrace
any crime committed by a public official. The law does not qualify the nature of the illegal act or
omission of the public official or employee that the Ombudsman may investigate. It does not
require that the act or omission be related to or be connected with or arise from the performance of
official duty.[27]

Petitioner fears that the fact-finding investigation being conducted by respondent would only
amount to “a general inquisitorial examination on the ‘case dockets’ with a view to search through
them to gather evidence”[28] considering that the subpoena duces tecum did not describe with
particularity the documents sought to be produced.

This Court is unimpressed. We agree with the view taken by the Solicitor General that the assailed
subpoena duces tecum indeed particularly and sufficiently described the records to be produced. There
is every indication that petitioner knew precisely what records were being referred to as it even
suggested that the tax dockets sought to be produced may not contain evidence material to the
inquiry and that it has already submitted the same to Baldrias.

The records do not show how the production of the subpoenaed documents would necessarily
contravene Sec. 269[29] of the National Internal Revenue Code (NIRC) on unlawful divulgence of
trade secrets and Sec. 277[30] of the same Code on procuring unlawful divulgence of trade
secrets. The documents sought to be produced were only the case dockets of the tax refunds granted
to Limtuaco and La Tondeña which are public records, and the subpoena duces tecum were directed
to the public officials who have the official custody of the said records. We find no valid reason
why the trade secrets of Limtuaco and La Tondeña would be unnecessarily disclosed if such official
records, subject of the subpoena duces tecum, were to be produced by the petitioner BIR to
respondent Office of the Ombudsman.

Assuming, for the sake of argument, that the case dockets of the tax refunds which were granted to
Limtuaco and La Tondeña contain trade secrets, that fact, however, would not justify their non-
production before the Ombudsman. As this Court has underscored in Almote v. Vasquez[31] -
At common law a governmental privilege against disclosure is recognized with respect to state
secrets bearing on military, diplomatic and similar matters. This privilege is based upon public
interest of such paramount importance as in and of itself transcending the individual interests of a
private citizen, even though, as a consequence thereof, the plaintiff cannot enforce his legal rights
xxx

In the case at bar, there is no claim that military or diplomatic secrets will be disclosed by the
production of records pertaining to the personnel of EIB. Indeed, EIIB’s function is the gathering
and evaluation of intelligence reports and information regarding “illegal activities affecting the
national economy, such as, but not limited to economic sabotage, smuggling, tax evasion, dollar
salting. Consequently, while in cases which involve state secrets it may be sufficient to determine
from the circumstances of the case that there is reasonable danger that compulsion of the evidence
will expose military maters without compelling production, no similar excuse can be made for a
privilege resting on other consideration.

Above all, even if the subpoenaed documents are treated as presumptively privileged, this decision
would only justify ordering their inspection in camera but not their nonproduction xxx
Besides, under the facts of this case, petitioner should not have concerned itself with possibly
violating the pertinent provisions of the NLRC on unlawful divulgence or unlawful procurement of
trade secrets considering Rule V of the Rules of Procedure of the Office of the Ombudsman[32]
which provides that –
(a) Any person whose testimony or production of documents or other evidence is necessary to
determine the truth in any inquiry, hearing, or proceeding being conducted by the Office of the
Ombudsman or under its authority in the performance or furtherance or its constitutional functions
and statutory objectives, including preliminary investigation, may be granted immunity from criminal
prosecution by the Ombudsman, upon such terms and conditions as the Ombudsman may
determine, taking into account the pertinent provisions of the Rules of Court xxx
With regard to the manner in which the investigation was conducted, petitioner asserts that the
investigation conducted by the Office of the Ombudsman violated due process, inasmuch as it
commenced its investigation by issuing the subpoena duces tecum without first furnishing petitioner
with a summary of the complaint and requiring it to submit a written answer.[33] The Ombudsman
labels this assertion of the BIR as premature maintaining that it is only when the Ombudsman finds
reasonable ground to investigate further that it is required to furnish respondent with the summary
of the complaint. The Ombudsman insists that in the instant case, it has yet to make that
determination.

On this score, we rule in favor of petitioner BIR. Records show that immediately upon receipt of
the information from an “informer-for-reward”, Graft Investigator Soquilon, in a Memorandum
dated November 26, 1993 addressed to then Ombudsman Conrado M. Vasquez, requested that the
“case” be docketed and assigned to him for a “full-blown fact-finding investigation.”[34] In his
Memorandum, Soquilon averred that he is “certain that these refunds can be recovered by reason of
the Tanduay precedent xxx and using the power of this Office, we will not only bring back to the
government multi-million illegal refunds but, like the Tanduay case, we will be establishing graft and
corruption against key BIR officials.”[35] In a marginal note dated November 26, 1993,[36]
Ombudsman Vasquez approved the docketing of the case and its assignment to Soquilon. Likewise,
in the Preliminary Evaluation Sheet[37] of the Office of the Ombudsman, the Fact Finding
Investigation Bureau of the Ombudsman was named as complainant against Concerned High
Ranking and Key Officials of the Bureau of Internal Revenue who granted multi-million tax refunds
to Limtuaco and La Tondeña Distilleries for alleged violation of RA 3019. On November 29, 1993
and December 9, 1993 Soquilon issued the assailed subpoena duces tecum requiring the concerned
BIR officials to appear before the Ombudsman and to bring with them the complete case dockets of
the tax refunds granted to Limtuaco and La Tondeña.

It is our view and we hold that the procedure taken by the respondent did not comply with the
safeguards enumerated in Sec. 26, §(2) of RA 6770 or the Ombudsman Act of 1989, which clearly
provides that –
(2) The Office of the Ombudsman shall receive complaints from any source in whatever form
concerning an official act or omission. It shall act on the complaint immediately and if it finds the
same entirely baseless, it shall dismiss the same and inform the complainant of such dismissal citing
the reasons therefore. If it finds a reasonable, ground to investigate further, it shall first furnish the
respondent public officer or employee with a summary of the complaint and require him to submit a
written answer within seventy-two hours from receipt hereof. If the answer is found satisfactory, it
shall dismiss the case.
The procedure which was followed by the respondent likewise contravened the Rules of Procedure of
the Office of the Ombudsman,[38] Sec. 4, Rule 11 of which provides that –
(a) If the complaint is not under oath or is based only on official reports, the investigating officer
shall require the complaint or supporting witnesses to execute affidavits to substantiate the
complaints.

(b) After such affidavits have been secured, the investigating officer shall issue an order, attaching
thereto a copy of the affidavits and other supporting documents, directing the respondent to submit,
within ten (10) days from receipt thereof, his counter-affidavits and controverting evidence with
proof of service thereof on the complainant. The complainant may file reply affidavits within ten
(10) days after service of the counter-affidavits xxx
It is clear from the initial comments of Soquilon in his Memorandum to Ombudsman Vasquez that
he undoubtedly found reasonable grounds to investigate further. In fact, he recommended that the
“case” be docketed immediately and assigned to him for a “full-blown fact-finding investigation.”
Even during that initial stage, Soquilon was convinced that the granting of the tax refunds was so
anomalous that he assured Ombudsman Vasquez of the eventual recovery of the tax refunds and the
prosecution and conviction of key BIR officials for graft and corruption.

We commend the graft investigators of the Office of the Ombudsman in their efforts to cleanse our
bureaucracy of scalawags. Sometimes, however, in their zeal and haste to pin down the culprits they
tend to circumvent some procedures. In this case, Graft Investigation Officer Soquilon forgot that
there are always two (2) sides to an issue and that each party must be given every opportunity to air
his grievance or explain his side as the case may be. This is the essence of due process.

The law clearly provides that if there is a reasonable ground to investigate further, the investigator of
the Office of the Ombudsman shall first furnish the respondent public officer or employee with a
summary of the complaint and require him to submit a written answer within seventy-two (72) hours
from receipt thereof. In the instant case, the BIR officials concerned were never furnished by the
respondent with a summary of the complaint and were not given the opportunity to submit their
counter-affidavits and controverting evidence. Instead, they were summarily ordered to appear
before the Ombudsman and to produce the case dockets of the tax refunds granted to Limtuaco and
La Tondeña. They are aggrieved in that, from the point of view of the respondent, they were
already deemed probably guilty of granting anomalous tax refunds. Plainly, respondent Office of the
Ombudsman failed to afford petitioner with the basics of due process in conducting its
investigation.

WHEREFORE, the petition is GRANTED. The respondent Office of the Ombudsman is

prohibited and ordered to desist from proceeding with Case No. OMB-0-93-3248; and its Orders
dated November 29, 1993, December 9, 1993 and February 15, 1994 are hereby ANNULLED and
SET ASIDE.

SO ORDERED.
Bellosillo, (Chairman), Mendoza, and Quisumbing, JJ., concur.

[1]
Memorandum dated November 26, 1993, Folder 1, pp. 3-4.

[2]
The “case” was subsequently docketed as OMB-0-93-3248.

[3]
Folder 1, p. 7.

[4]
Criminal Cases Nos. 14208 and 14209, September 18, 1992.

[5]
Manifestation and Motion dated December 8, 1993; Folder 1, pp. 8-9.

[6]
Folder 1, p. 12.

[7]
Now Sec. 270, National Internal Revenue Code.

[8]
Now Sec. 278, id.

[9]
Motion to Resolve Manifestation and Motion dated December 8, 1993 to Vacate Subpoena Duces
Tecum; Folder 1, pp. 14-15.

[10]
Order dated February 15, 1994; Folder 1, pp. 22-25.

[11]
Folder 1, pp. 26-33.

[12]
Id., pp. 49-50.

[13]
Manifestation and Motion, April 12, 1994; Folder 1, pp. 51-52.

[14]
Order dated April 26, 1994; Folder 1, pp. 64-65.

[15]
Rollo, pp. 1-29.

[16]
Id., pp. 16-17.

[17]
Article Ix, Sec. 12, 1987 Constitution; underscoring supplied.

[18]
Section 15 § (1), RA 6770.

[19]
Almonte v. Vasquez, G.R. No. 95367, May 23, 1995, 244 SCRA 302.
[20]
Id., p. 304.

[21]
Id., p. 303.

[22]
Uy v. The Hon. Sandiganbayan, et al., G.R. Nos. 105965-70, March 20, 2001.

[23]
Deloso v. Domingo, G.R. No. 90591, November 21, 1990, 191 SCRA 551.

[24]
Comment, p. 10; Rollo, p. 126.

[25]
Id., p. 11; Id., p. 127.

[26]
Id., pp. 12-13; id., pp. 128-129.

[27]
See Note 23, p. 550.

[28]
Rollo, pp. 25-26.

[29]
Now Sec. 270, National Internal Revenue Code.

[30]
Now Sec. 278, Id.

[31]
See Note 19, pp. 295, 298, 300; underscoring supplied.

[32]
Administrative Order No. 07.

[33]
Memorandum, Rollo, p. 240.

[34]
Folder 1, pp. 3-4.

[35]
Id., p. 3.

[36]
Id., p. 2.

[37]
Id., p. 1.

[38]
See Note 32.

500 Phil. 275

 THIRD DIVISION

G.R. NO. 158275, June 28, 2005

DOMINGO ROCO, PETITIONER, VS. HON. EDWARD B. CONTRERAS, PEOPLE

OF THE PHILIPPINES AND CAL’S POULTRY SUPPLY CORPORATION,
RESPONDENTS.

DECISION

GARCIA, J.:

Assailed and sought to be set aside in this appeal by way of a petition for review on certiorari under
Rule 45 of the Rules of Court are the following issuances of the Court of Appeals in CA-G.R. SP
No. 66038, to wit:
1. Decision dated 20 August 2002,[1] dismissing the appeal filed by herein petitioner
Domingo Roco contra the 18 October 2000 resolution of the Regional Trial Court (RTC) at
Roxas City, denying due course to and dismissing his petition for certiorari in SP Case No.
7489; and

2. Resolution dated 12 May 2003,[2] denying petitioner’s motion for reconsideration.

The material facts are not at all disputed:

Petitioner Domingo Roco was engaged in the business of buying and selling dressed
chicken. Sometime in 1993, he purchased his supply of dressed chicken from private respondent
Cal’s Poultry Supply Corporation (Cal’s Corporation, for short), a domestic corporation controlled
and managed by one Danilo Yap. As payment for his purchases, petitioner drew five (5) checks
payable to Cal’s Corporation against his account with the Philippine Commercial and Industrial
Bank (PCIB), which checks bear the following particulars:

Check No. Date Amount

004502 26 April 1993 P329,931.40
004503 4 May 1993 P319,314.40
004507 19 May 1993 P380,560.20
004511 26 May 1993 P258,660.20
004523 22 May 1993 P141,738.55.

Cal’s Corporation deposited the above checks in its account with PCIB but the bank dishonored
them for having been drawn against a closed account. Thereafter, Cal’s Corporation filed criminal
complaints against petitioner for violation of Batas Pambasa Blg. 22 (BP 22), otherwise known as
the Bouncing Checks Law.
After preliminary investigation, five (5) informations for violation of BP 22 were filed against
petitioner before the Municipal Trial Court in Cities (MTCC), Roxas City, thereat docketed as Crim.
Cases No. 94-2172-12 to 94-2176-12, all of which were raffled to Branch 2 of said court.

Meanwhile, and even before trial could commence, petitioner filed with the Bureau of Internal
Revenue (BIR) at Iloilo City a denunciation letter against Cal’s Corporation for the latter’s alleged
violation of Section 258 in relation to Section 263 of the National Internal Revenue Code in that it
failed to issue commercial invoices on its sales of merchandise. Upon BIR’s investigation, it was
found that Cal’s Corporation’s sales on account were unavoidable, hence, the corporation had to
defer the issuance of “Sales Invoices” until the purchases of its customers were paid in full. With
respect to the sales invoices of petitioner, the investigation disclosed that the same could not, as yet,
be issued by the corporation precisely because the checks drawn and issued by him in payment of
his purchases were dishonored by PCIB for the reason that the checks were drawn against a closed
account. Accordingly, the BIR found no prima facia evidence of tax evasion against Cal’s
Corporation.[3]

Thereupon, trial of the criminal cases proceeded. After the prosecution rested, the MTCC declared
the cases submitted for decision on account of petitioner’s failure to adduce evidence in his
behalf. Later, the same court rendered a judgment of conviction against petitioner.

Therefrom, petitioner went on appeal to the Regional Trial Court, contending that he was unlawfully
deprived of his right to due process when the MTCC rendered judgment against him without
affording him of the right to present his evidence. Agreeing with the petitioner, the RTC vacated the
MTCC decision and remanded the cases to it for the reception of petitioner’s evidence.

On 11 March 1999, during the pendency of the remanded cases, petitioner filed with the MTCC a
“Request for Issuance of Subpoena Ad Testificandum and Subpoena Duces Tecum”, requiring Vivian
Deocampo or Danilo Yap, both of Cal’s Corporation or their duly authorized representatives, to
appear and testify in court on 19 May 1999 and to bring with them certain documents, records and
books of accounts for the years 1993-1999, to wit:
a) Sales Journal for the year 1993;
b) Accounts Receivable Journal for the year 1993;
c) Sales Ledger for the year 1993;
d) Accounts Receivable Ledger for the year 1993 (in its absence, Accounts Receivable Ledger for the
years 1994, 1995, 1996, 1997, 1998 or 1999);
e) Audited Income Statement for the years 1993, 1994, 1995, 1996, 1997, 1998 and Income
Statements as of February 1999;
f) Audited Balance Sheet for the years 1993, 1994, 1995, 1996, 1997, 1998 and Balance Sheet as of
February 1999; and
g) Income Tax Returns for the years 1993, 1994, 1995, 1996 and 1997.
The prosecution did not object to this request.

When the cases were called on 19 May 1999, the MTCC, then presided by Acting Judge Geomer C.
Delfin, issued an order granting petitioner’s aforementioned request and accordingly directed the
issuance of the desired subpoenas.

During the trial of 14 July 1999, the private prosecutor manifested that it was improper for the trial
court to have directed the issuance of the requested subpoenas, to which the petitioner countered by
saying that Judge Delfin’s order of 19 May 1999 had become final and hence,
immutable. Nonetheless, the trial court issued an order allowing the prosecution to file its comment
or opposition to petitioner’s request for the issuance of subpoenas.

The prosecution did file its opposition, thereunder arguing that:

a) Vivian Deocampo, who previously testified for Lota Briones-Roco in Criminal Cases Nos. 94-
2177-12 to 94-2182-12 before Branch 1 of the MTC, had earlier attested to the fact that the
following documents, records and books of accounts for 1993 sought by petitioner were already
burned:

1. Audited Income Statement for the years 1993, 1994, 1995, 1996, 1997, 1998 and Income
Statement as of February 1999;

2. Audited Balance Sheet for the years 1993, 1994, 1995, 1996, 1997, 1998 and Balance Sheet as of
February 1999; and

3. Income Tax Returns for the years 1993, 1994, 1995, 1996 and 1997.

b) the Sales Ledger for the year 1993 cannot be produced because Cal’s Corporation did not
maintain such ledger; and

c) the account Receivable Ledger for the periods from 1993, the Income Statement for 1993 and the
Balance Sheet as of February 1999, cannot also be produced because Cal’s Corporation recently
computerized its accounting records and was still in the process of completing the same.
For its part, the corporation itself maintained that the production of the above-mentioned
documents was inappropriate because they are immaterial and irrelevant to the crimes for which the
petitioner was being prosecuted.

In a resolution dated 19 October 1999, the MTCC, this time thru its regular Presiding Judge, Judge
Edward B. Contreras, denied petitioner’s request on the following grounds: (a) the requested
documents, book ledgers and other records were immaterial in resolving the issues posed before the
court; and (b) the issuance of the subpoenas will only unduly delay the hearing of the criminal cases.

His motion for reconsideration of the denial resolution having been similarly denied by Judge
Contreras, petitioner then went to the RTC on a petition for certiorari with plea for the issuance of a
writ of preliminary injunction and/or temporary restraining order, imputing grave abuse of
discretion on the part of Judge Contreras, which petition was docketed in the RTC as SP Case No.
V-7489.
In a resolution dated 18 October 2000, the RTC denied due course to and dismissed the petition for
petitioner’s failure to show that Judge Contreras committed grave abuse of discretion amounting to
excess or lack of jurisdiction. A motion for reconsideration was thereafter filed by petitioner, but it,
too, was likewise denied.

Undaunted, petitioner went on appeal via certiorari to the Court of Appeals in CA-G.R. SP No.
66038.

As stated at the outset hereof, the Court of Appeals, in a decision dated 20 August 2002,[4] dismissed
the petition and accordingly affirmed the impugned resolutions of the RTC. With his motion for
reconsideration having been denied by the same court in its resolution of 12 May 2003,[5] petitioner
is now with us via the present recourse on his submissions that -

I.
XXX THE DENIAL OF THE REQUEST FOR THE ISSUANCE OF SUBPOENA AD
TESTIFICANDUM AND SUBPOENA DUCES TECUM IS VIOLATIVE OF THE
CONSTITUTIONAL RIGHT OF THE ACCUSED AS ENSHRINED IN ART. III, SEC. 14 (2)
OF THE CONSTITUTION; and

II.

XXX THERE MUST BE A BALANCING OF INTEREST BETWEEN THE RIGH [sic] OF AN

ACCUSED TO PROVE HIS INNOCENCE AND THE RIGHT OF A COMPLAINANT TO
THE SPEEDY DISPOSITION OF HIS CASE.
As we see it, the pivotal issue is whether or not the three (3) courts below committed reversible
error in denying petitioner’s request for the issuance of subpoena ad testificandum and subpoena duces
tecum in connection with the five (5) criminal cases for violation of BP 22 filed against him and now
pending trial before the MTCC.

We rule in the negative.

A subpoena is a process directed to a person requiring him to attend and to testify at the hearing or
trial of an action or at any investigation conducted under the laws of the Philippines, or for the
taking of his deposition.[6]

In this jurisdiction, there are two (2) kinds of subpoena, to wit: subpoena ad testificandum and subpoena
duces tecum. The first is used to compel a person to testify, while the second is used to compel the
production of books, records, things or documents therein specified. As characterized in H.C.
Liebenow vs. The Philippine Vegetable Oil Company:[7]
The subpoena duces tecum is, in all respects, like the ordinary subpoena ad testificandum with the
exception that it concludes with an injunction that the witness shall bring with him and produce at
the examination the books, documents, or things described in the subpoena.
Well-settled is the rule that before a subpoena duces tecum may issue, the court must first be
satisfied that the following requisites are present: (1) the books, documents or other things
requested must appear prima facie relevant to the issue subject of the controversy (test of relevancy);
and (2) such books must be reasonably described by the parties to be readily identified (test of
definiteness). Again, to quote from H.C. Liebenow:[8]
In determining whether the production of the documents described in a subpoena duces tecum
should be enforced by the court, it is proper to consider, first, whether the subpoena calls for the
production of specific documents, or rather for specific proof, and secondly, whether that
proof is prima facie sufficiently relevant to justify enforcing its production. A general
inquisitorial examination of all the books, papers, and documents of an adversary, conducted with a
view to ascertain whether something of value may not show up, will not be enforced. (Emphasis
supplied)
Further, in Universal Rubber Products, Inc. vs. CA, et al.,[9] we held:
Well-settled is Our jurisprudence that, in order to entitle a party to the issuance of a ‘subpoena duces
tecum,’ it must appear, by clear and unequivocal proof, that the book or document sought to be
produced contains evidence relevant and material to the issue before the court, and that the
precise book, paper or document containing such evidence has been so designated or
described that it may be identified. (Emphasis supplied)
Going by established precedents, it thus behooves the petitioner to first prove, to the satisfaction of
the court, the relevancy and the definiteness of the books and documents he seeks to be brought
before it.

Admittedly, the books and documents that petitioner requested to be subpoenaed are designated
and described in his request with definiteness and readily identifiable. The test of definiteness,
therefore, is satisfied in this case.

It is, however, in the matter of relevancy of those books and documents to the pending criminal
cases that petitioner miserably failed to discharge his burden.

In the recent case of Aguirre vs. People of the Philippines,[10] the Court reiterated the following
discussions regarding violations of BP 22:
xxx what the law punishes is the issuance of a bouncing check not the purpose for which it was
issued nor the terms and conditions relating to its issuance. The mere act of issuing a worthless
check is malum prohibitum. (Cruz vs. Court of Appeals, 233 SCRA 301). All the elements,
therefore, of the violation of Batas Pambansa Blg. 22 are all present in the instant criminal cases and
for which the accused is solely liable, to wit: [a] the making, drawing and issuance of any check to apply to
account or for value; [2] the knowledge of the maker, drawer or issuer that at the time of issue he does not have sufficient
funds in or credit with the drawee bank for the payment of such check in full upon its presentment; and [3] subsequent
dishonor of the check by the drawee bank for insufficiency of funds or credit or dishonor for the same reason had not the
drawer, without any valid cause, ordered the bank to stop payment. (Navarro vs. Court of Appeals, 234 SCRA
639).
We stress that the gravamen of the offense under BP 22 is the act of making or issuing a worthless
check or a check that is dishonored upon its presentment for payment.[11] The offense is already
consummated from the very moment a person issues a worthless check, albeit payment of the value
of the check, either by the drawer or by the drawee bank, within five (5) banking days from notice of
dishonor given to the drawer is a complete defense because the prima facie presumption that the
drawer had knowledge of the insufficiency of his funds or credit at the time of the issuance of the
check and on its presentment for payment is thereby rebutted by such payment.[12]

Here, petitioner would want it appear that the books and documents subject of his request for
subpoena duces tecum are indispensable, or, at least, relevant to prove his innocence. The Court
disagrees.

Based on the records below and as correctly pointed out by the Court of Appeals, petitioner had
been issued by Cal’s Corporation with temporary receipts in the form of yellow pad slips of paper
evidencing his payments, which pad slips had been validated by the corporation itself. Clear it is,
then, that the production of the books and documents requested by petitioner are not indispensable
to prove his defense of payment. In the words of the appellate court:
The Petitioner admitted, when he testified in the Regional Trial Court, that he had been issued
temporary receipts in the form of yellow pad slips of paper, by the Private Respondent, for his
payments which were all validated by the Private Respondent (Exhibits ‘8’ and ‘F’ and their
submarkings). Even if the temporary receipts issued by the Private Respondent may not have been
the official receipts for Petitioner’s payments, the same are as efficacious and binding on the Private
Respondent as official receipts issued by the latter.
We do not find any justifiable reason, and petitioner has not shown any, why this Court must have
to disbelieve the factual findings of the appellate court. In short, the issuance of a subpoena duces
tecum or ad testificandum to compel the attendance of Vivian Deocampo or Danilo Yap of Cal’s
Corporation or their duly authorized representatives, to testify and bring with them the records and
documents desired by the petitioner, would serve no purpose but to further delay the proceedings in
the pending criminal cases.

Besides, the irrelevancy of such books and documents would appear on their very face thereof, what
the fact that the requested Audited Income Statements, Audited Balance Sheets, Income Tax
Returns, etc. pertained to the years 1994 to 1999 which could not have reflected petitioner’s alleged
payment because the subject transaction happened in 1993. Again, we quote from the assailed
decision of the Court of Appeals:
The checks subject of the criminal indictments against the Petitioner were drawn and dated in
1993. The Petitioner has not demonstrated the justification, for the production of the
books/records for 1994, and onwards, up to 1999. Especially so, when the “Informations” against
the Petitioner, for violations of BP 22, were filed, with the Trial Court, as early as 1994.
We are inclined to believe, along with that court, that petitioner was just embarking on a “fishing
expedition” to derail “the placid flow of trial”.

With the above, it becomes evident to this Court that petitioner’s request for the production of
books and documents referred to in his request are nakedly calculated to merely lengthen the
proceedings in the subject criminal cases, if not to fish for evidence. The Court deeply deplores
petitioner’s tactics and will never allow the same.

WHEREFORE, the instant petition is DENIED and the challenged decision and resolution of the
Court of Appeals AFFIRMED.

Costs against petitioner.

SO ORDERED.

Panganiban, (Chairman), Sandoval-Gutierrez, Corona, and Carpio-Morales, JJ., concur.

[1]
Penned by then Associate Justice (now a member of this Court) Romeo J. Callejo, Sr., with
Associate Justices Remedios Salazar-Fernando and Danilo B. Pine, concurring; Rollo, pp. 14-35.

[2]
Rollo, p. 41.

[3]
Rollo, pp. 126-127.

[4]
Rollo, pp. 14-35.

[5]
Rollo, p. 41.

[6]
Caamic vs. Galapon, Jr., 237 SCRA 390, 395 [1994].

[7]
39 Phils. 60, 67 [1918].

[8]
Supra, p. 69.

[9]
215 Phils. 85, 91 [1984], citing Arnaldo vs. Locsin, 69 Phil. 113, 120 [1939].

[10]
416 Phils. 163, 170 [2001].

[11]
Cueme vs. People, 390 Phils. 294, 303 [2000].

[12]
Navarro vs. Court of Appeals and People of the Philippines, 234 SCRA 639, 644 [1994].

590 Phil. 801

 SECOND DIVISION

G.R. No. 177982, October 17, 2008

FITNESS BY DESIGN, INC., PETITIONER, VS. COMMISSIONER ON INTERNAL

REVENUE, RESPONDENT.

DECISION

CARPIO MORALES, J.:

On March 17, 2004, the Commissioner on Internal Revenue (respondent) assessed Fitness by
Design, Inc. (petitioner) for deficiency income taxes for the tax year 1995 in the total amount of
P10,647,529.69.[1] Petitioner protested the assessment on the ground that it was issued beyond the
three-year prescriptive period under Section 203 of the Tax Code.[2] Additionally, petitioner claimed
that since it was incorporated only on May 30, 1995, there was no basis to assume that it had already
earned income for the tax year 1995.[3]

On February 1, 2005, respondent issued a warrant of distraint and/or levy against petitioner,[4]
drawing petitioner to file on March 1, 2005 a Petition for Review (with Motion to Suspend
Collection of Income Tax, Value Added Tax, Documentary Stamp Tax and Surcharges and Interests
subject of this Petition)[5] before the Court of Tax Appeals (CTA) before which it reiterated its
defense of prescription. The petition was docketed as CTA Case No. 7160.

In his Answer,[6] respondent alleged:

The right of the respondent to assess petitioner for deficiency income tax, VAT and Documentary
Stamp Tax for the year 1995 has not prescribed pursuant to Section 222(a) of the 1997 Tax Code.
Petitioner's 1995 Income Tax Return (ITR) filed on April 11, 1996 was false and fraudulent for its
deliberate failure to declare its true sales. Petitioner declared in its 1995 Income Tax Return that it
was on its pre-operation stage and has not declared its income. Investigation by the revenue officers
of the respondent, however, disclosed that it has been operating/doing business and had sales
operations for the year 1995 in the total amount of P7,156,336.08 which it failed to report in its
1995 ITR. Thus, for the year 1995, petitioner filed a fraudulent annual income return with intent to
evade tax. Likewise, petitioner failed to file Value-Added Tax (VAT) Return and reported the
amount of P7,156,336.08 as its gross sales for the year 1995. Hence, for failure to file a VAT
return and for filing a fraudulent income tax return for the year 1995, the corresponding
taxes may be assessed at any time within ten (10) years after the discovery of such omission
or fraud pursuant to Section 222(a) of the 1997 Tax Code.

The subject deficiency tax assessments have already become final, executory and demandable for
failure of the petitioner to file a protest within the reglementary period provided for by law. The
"alleged protest" allegedly filed on June 25, 2004 at the Legal Division, Revenue Region No. 8,
Makati City is nowhere to be found in the BIR Records nor reflected in the Record Book of the
Legal Division as normally done by our receiving clerk when she receive[s] any document. The
respondent, therefore, has legal basis to collect the tax liability either by distraint and levy or civil
action.[7] (Emphasis and underscoring supplied)
The aforecited Section 222(a)[8] of the 1997 Tax Code provides:
In the case of a false or fraudulent return with intent to evade tax or of failure to file a return, the tax
may be assessed, or a proceeding in court for the collection of such tax may be filed without
assessment, at any time within ten (10) years after the discovery of the falsity, fraud, or omission:
Provided, That in a fraud assessment which has become final and executory, the fact of fraud shall be
judicially taken cognizance of in the civil or criminal action for the collection thereof. (Underscoring
supplied)
The Bureau of Internal Revenue (BIR) in fact filed on March 10, 2005 a criminal complaint before
the Department of Justice against the officers and accountant of petitioner for violation of the
provisions of "The National Internal Revenue Code of 1977, as amended,[9] covering the taxable year
1995." The criminal complaint was docketed as I.S. No. 2005-203.

On motion of petitioner in CTA Case No. 7160, a preliminary hearing on the issue of prescription[10]
was conducted during which petitioner's former bookkeeper attested that a former colleague -
certified public accountant Leonardo Sablan (Sablan) - illegally took custody of petitioner's
accounting records, invoices, and official receipts and turned them over to the BIR.[11]

On petitioner's request, a subpoena ad testificandum was issued to Sablan for the hearing before the
CTA scheduled on September 4, 2006 but he failed to appear.[12]

Petitioner thus requested for the issuance of another subpoena ad testificandum to Sablan for the
hearing scheduled on October 23, 2006,[13] and of subpoena duces tecum to the chief of the National
Investigation Division of the BIR for the production of the Affidavit of the Informer bearing on the
assessment in question.[14] Petitioner's requests were granted.[15]

During the scheduled hearing of the case on October 23, 2006, on respondent's counsel's
manifestation that he was not furnished a copy of petitioner's motion for the issuance of
subpoenaes, the CTA ordered petitioner to file a motion for the issuance of subpoenas and to
furnish respondent's counsel a copy thereof.[16] Petitioner complied with the CTA order.[17]

In a related move, petitioner submitted written interrogatories addressed to Sablan and to Henry
Sarmiento and Marinella German, revenue officers of the National Investigation Division of the
BIR.[18]

By Resolution[19] of January 15, 2007, the CTA denied petitioner's Motion for Issuance of
Subpoenas and disallowed the submission by petitioner of written interrogatories to Sablan, who is
not a party to the case, and the revenue officers,[20] it finding that the testimony, documents, and
admissions sought are not relevant.[21] Besides, the CTA found that to require Sablan to testify would
violate Section 2 of Republic Act No. 2338, as implemented by Section 12 of Finance Department
Order No. 46-66, proscribing the revelation of identities of informers of violations of internal
revenue laws, except when the information is proven to be malicious or false.[22]

In any event, the CTA held that there was no need to issue a subpoena duces tecum to obtain the
Affidavit of the Informer as the same formed part of the BIR records of the case, the production of
which had been ordered by it.[23]

Petitioner's Motion for Reconsideration[24] of the CTA Resolution of January 15, 2007 was denied,[25]
hence, the present Petition for Certiorari[26] which imputes grave abuse of discretion to the CTA
I.

x x x in holding that the legality of the mode of acquiring the documents which are the bases of the
above discussed deficiency tax assessments, the subject matter of the Petition for Review now
pending in the Honorable Second Division, is not material and relevant to the issue of prescription.

II.

x x x in holding that Mr. Leonardo Sablan's testimony, if allowed, would violate RA 2338 which
prohibits the BIR to reveal the identity of the informer since 1) the purpose of the subpoena is to
elicit from him the whereabouts of the original accounting records, documents and receipts owned
by the Petitioner and not to discover if he is the informer since the identity of the informer is not
relevant to the issues raised; 2) RA 2338 cannot legally justify violation of the Petitioner's property
rights by a person, whether he is an informer or not, since such RA cannot allow such invasion of
property rights otherwise RA 2338 would run counter to the constitutional mandate that "no person
shall be deprive[d] of life, liberty or property without due process of law."

III.

x x x in holding that the issuance of subpoena ad testificandum would constitute a violation of the
prohibition to reveal the identity of the informer because compliance with such prohibition has been
rendered moot and academic by the voluntary admissions of the Respondent himself.

IV.

x x x in holding that the constitutional right of an accused to examine the witness against him does
not exist in this case. The Petitioner's liability for tax deficiency assessment which is the main issue
in the Petition for Review is currently pending at the Honorable Second Division. Therefore, it is a
prejudicial question raised in the criminal case filed by the herein Respondent against the officers of
the Petitioner with the Department of Justice.

V.

x x x in dismissing the request for subpoena ad testificandum because the Opposition thereto
submitted by the Respondent was not promptly filed as provided by the Rules of Court thus, it is
respectfully submitted that, Respondent has waived his right to object thereto.

VI.

x x x when the Honorable Court of Tax Appeals ruled that the purpose of the Petitioner in
requesting for written interrogatories is to annoy, embarrass, or oppress the witness because such
ruling has no factual basis since Respondent never alleged nor proved that the witnesses to whom
the interrogatories are addressed will be annoyed, embarrassed or oppressed; besides the only
obvious purpose of the Petitioner is to know the whereabouts of accounting records and documents
which are in the possession of the witnesses to whom the interrogatories are directed and to
ultimately get possession thereof. Granting without admitting that there is annoyance,
embarrassment or oppression; the same is not unreasonable.

VII.

x x x when it failed to rule that the BIR officers and employees are not covered by the prohibition
under RA 2338 and do not have the authority to withhold from the taxpayer documents owned by
such taxpayer.

VIII.

x x x when it required the "clear and unequivocal proof" of relevance of the documents as a
condition precedent for the issuance of subpoena duces tecum.

IX.

x x x when it quashed the subpoena duces tecum as the Honorable Court had issued an outstanding
order to the Respondent to certify and forward to the CTA all the records of the case because up to
the date of this Petition the BIR records have not been submitted yet to the CTA.[27]
Grave abuse of discretion implies such capricious and whimsical exercise of judgment as equivalent
to lack of jurisdiction or, in other words, when the power is exercised in an arbitrary or despotic
manner by reason of passion or personal hostility, and it must be so patent and gross as to amount
to an evasion of positive duty or a virtual refusal of duty enjoined or to act at all in contemplation of
law.[28]

The Court finds that the issuance by the CTA of the questioned resolutions was not tainted by
arbitrariness.

The fact that Sablan was not a party to the case aside, the testimonies, documents, and admissions
sought by petitioner are not indeed relevant to the issue before the CTA. For in requesting the
issuance of the subpoenas and the submission of written interrogatories, petitioner sought to
establish that its accounting records and related documents, invoices, and receipts which were the
bases of the assessment against it were illegally obtained. The only issues, however, which surfaced
during the preliminary hearing before the CTA, were whether respondent's issuance of assessment
against petitioner had prescribed and whether petitioner's tax return was false or fraudulent.

Besides, as the CTA held, the subpoenas and answers to the written interrogatories would violate
Section 2 of Republic Act No. 2338 as implemented by Section 12 of Finance Department Order
No. 46-66.

Petitioner claims, however, that it only intended to elicit information on the whereabouts of the
documents it needs in order to refute the assessment, and not to disclose the identity of the
informer.[29] Petitioner's position does not persuade. The interrogatories addressed to Sablan and the
revenue officers show that they were intended to confirm petitioner's belief that Sablan was the
informer. Thus the questions for Sablan read:
1. Under what circumstances do you know petitioner corporation? Please state in what
capacity, the date or period you obtained said knowledge.

2. Do you know a Ms. Elnora Carpio, who from 1995 to the early part of 1996 was the book
keeper of petitioner? Please state how you came to know of Ms. Carpio.

3. At the time that Ms. Carpio was book keeper of petitioner did she consult you or show any
accounting documents and records of petitioner?

4. What documents, if any, did you obtain from petitioner?

5. Were these documents that you obtained from petitioner submitted to the Bureau of
Internal Revenue (BIR)? Please describe said documents and under what circumstances the
same were submitted.

6. Was the consent of the petitioner, its officers or employees obtained when the documents
that you obtained were submitted to the BIR? Please state when and from whom the
consent was obtained.

7. Did you execute an affidavit as an informer in the assessment which was issued by the BIR
against petitioner for the tax year 1995 and other years?[30] (Underscoring supplied)

while the questions for the revenue officers read:

1. Where did you obtain the documents, particularly the invoices and official receipts, which
[were] used by your office as evidence and as basis of the assessment for deficiency income
tax and value added tax for the tax year 1995 issued against petitioner?

2. Do you know Mr. Leonardo Sablan? Please state under what circumstance you came to
know Mr. Sablan?[31] (Underscoring supplied)
Petitioner impugns the manner in which the documents in question reached the BIR, Sablan having
allegedly submitted them to the BIR without its (petitioner's) consent. Petitioner's lack of consent
does not, however, imply that the BIR obtained them illegally or that the information received is
false or malicious. Nor does the lack of consent preclude the BIR from assessing deficiency taxes on
petitioner based on the documents. Thus Section 5 of the Tax Code provides:
In ascertaining the correctness of any return, or in making a return when none has been made, or in
determining the liability of any person for any internal revenue tax, or in collecting any such liability,
or in evaluating tax compliance, the Commissioner is authorized:

(A) To examine any book, paper, record or other data which may be relevant or material to such
query;
(B) To obtain on a regular basis from any person other than the person whose internal
revenue tax liability is subject to audit or investigation, or from any office or officer of the
national and local governments, government agencies and instrumentalities, including the
Bangko Sentral ng Pilipinas and government-owned and -controlled corporations, any information
such as, but not limited to, costs and volume of production, receipts or sales and gross incomes
of taxpayers, and the names, addresses, and financial statements of corporations, mutual fund
companies, insurance companies, regional operating headquarters of multinational companies,
joint accounts, associations, joint ventures or consortia and registered partnerships and their
members;
(C) To summon the person liable for tax or required to file a return, or any officer or employee of
such person, or any person having possession, custody, or care of the books of accounts
and other accounting records containing entries relating to the business of the person
liable for tax, or any other person, to appear before the Commissioner or his duly authorized
representatives at a time and place specified in the summons and to produce such books,
papers, records, or other data, and to give testimony;
(D) To take such testimony of the person concerned, under oath, as may be relevant or material to
such inquiry; and
(E) To cause revenue officers and employees to make a canvass from time to time of any revenue
district or region and inquire after and concerning all persons therein who may be liable to pay
any internal revenue tax, and all persons owning or having the care, management or possession
of any object with respect to which a tax is imposed.

x x x x (Emphasis and underscoring supplied)

The law thus allows the BIR access to all relevant or material records and data in the person of the
taxpayer,[32] and the BIR can accept documents which cannot be admitted in a judicial proceeding
where the Rules of Court are strictly observed.[33] To require the consent of the taxpayer would
defeat the intent of the law to help the BIR assess and collect the correct amount of taxes.

Petitioner's invocation of the rights of an accused in a criminal prosecution to cross examine the
witness against him and to have compulsory process issued to secure the attendance of witnesses
and the production of other evidence in his behalf does not lie. CTA Case No. 7160 is not a criminal
prosecution, and even granting that it is related to I.S. No. 2005-203, the respondents in the latter
proceeding are the officers and accountant of petitioner-corporation, not petitioner. From the
complaint and supporting affidavits in I.S. No. 2005-203, Sablan does not even appear to be a
witness against the respondents therein.[34]

AT ALL EVENTS, issuance of subpoena duces tecum for the production of the documents requested
by the petitioner - which documents petitioner claims to be crucial to its defense[35] - is unnecessary
in view of the CTA order for respondent to certify and forward to it all the records of the case.[36] If
the order has not been complied with, the CTA can enforce it by citing respondent for indirect
contempt.[37]

WHEREFORE, in light of the foregoing disquisition, the petition is DISMISSED.

Costs against petitioner.

SO ORDERED.

Quisumbing, (Chairperson), Tinga, Velasco, Jr., and Brion, JJ., Concur.

[1]
CTA records, pp. 96-101.

[2]
Id. at 30.

[3]
Ibid.

[4]
Id. at 29.

[5]
Id. at 1-11.

[6]
Id. at 44-46.

[7]
Id. at 44-45.

[8]
Formerly Section 223 of the 1977 Tax Code.

[9]
Rollo, pp. 40-64.

[10]
CTA records, pp. 83-85.

[11]
Id. at 133-134; TSN, August 9, 2005, pp. 4-7.
[12]
Id. at 139-140.

[13]
Id. at 141-142.

[14]
Id. at 144-145.

[15]
Id. at 147-151.

[16]
Id. at 152-158.

[17]
Id. at 152.

[18]
Id. at 159-163.

[19]
Penned by CTA Associate Justice Juanito C. Castañeda, Jr. with the concurrence of Associate
Justices Erlinda P. Uy and Olga Palanca-Enriquez. Id. at 177-183.

[20]
Id. at 182.

[21]
Id. at180.

[22]
Id. at 181.

[23]
Id. at 180-181.

[24]
Id. at 185-194.

[25]
Id. at 219-223.

[26]
Rollo, pp. 3-27.

[27]
Id. at 8-10.

[28]
Vide 246 Corporation v. Judge Daway, 461 Phil. 830, 842 (2003).

[29]
Rollo, pp. 12-15.

[30]
CTA records, pp. 159-160.

[31]
Id. at 160.

[32]
Commissioner of Internal Revenue v. Hantex Trading Co., Inc., G.R. No. 136975, March 31, 2005, 454
SCRA 301, 326.
[33]
Id. at 327.

[34]
Rollo, pp. 40-64.

[35]
Id. at 23.

[36]
Vide CTA records, pp. 36, 180-181, 377.

[37]
Vide Revised Rules of the Court of Tax Appeals, Rule 6, Section 5(b).

624 Phil. 458

SECOND DIVISION

G.R. No. 164152, January 21, 2010

COMMISSIONER OF INTERNAL REVENUE, PETITIONER, VS. JULIETA ARIETE,

RESPONDENT.

DECISION

CARPIO, J.:

The Case

The Commissioner of Internal Revenue (petitioner) filed this Petition for Review[1] to reverse the
Court of Appeals' (CA) Decision[2] dated 14 June 2004 in CA-G.R. SP No. 70693. In the assailed
decision, the CA affirmed the Court of Tax Appeals' (CTA) Decision[3] and Resolution dated 15
January 2002 and 3 May 2002, respectively. The CTA cancelled the assessments issued against Julieta
Ariete (respondent) for deficiency income taxes of P191,463.04 for the years 1993, 1994, 1995, and
1996.

The Facts

On 21 May 1997, George P. Mercado filed an Affidavit with the Special Investigation Division,
Revenue Region No. 19, Davao City. The affidavit attested that respondent earned substantial
income in 1994, 1995, and 1996 without paying income tax.[4]

The Chief of the Special Investigation Division (SID Chief) issued Mission Order No. 118-97 dated
23 May 1997, directing a Revenue Officer to conduct preliminary verification of the denunciation
made and submit a progress report. The SID Chief also sent a request to access the BIR records of
Revenue District No. 112, Tagum, Davao del Norte (RDO), inquiring if the income tax returns of
respondent for the years 1993 to 1996 are available for examination. The RDO replied that
respondent had no records of income tax returns for the years 1993 to 1996.[5]

On 15 October 1997, the Revenue Officer submitted a report stating that respondent admitted her
non-filing of income tax returns.[6]

On 2 December 1997, respondent filed her income tax returns for the years 1993, 1994, 1995, and
1996 under Revenue Memorandum Order (RMO) No. 59-97 as amended by RMO No. 60-97 and
RMO No. 63-97, otherwise known as the Voluntary Assessment Program (VAP).[7]

On 28 July 1998, the Regional Director issued a Letter of Authority to investigate respondent for tax
purposes covering the years 1993 to 1996.

On 14 October 1998, the Revenue Officer submitted a Memorandum to the SID Chief
recommending that respondent be assessed with deficiency income taxes for the years 1993 to 1996.
On 22 January 1999, four assessment notices were issued against respondent. The total deficiency
income taxes, inclusive of interests and surcharges amounted to P191,463.04:
1993 P 6,462.18[8]

1994 47,187.39[9]

1995 24,729.64[10]

1996 113,083.83[11]

P 191,463.04

On 22 February 1999, respondent filed an Assessment Protest with Prayer for Reinvestigation. On
30 March 1999, the assessment protest was denied.

On 16 April 1999, respondent offered a compromise settlement but the same was denied.

Respondent filed a petition for review with the CTA assailing the Bureau of Internal Revenue's
(BIR) decision denying with finality the request for reinvestigation and disapproving her availment
of the VAP. Respondent also contested the issuance of the four assessment notices.

On 15 January 2002, the CTA rendered a decision cancelling the deficiency assessments. Petitioner
filed a motion for reconsideration but the CTA denied the same in a Resolution dated 3 May 2002.

Petitioner appealed the CTA's decision to the CA. In a decision dated 14 June 2004, the CA
affirmed the CTA's decision.

Aggrieved by the CA's decision affirming the cancellation of the tax deficiency assessments,
petitioner elevated the case before this Court.
Ruling of the Court of Tax Appeals

The CTA stated that when respondent filed her income tax returns on 2 December 1997, she was
not yet under investigation by the Special Investigation Division. The Letter of Authority to
investigate respondent for tax purposes was issued only on 28 July 1998. Further, respondent's case
was not duly recorded in the Official Registry Book of the BIR before she availed of the VAP.

The CTA, quoting RMO Nos. 59-97, 60-97, and 63-97, ruled that the requirements before a person
may be excluded from the coverage of the VAP are:

1. a. The person(s) must be under investigation by the Tax Fraud Division and/or the regional
Special Investigation Division;

2. The investigation must be as a result of a verified information filed by an informer under Section
281 of the NIRC, as amended; and

3. The investigation must be duly registered in the Official Registry Book of the Bureau before the
date of availment under the VAP.[12]

The CTA ruled that the conjunctive word "and" is used; therefore, all of the above requisites must
be present before a person may be excluded from the coverage of the VAP. The CTA explained that
the word "and" is a conjunction connecting words or phrases expressing the idea that the latter is to
be added or taken along with the first.[13]
The CTA also stated that the rationale behind the VAP is to give taxpayers a final opportunity to
come up with a clean slate before they will be dealt with strictly for not paying their correct taxes.
The CTA noted that under the RMOs, among the benefits that can be availed by the taxpayer-
applicant are:

1) A bona fide rectification of filing errors and assessment of tax liabilities under the VAP shall
relieve the taxpayer-applicant from any criminal or civil liability incident to the misdeclaration of
incomes, purchases, deductions, etc., and non-filing of a return.

2) The taxpayer who shall avail of the VAP shall be liable only for the payment of the basic tax
due.[14]

The CTA ruled that even if respondent violated the National Internal Revenue Code (Tax Code),
she was given the chance to rectify her fault and be absolved of criminal and civil liabilities incident
to her non-filing of income tax by virtue of the VAP. The CTA held that respondent is not
disqualified to avail of the VAP. Hence, respondent has no more liabilities after paying the
corresponding taxes due.[15]

The CTA found the four assessments issued against respondent to be erroneous and ordered that
the same be cancelled.[16]

Ruling of the Court of Appeals

The CA explained that the persons who may avail of the VAP are those who are "liable to pay any
of the above-cited internal revenue taxes for the above specified period who due to inadvertence or
otherwise, has underdeclared his internal revenue tax liabilities or has not filed the required tax
returns." The CA rationalized that the BIR used a broad language to define the persons qualified to
avail of the VAP because the BIR intended to reach as many taxpayers as possible subject only to
the exclusion of those cases specially enumerated.

The CA ruled that in applying the rules of statutory construction, the exceptions enumerated in
paragraph 3[17] of RMO No. 59-97, as well as those added in RMO No. 63-97, should be strictly
construed and all doubts should be resolved in favor of the general provision stated under paragraph
2[18] rather than the said exceptions.

The CA affirmed the CTA's findings of facts and ruled that neither the verified information nor the
investigation was recorded in the Official Registry Book of the BIR. The CA disagreed with
petitioner's contention that the recording in the Official Registry Book of the BIR is merely a
procedural requirement which can be dispensed with for the purpose of determining who are
excluded from the coverage of RMO No. 59-97.

The CA explained that it is clear from the wordings of RMO No. 59-97 that the recording in the
Official Registry Book of the BIR is a mandatory requirement before a taxpayer-applicant under the
VAP may be excluded from its coverage as this requirement was preceded by the word "and." The
use of the conjunction "and" in subparagraph 3.4 of RMO No. 59-97 must be understood in its
usual and common meaning for the purpose of determining who are disqualified from availing of
the benefits under the VAP. This interpretation is more in faithful compliance with the mandate of
the RMOs.

Aggrieved by the CA decision, petitioner elevated the case to this Court.

Issue

Petitioner submits this sole issue for our consideration: whether the CA erred in holding that the
recording in the Official Registry Book of the BIR of the information filed by the informer under
Section 281[19] of the Tax Code is a mandatory requirement before a taxpayer-applicant may be
excluded from the coverage of the VAP.
Ruling of the Court

Petitioner contends that the VAP, being in the nature of a tax amnesty, must be strictly construed
against the taxpayer-applicant such that petitioner's failure to record the information in the Official
Registry Book of the BIR does not affect respondent's disqualification from availment of the
benefits under the VAP. Petitioner argues that taxpayers who are under investigation for non-filing
of income tax returns before their availment of the VAP are not covered by the program and are not
entitiled to its benefits. Petitioner alleges that the underlying reason for the disqualification is that
availment of the VAP by such taxpayer is no longer voluntary. Petitioner asserts that voluntariness is
the very essence of the Voluntary Assessment Program.[20]

Respondent claims that where the terms of a statute are clear and unambiguous, no interpretation is
called for, and the law is applied as written, for application is the first duty of the court, and
interpretation, only where literal application is impossible or inadequate.

Verba Legis

It is well-settled that where the language of the law is clear and unequivocal, it must be given its
literal application and applied without interpretation.[21] The general rule of requiring adherence to
the letter in construing statutes applies with particular strictness to tax laws and provisions of a
taxing act are not to be extended by implication.[22] A careful reading of the RMOs pertaining to
the VAP shows that the recording of the information in the Official Registry Book of the BIR is a
mandatory requirement before a taxpayer may be excluded from the coverage of the VAP.

On 27 October 1997, the CIR, in implementing the VAP, issued RMO No. 59-97 to give erring
taxpayers a final opportunity to come up with a clean slate. Any person liable to pay income tax on
business and compensation income, value-added tax and other percentage taxes under Titles II, IV
and V, respectively, of the Tax Code for the taxable years 1993 to 1996, who due to inadvertence or
otherwise, has not filed the required tax return may avail of the benefits under the VAP.[23] RMO
No. 59-97 also enumerates the persons or cases that are excluded from the coverage of the VAP.

3. Persons/Cases not covered

The following shall be excluded from the coverage of the VAP under this Order:

xxx

3.4. Persons under investigation as a result of verified information filed by an informer under
Section 281 of the NIRC, as amended, and duly recorded in the Official Registry Book of the
Bureau before the date of availment under the VAP; x x x (Boldfacing supplied)

On 30 October 1997, the CIR issued RMO No. 60-97 which supplements RMO No. 59-97 and
amended Item No. 3.4 to read as:

3. Persons/Cases not covered

The following shall be excluded from the coverage of the VAP under this Order:

xxx
3.4 Persons under investigation by the Tax Fraud Division and/or the Regional Special Investigation
Divisions as a result of verified information filed by an informer under Section 281 of the NIRC, as
amended, and duly recorded in the Official Registry Book of the Bureau before the date of
availment under VAP; (Boldfacing supplied)

On 27 November 1997, the CIR issued RMO No. 63-97 and clarified issues related to the
implementation of the VAP. RMO No. 63-97 provides:

3. Persons/cases not covered:

xxx

3.4 Persons under investigation by the Tax Fraud Division and/or the Regional Special Investigation
Divisions as a result of verified information filed by an informer under Section 281 of the NIRC, as
amended, and duly recorded in the Official Registry Book of the Bureau before the date of
availment under the VAP; (Underscoring in the original, boldfacing supplied)

It is evident from these RMOs that the CIR was consistent in using the word "and" and has even
underscored the word in RMO No. 63-97. This denotes that in addition to the filing of the verified
information, the same should also be duly recorded in the Official Registry Book of the BIR. The
conjunctive word "and" is not without legal significance. It means "in addition to." The word "and,"
whether it is used to connect words, phrases or full sentences, must be accepted as binding together
and as relating to one another.[24] "And" in statutory construction implies conjunction or union.[25]

It is sufficiently clear that for a person to be excluded from the coverage of the VAP, the verified
information must not only be filed under Section 281[26] of the Tax Code, it must also be duly
recorded in the Official Registry Book of the BIR before the date of availment under the VAP. This
interpretation of Item 3.4 of RMO Nos. 59-97, 60-97, and 63-97 is further bolstered by the fact that
on 12 October 2005, the BIR issued Revenue Regulations (RR) No. 18-2005 and reiterated the same
provision in the implementation of the Enhanced Voluntary Assessment Program (EVAP). RR No.
18-2005 reads:

SECTION 1. COVERAGE. - x x x

Any person, natural or juridical, including estates and trusts, liable to pay any of the above-cited
internal revenue taxes for the above specified period/s who, due to inadvertence or otherwise,
erroneously paid his/its internal revenue tax liabilities or failed to file tax returns/pay taxes, may
avail of the EVAP, except those falling under any of the following instances:

xxx

b. Persons under investigation as a result of verified information filed by a Tax Informer under
Section 282 of the NIRC, duly processed and recorded in the BIR Official Registry Book on or
before the effectivity of these regulations. (Boldfacing supplied)

When a tax provision speaks unequivocally, it is not the province of a Court to scan its wisdom or
its policy.[27] The more correct course of dealing with a question of construction is to take the
words to mean exactly what they say. Where a provision of law expressly limits its application to
certain transactions, it cannot be extended to other transactions by interpretation.[28]

Findings of Fact
Generally, the findings of fact of the CTA, a court exercising expertise on the subject of tax, are
regarded as final, binding, and conclusive upon this Court, especially if these are similar to the
findings of the Court of Appeals which is normally the final arbiter of questions of fact.[29]

In this case, the CA affirmed the CTA's findings of fact which states:

We will start with the question as to whether or not the respondent was already under investigation
for violation of the Tax Code provisions at the time she applied under VAP on December 2, 1997.
The records show that she was indeed under investigation. Albeit, the Letter of Authority was issued
only on 28 July 1998, there is no question that on 23 May 1997, a Mission Order No. 118-97 had
already been issued by the Chief of Special Investigation Division of the BIR, Revenue Region No.
19 to Intelligence Officer Eustaquio M. Valdez authorizing the conduct of monitoring and
surveillance activities on the respondent. This investigation was preceded by the filing of a verified
information by a certain George Mercado alleging respondent's failure to pay her income taxes for
the years 1994 to 1996.

xxx

We now proceed to the question as to whether or not the requirement of recording in the Official
Registry Book of the BIR is present in the respondent's case. At this juncture, we affirm CTA's
finding that neither the verified information nor the investigation was recorded in the Official
Registry Book of the BIR. Petitioner claims that this was merely a procedural omission which does
not affect respondent's exclusion from the coverage of the VAP.[30] (Boldfacing supplied)

Petitioner's failure to effect compliance with the requirement of recording the verified information
or investigation in the Official Registry Book of the BIR means that respondent, even if under
investigation, can avail of the benefits of the VAP. Consequently, respondent is relieved from any
criminal or civil liability incident to the non-filing of a return.
Wherefore, we DENY the petition. We AFFIRM the Court of Appeals' Decision dated 14 June
2004 in CA-G.R. SP No. 70693.

SO ORDERED.

Carpio, J., Chairperson, Brion, Del Castillo, Abad, and Perez, JJ., concur.

--------------------------------------------------------------------------------

[1] Under Rule 45 of the Rules of Court.

[2] Penned by Associate Justice Celia C. Librea-Leagogo with Associate Justices Arturo G. Tayag,
and Edgardo A. Camello, concurring.

[3] Penned by Presiding Justice Ernesto D. Acosta with Associate Justices Amancio Q. Saga and
Juanito C. Castañeda, Jr., concurring.

[4] Rollo, pp. 42-43.

[5] Id. at 12.

[6] Id.

[7] Id. at 12-13.

[8] Id. at 56.

[9] Id. at 57.

[10] Id. at 58.

[11] Id. at 59.

[12] Id. at 93.

[13] Id.

[14] Id. at 93-94.

[15] Id. at 95.

[16] Id.
[17] 3. Persons/Cases not covered

The following shall be excluded from the coverage of the VAP under this Order:

3.1. Dealers of petroleum products and purchasers of goods and services from petroleum companies
who have availed of the VAP under RMO No. 39-96, as amended by RMO No. 10-97;

3.2. Withholding Agents with respect to their withholding tax liabilities;

3.3. Persons to whom a validly issued Letter of Authority has been served;

3.4. Persons under investigation as a result of verified information filed by an informer under
Section 281 of the NIRC, as amended, and duly recorded in the Official Registry Book of the
Bureau before the date of availment under VAP; and

3.5. Tax cases filed in Court.

[18] 2. Who May Avail

Any person liable to pay any of the above-cited internal revenue taxes for the above specified
period; who due to inadvertence or otherwise, has under-declared his internal revenue tax liabilities
or has not filed the required tax return may avail of the benefits under VAP.

[19] Now Section 282 of the NIRC, as amended.

[20] Id. at 156-163.

[21] Commissioner of Internal Revenue v. Central Luzon Drug Corporation, G.R. No. 159610, 12
June 2008, 554 SCRA 398, 409.

[22] CIR v. Court of Appeals, 338 Phil. 322, 330 (1997).

[23] Items 1 & 2, RMO No. 59-97.

[24] LAUREL, JOSE JESUS, STATUTORY CONSTRUCTION CASES & MATERIALS, 1999
Revised Edition, p. 139.

[25] LICOMCEN, Incorporated v. Foundation Specialists, Inc., G.R. No. 167022, 31 August 2007,
531 SCRA 705, 722.

[26] Now Section 282 of the NIRC, as amended.

[27] Commissioner of Customs v. Manila Star Ferry, Inc., G.R. Nos. 31776-78, 21 October 1993,
227 SCRA 317, 322.

[28] Canet v. Decena, 465 Phil. 325, 333 (2004).

[29] Philippine Long Distance Telephone Company v. Commissioner of Internal Revenue G.R. No.
157264, 31 January 2008, 543 SCRA 329, 338 citing Far East Bank and Trust Company v. Court of
Appeals, G.R. No. 129130, 9 December 2005, 477 SCRA 49, 54.
[30] Rollo, p. 38.

--------------------------------------------------------------------------------

Copyright 2016 - Batas.org

634 Phil. 314

SECOND DIVISION

G.R. No. 178087, May 05, 2010

COMMISSIONER OF INTERNAL REVENUE, PETITIONER, VS. KUDOS METAL

CORPORATION, RESPONDENT.

DECISION

DEL CASTILLO, J.:

The prescriptive period on when to assess taxes benefits both the government and the taxpayer.[1]
Exceptions extending the period to assess must, therefore, be strictly construed.

This Petition for Review on Certiorari seeks to set aside the Decision[2] dated March 30, 2007 of the
Court of Tax Appeals (CTA) affirming the cancellation of the assessment notices for having been
issued beyond the prescriptive period and the Resolution[3] dated May 18, 2007 denying the motion
for reconsideration.

Factual Antecedents
On April 15, 1999, respondent Kudos Metal Corporation filed its Annual Income Tax Return (ITR)
for the taxable year 1998.

Pursuant to a Letter of Authority dated September 7, 1999, the Bureau of Internal Revenue (BIR)
served upon respondent three Notices of Presentation of Records. Respondent failed to comply
with these notices, hence, the BIR issued a Subpeona Duces Tecum dated September 21, 2006,
receipt of which was acknowledged by respondent's President, Mr. Chan Ching Bio, in a letter dated
October 20, 2000.

A review and audit of respondent's records then ensued.

On December 10, 2001, Nelia Pasco (Pasco), respondent's accountant, executed a Waiver of the
Defense of Prescription,[4] which was notarized on January 22, 2002, received by the BIR
Enforcement Service on January 31, 2002 and by the BIR Tax Fraud Division on February 4, 2002,
and accepted by the Assistant Commissioner of the Enforcement Service, Percival T. Salazar
(Salazar).

This was followed by a second Waiver of Defense of Prescription[5] executed by Pasco on February
18, 2003, notarized on February 19, 2003, received by the BIR Tax Fraud Division on February 28,
2003 and accepted by Assistant Commissioner Salazar.

On August 25, 2003, the BIR issued a Preliminary Assessment Notice for the taxable year 1998
against the respondent. This was followed by a Formal Letter of Demand with Assessment Notices
for taxable year 1998, dated September 26, 2003 which was received by respondent on November
12, 2003.

Respondent challenged the assessments by filing its "Protest on Various Tax Assessments" on
December 3, 2003 and its "Legal Arguments and Documents in Support of Protests against Various
Assessments" on February 2, 2004.
On June 22, 2004, the BIR rendered a final Decision[6] on the matter, requesting the immediate
payment of the following tax liabilities:

Kind of Tax

Amount

Income Tax

P 9,693,897.85

VAT

13,962,460.90

EWT

1,712,336.76

Withholding Tax-Compensation

247,353.24

Penalties

8,000.00

Total
P25,624,048.76

Ruling of the Court of Tax Appeals, Second Division

Believing that the government's right to assess taxes had prescribed, respondent filed on August 27,
2004 a Petition for Review[7] with the CTA. Petitioner in turn filed his Answer.[8]

On April 11, 2005, respondent filed an "Urgent Motion for Preferential Resolution of the Issue on
Prescription."[9]

On October 4, 2005, the CTA Second Division issued a Resolution[10] canceling the assessment
notices issued against respondent for having been issued beyond the prescriptive period. It found
the first Waiver of the Statute of Limitations incomplete and defective for failure to comply with the
provisions of Revenue Memorandum Order (RMO) No. 20-90. Thus:

First, the Assistant Commissioner is not the revenue official authorized to sign the waiver, as the tax
case involves more than P1,000,000.00. In this regard, only the Commissioner is authorized to enter
into agreement with the petitioner in extending the period of assessment;

Secondly, the waiver failed to indicate the date of acceptance. Such date of acceptance is necessary
to determine whether the acceptance was made within the prescriptive period;

Third, the fact of receipt by the taxpayer of his file copy was not indicated on the original copy. The
requirement to furnish the taxpayer with a copy of the waiver is not only to give notice of the
existence of the document but also of the acceptance by the BIR and the perfection of the
agreement.

The subject waiver is therefore incomplete and defective. As such, the three-year prescriptive period
was not tolled or extended and continued to run. x x x[11]

Petitioner moved for reconsideration but the CTA Second Division denied the motion in a
Resolution[12] dated April 18, 2006.

Ruling of the Court of Tax Appeals, En Banc

On appeal, the CTA En Banc affirmed the cancellation of the assessment notices. Although it ruled
that the Assistant Commissioner was authorized to sign the waiver pursuant to Revenue Delegation
Authority Order (RDAO) No. 05-01, it found that the first waiver was still invalid based on the
second and third grounds stated by the CTA Second Division. Pertinent portions of the Decision
read as follows:

While the Court En Banc agrees with the second and third grounds for invalidating the first waiver,
it finds that the Assistant Commissioner of the Enforcement Service is authorized to sign the waiver
pursuant to RDAO No. 05-01, which provides in part as follows:

A. For National Office cases

Designated Revenue Official

1. Assistant Commissioner (ACIR),

For tax fraud and policy

Enforcement Service

cases

2. ACIR, Large Taxpayers Service

For large taxpayers cases

other than those cases falling

under Subsection B hereof

3. ACIR, Legal Service

For cases pending

verification and awaiting

resolution of certain legal

issues prior to prescription

and for issuance/compliance

of Subpoena Duces Tecum

4. ACIR, Assessment Service (AS)

For cases which are

pending in or subject to

review or approval by

the ACIR, AS

Based on the foregoing, the Assistant Commissioner, Enforcement Service is authorized to sign
waivers in tax fraud cases. A perusal of the records reveals that the investigation of the subject
deficiency taxes in this case was conducted by the National Investigation Division of the BIR, which
was formerly named the Tax Fraud Division. Thus, the subject assessment is a tax fraud case.

Nevertheless, the first waiver is still invalid based on the second and third grounds stated by the
Court in Division. Hence, it did not extend the prescriptive period to assess.

Moreover, assuming arguendo that the first waiver is valid, the second waiver is invalid for violating
Section 222(b) of the 1997 Tax Code which mandates that the period agreed upon in a waiver of the
statute can still be extended by subsequent written agreement, provided that it is executed prior to
the expiration of the first period agreed upon. As previously discussed, the exceptions to the law on
prescription must be strictly construed.
In the case at bar, the period agreed upon in the subject first waiver expired on December 31, 2002.
The second waiver in the instant case which was supposed to extend the period to assess to
December 31, 2003 was executed on February 18, 2003 and was notarized on February 19, 2003.
Clearly, the second waiver was executed after the expiration of the first period agreed upon.
Consequently, the same could not have tolled the 3-year prescriptive period to assess.[13]

Petitioner sought reconsideration but the same was unavailing.

Issue

Hence, the present recourse where petitioner interposes that:

THE COURT OF TAX APPEALS EN BANC ERRED IN RULING THAT THE

GOVERNMENT'S RIGHT TO ASSESS UNPAID TAXES OF RESPONDENT
PRESCRIBED.[14]

Petitioner's Arguments

Petitioner argues that the government's right to assess taxes is not barred by prescription as the two
waivers executed by respondent, through its accountant, effectively tolled or extended the period
within which the assessment can be made. In disputing the conclusion of the CTA that the waivers
are invalid, petitioner claims that respondent is estopped from adopting a position contrary to what
it has previously taken. Petitioner insists that by acquiescing to the audit during the period specified
in the waivers, respondent led the government to believe that the "delay" in the process would not
be utilized against it. Thus, respondent may no longer repudiate the validity of the waivers and raise
the issue of prescription.

Respondent's Arguments

Respondent maintains that prescription had set in due to the invalidity of the waivers executed by
Pasco, who executed the same without any written authority from it, in clear violation of RDAO
No. 5-01. As to the doctrine of estoppel by acquiescence relied upon by petitioner, respondent
counters that the principle of equity comes into play only when the law is doubtful, which is not
present in the instant case.

Our Ruling

The petition is bereft of merit.

Section 203[15] of the National Internal Revenue Code of 1997 (NIRC) mandates the government
to assess internal revenue taxes within three years from the last day prescribed by law for the filing
of the tax return or the actual date of filing of such return, whichever comes later. Hence, an
assessment notice issued after the three-year prescriptive period is no longer valid and effective.
Exceptions however are provided under Section 222[16] of the NIRC.

The waivers executed by respondent's

accountant did not extend the period

within which the assessment can be made

Petitioner does not deny that the assessment notices were issued beyond the three-year prescriptive
period, but claims that the period was extended by the two waivers executed by respondent's
accountant.

We do not agree.

Section 222 (b) of the NIRC provides that the period to assess and collect taxes may only be
extended upon a written agreement between the CIR and the taxpayer executed before the
expiration of the three-year period. RMO 20-90[17] issued on April 4, 1990 and RDAO 05-01[18]
issued on August 2, 2001 lay down the procedure for the proper execution of the waiver, to wit:

1. The waiver must be in the proper form prescribed by RMO 20-90. The phrase "but not after
______ 19 ___", which indicates the expiry date of the period agreed upon to assess/collect the tax
after the regular three-year period of prescription, should be filled up.

2. The waiver must be signed by the taxpayer himself or his duly authorized representative. In the
case of a corporation, the waiver must be signed by any of its responsible officials. In case the
authority is delegated by the taxpayer to a representative, such delegation should be in writing and
duly notarized.

3. The waiver should be duly notarized.

4. The CIR or the revenue official authorized by him must sign the waiver indicating that the BIR
has accepted and agreed to the waiver. The date of such acceptance by the BIR should be indicated.
However, before signing the waiver, the CIR or the revenue official authorized by him must make
sure that the waiver is in the prescribed form, duly notarized, and executed by the taxpayer or his
duly authorized representative.
5. Both the date of execution by the taxpayer and date of acceptance by the Bureau should be before
the expiration of the period of prescription or before the lapse of the period agreed upon in case a
subsequent agreement is executed.

6. The waiver must be executed in three copies, the original copy to be attached to the docket of the
case, the second copy for the taxpayer and the third copy for the Office accepting the waiver. The
fact of receipt by the taxpayer of his/her file copy must be indicated in the original copy to show
that the taxpayer was notified of the acceptance of the BIR and the perfection of the agreement.[19]

A perusal of the waivers executed by respondent's accountant reveals the following infirmities:

1. The waivers were executed without the notarized written authority of Pasco to sign the waiver in
behalf of respondent.

2. The waivers failed to indicate the date of acceptance.

3. The fact of receipt by the respondent of its file copy was not indicated in the original copies of the
waivers.

Due to the defects in the waivers, the period to assess or collect taxes was not extended.
Consequently, the assessments were issued by the BIR beyond the three-year period and are void.

Estoppel does not apply in this case

We find no merit in petitioner's claim that respondent is now estopped from claiming prescription
since by executing the waivers, it was the one which asked for additional time to submit the required
documents.

In Collector of Internal Revenue v. Suyoc Consolidated Mining Company,[20] the doctrine of

estoppel prevented the taxpayer from raising the defense of prescription against the efforts of the
government to collect the assessed tax. However, it must be stressed that in the said case, estoppel
was applied as an exception to the statute of limitations on collection of taxes and not on the
assessment of taxes, as the BIR was able to make an assessment within the prescribed period. More
important, there was a finding that the taxpayer made several requests or positive acts to convince
the government to postpone the collection of taxes, viz:

It appears that the first assessment made against respondent based on its second final return filed on
November 28, 1946 was made on February 11, 1947. Upon receipt of this assessment respondent
requested for at least one year within which to pay the amount assessed although it reserved its right
to question the correctness of the assessment before actual payment. Petitioner granted an extension
of only three months. When it failed to pay the tax within the period extended, petitioner sent
respondent a letter on November 28, 1950 demanding payment of the tax as assessed, and upon
receipt of the letter respondent asked for a reinvestigation and reconsideration of the assessment.
When this request was denied, respondent again requested for a reconsideration on April 25, 1952,
which was denied on May 6, 1953, which denial was appealed to the Conference Staff. The appeal
was heard by the Conference Staff from September 2, 1953 to July 16, 1955, and as a result of these
various negotiations, the assessment was finally reduced on July 26, 1955. This is the ruling which is
now being questioned after a protracted negotiation on the ground that the collection of the tax has
already prescribed.

It is obvious from the foregoing that petitioner refrained from collecting the tax by distraint or levy
or by proceeding in court within the 5-year period from the filing of the second amended final
return due to the several requests of respondent for extension to which petitioner yielded to give it
every opportunity to prove its claim regarding the correctness of the assessment. Because of such
requests, several reinvestigations were made and a hearing was even held by the Conference Staff
organized in the collection office to consider claims of such nature which, as the record shows,
lasted for several months. After inducing petitioner to delay collection as he in fact did, it is most
unfair for respondent to now take advantage of such desistance to elude his deficiency income tax
liability to the prejudice of the Government invoking the technical ground of prescription.

While we may agree with the Court of Tax Appeals that a mere request for reexamination or
reinvestigation may not have the effect of suspending the running of the period of limitation for in
such case there is need of a written agreement to extend the period between the Collector and the
taxpayer, there are cases however where a taxpayer may be prevented from setting up the defense of
prescription even if he has not previously waived it in writing as when by his repeated requests or
positive acts the Government has been, for good reasons, persuaded to postpone collection to make
him feel that the demand was not unreasonable or that no harassment or injustice is meant by the
Government. And when such situation comes to pass there are authorities that hold, based on
weighty reasons, that such an attitude or behavior should not be countenanced if only to protect the
interest of the Government.

This case has no precedent in this jurisdiction for it is the first time that such has risen, but there are
several precedents that may be invoked in American jurisprudence. As Mr. Justice Cardozo has said:
"The applicable principle is fundamental and unquestioned. `He who prevents a thing from being
done may not avail himself of the nonperformance which he has himself occasioned, for the law
says to him in effect "this is your own act, and therefore you are not damnified."' "(R. H. Stearns Co.
vs. U.S., 78 L. ed., 647). Or, as was aptly said, "The tax could have been collected, but the
government withheld action at the specific request of the plaintiff. The plaintiff is now estopped and
should not be permitted to raise the defense of the Statute of Limitations." [Newport Co. vs. U.S.,
(DC-WIS), 34 F. Supp. 588].[21]

Conversely, in this case, the assessments were issued beyond the prescribed period. Also, there is no
showing that respondent made any request to persuade the BIR to postpone the issuance of the
assessments.
The doctrine of estoppel cannot be applied in this case as an exception to the statute of limitations
on the assessment of taxes considering that there is a detailed procedure for the proper execution of
the waiver, which the BIR must strictly follow. As we have often said, the doctrine of estoppel is
predicated on, and has its origin in, equity which, broadly defined, is justice according to natural law
and right.[22] As such, the doctrine of estoppel cannot give validity to an act that is prohibited by
law or one that is against public policy.[23] It should be resorted to solely as a means of preventing
injustice and should not be permitted to defeat the administration of the law, or to accomplish a
wrong or secure an undue advantage, or to extend beyond them requirements of the transactions in
which they originate.[24] Simply put, the doctrine of estoppel must be sparingly applied.

Moreover, the BIR cannot hide behind the doctrine of estoppel to cover its failure to comply with
RMO 20-90 and RDAO 05-01, which the BIR itself issued. As stated earlier, the BIR failed to verify
whether a notarized written authority was given by the respondent to its accountant, and to indicate
the date of acceptance and the receipt by the respondent of the waivers. Having caused the defects
in the waivers, the BIR must bear the consequence. It cannot shift the blame to the taxpayer. To
stress, a waiver of the statute of limitations, being a derogation of the taxpayer's right to security
against prolonged and unscrupulous investigations, must be carefully and strictly construed.[25]

As to the alleged delay of the respondent to furnish the BIR of the required documents, this cannot
be taken against respondent. Neither can the BIR use this as an excuse for issuing the assessments
beyond the three-year period because with or without the required documents, the CIR has the
power to make assessments based on the best evidence obtainable.[26]

WHEREFORE, the petition is DENIED. The assailed Decision dated March 30, 2007 and
Resolution dated May 18, 2007 of the Court of Tax Appeals are hereby AFFIRMED.

SO ORDERED.

Carpio, (Chairperson), Brion, Abad, and Perez, JJ., concur.

--------------------------------------------------------------------------------

[1] Republic of the Phils. v. Ablaza, 108 Phil. 1105, 1108 (1960).

[2] Rollo, pp. 31-45; penned by Associate Justice Lovell R. Bautista and concurred in by Associate
Justices Juanito C. Castañeda, Jr., Erlinda P. Uy, Caesar A. Casanova and Olga Palanca-Enriquez.
Presiding Justice Ernesto D. Acosta was on leave.

[3] Id., at 46-50; penned by Associate Justice Lovell R. Bautista and concurred in by Presiding Justice
Ernesto D. Acosta and Associate Justices Juanito C. Castañeda, Jr., Erlinda P. Uy, Caesar A.
Casanova and Olga Palanca-Enriquez.

[4] Records, pp. 227-228.

[5] Id. at 229-230.

[6] Id. at 18-21.

[7] Id. at 1-17.

[8] Id. at 161-165.

[9] Id. at 219-226.

[10] Id. at 259-266.

[11] Id. at 265.

[12] Id. at 294-296.

[13] Rollo, pp. 42-43.

[14] Id. at 17.

[15] SEC. 203. Period of Limitation Upon Assessment and Collection. — Except as provided in
Section 222, internal revenue taxes shall be assessed within three (3) years after the last day
prescribed by law for the filing of the return, and no proceeding in court without assessment for the
collection of such taxes shall be begun after the expiration of such period: Provided, That in a case
where a return is filed beyond the period prescribed by law, the three (3)-year period shall be
counted from the day the return was filed. For purposes of this Section, a return filed before the last
day prescribed by law for the filing thereof shall be considered as filed on such last day.

[16] SEC. 222. Exceptions as to period of limitation of assessment and collection of taxes. —

(a) In the case of a false or fraudulent return with intent to evade tax or of failure to file a return, the
tax may be assessed, or a proceeding in court for the collection of such tax may be filed without
assessment, at any time within ten (10) years after the discovery of the falsity, fraud, or omission:
Provided, That in a fraud assessment which has become final and executory, the fact of fraud shall
be judicially taken cognizance of in the civil or criminal action for the collection thereof.
(b) If before the expiration of the time prescribed in Section 203 for the assessment of the tax, both
the Commissioner and the taxpayer have agreed in writing to its assessment after such time, the tax
may be assessed within the period agreed upon. The period so agreed upon may be extended by
subsequent written agreement made before the expiration of the period previously agreed upon.

(c) Any internal revenue tax which has been assessed within the period of limitation as prescribed in
paragraph (a) hereof may be collected by distraint or levy or by a proceeding in court within five (5)
years following the assessment of the tax.

(d) Any internal revenue tax, which has been assessed within the period agreed upon as provided in
paragraph (b) hereinabove, may be collected by distraint or levy or by a proceeding in court within
the period agreed upon in writing before the expiration of the five (5)-year period. The period so
agreed upon may be extended by subsequent written agreements made before the expiration of the
period previously agreed upon.

(e) Provided, however, That nothing in the immediately preceding Section and paragraph (a) hereof
shall be construed to authorize the examination and investigation or inquiry into any tax return filed
in accordance with the provisions of any tax amnesty law or decree.

[17] In the execution of said waiver, the following procedures should be followed:

1. The waiver must be in the form identified hereof. This form may be reproduced by the Office
concerned but there should be no deviation from such form. The phrase "but not after ______ 19
___" should be filled up. This indicates the expiry date of the period agreed upon to assess/collect
the tax after the regular three-year period of prescription. The period agreed upon shall constitute
the time within which to effect the assessment/collection of the tax in addition to the ordinary
prescriptive period.

2. The waiver shall be signed by the taxpayer himself or his duly authorized representative. In the
case of a corporation, the waiver must be signed by any of its responsible officials.

Soon after the waiver is signed by the taxpayer, the Commissioner of Internal Revenue or the
revenue official authorized by him, as hereinafter provided, shall sign the waiver indicating that the
Bureau has accepted and agreed to the waiver. The date of such acceptance by the Bureau should be
indicated. Both the date of execution by the taxpayer and date of acceptance by the Bureau should
be before the expiration of the period of prescription or before the lapse of the period agreed upon
in case a subsequent agreement is executed.

3. The following revenue officials are authorized to sign the waiver.

A. In the National Office

1.

ACIRs for Collection, Special Operations

For tax cases involving

National Assessment, Excise and Legal on tax

not more than P500,000.00

cases pending before their respective offices. In

the absence of the ACIR, the Head Executive

Assistant may sign the waiver.

3.
Commissioner

For tax cases involving more than P1M

xxxx

4. The waiver must be executed in three (3) copies, the original copy to be attached to the docket of
the case, the second copy for the taxpayer and the third copy for the Office accepting the waiver.
The fact of receipt by the taxpayer of his/her file copy shall be indicated in the original copy.

5. The foregoing procedures shall be strictly followed. Any revenue official found not to have
complied with this Order resulting in prescription of the right to assess/collect shall be
administratively dealt with.

[18] I. Revenue Officials Authorized to Sign the Waiver

The following revenue officials are authorized to sign and accept the Waiver of the Defense of
Prescription Under the Statute of Limitations (Annex A) prescribed in Sections 203, 222 and other
related provisions of the National Internal Revenue Code of 1997:

A. For National Office cases

Designated Revenue Official

1. Assistant Commissioner (ACIR), — For tax fraud and policy

Enforcement Service cases

xxxx

In order to prevent undue delay in the execution and acceptance of the waiver, the assistant heads of
the concerned offices are likewise authorized to sign the same under meritorious circumstances in
the absence of the abovementioned officials.

The authorized revenue official shall ensure that the waiver is duly accomplished and signed by the
taxpayer or his authorized representative before affixing his signature to signify acceptance of the
same. In case the authority is delegated by the taxpayer to a representative, the concerned revenue
official shall see to it that such delegation is in writing and duly notarized. The "WAIVER" should
not be accepted by the concerned BIR office and official unless duly notarized.

II. Repealing Clause

All other issuances and/or portions thereof inconsistent herewith are hereby repealed and amended
accordingly.

[19] Philippine Journalist, Inc. v. Commissioner of Internal Revenue, 488 Phil. 218, 235 (2004).

[20] 104 Phil 819 (1958).

[21] Id. at 822-824.

[22] La Naval Drug Corporation v. Court of Appeals, G.R. No. 103200, August 31, 1994, 236 SCRA
78, 87.
[23] Ouano v. Court of Appeals, 446 Phil. 690, 708 (2003).

[24] C & S Fishfarm Corporation v. Court of Appeals, 442 Phil. 279, 290 (2002).

[25] Philippine Journalist, Inc. v. Commissioner of Internal Revenue, supra note 19 at 231-232.

[26] SEC. 6. Power of the Commissioner to Make Assessments and Prescribe Additional
Requirements for Tax Administration and Enforcement -

xxxx

(b) Failure to Submit Required Returns, Statements, Reports and other Documents. - When a report
required by law as a basis for the assessment of any national internal revenue tax shall not be
forthcoming within the time fixed by law or rules and regulation or when there is reason to believe
that any such report is false, incomplete or erroneous, the Commissioner shall assess the proper tax
on the best evidence obtainable.

In case a person fails to file a required return or other document at the time prescribed by law, or
willfully or otherwise files a false or fraudulent return or other document, the Commissioner shall
make or amend the return from his own knowledge and from such information as he can obtain
through testimony or otherwise, which shall be prima facie correct and sufficient for all legal
purposes.

--------------------------------------------------------------------------------

Copyright 2016 - Batas.org

G.R. Nos. 184379-80

EN BANC

G.R. Nos. 184379-80, April 24, 2012

RODOLFO NOEL LOZADA, JR., VIOLETA LOZADA AND ARTURO LOZADA,

PETITIONERS, VS. PRESIDENT GLORIA MACAPAGAL ARROYO, EDUARDO
ERMITA, AVELINO RAZON, ANGEL ATUTUBO AND SPO4 ROGER VALEROSO,*
 RESPONDENTS.

DECISION

SERENO, J.:

What the Court decides today has nothing to do with the substance or merits surrounding the
aborted deal of the Philippine government with the National Broadband Network and ZTE
Corporation, or any allegation of petitioner Rodolfo Noel “June” Lozada, Jr., (Lozada) regarding the
same. There is only one issue that we decide today – whether circumstances are adequately alleged
and proven by petitioner Lozada to entitle him to the protection of the writ of amparo. Before us is a
Petition for Review on Certiorari of the Decision dated 12 September 2008 of the Court of Appeals
(CA), dismissing the Petition for the Issuance of a Writ of Amparo.[1]

Petitioner Lozada was the former President and Chief Executive Officer of the Philippine Forest
Corporation (PFC), a government-owned- and -controlled corporation under the Department of
Environment and Natural Resources (DENR).[2] Petitioner Violeta Lozada (Violeta) is his wife,
while petitioner Arturo Lozada (Arturo) is his brother.

At the time the Petition for the Writ of Amparo was filed, respondent former President Gloria
Macapagal Arroyo (former President Arroyo) was the incumbent President of the Philippines.
Meanwhile, Eduardo Ermita (ES Ermita) was then the Executive Secretary; Avelino Razon (Razon),
the Director General of the Philippine National Police (PNP); Angel Atutubo (Atutubo), the
Assistant General Manager for Security and Emergency Services of the Manila International Airport
Authority; and Rodolfo Valeroso (Valeroso), an agent of the Aviation Security Group (ASG) of the
PNP.

Antecedent Facts

The instant Petition stems from the alleged corruption scandal precipitated by a transaction between
the Philippine government, represented by the National Broadband Network (NBN), and ZTE
Corporation (ZTE), a Chinese manufacturer of telecommunications equipment.[3] Former National
Economic Development Authority (NEDA) Secretary Romulo Neri (Sec. Neri) sought the services
of Lozada as an unofficial consultant in the ZTE-NBN deal.[4] The latter avers that during the
course of his engagement, he discovered several anomalies in the said transaction involving certain
public officials.[5] These events impelled the Senate of the Philippines Blue Ribbon Committee (Blue
Ribbon Committee) to conduct an investigation thereon,[6] for which it issued a subpoena directing
Lozada to appear and testify on 30 January 2008.[7]

On that date, instead of appearing before the Blue Ribbon Committee, Lozada left the country for a
purported official trip to London, as announced by then DENR Secretary Lito Atienza (Sec.
Atienza).[8] In the Petition, Lozada alleged that his failure to appear at the scheduled hearing was
upon the instructions of then Executive Assistant Undersecretary Manuel Gaite (Usec. Gaite).[9]
Consequently, the Senate issued an Order dated 30 January 2008: (a) citing Lozada for contempt; (b)
ordering his arrest and detention; and (c) directing the Senate Sergeant-at-Arms to implement the
Order and make a return thereon.[10]

While overseas, Lozada asked Sec. Atienza whether the former could be allowed to go back to the
Philippines.[11] Upon the approval of Sec. Atienza, Lozada informed his family that he was returning
from Hong Kong on 5 February 2008 on board Cathay Pacific Flight No. 919, bound to arrive in
Manila at 4:40 p.m. on the same day.[12]

In the Petition, Lozada claims that, upon disembarking from the aircraft, several men held his arms
and took his bag. Although he allegedly insisted on meeting with his family, he later realized that it
was wiser to just follow them, especially when he overheard from their handheld radio: “[H]wag
kayong dumaan diyan sir nandyan ang mga taga senado.”[13]

Lozada asked if he could go to the comfort room, an opportunity he used to call up his brother,
petitioner Arturo, and inform him of his situation.[14] The men thereafter led him through the
departure area of the airport and into a car waiting for them.[15] They made him sit alone at the back
of the vehicle, while a man, whom he later discovered to be respondent Valeroso, took the
passenger seat and was always in contact with other individuals.[16] Lozada observed that other cars
tailed their vehicle.[17]

Sec. Atienza then phoned Lozada, assuring the latter that he was with people from the government,
and that the former was going to confer with “ES and Ma’[a]m.” Lozada surmised that these
individuals referred to ES Ermita and former President Arroyo, respectively.[18] Sec. Atienza also
purportedly instructed Lozada to pacify his wife, petitioner Violeta, who was making public
statements asking for her husband’s return.[19]

The vehicle traversed the South Luzon Expressway and drove towards the direction of Laguna.[20]
Along the way, the men asked Lozada to draft an antedated letter requesting police protection.[21]

Lozada requested that he be brought home to Pasig, but the men were allegedly compelled to deny
his request on account of unidentified security risks.[22] Eventually, however, the vehicle turned
around and drove to Libis, Quezon City. The group stopped at The Outback restaurant to meet
with certain individuals, who turned out to be Atty. Antonio Bautista (Atty. Bautista) and Colonel
Paul Mascarinas (Col. Mascarinas) of the Police Special Protection Office (PSPO). At the restaurant,
Lozada claimed that he was made to fill in the blanks of a prepared affidavit.[23]

After the meeting, the men informed Lozada that they were going to billet him in a hotel for a night,
but he suggested that they take him to La Salle Green Hills instead. The men acquiesced.[24]

Upon arriving in La Salle Green Hills, Lozada was met by Violeta and his sister, Carmen Lozada
(Carmen).[25] He observed that the perimeter was guarded by policemen, purportedly restraining his
liberty and threatening not only his security, but also that of his family and the De La Salle
brothers.[26]

On 6 February 2008, at around 10:00 a.m., Col. Mascarinas supposedly brought Lozada to the office
of Atty. Bautista to finalize and sign an affidavit.[27]

At about 1:00 p.m., Violeta filed before this Court a Petition for Habeas Corpus, docketed as G.R.
No. 181342 (the Habeas Corpus case).[28] Arturo likewise filed before this Court a Petition for a Writ
of Amparo, docketed as G.R. No. 181356 (the Amparo case), and prayed for the issuance of (a) the
writ of amparo; (b) a Temporary Protection Order (TPO); and (c) Inspection and Production Orders
as regards documents related to the authority ordering custody over Lozada, as well as any other
document that would show responsibility for his alleged abduction.[29]

At around the same time that Arturo filed the Petition for a Writ of Amparo, Col. Mascarinas drove
Lozada back to La Salle Green Hills.[30] Lozada was then made to sign a typewritten, antedated letter
requesting police protection.[31] Thereafter, former Presidential Spokesperson Michael Defensor
(Sec. Defensor) supposedly came and requested Lozada to refute reports that the latter was
kidnapped and to deny knowledge of alleged anomalies in the NBN-ZTE deal. Sec. Defensor then
purportedly gave Lozada P50,000 for the latter’s expenses.[32]

On 7 February 2008, Lozada decided to hold a press conference and contact the Senate Sergeant-at-
Arms, who served the warrant of arrest on him.[33] Lozada claimed that after his press conference
and testimony in the Senate, he and his family were since then harassed, stalked and threatened.[34]

On the same day, this Court issued a Resolution (a) consolidating the Habeas Corpus case and the
Amparo case; (b) requiring respondents in the Habeas Corpus case to comment on the Petition; (c)
issuing a Writ of Amparo; (d) ordering respondents in the Amparo case to file their verified Return;
(e) referring the consolidated Petitions to the CA; and (f) directing the CA to set the cases for
hearing on 14 February 2008.[35] Accordingly, the court a quo set both cases for hearing on 14
February 2008.[36]

On 12 February 2008, respondents filed before the CA a Manifestation and Motion, praying for the
dismissal of the Habeas Corpus case.[37] They asserted that Lozada was never illegally deprived of his
liberty and was, at that time, no longer in their custody. They likewise averred that, beginning 8
February 2008, Lozada had already been under the supervision of the Senate and, from then on, had
been testifying before it.[38]

In their verified Return, respondents claimed that Sec. Atienza had arranged for the provision of a
security team to be assigned to Lozada, who was then fearful for his safety.[39] In effect, respondents
asserted that Lozada had knowledge and control of the events that took place on 5 February 2008,
voluntarily entrusted himself to their company, and was never deprived of his liberty. Hence,
respondents prayed for the denial of the interim reliefs and the dismissal of the Petition.[40]

During the initial hearing on 14 February 2008, Lozada and Violeta ratified the Petition in the
Amparo case[41] to comply with Section 2 of the Rule on the Writ of Amparo,[42] which imposes an
order to be followed by those who can sue for the writ.[43] The CA also dismissed the Habeas Corpus
case in open court for being moot and academic, as Lozada was physically present and was not
confined or detained by any of the respondents.[44] Considering that petitioners failed to question the
dismissal of the Habeas Corpus case, the said dismissal had lapsed into finality, leaving only the
Amparo case open for disposition.

Thereafter, Lozada filed a Motion for Temporary Protection Order and Production of
Documents,[45] while Arturo filed a Motion for Production of Documents.[46] Additionally, Arturo
also filed a Motion for the Issuance of Subpoena Ad Testificandum and Presentation of Hostile
Witnesses and Adverse Parties Romulo Neri, Benjamin Abalos, [Sr.], Rodolfo Valeroso, “Jaime” the
Driver and Other Respondents. Respondents opposed these motions.[47] The CA denied the Motion
for the Issuance of Subpoena on the ground that the alleged acts and statements attributed to Sec.
Neri and Benjamin Abalos (Abalos) were irrelevant to the Amparo case, and that to require them to
testify would only result in a fishing expedition.[48] The CA likewise denied Arturo’s subsequent
Motion for Reconsideration.[49]

In its Resolution dated 5 March 2008, the CA dropped former President Arroyo as a respondent on
the ground that at the time the Petition in the Amparo case was filed, she was still the incumbent
President enjoying immunity from suit.[50] Arturo filed a Motion for Reconsideration,[51] which the
CA denied in its Resolution dated 25 March 2008.[52]

On 12 September 2008, the CA rendered its Decision denying petitioners the privilege of the Writ
of Amparo and dismissing the Petition.[53] The CA found that petitioners were unable to prove
through substantial evidence that respondents violated, or threatened with violation, the right to life,
liberty and security of Lozada.

Petitioners thus filed the instant Petition, praying for: (a) the reversal of the assailed CA Decision;
(b) the issuance of the TPO; and (c) the accreditation of the Association of Major Religious
Superiors of the Philippines and the De La Salle Brothers as the sanctuaries of Lozada and his
family.[54] In the alternative, petitioners pray that this Court remand the case to the CA for further
hearings and reverse the latter’s Orders: (a) denying the Motion to Issue a Subpoena Ad Testificandum
and (b) dropping former President Arroyo as a respondent. Petitioners raise the following issues:

(1) Whether the Court a [q]uo erred in ruling to dismiss the petition for a writ of amparo and deny
Petitioners’ prayer for a Temporary Protection Order, inter alia, because there is no substantial
evidence to prove that the right to life, liberty or security of Jun Lozada was violated or threatened
with violation. This rule is not in accord with the rule on the writ of amparo and Supreme Court
jurisprudence on substantial evidence[.]

(2) Whether the Ponencia erred and gravely abused its discretion by prematurely ruling that the
testimony of witnesses which Petitioners sought to present and who are subject of the Motion for
Issuance of Subpoena ad testificandum were irrelevant to the Petition for a Writ of Amparo in a way
not in accord with the Rules of Court and Supreme Court decisions.

(3) Whether the Court a quo erred in using and considering the affidavits of respondents in coming
up with the questioned decision when these were not offered as evidence and were not subjected to
cross-examination. This ruling is not in accord with the Rules of Court and jurisprudence.

(4) Whether the Court a [q]uo erred in dropping as respondent Pres. Gloria Arroyo despite her
failure to submit a verified return and personally claim presidential immunity in a way not in accord
with the Rule on the Writ of Amparo.[55]

The Office of the Solicitor General (OSG) asserts that petitioners failed to adduce substantial
evidence, as the allegations they propounded in support of their Petition were largely hearsay.[56] The
OSG also maintains that it was proper for the CA to have dropped former President Arroyo as
respondent on account of her presidential immunity from suit.[57]

Respondent Atutubo also alleges, among others, that: (a) Lozada voluntarily asked for security and
protection; (b) Lozada willingly submitted himself to the company of the police escorts; (c) Atutubo
merely accompanied him to pass through the contingency route customarily provided to VIP
passengers, public figures, foreign dignitaries, and the like; and (d) Atutubo only performed his job
to ensure security and maintain order at the airport upon the arrival of Lozada.[58]

In the face of these assertions by respondents, petitioners nevertheless insist that while they have
sufficiently established that Lozada was taken against his will and was put under restraint,
respondents have failed to discharge their own burden to prove that they exercised extraordinary
diligence as public officials.[59] Petitioners also maintain that it was erroneous for the CA to have
denied their motion for subpoena ad testificandum for being irrelevant, given that the relevancy of
evidence must be examined after it is offered, and not before.[60] Finally, petitioners contend that the
presidential immunity from suit cannot be invoked in amparo actions.[61]

Issues

In ruling on whether the CA committed reversible error in issuing its assailed Decision, three issues
must be discussed:

I. Whether the CA committed an error in dropping former President Arroyo as a respondent

in the Amparo case.

II. Whether the CA committed an error in denying petitioners’ Motion for the Issuance of a
Subpoena Ad Testificandum.

III. Whether petitioners should be granted the privilege of the writ of amparo.
 Discussion

The writ of amparo is an independent and summary remedy that provides rapid judicial relief to
protect the people’s right to life, liberty and security.[62] Having been originally intended as a
response to the alarming cases of extrajudicial killings and enforced disappearances in the country, it
serves both preventive and curative roles to address the said human rights violations. It is preventive
in that it breaks the expectation of impunity in the commission of these offenses, and it is curative in
that it facilitates the subsequent punishment of perpetrators by inevitably leading to subsequent
investigation and action.[63]

As it stands, the writ of amparo is confined only to cases of extrajudicial killings and enforced
disappearances, or to threats thereof.[64] Considering that this remedy is aimed at addressing these
serious violations of or threats to the right to life, liberty and security, it cannot be issued on
amorphous and uncertain grounds,[65] or in cases where the alleged threat has ceased and is no
longer imminent or continuing.[66] Instead, it must be granted judiciously so as not to dilute the
extraordinary and remedial character of the writ, thus:

The privilege of the writ of amparo is envisioned basically to protect and guarantee the rights to life,
liberty, and security of persons, free from fears and threats that vitiate the quality of this life. It is an
extraordinary writ conceptualized and adopted in light of and in response to the prevalence of extra-
legal killings and enforced disappearances. Accordingly, the remedy ought to be resorted to and
granted judiciously, lest the ideal sought by the Amparo Rule be diluted and undermined by
the indiscriminate filing of amparo petitions for purposes less than the desire to secure
amparo reliefs and protection and/or on the basis of unsubstantiated allegations.[67]
(Emphasis supplied.)

Using this perspective as the working framework for evaluating the assailed CA decision and the
evidence adduced by the parties, this Court denies the Petition.

First issue: Presidential immunity from suit

It is settled in jurisprudence that the President enjoys immunity from suit during his or her tenure of
office or actual incumbency.[68] Conversely, this presidential privilege of immunity cannot be invoked
by a non-sitting president even for acts committed during his or her tenure.[69]

In the case at bar, the events that gave rise to the present action, as well as the filing of the original
Petition and the issuance of the CA Decision, occurred during the incumbency of former President
Arroyo. In that respect, it was proper for the court a quo to have dropped her as a respondent on
account of her presidential immunity from suit.

It must be underscored, however, that since her tenure of office has already ended, former President
Arroyo can no longer invoke the privilege of presidential immunity as a defense to evade judicial
determination of her responsibility or accountability for the alleged violation or threatened violation
of the right to life, liberty and security of Lozada.

Nonetheless, examining the merits of the case still results in the denial of the Petition on the issue of
former President Arroyo’s alleged responsibility or accountability. A thorough examination of the
allegations postulated and the evidence adduced by petitioners reveals their failure to sufficiently
establish any unlawful act or omission on her part that violated, or threatened with violation, the
right to life, liberty and security of Lozada. Except for the bare claims that: (a) Sec. Atienza
mentioned a certain “Ma’[a]m,”[70] whom Lozada speculated to have referred to her, and (b) Sec.
Defensor told Lozada that “the President was ‘hurting’ from all the media frenzy,”[71] there is
nothing in the records that would sufficiently establish the link of former President Arroyo to the
events that transpired on 5-6 February 2010, as well as to the subsequent threats that Lozada and his
family purportedly received.

Second issue: Denial of the issuance of a subpoena ad testificandum

This Court, in Roco v. Contreras,[72] ruled that for a subpoena to issue, it must first appear that the
person or documents sought to be presented are prima facie relevant to the issue subject of the
controversy, to wit:

A subpoena is a process directed to a person requiring him to attend and to testify at the hearing or
trial of an action or at any investigation conducted under the laws of the Philippines, or for the
taking of his deposition.

In this jurisdiction, there are two (2) kinds of subpoena, to wit: subpoena ad testificandum and subpoena
duces tecum. The first is used to compel a person to testify, while the second is used to compel the
production of books, records, things or documents therein specified. As characterized in H.C.
Liebenow vs. The Philippine Vegetable Oil Company:

The subpoena duces tecum is, in all respects, like the ordinary subpoena ad testificandum
with the exception that it concludes with an injunction that the witness shall bring with him and
produce at the examination the books, documents, or things described in the subpoena.

Well-settled is the rule that before a subpoena duces tecum may issue, the court must first be satisfied
that the following requisites are present: (1) the books, documents or other things requested must
appear prima facie relevant to the issue subject of the controversy (test of relevancy); and (2)
such books must be reasonably described by the parties to be readily identified (test of
definiteness).[73] (Emphasis supplied.)

In the present case, the CA correctly denied petitioners’ Motion for the Issuance of Subpoena Ad
Testificandum on the ground that the testimonies of the witnesses sought to be presented during trial
were prima facie irrelevant to the issues of the case. The court a quo aptly ruled in this manner:
The alleged acts and statements attributed by the petitioner to Neri and Abalos are not relevant to
the instant Amparo Petition where the issue involved is whether or not Lozada’s right to life, liberty
and security was threatened or continues to be threatened with violation by the unlawful act/s of the
respondents. Evidence, to be relevant, must have such a relation to the fact in issue as to induce
belief in its existence or nonexistence. Further, Neri, Abalos and a certain driver “Jaime” are not
respondents in this Amparo Petition and the vague allegations averred in the Motion with respect to
them do not pass the test of relevancy. To Our mind, petitioner appears to be embarking on a
“fishing expedition”. Petitioner should present the aggrieved party [Lozada], who has been regularly
attending the hearings, to prove the allegations in the Amparo Petition, instead of dragging the names
of other people into the picture. We have repeatedly reminded the parties, in the course of the
proceedings, that the instant Amparo Petition does not involve the investigation of the
ZTE-[NBN] contract. Petitioner should focus on the fact in issue and not embroil this Court into
said ZTE-NBN contract, which is now being investigated by the Senate Blue Ribbon Committee
and the Office of the Ombudsman.[74] (Emphasis supplied.)

All the references of petitioners to either Sec. Neri or Abalos were solely with respect to the ZTE-
NBN deal, and not to the events that transpired on 5-6 February 2008, or to the ensuing threats that
petitioners purportedly received. Although the present action is rooted from the involvement of
Lozada in the said government transaction, the testimonies of Sec. Neri or Abalos are nevertheless
not prima facie relevant to the main issue of whether there was an unlawful act or omission on the
part of respondents that violated the right to life, liberty and security of Lozada. Thus, the CA did
not commit any reversible error in denying the Motion for the Issuance of Subpoena Ad
Testificandum.

Third issue: Grant of the privilege of the writ of amparo

A. Alleged violation of or threat to the right to life, liberty and security of Lozada

Sections 17 and 18 of the Rule on the Writ of Amparo requires the parties to establish their claims by
substantial evidence,[75] or such relevant evidence as a reasonable mind might accept as adequate to
support a conclusion.[76] The use of this evidentiary threshold reveals the clear intent of the framers
of the Rule on the Writ of Amparo to have the equivalent of an administrative proceeding, albeit
judicially conducted, in addressing amparo situations.[77]

In cases where the violation of the right to life, liberty or security has already ceased, it is necessary
for the petitioner in an amparo action to prove the existence of a continuing threat.[78] Thus, this
Court held in its Resolution in Razon v. Tagitis:[79]

Manalo is different from Tagitis in terms of their factual settings, as enforced disappearance was
no longer a problem in that case. The enforced disappearance of the brothers Raymond and
Reynaldo Manalo effectively ended when they escaped from captivity and surfaced, while
Tagitis is still nowhere to be found and remains missing more than two years after his reported
disappearance. An Amparo situation subsisted in Manalo, however, because of the continuing
threat to the brothers’ right to security; the brothers claimed that since the persons responsible
for their enforced disappearance were still at large and had not been held accountable, the former
were still under the threat of being once again abducted, kept captive or even killed, which threat
constituted a direct violation of their right to security of person.[80] (Emphasis supplied.)

In the present case, the totality of the evidence adduced by petitioners failed to meet the threshold
of substantial evidence. Sifting through all the evidence and allegations presented, the crux of the
case boils down to assessing the veracity and credibility of the parties’ diverging claims as to what
actually transpired on 5-6 February 2008. In this regard, this Court is in agreement with the factual
findings of the CA to the extent that Lozada was not illegally deprived of his liberty from the point
when he disembarked from the aircraft up to the time he was led to the departure area of the
airport,[81] as he voluntarily submitted himself to the custody of respondents:

[Lozada] was one of the first few passengers to get off the plane because he was instructed by
Secretary Atienza, th[r]ough a phone call on the night of 04 February 2008, while he was still in
Hong Kong, to proceed directly to the Bureau of Immigration so that few people would
notice him and he could be facilitated in going out of the airport without any hassle from the
people of the Senate Sergeant-at-Arms. Again, [Lozada] stated that he wanted to get away from the
Senate people. [Lozada] even went to the men’s room of the airport, after he was allegedly
“grabbed”, where he made a call to his brother Arturo, using his Globe phone, and he was not
prevented from making said call, and was simply advised by the person who met him at the tube to
(sic) “sir, bilisan mo na”. When they proceeded out of the tube and while walking, [Lozada] heard
from the radio track down, “wag kayo dyan, sir, nandyan yong mga taga Senado”, so they took a detour
and went up to the departure area, did not go out of the normal arrival area, and proceeded towards
the elevator near the Duty Free Shop and then down towards the tarmac. Since [Lozada] was
avoiding the people from the Office of the Senate Sergeant-at-Arms, said detour appears to
explain why they did not get out at the arrival area, where [Lozada] could have passed through
immigration so that his passport could be properly stamped.

This Court does not find any evidence on record that [Lozada] struggled or made an outcry
for help when he was allegedly “grabbed” or “abducted” at the airport. [Lozada] even
testified that nobody held him, and they were not hostile to him nor shouted at him. With
noon day clarity, this Court finds that the reason why [Lozada] was fetched at the airport was to help
him avoid the Senate contingent, who would arrest and detain him at the Office of the Senate
Sergeant-at-Arms, until such time that he would appear and give his testimony, pursuant to the
Order of the Senate on the NBN-ZTE Project. [Lozada] clearly knew this because at that time,
it was still his decision not to testify before the Senate. He agreed with that plan.[82]
(Emphases supplied.)

The foregoing statements show that Lozada personally sought the help of Sec. Atienza to avoid the
Senate personnel, and thus knew that the men who met him at the airport were there to aid him in
such objective. Surely, the actions of Lozada evinced knowledge and voluntariness, uncharacteristic
of someone who claims to have been forcibly abducted.

However, these men’s subsequent acts of directing Lozada to board the vehicle and driving him
around, without disclosing the exact purpose thereof, appear to be beyond what he had consented
to and requested from Sec. Atienza. These men neither informed him of where he was being
transported nor provided him complete liberty to contact his family members to assure them of his
safety. These acts demonstrated that he lacked absolute control over the situation, as well as an
effective capacity to challenge their instructions.

Nevertheless, it must be emphasized that if Lozada had in fact been illegally restrained, so much so
that his right to liberty and security had been violated, the acts that manifested this restraint had
already ceased and has consequently rendered the grant of the privilege of the writ of amparo moot.
Whether or not Lozada was deprived of his liberty from the point when he was led inside the vehicle
waiting for him at the airport up to the time he was taken to La Salle Green Hills, petitioners’
assertions that Lozada and his family continue to suffer various threats from respondents remain
unproven. The CA correctly found as follows:

The supposed announcement of General Razon over the radio that [Lozada] was in the
custody of the PNP can neither be construed as a threat to [Lozada’s] life, liberty and security.
Certainly, no person in his right mind would make that kind of media announcement if his
intent was indeed to threaten somebody’s life, liberty and security.

xxx xxx xxx

He claims that he is threatened by the alleged presence of armed men riding in motorcycle
passing outside the De La Salle premises where he and his family are staying and by alleged threats
of armed men around him at places where he went to. Again, these alleged threats were not proven
by any evidence at all, as having originated from any of the respondents.

[Lozada] also considers the installation of the surveillance camera at the De La Salle and at St.
Scholastica as indirect threat to his right to life, liberty and security. He claims that these are spy
cameras. However, save for [Lozada’s] self-serving claim, he simply failed to prove that they were
installed or ordered installed by the respondents for the purpose of threatening his right to life,
liberty and security.

[Lozada] further maintains that there is an alleged trend, i.e., wherever he goes, there is a bomb
threat. There were bomb threats in the places where he went to like in [the Polytechnic University
of the Philippines], Dagupan, Cebu and Bohol. However, [Lozada] himself testified that he did not
try to ascertain where the bomb threats emanated. Plainly, there is no evidence on record that the
bomb threats were made by the respondents or done upon their instigation.
Moreover, [Lozada] views the pronouncement of the Secretary of Justice that he was put on the watch
list of the Bureau of Immigration as a threat to his life, liberty and security. This alleged threat is again
unsupported by evidence, as in fact, [Lozada] testified that he did not ascertain from the Bureau
of Immigration whether his name was actually in the official watch list of the Bureau. At any
rate, the Secretary of Justice is not one of the respondents in the amparo petition, and there is no
showing in the record that it was the respondents who ordered the same for the purpose of
threatening him.

[Lozada] harps on the filing of alleged frivolous cases against him and his family as threat to his
life, liberty and security. xxx However, [Lozada] himself testified that he does not know
whether the respondents or any of the respondents ordered the filing of these cases against
him. In any event, said purported cases are to be determined based on their own merits and
are clearly beyond the realm of the instant amparo petition filed against the respondents.[83]
(Emphasis supplied.)

Finally, petitioners insist that while they were able to sufficiently establish their case by the required
evidentiary standard, respondents failed to discharge their burden to prove their defenses by
substantial evidence and to show that respondents exercised extraordinary diligence as required by
the Rule on the Writ of Amparo.[84] This Court has squarely passed upon this contention in Yano v.
Sanchez,[85] to wit:

The failure to establish that the public official observed extraordinary diligence in the performance
of duty does not result in the automatic grant of the privilege of the amparo writ. It does not relieve
the petitioner from establishing his or her claim by substantial evidence.

Thus, in amparo actions, petitioners must establish their claims by substantial evidence, and they
cannot merely rely on the supposed failure of respondents to prove either their defenses or their
exercise of extraordinary diligence. In this case, the totality of the evidence presented by petitioners
fails to meet the requisite evidentiary threshold, and the privilege of the writ of amparo has already
been rendered moot and academic by the cessation of the restraint to Lozada’s liberty.

B. Propriety of the privilege of the writ of amparo and its interim reliefs

As previously discussed, there is no basis to grant Lozada the privilege of the writ of amparo,
considering that the illegal restraint alleged in this case had already ceased and there is no imminent
or continuing restriction on his liberty. In Castillo v. Cruz,[86] this Court held as follows:

Although respondents’ release from confinement does not necessarily hinder supplication for the
writ of amparo, absent any evidence or even an allegation in the petition that there is undue
and continuing restraint on their liberty, and/or that there exists threat or intimidation that
destroys the efficacy of their right to be secure in their persons, the issuance of the writ cannot be
justified. (Emphasis supplied.)
Further, it appears that Lozada had already filed before the Department of Justice (DOJ) a
Complaint charging respondents with kidnapping and attempted murder, docketed as I.S. No. 2008-
467.[87] In this regard, this Court’s ruling in Rubrico v. Arroyo[88] is worth considering:

First, a criminal complaint for kidnapping and, alternatively, for arbitrary detention rooted in the
same acts and incidents leading to the filing of the subject amparo petition has been instituted with
the OMB, docketed as OMB-P-C-O7-0602-E. The usual initial steps to determine the existence of a
prima facie case against the five (5) impleaded individuals suspected to be actually involved in the
detention of Lourdes have been set in motion. It must be pointed out, though, that the filing of the
OMB complaint came before the effectivity of the Amparo Rule on October 24, 2007.

Second, Sec. 22 of the Amparo Rule proscribes the filing of an amparo petition should a criminal
action have, in the meanwhile, been commenced. The succeeding Sec. 23, on the other hand,
provides that when the criminal suit is filed subsequent to a petition for amparo, the petition shall be
consolidated with the criminal action where the Amparo Rule shall nonetheless govern the
disposition of the relief under the Rule. Under the terms of said Sec. 22, the present petition ought
to have been dismissed at the outset. But as things stand, the outright dismissal of the petition by
force of that section is no longer technically feasible in light of the interplay of the following factual
mix: (1) the Court has, pursuant to Sec. 6 of the Rule, already issued ex parte the writ of amparo; (2)
the CA, after a summary hearing, has dismissed the petition, but not on the basis of Sec. 22; and (3)
the complaint in OMB-P-C-O7-0602-E named as respondents only those believed to be the actual
abductors of Lourdes, while the instant petition impleaded, in addition, those tasked to investigate
the kidnapping and detention incidents and their superiors at the top. Yet, the acts and/or omissions
subject of the criminal complaint and the amparo petition are so linked as to call for the consolidation
of both proceedings to obviate the mischief inherent in a multiplicity-of-suits situation.

Given the above perspective and to fully apply the beneficial nature of the writ of amparo as an
inexpensive and effective tool to protect certain rights violated or threatened to be violated, the
Court hereby adjusts to a degree the literal application of Secs. 22 and 23 of the Amparo Rule to
fittingly address the situation obtaining under the premises. Towards this end, two things are at once
indicated: (1) the consolidation of the probe and fact-finding aspects of the instant petition with the
investigation of the criminal complaint before the OMB; and (2) the incorporation in the same
criminal complaint of the allegations in this petition bearing on the threats to the right to security.
Withal, the OMB should be furnished copies of the investigation reports to aid that body in its own
investigation and eventual resolution of OMB-P-C-O7-0602-E. Then, too, the OMB shall be given
easy access to all pertinent documents and evidence, if any, adduced before the CA. Necessarily,
Lourdes, as complainant in OMB-P-C-O7-0602-E, should be allowed, if so minded, to amend her
basic criminal complaint if the consolidation of cases is to be fully effective. (Emphasis supplied.)

Thus, if the Complaint filed before the DOJ had already progressed into a criminal case, then the
latter action can more adequately dispose of the allegations made by petitioners. After all, one of the
ultimate objectives of the writ of amparo as a curative remedy is to facilitate the subsequent
punishment of perpetrators.[89] On the other hand, if there is no actual criminal case lodged before
the courts, then the denial of the Petition is without prejudice to the filing of the appropriate
administrative, civil or criminal case, if applicable, against those individuals whom Lozada deems to
have unduly restrained his liberty.

Finally, with respect to the interim reliefs sought by petitioners, this Court, in Yano v. Sanchez,[90]
declined to grant the prayer for the issuance of a TPO, as well as Inspection and Production Orders,
upon a finding that the implicated public officials were not accountable for the disappearance
subject of that case. Analogously, it would be incongruous to grant herein petitioners’ prayer for a
TPO and Inspection and Production Orders and at the same time rule that there no longer exists
any imminent or continuing threat to Lozada’s right to life, liberty and security. Thus, there is no
basis on which a prayer for the issuance of these interim reliefs can be anchored.

WHEREFORE, the instant petition is DENIED for being moot and academic. The Court of
Appeals’ denial of the privilege of the writ of amparo is hereby AFFIRMED.

SO ORDERED.

Corona, C.J., Carpio, Velasco, Jr., Leonardo-De Castro, Brion, Peralta, Bersamin, Del Castillo, Abad,
Villarama, Jr., Perez, Mendoza, Reyes, and Perlas-Bernabe, JJ., concur.

*
Corrected by the Office of the Solicitor General (OSG) to be Rodolfo – and not Roger – Valeroso.

[1]
In the Matter of the Petition for the Writ of Amparo in favor of Rodolfo Noel I. Lozada, Jr., Arturo Lozada v.
President Gloria Macapagal-Arroyo, Eduardo Ermita, Avelino Razon, Angel Atutubo and SPO4 Roger
Valeroso, CA-G.R. SP No. 00017; In the Matter of the Petition for Issuance of [the] Writ of Habeas Corpus of
Rodolfo Noel Lozada, Jr., Rodolfo Noel Lozada, Jr. and Violeta Cruz Lozada, for herself and in representation of
Rodolfo Noel Lozada, Jr., v. General Angel Atutubo, General Avelino Razon, Lt. Gen. Pedrio Cadungog, General
Octavio Lina, Brig. Gen. Romeo C. Prestoza, and SPO1 Roger Valeroso, CA-G.R. SP No. 102251, 12
September 2008. Penned by CA Associate Justice Celia C. Librea-Leagogo and concurred in by
Associate Justices Regalado E. Maambong and Sixto C. Marella, Jr., rollo, pp. 61-144.

[2]
Complaint-Affidavit dated 22 February 2008, at 1; rollo, p. 453.

[3]
Petition dated 23 September 2008, at 8; rollo, p. 9.

[4]
Id.
[5]
Id.

[6]
Id.

[7]
Petition, p. 7; rollo, p. 8.

[8]
Id.

[9]
Petition, p. 8; rollo, p. 9.

[10]
Senate Order dated 30 January 2008, CA rollo, pp. 8-10.

[11]
Petition, p. 9; rollo, p. 10.

[12]
Petition, p. 7; rollo, p. 8.

[13]
Petition, pp. 9-10; rollo, pp. 10-11.

[14]
Petition, p. 10; rollo, p. 11.

[15]
Petition, p. 11; rollo, p. 12.

[16]
Id.

[17]
Id.

[18]
Id.

[19]
Id.

[20]
Petition, pp. 11-12; rollo, pp. 12-13.

[21]
Petition, p. 12; rollo, p. 13.

[22]
Id.

[23]
Id.

[24]
Id.

[25]
Petition, p. 13; rollo, p. 14.

[26]
Id.
[27]
Petition, p. 14; rollo, p. 15.

[28]
Id.

[29]
Petition, p. 14; rollo, p. 15; Petition for a Writ of Amparo, CA rollo, pp. 2-7.

[30]
Petition, p. 14; rollo, p. 15.

[31]
Id.

[32]
Id.

[33]
Id.

[34]
Petition, p. 15; rollo, p. 16.

[35]
Petition, p. 26; rollo, p. 27; Resolution dated 7 February 2008, CA rollo, pp. 11-14.

[36]
CA Resolution dated 8 February 2008, CA rollo, pp. 17-19. The Habeas Corpus case was docketed
as CA-G.R. SP No. 1022551; the Amparo case, CA-G.R. SP No. 00017.

[37]
Manifestation and Motion (in lieu of Comment on the Petition for Issuance of Writ of Habeas
Corpus dated 6 February 2008) dated 12 February 2008, CA rollo, pp. 20-25.

[38]
CA rollo, p. 22.

[39]
Return dated 13 February 2008, rollo, pp. 275-333.

[40]
Id.

[41]
CA Resolution dated 20 February 2008, p. 3; CA rollo, p. 133.

[42]
A.M. No. 07-9-12-SC. Section 2 of the Rule on the Writ of Amparo provides:

Who May File. – The petition may be filed by the aggrieved party or by any qualified person or entity
in the following order:

a. Any member of the immediate family, namely: the spouse, children and parents of the aggrieved
party;

b. Any ascendant, descendant or collateral relative of the aggrieved party within the fourth civil
degree of consanguinity or affinity, in default of those mentioned in the preceding paragraph; or
c. Any concerned citizen, organization, association or institution, if there is no known member of
the immediate family or relative of the aggrieved party.

The filing of a petition by the aggrieved party suspends the right of all other authorized parties to file
similar petitions. Likewise, the filing of the petition by an authorized party on behalf of the aggrieved
party suspends the right of all others, observing the order established herein.

[43]
Annotation to the Rule on the Writ of Amparo, Supreme Court, p. 4.

[44]
CA Resolution dated 20 February 2008, CA rollo, pp.131-136.

[45]
CA rollo, pp. 100-114.

[46]
Motion for the Issuance of Subpoena dated 22 February 2008, CA rollo, pp.149-156.

[47]
Opposition to Petitioner’s Motion for Temporary Protection Order and Production of
Documents dated 22 February 2008, CA rollo pp.171-180; Opposition to Petitioner’s Motion for
Issuance of Subpoena Ad Testificandum and Presentation of Hostile Witnesses and Adverse Parties
Romulo Neri, Benjamin Abalos, [Sr.], Rodolfo Valeroso, “Jaime” the Driver, and Other
Respondents dated 3 March 2008; CA rollo, pp. 240-251.

[48]
CA Resolution dated 12 March 2008, CA rollo, pp. 338-344.

[49]
CA Resolution dated 8 April 2008, CA rollo, pp. 414-417.

[50]
Rollo pp. 468-478; CA rollo, pp. 254-264.

[51]
Motion for Reconsideration dated 10 March 2008, CA rollo, pp. 287-303.

[52]
CA rollo, pp. 371-374.

[53]
CA Decision, rollo, pp. 60-147.

[54]
Rollo, pp. 2-59.

[55]
Id. at 34-35.

[56]
Comment dated 5 November 2008, rollo, pp. 161-274.

[57]
Id.

[58]
Comment/Opposition (To: Petition for Review) dated 17 November 2008, rollo, pp. 484-504.
[59]
Reply to Respondent[s’] Comment dated 26 January 2009, rollo, pp. 510-524; Reply to the
Comment of Respondent Atutubo dated 6 February 2009, rollo, pp. 547-564.

[60]
Id.

[61]
Reply to Respondent[s’] Comment dated 26 January 2009, rollo, pp. 510-524.

[62]
Section 1, Rule on the Writ of Amparo; Rodriguez v. Arroyo, G.R. Nos. 191805 and 193160.

[63]
Secretary of National Defense v. Manalo, G.R. No. 180906, 7 October 2008, 568 SCRA 1, 43.

[64]
Id. at 38, reiterated in Reyes v. Court of Appeals, G.R. No. 182161, 3 December 2009, 606 SCRA
580.

[65]
Tapuz v. Del Rosario, G.R. 182484, 17 June 2008, 554 SCRA 768, 784.

[66]
Id. at 789.

[67]
Rubrico v. Arroyo, G.R. 183871, 18 February 2010, 613 SCRA 233, 261.

[68]
David v. Arroyo, 522 Phil. 705, 763-764 (2006).

[69]
Rodriguez v. Arroyo, G.R. Nos. 191805 and 193160, 15 November 2011, citing Estrada v. Desierto,
408 Phil. 194, 242 (2001).

[70]
Petition, p. 11; rollo, p. 12.

[71]
Petition, p. 14; rollo, p. 15.

[72]
500 Phil. 275 (2005).

[73]
Id. at 283-284.

[74]
CA Resolution dated 12 March 2008, pp. 4-5; CA rollo, pp. 341-342.

[75]
Section 17. Burden of Proof and Standard of Diligence Required. – The parties shall establish their claims
by substantial evidence.

The respondent who is a private individual or entity must prove that ordinary diligence as required
by applicable laws, rules and regulations was observed in the performance of duty.

The respondent who is a public official or employee must prove that extraordinary diligence as
required by applicable laws, rules and regulations was observed in the performance of duty.

The respondent public official or employee cannot invoke the presumption that official duty has
been regularly performed to evade responsibility or liability.

Section 18. Judgment. — The court shall render judgment within ten (10) days from the time the
petition is submitted for decision. If the allegations in the petition are proven by substantial
evidence, the court shall grant the privilege of the writ and such reliefs as may be proper and
appropriate; otherwise, the privilege shall be denied.

[76]
Razon v. Tagitis, G.R. No. 182498, 3 December 2009, 606 SCRA 598, 688, citing Ang Tibay v. Court
of Industrial Relations, 69 Phil. 635, 642 (1940).

[77]
Razon v. Tagitis, G.R. No. 182498, 3 December 2009, 606 SCRA 598, 687.

[78]
Supra note 66.

[79]
Razon v. Tagitis (Resolution), G.R. No. 182498, 16 February 2010, 612 SCRA 685.

[80]
Id. at 696-697.

[81]
Petition, p. 11; rollo, p. 12.

[82]
CA Decision, pp. 76-77; rollo, pp. 136-137.

[83]
CA Decision, pp. 79-81; rollo, pp. 139-141.

[84]
Reply to Respondent[s’] Comment dated 26 January 2009, pp. 4-5; rollo, pp. 513-514.

[85]
G.R. No. 186640, 11 February 2010, 612 SCRA 347, 360.

[86]
Castillo v. Cruz, G.R. No. 182165, 25 November 2009, 605 SCRA 628, 638.

[87]
Complaint-Affidavit dated 22 February 2008, rollo, pp. 453-467.

[88]
Supra note 67, at 263-265.

[89]
Supra note 67; supra note 78 at 668.

[90]
Supra note 85.
Copyright 2016 - Batas.org

G.R. No. 179786

THIRD DIVISION

G.R. No. 179786, July 24, 2013

JOSIELENE LARA CHAN, PETITIONER, VS. JOHNNY T. CHAN, RESPONDENT.

DECISION

ABAD, J.:

This case is about the propriety of issuing a subpoena duces tecum for the production and submission
in court of the respondent husband's hospital record in a case for declaration of nullity of marriage
where one of the issues is his mental fitness as a husband.

The Facts and the Case

On February 6, 2006 petitioner Josielene Lara Chan (Josielene) filed before the Regional Trial Court
(RTC) of Makati City, Branch 144 a petition for the declaration of nullity of her marriage to
respondent Johnny Chan (Johnny), the dissolution of their conjugal partnership of gains, and the
award of custody of their children to her. Josielene claimed that Johnny failed to care for and
support his family and that a psychiatrist diagnosed him as mentally deficient due to incessant
drinking and excessive use of prohibited drugs. Indeed, she had convinced him to undergo hospital
confinement for detoxification and rehabilitation.

Johnny resisted the action, claiming that it was Josielene who failed in her wifely duties. To save
their marriage, he agreed to marriage counseling but when he and Josielene got to the hospital, two
men forcibly held him by both arms while another gave him an injection. The marriage relations got
worse when the police temporarily detained Josielene for an unrelated crime and released her only
after the case against her ended. By then, their marriage relationship could no longer be repaired.

During the pre-trial conference, Josielene pre-marked the Philhealth Claim Form1 that Johnny
attached to his answer as proof that he was forcibly confined at the rehabilitation unit of a hospital.
The form carried a physician’s handwritten note that Johnny suffered from “methamphetamine and
alcohol abuse.” Following up on this point, on August 22, 2006 Josielene filed with the RTC a
request for the issuance of a subpoena duces tecum addressed to Medical City, covering Johnny’s
medical records when he was there confined. The request was accompanied by a motion to “be
allowed to submit in evidence” the records sought by subpoena duces tecum.[2]

Johnny opposed the motion, arguing that the medical records were covered by physician-patient
privilege. On September 13, 2006 the RTC sustained the opposition and denied Josielene’s motion.
It also denied her motion for reconsideration, prompting her to file a special civil action of certiorari
before the Court of Appeals (CA) in CA-G.R. SP 97913, imputing grave abuse of discretion to the
RTC.

On September 17, 2007 the CA[3] denied Josielene’s petition. It ruled that, if courts were to allow the
production of medical records, then patients would be left with no assurance that whatever relevant
disclosures they may have made to their physicians would be kept confidential. The prohibition
covers not only testimonies, but also affidavits, certificates, and pertinent hospital records. The CA
added that, although Johnny can waive the privilege, he did not do so in this case. He attached the
Philhealth form to his answer for the limited purpose of showing his alleged forcible confinement.

Question Presented

The central question presented in this case is:

Whether or not the CA erred in ruling that the trial court correctly denied the issuance of a
subpoena duces tecum covering Johnny’s hospital records on the ground that these are covered by the
privileged character of the physician-patient communication.

The Ruling of the Court

Josielene requested the issuance of a subpoena duces tecum covering the hospital records of Johnny’s
confinement, which records she wanted to present in court as evidence in support of her action to
have their marriage declared a nullity. Respondent Johnny resisted her request for subpoena,
however, invoking the privileged character of those records. He cites Section 24(c), Rule 130 of the
Rules of Evidence which reads:

SEC. 24. Disqualification by reason of privileged communication.— The following persons cannot testify as
to matters learned in confidence in the following cases:

xxxx

(c) A person authorized to practice medicine, surgery or obstetrics cannot in a civil case, without the
consent of the patient, be examined as to any advice or treatment given by him or any information
which he may have acquired in attending such patient in a professional capacity, which information
was necessary to enable him to act in that capacity, and which would blacken the reputation of the
patient.

The physician-patient privileged communication rule essentially means that a physician who gets
information while professionally attending a patient cannot in a civil case be examined without the
patient’s consent as to any facts which would blacken the latter’s reputation. This rule is intended to
encourage the patient to open up to the physician, relate to him the history of his ailment, and give
him access to his body, enabling the physician to make a correct diagnosis of that ailment and
provide the appropriate cure. Any fear that a physician could be compelled in the future to come to
court and narrate all that had transpired between him and the patient might prompt the latter to
clam up, thus putting his own health at great risk.[4]

1. The case presents a procedural issue, given that the time to object to the admission of evidence,
such as the hospital records, would be at the time they are offered. The offer could be made part of
the physician’s testimony or as independent evidence that he had made entries in those records that
concern the patient’s health problems.

Section 36, Rule 132, states that objections to evidence must be made after the offer of such
evidence for admission in court. Thus:

SEC. 36. Objection.— Objection to evidence offered orally must be made immediately after the offer
is made.

Objection to a question propounded in the course of the oral examination of a witness shall be
made as soon as the grounds therefor shall become reasonably apparent.

An offer of evidence in writing shall be objected to within three (3) days after notice of the offer
unless a different period is allowed by the court.

In any case, the grounds for the objections must be specified.

Since the offer of evidence is made at the trial, Josielene’s request for subpoena duces tecum is
premature. She will have to wait for trial to begin before making a request for the issuance of a
subpoena duces tecum covering Johnny’s hospital records. It is when those records are produced for
examination at the trial, that Johnny may opt to object, not just to their admission in evidence, but
more so to their disclosure. Section 24(c), Rule 130 of the Rules of Evidence quoted above is about
non-disclosure of privileged matters.

2. It is of course possible to treat Josielene’s motion for the issuance of a subpoena duces tecum
covering the hospital records as a motion for production of documents, a discovery procedure
available to a litigant prior to trial. Section 1, Rule 27 of the Rules of Civil Procedure provides:

SEC. 1. Motion for production or inspection; order.— Upon motion of any party showing good cause
therefor, the court in which an action is pending may (a) order any party to produce and permit the
inspection and copying or photographing, by or on behalf of the moving party, of any designated
documents, papers, books, accounts, letters, photographs, objects or tangible things, not privileged,
which constitute or contain evidence material to any matter involved in the action and which are in
his possession, custody or control; or (b) order any party to permit entry upon designated land or
other property in his possession or control for the purpose of inspecting, measuring, surveying, or
photographing the property or any designated relevant object or operation thereon. The order shall
specify the time, place and manner of making the inspection and taking copies and photographs, and
may prescribe such terms and conditions as are just. (Emphasis supplied)

But the above right to compel the production of documents has a limitation: the documents to be
disclosed are “not privileged.”

Josielene of course claims that the hospital records subject of this case are not privileged since it is
the “testimonial” evidence of the physician that may be regarded as privileged. Section 24(c) of Rule
130 states that the physician “cannot in a civil case, without the consent of the patient, be examined”
regarding their professional conversation. The privilege, says Josielene, does not cover the hospital
records, but only the examination of the physician at the trial.

To allow, however, the disclosure during discovery procedure of the hospital records—the results of
tests that the physician ordered, the diagnosis of the patient’s illness, and the advice or treatment he
gave him— would be to allow access to evidence that is inadmissible without the patient’s consent.
Physician memorializes all these information in the patient’s records. Disclosing them would be the
equivalent of compelling the physician to testify on privileged matters he gained while dealing with
the patient, without the latter’s prior consent.

3. Josielene argues that since Johnny admitted in his answer to the petition before the RTC that he
had been confined in a hospital against his will and in fact attached to his answer a Philhealth claim
form covering that confinement, he should be deemed to have waived the privileged character of its
records. Josielene invokes Section 17, Rule 132 of the Rules of Evidence that provides:

SEC. 17. When part of transaction, writing or record given in evidence, the remainder admissible.— When part of
an act, declaration, conversation, writing or record is given in evidence by one party, the whole of
the same subject may be inquired into by the other, and when a detached act, declaration,
conversation, writing or record is given in evidence, any other act, declaration, conversation, writing
or record necessary to its understanding may also be given in evidence.

But, trial in the case had not yet begun. Consequently, it cannot be said that Johnny had already
presented the Philhealth claim form in evidence, the act contemplated above which would justify
Josielene into requesting an inquiry into the details of his hospital confinement. Johnny was not yet
bound to adduce evidence in the case when he filed his answer. Any request for disclosure of his
hospital records would again be premature.

For all of the above reasons, the CA and the RTC were justified in denying Josielene her request for
the production in court of Johnny’s hospital records.

ACCORDINGLY, the Court DENIES the petition and AFFIRMS the Decision of the Court of
Appeals in CA-G.R. SP 97913 dated September 17, 2007.

SO ORDERED.

Velasco, Jr., (Chairperson), Peralta, and Mendoza, JJ., concur.

Leonen, J., see separate concurring opinion.

July 30, 2013

N O T I C E OF J U D G M E N T

Sirs/Mesdames:

Please take notice that on ___July 24, 2013___ a Decision, copy attached herewith, was rendered by
the Supreme Court in the above-entitled case, the original of which was received by this Office on
July 30, 2013 at 2:20 p.m.

Very truly yours,

(SGD)
LUCITA ABJELINA SORIANO
Division Clerk of Court

[1]
Annex “B.”

[2]
Rollo, pp. 69-72.

[3]
Penned by Associate Justice Jose L. Sabio, Jr. and concurred in by Associate Justices Jose C.
Reyes, Jr. and Myrna Dimaranan Vidal.

[4]
Francisco, The Revised Rules of Court of the Philippines, Volume VII, Part I, 1997 ed., p. 282,
citing Will of Bruendi, 102 Wis. 47, 78 N.W. 169. and McRae v. Erickson, 1 Cal. App. 326.
 CONCURRING OPINION

LEONEN, J.

I concur but add the following points:

I agree that the hospital records of respondent Johnny Chan may not be produced in court without
his/her consent. Issuance of a subpoena duces tecum for its production will violate the physician-
patient privilege rule under Rule 130, Sec. 24(c)[1] of the Rules of Civil Procedure.

However, this privilege is not absolute. The request of petitioner for a copy of the medical records
has not been properly laid.

Instead of a request for the issuance of a subpoena duces tecum, Josielene Lara Chan should avail of
the mode of discovery under Rule 28 of the Rules of Civil Procedure.

Rule 28 pertains to the physical or mental examination of persons. This may be ordered by the
court, in its discretion,[2] upon motion and showing of good cause[3] by the requesting party, in cases
when the mental and/or physical condition of a party is in controversy.[4] Aside from showing good
cause, the requesting party needs only to notify the party to be examined (and all other parties) and
specify the time, place, manner, conditions, and scope of the examination, including the name of
the physician who will conduct the examination.[5]

The examined party may obtain a copy of the examining physician's report concerning his/her
mental or physical examination.[6] The requesting party shall deliver this report to him/her.[7] After
such delivery, however, the requesting party becomes entitled to any past or future medical report
involving the same mental or physical condition.[8] Upon motion and notice, the court may order the
examined party to deliver those medical reports to the requesting party if the examined party refuses
to do so.[9]

Moreover, if the examined party requests a copy of the examining physician's report or if he/she
takes the examining physician's deposition, the request waives the examined party's privileges when
the testimony of any person who examined or will examine his/her mental of physical status is taken
in the action or in any action involving the same controversy.[10]

Discovery procedures provide a balance between the need of the plaintiff or claimant to fully and
fairly establish her case and the policy to protect to a certain extent - communications made
between a patient and his doctor. Hence, the physician-patient privilege does not cover information
discovered under Rule 28. This procedure is availed with the intention of making the results public
during trial. Along with other modes of discovery, this would prevent the trial from being carried on
in the dark.[11]

In view of the foregoing, vote to DENY the petition.

[1]
RULES OF COURT, Rule 130, Sec. 24(c) provides:
A person authorized to practice medicine, surgery or obstetrics cannot in a civil case, without the
consent of the patient, be examined as to any advice or treatment given by him or any information
which he may have acquired in attending such patient in a professional capacity,
which information was necessary to enable him to act in that capacity, and which would blacken the
reputation of the patient.
[2]
RULES OF COURT, Rule 28, Sec. 1.

[3]
RULES OF COURT, Rule 28, Sec. 2.

[4]
RULES OF COURT, Rule 28, Sec. 1.

[5]
RULES OF COURT Rule 28, Sec. 2.

[6]
RULES OF COURT, Rule 28. Sec. 3.

[7]
RULES OF COURT, Rule 28, Sec. 3.

[8]
RULES OF COURT, Rule 28, Sec. 3.

[9]
RULES OF COURT, Rule 28. Sec. 3.

[10]
RULES OF COURT, Rule 28, Sec. 4.

[11]
Republic v. Sandiganhayan, Tantoco and Santiago, G.R. No. 90478, November 21. 1991, 204 SCRA
212.

Copyright 2016 - Batas.org

FIRST DIVISION
 G.R. No. 172509, February 04, 2015

CHINA BANKING CORPORATION, PETITIONER, VS. COMMISSIONER OF INTERNAL

REVENUE, RESPONDENT.

DECISION

SERENO, C.J.:

This Rule 45 Petition[1] requires this Court to address the question of prescription of the
government’s right to collect taxes. Petitioner China Banking Corporation (CBC) assails the
Decision[2] and Resolution[3] of the Court of Tax Appeals (CTA) En Banc in CTA En Banc Case
No. 109. The CTA En Banc affirmed the Decision[4] in CTA Case No. 6379 of the CTA Second
Division, which had also affirmed the validity of Assessment No. FAS-5-82/85-89-000586 and FAS-
5-86-89-00587. The Assessment required petitioner CBC to pay the amount of P11,383,165.50, plus
increments accruing thereto, as deficiency documentary stamp tax (DST) for the taxable years 1982
to 1986.

FACTS

Petitioner CBC is a universal bank duly organized and existing under the laws of the Philippines. For
the taxable years 1982 to 1986, CBC was engaged in transactions involving sales of foreign exchange
to the Central Bank of the Philippines (now Bangko Sentral ng Pilipinas), commonly known as
SWAP transactions.[5] Petitioner did not file tax returns or pay tax on the SWAP transactions for
those taxable years.

On 19 April 1989, petitioner CBC received an assessment from the Bureau of Internal Revenue
(BIR) finding CBC liable for deficiency DST on the sales of foreign bills of exchange to the Central
Bank. The deficiency DST was computed as follows:
 Deficiency Documentary Stamp Tax

Amount

For the years 1982 to 1985

P 8,280,696.00

For calendar year 1986

P 2,481 ,975.60

Add : Surcharge

P 620,493.90

P 3,102.469.50

P11 ,383,165.50[6]

On 8 May 1989, petitioner CBC, through its vice-president, sent a letter of protest to the BIR. CBC
raised the following defenses: (1) double taxation, as the bank had previously paid the DST on all its
transactions involving sales of foreign bills of exchange to the Central Bank; (2) absence of liability,
as the liability for the DST in a sale of foreign exchange through telegraphic transfers to the Central
Bank falls on the buyer ? in this case, the Central Bank; (3) due process violation, as the bank’s
records were never formally examined by the BIR examiners; (4) validity of the assessment, as it did
not include the factual basis therefore; (5) exemption, as neither the tax-exempt entity nor the other
party was liable for the payment of DST before the effectivity of Presidential Decree Nos. (PD)
1177 and 1931 for the years 1982 to 1986.[7] In the protest, the taxpayer requested a reinvestigation
so as to substantiate its assertions.[8]
 On 6 December 2001, more than 12 years after the filing of the protest, the Commissioner of
Internal Revenue (CIR) rendered a decision reiterating the deficiency DST assessment and ordered
the payment thereof plus increments within 30 days from receipt of the Decision.[9]

On 18 January 2002, CBC filed a Petition for Review with the CTA. On 11 March 2002, the CIR
filed an Answer with a demand for CBC to pay the assessed DST.[10]

On 23 February 2005, and after trial on the merits, the CTA Second Division denied the Petition of
CBC. The CTA ruled that a SWAP arrangement should be treated as a telegraphic transfer subject to
documentary stamp tax.[11]

On 30 March 2005, petitioner CBC filed a Motion for Reconsideration, but it was denied in a
Resolution dated 14 July 2005.

On 5 August 2005, petitioner appealed to the CTA En Banc. The appellate tax court, however,
dismissed the Petition for Review in a Decision dated 1 December 2005. CBC filed a Motion for
Reconsideration on 21 December 2005, but it was denied in a 20 March 2006 Resolution.

The taxpayer now comes to this Court with a Rule 45 Petition, reiterating the arguments it raised at
the CTA level and invoking for the first time the argument of prescription. Petitioner CBC states
that the government has three years from 19 April 1989, the date the former received the assessment
of the CIR, to collect the tax. Within that time frame, however, neither a warrant of distraint or levy
was issued, nor a collection case filed in court.

On 17 October 2006, respondent CIR submitted its Comment in compliance with the Court’s
Resolution dated 26 June 2006.[12] The Comment did not have any discussion on the question of
prescription.

On 21 February 2007, the Court issued a Resolution directing the parties to file their respective
Memoranda. Petitioner CBC filed its Memorandum[13] on 26 April 2007. The CIR, on the other
 hand, filed on 17 April 2007 a Manifestation stating that it was adopting the allegations and
authorities in its Comment in lieu of the required Memorandum.[14]

ISSUE

Given the facts and the arguments raised in this case, the resolution of this case hinges on this issue:
whether the right of the BIR to collect the assessed DST from CBC is barred by prescription.[15]

RULING OF THE COURT

We grant the Petition on the ground that the right of the BIR to collect the assessed DST is barred
by the statute of limitations.

Prescription Has Set In.

To recall, the Bureau of Internal Revenue (BIR) issued the assessment for deficiency DST on 19
April 1989, when the applicable rule was Section 319(c) of the National Internal Revenue Code of
1977, as amended.[16] In that provision, the time limit for the government to collect the assessed
tax is set at three years, to be reckoned from the date when the BIR mails/releases/sends the
assessment notice to the taxpayer. Further, Section 319(c) states that the assessed tax must be
collected by distraint or levy and/or court proceeding within the three-year period.

With these rules in mind, we shall now determine whether the claim of the BIR is barred by time.
 In this case, the records do not show when the assessment notice was mailed, released or sent to
CBC. Nevertheless, the latest possible date that the BIR could have released, mailed or sent the
assessment notice was on the same date that CBC received it, 19 April 1989. Assuming therefore
that 19 April 1989 is the reckoning date, the BIR had three years to collect the assessed DST.
However, the records of this case show that there was neither a warrant of distraint or levy served
on CBC's properties nor a collection case filed in court by the BIR within the three-year period.

The attempt of the BIR to collect the tax through its Answer with a demand for CBC to pay the
assessed DST in the CTA on 11 March 2002 did not comply with Section 319(c) of the 1977 Tax
Code, as amended. The demand was made almost thirteen years from the date from which the
prescriptive period is to be reckoned. Thus, the attempt to collect the tax was made way beyond the
three-year prescriptive period.

The BIR’s Answer in the case filed before the CTA could not, by any means, have qualified as a
collection case as required by law. Under the rule prevailing at the time the BIR filed its Answer, the
regular courts, and not the CTA, had jurisdiction over judicial actions for collection of internal
revenue taxes. It was only on 23 April 2004, when Republic Act Number 9282 took effect,[17] that
the jurisdiction of the CTA was expanded to include, among others, original jurisdiction over
collection cases in which the principal amount involved is one million pesos or more.

Consequently, the claim of the CIR for deficiency DST from petitioner is forever lost, as it is now
barred by time. This Court has no other option but to dismiss the present case.

The running of the statute of

limitations was not suspended

by the request for reinvestigation.

The fact that the taxpayer in this case may have requested a reinvestigation did not toll the running
of the three-year prescriptive period. Section 320 of the 1977 Tax Code states:

Sec. 320. Suspension of running of statute.—The running of the statute of limitations provided in
Sections 318 or 319 on the making of assessment and the beginning of distraint or levy or a
proceeding in court for collection, in respect of any deficiency, shall be suspended for the period
during which the Commissioner is prohibited from making the assessment or beginning distraint or
levy or a proceeding in court and for sixty days thereafter; when the taxpayer requests for a re-
investigation which is granted by the Commissioner; when the taxpayer cannot be located in the
address given by him in the return filed upon which a tax is being assessed or collected: Provided,
 That if the taxpayer informs the Commissioner of any change in address, the running of the statute
of limitations will not be suspended; when the warrant of distraint and levy is duly served upon the
taxpayer, his authorized representative, or a member of his household with sufficient discretion, and
no property could be located; and when the taxpayer is out of the Philippines. (Emphasis supplied)

The provision is clear. A request for reinvestigation alone will not suspend the statute of limitations.
Two things must concur: there must be a request for reinvestigation and the CIR must have granted
it. BPI v. Commissioner of Internal Revenue[18] emphasized this rule by stating:

In the case of Republic of the Philippines v. Gancayco, taxpayer Gancayco requested for a thorough
reinvestigation of the assessment against him and placed at the disposal of the Collector of Internal
Revenue all the [evidence] he had for such purpose; yet, the Collector ignored the request, and the
records and documents were not at all examined. Considering the given facts, this Court
pronounced that—

x x x. The act of requesting a reinvestigation alone does not suspend the period. The request should
first be granted, in order to effect suspension. (Collector v. Suyoc Consolidated, supra; also Republic
v. Ablaza, supra). Moreover, the Collector gave appellee until April 1, 1949, within which to submit
his evidence, which the latter did one day before. There were no impediments on the part of the
Collector to file the collection case from April 1, 1949 x x x.

In Republic of the Philippines v. Acebedo, this Court similarly found that —

. . . [T]he defendant, after receiving the assessment notice of September 24, 1949, asked for a
reinvestigation thereof on October 11, 1949 (Exh. “A”). There is no evidence that this request was
considered or acted upon. In fact, on October 23, 1950 the then Collector of Internal Revenue
issued a warrant of distraint and levy for the full amount of the assessment (Exh. “D”), but there
was follow-up of this warrant. Consequently, the request for reinvestigation did not suspend the
running of the period for filing an action for collection. (Emphasis in the original)

The Court went on to declare that the burden of proof that the request for reinvestigation had been
actually granted shall be on the CIR. Such grant may be expressed in its communications with the
taxpayer or implied from the action of the CIR or his authorized representative in response to the
request for reinvestigation.

There is nothing in the records of this case which indicates, expressly or impliedly, that the CIR had
granted the request for reinvestigation filed by BPI. What is reflected in the records is the piercing
silence and inaction of the CIR on the request for reinvestigation, as he considered BPI's letters of
protest to be.
 In the present case, there is no showing from the records that the CIR ever granted the request for
reinvestigation filed by CBC. That being the case, it cannot be said that the running of the three-year
prescriptive period was effectively suspended.

Failure to raise prescription at the

administrative level/lower court as a

defense is of no moment.

When the pleadings or the evidence on record

show that the claim is barred by prescription,

the court must dismiss the claim even if prescription

is not raised as a defense.

We note that petitioner has raised the issue of prescription for the first time only before this Court.
While we are mindful of the established rule of remedial law that the defense of prescription must
be raised at the trial court that has also been applied for tax cases.[19] Thus, as a rule, the failure to
raise the defense of prescription at the administrative level prevents the taxpayer from raising it at
the appeal stage.

This rule, however, is not absolute.

The facts of the present case are substantially identical to those in the 2014 case, Bank of the
Philippine Islands (BPI) v. Commissioner of Internal Revenue.[20] In that case, petitioner received
an assessment notice from the BIR for deficiency DST based on petitioner’s SWAP transactions for
the year 1985 on 16 June 1989. On 23 June 1989, BPI, through its counsel, filed a protest requesting
the reinvestigation and/or reconsideration of the assessment for lack of legal or factual bases.
Almost ten years later, the CIR, in a letter dated 4 August 1998, denied the protest. On 4 January
1999, BPI filed a Petition for Review with the CTA. On 23 February 1999, the CIR filed an Answer
with a demand for BPI to pay the assessed DST. It was only when the case ultimately reached this
Court that the issue of prescription was brought up. Nevertheless, the Court ruled that the CIR
could no longer collect the assessed tax due to prescription. Basing its ruling on Section 1, Rule 9 of
the Rules of Court and on jurisprudence, the Court held as follows:

In a Resolution dated 5 August 2013, the Court, through the Third Division, found that the assailed
tax assessment may be invalidated because the statute of limitations on the collection of the alleged
deficiency DST had already expired, conformably with Section 1, Rule 9 of the Rules of Court and
the Bank of the Philippine Islands v. Commissioner of Internal Revenue decision. However, to
afford due process, the Court required both BPI and CIR to submit their respective comments on
the issue of prescription.

Only the CIR filed his comment on 9 December 2013. In his Comment, the CIR argues that the
issue of prescription cannot be raised for the first time on appeal. The CIR further alleges that even
assuming that the issue of prescription can be raised, the protest letter interrupted the prescriptive
period to collect the assessed DST, unlike in the Bank of the Philippine Islands case.

xxxx

We deny the right of the BIR to collect the assessed DST on the ground of prescription.

Section 1, Rule 9 of the Rules of Court expressly provides that:

Section 1. Defenses and objections not pleaded. - Defenses and objections not pleaded either in a
motion to dismiss or in the answer are deemed waived. However, when it appears from the
pleadings or the evidence on record that the court has no jurisdiction over the subject matter, that
there is another action pending between the same parties for the same cause, or that the action is
barred by prior judgment or by the statute of limitations, the court shall dismiss the claim.

If the pleadings or the evidence on record show that the claim is barred by prescription, the court is
mandated to dismiss the claim even if prescription is not raised as a defense. In Heirs of Valientes v.
Ramas, we ruled that the CA may motu proprio dismiss the case on the ground of prescription
despite failure to raise this ground on appeal. The court is imbued with sufficient discretion to
review matters, not otherwise assigned as errors on appeal, if it finds that their consideration is
necessary in arriving at a complete and just resolution of the case. More so, when the provisions on
prescription were enacted to benefit and protect taxpayers from investigation after a reasonable
period of time.

Thus, we proceed to determine whether the period to collect the assessed DST for the year 1985 has
prescribed.
 To determine prescription, what is essential only is that the facts demonstrating the lapse of the
prescriptive period were sufficiently and satisfactorily apparent on the record either in the allegations
of the plaintiff’s complaint, or otherwise established by the evidence. Under the then applicable
Section 319(c) [now, 222(c)] of the National Internal Revenue Code (NIRC) of 1977, as amended,
any internal revenue tax which has been assessed within the period of limitation may be collected by
distraint or levy, and/or court proceeding within three years following the assessment of the tax.
The assessment of the tax is deemed made and the three-year period for collection of the assessed
tax begins to run on the date the assessment notice had been released, mailed or sent by the BIR to
the taxpayer.

In the present case, although there was no allegation as to when the assessment notice had been
released, mailed or sent to BPI, still, the latest date that the BIR could have released, mailed or sent
the assessment notice was on the date BPI received the same on 16 June 1989. Counting the three-
year prescriptive period from 16 June 1989, the BIR had until 15 June 1992 to collect the assessed
DST. But despite the lapse of 15 June 1992, the evidence established that there was no warrant of
distraint or levy served on BPI’s properties, or any judicial proceedings initiated by the BIR.

The earliest attempt of the BIR to collect the tax was when it filed its answer in the CTA on 23
February 1999, which was several years beyond the three-year prescriptive period. However, the
BIR’s answer in the CTA was not the collection case contemplated by the law. Before 2004 or the
year Republic Act No. 9282 took effect, the judicial action to collect internal revenue taxes fell under
the jurisdiction of the regular trial courts, and not the CTA. Evidently, prescription has set in to bar
the collection of the assessed DST. (Emphasis supplied)

BPI thus provides an exception to the rule against raising the defense of prescription for the first
time on appeal: the exception arises when the pleadings or the evidence on record show that the
claim is barred by prescription.

In this case, the fact that the claim of the government is time-barred is a matter of record. As can be
seen from the previous discussion on the determination of the prescription of the right of the
government to claim deficiency DST, the conclusion that prescription has set in was arrived at using
the evidence on record. The date of receipt of the assessment notice was not disputed, and the date
of the attempt to collect was determined by merely checking the records as to when the Answer of
the CIR containing the demand to pay the tax was filed.
 Estoppel or waiver prevents the government

from invoking the rule against raising the

issue of prescription for the first time on appeal.

In this case, petitioner may have raised the question of prescription only on appeal to this Court.
The BIR could have crushed the defense by the mere invocation of the rule against setting up the
defense of prescription only at the appeal stage. The government, however, failed to do so.

On the contrary, the BIR was silent despite having the opportunity to invoke the bar against the
issue of prescription. It is worthy of note that the Court ordered the BIR to file a Comment. The
government, however, did not offer any argument in its Comment about the issue of prescription,
even if petitioner raised it in the latter’s Petition. It merely fell silent on the issue. It was given
another opportunity to meet the challenge when this Court ordered both parties to file their
respective memoranda. The CIR, however, merely filed a Manifestation that it would no longer be
filing a Memorandum and, in lieu thereof, it would be merely adopting the arguments raised in its
Comment. Its silence spoke loudly of its intent to waive its right to object to the argument of
prescription.

We are mindful of the rule in taxation that estoppel does not prevent the government from
collecting taxes; it is not bound by the mistake or negligence of its agents. The rule is based on the
political law concept “the king can do no wrong,”[21] which likens a state to a king: it does not
commit mistakes, and it does not sleep on its rights. The analogy fosters inequality between the
taxpayer and the government, with the balance tilting in favor of the latter. This concept finds
justification in the theory and reality that government is necessary, and it must therefore collect taxes
if it is to survive. Thus, the mistake or negligence of government officials should not bind the state,
lest it bring harm to the government and ultimately the people, in whom sovereignty resides.[22]

Republic v. Ker & Co. Ltd.[23] involved a collection case for a final and executory assessment. The
taxpayer nevertheless raised the prescription of the right to assess the tax as a defense before the
Court of First Instance. The Republic, instead of objecting to the invocation of prescription as a
defense by the taxpayer, litigated on the issue and thereafter submitted it for resolution. The
Supreme Court ruled for the taxpayer, treating the actuations of the government as a waiver of the
right to invoke the defense of prescription. Ker effectively applied to the government the rule of
estoppel. Indeed, the no-estoppel rule is not absolute.

The same ingredients in Ker - procedural matter and injustice - obtain in this case. The procedural
matter consists in the failure to raise the issue of prescription at the trial court/administrative level,
and injustice in the fact that the BIR has unduly delayed the assessment and collection of the DST in
this case. The fact is that it took more than 12 years for it to take steps to collect the assessed tax.
The BIR definitely caused untold prejudice to petitioner, keeping the latter in the dark for so long, as
to whether it is liable for DST and, if so, for how much.
 CONCLUSION

Inasmuch as the government’s claim for deficiency DST is barred by prescription, it is no longer
necessary to dwell on the validity of the assessment.

WHEREFORE, the Petition is GRANTED. The Court of Tax Appeals En Banc Decision dated 1
December 2005 and its Resolution dated 20 March 2006 in CTA EB Case No. 109 are hereby
REVERSED and SET ASIDE. A new ruling is entered DENYING respondent’s claim for
deficiency DST in the amount of P11,383,165.50.

SO ORDERED.

Leonardo-De Castro, Bersamin, Perez, and Perlas-Bernabe, JJ., concur.

--------------------------------------------------------------------------------

[1] Rollo, pp. 16-53.

[2] Id. at 152-167; dated 1 December 2005, penned by Associate Justice Olga Palanca-Enriquez and
concurred in by Presiding Justice Ernesto D. Acosta, Juanito C. Castañeda, Associate Justices Lovell
R. Bautista, Erlinda P. Uy, and Caesar A. Casanova, Jr.

[3] 20 March 2006.

[4] Id. at 112-124; dated 23 February 2005, penned by Associate Justice Erlinda P. Uy and concurred
in by Associate Justices Juanito C. Castañeda, Jr. and Olga Palanca-Enriquez.

[5] Rollo, p. 113.

[6] Id.

[7] Id. at 91-93.

[8] Id. at p. 93.

[9] Id. at 114-115; See also CIR Decision on the protest dated 6 December 2001, pp. 94-99.

[10] Id. at p. 115.

[11] Id. at 115-116.

[12] Id. at 218-242.

[13] Id. at 264-302.

[14] Id. at 261.

 [15] Id. at 43-47.

[16] SEC. 319. Exceptions as to period of limitations of assessment and collection of taxes. —

(c) Where the assessment of any internal revenue tax has been made within the period of limitation
above-prescribed such tax may be collected by distraint or levy by a proceeding in court, but only if
began (1) within five years after the assessment of the tax, or (2) prior the expiration of any period
for collection agreed upon in writing by the Commissioner and the taxpayer before the expiration of
such five-year period. The period so agreed upon may be extended by subsequent agreements in
writing made before the expiration of the period previously agreed upon. (Emphasis supplied)

Batas Pambansa Blg. 700, which was approved on 5 April 1984, shortened the statute of limitations
on the assessment and collection of national internal revenue taxes from 5 years to 3 years.

[17] < http://sc.judiciary.gov.ph/pio/annualreports/CTA2005.pdf. > (Last visited 23 November

2014).

[18] 571 Phil. 535.

[19] Aguinaldo Industries Corp. v. CIR, 197 Phil. 822 (1982).

[20] G.R. No. 181836, 9 July 2014.

[21] Eric R. Recalde, A Treatise on Tax Principles and Remedies, p. 33 (2009).

 [22] Id., citing Vera v. Fernandez, id. at 33.

[23] Republic v. Ker & Co., 124 Phil. 822 (1966).

--------------------------------------------------------------------------------

Copyright 2016 - Batas.org

120 Phil. 1339

G.R. Nos. L-15902-03, December 23, 1964

IN RE: PETITION FOR CONTEMPT AGAINST MRS. DOLORES H. SISON.
ALFREDO V. CRUZ, JR., PETITIONER AND APPELLANT, VS. MRS.
DOLORES H. SISON, RESPONDENT AND APPELLEE.IN RE: PETITION
FOR CONTEMPT AGAINST BENJAMIN RAVANERA. ALFREDO V. CRUZ,
JR., PETITIONER AND APPELLANT, VS. BENJAMIN RAVANERA,
RESPONDENT AND APPELLEE.

DECISION

MAKALINTAL, J.:

Alfredo V. Cruz, Jr., as Assistant Fiscal of Manila, filed two petitions for
contempt in the Court of First Instance of Manila, one against Dolores H. Sison
and the other against Benjamin Ravanera. In the said petitions it is alleged that
respondent Sison, as secretary of the Bicol Electric Company in Napa City, and
respondent Ravanera, as secretary of the University of Nueva Caceres, also in
Naga City, refused to receive the subpoenas duces tecum issued to them by
petitioner and failed to appear before the latter to give evidence in Criminal
Case No. 47152 of the said Court, entitled "People of the Philippines vs.
Secretary Jaime Hernandez".
The Court of First Instance decided the two cases jointly and dismissed both
petitions on the ground that respondents were not bound by the processes
issued by petitioner because their place of residence, which is Naga City, is more
than 50 kilometers from Manila, where the investigation was being conducted.

Petitioner appealed and now claims that the lower court erred (1) in holding that
Section 9 of Rule 29 (now Sec. 9, Rule 23 of the revised Rules) applies to both
civil and criminal cases; and (2) in not holding appellees in contempt for
refusing to comply with the subpoenas issued to them by appellant.

The rule above cited provides that a witness is not bound to attend as such
before any court, judge, or other officer out of the province in which the
resides, unless the distance be less than fifty (50) kilometers from his place of
residence to the place of trial by the usual course of travel. Without going,
however, into the question discussed at length by the parties in their respective
briefs, namely, whether the said rule covers civil cases alone or both civil and
criminal cases, we are of the opinion that the petitions for contempt were
prematurely filed and hence their dismissal was in order.

Appellant issued the subpoenas in question on the authority of the Revised

Charter of the City of Manila, Republic Act No. 409 (Sec. 38-B), as amended by
Republic Act No. 1201, which provides:

"The fiscal of the City shall cause to be investigated all charges of crimes,
misdemeanor, and violations of ordinances and have the necessary informations
or complaints prepared or made against the persons accused. He or any of his
assistants may conduct such investigations by taking oral evidence, of reputed
witnesses, and for this purpose may issue subpoena, summon witnesses to
appear and testify under oath before him, and the attendance or evidence of an
absent or recalcitrant witness may be enforced by application to the Municipal
Court or the Court of First Instance. No witness summoned to testify under this
section shall be under obligation to give any testimony tending to incriminate
himself."
Thus, although the City Fiscal and his assistants have the power to issue
subpoenas and summon witnesses to testify, the attendance or evidence of an
absent or refractory witness can be enforced only by application to the proper
Municipal Court or Court of First Instance. This is obviously intended to give
the person subpoenaed a chance to question the validity, propriety and
reasonableness of the subpoena. It may be noted that in case of subpoena duces
tecum issued by a court, the person subpoenaed may move for the quashal
thereof if it is unreasonable or oppressive, or the relevancy of the books,
documents or things sought to be produced does not appear, or if the person in
whose behalf the subpoena is issued fails to advance the reasonable cost of the
production, thereof (Section 4, Rule 23 of the Revised Rules of Court, formerly
Section 4, Rule 29). If the person subpoenaed may question the propriety of a
writ issued by the court, then in the same manner he should be afforded the
opportunity to question the propriety and reasonableness of a similar process
issued by the City Fiscal or by an assistant of his. And this chance is afforded
him when the latter applies to the proper court for enforcement of the
subpoena thus issued. Should the court find the subpoena to have been properly
issued, it shall order compliance therewith, and it is only upon failure to comply
that a contempt proceeding would lie.

The contempt proceedings against appellees here were instituted without a

previous application to the court for the enforcement of the subpoenas issued
by appellant and were, therefore, premature.

It further appears, as alleged by appellees and not contradicted by appellant, that

the subpoenas were issued so that they could give evidence in Criminal Case
No. 47152, "People of the Philippines vs. Secretary Jaime Hernandez," which
was then already pending trial before a branch of the Court of First Instance of
Manila. The power of the City Fiscal of Manila to issue subpoenas extends to
cases pending investigation before him, but not where the complaint or
information has been filed in court, in which case it is the court that should
issue the necessary processes (Concepcion vs. Gonzales, L-15638, April 26,
1962).

For the reasons hereinabove set forth, the decision appealed from is affirmed,
without pronouncement as to costs.

Bengzon, C. J., Bautista Angelo, Concepcion, Reyes, J. B. L. Barrera, Paredes, Dizon,

Regala, Bengzon, J. P., and Zaldivar, JJ., concur.

59 Phil. 244
 G.R. No. 38375, December 22, 1933
JOSE SY JONG CHUY, MANAGER OF HOA HIN & CO., INC., PLAINTIFF
AND APPELLEE, VS. PABLO C. REYES, SPECIAL DEPUTY OF THE
COLLECTOR OF INTERNAL REVENUE, DEFENDANT AND
APPELLANT.

DECISION

MALCOLM, J.:

This case was submitted for the trial court's decision on the legal issues arising
from the following:

"STIPULATION OF FACTS

"I

"The plaintiff is the manager of Hoa Hin & Co., Inc., a large shipbuilding
concern with offices in Cebu, which corporation had average annual gross
receipts of P900,000 for the years 1925, 1926, 1927, and 1928, and the
defendant is a duly appointed special deputy of the Collector of Internal
Revenue especially assigned to income tax investigation. At all times mentioned
in this case, and for all purposes of this case, both the plaintiff and the
defendant have acted, and do act, in their respective capacities of manager of
Hoa Hin & Co., Inc., and special deputy of the Collector of Internal Revenue.

"II

"Prior to July 14, 1930, the defendant, at various times requested the plaintiff to
bring the Chinese books of account of Hoa Hin & Co., Inc., for the years 1925,
1926, 1927, and 1928 to the office of the defendant at the provincial building of
Cebu, Cebu, for income tax and other Internal Revenue Tax investigation, but
the plaintiff refused to do so, and advised the defendant that the said Chinese
books of account were at his disposition in the offices of Hoa Hin & Co., Inc.,
where a suitable room and all necessary conveniences would be given the
defendant for making any tax inspection or tax investigation.

"III
"Consequently, on July 14, 1930, the defendant issued the attached subpoena duces
tecum, marked Exhibit A directed to the plaintiff commanding him to appear at
the Internal Revenue Office in the provincial building of Cebu, at 9 a. m., on
July 16, 1930, bringing with him 'all the commercial BOOKS OR OTHER
PAPERS OF HOA HIN & CO., INC., ON WHICH ARE RECORDED
YOUR TRANSACTIONS SHOWING INCOME AND EXPENSES FOR
THE YEARS 1925, 1926, 1927, AND 1928, INCLUSIVE which said subpoena
duces tecum was received by the plaintiff on July 14, 1930, and is in words and
figures as follows:

" 'UNITED STATES OF AMERICA

" 'PHILIPPINE ISLANDS

" 'BUREAU OF INTERNAL REVENUE

" 'SUBPOENA DUCES TECUM
" 'CEBU, CEBU, P. I.

" ' To Mr. JOSE SY

HUNG CHUY
" 'Manager of Hoa Hin & Co., Inc.
"Morga, Cebu

" 'GREETING:

" 'By authority vested in me under the provisions of sections 580 and 1436 of
the Administrative Code, you are hereby commanded to appear before me at
Bureau of Internal Revenue, provincial building, Cebu, Cebu, Philippine Islands,
on the 16th day of July, 1930, at 9 a. m., and bring with you the following: all the
commercial books or any OTHER PAPERS OF HOA HIN & CO., INC., ON
WHICH ARE RECORDED YOUR TRANSACTIONS SHOWING
INCOME AND EXPENSES FOR THE YEARS 1925, 1926, 1927, AND 1928
INCLUSIVE, it being necessary to use them in an investigation now pending
under the Income Tax and Internal Revenue Laws. Hereof FAIL NOT
UNDER PENALTY OF THE LAW. This 14th day of July, 1930.

"(Sgd.) 'PABLO C. REYES

"''Special Deputy Authorized to administer
 oaths and to take testimony under the
provisions
of section 1436, of the Administrative
Code

" 'I certify that I have this........day of............................, 192 , been served with the
original of this subpoena duces tecum.

"(Sgd.) 'JOSE SY JONG CHUY'

"IV

"The defendant refused to comply with this subpoena duces tecum and reiterated
that these Chinese books of account could only be legally inspected and
investigated at the offices of Hoa Hin & Co., Inc., in the municipality of Cebu,
Province of Cebu.

"V

"Subsequently, on September 8, 1930, to make the issue more definite, the

parties agreed to an amendment to the complaint by which the defendant agreed
that the bringing to the offices of the Internal Revenue in the provincial building
at Cebu, of the following Chinese books of account of Hoa Hin & Co., Inc.,
would be a sufficient compliance with the afore-mentioned subpoena duces tecum
issued on July 14, 1930, which Chinese books, fifty-three (53) in number,
measure per book, ten (10) inches by nine and one-half (9.5) inches by two (2)
inches of two hundred (200) pages each, to wit:

1925 1926 1927 1928

Journal 3 3 3 3
Ledger 8 8 8 8
Purchase 1 1 1 2
Sales 1 1 1 1
_____ _____ _____ _____
13 13 13 14
__________________________________________
Total 53
 "VI

"As the plaintiff still insisted on his original contention that the inspection and
investigation of the books of account of Hoa Hin & Co., Inc., must be made in
the offices of Hoa Hin & Co., Inc., the defendant, threatened to bring contempt
proceedings against the plaintiff with the result that this action was filed.

"VII

"The defendant does not specify in the subpoena duces tecum any specific
document required or set forth any specific indication of any fact to be verified,
but asks for the general production of the fifty-three (53) Chinese books of
account of Hoa Hin & Co., Inc., for the years 1925, 1926, 1927, and 1928, to
use them in an investigation now pending under the Income Tax and Internal
Revenue Laws.

"VIII

"The said fifty-three (53) Chinese books of account of Hoa Hin & Co., Inc.,
form the principal accounts of Hoa Hin & Co., Inc., for the years 1925, 1926,
1927, and 1928, and are at times needed for checking the transactions of the
company for the years mentioned.

"IX

"That the defendant has informed the plaintiff that at any time while the said
fifty-three (53) Chinese books of account are being examined at the office of the
Bureau of Internal Revenue, Cebu, Cebu, the said plaintiff, or any of his
representatives, may consult the same during office hours."

Judgment was rendered by Judge Borromeo Veloso in favor of the plaintiff, and
from the same the defendant has appealed to this court and assigns as error that
"the trial court erred in declaring that the issuance of subpoena duces tecum was
improperly made and not in accordance with law." In this connection it is
conceded that the defendant, as a special deputy of the Collector of Internal
Revenue, is authorized to administer oaths, to take testimony in any official
matter or investigation conducted by him within the jurisdiction of the Bureau
of Internal Revenue, and to issue a subpoena duces tecum. The question centers on
whether or not the subpoena duces tecum Exhibit A, served on the plaintiff by the
special deputy, has been properly issued in accordance with the laws of the
Philippine Islands.

As before indicated, the parties have agreed upon the facts. It is accordingly
unavailing to spend any time in a consideration of the pleadings and in
suppositions not supported by any of the stipulated facts. It is only appropriate
to direct attention to a few points evidenced by the stipulation. Thus it is shown
that Hoa Hin & Co., Inc., the plaintiff, is a corporation, a shipbuilding concern,
which does an annual gross business of P900,000 although the same principles
which govern the case of this comparatively large firm would likewise govern
the case of a small merchant. When the manager of the plaintiff corporation was
requested by the defendant to bring the Chinese books of account of the
corporation for the years 1925, 1926, 1927, and 1928, to the office of the
defendant for an income tax and other internal revenue tax investigation, the
plaintiff refused to do so, but instead advised the defendant that the said
Chinese books of account were at his disposition in the offices of the
corporation, where a suitable room and all necessary conveniences would be
given the defendant for making any tax inspection or investigation. The subpoena
duces tecum Exhibit A, as pointed out by the trial judge, is an ordinary
mimeographed form on cheap paper without official insignia. The Chinese
books mentioned in the subpoena were fifty-three in number of two hundred
pages each. It is admitted that the defendant did "not specify in the subpoena duces
tecum any specific document required or set forth any specific indication of any
fact to be verified", but asked "for the general production of the fifty-three (53)
Chinese books of account of Hoa Hin & Co., Inc., for the years 1925, 1926,
1927, and 1928, to use them in an investigation now pending under the Income
Tax and Internal Revenue Laws." It is further admitted that "the said fifty-three
(53) Chinese books of account of Hoa Hin & Co., Inc., form the principal
accounts of Hoa Hin & Co., Inc., for the years 1925, 1926, 1927, and 1928, and
are at times needed for checking the transactions of the company for the years
mentioned."

Act No. 3292 provides that all the books of account of corporations of the
character of the plaintiff shall be subject to inspection and examination at any
time by internal revenue officers. It is accordingly self-evident that the
defendant had the right to go into the offices of the plaintiff and there conduct
such an investigation of the business done by the plaintiff as seemed desirable,
and that the consent given to such examination by the plaintiff did not add
anything to the legal powers conferred by law upon the defendant.

Further, as provided in section 1436 of the Administrative Code:

"The Collector of Internal Revenue, the Deputy Collector of Internal Revenue,

special deputies of the Collector, internal-revenue agents, provincial treasurers
and their deputies, and any other employee of the Bureau thereunto especially
deputed by the Collector shall have power to administer oaths and to take
testimony in any official matter or investigation conducted by them touching
any matter within the jurisdiction of the Bureau." The extent of such authority is
delimited by section 580 of the same Code, wherein it is provided:

"When authority to take testimony or evidence is conferred upon an

administrative officer or upon any nonjudicial person, committee, or other
body, such authority shall be understood to comprehend the right to administer
oaths and summon witnesses and shall include authority to require the
production of documents under a subpoena duces tecum or otherwise, subject in all
respects to the same restrictions and qualifications as apply in judicial
proceedings of a similar character," The above provisions contained in the
Administrative Code accordingly expressly empowered the defendant to issue a
subpoena duces tecum, the act being subject in all respects to the same restrictions
and qualifications as apply in judicial proceedings of a similar character. The
Code of Civil Procedure is, therefore, made applicable, which brings into view a
portion of codal section 402 recognizing a writ called a subpoena duces tecum,
requiring a witness "to bring with him any books, documents, or other things
under his control, which he is bound by law to produce in evidence."

The use of the subpoena duces tecum by the courts was considered in the case of
Liebenow vs. Philippine Vegetable Oil Co. ([1918], 39 Phil., 60), and
observations were there made intended to guide the litigant who desired to avail
himself of the writ. Speaking of section 402 of the Code of Civil Procedure, it
was said that, "The words 'which he is bound by law to produce in evidence'
indicate a limitation upon the exigency of the writ; and it is evident that there is
this difference between the ordinary subpoena to testify and the subpoena duces
tecum, namely, that while the person to whom the subpoena to testify is directed
is bound absolutely and without qualification to appear in response to the
subpoena, the person to whom the subpoena duces tecum is directed is bound only
in so far as he is required by law to produce the documents in evidence." It is
the consensus of opinion here that the decision in Liebenow vs. Philippine
Vegetable Oil Co., supra, is in point, and that the trial judge was right in making
use of the authority to reach the conclusion that the subpoena duces tecum Exhibit
A was improperly issued.

Section 402 of the Philippine Code of Civil Procedure found its origin in the
statutes of California, and accordingly it is wise to look to the decisions of
California for assistance in solving the problem before us. The doctrines
announced by the California courts are summarized in the following language:
"In order to entitle a party to the issuance of such a subpoena, it must appear,
by clear and unequivocal proof, that the book or document sought to be
produced contains evidence relevant and material to the issue before the court,
and that the precise book, paper or document containing such evidence has
been so designated or described that it may be identified. It follows that a
witness may not be punished for disobedience of a subpoena which requires
him to produce irrelevant documents, or a subpoena which is too broad in its
scope." (27 Cal. Jur., pp. 15, 16.)

The United States internal revenue laws are not as helpful as they might be
because of frequent amendment and because phrased in a different and more
extensive manner than are the Philippine laws on the subject. (26 U. S. Code
Annotated, pp. 59, 60.) Nevertheless the scattered decisions construing the
internal revenue laws of the United States furnish some information. The
Federal courts have taken the attitude that since the American law confers upon
the collectors of internal revenue an extraordinary inquisitorial power, it ought
to be most strictly construed. In other words, the power should be limited to
books and papers concerning the subject of investigation which should be
mentioned with reasonable certainty. (33 C. J., pp. 356, 357; In re Brown [1866],
Fed. Cas. No. 1,977.)

With reference to the cases before-cited and those which will be cited in a
moment, it should be recalled that the Philippine law makes the production of
documents under a subpoena duces tecum subject in all respects to the same
restrictions and qualifications as apply in judicial proceedings of a similar
character. Therefore, it is interesting to note that even where the state or federal
government conducts investigations of corporations pursuant to grand jury
process for the purpose of establishing a crime or under an act like that creating
the Federal Trade Commission, the United States Supreme Court has
nevertheless set a limit to the use of the power and has done so in a most
emphatic manner. We propose to refer to two decisions of the United States
Supreme Court.

Hale vs. Henkel ([1906], 201 U. S., 43), is a leading case on the subject of search
and seizure. The subpoena duces tecum issued in this case commanded the plaintiff
to appear before the grand jury and to bring with him:

"1. All understandings, agreements, arrangements, or contracts, whether

evidenced by correspondence, memoranda, formal agreements, or other
writings, between MacAndrews & Forbes Company and six other firms and
corporations named, from the date of the organization of the said MacAndrews
& Forbes Company.

"2. All correspondence by letter or telegram between MacAndrews & Forbes

Company and six other firms and corporations.

"3. All reports made or accounts rendered by these six companies or

corporations to the principal company.

"4. Any agreements or contracts or arrangements, however evidenced, between

MacAndrews & Forbes Company and the Amsterdam Supply Company or the
American Tobacco Company or the Continental Company or the Consolidated
Tobacco Company.

"5. All letters received by the MacAndrews & Forbes Company since the date of
its organization from thirteen other companies named, located in different parts
of the United States, and also copies of all correspondence with such
companies." The court, while conceding that the search and seizure clause of
the Fourth Amendment to the United States Constitution was not intended to
interfere with the power of the courts to compel the production upon a trial of
documentary evidence through a subpoena duces tecum, nevertheless found the
particular subpoena duces tecum in this case to be too broad in its requisition. The
court, speaking through Justice Brown, in part said:

"We are also of opinion that an order for the production of books and papers
may constitute an unreasonable search and seizure within the Fourth
Amendment. While a search ordinarily implies a quest by an officer of the law,
and a seizure contemplates a forcible dispossession of the owner, still, as was
held in the Boyd case, the substance of the offense is the compulsory production
of private papers, whether under a search warrant or a subpoena duces tecum,
against which the person, be he individual or corporation, is entitled to
protection. Applying the test of reasonableness to the present case, we think the
subpoena duces tecum is far too sweeping in its terms to be regarded as reasonable.
It does not require the production of a single contract, or of contracts with a
particular corporation, or a limited number of documents, but all
understandings, contracts, or correspondence between the MacAndrews &
Forbes Company, and no less than six different companies, as well as all reports
made and accounts rendered by such companies from the date of the
organization of the MacAndrews & Forbes Company, as well as all letters
received by that company since its organization from more than a dozen
different companies, situated in seven different States in the Union.

"If the writ had required the production of all the books, papers, and documents
found in the office of the MacAndrews & Forbes Company, it would scarcely be
more universal in its operation or more completely put a stop to the business of
that company. Indeed, it is difficult to say how its business could be carried on
after it had been denuded of this mass of material, which is not shown to be
necessary in the prosecution of this case, and is clearly in violation of the general
principle of law with regard to the particularity required in the description of
documents necessary to a search warrant or subpoena. Doubtless many, if not
all, of these documents may ultimately be required, but some necessity should
be shown, either from an examination of the witnesses orally, or from the
known transactions of these companies with the other companies implicated, or
some evidence of their materiality produced, to justify an order for the
production of such a mass of papers. A general subpoena of this description is
equally indefensible as a search warrant would be if couched in similar terms."

In the more recent case of Federal Trade Commission vs. American Tobacco
Co. ([1924], 264 U. S., 298), it appeared that the law authorized the Federal
Trade Commission to investigate and report facts as to alleged violations of the
Anti-Trust Acts, and for this purpose granted the commission access to any
documentary evidence of any corporation being investigated. The purpose of
the particular petitions for mandamus sued out by the Federal Trade
Commission was to require the production of records, contracts, memoranda,
and correspondence for inspection and making copies. The United States
Supreme Court denied the Federal Trade Commission this right, Justice Holmes
saying:

"* * * Anyone who respects the spirit as well as the letter of the Fourth
Amendment would be loath to believe that Congress intended to authorize one
of its subordinate agencies to sweep all our traditions into the fire (Interstate
Commerce Commission vs. Brimson, 154 U. S., 447, 479), and to direct fishing
expeditions into private papers on the possibility that they may disclose evidence
of crime. We do not discuss the question whether it could do so if it tried, as
nothing short of the most explicit language would induce us to attribute to
Congress that intent. The interruption of business, the possible revelation of
trade secrets, and the expense that compliance with the commission's wholesale
demand would cause, are the least considerations. It is contrary to the first
principles of justice to allow a search through all the respondents' records,
relevant or irrelevant, in the hope that something will turn up. * * *

"The right of access given by the statute is to documentary evidence,—not to all

documents, but to such documents as are evidence. The analogies of the law do
not allow the party wanting evidence to call for all documents in order to see if
they do not contain it. Some ground must be shown for supposing that the
documents called for do contain it. Formerly in equity the ground must be
found in admissions in the answer, (Wigram, Discovery [2d ed.], sec. 293.) We
assume that the rule to be applied here is more liberal, but still a ground must be
laid, and the ground and the demand must be reasonable. (Essgee Co. vs. United
States, 262 U. S., 151, 156, 157.) A general subpoena in the form of these
petitions would be bad. Some evidence of the materiality of the papers
demanded must be produced. (Hale vs. Henkel, 201 U. S., 43, 77.)

"* * * We cannot attribute to Congress an intent to defy the Fourth

Amendment, or even to come so near to doing so as to raise a serious question
of constitutional law. * * *"

The foregoing discussion will disclose that there are two factors involved in the
correct solution of the question before us. The first fact which must be made to
appear by clear and unequivocal proof, as a condition precedent to the right of a
court, and, by analogy, an internal revenue officer, to require a person to deliver
up for examination by the court or an internal revenue officer his private books
and papers, is their relevancy; and the second fact which must be established in
the same manner is the specification of documents and an indication of them
with as much precision as is fair and feasible (Liebenow vs. Philippine Vegetable
Oil Co., supra; Kullman, Salz & Co. vs. Superior Court [1911], 114 Pac., 589).

Speaking to the fact of relevancy, there is absolutely no showing of the nature of

any official investigation which is being conducted by the Bureau of Internal
Revenue, and this is a prerequisite to the use of the power granted by section
436 of the Administrative Code. Moreover, when the production under a
subpoena duces tecum is contested on the ground of irrelevancy, it is for the movant
or the internal revenue officer to show facts sufficient to enable the court to
determine whether the desired documents are material to the issues. And here,
all that we have to justify relevancy is the typewritten part of a mimeographed
form reading: "it being necessary to use them (referring to the books) in an
investigation now pending under the Income Tax and Internal Revenue Laws."
This is insufficient.

But it is in the second respect that the subpoena is most fatally defective. It will
be recalled that it required the production of "all the commercial books or any
other papers on which are recorded your transactions showing income and
expenses for the years 1925, 1926, 1927, 1928 inclusive", that these books
numbered fifty-three in all, and that they are needed in the business of the
corporation. In the parlance of equity, the subpoena before us savored of a
fishing bill, and such bills are to be condemned. That this is so is shown by the
phraseology of the subpoena which is a general command to produce all the
books of account for four years. This, it seems to us, made the subpoena
unreasonably broad in scope. The internal revenue officer had it within his
power to examine any or all of the books of the corporation in the offices of the
corporation and then having ascertained what particular books were necessary
for an official investigation had it likewise within his power to issue a subpoena
duces tecum sufficiently explicit to be understood and sufficiently reasonable not
to interfere with the ordinary course of business. But this method was not
followed. Obviously, if the special deputy could in 1930 call for the production
of the books of the corporation for 1925, 1926, 1927, and 1928, the officer
could have called for the production of the books for the year just previous, or
1929, and for the books of the current year, and if this could be done, the
intrusion into private affairs with disastrous paralyzation of business can easily
be visualized.
Generally speaking, there are two readily understandable points of view on the
question at issue. The first is the viewpoint of the tax collecting officials.
Taxation is a necessity as all must agree. It is for the officials who have to
enforce the revenue laws to see to it that there is no evasion of those laws and
that there is an equal distribution of the tax burden. To accomplish their duty it
will often be incumbent upon the internal revenue officers, for the efficient
administration of the service, to inspect the books of merchants and even
require the production of those books in the offices of the inspecting officials.
The right of a citizen to his property becomes subservient to the public welfare.
All this we are the first to concede. In proper cases, the officers of the Bureau of
Internal Revenue should receive the support of the courts when these officers
attempt to perform in a conscientious and lawful manner the duties imposed
upon them by law. The trouble is that the particular subpoena under scrutiny
neither shows its relevancy nor specifies with the particularity required by law
the books which are to be produced.

The second viewpoint is not that of the government on which is imposed the
duty to collect taxes, but is the viewpoint of the merchant. A citizen goes into
business, and in so doing provides himself with the necessary books of account.
He cannot have government officials on a mere whim or a mere suspicion
taking his books from his offices to the offices of the government for
inspection. To permit that would be to place a weapon in the hands of a
miscellaneous number of government employees some of whom might use it
properly and others of whom might use it improperly. With an understanding of
the obligations of the government to protect the citizen, the constitution and
the organic law have done so by throwing around him a wall which makes his
home and his private papers his castle. It should be our constant purpose to
keep a subpoena duces tecum from being of such a broad and sweeping character as
to clash with the constitutional prohibition against unreasonable searches and
seizures.

Answering the question at issue, we do so without vacillation by holding that the

subpoena duces tecum was not properly issued in accordance with law because the
showing of relevancy was not sufficient to justify enforcing the production of
the Chinese books; because the subpoena duces tecum failed to specify the particular
books desired, and because a ruling should be avoided which in any manner
appears to sanction an unreasonable search and seizure. In the absence of a
showing of materiality, and in the absence of all particularity in specifying what
is wanted by a subpoena duces tecum, the refusal of a merchant to obey a subpoena,
commanding him to produce his commercial books, will be sustained. The
courts function to protect the individual citizen of whatever class or nationality
against an unjust inquisition of his books and papers. As a result, we fully agree
with the trial judge, and accordingly must overrule the assignment of error made
by the Government. Judgment affirmed, without special pronouncement as to
costs in this instance.

Avanceña, C. J., Street, Villa-Real, Abad Santos, Hull, and Diaz, JJ., concur.

DISSENTING

IMPERIAL, J.:

To my mind the subpoena duces tecum objected to by plaintiff corporation is not

Exhibit A but its amendment restricting the scope of the subpoena to the
production of 53 books of account, to wit:

1925 1926 1927 1928

Journal 3 3 3 3
Ledger 8 8 8 8
Purchase 1 1 1 2
Sales 1 1 1 1
_____ _____ _____ _____
13 13 13 14
__________________________________________
Total 53

(Paragraphs V of the stipulation of facts and 7-A and 9 of the amended

complaint.)
So it is a misapprehension to say that defendant, as Special Deputy Collector of
Internal Revenue, called for the production in his office of "all the commercial
books or any other papers of Hoa Hin & Co., Inc., on which are recorded your
transactions showing income and expenses for the years 1925, 1926, 1927 and
1928 inclusive."

The defendant was assigned by the Collector of Internal Revenue as special

deputy for the purpose of verifying the income tax returns filed by the plaintiff
corporation. His power to conduct said verification and investigation is based
on the provisions of sections 580 and 1436 of the Administrative Code which
read as follows:

"Sec. 580. Powers incidental to taking of testimony.— When authority to take

testimony or evidence is conferred upon an administrative officer or upon any
nonjudicial person, committee, or other body, such authority shall be
understood to comprehend the right to administer oaths and summon witnesses
and shall include authority to require the production of documents under a
subpoena duces tecum or otherwise, subject in all respects to the same restrictions
and qualifications as apply in judicial proceedings of a similar character."

"SEC. 1436. Authority of officers to administer oaths and take testimony.—The Collector
of Internal Revenue, the Deputy Collector of Internal Revenue, special deputies
of the Collector, internal-revenue agents, provincial treasurers and their
deputies, and any other employee of the Bureau thereunto especially deputed by
the Collector shall have power to administer oaths and to take testimony in any
official matter or investigation conducted by them touching any matter within
the jurisdiction of the Bureau."

As the stipulation of facts and the amended complaint show, plaintiff did not
base its objection on the lack of relevancy and certainty of the subpoena.
Materiality and sufficiency in the description of the books of account above
quoted were impliedly admitted by plaintiff. In fact both elements are covered
by the pleadings since it is admitted that the books were to be used to verify the
income tax returns filed by the plaintiff for the four years above stated and since
the description of said books as given is sufficiently specific as to enable the
officers of the corporation to identify all and each of them.

From the outset plaintiff's contention was that the law does not compel it to
produce the required books in the defendant's office and that this officer should
go to its premises for that purpose where he could examine all of said books.
This contention is untenable. Sections 580 and 1436 of the Administrative
Code, above-cited, expressly empower the Collector of Internal Revenue and his
deputies to make such inquiries and to issue subpoena duces tecum for the
production of books and documents material and necessary to any investigation.

"While the rights of a corporation are to be protected from unreasonable

searches and seizures of their books and papers, still the right to inquire into the
condition of a corporation exists, as does the right, by subpoena duces tecum, to
secure its books and papers, and, if necessary for the purpose of enforcing a law,
there is the right to compel the production of all books, letters, and records
without violating the Fourth Amendment. Hence, statutes requiring
corporations to produce their books and papers, or to submit to an examination
of their books and papers for certain purposes, have been held not to be
violative of the constitutional immunity from unreasonable searches and
seizures. Therefore, despite the guaranty, a corporation may be compelled to
produce its books and papers even though they tend to incriminate an officer
thereof; and the protection of the immunity cannot be invoked ordinarily to
justify the refusal of an officer to produce its books and papers in obedience to
a subpoena duces tecum in an action against the corporation to recover a statutory
penalty. Where a copartnership, illegally masquerading as a corporation, is,
before the discovery of its status, compelled by a subpoena duces tecum to produce
its books and papers, such production is no violation of the Fourth
Amendment." (56 C. J., 1171.)

In Standard Home Co. vs. Davis (217 Federal Reporter, 904, 916), wherein the
State law authorizing an inquiry into the condition of corporations doing
business in the State and requiring them to submit to an examination in respect
thereto was challenged, as unconstitutional, the court said;

"The act is also attacked upon the ground that it authorizes the bank
commissioner, his clerks, accountants, and examiners, to examine the business
of such investment company, and may require it to divulge any and all facts in
connection with said business, whether or not the same relates in any way to
securities proposed to be sold in Arkansas. The plaintiff is a corporation, and it
is now well settled by the decisions of the Supreme Court of the United States
that the right to inquire into the condition of corporations exists, and, if
necessary for the purpose of enforcing a law, to compel the production of all
books, letters, and other records, without violating the provisions of the fourth
and fifth amendments to the Constitution of the United States. (Hale vs. Henkel,
201 U. S., 43, 74, 75; 26 Sup. Ct., 370; 50 L. ed., 652; Consolidated Rendering
Co. vs. Vermont, 207 U. S., 541; 28 Sup. Ct., 178; 52 L. ed., 327; 12 Ann. Cas.,
658; Hammond Packing Co. vs. State of Arkansas, 212 U. S., 322, 348, 349; 29
Sup. Ct., 370; 53 L. ed., 530; 15 Ann. Cas., 645; Wilson vs. United States, 221 U.
S., 361, 383; 31 Sup. Ct., 538; 55 L. ed., 771; Ann. Cas. 1912D, 558.)"

Neither could the amended subpoena duces tecum be successfully challenged as

unreasonable for according to the description given in the stipulation of facts
the books of account could easily be taken to the defendant's office. To say that
the production of these 53 books of account corresponding to the past four
years is unreasonable because it creates great embarrassment to the plaintiff
corporation is equivalent, in my opinion, to nullify the power granted by law to
the officers of the Bureau of Internal Revenue and to defeat the authority of the
Government of the Philippine Islands to collect revenue taxes. It is argued that
in the instant case the defendant could avail himself of the offer made by the
manager of plaintiff corporation and proceed to its office where he could make
a thorough examination of the books, instead of requiring the production of the
same, which might be used by it during the ordinary course of business. This
remark may be readily answered that in this case we do not aim to serve the
convenience of the plaintiff corporation or its officers but to enforce the
provisions of the law which are not challenged by anybody as being illegal or
unconstitutional. This is not the first time this court has denied the right of the
tribunals and public officers, duly authorized to conduct investigations, to call
for the production of books and documents needed in connection with a
judicial proceeding or an administrative investigation; and if this policy is not
discontinued or abandoned I fear time will come when no court or public
officer could issue regular and legal subpoena duces tecum without being challenged
as unreasonable and unconstitutional, thus defeating absolutely the purpose of
the law.

Before closing it might not be amiss to say that according to the stipulation of
facts and pleadings no one could foretell how long the examination of the books
would last. The defendant might perform his duties in 2 or 3 hours, or, say, one-
half day, in which event the plaintiff corporation would not be deprived of the
use of said books but for only a few hours.
For the foregoing reasons, I dissent from the majority opinion and the appealed
decision should be reversed and the subpoena duces tecum, as amended, upheld,
with costs against the appellee.

Butte, J.: I concur in the dissent of Justice Imperial.