THIRD DIVISION

[G.R. No. 199480. October 12, 2016.]

PEOPLE OF THE PHILIPPINES, petitioner, vs. TESS S.

VALERIANO, respondent.

DECISION

REYES, J : p

This is a Petition for Review on Certiorari 1 filed by the People of the

Philippines (petitioner) assailing the Decision 2 dated November 18, 2011 of
the Court of Tax Appeals (CTA) en banc in CTA EB Criminal Case No. 010.
The CTA en banc sustained the Resolutions dated November 23, 2009 3 and
June 1, 2010 4 of the CTA Special First Division which dismissed the criminal
case against Tess S. Valeriano (Valeriano).
Antecedent Facts
On February 9, 2006, the Regional Director (RD) of the Bureau of
Internal Revenue (BIR), Revenue Region No. 6, wrote a Letter 5 to the City
Prosecutor of Manila, recommending the criminal prosecution of Valeriano as
president/authorized officer of the Capital Insurance & Surety Co., Inc.
(Corporation) for failure to pay the following internal revenue tax obligations
of the Corporation in violation of Section 255, 6 in relation to Section 253 (d)
7 and Section 256, 8 of the 1997 National Internal Revenue Code (NIRC):

Kind of Tax Assessment No./ Year Date Amount

Demand No.
Def. Income
34-2000 2000 January 14, 2004 P12,541,339.18
Tax
Def[.] VAT 34-2000 2000 January 14, 2004 16,296,946.70
Def. EWT 34-2000 2000 January 14, 2004 4,397,619.73
Def. DST 34-2000 2000 January 14, 2004 17,513,440.24 9
Thus, an Information 10 was filed with the CTA by Assistant City
Prosecutor Suwerte L. Ofrecio-Gonzales (Assistant City Prosecutor Ofrecio-
Gonzales) on July 9, 2009 against Valeriano for violation of Section 255, in
relation to Section 253 (d) and Section 256, of the 1997 NIRC.
On August 4, 2009, the CTA First Division issued a Resolution, 11
whereby Assistant City Prosecutor Ofrecio-Gonzales was ordered to submit
within five days from receipt thereof proof that the filing of the criminal case
was with the written approval of the BIR Commissioner, and not by the RD, in
compliance with Section 220 12 of the 1997 NIRC, as amended.
In a Resolution 13 dated September 28, 2009, the CTA First Division
ordered Assistant City Prosecutor Ofrecio-Gonzales to comply with the earlier
resolution, within a final and non-extendible period of five days from receipt
of the Resolution.
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 However, Assistant City Prosecutor Ofrecio-Gonzales failed to comply
with the order to submit the approval of the Commissioner (to file the
criminal action), as required. Consequently, the CTA First Division, through a
Resolution 14 dated November 23, 2009, dismissed the case against
Valeriano for failure to prosecute.
On January 29, 2010, a Special Attorney from the Legal Division of BIR
Revenue Region No. 6 filed an "Entry of Appearance with Leave to Admit
Manifestation and Motion for Reconsideration." 15 Attached thereto was a
photocopy 16 of the supposed written approval of the BIR Commissioner to
file the criminal case against Valeriano.
The CTA Special First Division then promulgated an Order 17 on
February 9, 2010, requiring Valeriano to comment on the Motion with Leave
to Admit Manifestation and Motion for Reconsideration filed by the counsel of
the BIR Commissioner. However, the records disclose that Valeriano had
already moved out of her address of record. 18 AIDSTE

On June 1, 2010, the CTA Special First Division issued a Resolution, 19

denying the petitioner's motion for reconsideration for lack of merit.
On July 1, 2010, the petitioner filed a Petition for Review 20 with the
CTA en banc, arguing that it was not at fault when Assistant City Prosecutor
Ofrecio-Gonzales failed to comply with the orders of the CTA Special First
Division 21 and that the government is not bound by the errors committed by
its agents. 22
The CTA en banc, in its Resolution 23 dated August 9, 2010, directed
Valeriano to file her comment. But as with the other documents sent to her,
the resolution was returned unserved with the notation "RTS moved out." As
Valeriano failed to file Comment, 24 the CTA en banc, through a Resolution 25
dated October 14, 2010, directed the parties to submit their respective
memoranda. Only the petitioner filed a Memorandum, 26 after which the
case was submitted for decision. 27
The CTA en banc rendered its Decision 28 on November 18, 2011,
denying the petition. The dispositive portion thereof reads as follows:
WHEREFORE, premises considered, the petition for review is
h e r e b y DENIED. Accordingly, the assailed Resolutions dated
November 23, 2009 and June 1, 2010 are hereby AFFIRMED with
MODIFICATION that the DISMISSAL is without prejudice.
SO ORDERED. 29

In sustaining the dismissal of the case, the CTA en banc noted that the
petitioner failed to comply with the Resolutions dated August 4, 2009 and
September 28, 2009 of the CTA Special First Division. While the petitioner
did attach to its motion for reconsideration an alleged written approval of
the BIR Commissioner, 30 it was merely a photocopy which was hardly
readable. Hence, there was no compliance with the resolutions even when
the lawyer of the BIR, deputized as special prosecutor, took over in the filing
of the motion for reconsideration. 31
Ergo, this petition with the lone assignment of error:
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 THE HONORABLE CTA EN BANC ERRED IN RENDERING ITS
DECISION DATED NOVEMBER 18, 2011, DENYING THE
PETITION FOR REVIEW FOR THE PETITIONER'S SUPPOSED
FAILURE TO PROSECUTE. 32
Ruling of the Court
The records of the case reveal that, indeed, the petitioner had earlier
submitted a letter 33 of the RD of BIR Revenue Region No. 6, recommending
the criminal prosecution of Valeriano. This letter was attached to the
Information along with other documents pertinent to the case. 34 However,
this was not deemed as compliance with Section 220, as the letter was not
from the BIR Commissioner himself.
After the dismissal decreed by the CTA Special First Division, the
petitioner, through a motion for reconsideration, presented an alleged copy
of the written approval 35 dated July 2006 signed by then BIR Commissioner
Jose Mario C. Buñag. Yet, as the CTA en banc found, the contents of the
photocopied letter were faded and almost imperceptible.
The prerequisite approval of the BIR Commissioner in the filing of a
civil or criminal action is provided under Section 220 of the 1997 NIRC,
which states that:
Sec. 220. Form and Mode of Proceeding in Actions Arising under this
Code. — Civil and criminal actions and proceedings instituted in
behalf of the Government under the authority of this Code or other
law enforced by the Bureau of Internal Revenue shall be brought in
the name of the Government of the Philippines and shall be
conducted by legal officers of the Bureau of Internal Revenue but no
civil or criminal action for the recovery of taxes or the
enforcement of any fine, penalty or forfeiture under this Code
shall be filed in court without the approval of the
Commissioner. (Emphasis ours) AaCTcI

The required approval of the Commissioner provided under Section 220

of the 1997 NIRC aside, Section 7 thereof allows the delegation of powers of
the Commissioner to any subordinate official with the rank equivalent to a
division chief or higher, save for the instances specified thereunder, viz.:
Section 7. Authority of the Commissioner to Delegate Power. — The
Commissioner may delegate the powers vested in him under the
pertinent provisions of this Code to any or such subordinate officials
with the rank equivalent to a division chief or higher , subject to
such limitations and restrictions as may be imposed under rules and
regulations to be promulgated by the Secretary of Finance, upon
recommendation of the Commissioner: Provided, however, That the
following powers of the Commissioner shall not be delegated:
(a) The power to recommend the promulgation of rules and
regulations by the Secretary of Finance;
(b) The power to issue rulings of first impression or to
reverse, revoke or modify any existing ruling of the Bureau;
(c) The power to compromise or abate, under Sec. 204 (A)
and (B) of this Code, any tax liability: Provided, however,
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 That assessments issued by the regional offices involving
basic deficiency taxes of Five hundred thousand pesos
(P500,000[.00]) or less, and minor criminal violations, as
may be determined by rules and regulations to be
promulgated by the Secretary of [F]inance, upon
recommendation of the Commissioner, discovered by
regional and district officials, may be compromised by a
regional evaluation board which shall be composed of the
Regional Director as Chairman, the Assistant Regional
Director, the heads of the Legal, Assessment and Collection
Divisions and the Revenue District Officer having
jurisdiction over the taxpayer, as members; and
(d) The power to assign or reassign internal revenue officers
to establishments where articles subject to excise tax are
produced or kept. (Emphasis and underlining ours)
In Republic v. Hizon , 36 the Court upheld the validity of a complaint for
collection of tax deficiency which was signed by the Chief of the Legal
Division of BIR Region 4 and verified by the RD of Pampanga. Citing Section
7 of the 1997 NIRC, the Court ratiocinated that "[n]one of the exceptions
relates to the Commissioner's power to approve the filing of tax collection
cases." 37
The Court made a similar pronouncement in Oceanic Wireless Network,
Inc. v. Commissioner of Internal Revenue , 38 where the authority of the Chief
of the BIR Accounts Receivable and Billing Division to issue a demand letter
was questioned. The Court ruled that "[t]he general rule is that the
Commissioner of Internal Revenue may delegate any power vested upon him
by law to Division Chiefs or to officials of higher rank. He cannot, however,
delegate the four powers granted to him under the [NIRC] enumerated in
Section 7." 39 The act of issuance of the demand letter by the Chief of the
Accounts Receivable and Billing Division did not fall under any of the
exceptions that have been specified as non-delegable. 40
In the same manner, the approval of filing of a criminal action is not
one of the non-delegable functions of the Commissioner. As previously
stated, the petitioner had earlier submitted a written recommendation from
the RD to file the instant case against Valeriano. Therefore, the
recommendation of the RD to file the instant case constitutes as compliance
with the requirement under Section 220 of the 1997 NIRC.
Notwithstanding the foregoing, the petitioner is cautioned to take the
initiative of periodically checking on the progress of its cases 41 to avoid a
similar instance where its counsel's negligence or failure to comply with
court orders would result to delay or worse, constitute as bar in the
prosecution of criminal tax cases.
WHEREFORE, the petition is hereby GRANTED. The Decision dated
November 18, 2011 of the Court of Tax Appeals en banc in CTA EB Criminal
Case No. 010, as well as the Resolutions dated November 23, 2009 and June
1, 2010 of the Court of Tax Appeals Special First Division in CTA Case No. O-
145, are REVERSED and SET ASIDE. The case is REMANDED to the Court
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 of Tax Appeals for further proceedings.
SO ORDERED. EcTCAD

Velasco, Jr., Peralta, Del Castillo * and Perez, JJ., concur.

Footnotes

* Additional Member per Raffle dated November 3, 2014 vice Associate Justice
Francis H. Jardeleza.

1. Rollo , pp. 7-25.

2. CTA en banc rollo, pp. 67-75.

3. CTA Special First Division rollo, pp. 32-33.

4. Id. at 61-64.
5. Id. at 4-6.

6. Sec. 255. Failure to File Return, Supply Correct and Accurate Information, Pay
Tax, Withhold and Remit Tax and Refund Excess Taxes Withheld on
Compensation. — Any person required under this Code or by rules and
regulations promulgated thereunder to pay any tax make a return, keep
any record, or supply correct the accurate information, who willfully fails
to pay such tax, make such return, keep such record, or supply correct
and accurate information, or withhold or remit taxes withheld, or refund
excess taxes withheld on compensation, at the time or times required by
law or rules and regulations shall, in addition to other penalties provided
by law, upon conviction thereof, be punished by a fine of not less than Ten
thousand pesos (P10,000[.00]) and suffer imprisonment of not less than
one (1) year but not more than ten (10) years.
Any person who attempts to make it appear for any reason that he or another
has in fact filed a return or statement, or actually files a return or
statement and subsequently withdraws the same return or statement
after securing the official receiving seal or stamp of receipt of internal
revenue office wherein the same was actually filed shall, upon conviction
therefor, be punished by a fine of not less than Ten thousand pesos
(P10,000[.00]) but not more than Twenty thousand pesos (P20,000[.00])
and suffer imprisonment of not less than one (1) year but not more than
three (3) years.
7. Sec. 253. General Provisions. —

xxx xxx xxx

(d) In the case of associations, partnerships or corporations, the penalty
shall be imposed on the partner, president, general manager, branch
manager, treasurer, officer-in-charge, and the employees responsible for
the violation.

xxx xxx xxx

8. Sec. 256. Penal Liability of Corporations. — Any corporation, association or
general co-partnership liable for any of the acts or omissions penalized
under this Code, in addition to the penalties imposed herein upon the
responsible corporate officers, partners, or employees shall, upon
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 conviction for each act or omission, be punished by a fine of not less than
Fifty thousand pesos (P50,000[.00]) but not more than One hundred
thousand pesos (P100,000[.00]).
9. CTA Special First Division rollo, p. 4.

10. Id. at 1-2.

11. Signed by Presiding Justice Ernesto D. Acosta, Associate Justices Lovell R.
Bautista and Caesar A. Casanova; id. at 26-27.
12. Sec. 220. Form and Mode of Proceeding in Actions Arising under this Code. —
Civil and criminal actions and proceedings instituted in behalf of the
Government under the authority of this Code or other law enforced by the
Bureau of Internal Revenue shall be brought in the name of the
Government of the Philippines and shall be conducted by legal officers of
the Bureau of Internal Revenue but no civil or criminal action for the
recovery of taxes or the enforcement of any fine, penalty or forfeiture
under this Code shall be filed in court without the approval of the
Commissioner.

13. CTA Special First Division rollo, pp. 29-30.

14. Id. at 32-33.
15. Id. at 34-35.
16. Id. at 43-44.
17. Id. at 57.

18. Id.
19. Id. at 61-64.
20. CTA en banc rollo, pp. 4-14.
21. Id. at 12.

22. Id. at 12-A.

23. Id. at 43-44.
24. Id. at 45.
25. Id. at 47-48.
26. Id. at 49-60.

27. Id. at 63-64.

28. Id. at 67-75.
29. Id. at 74-75.
30. Id. at 32-33.
31. Id. at 74.

32. Rollo , p. 18.

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 33. CTA Special First Division rollo, pp. 4-6.

34. Rollo , pp. 29-30.

35. CTA Special First Division rollo, pp. 43-44.
36. 378 Phil. 330 (1999).
37. Id. at 338.
38. 513 Phil. 317 (2005).

39. Id. at 325.

40. Id. at 326.
41. Macondray & Co., Inc. v. Provident Insurance Corporation, 487 Phil. 158, 161
(2004).

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