Before us is a petition for review on certiorari assailing the decision of the Sandiganbayan dated September 11, 1992 in Criminal Case Nos. 14208-14209 finding petitioner Potenciana M. Evangelista guilty beyond reasonable doubt of violation of Section 268, paragraph 4 of the National Internal Revenue Code (NIRC) and Section 3(e) of R.A. No. 3019, otherwise known as the Anti-Graft and Corrupt Practices Act.

Tanduay Distillery Inc., is a company engaged in the manufacture and sale of rum, gin, vodka and other spirits. On September 17, 1987, Tanduay filed with the Bureau of Internal Revenue (BIR) an application for tax credit in the sum of P180,701,682.00 representing alleged erroneous payments for ad valorem taxes covering the period January 1, 1986 to August 31, 1987. Attached to the application was a schedule of ad valorem taxes1 [Exh. "E-2."] allegedly paid by Tanduay with supporting confirmation receipts. The application was filed with the Specific Tax Office of the BIR headed by Aquilino T. Larin. Jjsc

Tanduay anchored its claim for tax credit on the ground that it is a rectifier which is liable for specific taxes and not ad valorem taxes, citing a BIR ruling in a case involving Distilleria Limtuaco and Co. Inc. The ruling states that rectifiers are considered as extensions of distillers inasmuch as they purchase alcohol from distillers without prepayment of the specific tax. Since specific tax should be paid by the distiller before its removal from the place of production, the burden of payment therefor is shifted to and assumed by the rectifier.

In its application for tax credit, Tanduay stated that it is a rectifier with Assessment No. A-1-8 and a compounder with Assessment No. A-1-8-A, although compounding is only incidental to rectification of its products. Consequently, before the tax credit being sought by Tanduay could be granted, the BIR’s Tax and Alcohol Division, headed by Teodoro D. Pareño, had to verify first whether Tanduay’s products are distilled spirits or compounded liquor based on how they are manufactured. To do this, Justino Galban, Head of the Compounders, Rectifiers and Repackers Section under the Alcohol and Tax Division, had to look into the technical process for the manufacture of rum, gin, vodka and other intoxicating beverages of Tanduay. If it is determined that the products can be properly classified as distilled spirits based on how they are manufactured, then Tanduay could properly claim for a tax credit on its payments of ad valorem taxes in accordance with Section 121 of the NIRC and the Limtuaco ruling that rectifiers, as an extension of distillers, are subject to specific and not ad valorem taxes. Finally, it had to be verified by the Revenue Accounting Division (RAD) headed by petitioner Potenciana M. Evangelista whether Tanduay actually paid the P180,701,682.00 as ad valorem taxes to the BIR which it claims it paid. Edpmis

On September 23, 1987, Larin, in a marginal handwritten note, directed Pareño to prepare a request to the Revenue Accounting Division (RAD) for the authentication of the confirmation receipts covering the tax payments sought to be credited. Accordingly, a memorandum, signed by Larin, was sent to the RAD headed by petitioner Evangelista requesting verification and authentication whether the amounts reflected in the confirmation receipts submitted by Tanduay were actually paid to the BIR as ad valorem taxes. Misoedp

Larin’s Memorandum was received by the Records and Administrative Section (RAS), a unit under RAD, on September 24, 1987. In due course, RAS made the necessary verification on the basis of its records and prepared the corresponding verification2 [Exh. "D".] in the form of a 1st Indorsement to the Specific Tax Office on September 25, 1987. The indorsement, which was signed by petitioner Evangelista, contained a listing of two hundred thirty seven (237) confirmation receipts in various amounts under two categories designated with Tax Numeric Code (TNC) 3011-0011 and TNC 0000-0000. A total of 149 confirmation receipts covering P102,519,100.00 were listed as tax payments under TNC 3011-0011 and a total of 88 confirmation receipts covering P78,182,582.00 were listed as tax receipts under TNC 0000-0000.

A memorandum was thereafter prepared by Galban as Chief of the Compounders and Rectifier’s Section addressed to Pareño describing the technical aspects of Tanduay’s manufacturing process. Galban made no recommendation, however, as to the validity of Tanduay’s claim. On October 13, 1987, Pareño sent a memorandum to Larin recommending that the request for tax credit of Tanduay Distillery, Inc. be given due course on the ground that Tanduay as a rectifier is an extension of the distiller and its products are subject of the payment of specific tax and not ad valorem tax. On same date, Larin signed a memorandum for the Deputy Commissioner of the BIR recommending that the claim of Tanduay Distillery Inc., for the alleged erroneous payment of ad valorem taxes in the amount of P180,701,682.00 be tax credited as in the case of Distilleria Limtuaco and Co. Inc. Misedp

On October 13, 1987, Eufracio D. Santos, Deputy Commissioner of the BIR, approved the recommendation made by Larin in his memorandum and thereafter signed Tax Credit Memo No. 5177 in the amount of P180,701,682.00 in favor of Tanduay Distillery, Inc. The approval was based on the following:

Immediately after the approval of Tax Credit Memo No. 5177, Tanduay availed of the tax credit on various dates covering the period from October 19, 1987 to June 20, 1988.4 [Exh. "AA"; "AA-1" to "AA-31-1-1".] However, on June 22, 1988, a certain Ruperto Lim wrote a letter-complaint to BIR Commissioner Bienvenido Tan, Jr. alleging that the grant of Tax Credit Memo No. 5177 in favor of Tanduay was irregular and anomalous. More specifically, Lim pointed out that Tanduay had paid only P73,614,287.205 [The exact amount of ad valorem taxes paid by Tanduay for said period is disputed.] by way of ad valorem taxes to the BIR from January 1, 1986 to August 31, 1987 and not P180,701,682.00 as claimed. Deputy Commissioner Santos, in approving TCM No. 5177, failed to notice that petitioner’s 1st indorsement contained a listing of TNC indicating tax payments received from Tanduay under two categories, i.e., TNC 3011-0011 and TNC 0000-0000. As earlier mentioned, a total of 149 confirmation receipts were listed as tax payments under TNC 3011-0011 while a total of 88 confirmation receipts were listed as tax payments under TNC 0000-0000. Deputy Commissioner Santos admitted that while he knew that there was a tax numeric code for the kind of tax paid, he did not know which particular numbers corresponded to a particular tax revenue. These codes are contained in the "Handbook of Tax Numeric Code of the Revenue Sources," wherein it is stated that TNC No. 3011-0011 stands for specific tax on domestic and distilled spirits, TNC No. 3023-2001 for ad valorem on compounded liquors and TNC No. 0000-0000 for unclassified taxes. Had Deputy Commissioner Santos looked these up in the Handbook, he would have known that Tanduay was not entitled to the whole sum of P180,701,682.00. Santos, however, contended that the practice of using numeric tax codes is for the purpose of checking remittances of payments by the banks which properly falls under the jurisdiction of the RAD. He claimed that he merely relied on the certification of his subordinates, inasmuch as his work was merely confirmational. Supreme

On January 3, 1990, two informations were filed with the Sandiganbayan against Aquilino T. Larin, Teodoro D. Pareño, Justino E. Galban, Jr. and petitioner Potenciana M. Evangelista for violation of Section 268, Par. 4 of the National Internal Revenue Code (NIRC), docketed as Criminal Case No. 14208, and for violation of Section 3(e) of R.A. No. 3019 of the Anti-Graft and Corrupt Practices Act, docketed as Criminal Case No. 14209.

Section 268, par. 4 of the NIRC reads:

x x x x x x x x x

On the other hand, Section 3 (e) of R.A. No. 3019 of the Anti-Graft and Corrupt Practices Act states:

x x x x x x x x x

Upon arraignment, all the accused including petitioner Evangelista pleaded not guilty. They raised the defense that no undue injury had been caused to the government and no unwarranted benefits had been accorded to Tanduay inasmuch as Tanduay had already fully reimbursed the BIR of the availments found to have been unjustified or improper in the amount of P73,000,000.00 and had, additionally paid P11,000,000.00 by way of penalties, or a total of P84,000,000.00.

Petitioner Evangelista, for her part, did not deny having issued the 1st indorsement. However, instead of taking the witness stand, she, like her three co-accused, refused to testify and opted to present as evidence in her behalf the following paragraphs from her letter of explanation dated November 21, 1988 to BIR Commissioner Bienvenido Tan which read as follows:

x x x x x x x x x

In her letter, petitioner also categorically stated that, "Upon signing of this indorsement/certification I or whoever is head of this Division, for that matter, do not know what TNC stands for."6 [Exh "19".]

On September 18, 1992, Aquilino T. Larin, Teodoro D. Pareño and petitioner Potenciana M. Evangelista were convicted and sentenced to suffer the penalty of imprisonment for an indeterminate period of 4 years, 8 months and 1 day by way of minimum to 6 years and 8 months by way of maximum, and a fine of Twenty Thousand Pesos (P20,000.00) each in Criminal Case No. 14208; while in Criminal Case No. 124209, Aquilino T. Larin, Teodoro D. Pareño and petitioner Potenciana M. Evangelista were convicted and sentenced to suffer imprisonment for an indeterminate period ranging from a minimum of 9 years and 1 month to a maximum of 12 years. The penalty of perpetual disqualification from public office was likewise imposed upon the three accused. Justino Galban was acquitted inasmuch as his only participation was the preparation of the memorandum describing Tanduay’s manufacturing process as rectifier and compounder of liquors. Jjjuris

Petitioner Evangelista was convicted on the basis of the 1st indorsement issued by her which the Sandiganbayan condemned as a "studied non-response" to Larin’s query as to how much the BIR actually received as payment for ad valorem taxes from Tanduay. The Sandiganbayan held that Evangelista’s indorsement could have been explicitly and directly responsive because Larin’s memo was clear and the purpose for his query was specific: How much was paid by Tanduay to the BIR by way of ad valorem taxes for the purpose of computing the amount properly creditable to Tanduay for refund? However, Evangelista’s response merely enumerated a set of confirmation receipts with the corresponding TNC numbers despite the fact that several employees of the Bureau were not well acquainted with the use and meaning of TNCs. Petitioner’s ambiguous reply, according to the Sandiganbayan, permitted her superiors to equivocate as to its meaning which resulted in the improper grant of tax credits to Tanduay. The Sandiganbayan thus concluded that the gross negligence of the petitioner and its confluence with the acts of accused Larin and Pareño in recommending the approval of Tanduay’s application for tax credit adequately proved conspiracy among them. justice

Her motion for reconsideration having been denied by the Sandiganbayan, Evangelista filed the instant petition contending that the 1st indorsement was issued after proper verification of the data given to the RAD against available records of the division. Petitioner claims the certification issued was patterned after the prescribed format as a routine response to an official request of the Assistant Commissioner for Excise Tax Office. Petitioner insists that she could not be held liable because there was no mention in the 1st indorsement that the payments made by Tanduay Distillery Inc. were actually for ad valorem taxes for which it could claim tax credit in the sum of P180,701,682.00.

On November 29, 1993, the Office of the Solicitor General filed a manifestation and motion in lieu of comment recommending the acquittal of petitioner. The Manifestation stated that: "Although petitioner herself may not have known the exact kind of taxes covered by the TNC reflected in her 1st Indorsement, this does not in any way make her guilty of gross negligence. Her duty was purely ministerial in nature, that is, to report all data pertinent to Tanduay’s tax payments on file with RAD. She was not duty-bound to report her personal perception, understanding or conclusion regarding the significance or meaning of the data she had reported. It was Larin and Pareño’s duty to do so."7 [Rollo, pp. 298-299.] Jksmä â Ó

In view of the position taken by the Office of the Solicitor General, the Ombudsman and the Office of the Special Prosecutor filed a motion for leave of court to file comment which was granted. In its comment, the Office of the Ombudsman and the Office of the Special Prosecutor sought petitioner’s conviction on the ground that the decision of the Sandiganbayan on the two cases filed against her is in accord with applicable jurisprudence and supported by factual evidence.

We find no reason to overturn petitioner’s conviction for gross negligence.

Before 1969, internal revenue taxes were designated by descriptive words. This, however, proved to be unsatisfactory inasmuch as tax data could not easily be stored and processed by the computer, resulting in delayed compilation and retrieval of the data. Esä m

To facilitate the preparation of statistical and other management reports, the BIR adopted the Tax Numeric Code System under which a numeric code stands for kinds or classes of tax and their applicable rate. For this purpose, a "Handbook on Tax Numeric Codes of the Revenue Sources," was issued for BIR use.8 [Exh. "33".] Under this system, TNC No. 3011-0011 was made to stand for "specific tax on domestic distilled spirits,"9 [Revenue Memo Order 19-83 marked as Exh. "17".] TNC No. 3023-2001 for ad valorem on compounded liquors,10 [Revenue Memo Circular 15-86 marked as Exh. "33".] and TNC No. 0000-0000 for unclassified taxes. Under various BIR Revenue Memorandum Orders and Circulars, the use of TNC instead of word descriptions to identify and record tax payments was made mandatory.11 [RMO 19-83 marked as Exhibit "17".] It may not be amiss to note at this point however that despite the fact that the use of TNC to identify and record tax payments was made mandatory, it had become obvious during trial that not all employees of the BIR were well acquainted with the meanings of the TNC. Even Deputy Commissioner Santos who approved the Tax Credit Memo and the BIR Commissioner himself, Bienvenido Tan, were not familiar with the corresponding TNC numbers for a particular revenue. Not surprisingly, petitioner and the three other accused claimed they too were unaware of the meaning of TNC. Esâ msc

In the case at bar, petitioner is the head of the Revenue Accounting Division (RAD). Under Revenue Administrative Order No. 5-84, one of the functions of the said division is to "Confirm and certify as to the correctness of payment and other informations verified from accounting records and documents." As head of the RAD, petitioner holds an extremely sensitive position, whose certification to the payments received by the Bureau from taxpayers determines whether the taxpayer is entitled to a refund or a tax credit. Despite her sensitive position, however, and despite her own admission from the pleadings that the use of TNC instead of word descriptions to identify and record tax payments were made mandatory since 1969, petitioner claims that she practically had no idea what the TNC meant until a year after having issued the 1st indorsement, when investigation regarding the tax credits given to Tanduay was well under way. Petitioner further claims that there was no way she could have verified whether the payments made by Tanduay were for ad valorem taxes because the confirmation receipts do not contain any information as to the kind of tax paid by the taxpayer nor the requisite TNC.

We are not impressed. EsmmÓ is

A payment order, which contains the particular kind of tax to be paid and the corresponding TNC, is issued to a taxpayer to be presented by him to the bank where he pays his taxes. When the payment order is presented, a confirmation receipt is issued by the bank evidencing payment of the tax. Although it is not stated in the confirmation receipts what kind of tax is being paid by the taxpayer nor the TNC, the BIR’s copy of the confirmation receipt is usually attached to the original copy of the Payment Order (PO) which in turn specifies the kind of tax paid and the TNC. Since petitioner’s division is the repository of all accounting records of the Bureau, it should have copies of the payment orders for the corresponding confirmation receipts and therefore petitioner could have easily verified what kind of taxes were covered by the payments made by Tanduay from January 1, 1986 to August 31, 1987. Moreover, petitioner’s claim that there were no pertinent records, codes and references that could be used to distinguish the confirmation receipts as either for ad valorem or specific tax is belied by the denial of her immediate superior, Melchor Ramos, who stated that the RAD has in its possession the monthly Alpha List of Taxpayers issued in 1986 as well as the collection report by agent banks (Abstract of Collection thru Banks) for the same year which were prepared by the Revenue Information System Service, Inc. (RISSI) based on the confirmation receipts transmitted to them by the field offices and the PO/CR Monitoring Division. Petitioner’s immediate superior added that these records contain the TNC of every receipt listed therein and thus it would be very easy to identify the kind of tax paid by the taxpayer by simply referring to the Handbook on Numeric Tax Code.12 [Exh. "32-B".] Esmsoâ

Clearly, petitioner’s alleged lack of knowledge as to what TNC meant was grossly inexcusable if not improbable considering that the use of TNC to record tax payments received by the Bureau is directly connected with the duties of her office. If there is anyone in the Bureau who was expected to have a working knowledge of the TNC, it should have been petitioner because the use of TNC was precisely meant to facilitate the recording of the tax payments received by the Bureau for verification purposes. Petitioner as head of the Revenue Accounting Division was called upon to verify whether the schedule of payments submitted by Tanduay in support of its application for tax credit were payments for ad valorem taxes. Petitioner had submitted a list of payments made by Tanduay with the corresponding bank account nos., amounts and TNC Nos., as required by the Memorandum Circular. But, as admitted by petitioner herself, she had not the slightest idea what TNC meant, despite the fact that they are mandated by the Bureau to use it accordingly in identifying and recording tax payments. Mseä sm

We have a situation where the Head of the Division, which is in charge of recording tax payments received by the Bureau and whose certification is relied upon by the Bureau in the granting of tax credits, does not even know or care to know what are the kind of tax payments received by the Bureau. For all intents and purposes, petitioner issued an indorsement certifying a whole schedule of payments made by the taxpayer without a specification of the kinds of taxes since she did not have any idea what TNC meant. It could not even be said that petitioner made an error of judgment in answering Larin’s query with an enumeration of TNCs instead of opting for a more explicit response since petitioner, not having any idea as to what the TNCs meant, could not have couched the statement of her 1st Indorsement in any other way. She could not have made a more explicit answer to the query of Larin inasmuch as she did not even know or care to find out whether the BIR actually received payments for ad valorem taxes from Tanduay. Clearly, there is no doubt that petitioner was grossly negligent in discharging her duties. As defined in the case of Alejandro v. People,13 [170 SCRA 400 [1989].] gross negligence is "negligence characterized by want of even slight care, acting or omitting to act in a situation where there is a duty to act, not inadvertently but willfully and intentionally with a conscious indifference to consequences insofar as other persons may be affected. It is the omission of that care which even inattentive and thoughtless men never fail to take on their own property." The test to determine the existence of negligence in a particular case may be stated in this wise: "Did the defendant in doing the negligent act use that reasonable care and caution which an ordinarily prudent person would have used in the same situation? If not, then he is guilty of negligence. The law here in effect adopts the standard supposed to be exercised by the discreet paterfamilias of Roman Law. The existence of negligence in a given case is not determined by reference to the personal judgment of the actor in the situation before him. The law considers what would be reckless, blameworthy or negligent in the man of ordinary intelligence and prudence and determines liability by that."14 [Layugan vs. IAC, 167 SCRA 363 [1988] citing Picart vs. Smith, 37 Phil 809 [1918].] ExÓ sm

Petitioner asserts that there was nothing untruthful in the certification she issued regarding the tax payments received by the BIR from Tanduay. Petitioner further claims that the first endorsement was patterned after the standard format used by the division whenever a request is made for verification of payments and she could not be faulted for adhering to the mandate of the various memoranda issued regarding the use of TNCs.

Admittedly, the use of TNCs to record tax payments is mandated by various memoranda issued by the Bureau. Petitioner, however, as previously stated, never exerted any effort to find out what the TNCs meant. Had she been more circumspect, she would have appreciated the significance of her certification. She would have known that Tanduay was not entitled to the whole amount of P180,701,682.00 it was claiming as tax credit. She would have been forewarned of the implied consequences of her certification and could have accordingly informed her superiors and her co-accused whether Tanduay was really entitled to a tax credit at all or not. That her co-accused were mandated to know what TNC meant is beside the point. Petitioner, by the position she occupies, is mandated to know the kind of taxes for which payment is made by the taxpayer claiming a refund before she issues a certification because it is on the basis of this certification that it is determined whether tax credits should be granted at all. Certainly, the petitioner held a sensitive position with a function that could hardly be classified as ministerial. As head of the division which is supposedly in charge of encoding payment received by the Bureau from taxpayers and who is supposedly expected more than anyone to know the meaning of the TNC, petitioner issued an indorsement containing cryptic codes which she admittedly did not know the meaning of and expecting her superiors, who were not even in charge of recording tax payments and who relied on her certification, to be familiar with. Kyleä

Petitioner cannot take refuge in the claim that the 1st indorsement was issued in the usual format as a routine response to an official request of the Commissioner of Excise Tax after it has verified the data given to them against available records of the division. We fully concur with the observation of the Sandiganbayan that --

While petitioner was grossly negligent in her duties for which she could be held liable under R.A. No. 3019 (e), petitioner may not be held liable for violation of Section 268(4) of the National Internal Revenue Code inasmuch as it has not been proven that there was an actual agreement between her and her co-accused to grant unwarranted tax credits to Tanduay. What is punished in said Sec. 268 (4) is the act of conspiring and colluding to defraud the government of revenues. It is well entrenched in our jurisprudence that conspiracy must be shown to exist as clearly and as convincingly as the commission of the offense itself. Absent any act or circumstance from which may be logically inferred the existence of a common design among the accused to commit the crime, the theory of conspiracy remains a speculation not a fact.15 [People vs. Viernes, 262 SCRA 641 [1996].]

Significantly, in the separate appeal of petitioner’s two other co-accused to this Court, entitled Pareño vs. Sandiganbayan and the People of the Philippines,16 [256 SCRA 242 [1996].] we ruled that "the acts of petitioners and that of Evangelista may be considered concerted only because they performed interrelated functions but there is no actual proof that conspiracy existed between the parties." CalrkyÓ

WHEREFORE, the decision of the Sandiganbayan in Criminal Case No. 14208 convicting petitioner Potenciana M. Evangelista of violation of Section 268 (4) of the National Internal Revenue Code is REVERSED and petitioner is accordingly ACQUITTED. The decision of the Sandiganbayan in Criminal Case No. 14209 convicting petitioner of violation of R.A. 3019 (e) of the Anti-Graft and Corrupt Practices Act is AFFIRMED with the MODIFICATION that petitioner is sentenced to suffer an indeterminate penalty of imprisonment of six (6) years and one month as minimum to twelve (12) years as maximum. The penalty of perpetual disqualification from public office is likewise imposed on her. No costs.

Davide, Jr., C.J., Puno, Kapunan, and Pardo, JJ., concur.