G.R. Nos. 108135-36 September 30, 1999
Potenciana M. Evangelista, petitioner, vs. The People of the Philippines and the Honorable Sandiganbayan (First Division), respondents.

FACTS

Tanduay Distillery Inc. filed an application for tax credit of P180,701,682.00 for alleged erroneous payments of ad valorem taxes. The Bureau of Internal Revenue (BIR) process required verification from several divisions. Petitioner Potenciana M. Evangelista, as Chief of the Revenue Accounting Division (RAD), signed a 1st Indorsement listing 237 confirmation receipts under two Tax Numeric Codes (TNCs): TNC 3011-0011 (specific tax) covering P102,519,100.00 and TNC 0000-0000 (unclassified taxes) covering P78,182,582.00. Based on recommendations from other officials and this indorsement, Deputy Commissioner Eufracio D. Santos approved Tax Credit Memo No. 5177 for the full amount. A complaint later alleged Tanduay had only paid P73,614,287.20 in ad valorem taxes. Petitioner and others were charged with violation of Section 268(4) of the National Internal Revenue Code (conspiring to defraud revenues) and Section 3(e) of R.A. No. 3019 (Anti-Graft and Corrupt Practices Act). The Sandiganbayan convicted petitioner on both counts.

ISSUE

The primary issue is whether petitioner Potenciana M. Evangelista is guilty beyond reasonable doubt of (1) conspiring to defraud the revenues under Section 268(4) of the NIRC, and (2) causing undue injury to the government or giving unwarranted benefit through gross inexcusable negligence under Section 3(e) of R.A. No. 3019 .

RULING

The Supreme Court modified the Sandiganbayan decision.
1. On the charge under Section 268(4) of the NIRC (conspiracy to defraud revenues), the Court REVERSED the conviction and ACQUITTED petitioner. The Court found no evidence of conspiracy. The acts of petitioner and her co-accused were merely interrelated functions in the bureaucratic process. There was no proof of a common design or agreement to commit fraud.
2. On the charge under Section 3(e) of R.A. No. 3019 , the Court AFFIRMED the conviction but MODIFIED the penalty. The Court held petitioner guilty of gross inexcusable negligence. Her duty was to verify and authenticate the actual tax payments. By listing the confirmation receipts under TNC 0000-0000 (unclassified) without clarifying that this code did not represent ad valorem tax payments, and by failing to indicate the total amount actually paid as ad valorem tax, she performed her duty in a grossly negligent manner. This negligence provided the basis for the approval of the excessive tax credit, causing undue injury to the government. She was sentenced to an indeterminate penalty of six (6) years and one month as minimum to twelve (12) years as maximum, with perpetual disqualification from public office.