Bureau Of Internal Revenue v. Court Of Appeals

DEL CASTILLO, J.:

There is grave abuse of discretion when the determination of probable cause is exercised in an arbitrary or despotic manner, due to passion or personal hostility, so patent and gross as to amount to an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law.1 This Petition for Certiorari2 under Rule 65 of the Rules of Court assails the Decision3 dated October 28, 2010 and the Resolution4 dated May 10, 2011 of the Court of Appeals (CA) in CA-G.R. SP No. 112479. Factual Antecedents Respondent Antonio Villan Manly (Antonio) is a stockholder and the Executive Vice-President of Standard Realty Corporation, a family-owned corporation.5 He is also engaged in rental business.6 His spouse, respondent Ruby Ong Manly, is a housewife.7 On April 27, 2005, petitioner Bureau of Internal Revenue (BIR) issued Letter of Authority No. 2001 000123878 authorizing its revenue officers to investigate respondent spouses' internal revenue tax liabilities for taxable year 2003 and prior years.

On June 6, 2005, petitioner issued a letter9 to respondent spouses requiring them to submit documentary evidence to substantiate the source of their cash purchase of a 256-square meter log cabin in Tagaytay City worth ₱17,511,010.00. Respondent spouses, however, failedto comply with the letter.10 On June 23, 2005, the revenue officers executed a Joint Affidavit11 alleging that respondent Antonio's reported or declared annual income for the taxable years 1998-2003 are as follows: Taxable Compensation Income Net Profit Rental Business (1169-73 G. Masangkay St., Tondo, Manila Total sources of Funds Tax Due/paid CASH 1998 [P]133,532.36 [P] 191,915.10 [P] 325,447.46 [P]55,834.00< [P] 269,613.46 1999 142,550.50 260,961.78 403,512.28 79,254.00 324,258.28 2000 141,450.00 213,740.67 355,190.67 64,757.21 290,433.46 2001 151,500.00 233,396.62 384,896.62 73,669.00 311,227.62 2002 148,500.00 186,106.62 334,606.62 58,581.00 276,025.62 2003 148,100.00 152,817.53 300.917.93 48,729.00 252,188.93 [Total]