G.R. No.

180197
PEOPLE V. CASTAEDA
FACTS:

Sometime in 1971, 2 informants submitted sworn information under Republic Act No.
2338 ("An Act to Provide for Reward to Informers of Violations of the Internal Revenue
and Customs Laws" to the BIR concerning alleged violations of provisions of the Internal
Revenue Code committed by the private respondents
Following an investigation and examination by the BIR, the State Prosecutor filed with
the CFI of Pampanga several informations against private respondents
Respondents were charged with various violations of the NIRC including possession of
counterfeit internal revenue labels, possession of liquors and spirits whose specific
taxes have not been paid, and finally, manufacture of alcoholic products without
paying the privilege tax therefor.
After arraignment, accused Valencia filed a Motion to Quash upon the grounds that the
informations had been filed without conducting the necessary preliminary investigation
and that he was entitled to the benefits of the tax amnesty provided by P.D. No. 370
The State Prosecutor opposed saying that the lack of a preliminary investigation is not a
ground for quashal.
The prosecutor further argued that the accused Valencia was not entitled to avail himself
of the benefits of P.D. No. 370 since his tax cases were the subject of valid information
submitted under R.A. No. 2338 as of 31 December 1973
The trial court judge granted the Motion to Quash. Reconsideration by the People was
denied.
The co-accused also filed Motions to Quash on the theory that the dismissal of the action
as to Valencia inured to their benefit. Such motions were also granted by the respondent
judge
Petitioner now filed a petition for certiorari and mandamus seeking the annulment of the
order granting quashal

ISSUE:
1. W/N private respondents are entitled to the benefits of the tax amnesty?
2. Whether or not, assuming arguendo that Valencia is entitled to an amnesty, the
dismissal of his case redounded to the benefit of his co-accused?
RULING:
1. NO

PD 370 provides for a tax amnesty in broad terms:

A tax amnesty is hereby granted to any person, natural or juridical, xxx failed to
include all that were required to be declared therein if he now voluntarily
discloses under this decree all his previously untaxed income and/or wealth
such as earnings, receipts, gifts, bequests or any other acquisitions from any source
whatsoever which are or were previously taxable under the National Internal Revenue
Code, realized here or abroad by condoning all internal revenue taxes including the
increments or penalties on account of non-payment as well as all civil, criminal or
administrative liabilities, under the National Internal Revenue Code, the Revised
Penal Code, the Anti-Graft and Corrupt Practices Act, the Revised Administrative
Code, the Civil Service Laws and Regulations, laws and regulations on Immigration
and Deportation, or any other applicable law or proclamation, as it is hereby

condoned, provided a tax of fifteen (15%) per centum on such previously

untaxed income and/or wealth is imposed subject to the following
conditions:
a. Such previously untaxed income and/or wealth must have been earned or realized
prior to 1973, except the following:
xxx
e. Tax cases which are the subject of a valid information under
Republic Act No. 2338 as of December 31, 1973; and
xxx
The amnesty provides for the extinction of ALL liability arising from such acts such as
those of the respondents. Thus the amnesty also eliminates the criminal liabilities
attendant to the acts. HOWEVER, to avail of the benefits of the amnesty, it is required
that the claimant must have VOLUNTARILY disclosed of his untaxed income or wealth.
Where the disclosure of such previously untaxed income or wealth was not voluntary but
rather the accompaniment or result of tax cases or tax assessments already pending as
of 31 December 1973, the claimant is not entitled to the benefits of P.D. No. 370. Section
1 (a) (4) of P.D. No. 370, expressly excluded from the coverage of P.D. No. 370: tax
cases which are the subject of a valid information under R.A. No. 2338 as of December
31, 1973.
In the instant case, the violations of the National Internal Revenue Code with which
the respondent accused were charged, had already been discovered by the BIR when
P.D. No. 370 took effect on 9 January 1974, by reason of the sworn information or
affidavit-complaints filed by informers with the BIR. The information referred to in the PD
refers to information provided by informants under PD 2338 which is the situation
obtaining in this case. Thus, it is clear from the provisions of the amnesty that the acts of
the respondents, not having been voluntarily disclosed, are not subject to the benefits
under the same.
The fact that the agents of the BIR had already accepted Valencias application for
tax amnesty and his payment of the required fifteen percent (15%) special tax cannot be
ground for estoppel on the part of the State. The State is not bound by the mistakes of
its agents. Still further, a tax amnesty, much like to a tax exemption, is never favored
nor presumed in law and if granted by statute, the terms of the amnesty like that of a
tax exemption must be construed strictly against the taxpayer and liberally in favor of
the taxing authority.

2.NO
The fact that conspiracy was alleged does not automatically free the co-accused from
liability. It must be shown that they themselves complied with requirements of the grant of
amnesty. The statute makes the defense of extinguishment of liability available only under
very specific circumstances and on the basis of reciprocity, as it were: the claimant must
disclose his previously untaxed income or wealth (which then may be effectively subjected
to future taxation) and surrender to the Government fifteen percent (15%) of such income or
wealth; then, and only then, would the claimant's liability be extinguished. However, as was
established, Valencia was not entitled to the benefits of the amnesty. Hence nothing could
have inured to the benefit of his co-accused