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SUPREME COURT REPORTS ANNOTATED VOLUME 097

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Case Title:
QUIRICO P. UNGAB, petitioner, vs.
HON. VICENTE N. CUSI, JR., in his
*
capacity as Judge of the Court of Nos. L-41919-24. May 30, 1980.
First Instance, Branch 1, 16TH
Judicial District, Davao City, THE QUIRICO P. UNGAB, petitioner, vs. HON. VICENTE N. CUSI, JR., in his capacity as
COMMISSIONER OF INTERNAL Judge of the Court of First Instance, Branch 1, 16TH Judicial District, Davao City,
REVENUE, and JESUS N. ACEBES, in THE COMMISSIONER OF INTERNAL REVENUE, and JESUS N. ACEBES, in his
his capacity as State Prosecutor, capacity as State Prosecutor, respondents.
respondents.
Citation: 97 SCRA 877
Criminal Procedure; Taxation; National Internal Revenue Code; Preliminary investigation;
More...
Authority of State Prosecutor to investigate and prosecute violations of the National Internal
Revenue Code independently of the City Fiscal; Case at bar.·The respondent State Prosecutor,
Search Result although believing that he can proceed independently of the City Fiscal in the investigation
and prosecution of these cases, first sought permission from the City Fiscal of Davao City
before he started the preliminary investigation of these cases, and the City Fiscal, after being
shown Administrative Order No. 116, dated December 5, 1974, designating the said State
Prosecutor to assist all Provincial and City fiscals throughout the Philippines in the
investigation and prosecution of all violations of the National In-

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* SECOND DIVISION

878

878 SUPREME COURT REPORTS ANNOTATED

Ungab vs. Cusi, Jr.

ternal Revenue Code, as amended, and other related laws, graciously allowed the respondent
State Prosecutor to conduct the investigation of said cases, and in fact, said investigation was
conducted in the office of the City Fiscal.
Same; Same; Same; Jurisdiction of the Court of First Instance over criminal prosecution for
violations of the National Internal Revenue Code; Computation and assessment of deficiency
taxes is not a pre-requisite for criminal prosecution under the Code.·What is involved here is
not the collection of taxes where the assessment of the Commissioner of Internal Revenue may
be reviewed by the Court of Tax Appeals, but a criminal prosecution for violations of the
National Internal Revenue Code which is within the recognizance of Courts of First Instance.
While there can be no civil action to enforce collection before the assessment procedures
provided in the Code have been followed, there is no requirement for the precise computation
and assessment of the tax before there can be a criminal prosecution under the Code.
Same; Same; Same; Prescription; Petition for reconsideration of assessment of deficiency
taxes suspends the prescriptive period for the collection of taxes, not the prescriptive period of a
criminal action for violation of law.·Besides, it has been ruled that a petition for
reconsideration of an assessment may affect the suspension of the prescriptive period for the
collection of taxes, but not the prescriptive period of a criminal action for violation of law.
Obviously, the protest of the petitioner against the assessment of the District Revenue Officer
cannot stop his prosecution for violation of the National Internal Revenue Code. Accordingly,
the respondent Judge did not abuse his discretion in denying the motion to quash filed by the
petitioner.

CONCEPCION JR., J.:

Petition for certiorari and prohibition with preliminary injunction and restraining
order to annul and set aside the informations filed in Criminal Case Nos. 1960, 1961,
1962, 1963, 1964, and 1965 of the Court of First Instance of Davao, all entitled:
„People of the Philippines, plaintiff, versus Quirico Ungab, accused;‰ and to restrain
the respondent Judge from further proceeding with the hearing and trial of the said
cases.

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VOL. 97, MAY 30, 1980 879

Ungab vs. Cusi, Jr.

It is not disputed that sometime in July, 1974, BIR Examiner Ben Garcia examined
the income tax returns filed by the herein petitioner, Quirico P. Ungab, for the
calendar year ending December 31, 1973. In the course of his examination, he
discovered that the petitioner failed to report his income derived from sales of banana
saplings. As a result, the BIR District Revenue Officer at Davao City sent a „Notice of
Taxpayer‰ to the petitioner informing him that there is due from him (petitioner) the
amount of P104,980.81, representing income, business tax and forest charges for the
year 1973 and inviting petitioner to an informal conference where the petitioner, duly1
assisted by counsel, may present his objections to the findings of the BIR Examiner.
Upon receipt of the notice, the petitioner wrote the BIR District Revenue Officer
protesting the assessment, claiming that he was only a dealer or agent on commission
basis in the banana sapling business and that his income, as reported in his income
tax returns for the said year, was accurately stated. BIR Examiner Ben Garcia,
however, was fully convinced that the petitioner had filed a fraudulent income tax
return so that he submitted a „Fraud Referral Report,‰ to the Tax Fraud Unit of the
Bureau of Internal Revenue. After examining the records of the case, the Special
Investigation Division of the Bureau of Internal Revenue found sufficient proof that
the herein petitioner is guilty of tax evasion for the taxable year 1973 and
recommended his prosecution:

(1) For having filed a false or fraudulent income tax return for 1973 with intent to
evade his just taxes due the government under Section 45 in relation to Section
72 of the National Internal Revenue Code;
(2) For failure to pay a fixed annual tax of P50.00 a year in 1973 and 1974, or a
total of unpaid fixed taxes of P100.00 plus penalties of P75.00 or a total of
P175.00, in accordance with Section 183 of the National Internal Revenue
Code;
(3) For failure to pay the 7% percentage tax, as a producer of banana poles or
saplings, on the total sales of P129,580.35 to the

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1 Rollo, p. 134.

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880 SUPREME COURT REPORTS ANNOTATED

Ungab vs. Cusi, Jr.

Davao Fruit Corporation, depriving thereby the government

2
of its due revenue
in the amount of P15,872.59, inclusive of surcharge.

In a second indorsement to the Chief of the Prosecution Division, dated December 12,
1974, the3 Commissioner of Internal Revenue approved the prosecution of the
petitioner.
Thereafter, State Prosecutor Jesus Acebes, who had been designated to assist all
Provincial and City Fiscals throughout the Philippines in the investigation and
prosecution, if the evidence warrants, of all violations of the National Internal
Revenue Code, as amended, and other related laws, in Administrative Order No. 116
dated December 5, 1974, and to whom the case was assigned, conducted a preliminary
investigation of the case, and finding probable cause, filed six (6) informations against
the petitioner with the Court of First Instance of Davao City, to wit:

(1) Criminal Case No. 1960·Violation of Sec. 45, in relation to Sec. 72 of the
National Internal Revenue Code, for filing a4 fraudulent income tax return for
the calendar year ending December 31, 1973;
(2) Criminal Case No. 1961·Violation of Sec. 182 (a), in relation to Secs. 178, 186,
and 208 of the National Internal Revenue Code, for engaging in business as
producer of saplings, from January, 1973 to 5December, 1973, without first
paying the annual fixed or privilege tax thereof;
(3) Criminal Case No. 1962·Violation of Sec. 183 (a), in relation to Secs. 186 and
209 of the National Internal Revenue Code, for failure to render a true and
complete return on the gross quarterly sales, receipts and earnings in his
business as producer of banana saplings and to pay 6
the percentage tax due
thereon, for the quarter ending December 31, 1973;
(4) Criminal Case No. 1963·Violation of Sec. 183 (a), in relation to Secs. 186 and
209 of the National Internal Revenue Code, for

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2 Id., pp. 136; 140.

3 Id., p. 141.
4 Id., p. 11.

5 Id., p. 13

6 Id., p. 15

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VOL. 97, MAY 30, 1980 881

Ungab vs. Cusi, Jr.

failure to render a true and complete return on the gross quarterly sales
receipts and earnings in his business as producer of saplings, and to7 pay the
percentage tax due thereon, for the quarter ending on March 31, 1973;
(5) Criminal Case No. 1964·Violation of Sec. 183 (a), in relation to Secs. 186 and
209 of the National Internal Revenue Code, for failure to render a true and
complete return on the gross quarterly sales, receipts and earnings in his
business as producer of banana saplings for the8 quarter ending on June 30,
1973, and to pay the percentage tax due thereon;
(6) Criminal Case No. 1965·Violation of Sec. 183 (a), in relation to Secs. 186
and 209 of the National Internal Revenue Code, for failure to render a true and
complete return on the gross quarterly sales, receipts and earnings as producer
of banana saplings, for the quarter
9
ending on September 30, 1973, and to pay
the percentage tax due thereon.

On September 16, 1975, the petitioner filed a motion to quash the informations upon
the grounds that: (1) the informations are null and void for want of authority on the
part of the State Prosecutor to initiate and prosecute the said cases; and (2) the trial
court has no jurisdiction to take cognizance of the above-entitled cases10 in view of his
pending protest against the assessment made by11 the BIR Examiner. However, the
trial court denied the motion on October 22, 1975. Whereupon, the petitioner filed the
instant recourse. As prayed for, a temporary restraining order was issued by the
Court, ordering the respondent Judge from further proceeding with the trial and
hearing of Criminal Case Nos. 1960, 1961, 1962, 1963, 1964, and 1965 of the Court of
First Instance of Davao, all entitled: „People of the Philippines, plaintiff, versus
Quirico Ungab, accused.‰
The petitioner seeks the annulment of the informations filed against him on the
ground that the respondent State Pro-

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7 Id., p. 17.
8 Id., p. 19.
9 Id., p. 21.

10 Id., p. 23.

11 Id., p. 40.

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882 SUPREME COURT REPORTS ANNOTATED

Ungab vs. Cusi, Jr.

secutor is allegedly without authority to do so. The petitioner argues that while the
respondent State Prosecutor may initiate the investigation of and prosecute crimes
and violations of penal laws when duly authorized, certain requisites,
12
enumerated by
this Court in its decision in the case of Estrella vs. Orendain, should be observed
before such authority may be exercised; otherwise, the provisions of the Charter of
Davao City on the functions and powers of the City Fiscal will be meaningless because
according to said charter he has charge of the prosecution of all crimes committed
within his jurisdiction; and since „appropriate circumstances are not extant to warrant
the intervention of the State Prosecution to initiate the investigation, sign the
informations and prosecute these cases, said informations are null and void.‰ The
ruling adverted to by the petitioner reads, as follows:

„In view of all the foregoing considerations, it is the ruling of this Court that under Sections
1679 and 1686 of the Revised Administrative Code, in any instance where a provincial or city
fiscal fails, refuses or is unable, for any reason, to investigate or prosecute a case and, in the
opinion of the Secretary of Justice it is advisable in the public interest to take a different course
of action, the Secretary of Justice may either appoint as acting provincial or city fiscal, to
handle the investigation or prosecution exclusively and only of such case, any practicing
attorney or some competent officer of the Department of Justice or office of any city or
provincial fiscal, with complete authority to act therein in all respects as if he were the
provincial or city fiscal himself, or appoint any lawyer in the government service, temporarily
to assist such city of provincial fiscal in the discharge of his duties, with the same complete
authority to act independently of and for such city or provincial fiscal, provided that no such
appointment may be made without first hearing the fiscal concerned and never after the
corresponding information has already been filed with the court by the corresponding city or
provincial fiscal without the conformity of the latter, except when it can be patently shown to
the court having cognizance of the case that said fiscal is intent on prejudicing the interests of
justice. The same sphere of authority is true with the prosecutor directed and authorized under

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12 G.R. No. L-19811, February 27, 1971; 37 SCRA 640.

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VOL. 97, MAY 30, 1980 883

Ungab vs. Cusi, Jr.

Section 3 of Republic Act 3783, as amended and/or inserted by Republic Act 5184. The
observation in Salcedo vs. Liwag, supra, regarding the nature of the power of the Secretary of
Justice over fiscals as being purely over administrative matters only was not really necessary,
as indicated in the above relation of the facts and discussion of the legal issues of said case, for
the resolution thereof. In any event, to any extent that the opinion therein may be inconsistent
herewith, the same is hereby modified.‰

The contention is without merit. Contrary to the petitionerÊs claim, the rule therein
established had not been violated. The respondent State Prosecutor, although
believing that he can proceed independently of the City Fiscal in the investigation and
prosecution of these cases, first sought permission from the City Fiscal of Davao City
before he started the preliminary investigation of these cases, and the City Fiscal,
after being shown Administrative Order No. 116, dated December 5, 1974, designating
the said State Prosecutor to assist all Provincial and City fiscals throughout the
Philippines in the investigation and prosecution of all violations of the National
Internal Revenue Code, as amended, and other related laws, graciously allowed the
respondent State Prosecutor to conduct the investigation of said 13
cases, and in fact,
said investigation was conducted in the office of the City Fiscal.
The petitioner also claims that the filing of the informations was precipitate and
premature since the Commissioner of Internal Revenue has not yet resolved his
protests against the assessment of the Revenue District Officer; and that he was
denied recourse to the Court of Tax Appeals.
The contention is without merit. What is involved here is not the collection of taxes
where the assessment of the Commissioner of Internal Revenue may be reviewed by
the Court of Tax Appeals, but a criminal prosecution for violations of the National
Internal Revenue Code which is within the cognizance of courts of first instance. While
there can be no civil action to enforce collection before the assessment procedures
provided in the Code have been followed, there is no re-

_____________

13 Rollo, p. 35.

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884 SUPREME COURT REPORTS ANNOTATED

Ungab vs. Cusi, Jr.

quirement for the precise computation and assessment of the tax before there can be a
criminal prosecution under the Code.

„The contention is made, and is here rejected, that an assessment of the deficiency tax due is
necessary before the taxpayer can be prosecuted criminally for the charges preferred. The
crime is complete when the violator has, as in this case, knowingly14 and willfully filed
fraudulent returns with intent to evade and defeat a part or all of the tax.‰
„An assessment of a deficiency is not necessary to a criminal prosecution for willful attempt
to defeat and evade the income tax. A crime is complete when the violator has knowingly and
willfully filed a fraudulent return with intent to evade and defeat the tax. The perpetration of
the crime is grounded upon knowledge on the part of the taxpayer that he has made an
inaccurate return, and the governmentÊs failure to discover the error and promptly to assess
15
has no connections with the commission of the crime.‰

Besides, it has been ruled that a petition for reconsideration of an assessment may
affect the suspension of the prescriptive period for the collection
16
of taxes, but not the
prescriptive period of a criminal action for violation of law. Obviously, the protest of
the petitioner against the assessment of the District Revenue Officer cannot stop his
prosecution for violation of the National Internal Revenue Code. Accordingly, the
respondent Judge did not abuse his discretion in denying the motion to quash filed by
the petitioner.
WHEREFORE, the petition should be, as it is hereby dismissed. The temporary
restraining order heretofore issued is hereby set aside. With costs against the
petitioner.
SO ORDERED.

Barredo (Chairman), Aquino, Abad Santos and De Castro, JJ., concur.

________________

14 Guzik vs. U.S., 54 F2d 618.

15 MertenÊs Law of Federal Income Taxation, Vol. 10, Sec. 55A.05, p. 21.
16 People vs. Ching Lak alias Ang You Chu, L-10609, May 23, 1958.

* Mr. Justice Pacifico P. de Castro, a member of the First Division, was designated to sit in the Second
Division.

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VOL. 97, MAY 30, 1980 885

Ungab vs. Cusi, Jr.

Petition denied.

Notes.·As a rule, any claim for exemption from tax is strictly construed against
the taxpayer. However, where the law is clear and unambiguous, the law must be
taken as it is devoid of judicial addition or substraction. Thus, the term „insulating oil‰
includes the term „insulator‰ and qualifies the MERALCO for exemption from the tax
on importation of insulators as expressly provided for in its franchise. (Acgt. CommÊr.
of Customs vs. MERALCO, 77 SCRA 469).
The Supreme Court is bound by the findings of facts of the Court of Appeals. (Ibid).
An heir is not solidarity liable for the payment of the inheritance tax due from a co-
heir. (Vera vs. Navarro, 79 SCRA 408).
Internal revenue taxes cannot be the subject of compensation or set-off because the
government and the taxpayer are not mutually creditors and debtors of each other.
(Cordero vs. Gonda, 18 SCRA 331).
A tax refund partakes of the nature of an exemption and thus cannot be allowed
unless granted by law in the most explicit and categorical language. (Resins, Inc. vs.
Auditor General, 25 SCRA 754).
The 30-day period fixed by R.A. 1125 within which the taxpayer may question any
ruling of the Commissioner of Internal Revenue before the Court of Tax Appeals is
jurisdictional. (Actg. CommÊr. of Internal Revenue vs. Joseph, 5 SCRA 895).
The City may appeal from a decision of the City Board of Assessment Appeals in
the matter of grant of exemption from real property tax in favor of taxpayer. (Mun.
Board of Cebu City vs. Court of Tax Appeals, 12 SCRA 645).
Assessment made beyond five-year prescription period no longer binding on tax
payer. (Commissioner of Internal Revenue vs. Ayala Securities Corporation, 70 SCRA
214).
Fraud is a question of fact and the circumstances constituting fraud must be
alleged and proved in the court below. The finding of the trial court as to its existence
and non-
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886 SUPREME COURT REPORTS ANNOTATED

Ungab vs. Cusi, Jr.

existence is final and cannot be reviewed here unless clearly shown to be erroneous.
Fraud is never lightly to be presumed because it is a serious charge. (Commissioner of
Internal Revenue vs. Ayala Securities Corporation, 70 SCRA 214).
The Court of Tax Appeals has exclusive jurisdiction on matters involving internal
revenue and customs duties. (Secretary of Finance vs. Agana, 62 SCRA 68).
Court of Tax Appeals may take cognizance of issue on interest not raised before the
Commissioner of Internal Revenue where the latter himself presented it to Tax Court
for resolution. (Commissioner of Internal Revenue vs. Cu Unjieng, 66 SCRA 1).
Findings of fact of Court of Tax Appeals are conclusive upon the Supreme Court.
(Commissioner of Internal Revenue vs. P.J. Kiener Co., Ltd., 65 SCRA 142).

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