Facts:

The case involves Bibiano V. BaAas Jr. as the petitioner and Aquilino T. Larin, Rodolfo Tuazon, and Procopio Talon as respondents. The case was heard by the Second Division of the Supreme Court, with a decision promulgated on February 10, 2000, arising from a legal dispute initiated by the petitioner against the Bureau of Internal Revenue (BIR) officials concerning their actions related to tax assessments.

On February 20, 1976, Bibiano V. BaAas Jr. sold a parcel of land—specifically 128,265 square meters located in Bayanan, Muntinlupa—to Ayala Investment Corporation for a total price of P2,308,770. The terms of the sale stipulated that an initial payment of P461,754 was to be made upon signing the contract, followed by three additional annual installments of P461,754 plus interest at a rate of 12%. Concurrent with this agreement, BaAas discounted the accompanying promissory note at Ayala, which covered the outstanding balance of the purchase price.

In his subsequent tax return

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Facts:

Sale of Land and Terms of Payment

• On February 20, 1976, petitioner Bibiano V. BaAas Jr. sold 128,265 square meters of land located at Bayanan, Muntinlupa to Ayala Investment Corporation (AYALA) for a total of P2,308,770.00.
• The Deed of Sale specified that an initial payment of P461,754.00 was to be made upon signing and the remaining balance of P1,847,016.00 was to be paid in four equal, consecutive annual installments with interest at 12% per annum on the outstanding balance, evidenced by four negotiable promissory notes.

Discounting and Reporting of the Transaction

• On the same day of the sale, petitioner discounted the promissory note with AYALA for its face value, as evidenced by a Deed of Assignment.
• AYALA issued nine checks, all dated February 20, 1976, each amounting to P205,224.00, as part of the transaction.
• In his 1976 Income Tax Return, petitioner reported the P461,754.00 as income from the disposition of a capital asset and subsequently reported a uniform income of P230,877.00 for the years 1977 to 1979 from the installment sale.

Tax Examination and Deficiency Assessment

• On April 11, 1978, Revenue Director Mauro Calaguio authorized tax examiners to scrutinize petitioner’s 1976 records, where they found no outstanding receivable from the sale, concluding the sale was effectively a cash transaction.
• The audit report discovered a discrepancy of P2,095,915.00 in petitioner’s 1976 net income, recommending a deficiency tax assessment of P2,473,673.00.
• Subsequent review by the new Regional Director of Manila Region IV-A, Aquilino Larin, reclassified the transaction as a sale of capital asset, reducing the deficiency tax assessment to P936,598.50.

Communications, Tax Amnesty Filings, and Criminal Charges

• On June 27, 1980, Larin notified petitioner of the tax deficiency, to which petitioner responded by claiming that the sale was on installment.
• As the controversy escalated with the issuance of criminal complaints for tax evasion on June 17, 1981, the media reported the matter, emphasizing allegations of a false income tax return by petitioner.
• Subsequently, petitioner filed two separate Amnesty Tax Returns under Presidential Decrees Nos. 1740 (on July 2, 1981) and 1840 (on November 2, 1981), paying sums of P41,729.81 and P1,525.62 respectively, while still maintaining that the sale was on installment and not a cash transaction.

Action for Damages and Trial Court Proceedings

• Reacting to the criminal complaint and unfavorable media coverage, petitioner initiated an action for damages against respondents Larin, Tuazon, and Talon alleging extortion and malicious publication.
• The trial court ruled in favor of respondents; dismissing petitioner’s complaint on extortion and ordering petitioner to pay respondent Larin actual, moral, exemplary damages, and attorney’s fees as part of the judgment.
• The Court of Appeals, in its decision dated November 29, 1991, affirmed the trial court’s ruling, finding that petitioner’s claims were unwarranted and that Larin acted within the bounds of his authority.

Issue:

Determination of Extortion

• Whether the evidence was sufficient to prove that BIR officials, particularly respondent Larin, attempted to extort money from petitioner.
• Whether the allegation of extortion, based largely on petitioner’s own declarations without corroborative testimony, justified the proceeding against Larin.

Tax Treatment of the Sale Transaction

• Whether the transaction should be treated as a cash sale (thereby requiring the entire profit to be taxed in 1976) or as an installment sale, as claimed by petitioner.
• Whether the discounting of the promissory note by the buyer on the same day of the sale converted the installment sale into a taxable cash transaction.

Application and Interpretation of Tax Amnesty Provisions

• Whether the filing of tax amnesty returns under Presidential Decree Nos. 1740 and 1840 granted petitioner immunity from criminal prosecution for tax evasion.
• Whether petitioner complied with the essential conditions set by these amnesty laws, particularly the full disclosure of income and payment of corresponding taxes.

Award of Damages

• Whether the award of actual, moral, and exemplary damages, as well as attorney’s fees in favor of respondent Larin, was proper and justified.
• Whether the amounts awarded were excessive or improperly computed given the evidentiary support (or lack thereof) regarding the actual loss suffered.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)