Banas, Jr. V.

CA
G.R. No. 102967 February 10, 2000

BIBIANO V. BAAS, JR., petitioner, vs. CO R! OF A""#A$S, A% I$INO !. $ARIN, RO&O$FO ! A'ON AN& "ROCO"IO !A$ON, respondents. % IS (BING, J.: For review is the Decision of the Court of Appeals in CA-C.R. CV No. 172 1 pro!ul"ated on Nove!#er 2$, 1$$1. %t affir!ed in toto the &ud"!ent of the Re"ional 'rial Court (R'C), *ranch +$, ,anila, in Civil Case No. -2-121.7. /aid &ud"!ent disposed as follows0 F1R A22 '34 F1R451%N5 C1N/%D4RA'%1N/, this Court here#6 renders &ud"!ent D%/,%//%N5 the co!plaint a"ainst all the defendants and orderin" plaintiff 7herein petitioner8 to pa6 defendant 2arin the a!ount of 92..,...... ('wo 3undred 'housand 9esos) as actual and co!pensator6 da!a"es: 92..,...... as !oral da!a"es: and 9 .,...... as e;e!plar6 da!a"es and attorne6s fees of 91..,....... 1 'he facts, which we find supported #6 the records, have #een su!!ari<ed #6 the Court of Appeals as follows0 1n Fe#ruar6 2., 1$7=, petitioner, *i#iano V. *a>as ?r. sold to A6ala %nvest!ent Corporation (A@A2A), 12-,2= sAuare !eters of land located at *a6anan, ,untinlupa, for two !illion, three hundred ei"ht thousand, seven hundred sevent6 (92,+.-,77....) pesos. 'he Deed of /ale provided that upon the si"nin" of the contract A@A2A shall pa6 four hundred si;t6-one thousand, seven hundred fift6-four (9B=1,7 B...) pesos. 'he #alance of one !illion, ei"ht hundred fort6-seven thousand and si;teen (91,-B7,.1=...) pesos was to #e paid in four eAual consecutive annual install!ents, with twelve (12C) percent interest per annum on the outstandin" #alance. A@A2A issued one pro!issor6 note coverin" four eAual annual install!ents. 4ach periodic pa6!ent of 9B=1,7 B... pesos shall #e pa6a#le startin" on Fe#ruar6 2., 1$77, and ever6 6ear thereafter, or until Fe#ruar6 2., 1$-.. 'he sa!e da6, petitioner discounted the pro!issor6 note with A@A2A, for its face value of 91,-B7,.1=..., evidenced #6 a Deed of Assi"n!ent si"ned #6 the petitioner and A@A2A. A@A2A issued nine ($) checDs to petitioner, all dated Fe#ruar6 2., 1$7=, drawn a"ainst *anD of the 9hilippine %slands with the unifor! a!ount of two hundred five thousand, two hundred twent6-four (92. ,22B...) pesos. %n his 1$7= %nco!e 'a; Return, petitioner reported the 9B=1,7 B initial pa6!ent as inco!e fro! disposition of capital asset.2 /ellin" 9rice of 2and 2ess %nitial 9a6!ent Enreali<ed 5ain 92,+.-,77.... B=1,7 B... 91,-B7,.1=...
+

1$7= Declaration of %nco!e on Disposition of Capital Asset su#&ect to

'a;0 %nitial 9a6!ent 2ess0 Cost of land and other incidental 4;penses %nco!e %nco!e su#&ect to ta; (9+- ,2.=. 1. ; .C) 9B=1,7 B... ( 7=, B7.$.) 9+- ,2.=.1. 91$2,=.+.=

%n the succeedin" 6ears, until 1$7$, petitioner reported a unifor! inco!e of two hundred thirt6 thousand, ei"ht hundred sevent6-seven (92+.,-77...) pesos B as "ain fro! sale of capital asset. %n his 1$-. inco!e ta; a!nest6 return, petitioner also reported the sa!e a!ount of 92+.,-77... as the reali<ed "ain on disposition of capital asset for the 6ear. 1n April 11, 1$7-, then Revenue Director ,auro Cala"uio authori<ed ta; e;a!iners, Rodolfo 'ua<on and 9rocopio 'alon to e;a!ine the #ooDs and records of petitioner for the 6ear 1$7=. 'he6 discovered that petitioner had no outstandin" receiva#le fro! the 1$7= land sale to A@A2A and concluded that the sale was cash and the entire profit should have #een ta;a#le in 1$7= since the inco!e was wholl6 derived in 1$7=. 'ua<on and 'alon filed their audit report and declared a discrepanc6 of two !illion, ninet6-five thousand, nine hundred fifteen (92,.$ ,$1 ...) pesos in petitionerFs 1$7= net inco!e. 'he6 reco!!ended deficienc6 ta; assess!ent for two !illion, four hundred sevent6-three thousand, si; hundred sevent6-three (92,B7+,=7+...) pesos. ,eanti!e, AAuilino 2arin succeeded Cala"uio as Re"ional Director of ,anila Re"ion %V-A. After reviewin" the e;a!inersF report, 2arin directed the revision of the audit report, with instruction to consider the land as capital asset. 'he ta; due was onl6 fift6 ( .C) percent of the total "ain fro! sale of the propert6 held #6 the ta;pa6er #e6ond twelve !onths pursuant to /ection +B of the 1$77 National %nternal Revenue Code (N%RC). 'he deficienc6 ta; assess!ent was reduced to nine hundred thirt6 si; thousand, five hundred ninet6-ei"ht pesos and fift6 centavos (9$+=, $-. .), inclusive of surchar"es and penalties for the 6ear 1$7=. 1n ?une 27, 1$-., respondent 2arin sent a letter to petitioner infor!in" of the inco!e ta; deficienc6 that !ust #e settled hi! i!!ediatel6. 1n /epte!#er 2=, 1$-., petitioner acDnowled"ed receipt of the letter #ut insisted that the sale of his land to A@A2A was on install!ent. 1n ?une -, 1$-1, the !atter was endorsed to the Actin" Chief of the 2e"al *ranch of the National 1ffice of the *%R. 'he Chief of the 'a; Fraud Enit reco!!ended the prosecution of a cri!inal case for conspirin" to file false and fraudulent returns, in violation of /ection 1 of the 'a; Code a"ainst petitioner and his accountants, Andres 9. Ale&andre and Conrado *a>as. 1n ?une 17, 1$-1, 2arin filed a cri!inal co!plaint for ta; evasion a"ainst the petitioner. 1n ?ul6 1, 1$-1, news ite!s appeared in the now defunct 4venin" 4;press with the headline0 G*%R Char"es RealtorG and another in the defunct 4venin" 9ost with a news ite!0 G*%R raps Realtor, 2 accountants.G Another news ite! also appeared in the ?ul6 2, 1$-1, issue of the *ulletin 'oda6 entitled0 G+-face 91-, ta; evasion raps.G All news ite!s !entioned petitionerFs false inco!e ta; return concernin" the sale of land to A@A2A.

1n ?ul6 2, 1$-1, petitioner filed an A!nest6 'a; Return under 9.D. 17B. and paid the a!ount of fort6-one thousand, seven hundred twent6-nine pesos and ei"ht6-one centavos (9B1,72$.-1). 1n Nove!#er 2, 1$-1, petitioner a"ain filed an A!nest6 'a; Return under 9.D. 1-B. and paid an additional a!ount of one thousand, five hundred twent6-five pesos and si;t6-two centavos (91, 2 .=2). %n #oth, petitioner did not reco"ni<e that his sale of land to A@A2A was on cash #asis. Reactin" to the co!plaint for ta; evasion and the news reports, petitioner filed with the R'C of ,anila an action=for da!a"es a"ainst respondents 2arin, 'ua<on and 'alon for e;tortion and !alicious pu#lication of the *%RFs ta; audit report. 3e clai!ed that the filin" of cri!inal co!plaints a"ainst hi! for violation of ta; laws were i!proper #ecause he had alread6 availed of two ta; a!nest6 decrees, 9residential Decree Nos. 17B. and 1-B.. 'he trial court decided in favor of the respondents and awarded 2arin da!a"es, as alread6 stated. 9etitioner seasona#l6 appealed to the Court of Appeals. %n its decision of Nove!#er 2$, 1$$1, the respondent court affir!ed the trial courtFs decision, thus0 'he findin" of the court a quo that plaintiff-appellantFs actions a"ainst defendant-appellee 2arin were unwarranted and #aseless and as a result thereof, defendant-appellee 2arin was su#&ected to unnecessar6 an;iet6 and hu!iliation is therefore supported #6 the evidence on record.
1wphi1.nt

Defendant-appellee 2arin acted onl6 in pursuance of the authorit6 "ranted to hi!. %n fact, the cri!inal char"es filed a"ainst hi! in the 'anod#a6an and in the Cit6 FiscalFs 1ffice were all dis!issed. H34R4F1R4, the appealed &ud"!ent is here#6 AFF%R,4D in toto.7 3ence this petition, wherein petitioner raises #efore us the followin" Aueries0 %. H34'34R '34 C1ER' 1F A994A2/ 4RR4D %N %'/ %N'4R9R4'A'%1N 1F 94R'%N4N' 'AI 2AH/, '3E/ %' FA%24D '1 A99R4C%A'4 '34 C1RR4C'N4// AND ACCERAC@ 1F 94'%'%1N4RF/ R4'ERN 1F '34 %NC1,4 D4R%V4D FR1, '34 /A24 1F '34 2AND '1 A@A2A. %%. H34'34R '34 R4/91ND4N' C1ER' 4RR4D %N N1' F%ND%N5 '3A' '34R4 HA/ AN A22454D A''4,9' '1 4I'1R' 7,1N4@ FR1,8 94'%'%1N4R *@ 9R%VA'4 R4/91ND4N'/. %%%. H34'34R '34 R4/91ND4N' C1ER' 4RR4D %N %'/ %N'4R9R4'A'%1N 1F 9R4/%D4N'%A2 D4CR44 N1/. 17B. AND 1-B., A,1N5 1'34R/, 94'%'%1N4RF/ %,,EN%'@ FR1, CR%,%NA2 9R1/4CE'%1N. %V. H34'34R '34 R4/91ND4N' C1ER' 4RR4D %N %'/ %N'4R9R4'A'%1N 1F H4224/'A*2%/34D D1C'R%N4/ 1F '3%/ 31N1RA*24 C1ER' A/ R45ARD/ '34 AHARD 1F AC'EA2, ,1RA2 AND 4I4,92AR@ DA,A54/ %N FAV1R 1F R4/91ND4N' 2AR%N. %n essence, petitioner asDs the Court to resolve seriatim the followin" issues0 1. Hhether respondent court erred in rulin" that there was no e;tortion atte!pt #6 *%R officials:

2. Hhether respondent court erred in holdin" that 9.D. 17B. and 1-B. "rantin" ta; a!nesties did not "rant i!!unit6 fro! ta; suits: +. Hhether respondent court erred in findin" that petitionerFs inco!e fro! the sale of land in 1$7= should #e declared as a cash transaction in his ta; return for the sa!e 6ear (#ecause the #u6er discounted the pro!issor6 note issued to the seller on future install!ent pa6!ents of the sale, on the sa!e da6 of the sale): B. Hhether respondent court erred and co!!itted "rave a#use of discretion in awardin" da!a"es to respondent 2arin. 'he first issue, on whether the Court of Appeals erred in findin" that there was no e;tortion, involves a deter!ination of fact. 'he Court of Appeals o#served, 'he onl6 evidence to esta#lish the alle"ed e;tortion atte!pt #6 defendants-appellees is the plaintiff-appellantFs self servin" declarations. As found #6 the court a quo, Gsaid atte!pt was Dnown to plaintiff-appellantFs son-in-law and counsel on record, 6et, said counsel did not taDe the witness stand to corro#orate the testi!on6 of plaintiff.GAs repeatedl6 held, findin"s of fact #6 the Court of Appeals especiall6 if the6 affir! factual findin"s of the trial court will not #e distur#ed #6 this Court, unless these findin"s are not supported #6 evidence.$ /i!ilarl6, neither should we distur# a findin" of the trial court and appellate court that an alle"ation is not supported #6 evidence on record. 'hus, we a"ree with the conclusion of respondent court that herein private respondents, on the #asis of evidence, could not #e held lia#le for e;tortion. 1n the second issue of whether 9.D. Nos. 17B. and 1-B. which "ranted ta; a!nesties also "ranted i!!unit6 fro! cri!inal prosecution a"ainst ta; offenses, the pertinent sections of these laws state0 9.D. No. 17B.. C1ND1N%N5 94NA2'%4/ F1R C4R'A%N V%12A'%1N/ 1F '34 %NC1,4 'AI 2AH E91N V12EN'AR@ D%/C21/ER4 1F END4C2AR4D %NC1,4 F1R %NC1,4 'AI 9ER91/4/ AND R4JE%R%N5 94R%1D%C /E*,%//%1N 1F N4' H1R'3 /'A'4,4N'. ;;; ;;; ;;;

/ec. 1. Voluntary Disclosure of Correct Taxable Income. K An6 individual who, for an6 or all of the ta;a#le 6ears 1$7B to 1$7$, had failed to file a return is here#6, allowed to file a return for each of the aforesaid ta;a#le 6ears and accuratel6 declare therein the true and correct inco!e, deductions and e;e!ptions and pa6 the inco!e ta; due per return. 2iDewise, an6 individual who filed a false or fraudulent return for an6 ta;a#le 6ear in the period !entioned a#ove !a6 a!end his return and pa6 the correct a!ount of ta; due after deductin" the ta;es alread6 paid, if an6, in the ori"inal declaration. (e!phasis ours) ;;; ;;; ;;;

/ec. . Immunity from Penalties. K An6 individual who voluntaril6 files a return under this Decree and pa6s the inco!e ta; due thereon shall #e i!!une fro! the penalties, civil or cri!inal, under the National %nternal Revenue Code arisin" fro! failure to pa6 the correct inco!e ta; with respect to the ta;a#le 6ears fro! which an a!ended return was filed or for

which an ori"inal return was filed in cases where no return has #een filed for an6 of the ta;a#le 6ears 1$7B to 1$7$0 Pro i!e!, howe er, 'hat these i!!unities shall not appl6 in cases where the a!ount of net ta;a#le inco!e declared under this Decree is understated to the e;tent of 2 C or !ore of the correct net ta;a#le inco!e. (e!phasis ours) 9.D. N1. 1-B. K 5RAN'%N5 A 'AI A,N4/'@ 1N EN'AI4D %NC1,4 ANDL1R H4A2'3 4ARN4D 1R ACJE%R4D DER%N5 '34 'AIA*24 @4AR/ 1$7B '1 1$-. AND R4JE%R%N5 '34 F%2%N5 1F '34 /'A'4,4N' 1F A//4'/, 2%A*%2%'%4/, AND N4' H1R'3. /ec. 1. Co era"e. K %n case of voluntar6 disclosure of previousl6 unta;ed inco!e andLor wealth such as earnin"s, receipts, "ifts, #eAuests or an6 other acAuisition fro! an6 source whatsoever, reali<ed here or a#road, #6 an6 individual ta;pa6er, which are ta;a#le under the National %nternal Revenue Code, as a!ended, the assess!ent and collection of all internal revenue ta;es, includin" the incre!ents or penalties on account of non-pa6!ent, as well as all civil, cri!inal or ad!inistrative lia#ilities arisin" fro! or incident thereto under the National %nternal Revenue Code, are here#6 condoned provided that the individual ta;pa6er shall pa6. (e!phasis ours) . . . /ec. 2. Con!itions for Immunity. K 'he i!!unit6 "ranted under /ection one of this Decree shall appl6 onl6 under the followin" conditions0 a) /uch previousl6 unta;ed inco!e andLor wealth !ust have #een earned or reali<ed in an6 of the 6ears 1$7B to 1$-.: #) 'he ta;pa6er !ust file an a!nest6 return on or #efore Nove!#er +., 1$-1, and full6 pa6 the ta; due thereon: c) 'he a!nest6 ta; paid #6 the ta;pa6er under this Decree shall not #e less than 91,...... per ta;a#le 6ear: and d) 'he ta;pa6er !ust file a state!ent of assets, lia#ilities and net worth as of Dece!#er +1, 1$-., as reAuired under /ection = hereof. (e!phasis ours) %t will #e recalled that petitioner entered into a deed of sale purportedl6 on install!ent. 1n the sa!e da6, he discounted the pro!issor6 note coverin" the future install!ents. 'he discountin" see!s Auestiona#le #ecause ordinaril6, when a #ill is discounted, the lender ( e.". #anDs, financial institution) char"es or deducts a certain percenta"e fro! the principal value as its co!pensation. 3ere, the discountin" was done #6 the #u6er. 1n ?ul6 2, 1$-1, two weeDs after the filin" of the ta; evasion co!plaint a"ainst hi! #6 respondent 2arin on ?une 17, 1$-1, petitioner availed of the ta; a!nest6 under 9.D. No. 17B.. 3is a!ended ta; return for the 6ears 1$7B - 1$7$ was filed with the *%R office of Valen<uela, *ulacan, instead of ,anila where the petitionerFs principal office was located. 3e a"ain availed of the ta; a!nest6 under 9.D. No. 1-B.. 3is disclosure, however, did not include the inco!e fro! his sale of land to A@A2A on cash #asis. %nstead he insisted that such sale was on install!ent. 3e did not a!end his inco!e ta; return. 3e did not pa6 the ta; which was considera#l6 increased #6 the inco!e derived fro! the discountin". 3e did not !eet the twin reAuire!ents of 9.D. 17B. and 1-B., declaration of his unta;ed inco!e and full pa6!ent of ta; due thereon. Clearl6, the petitioner is not entitled to the #enefits of 9.D. Nos. 17B. and 1-B.. 'he !ere filin" of ta; a!nest6 return under 9.D. 17B. and 1-B. does not ipso facto shield hi! fro! i!!unit6 a"ainst prosecution. 'a; a!nest6 is a "eneral pardon to ta;pa6ers who want to start a clean ta; slate. %t also "ives the "overn!ent a chance to collect uncollected ta; fro! ta; evaders without havin" to "o throu"h the tedious process of a ta; case. 'o avail of a ta; a!nest6 "ranted #6 the

"overn!ent, and to #e i!!une fro! suit on its delinAuencies, the ta; pa6er !ust have voluntaril6 disclosed his previousl6 unta;ed inco!e and !ust have paid the correspondin" ta; on such previousl6 unta;ed inco!e.1. %t also #ears notin" that a ta; a!nest6, !uch liDe a ta; e;e!ption, is never favored nor presu!ed in law and if "ranted #6 statute, the ter!s of the a!nest6 liDe that of a ta; e;e!ption !ust #e construed strictl6 a"ainst the ta;pa6er and li#erall6 in favor of the ta;in" authorit6. 11 3ence, on this !atter, it is our view that petitionerFs clai! of i!!unit6 fro! prosecution under the shield of availin" ta; a!nest6 is untena#le. 1n the third issue, petitioner asserts that his sale of the land to A@A2A was not on cash #asis #ut on install!ent as clearl6 specified in the Deed of /ale which states0 'hat for and in consideration of the su! of 'H1 ,%22%1N '3R44 3ENDR4D 4%53' '31E/AND /4V4N 3ENDR4D /4V4N'@ (92,+.-,77....) 94/1/ 9hilippine Currenc6, to #e paid as follows0 1. 9B=1,7 B..., upon the si"nin" of the Deed of /ale: and, 2. 'he #alance of 91,-B7,.1=..., to #e paid in four (B) eAual, consecutive, annual install!ents with interest thereon at the rate of twelve percent (12C) per annum, #e"innin" on Fe#ruar6 2., 1$7=, said install!ents to #e evidenced #6 four (B) ne"otia#le pro!issor6 notes.12 9etitioner resorts to /ection B+ of the N%RC and /ec. 17 of Revenue Re"ulation No. 2 to support his clai!. /ec. B+ of the 1$77 N%RC states, %nstall!ent #asis. K (a) Dealers in personal propert6. K . . . (#) #ales of realty an! casual sales of personalty K %n the case (1) of a casual sale or other casual disposition of personal propert6 (other than propert6 of a Dind which would properl6 #e included in the inventor6 of the ta;pa6er if on hand at the close of the ta;a#le 6ear), for a price e;ceedin" one thousand pesos, or (2) of a sale or other disposition of real propert6 if in either case the initial pa6!ents do not e;ceed twent6-five percentum of the sellin" price, the inco!e !a6, under re"ulations prescri#ed #6 the ,inister of Finance, #e returned on the #asis and in the !anner a#ove prescri#ed in this section. As used in this section the ter! Ginitial pa6!entG !eans the pa6!ents received in cash or propert6 other than evidences of inde#tedness of the purchaser durin" the ta;a#le period in which the sale or other disposition is !ade. . . . (e!phasis ours) Revenue Re"ulation No. 2, /ection 17 provides, #ale of real property in ol in" !eferre! payments . K Ender section B+ deferred-pa6!ent sales of real propert6 include (1) a"ree!ents of purchase and sale which conte!plate that a conve6ance is not to #e !ade at the outset, #ut onl6 after all or a su#stantial portion of the sellin" price has #een paid, and (#) sales in which there is an i!!ediate transfer of title, the vendor #ein" protected #6 a !ort"a"e or other lien as to deferred pa6!ents. /uch sales either under (a) or (#), fall into two classes when considered with respect to the ter!s of sale, as follows0

(1) /ales of propert6 on the install!ent plan, that is, sales in which the pa6!ents received in cash or propert6 other than evidences of inde#tedness of the purchaser durin" the ta;a#le 6ear in which the sale is !ade do not e;ceed 2 per cent of the sellin" price: (2) Deferred-pa6!ent sales not on the install!ent plan, that is sales in which the pa6!ents received in cash or propert6 other than evidences of inde#tedness of the purchaser durin" the ta;a#le 6ear in which the sale is !ade e;ceed 2 per cent of the sellin" price: %n the sale of !ort"a"ed propert6 the a!ount of the !ort"a"e, whether the propert6 is !erel6 taDen su#&ect to the !ort"a"e or whether the !ort"a"e is assu!ed #6 the purchaser, shall #e included as a part of the Gsellin" priceG #ut the a!ount of the !ort"a"e, to the e;tent it does not e;ceed the #asis to the vendor of the propert6 sold, shall not #e considered as a part of the Ginitial pa6!entsG or of the Gtotal contract price,G as those ter!s are used in section B+ of the Code, in sections 17B and 17= of these re"ulations, and in this section. 'he ter! Ginitial pa6!entsG does not include a!ounts received #6 the vendor in the 6ear of sale fro! the disposition to a third person of notes "iven #6 the vendee as part of the purchase price which are due and pa6a#le in su#seAuent 6ears. Co!!issions and other sellin" e;penses paid or incurred #6 the vendor are not to #e deducted or taDen into account in deter!inin" the a!ount of the Ginitial pa6!ents,G the Gtotal contract price,G or the Gsellin" price.G 'he ter! Ginitial pa6!entsG conte!plates at least one other pa6!ent in addition to the initial pa6!ent. %f the entire purchase price is to #e paid in a lu!p su! in a later 6ear, there #ein" no pa6!ent durin" the 6ear, the inco!e !a6 not #e returned on the install!ent #asis. %nco!e !a6 not #e returned on the install!ent #asis where no pa6!ent in cash or propert6, other than evidences of inde#tedness of the purchaser, is received durin" the first 6ear, the purchaser havin" pro!ised to !aDe two or !ore pa6!ents, in later 6ears. 9etitioner asserts that /ec. B+ allows hi! to return as inco!e in the ta;a#le 6ears involved, the respective install!ents as provided #6 the deed of sale #etween hi! and A@A2A. ConseAuentl6, he reli"iousl6 reported his 6earl6 inco!e fro! sale of capital asset, su#&ect to ta;, as follows0 @ear 1$77 ( .C of 9B=1,7 B) 1$71$7$ 1$-. 92+.,-77... 2+.,-77... 2+.,-77... 2+.,-77...

9etitioner sa6s that his ta; declarations are accepta#le !odes of pa6!ent under /ection 17 of the Revenue Re"ulations (RR) No. 2. 'he ter! Ginitial pa6!entG, he ar"ues, does not include a!ounts received #6 the vendor which are part of the co!plete purchase price, still due and pa6a#le in su#seAuent 6ears. 'hus, the proceeds of the pro!issor6 notes, not 6et due which he discounted to A@A2A should not #e included as inco!e reali<ed in 1$7=. 9etitioner states that the ori"inal a"ree!ent in the Deed of /ale should not #e affected #6 the su#seAuent discountin" of the #ill. 1n the other hand, respondents assert that ta;ation is a !atter of su#stance and not of for!. Returns are scrutini<ed to deter!ine if transactions are what the6 are and not declared to evade ta;es. Considerin" the pro"ressive nature of our inco!e ta;ation, when inco!e is spread over several install!ent pa6!ents throu"h the 6ears, the ta;a#le inco!e "oes down and the ta; due correspondin"l6 decreases. Hhen pa6!ent is in lu!p su! the ta; for the 6ear proportionatel6

increases. Elti!atel6, a declaration that a sale is on install!ent di!inishes "overn!ent ta;es for the 6ear of initial install!ent as a"ainst a declaration of cash sale where ta;es to the "overn!ent is lar"er. As a "eneral rule, the whole profit accruin" fro! a sale of propert6 is ta;a#le as inco!e in the 6ear the sale is !ade. *ut, if not all of the sale price is received durin" such 6ear, and a statute provides that inco!e shall #e ta;a#le in the 6ear in which it is Greceived,G the profit fro! an install!ent sale is to #e apportioned #etween or a!on" the 6ears in which such install!ents are paid and received. 1+ /ec. B+ and /ec. 17 sa6s that a!on" the entities who !a6 use the a#ove-!entioned install!ent !ethod is a seller of real propert6 who disposes his propert6 on install!ent, provided that the initial pa6!ent does not e;ceed 2 C of the sellin" price. 'he6 also state what !a6 #e re"arded as install!ent pa6!ent and what constitutes initial pa6!ent. %nitial pa6!ent !eans the pa6!ent received in cash or propert6 e;cludin" evidences of inde#tedness due and pa6a#le in su#seAuent 6ears, liDe pro!issor6 notes or !ort"a"es, "iven of the purchaser durin" the ta;a#le 6ear of sale. %nitial pa6!ent does not include a!ounts received #6 the vendor in the 6ear of sale fro! the disposition to a third person of notes "iven #6 the vendee as part of the purchase price which are due and pa6a#le in su#seAuent 6ears. 1B /uch disposition or discountin" of receiva#le is !aterial onl6 as to the co!putation of the initial pa6!ent. %f the initial pa6!ent is within 2 C of total contract price, e;clusive of the proceeds of discounted notes, the sale Aualifies as an install!ent sale, otherwise it is a deferred sale.1 Althou"h the proceed of a discounted pro!issor6 note is not considered part of the initial pa6!ent, it is still ta;a#le inco!e for the 6ear it was converted into cash. 'he su#seAuent pa6!ents or liAuidation of certificates of inde#tedness is reported usin" the install!ent !ethod in co!putin" the proportionate inco!e1= to #e returned, durin" the respective 6ear it was reali<ed. Non-dealer sales of real or personal propert6 !a6 #e reported as inco!e under the install!ent !ethod provided that the o#li"ation is still outstandin" at the close of that 6ear. %f the seller disposes the entire install!ent o#li"ation #6 discountin" the #ill or the pro!issor6 note, he necessaril6 !ust report the #alance of the inco!e fro! the discountin" not onl6 inco!e fro! the initial install!ent pa6!ent. Hhere an install!ent o#li"ation is discounted at a #anD or finance co!pan6, a ta;a#le disposition results, even if the seller "uarantees its pa6!ent, continues to collect on the install!ent o#li"ation, or handles repossession of !erchandise in case of default. 17 'his rule prevails in the Enited /tates.1- /ince our inco!e ta; laws are of A!erican ori"in, 1$ interpretations #6 A!erican courts an our parallel ta; laws have persuasive effect on the interpretation of these laws. 2. 'hus, #6 analo"6, all the !ore would a ta;a#le disposition result when the discountin" of the pro!issor6 note is done #6 the seller hi!self. Clearl6, the inde#tedness of the #u6er is dischar"ed, while the seller acAuires !one6 for the settle!ent of his receiva#les. 2o"icall6 then, the inco!e should #e reported at the ti!e of the actual "ain. For inco!e ta; purposes, inco!e is an actual "ain or an actual increase of wealth.21 Althou"h the proceeds of a discounted pro!issor6 note is not considered initial pa6!ent, still it !ust #e included as ta;a#le inco!e on the 6ear it was converted to cash. Hhen petitioner had the pro!issor6 notes coverin" the succeedin" install!ent pa6!ents of the land issued #6 A@A2A, discounted #6 A@A2A itself, on the sa!e da6 of the sale, he lost entitle!ent to report the sale as a sale on install!ent since, a ta;a#le disposition resulted and petitioner was reAuired #6 law to report in his returns the inco!e derived fro! the discountin". Hhat petitioner did is tanta!ount to an atte!pt to circu!vent the rule on pa6!ent of inco!e ta;es "ained fro! the sale of the land to A@A2A for the 6ear 1$7=. 2astl6, petitioner Auestions the da!a"es awarded to respondent 2arin.

An6 person who seeDs to #e awarded actual or co!pensator6 da!a"es due to acts of another has the #urden of provin" said da!a"es as well as the a!ount thereof. 22 2arin sa6s the e;tortion cases filed a"ainst hi! ha!pered his i!!ediate pro!otion, caused hi! stron" an;iet6 and social hu!iliation. 'he trial court awarded hi! two hundred thousand (92..,...,..) pesos as actual da!a"es. 3owever, the appellate court stated that, despite pendenc6 of this case, 2arin was "iven a pro!otion at the *%R. /aid respondent court0 He find nothin" on record, aside fro! defendant-appellee 2arinFs state!ents ('/N, pp. =-7, 11 Dece!#er 1$- ), to show that he suffered loss of seniorit6 that alle"edl6 #arred his pro!otion. %n fact, he was pro!oted to his present position despite the pendenc6 of the instant case ('/N, pp. + -+$, .B Nove!#er 1$- ).2+ ,oreover, the records of the case contain no state!ent whatsoever of the a!ount of the actual da!a"es sustained #6 the respondents. Actual da!a"es cannot #e allowed unless supported #6 evidence on the record.2B'he court cannot rel6 on speculation, con&ectures or "uessworD as to the fact and a!ount of da!a"es.2 'o &ustif6 a "rant of actual or co!pensator6 da!a"es, it is necessar6 to prove with a reasona#le de"ree of certaint6, the actual a!ount of loss. 2= /ince we have no #asis with which to assess, with certaint6, the actual or co!pensator6 da!a"es counter-clai!ed #6 respondent 2arin, the award of such da!a"es should #e deleted. ,oral da!a"es !a6 #e recovered in cases involvin" acts referred to in Article 21 27 of the Civil Code.2- As a rule, a pu#lic official !a6 not recover da!a"es for char"es of falsehood related to his official conduct unless he proves that the state!ent was !ade with actual !alice. %n $abst, et. al. s. %ational Intelli"ence $oar!, et. al., 1+2 /CRA +1=, ++. (1$-B), we reiterated the test for actual !alice as set forth in the land!arD A!erican case of %ew &or' Times s. #ulli an,2$ which we have lon" adopted, in defa!ation and li#el cases, i(.0 . . . with Dnowled"e that it was false or with recDless disre"ard of whether it was false or not. He appreciate petitionerFs clai! that he filed his 1$7= return in "ood faith and that he had honestl6 #elieved that the law allowed hi! to declare the sale of the land, in install!ent. He can further "rant that the pertinent ta; laws needed construction, as we have earlier done. 'hat petitioner was offended #6 the headlines alludin" to hi! as ta; evader is also full6 understanda#le. All these, however, do not &ustif6 what a!ounted to a #aseless prosecution of respondent 2arin. 9etitioner presented no evidence to prove 2arin e;torted !one6 fro! hi!. 3e even ad!itted that he never !et nor talDed to respondent 2arin. Hhen the ta; investi"ation a"ainst the petitioner started, 2arin was not 6et the Re"ional Director of *%R Re"ion %V-A, ,anila. 1n respondent 2arinFs instruction, petitionerFs ta; assess!ent was considered one involvin" a sale of capital asset, the inco!e fro! which was su#&ected to onl6 fift6 percent ( .C) assess!ent, thus reducin" the ori"inal ta; assess!ent #6 half. 'hese circu!stances !a6 #e taDen to show that 2arinFs involve!ent in e;tortion was not indu#ita#le. @et, petitioner went on to file the e;tortion cases a"ainst 2arin in different fora. 'his is where actual !alice could attach on petitionerFs part. /i"nificantl6, the trial court did not err in dis!issin" petitionerFs co!plaints, a rulin" affir!ed #6 the Court of Appeals. Meepin" all these in !ind, we are constrained to a"ree that there is sufficient #asis for the award of !oral and e;e!plar6 da!a"es in favor of respondent 2arin. 'he appellate court #elieved respondent 2arin when he said he suffered an;iet6 and hu!iliation #ecause of the unfounded char"es a"ainst hi!. 9etitionerFs actions a"ainst 2arin were found Gunwarranted and #aseless,G and the cri!inal char"es filed a"ainst hi! in the 'anod#a6an and Cit6 FiscalFs 1ffice were all dis!issed.+. 3ence, there is adeAuate support for respondent courtFs conclusion that !oral da!a"es have #een proved.

Now, however, what would #e a fair a!ount to #e paid as co!pensation for !oral da!a"es also reAuires deter!ination. 4ach case !ust #e "overned #6 its own peculiar circu!stances. +1 1n this score, Del )osario s.Court of *ppeals,+2 cites several cases where no actual da!a"es were ad&udicated, and where !oral and e;e!plar6 da!a"es were reduced for #ein" Gtoo e;cessive,G thus0 %n the case of P%$ . C.*., 72 = /CRA +.$ (1$$=)8, this Court Auoted with approval the followin" o#servation fro! )CPI . )o!ri"ue(, i(0 )) )). Nevertheless, we find the award of 91..,...... as !oral da!a"es in favor of respondent Rodri"ue< e;cessive and unconsciona#le. %n the case of Pru!encia!o . *lliance Transport #ystem,Inc. (1B- /CRA BB. 71$-78) we said0 . . . 7%8t is undisputed that the trial courts are "iven discretion to deter!ine the a!ount of !oral da!a"es (Alcantara v. /urro, $+ 9hil. B72) and that the Court of Appeals can onl6 !odif6 or chan"e the a!ount awarded when the6 are palpa#l6 and scandalousl6 e;cessive Gso as to indicate that it was the result of passion, pre&udice or corruption on the part of the trial courtG (5ellada v. Harner *arnes N Co., %nc., 7 1.5. 7B8 7+B7, 7+ -: /adie v. *acharach ,otors Co., %nc., 7 1.5. 7B8 =+= and Adone v. *acharach ,otor Co., %nc., 7 1.5. = =). *ut in !ore recent cases where the awards of !oral and e;e!plar6 da!a"es are far too e;cessive co!pared to the actual loses sustained #6 the a""rieved part6, this Court ruled that the6 should #e reduced to !ore reasona#le a!ounts. . . . . (4!phasis ours.) %n other words, the !oral da!a"es awarded !ust #e co!!ensurate with the loss or in&ur6 suffered. %n the sa!e case (9N* v. CA), this Court found the a!ount of e;e!plar6 da!a"es reAuired to #e paid (91,...,...,..) Gtoo e;cessiveG and reduced it to an GeAuita#le levelG (92 ,......). %t will #e noted that in a#ove cases, the parties who were awarded !oral da!a"es were not pu#lic officials. Considerin" that here, the award is in favor of a "overn!ent official in connection with his official function, it is with caution that we affir! "rantin" !oral da!a"es, for it !i"ht open the flood"ates for "overn!ent officials counter-clai!in" da!a"es in suits filed a"ainst the! in connection with their functions. ,oreover, we !ust #e careful lest the a!ounts awarded !aDe citi<ens hesitate to e;pose corruption in the "overn!ent, for fear of lawsuits fro! vindictive "overn!ent officials. 'hus, confor!a#l6 with our declaration that !oral da!a"es are not intended to enrich an6one,++ we here#6 reduce the !oral da!a"es award in this case fro! two hundred thousand (92..,......) pesos to sevent6 five thousand (97 ,......) pesos, while the e;e!plar6 da!a"e is set at 92 ,...... onl6. 'he law allows the award of attorne6Fs fees when e;e!plar6 da!a"es are awarded, and when the part6 to a suit was co!pelled to incur e;penses to protect his interest. +B 'hou"h "overn!ent officers are usuall6 represented #6 the /olicitor 5eneral in cases connected with the perfor!ance of official functions, considerin" the nature of the char"es, herein respondent 2arin was co!pelled to hire a private law6er for the conduct of his defense as well as the successful pursuit of his counterclai!s. %n our view, "iven the circu!stances of this case, there is a!ple "round to award in his favor 9 .,...,.. as reasona#le attorne6Fs fees. H34R4F1R4, the assailed decision of the Court of Appeals dated Nove!#er 2$, 1$$1, is here#6 AFF%R,4D with ,1D%F%CA'%1N so that the award of actual da!a"es are deleted: and that petitioner is here#6 1RD4R4D to pa6 to respondent 2arin !oral da!a"es in the a!ount of

97 ,......, e;e!plar6 da!a"es in the a!ount of 92 ,......, and attorne6Fs fees in the a!ount of 9 .,...... onl6.
1wphi1.nt

No pronounce!ent as to costs. /1 1RD4R4D.