Tax Cases for 092815

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EN BANCCONGRESSMAN ENRIQUE T. GARCIA of the 2ndDistrict of Bataan,Petitioner,-versus-THE EXECUTIVE SECRETARY, THE SECRETARY OF THE DEPARTMENT OF ENERGY, CALTEX PHILIPPINES, INC., PETRON CORPORATION, and PILIPINAS SHELL CORPORATION,Respondents.G.R. No.157584Present:PUNO,C.J.,QUISUMBING,YNARES-SANTIAGO,CARPIO,AUSTRIA-MARTINEZ,CORONA,CARPIO MORALES,TINGA,CHICO-NAZARIO,VELASCO, JR.,NACHURA,LEONARDO-DE CASTRO,BRION,andPERALTA,JJ.Promulgated:April 2, 2009

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D E C I S I O N

BRION,J.:

For the second time, petitioner Enrique T. Garcia, Jr. (petitioner Garcia) asks this Court to examine the constitutionality of Section 19 of Republic Act No. 8479 (R.A. No. 8479), otherwise known as the Oil Deregulation Law of 1998) through this petition forcertiorari.[1]He raises once again before us the propriety of implementing full deregulation by removing the system of price controls in the local downstream oil industry a matter that we have ruled upon in the past.THE FACTSAfter years of imposing significant controls over the downstream oil industry in the Philippines, the government decided in March 1996 to pursue a policy of deregulation by enacting Republic Act No. 8180 (R.A. No. 8180) or the Downstream Oil Industry Deregulation Act of 1996.R.A. No. 8180, however, met strong opposition, and rightly so, as this Court concluded in itsNovember 5, 1997decision inTatad v. Secretary of Department of Energy.[2]We struck down the law as invalid because the three key provisions intended to promote free competition were shown to achieve the opposite result; contrary to its intent, R.A. No. 8180s provisions on tariff differential, inventory requirements, and predatory pricing inhibited fair competition, encouraged monopolistic power, and interfered with the free interaction of market forces. We declared:R.A. No. 8180 needs provisions to vouchsafe free and fair competition.The need for these vouchsafing provisions cannot be overstated.Before deregulation, PETRON, SHELL and CALTEX had no real competitors but did not have a free run of the market because government controls both the pricing and non-pricing aspects of the oil industry.After deregulation, PETRON, SHELL and CALTEX remain unthreatened by real competition yet are no longer subject to control by government with respect to their pricing and non-pricing decisions.The aftermath of R.A. No. 8180 is a deregulated market where competition can be corrupted and where market forces can be manipulated by oligopolies.[3]Notwithstanding the existence of a separability clause among its provisions, we struck down R.A. No. 8180 in its entirety because its offensive provisions permeated the whole law and were the principal tools to carry deregulation into effect.Congress responded to our Decision inTatadby enacting onFebruary 10, 1998a new oil deregulation law, R.A. No. 8479.This time, Congress excluded the offensive provisions found in the invalidated law. Nonetheless, petitioner Garcia again sought to declare the new oil deregulation lawunconstitutional on the ground that it violated Article XII, Section 19 of the Constitution.[4]He specifically objected to Section 19 of R.A. No. 8479 which, in essence, prescribed the period for removal of price control on gasoline and other finished petroleum products and set the time for the full deregulation of the local downstream oil industry.The assailed provision reads:SEC. 19.Start of Full Deregulation.Full deregulation of the Industry shall start five (5) months following the effectivity of this Act:Provided, however, That when the public interest so requires, the President may accelerate the start of full deregulation upon the recommendation of the DOE and the Department of Finance (DOF) when the prices of crude oil and petroleum products in the world market are declining and the value of the peso in relation to the US dollar is stable, taking into account relevant trends and prospects;Provided, further,That the foregoing provision notwithstanding, the five (5)-month Transition Phase shall continue to apply to LPG, regular gasoline and kerosene as socially-sensitive petroleum products and said petroleum products shall be covered by the automatic pricing mechanism during the said period.Upon the implementation of full deregulation as provided herein, the Transition Phase is deemed terminated and the following laws are repealed:a)Republic Act No. 6173, as amended;b)Section 5 of Executive Order No. 172, as amended;c)Letter of Instruction No. 1431, dated October 15, 1984;d)Letter of Instruction No. 1441, dated November 20, 1984, as amended;e)Letter of Instruction No. 1460, dated May 9, 1985;f)Presidential Decree No. 1889; andg)Presidential Decree No. 1956, as amended by Executive Order No. 137:Provided, however,That in case full deregulation is started by the President in the exercise of the authority provided in this Section, the foregoing laws shall continue to be in force and effect with respect to LPG, regular gasoline and kerosene for the rest of the five (5)-month period.Petitioner Garcia contended that implementing full deregulation and removing price control at a time when the market is still dominated and controlled by an oligopoly[5]would be contrary to public interest, as it would only provide an opportunity for the Big 3 to engage in price-fixing and overpricing.He averred that Section 19 of R.A. No. 8479 is glaringly pro-oligopoly, anti-competition, and anti-people, and thus asked the Court to declare the provision unconstitutional.OnDecember 17, 1999, inGarcia v.Corona(1999 Garcia case),[6]we denied petitioner Garcias plea for nullity. We declined to rule on the constitutionality of Section 19 of R.A. No. 8479 as we found the question replete with policy considerations; in the words of Justice Ynares-Santiago, theponenteof the1999 Garcia case:It bears reiterating at the outset that the deregulation of the oil industry is a policy determination of the highest order.It is unquestionably a priority program of Government.The Department of Energy Act of 1992 expressly mandates that the development and updating of the existing Philippine energy program shall include a policy direction towards deregulation of the power and energy industry.Be that as it may, we are not concerned with whether or not there should be deregulation.This is outside our jurisdiction.The judgment on the issue is a settled matter and only Congress can reverse it.xxxxxxxxxReduced to its basic arguments, it can be seen that the challenge in this petition is not against the legality of deregulation.Petitioner does not expressly challenge deregulation.The issue, quite simply, is the timeliness or the wisdom of the date when full deregulation should be effective.In this regard, what constitutes reasonable time is not for judicial determination.Reasonable time involves the appraisal of a great variety of relevant conditions, political, social and economic.They are not within the appropriate range of evidence in a court of justice.It would be an extravagant extension of judicial authority to assert judicial notice as the basis for the determination. [Emphasis supplied.]Undaunted, petitioner Garcia is again before us in the present petition forcertiorariseeking a categorical declaration from this Court of the unconstitutionality of Section 19 of R.A. No. 8479.THE PETITIONPetitioner Garcia does not deny that the present petition forcertiorariraises the same issue of the constitutionality of Section 19 of R.A. No. 8479, which was already the subject of the1999 Garcia case.He disagrees, however, with the allegation that the prior rulings of the Court in the two oil deregulation cases[7]amount tores judicatathat would effectively bar the resolution of the present petition.He reasons thatres judicatawill not apply, as the earlier cases did not completely resolve the controversy and were not decided on the merits.Moreover, he maintains that the present case involves a matter of overarching and overriding importance to the national economy and to the public and cannot be sacrificed for technicalities likeres judicata.[8]To further support the present petition, petitioner Garcia invokes the following additional grounds to nullify Section 19 of R.A. No. 8479:1.Subsequent events after the lifting of price control in 1997 have confirmed the continued existence of the Big 3 oligopoly and its overpricing of finished petroleum products;2.The unabated overpricing of finished petroleum products by the Big 3 oligopoly is gravely and undeniably detrimental to the public interest;3.No longer may the bare and blatant constitutionality of the lifting of price control be glossed over through the expediency of legislative wisdom or judgment call in the face of the Big 3 oligopolys characteristic, definitive, and continued overpricing;4.To avoid declaring the lifting of price control on finished petroleum products as unconstitutional is to consign to the dead letter dustbin the solemn and explicit constitutional command for the regulation of monopolies/oligopolies.[9]THE COURTS RULINGWe resolve to dismiss the petition.In asking the Court to declare Section 19 of R.A. No. 8479 as unconstitutional for contravening Section 19, Article XII of the Constitution, petitioner Garcia invokes the exercise by this Court of its power of judicial review, which power is expressly recognized under Section 4(2), Article VIII of the Constitution.[10]The power of judicial review is the power of the courts to test the validity of executive and legislative acts for their conformity with the Constitution.[11]Through such power, the judiciary enforces and upholds the supremacy of the Constitution.[12]For a court to exercise this power, certain requirements must first be met, namely:(1)an actual case or controversy calling for the exercise of judicial power;(2)the person challenging the act must have standing to challenge; he must have a personal and substantial interest in the case such that he has sustained, or will sustain, direct injury as a result of its enforcement;(3)the question of constitutionality must be raised at the earliest possible opportunity; and(4)the issue of constitutionality must be the verylis motaof the case.[13]Actual Case ControversySusceptible of Judicial DeterminationThe petition fails to satisfy the very first of these requirements the existence of an actual case or controversy calling for the exercise of judicial power. An actual case or controversy is one that involves a conflict of legal rights, an assertion of opposite legal claimssusceptible of judicial resolution;the case must not bemoot or academic orbased on extra-legal or other similar considerations not cognizable by a court of justice.Stated otherwise, it is not the mere existence of a conflict or controversy that will authorize the exercise by the courts of its power of review; more importantly, the issue involved must be susceptible of judicial determination. Excluded from these are questions of policy or wisdom, otherwise referred to as political questions:AsTaada v. Cuencoputs it, political questions refer to those questions which, under the Constitution, are to be decided by the people in their sovereign capacity, or in regard to whichfull discretionary authority has been delegated to the legislative or executive branch of government. Thus,if an issue is clearly identified by the text of the Constitution as matters for discretionary action by a particular branch of government or to the people themselves then it is held to be a political question.In the classic formulation of Justice Brennan inBaker v. Carr, [p]rominent on the surface of any case held to involve a political question is found a textually demonstrable constitutional commitment of the issue to a coordinate political department; ora lack of judicially discoverable and manageable standards for resolving it; or the impossibility of deciding without an initial policy determination of a kind clearly for non-judicial discretion;or the impossibility of a courts undertaking independent resolution without expressing lack of the respect due coordinate branches of government; or an unusual need for unquestioning adherence to a political decision already made; or the potentiality of embarrassment from multifarious pronouncements by various departments on the one question.[14][Emphasis supplied.]Petitioner Garcias issues fit snugly into the political question mold, as he insists that by adopting a policy of full deregulation through the removal of price controls at a time when an oligopoly still exists, Section 19 of R.A. No. 8479 contravenes the Constitutional directive to regulate or prohibit monopolies[15]under Article XII, Section 19 of the Constitution.This Section states:The State shall regulate or prohibit monopolies when the public interest so requires.No combinations in restraint of trade or unfair competition shall be allowed.Read correctly, this constitutional provision does not declare an outright prohibition of monopolies. It simply allows the State to actwhen public interest so requires;even then, no outright prohibition is mandated, as the State may choose to regulate rather than to prohibit.Two elements must concur before a monopoly may be regulated or prohibited:1.There in fact exists a monopoly or an oligopoly, and2.Public interest requires its regulation or prohibition.Whether a monopoly exists is a question of fact.On the other hand, the questions of (1) what public interest requires and (2) what the State reaction shall be essentially require the exercise of discretion on the part of the State.Stripped to its core, what petitioner Garcia raises as an issue is the propriety of immediately and fully deregulating the oil industry. Such determination essentially dwells on the soundness or wisdom of the timing and manner of the deregulation Congress wants to implement through R.A. No. 8497.Quite clearly, the issue is not for us to resolve; we cannot rule on when and to what extent deregulation should take place without passing upon the wisdom of the policy of deregulation that Congress has decided upon.To use the words ofBaker v. Carr,[16]the ruling that petitioner Garcia asks requiresan initial policy determination of a kind clearly for non-judicial discretion;the branch of government that was given by the people the full discretionary authority to formulate the policy is the legislative department.Directly supporting our conclusion that Garcia raises a political question is his proposal to adopt instead a system of partial deregulation a system he presents as more consistent with the Constitutional dictate. He avers that free market forces (in a fully deregulated environment) cannot prevail for as long as the market itself is dominated by an entrenched oligopoly. In such situation, he claims that prices are not determined by the free play of supply and demand, but instead by the entrenched and dominant oligopoly where overpricing and price-fixing are possible.[17]Thus, before full deregulation can be implemented, he calls for an indefinite period of partial deregulation through imposition of price controls.[18]Petitioner Garcias thesis readily reveals the political,[19]hence, non-justiciable, nature of his petition; the choice of undertaking full or partial deregulation is not for this Court to make.By enacting the assailed provision Section 19 of R.A. No. 8479, Congress already determined that the problems confronting the local downstream oil industry are better addressed by removing all forms of prior controls and adopting a deregulated system. This intent is expressed in Section 2 of the law:Section 2.Declaration of Policy. It shall be the policy of the State to liberalize and deregulate the downstream oil industry in order to ensure a truly competitive market under a regime of fair prices, adequate and continuous supply of environmentally-clean and high-quality petroleum products.To this end, the State shall promote and encourage the entry of new participants in the downstream oil industry, and introduce adequate measures to ensure the attainment of these goals.InTatad, we declared that the fundamental principle espoused by Section 19, Article XII of the Constitution is competition.[20]Congress, by enacting R.A. No. 8479, determined that this objective is better realized by liberalizing the oil market, instead of continuing with a highly regulated system enforced by means of restrictive prior controls.This legislative determination was a lawful exercise of Congress prerogative and one that this Court must respect and uphold.Regardless of the individual opinions of the Members of this Court, we cannot, acting as a body, question the wisdom of a co-equal departments acts. The courts do not involve themselves with or delve into the policy or wisdom of a statute;[21]it sits, not to review or revise legislative action, but to enforce the legislative will.[22]For the Court to resolve a clearly non-justiciable matter would be to debase the principle of separation of powers that has been tightly woven by the Constitution into our republican system of government.This same line of reasoning was what we used when we dismissed the first Garcia case.The petitioner correctly noted that this is not a matter ofres judicata(as the respondents invoked), as the application of the principle ofres judicatapresupposes that there is a final judgment or decreeon the meritsrendered by a court ofcompetent jurisdiction.To be exact, we are simply declaring that then, as now, and for the same reasons, we find that there is no justiciable controversy that would justify the grant of the petition.Grave Abuse of DiscretionRecourse to the political question doctrine necessarily raises the underlying doctrine of separation of powers among the three great branches of government that our Constitution has entrenched. But at the same time that the Constitution mandates this Court to respect acts performed by co-equal departments done within their sphere of competence and authority, it has also allowed us to cross the line of separation on a very limited and specific point to determine whether the acts of the executive and the legislative departments are null because they were undertaken with grave abuse of discretion.IBP v. Zamorateaches us that -When political questions are involved, the Constitution limits the determination as to whether there has been grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the official whose action is being questioned.xxxxxxxxx[W]hile this Court has no power to substitute its judgment for that of Congress or of the President, it may look into the question of whether such exercise has been made in grave abuse of discretion.A showing that plenary power is granted either department of government, may not be an obstacle to judicial inquiry, for the improvident exercise or abuse thereof may give rise to justiciable controversy.[23][Emphasis supplied.]Jurisprudence has defined grave abuse of discretion to meanthe capricious or whimsical exercise of judgment that is so patent and gross as to amount to an evasion of positive duty or a virtual refusal to perform a duty enjoined by law, or to act at all in contemplation of law, as where the power is exercised in an arbitrary and despotic manner by reason of passion or hostility.[24]Significantly, the pleadings before us fail to disclose any act of the legislature that may be characterized as patently capricious or whimsical.A reading of the congressional deliberations made onR.A. No.8479 indicates that the measure was thoroughly and carefully considered.Indeed, petitioner Garcia was among the many who interpellated the laws principal author, then Congressman Dante O. Tinga, now a Member of this Court.We note, too, that petitioner Garcia has not adequately proven at this point that an oligopoly does in fact exist in the form of the Big 3, and that the Big 3 have actually engaged in oligopolistic practices.He merely cites (in his argument against the applicability ofres judicata) and relies on the facts and findings stated in the two prior cases on oil deregulation.This calls to mind what former Chief Justice Panganiban said in his Separate Opinion in the1999 Garcia case:Petitioner merely resurrects and relies heavily on the arguments, the statistics and the proofs he submittedtwoyears ago in the first oil deregulation case,Tatad v. Secretary of the Department of Energy.Needless to state, those reasons were taken into consideration in said case, and they indeed helped show the unconstitutionality of RA 8180.But exactly the same old grounds cannot continue to support petitioners present allegation that the major oil companies -- Petron, Shell and Caltex -- persistto this datein their oligopolistic practices, as a consequence of thecurrentOil Deregulation Law and in violation of the Constitution.In brief, the legal cause and effect relationship has not been amply shown. [Emphasis supplied.]This observation is true in the present case as it was true in the 1999 Garcia case; the petitioner has simply omitted the citation of facts, figures and statistics specifically supporting his petition.To prove charges of continued overpricing or price-fixing, he refers to data showing price adjustments of petroleum products for the period coveringFebruary 8, 1997toAugust 1, 1997.Insofar asR.A. No.8479 is concerned, however, these data are irrelevant, as they cover a period way beforeR.A. No.8479 was enacted.[25]Petitioner Garcia contends that the identity in the pricing patterns of the Big 3 confirms the existence of an oligopoly and shows that they have colluded to engage in unlawful cartel-like behaviour.His reasoning fails to persuade us. That the oil firms havethe same prices and change them at the same rate at the same time are not sufficient evidence to conclude that collusion exists. An independent study on local oil prices explains:[W]hen products are highly substitutable with each other (or what economists call homogeneous products), then firms will tend to set similar prices, especially when there are many competing sellers.Otherwise, if one firm tried to set a price significantly higher than the others, it would find itself losing customers to the others.[26]Even assuming that the Big 3 have indeed colluded in fixing oil prices, this development will not necessarily justify a declaration against the validity and constitutionality of Section 19 ofR.A. No.8479.The remedy against the perceived failure of the Oil Deregulation Law to combat cartelization is not to declare it invalid, but to set in motion its anti-trust safeguards under Sections 11,[27]12,[28]and 13.[29]Lis MotaLis Mota the fourth requirement to satisfy before this Court will undertake judicial review means that the Court will not pass upon a question of unconstitutionality, although properly presented,if the case can be disposed of on some other ground, such as the application of the statute or the general law.The petitioner must be able to show that the case cannot be legally resolved unless the constitutional question raised is determined.[30]This requirement is based on the rule that every law has in its favor the presumption of constitutionality;[31]to justify its nullification, there must be a clear and unequivocal breach of the Constitution, and not one that is doubtful, speculative, or argumentative.Petitioner Garcia argues against full deregulation implemented through the lifting of price control, as it allows oligopoly, overpricing and price-fixing.R.A. No.8479, however, does not condone these acts; indeed, Section 11 (a) of the law expressly prohibits and punishes cartelization, which is defined in the same section asany agreement, combination or concerted action by refiners, importers and/or dealers, or their representatives,to fix prices, restrict outputs or divide markets, either by products or by areas, or allocate markets, either by products or by areas, in restraint of trade or free competition, including any contractual stipulation which prescribes pricing levels and profit margins.This definition is broad enough to include the alleged acts of overpricing or price-fixing by the Big 3.R.A. No. 8479 has provided, aside from prosecution for cartelization, several other anti-trust mechanisms, including the enlarged scope of the Department of Energys monitoring power and the creation of a Joint Task Force to immediately act on complaints against unreasonable rise in the price of petroleum products.[32]Petitioner Garcias failure is that he failed to show that he resorted to these measures before filing the instant petition.His belief that these oversight mechanisms are unrealistic and insufficient does not permit disregard of these remedies.[33]CONCLUSIONTo summarize, we declare that the issues petitioner Garcia presented to this Court are non-justiciable matters that preclude the Court from exercising its power of judicial review. The immediate implementation of full deregulation of the local downstream oil industry is a policy determination by Congress which this Court cannot overturn without offending the Constitution and the principle of separation of powers. That the law failed in its objectives because its adoption spawned the evils petitioner Garcia alludes to does not warrant its nullification.In the words of Mr. Justice Leonardo A. Quisumbing in the 1999 Garcia case,[a] calculus of fear and pessimism xxx does not justify the remedy petitioner seeks: that we overturn a law enacted by Congress and approved by the Chief Executive.[34]WHEREFORE, we herebyDISMISSthe petition.No pronouncements as to costs.SO ORDERED.Republic of the PhilippinesSUPREME COURTManilaTHIRD DIVISIONG.R. No. 79307 August 29, 1989COMMISSIONER OF CUSTOMS,petitioner,vs.THE HON. RAMON P. MAKASIAR, RTC Judge, Branch 35, Manila and THE DISTILLERS CO. LTD. OF ENGLAND,respondents.Quasha, Asperilla, Ancheta, Pena & Nolasco for private respondent.CORTES,J.:Petitioner Commissioner of Customs seeks the reversal of respondent judge's decision dated 20 July 1987 in Civil Case No. 82-12821 entitled "The Distillers Co. Ltd., of England v. Victorio Francisco, et al.," the dispositive portion of which reads as follows:WHEREFORE, having been issued by the Collector of Customs in excess of his jurisdiction the disputed Warrant of Seizure and Detention dated January 2, 1979, in Seizure Identification No. 2-79 of the Bureau of Customs, as well as all the proceedings taken thereon are declared NULL and VOID, and the writ of prohibition prayed for is GRANTED. The public respondent is ordered to REFRAIN and DESIST from conducting any proceedings for the seizure and forfeiture of the articles in question until after the Court having taken cognizance and legal custody thereof has rendered its final judgment in the criminal cases which involve the same articles. Without costs.SO ORDERED. [RTC Decision, p. 7; Rollo, p. 26].The undisputed acts are as follows:On 7 December 1978, the then Court of First Instance of Manila (herein referred to as CFI-MANILA) issued Search and Seizure Warrants in Criminal Case Nos. 8602 and 8603 entitled "People of the Philippines vs. Howard J. Sosis,, et al.," for violation of Section 11 (a) and/or 11(e) of Republic Act No. 3720,*and violation of Article 188 of the Revised Penal Code (captioned as "Substituting and altering trademarks, tradenames, or service marks"), respectively, and ordering the seizure of the following:a) Materials:All whisky, bottles, labels, caps, cartons, boxes, machinery equipment or other materials used or intended to be used, or suitable for use, in connection with counter-feiting or imitation of Johnnie Walker Scotch Whisky (Emphasis supplied)b) Documents:x x xunder the control and possession of:1. Howard J. Sosis2. George Morrison Lonie3. Hercules Bottling Co.4. Lauro Villanueva5. Vicente Velasco6. Manuel Esteban7. Eugenio Mauricio[Rollo, pp. 106-107].On 8 December 1978, a composite team from the Ministry of Finance Bureau of Investigation and Intelligence (herein referred to as BII), the Bureau of Customs and the Integrated National Police enforced the search and seizure warrants, and seized and confiscated the following articles, among others, found in the premises of the Hercules Bottling Co., Inc. (herein referred to as HERCULES) at Isla de Provisor, Paco, Manila:Six (6) Tanks of Scotch Whisky; 417 cartons each containing I doz. bottles of "Johnnie Walker Black Label Whisky"; 109 empty bottles; Empty Cartons of "Johnnie Walker Black Label Scotch Whisky" number 900-2044 empty cartons. [Rollo, p. 21].The articles seized remained in the premises of HERCULES guarded and secured by BII personnel.On 2 January 1979, the Collector of Customs for the Port of Manila, after being informed of the seizure of the subject goods and upon verification that the same were imported contrary to law, issued a warrant of seizure and detention, in Seizure Identification No. 2-79, and ordered the immediate seizure and turnover of the seized items to its Auction and Cargo Disposal Division at the Port of Manila. Seizure and forfeiture proceedings were then initiated against the above-enumerated articles for alleged violation of Section 2530 (f) of the Tariff and Customs Code, in relation to Republic Act 3720, to wit:Sec. 2530. Property subject to forfeiture under Tariff and Customs law:x x x(f) Any article the importation or exportation of which is effected or attempted contrary to law, or any article of prohibited importation or exportation, and all other articles which, in the opinion of the collector have been used, are or were entered to be used as instruments in the importation or exportation of the former.x x xOn 29 January 1979, the CFI-MANILA issued an order authorizing the transfer and delivery of the seized articles to the customs warehouse located at South Harbor, Port of Manila, subject to the following conditions:1. The Commissioner of Customs is willing to have custody of the same and guarantees their safekeeping at all times in the same quantity, quality, manner and condition when the articles shall be turned over to and received by the Bureau of Customs incustodia legis, subject to the further orders from the Court;2. No article shall be transferred without the presence of a representative of the applicant, the defendants, the Commissioner of Customs and the Court; these representatives to secure the necessary escort as guarantee that nothing will happen during the transfer of the articles.3. The Commissioner of Customs to issue the proper and necessary receipt for each and every article transferred to and received by the Bureau of Customs pursuant to this order [Rollo, p. 22].Meanwhile, the validity and constitutionality of the issuance and service of the search and seizure warrants issued by the CFI- MANILA were contested in and upheld by the Court of Appeals in CA-G.R. No. SP-09153-R entitled "Hercules Bottling Co. Inc., et al., v. Victoriano Savellano, et al." HERCULES filed a petition for certiorari in the Supreme Court but in a resolution dated 26 November 1986 in G.R. No. 55061 captioned asHercules Bottling Co., Inc. v. The Court of Appeals, the Court dismissed the petition.Consequently, the City Fiscal of Manila proceeded with the preliminary investigation of the criminal cases, where private respondent, The Distillers Co. Ltd. of England, claiming to be the owner and exclusive manufacturer of Johnnie Walker Scotch Whiskey was the private complainant [Rollo, p. 61], With the dismissal of HERCULES' petition, the Bureau of Customs also resumed hearing the seizure and forfeiture proceedings over the said articles.The present controversy arose when private respondent, on 11 June 1982, objected to the continuation by the Collector of Customs of the seizure proceedings claiming, among others, that these proceedings would hamper or even jeopardize the preliminary investigation being conducted by the fiscal. The Collector of Customs ignored the objections.In order to stop and enjoin the Hearing Officer of the Bureau of Customs from taking further action in the seizure proceedings of the subject goods, private respondent on 24 September 1982 filed a petition for prohibition with preliminary injunction and/or temporary restraining order, docketed as Civil Case No. 82-12721. It must be noted at this juncture that the petition was heard not before the CFI-MANILA which originally issued the search warrants, but before another sala, that of respondent judge of the Regional Trial Court, Branch 35, Manila.Respondent judge issued a temporary restraining order on 29 September 1982. Subsequently, a writ for preliminary injunction was issued as well. Petitioner filed an answer on 12 November 1982. On 20 July 1987, respondent judge rendered a decision holding that the Collector of Customs acted in excess of its jurisdiction in issuing the warrant of seizure and detention considering that the subject goods had already come under the legal custody of the CFI-MANILA. Hence, petitioner represented by the Solicitor General, filed the instant petition on 11 August 1987.In the meantime, Howard Sosis and company were charged for violation of Chapter VI, Sec. 11(a) & (e) of Republic Act 3720 in Criminal Case No. 88-63157 and for violation of Article 188 of the Revised Penal Code in Criminal Case No. 88-63156 before the Regional Trial Court and the Metropolitan Trial Court of Manila, respectively [Rollo, p. 83].In his petition, the Commissioner of Customs assigns as errors the following:I. RESPONDENT JUDGE ERRED IN ISSUING A TEMPORARY RESTRAINING ORDER AND SUBSEQUENTLY A WRIT OF INJUNCTION IN CIVIL CASE NO. 82-12721 NOTWITHSTANDING THE FACT THAT PRIVATE RESPONDENT, THE DISTILLERS CO., LTD., OF ENGLAND HAS NO VALID CAUSE OF ACTION AGAINST HEREIN PETITIONER;II. RESPONDENT RTC JUDGE GRAVELY ERRED IN TAKING COGNIZANCE OF THE PETITION AND IN PROCEEDING TO HEAR AND RENDER A DECISION IN CIVIL CASE NO. 82-12721 NOTWITHSTANDING THE FACT THAT THE TRIAL COURT HAS NO JURISDICTION OVER THE CASE [Rollo, pp. 10-11].Petitioner contends that the authority of the Bureau of Customs over seizure and forfeiture cases is beyond the judicial interference of the Regional Trial Court, even in the form of certiorari, prohibition or mandamus which are really attempts to review the Commissioner's actions [Rollo, p. 98]. Petitioner argues that judicial recourse from the decision of the Bureau of Customs on seizure and forfeiture cases can only be sought in the Court of Tax Appeals and eventually in this Court.Private respondent however contends that while the law may have vested exclusive jurisdiction in the Bureau of Customs over forfeiture and seizure cases, in this case respondent judge had jurisdiction to enjoin the Bureau of Customs from continuing with its seizure and forfeiture proceedings since the articles here were already incustodia legis, by virtue of the search warrants issued by the CFI-MANILA. Private respondent contends that respondent judge may properly take cognizance of the instant case since unlike the cases cited by petitioner, the action for prohibition was brought not to claim ownership or possession over the goods but only to preserve the same and to prevent the Bureau of Customs from doing anything prejudicial to the successful prosecution of the criminal cases [Rollo, p. 123].The issue thus presented is whether or not respondent judge may enjoin the Collector of Customs from continuing with its seizure and forfeiture proceedings over goods earlier seized by virtue of search warrants issued by the CFI-MANILA.The instant petition is impressed with merit.This Court finds that respondent-judge has failed to adhere to the prevailing rule which denies him jurisdiction to enjoin the Bureau of Customs from taking further action in the seizure and forfeiture proceedings over the subject goods.Jurisprudence is replete with cases which have held that regional trial courts are devoid of any competence to pass upon the validity or regularity of seizure and forfeiture proceedings conducted in the Bureau of Customs, and to enjoin, or otherwise interfere with, these proceedings. The Collector of Customs sitting in seizure and forfeiture proceedings has exclusive jurisdiction to hear and determine all questions touching on the seizure and forfeiture of dutiable goods. The regional trial courts are precluded from assuming cognizance over such matters even through petitions of certiorari, prohibition or mandamus [SeeGeneral Travel Service v. David, G.R. No. L-19259, September 23, 1966, 18 SCRA 59; Pacis v. Averia, G.R. No. L-22526, November 29, 1966, 18 SCRA 907; De Joya v. Lantin, G.R. No. L-24037, April 27, 1967, 19 SCRA 893; Ponce Enrile v. Vinuya G.R. No. L-29043, January 30, 1971, 37 SCRA 381; Collector of Customs v. Torres, G.R. No. L-22977, May 31, 1972, 45 SCRA 272; Pacis v. Geronimo, G.R. No. L-24068, April 23, 1974,56 SCRA 583; Commissioner of Customs v. Navarro, G.R. No. L-33146, May 31, 1977, 77 SCRA 264; Republic v. Bocar, G.R. No. L-35260, September 4, 1979,93 SCRA 78; De la Fuente v. De Veyra, G.R. No. L-35385, January 31, 1983, 120 SCRA 451].It is likewise well-settled that the provisions of the Tariff and Customs Code and that of Republic Act No. 1125, as amended**specify the proper fora for the ventilation of any legal objections or issues raised concerning these proceedings. Actions of the Collector of Customs are appealable to the Commissioner of Customs, whose decisions, in turn, are subject to the exclusive appellate jurisdiction of the Court of Tax Appeals. Thereafter, an appeal lies to this Court through the appropriate petition for review by writ of certiorari. Undeniably, regional trial courts do not share these review powers.The above rule is anchored upon the policy of placing no unnecessary hindrance on the government's drive not only to prevent smuggling and other frauds upon customs, but also, and more importantly, to render effective and efficient the collection of import and export duties due the state. For tariff and customs duties are taxes constituting a significant portion of the public revenue which are the lifeblood that enables the government to carry out functions it has been instituted to perform.Notwithstanding these considerations, respondent judge entertained private respondent's petition for prohibition holding that the seizure and forfeiture proceedings instituted in the Bureau of Customs was null and void because the subject goods were earlier seized by virtue of the warrants issued by the CFI-MANILA in Criminal Cases Nos. 8602 and 8603.This holding is erroneous.Even if it be assumed that a taint of irregularity may be imputed to the exercise by the Collector of Customs of his jurisdiction to institute seizure and forfeiture proceedings over the subject goods because he had accepted custody of the same under conditions specified in the CFI-Manila order dated January 29, 1979, it would not mean that respondent judge was correspondingly vested with the jurisdiction to interfere with such proceedings (See Ponce Enrile v. Vinuyasupra]. It bears repeating that law and settled jurisprudence clearly deprive the regional trial courts of jurisdiction to enjoin the Collector of Customs from exercising his exclusive authority to order seizure and forfeiture proceedings over imported goods.Moreover, there is no legal basis for respondent judge's conclusion that the Collector of Customs is deprived of his jurisdiction to issue the assailed warrant of seizure and detention, and to institute seizure and forfeiture proceedings for the subject goods simply because the same were first taken incustodia legis.Undeniably, the subject goods have been brought under the legal control of the CFI-MANILA by virtue of its search and seizure warrants and are, therefore, incustodia legis. But this fact merely serves to deprive any other court or tribunal, except one having supervisory control or superior jurisdiction in the premises, of the right to divest the CFI-MANILA of its custody and control of the said property[Collector of Internal Revenue v. Flores Vda. de Codinera G.R. No. L-9675, September 28, 1957],or to interfere with and change its possession without its consent[National Power Corporation v. De Veyra, G.R. No. L-15763, December 22, 1961, 3 SCRA 646; De Leon v. Salvador, G.R. Nos. L-30871 & L-31603, December 28, 1970, 36 SCRA 567; Vlasons Enterprises Corporation v. Court of Appeals, G.R. No. 61688, October 28, 1987, 155 SCRA 186].In the instant case, the CFI-Manila was not divested of its jurisdiction over the subject goods, nor were its processes interfered with by the Collector of Customs. It, in fact, authorized the transfer and delivery of the subject goods from the premises of HERCULES to the Bureau of Customs warehouse/bodega at the South Harbor, Port of Manila thereby entrusting the Bureau of Customs with the actual possession and control of the same.On the other hand, since the Collector of Customs herein had actual possession and control over the subject goods, his jurisdiction over the goods was secured for the purpose of instituting seizure and forfeiture proceedings to determine whether or not the same were imported into the country contrary to law [SeePapa v. Mago, G.R. No. L-27360, February 28, 1968, 22 SCRA 857]. This is consistent with the principle that the basic operative fact for the institution and perfection of proceedingsin remlike the seizure and forfeiture proceedings pursuant to the Tariff and Customs Code, is the actual or constructive possession of theresby the tribunal empowered by law to conduct the proceedings [SeeDodge v. US, 71 L. ed. 392 (1926); US v. Mack, 79 L. ed. 1559 (1935) citing The Ann, 3 L. ed. 734 (1815); Fettig Canning Co. v. Steckler, 188 F. 2d 715 (1951) citing Strong v. US, 46 F. 2d 257, 79 ALR 150 (1931)].Therefore, contrary to the import of respondent judge's decision, the Collector of Customs was not precluded by law or legal principle from assuming jurisdiction over the subject goods. No legal infirmity attended the seizure and forfeiture proceedings over the subject goods.The Court must emphasize at this point that the instant case does not involve a conflict of jurisdictions. Proceedings before the regular courts for criminal prosecutions against Howard Sosis, et al., and seizure and forfeiture proceedings for the subject goods conducted by the Bureau of Customs may be maintained simultaneously and independently of each other. For the nature of the two proceedings are entirely different such that a resolution in one is not decisive of the issue in the other. The latter, which is administrative and civil in nature, is directed against theresor articles imported and entails a determination of the legality of its importation. The former is directed against those persons who may be held liable for violating the penal laws in connection with the importation [See Diosamito v. Balanque, G.R. No. L-30734, July 28,1969,28 SCRA 836; People v. CFI, G.R. No. L-41686, November 17, 1980, 101 SCRA 86].Private respondent, however, argues that conflict may arise regarding the disposition of the subject goods if the proceedings before the Collector of Customs and the regular courts were allowed to proceed simultaneously. Private respondent contends that in view of the nature of the seizure and forfeiture proceedings, a judgment in favor of HERCULES will result in the release of the subject goods to the claimants thereof, while an unfavorable decision will entail their destruction or sale. It is asserted that either of the two outcomes will hamper or even jeopardize the ongoing criminal prosecutions, said goods comprising the substantial part of the evidence for the People of the Philippines.Proper adherence by both tribunals to the rules of comity as defined in the leading case ofThe Government of the Philippines v. Gale[24 Phil. 95 (1931)] will forestall the conflict feared. In that case the Court had established the rule that where the preservation and safekeeping of the subject matter of an action is demanded, as it is made to appear that these articles may prove to be of vital importance as exhibits in the prosecution of other charges in another proceeding, the rules for the orderly course of proceedings in courts and tribunals forbid the disposition or destruction thereof in one action which would prejudice the other, andvice versa[Id. at pp. 98-99].The State in the instant case must be given reasonable opportunity to present its cases for the proper enforcement of the applicable provisions of the Revised Penal Code, Republic Act No. 3720, and the Tariff and Customs Code, and the prosecution of the violators thereof. It follows then that the execution of any final decision in the seizure and forfeiture case before the Bureau of Customs, whether it requires the destruction, sale or the release of the subject goods, should not frustrate the prosecution's task of duly presenting and offering its evidence in Criminal Cases Nos. 88-63156 and 88-63157.It is apropos to note that for evidentiary purposes, it would not be necessary to present each and every item of the goods in question before the courts trying the criminal cases. Thus, a representative quantity of the goods, as may be agreed upon by the authorized customs officials and fiscals prosecuting the criminal cases, shall be set aside as evidence to be presented in the above criminal cases and retained incustodia legisuntil final judgment is secured in these cases. The rest of the goods may be disposed of in accordance with the final decision rendered in the seizure and forfeiture proceedings pursuant to the Tariff and Customs Code.WHEREFORE, in view of the foregoing, the respondent judge's decision dated 20 July 1987 is REVERSED. The seizure and forfeiture proceedings involving the goods in question before the Bureau of Customs may proceed subject to the above pronouncements relative to the setting aside of so much of the goods as may be required for evidentiary purposes.SO ORDEREDTHIRD DIVISION[A.M. No. RTJ-99-1484 (A).October 24, 2000]JOSELITO RALLOS, JOSEFINA RALLOS VALLAR, SIMON RALLOS representing his deceased father CARLOS RALLOS, TERESITA RALLOS YAP, and JOSELITO RALLOS,complainants, vs.Judge IRENEO LEE GAKO JR., RTC, Branch 5, Cebu City,respondent.[A.M. No. RTJ-99-1484.October 24, 2000]Executive Secretary RONALDO B. ZAMORA,complainant, vs.Judge IRENEO LEE GAKO JR., RTC, Branch 5, Cebu City,respondent.D E C I S I O NPANGANIBAN,J.:A judge may be held administratively liable for gross ignorance of the law when it is shown that-- motivated by bad faith, fraud, dishonesty or corruption --he ignored,contradicted or failed to apply settled law and jurisprudence.The CaseTwo consolidated administrative cases were filed against Judge Ireneo Lee Gako Jr. of the Regional Trial Court (RTC) of Cebu City, Branch 5.The first case was filed by Joselito Rallos, Simon Rallos, Josefina Rallos Vallar and Teresita Rallos Yap.It was an Administrative Complaint in connection with Special Proceedings Case No. 1576-R entitled Intestate Estate of Simeon Rallos, then pending before respondent.The second was filed by Executive Secretary Ronaldo B. Zamora, charging respondent with ignorance of the law and grave abuse of authority.This Complaint was based on the allegation that the latter had ordered the release of 25,000 sacks of imported rice to the claimants,[1]notwithstanding the pendency of seizure and forfeiture proceedings before the Bureau of Customs.After respondent had filed his Comment, the Court, in its September 1, 1999 Resolution, docketed the two cases as administrative matters and referred them to Deputy Court Administrator Bernardo T. Ponferrada for investigation, report and recommendation.After conducting hearings, the investigator submitted his findings and recommendations in a Memorandum dated January 4, 2000.On March 17, 2000, we promulgated a Decision finding respondent guilty of the first charge and ordering him to pay a fine of P10,000.The second charge, however, was held in abeyance, pending the judicial resolution of the Petition questioning respondents Orders.Hence, in its earlier Decision, the Court disposed as follows:[2]WHEREFORE, the Court finds Judge Ireneo Lee Gako Jr. GUILTY of grave abuse of authority and partiality aggravated by dishonesty for which he is ordered to PAY a FINE of P10,000.He is sternly warned that a commission of similar acts in the future shall be dealt with more severely.The Complaint filed by Executive Secretary Ronaldo Zamora is hereby held in abeyance.Respondents Motion for Reconsideration[3]of our March 17, 2000 Decision was denied with finality by this Court.[4]Subsequently, in a Decision[5]dated March 30, 2000, the Court set aside respondents Orders, which were also the bases of Secretary ZamorasComplaint.Hence, the Court will now rule on the second case against respondent.The FactsFor clarity, we again present the antecedent facts in thefirstcase, which were summarized by the investigator[6]in this wise:On December 8, 1998, the Economic Intelligence and Investigation Bureau (EIIB) of the Bureau of Customs (BOC), the Philippine Coast Guard, and the Philippine National Police (PNP) at the Port of Cebu withheld, for investigation, an estimated 25,000 sacks of rice marked as Snowman on board the vessel, M/V Alberto.The sacks of rice allegedly came from Palawan to be unloaded in Cebu.Likewise seized on the same date were nine cargo trucks to be used for carrying the subject sacks of rice.The EIIB then wrote to the Bureau of Customs, Cebu, stating that upon further verification, no proper voyage clearance to sail from Palawan to Cebu was issued to the vessel, M/V Alberto.The EIIB then requested that a warrant of seizure and detention be issued over the rice shipment.On December 9, 1998, the Bureau of Customs issued a Warrant of Seizure and Detention against: a) the vessel M/V Alberto used in the illegal transport of imported staple rice; b) the imported staple rice consisting of 25,000 sacks, more or less, with the Snowman brand; and c) nine (9) motor-vehicle trucks used and utilized in the illegal transport of the rice.The warrant was also directed to the owner of the M/V Alberto, ANMA Philippine Shipping Corporation, and the consignee of the rice shipment, Mark Montelibano.Thereafter, the claimants Mark Montelibano and Elson Ogario, on December 10, 1998, filed a complaint for injunction with prayer for temporary restraining order and writ of preliminary injunction.The case, entitled Elson Ogario and Mark Montelibano vs. Bureau of Customs, EIIB, Philippine Navy, Maritime Command, Philippine National Police, Philippine Coast Guard and All Enforcement Agencies was docketed as Civil Case No. CEB 23077 and assigned to Branch 5, Regional Trial Court of Cebu City, which is the sala of respondent judge.The complaint alleged that the acts of defendants in intercepting the subject sacks of rice [were] unlawful, illegal and merely based on suspicion.Thus, plaintiffs prayed for the quashal of the warrant of seizure and detention (dated December 9, 1998) issued by the Collector of Customs, and for the release of the goods.The Bureau of Customs filed a motion to dismiss on December 11, 1998, alleging that the trial court ha[d] no jurisdiction over the complaint.x x xx x xx x xx x xThe Bureau of Customs also pointed out that the appropriate seizure proceeding was already instituted on December 9, 1998, by virtue of the issuance of the warrant of seizure and detention.This had the effect of depriving the trial court of jurisdiction over the matter.On December 28, 1998, a hearing was held by respondent judge on both the motion to dismiss of the Bureau of Customs and the complainants application for a writ of preliminary injunction.The parties presented evidence in support of their respective positions.In a Resolution dated January 11, 1999, the respondent judge denied the Bureau of Customs motion to dismiss and granted complainants prayer for writ of preliminary injunction, the dispositive portion of which reads:x x xx x xx x xIn the subject resolution, the respondent judge also ruled that the Bureau of Customs ha[d] no jurisdiction because the goods involved [were] neither imported nor smuggled and were apprehended outside the customs zone.As further basis, it was ruled that plaintiff was able to present a certification issued by the National Food Authority that the subject rice came from Palawan.Defendants, on the other hand, submitted no evidence that the subject bags of rice were imported or smuggled.The issuance of the warrant of seizure and detention being arbitrary and without probable cause, it did not divest the trial court of its jurisdiction.The Bureau of Customs filed a motion for reconsideration, but this was subsequently denied in the trial courts Order dated January 25, 1999.In this resolution, respondent judge ordered the defendants to release the 25,000 sacks of rice without delay, the dispositive portion of which reads:x x xx x xx x xThe Bureau of Customs, through the Office of the Solicitor General, filed a petition for certiorari before the Court of Appeals, docketed as CA-G.R. SP No. 51051, assailing the Resolutions dated January 11 and 25, 1999 of the respondent judge.In the meantime, on April 5, 1999, the District Collector of Customs of Cebu City rendered a Decision in the seizure proceedings (Cebu Seizure Identification Case No. 17-98) declaring the 25,000 sacks of Snowman rice as smuggled and ordering their forfeiture.On April 15, 1999, the Court of Appeals issued a Decision[7]denying the petition for certiorari filed by the Bureau of Customs and affirmed the questioned Resolutions dated January 11 and 25, 1999 issued [by] respondent judge.In view of the Court of Appeals decision, respondent judge issued another Resolution dated April 26, 1999 reiterating the release of the 25,000 sacks of rice, the dispositive portion of which reads:x x xx x xx x xA petition for review was then filed by the Bureau of Customs before the Supreme Court questioning the Decision of the Court of Appeals.Upon application, a Temporary Restraining Order was subsequently issued by the Supreme Court on May 17, 1999, enjoining the Presiding Judge of the Regional Trial Court, 7th Judicial Region, Branch 5, Cebu City or any of his representatives and the respondents from enforcing or causing to be enforced the questioned Resolution dated 11 January 1999, the Order dated 25 January 1999, and the Resolution dated 26 April 1999, as well as all subsequent orders issued by the Regional Trial Court, Branch 5, Cebu City in Civil Case No. CEB-23077 entitled Elson Ogario and Mark Montelibano vs. Bureau of Customs, et. al.x x xx x xx x xRespondent judge was required to comment on the administrative complaint.1. In his Comment dated July 21, 1999 (Exh. 8), the judge in essence, sought to justify the issuance of the questioned orders on the following propositions:a. The Warrant of Seizure and Detention issued by the Bureau of Customs of the Port of Cebu on December 9, 1998 was based merely on a suspicion and not anchored on probable cause.Hence, the issuance of the Warrant was not valid and, therefore, of no legal effect.b. That the Bureau of Customs [of the Port of] Cebu x x x abused its authority or function in seizing the '25 thousand bags of rice' on the basis of a suspicion that they were smuggled goods or illegally imported.The issuance of the Warrant of Seizure and Detention was arbitrary.c. That the Regional Trial Court Judge in the exercise of his jurisdiction, can issue an injunction to stop or prevent a purported enforcement of a criminal law which is not in accordance with an orderly administration of justice, and also to stop and prevent the Bureau of Customs from using the strong arm of the law in an oppressive and arbitrary manner.[8]Investigators RecommendationDeputy Court Administrator Ponferrada recommended that respondent be suspended for six months without pay in regard to Secretary Zamoras Complaint for gross ignorance of the law.The investigator explained as follows:"Well-settled is the rule that the trial court has no jurisdiction over the property subject of the warrant of seizure and detention issued by the Bureau of Customs.In the case of Mison vs. Natividad,[9]the Honorable Supreme Court held that:'The court a quo has no jurisdiction over the res subject of the warrant of seizure and detention.The respondent judge, therefore, acted arbitrarily and despotically in issuing the temporary restraining order, granting the writ of preliminary injunction and denying the motion to dismiss, thereby removing the res from the control of the Collector of Customs and depriving him of his exclusive original jurisdiction over the controversy.Respondent judge exercised a power he never had and encroached upon the exclusive original jurisdiction of the Collector of Customs.By express provision of law, amply supported by well-settled jurisprudence, the Collector of Customs has exclusive jurisdiction over seizure and forfeiture proceedings, and regular courts cannot interfere with his exercise thereof or stifle or put it to naught."The Office of the Court Administrator also issued Circular 68-94 dated November 3, 1994, which reiterated the provisions of Circular No. 13-93."The aforesaid circulars were again reiterated in Administrative Circular No. 07-99 dated June 25, 1999 issued by Chief Justice Hilario G. Davide informing judges of the lower courts to exercise utmost caution, prudence, and judiciousness in the issuance of temporary restraining orders and writs of preliminary injunctions to avoid any suspicion that its issuance or grant was for considerations other than the strict merits of the case.x x x[10]The Courts RulingWe agree with the findings of the deputy court administrator.However, we reduce the penalty to three months suspension without pay.Gross Ignorance of the LawThe administrative case, initiated by Secretary Zamora, is bolstered byBureau of Customs (B0C) v. Ogario,[11]in which the Court set aside respondents Orders.We ruled thus:InJao v. Court of Appeals, this Court, reiterating its ruling in a long line of cases, said:There is no question that Regional Trial Courts are devoid of any competence to pass upon the validity or regularity of seizure and forfeiture proceedings conducted by the Bureau of Customs and to enjoin or otherwise interfere with these proceedings.The Collector of Customs sitting in seizure and forfeiture proceedings has exclusive jurisdiction to hear and determine all questions touching on the seizure and forfeiture of dutiable goods.The Regional Trial Courts are precluded from assuming cognizance over such matters even through petitions for certiorari, prohibition or mandamus.x x xx x xx x xThe rule that Regional Trial Courts have no review powers over such proceedings is anchored upon the policy of placing no unnecessary hindrance on the governments drive, not only to prevent smuggling and other frauds upon Customs, but more importantly, to render effective and efficient the collection of import and export duties due the State, which enables the government to carry out the functions it has been instituted to perform.Even if the seizure by the Collector of Customs were illegal, which has yet to be proven, we have said that such act does not deprive the Bureau of Customs of jurisdiction thereon.[12](citations omitted.)Clearly, respondent had absolutely no jurisdiction to take cognizance of the Complaint for Injunction filed by Ogario and Montelibano.[13]Administrative Circular No. 07-99,[14]cautioning lower court judges in their issuance of temporary restraining orders and writs of preliminary injunctions, emphasized this lack of jurisdiction of trial courts.It stressed, inter alia, the rule enunciated inMison:[15]that the Collector of Customs hasexclusivejurisdiction over seizure and forfeiture proceedings.When asked to explain why he ruled contrary to a basic and settled doctrine, respondent explained as follows:The court believes that a Warrant of Seizure and Detention, which is a counterpart of a Warrant of Arrest, must be issued on the basis of a probable cause.Verily, the quantum of evidence required in the issuance of a Warrant of Seizure and Detention should also be the same as in the Warrant of Arrest.Consequently, since the said Warrant of Seizure and Detention was merely issued on the basis of a mere suspicion and as recommended by the EIIB and not anchored on probable cause, the same is not valid and has no legal effect.x x xx x xx x xIn the instant case, the court believes that the defendants had abused their authority or function in seizing the plaintiffs goods on the basis of suspicion that they are smuggled or illegally imported.The court also believes that the issuance of the Warrant of Seizure and Detention by the defendant Bureau of Customs was attended with arbitrariness.x x x.Consequently, the Regional Trial Court, in the exercise of its general jurisdiction, can issue an injunction to stop or prevent a purported enforcement of the criminal law which is not in accordance with an orderly administration of justice, and also to stop and prevent the defendants from using the strong arm of the law in an oppressive and arbitrary manner.[16]The reason given by respondent is unsatisfactory, having been aptly answered inOgario,[17]from which we quote:[U]nder the law, the question of whether probable cause exists for the seizure of the subject sacks of rice is not for the Regional Trial Court to determine.The customs authorities do not have to prove to the satisfaction of the court that the articles on board a vessel were imported from abroad or are intended to be shipped abroad before they may exercise the power to effect customs searches, seizures, or arrests provided by law and continue with the administrative hearings.As the Court held inPonce Enrile v. Vinuya:The governmental agency concerned, the Bureau of Customs, is vested with exclusive authority.Even if it be assumed that in the exercise of such exclusive competence a taint of illegality may be correctly imputed, the most that can be said is that under certain circumstances the grave abuse of discretion conferred may oust it of such jurisdiction.It does not mean however that correspondingly a court of first instance is vested with competence when clearly in the light of the above decisions the law has not seen fit to do so.The proceeding before the Collector of Customs is not final.An appeal lies to the Commissioner of Customs and thereafter to the Court of Tax Appeals.It may even reach this Court through the appropriate petition for review.The proper ventilation of the legal issues raised is thus indicated.Certainly a court of first instance is not therein included.It is devoid of jurisdiction.(citations omitted; emphasis in the original)Clearly, respondent decided against a settled doctrine.This act constitutes gross ignorance of the law.[18]However, we have held that to be punishable as such, it must not only be contradictory to existing law and jurisprudence, but must also be motivated by bad faith, fraud, dishonesty or corruption.[19]That there is enough evidence here to show respondents bad faith is aptly pointed out by the Office of the Court Administrator (OCA) in its Memorandum:[20]The records of this case indicate that after the issuance of that questioned order of January 11, 1999, the Bureau of Customs, et al. filed their Motions for Reconsideration and requested to set the hearing on January 21, 1999, the date scheduled by the respondent judge for the continuation of the trial on the merits in Civil Case No. CEB-23077.But, the respondent judge set the hearing of said motions on January 19, 1999.However, from January 18, 1999 to January 21, 1999, the respondent judge did not report to the Court.He could not be contacted or located even by his own staff.The respondent judge also did not leave any word regarding his whereabouts, even with the Executive Judge.Hence, the scheduled hearings could not proceed.Obviously, the respondent judge reported back to his Office only after the Assistant Solicitor General and the Solicitor representing the Bureau of Customs, et al. returned to Manila from Cebu City because on January 22, 1999, the same respondent judge issued instead, an order requiring the Officials of the Bureau of Customs to comment on a Motion for Contempt filed against them.Indeed, this actuation of respondent judge amounted to bad faith.Because he played with the court calendar, the issuance of the questioned Orders was clearly motivated by dishonesty and fraud.While we agree with the findings of the OCA, we believe however that the recommended penalty is too harsh.Under the circumstances, we hold that the appropriate penalty is three months suspension without pay.Likewise, we agree that respondents Motion to Dismiss had no legal basis either.Indeed, [t]he subject of the x x x administrative case are the acts committed by the respondent judge in the performance of his duties.This being the sole subject of the complaint filed by the Executive Secretary, the Court will confine itself to the issue of whether or not the respondent judge is liable for gross ignorance of the law.[21]WHEREFORE, the Court finds Judge Ireneo Lee Gako Jr.GUILTYof gross ignorance of the law, for which he is herebySUSPENDEDfor three months without pay.He is sternly warned that a commission of similar acts in the future shall be dealt with more severely.SO ORDERED.FIRST DIVISIONLUCAS G. ADAMSON, THERESEG.R. No. 120935JUNE D. ADAMSON, and SARAS. DE LOS REYES, in their capacitiesas President, Treasurer and Secretaryof Adamson Management Corporation,Petitioners,- versus -COURT OF APPEALS andLIWAYWAY VINZONS-CHATO,in her capacity as Commissionerof the Bureau of Internal Revenue,Respondents.x-- - - - - - - - - - - - - - - - - - - - - - - - xCOMMISSIONER OFG.R. No. 124557INTERNAL REVENUE,Petitioner,Present:-versus-PUNO,C.J., Chairperson,CARPIO,CORONA,COURT OF APPEALS, COURTLEONARDO-DE CASTRO, andOF TAX APPEALS, ADAMSONBERSAMIN,JJ.MANAGEMENT CORPORATION,LUCAS G. ADAMSON, THERESEJUNE D. ADAMSON, and SARAPromulgated:S. DE LOS REYES,Respondents.May 21, 2009x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - xD E C I S I O NPUNO,C.J.:Before the Court are the consolidated cases ofG.R. No. 120935andG.R. No. 124557.G.R. No. 120935involves a petition for review on certiorari filed by petitioners LUCAS G. ADAMSON, THERESE JUNE D. ADAMSON, and SARA S. DE LOS REYES (private respondents), in their respective capacities as president, treasurer and secretary of Adamson Management Corporation (AMC) against then Commissioner of Internal Revenue Liwayway Vinzons-Chato (COMMISSIONER), under Rule 45 of the Revised Rules of Court.They seek to review and reverse the Decision promulgated onMarch 21, 1995and Resolution issued onJuly 6, 1995of the Court of Appeals in CA-G.R. SP No. 35488 (Liwayway Vinzons-Chato, et al. v. Hon. Judge Erna Falloran-Aliposa, et al.).G.R. No. 124557is a petition for review on certiorari filed by the Commissioner, assailing the Decision datedMarch 29, 1996of the Court of Appeals in CA-G.R. SP No. 35520, titled Commissioner of Internal Revenue v. Court of Tax Appeals, Adamson Management Corporation, Lucas G. Adamson, Therese June D. Adamson and Sara S. de los Reyes.In the said Decision, the Court of Appeals upheld the Resolution promulgated on September 19, 1994 by the Court of Tax Appeals (CTA) in C.T.A. Case No. 5075 (Adamson Management Corporation, Lucas G. Adamson, Therese Adamson and Sara de los Reyes v. Commissioner of Internal Revenue).The facts, as culled from the findings of the appellate court, follow:OnJune 20, 1990, Lucas Adamson andAMCsold 131,897 common shares of stock in Adamson and Adamson, Inc. (AAI) toAPACHolding Limited (APAC). The shares were valued atP7,789,995.00.[1]OnJune 22, 1990,P159,363.21 was paid as capital gains tax for the transaction.OnOctober 12, 1990,AMCsold toAPACPhilippines, Inc. another 229,870 common shares of stock inAAIforP17,718,360.00.AMC paid the capital gains tax ofP352,242.96.OnOctober 15, 1993, the Commissioner issued a Notice of Taxpayer to AMC, Lucas G. Adamson, Therese June D. Adamson and Sara S. de los Reyes, informing them of deficiencies on their payment of capital gains tax and Value Added Tax (VAT).The notice contained a schedule for preliminary conference.The events precedingG.R. No. 120935are the following:OnOctober 22, 1993, the Commissioner filed with the Department of Justice (DOJ) her Affidavit of Complaint[2]againstAMC, Lucas G. Adamson, Therese June D. Adamson and Sara S. de los Reyes for violation of Sections 45 (a) and (d)[3], and 110[4], in relation to Section 100[5], as penalized under Section 255,[6]and for violation of Section 253[7], in relation to Section 252 (b) and (d) of the National Internal Revenue Code (NIRC).[8]AMC, Lucas G. Adamson, Therese June D. Adamson and Sara S. de los Reyes filed with the DOJ a motion to suspend proceedings on the ground of prejudicial question, pendency of a civil case with the Supreme Court, and pendency of their letter-request for re-investigation with the Commissioner.After the preliminary investigation, State Prosecutor Alfredo P. Agcaoili found probable cause.The Motion for Reconsideration against the findings of probable cause was denied by the prosecutor.OnApril 29, 1994, Lucas G. Adamson, Therese June D. Adamson and Sara S. de los Reyes were charged before the Regional Trial Court (RTC) ofMakati, Branch 150 in Criminal Case Nos. 94-1842 to 94-1846.They filed a Motion to Dismiss or Suspend the Proceedings.They invoked the grounds that there was yet no final assessment of their tax liability, and there were still pending relevant Supreme Court andCTAcases.Initially, the trial court denied the motion.A Motion for Reconsideration was however filed, this time assailing the trial courts lack of jurisdiction over the nature of the subject cases.OnAugust 8, 1994, the trial court granted the Motion.It ruled that the complaints for tax evasion filed by the Commissioner should be regarded as a decision of the Commissioner regarding the tax liabilities of Lucas G. Adamson, Therese June D. Adamson and Sara S. de los Reyes, and appealable to the CTA.It further held that the said cases cannot proceed independently of the assessment case pending before the CTA, which has jurisdiction to determine the civil and criminal tax liability of the respondents therein.OnOctober 10, 1994, the Commissioner filed a Petition for Review with the Court of Appeals assailing the trial courts dismissal of the criminal cases.She averred that it was not a condition prerequisite that a formal assessment should first be given to the private respondents before she may file the aforesaid criminal complaints against them.She argued that the criminal complaints for tax evasion may proceed independently from the assessment cases pending before the CTA.OnMarch 21, 1995, the Court of Appeals reversed the trial courts decision and reinstated the criminal complaints.The appellate court held that, in a criminal prosecution for tax evasion, assessment of tax deficiency is not required because the offense of tax evasion is complete or consummated when the offender has knowingly and willfully filed a fraudulent return with intent to evade the tax.[9]It ruled that private respondents filed false and fraudulent returns with intent to evade taxes, and acting thereupon, petitioner filed an Affidavit of Complaint with the Department of Justice, without an accompanying assessment of the tax deficiency of private respondents, in order to commence criminal action against the latter for tax evasion.[10]Private respondents filed a Motion for Reconsideration, but the trial court denied the motion onJuly 6, 1995.Thus, they filed the petition inG.R. No. 120935, raising the following issues:1.WHETHER OR NOT THE RESPONDENT HONORABLE COURT OF APPEALS ERRED IN APPLYING THE DOCTRINE IN UNGAB V. CUSI (Nos. L-41919-24,May 30, 1980, 97 SCRA 877) TO THE CASE AT BAR.2.WHETHER OR NOT AN ASSESSMENT IS REQUIRED UNDER THE SECOND CATEGORY OF THE OFFENSE IN SECTION 253 OF THE NIRC.3.WHETHER OR NOT THERE WAS A VALID ASSESSMENT MADE BY THE COMMISSIONER IN THE CASE AT BAR.4.WHETHER OR NOT THE FILING OF A CRIMINAL COMPLAINT SERVES AS AN IMPLIED ASSESSMENT ON THE TAX LIABILITY OF THE TAXPAYER.5.WHETHER OR NOT THE FILING OF THE CRIMINAL INFORMATION FOR TAX EVASION IN THE TRIAL COURT IS PREMATURE BECAUSE THERE IS YET NO BASIS FOR THE CRIMINAL CHARGE OF WILLFULL INTENT TO EVADE THE PAYMENT OF A TAX.6.WHETHER OR NOT THE DOCTRINES LAID DOWN IN THE CASES OF YABES V. FLOJO (No. L-46954,July 20, 1982, 115 SCRA 286)ANDCIRV. UNION SHIPPING CORP. (G.R. No. 66160,May 21, 1990, 185 SCRA 547)AREAPPLICABLE TO THE CASE AT BAR.7.WHETHER OR NOT THE COURT OF TAX APPEALSHASJURISDICTION OVER THE DISPUTE ON WHAT CONSTITUTES THE PROPER TAXES DUE FROM THE TAXPAYER.In parallel circumstances, the following events precededG.R. No. 124557:OnDecember 1, 1993, AMC, Lucas G. Adamson, Therese June D. Adamson and Sara S. de los Reyes filed a letter request for re-investigation with the Commissioner of the Examiners Findings earlier issued by the Bureau of Internal Revenue (BIR), which pointed out the tax deficiencies.OnMarch 15, 1994before the Commissioner could act on their letter-request, AMC, Lucas G. Adamson, Therese June D. Adamson and Sara S. de los Reyes filed a Petition for Review with the CTA.They assailed the Commissioners finding of tax evasion against them. The Commissioner moved to dismiss the petition, on the ground that it was premature, as she had not yet issued a formal assessment of the tax liability of therein petitioners.OnSeptember 19, 1994, theCTAdenied the Motion to Dismiss.It considered the criminal complaint filed by the Commissioner with the DOJ as an implied formal assessment, and the filing of the criminal informations with the RTC as a denial of petitioners protest regarding the tax deficiency.The Commissioner repaired to the Court of Appeals on the ground that theCTAacted with grave abuse of discretion.She contended that, with regard to the protest provided under Section 229 of the NIRC, there must first be a formal assessment issued by the Commissioner, and it must be in accord with Section 6 of Revenue Regulation No. 12-85.She maintained that she had not yet issued a formal assessment of tax liability, and the tax deficiency amounts mentioned in her criminal complaint with the DOJ were given only to show the difference between the tax returns filed and the audit findings of the revenue examiner.The Court of Appeals sustained theCTAs denial of the Commissioners Motion to Dismiss.Thus, the Commissioner filed the petition for review underG.R. No. 124557, raising the following issues:1.WHETHER OR NOT THE INSTANT PETITION SHOULD BE DISMISSED FOR FAILURE TO COMPLY WITH THE MANDATORY REQUIREMENT OF A CERTIFICATION UNDER OATH AGAINST FORUM SHOPPING;2.WHETHER OR NOT THE CRIMINAL CASE FOR TAX EVASION IN THE CASE AT BAR CAN PROCEED WITHOUT AN ASSESSMENT;3.WHETHER OR NOT THE COMPLAINT FILED WITH THE DEPARTMENT OF JUSTICE CAN BE CONSTRUED AS AN IMPLIED ASSESSMENT; and4.WHETHER OR NOT THE COURT OF TAX APPEALSHASJURISDICTION TO ACT ON PRIVATE RESPONDENTS PETITION FOR REVIEW FILED WITH THE SAID COURT.The issues inG.R. No. 124557 and G.R. No. 120935can be compressed into three:1.WHETHER THE COMMISSIONERHASALREADY RENDERED AN ASSESSMENT (FORMAL OR OTHERWISE) OF THE TAX LIABILITY OF AMC, LUCAS G. ADAMSON, THERESE JUNE D. ADAMSON AND SARA S. DE LOS REYES;2.WHETHER THERE IS BASIS FOR THE CRIMINAL CASES FOR TAX EVASION TO PROCEED AGAINST AMC, LUCAS G. ADAMSON, THERESE JUNE D. ADAMSONANDSARA S. DE LOS REYES; and3.WHETHER THE COURT OF TAX APPEALSHASJURISDICTION TO TAKE COGNIZANCE OF BOTH THE CIVILANDTHE CRIMINAL ASPECTS OF THE TAX LIABILITY OF AMC, LUCAS G. ADAMSON, THERESE JUNE D. ADAMSONANDSARA S. DE LOS REYES.The case ofCIR v. Pascor Realty, et al.[11]is relevant.In this case, then BIR Commissioner Jose U. Ong authorized revenue officers to examine the books of accounts and other accounting records of Pascor Realty and Development Corporation (PRDC) for 1986, 1987 and 1988. This resulted in a recommendation for the issuance of an assessment in the amounts ofP7,498,434.65 andP3,015,236.35 for the years 1986 and 1987, respectively.On March 1, 1995, the Commissioner filed a criminal complaint before the DOJ against PRDC, its President Rogelio A. Dio, and its Treasurer Virginia S. Dio, alleging evasion of taxes in the total amount ofP10,513,671.00.Private respondents filed an Urgent Request for Reconsideration/Reinvestigation disputing the tax assessment and tax liability.The Commissioner denied the urgent request for reconsideration/reinvestigation because she had not yet issued a formal assessment.Private respondents then elevated the Decision of the Commissioner to the CTA on a petition for review.The Commissioner filed a Motion to Dismiss the petition on the ground that the CTA has no jurisdiction over the subject matter of the petition, as there was yet no formal assessment issued against the petitioners.The CTA denied the said motion to dismiss and ordered the Commissioner to file an answer within thirty (30) days.The Commissioner did not file an answer nor did she move to reconsider the resolution.Instead, the Commissioner filed a petition for review of the CTA decision with the Court of Appeals.The Court of Appeals upheld the CTA order. However, this Court reversed the Court of Appeals decision and the CTA order, and ordered the dismissal of the petition. We held:An assessment contains not only a computation of tax liabilities, but also a demand for payment within a prescribed period.It also signals the time when penalties and interests begin to accrue against the taxpayer.To enable the taxpayer to determine his remedies thereon, due process requires that it must be served on and received by the taxpayer.Accordingly, an affidavit, which was executed by revenue officers stating the tax liabilities of a taxpayer and attached to a criminal complaint fortaxevasion, cannot be deemed an assessment that can be questioned before the Court of Tax Appeals.Neither the NIRC nor the revenue regulations governing the protest of assessments[12]provide a specific definition or form of an assessment.However, the NIRC defines the specific functions and effects of an assessment.To consider the affidavit attached to the Complaint as a proper assessment is to subvert the nature of an assessment and to set a bad precedent that will prejudice innocent taxpayers.True, as pointed out by the private respondents, an assessment informs the taxpayer that he or she has tax liabilities.But not all documents coming from the BIR containing a computation of the tax liability can be deemed assessments.To start with, an assessment must be sent to and received by a taxpayer, and must demand payment of the taxes described therein within a specific period.Thus, the NIRC imposes a 25 percent penalty, in addition to the tax due, in case the taxpayer fails to pay the deficiency tax within the time prescribed for its payment in the notice of assessment.Likewise, an interest of 20 percent per annum, or such higher rate as may be prescribed by rules and regulations, is to be collected from the date prescribed for its payment until the full payment.[13]The issuance of an assessment is vital in determining the period of limitation regarding its proper issuance and the period within which to protest it.Section 203[14]of the NIRC provides that internal revenue taxes must be assessed within three years from the last day within which to file the return.Section 222,[15]on the other hand, specifies a period of ten years in case a fraudulent return with intent to evade was submitted or in case of failure to file a return.Also, Section 228[16]of the same law states that said assessment may be protested only within thirty days from receipt thereof.Necessarily, the taxpayer must be certain that a specific document constitutes an assessment.Otherwise, confusion would arise regarding the period within which to make an assessment or to protest the same, or whether interest and penalty may accrue thereon.It should also be stressed that the said document is a notice duly sent to the taxpayer.Indeed, an assessment is deemed made only when the collector of internal revenue releases, mails or sends such notice to the taxpayer.[17]In the present case, the revenue officers Affidavit merely contained a computation of respondents tax liability.It did not state a demand or a period for payment.Worse, it was addressed to the justice secretary, not to the taxpayers.Respondents maintain that an assessment, in relation to taxation, is simply understood to mean:A notice to the effect that the amount therein stated is due as tax and a demand for payment thereof.[18]Fixes the liability of the taxpayer and ascertains the facts and furnishes the data for the proper presentation of tax rolls.[19]Even these definitions fail to advance private respondents case. That the BIR examiners Joint Affidavit attached to the Criminal Complaint contained some details of the tax liabilities of private respondents does notipso factomake it an assessment.The purpose of the Joint Affidavit was merely to support and substantiate the Criminal Complaint fortaxevasion.Clearly, it was not meant to be a notice of the tax due and a demand to the private respondents for payment thereof.The fact that the Complaint itself was specifically directed and sent to the Department of Justice and not to private respondents shows that the intent of the commissioner was to file a criminal complaint fortaxevasion, not to issue an assessment.Although the revenue officers recommended the issuance of an assessment, the commissioner opted instead to file a criminal case fortaxevasion.What private respondents received was a notice from the DOJ that a criminal case fortaxevasion had been filed against them, not a notice that the Bureau of Internal Revenue had made an assessment.Private respondents maintain that the filing of a criminal complaint must be preceded by an assessment.This is incorrect, because Section 222 of the NIRC specifically states that in cases where a false or fraudulent return is submitted or in cases of failure to file a return such as this case, proceedings in court may be commencedwithout an assessment.Furthermore, Section 205 of the same Code clearly mandates that the civil and criminal aspects of the case may be pursued simultaneously.InUngab v. Cusi,[20]petitioner therein sought the dismissal of the criminal Complaints for being premature, since his protest to the CTA had not yet been resolved.The Court held that such protests could not stop or suspend the criminal action which was independent of the resolution of the protest in the CTA.This was because the commissioner of internal revenue had, in suchtaxevasion cases, discretion on whether to issue an assessment or to file a criminal case against the taxpayer or to do both.Private respondents insist that Section 222 should be read in relation to Section 255 of the NIRC,[21]which penalizes failure to file a return.They add that a tax assessment should precede a criminal indictment.We disagree.To reiterate, said Section 222 states that an assessment is not necessary before a criminal charge can be filed.This is the general rule.Private respondents failed to show that they are entitled to an exception.Moreover, the criminal charge need only be supported by aprima facieshowing of failure to file a required return.This fact need not be proven by an assessment.The issuance of an assessment must be distinguished from the filing of a complaint.Before an assessment is issued, there is, by practice, a pre-assessment notice sent to the taxpayer.The taxpayer is then given a chance to submit position papers and documents to prove that the assessment is unwarranted.If the commissioner is unsatisfied, an assessment signed by him or her is then sent to the taxpayer informing the latter specifically and clearly that an assessment has been made against him or her.In contrast, the criminal charge need not go through all these.The criminal charge is filed directly with the DOJ.Thereafter, the taxpayer is notified that a criminal case had been filed against him, not that the commissioner has issued an assessment.It must be stressed that a criminal complaint is instituted not to demand payment, but to penalize the taxpayer for violation of the Tax Code.In the cases at bar, the Commissioner denied that she issued a formal assessment of the tax liability of AMC, Lucas G. Adamson, Therese June D. Adamson and Sara S. de los Reyes.She admits though that she wrote the recommendation letter[22]addressed to the Secretary of the DOJ recommending the filing of criminal complaints against AMC and the aforecitedpersons for fraudulent returns and tax evasion.The first issue is whether the Commissioners recommendation letter can be considered as a formal assessment of private respondents tax liability.In the context in which it is used in the NIRC, an assessment is a written notice and demand made by the BIR on the taxpayer for the settlement of a due tax liability that is there definitely set and fixed.A written communication containing a computation by a revenue officer of the tax liability of a taxpayer and giving him an opportunity to contest or disprove the BIR examiners findings is not an assessment since it is yet indefinite.[23]We rule that the recommendation letter of the Commissioner cannot be considered a formal assessment.Even a cursory perusal of the said letter would reveal three key points:1.It was not addressed to the taxpayers.2.There was no demand made on the taxpayers to pay the tax liability, nor a period for payment set therein.3.The letter was never mailed or sent to the taxpayers by the Commissioner.In fine, the said recommendation letter served merely as theprima faciebasis for filing criminal informations that the taxpayers had violated Section 45 (a) and (d), and 110, in relation to Section 100, as penalized under Section 255, and for violation of Section 253, in relation to Section 252 9(b) and (d)of the Tax Code.[24]The next issue is whether the filing of the criminal complaints against the private respondents by the DOJ is premature for lack of a formal assessment.Section 269 of the NIRC (now Section 222 of the Tax Reform Act of 1997) provides:Sec. 269.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 after the collection of such tax may be begun without assessment, at any time within ten 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 collection thereofThe law is clear.When fraudulent tax returns are involved as in the cases at bar,a proceeding in court after the collection of such tax may be begun without assessment.Here, the private respondents had already filed the capital gains tax return and the VAT returns, and paid the taxes they have declared due therefrom.Upon investigation of the examiners of the BIR, there was a preliminary finding of gross discrepancy in the computation of the capital gains taxes due from the sale of two lots of AAI shares, first to APAC and then to APAC Philippines, Limited.The examiners also found that the VAT had not been paid for VAT-liable sale of services for the third and fourth quarters of 1990.Arguably, the gross disparity in the taxes due and the amounts actually declared by the private respondents constitutes badges of fraud.Thus, the applicability ofUngab v. Cusi[25]is evident to the cases at bar.In this seminal case, this Court ruled that there was no need for precise computation and formal assessment in order for criminal complaints to be filed against him.It quoted Mertens Law of Federal Income Taxation, Vol. 10, Sec. 55A.05, p. 21, thus: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 governments failure to discover the error and promptly to assess has no connections with the commission of the crime.This hoary principle still underlies Section 269 and related provisions of the present Tax Code.We now go to the issue of whether the CTA has no jurisdiction to take cognizance of both the criminal and civil cases here at bar.Under Republic Act No. 1125 (An Act Creating the Court of Tax Appeals) as amended, the rulings of the Commissioner are appealable to the CTA, thus:SEC. 7.Jurisdiction.The Court of Tax Appeals shall exercise exclusive appellate jurisdiction to review by appeal, as herein provided -(1) Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties imposed in relation thereto, or other matters arising under the National Internal Revenue Code or other laws or part of law administered by the Bureau of