G.R. No. 102967 February 10, 2000
BIBIANO V. BAÑAS, JR., petitioner, vs. COURT OF APPEALS, AQUILINO T. LARIN, RODOLFO TUAZON AND PROCOPIO TALON, respondents.

FACTS

Petitioner Bibiano Bañas, Jr. sold land to Ayala Investment Corporation (AYALA) in 1976. The deed stipulated a down payment with the balance payable in four annual installments, evidenced by a single promissory note. On the same day, Bañas discounted this note with AYALA, receiving its full face value in nine checks. In his 1976 tax return, he reported only the down payment as income, treating the sale as an installment transaction. BIR examiners Tuazon and Talon, under Regional Director Aquilino Larin, later assessed a deficiency tax, contending the discounted note made the entire sale price constructively received in 1976, thus taxable in full that year. Larin revised the assessment but still demanded payment. After Bañas failed to settle, Larin filed a criminal complaint for tax evasion, which was publicized in newspapers. Bañas then availed of tax amnesties and sued the BIR officials for damages, alleging malicious prosecution.

ISSUE

Whether the BIR officials, particularly respondent Larin, acted with malice or bad faith in issuing the deficiency tax assessment and filing the criminal complaint, thereby making them liable for damages.

RULING

The Court ruled in the negative, affirming the dismissal of the damage suit. The legal logic rests on the principle that public officials are presumed to have performed their duties regularly and in good faith. For liability under Article 32 of the Civil Code on violations of constitutional rights, or for quasi-delict under Article 2176, the plaintiff must prove bad faith, malice, or negligence. Here, the assessment and subsequent criminal complaint were based on a legitimate interpretation of tax law. The BIR’s position—that discounting the promissory note constituted a disposition equivalent to receiving the full price, making the entire gain taxable in 1976—was a tenable legal stance, even if ultimately subject to judicial review. The act of filing a criminal complaint after the taxpayer’s non-compliance is within the official’s discretionary duty to enforce revenue laws. The mere fact of newspaper publicity, absent proof that Larin orchestrated it with malice, does not establish bad faith. The availment of tax amnesty does not retroactively nullify the prior official actions taken in good faith. Consequently, petitioner failed to overcome the presumption of regularity, and no actionable wrong was committed by the respondents in the performance of their official functions.