THESIS SPEECH

Background:

Section 248(B), the heading of which states “Civil Penalties,” provides that in case a false
or fraudulent return is willfully made, the penalty imposed shall be 50% of the tax or of
the deficiency tax. The provision also states that failure to report sales, receipts or income
in an amount exceeding 30% of that declared per return, or a claim of deductions in an
amount exceeding the same threshold shall give rise to a prima facie presumption of false
or fraudulent returns.

The presumption found under 248(B) is being used by the government to initiate criminal
prosecution proceedings for tax evasion cases, and subsequently, file a criminal
information for such crime, notwithstanding the fact that such presumption is for
purposes of imputing civil liability only.

Further, not only is the presumption under 248(B) used to initiate criminal proceedings,
but the same is also being used to nullify the determination of the DOJ in preliminary
investigation proceedings through a petition for certiorari under Rule 65.

Discussion on the Cases:

In BIR v. Spouses Manly, the Supreme Court recommended the filing of a criminal
information for tax evasion cases, because the BIR was able to prove the validity of the
computation and the method used in the determination of the tax liability of the accused,
which in this case, exceeded the 30%-threshold. In short, the presumption under 248(B)
was considered as sufficient as constituting probable cause to file a criminal information.

(If they ask, point out that the ruling of the Supreme Court only focused on the validity
of the assessment of the BIR in the determination of the amount of deficiency. The
Supreme Court did not touch upon the element of fraud, which is essential in tax
evasion).

Further, in BIR v. Gonzales, wherein the investigating prosecutor found no probable

cause to file a criminal information for tax evasion, which resolution was affirmed by the
Secretary of Justice and the CA, the Supreme Court granted a petition for certiorari on
the ground that the DOJ committed a grave abuse of discretion amounting to a lack or
excess of jurisdiction when it found that no probable cause existed.

Thesis Statement:

With that being said, the proponent will attempt to establish to points:
First, that 248(B) cannot be used to file a criminal information for tax evasion, for it
violates it violates several well-established legal principles; and

Second, 248(B) cannot be used as a legal basis for granting a petition for certiorari, because
it takes away the discretion of DOJ in the determination of probable cause – the duty
becomes, in effect, ministerial.

Substantive:

Why 248(B) Be Used To File A Criminal Information For Tax Evasion

1. Eliminates the distinction between civil liability and criminal liability
2. There is a violation of the right to be presumed innocent
o There should be a law that presumes the guilty of the accused; there is no
such law in tax evasion
o The presumption of innocence to can only be overturned by proving the
elements of a crime beyond reasonable doubt. Hence, in the absence of any
law, the burden to prove innocence cannot be shifted to the accused, even
at the preliminary investigation stage.
 Discuss the purpose of a preliminary investigation as to avoid
subjecting persons to the rigors of trial.
3. Judicial legislation – in the absence of any ambiguity, the courts should not
interpret. 248(B) is clear!
4. Construe penal laws in favor of the accused.
o In case of doubt, do not apply in criminal prosecution.
o SC ruling: No act should be pronounced criminal when not clearly made so
by the subject law.

Why 248(B) Cannot Be Used To Used To Nullify The Determination of the DOJ Of The
Non-existence Of Probable Cause On The Ground Of A Grave Abuse of Discretion
Amounting To A Lack Or Excess Of Jurisdiction.

Discuss The Determination of Probable Cause As An Executive Function, and the Rule
On Non-Interference
 The determination of probable cause is an executive function, meaning it is based
on the opinion of the DOJ that with reasonable likelihood, all the elements of a
crime are present as to justify the filing of a criminal information (Aguilar case and
CIR).
 Courts can only interfere when there is a grave abuse of discretion:
o The petitioner must clearly show that the prosecutor gravely abused his discretion
amounting to lack or excess of jurisdiction in making his determination, and in
arriving at the conclusion he reached. This requires the petitioner to establish that
the prosecutor exercised his power in an arbitrary and despotic manner, by reason
of passion or personal hostility; and it must be so patent and gross as to amount to
 an evasion, or to a unilateral refusal to perform the duty enjoined, or to act in
contemplation of law, before judicial relief from a discretionary prosecutorial action
may be obtained.

The DOJ did not commit GADALEJ:

1. 248(B) cannot be used in criminal prosecution
2. SC decisions state that fraud cannot be presumed, but must be proven. Also, gross
negligence will not amount to bad faith in tax evasion cases (Aznar case).
3. Even assuming 248(B) can be used, the same cannot be used indiscriminately to
nullify the resolution of the DOJ. The duty becomes ministerial.
a. Discuss that in the case, there was no categorical finding of fraud. The
discussion was mainly on the procedures undertaken by the BIR to
determine the underdeclaration. The BIR did not show any overt act of
fraud, nor did the SC show how fraud was present.
b. Affirmed by Secretary of Justice and the CA – Negates GAD.
c. Presumption of regularity
i. Cannot overcome presumption of innocence
ii. Presumption of regularity of BIR v. Presumption of regularity of
Prosecutor, Secretary of Justice, and CA.

Relevance of Thesis
 Prevent circumvention by the BIR and the SC

Effects of the Cases:

1. Violation of Separation of Powers
2. Violation of Right to Procedural Due Process
3. Violation of Equal Protection Clause

Recommendation:
 Amend the law.

x---x

Why 30%?

Look for cases wherein the Supreme Court stated that the decision must state the reasons
bla bla.
Make clear: Deficiency different from penalty  Give refund instead of credit.

Avoid using 248(B) as “enforcement”

Fix recommendation

Question for Nicole:

Bitcoin

Security – SEC

BSP – Mode of exchange

Can’t it have different definitions? Intent?

Administrative feasibility

Uniformity

European Court of Justice –

Bitcoin is sui generis

Recommendation:

BIR Regulation

How is it being used exactly? Like how in Starbucks?

Can’t you base the tax implications on the intent of usage?

Base it on law? Definition lang?

CHESKA

The power of the government is limited by the bill of rights

Pollution tax? Hindi ba ganyan na sa fees?

Hindi ba ‘to covered by fees?