DR. JOEL C. MENDEZ, PETITIONER, VS. PEOPLE OF THE PHILIPPINES AND COURT OF TAX APPEALS, RESPONDENTS.

Mendez versus People of the Philippines

The Case

This is a petition for certiorari and prohibition filed by Dr. Joel C. Mendez against the People of the Philippines and the Court of Tax Appeals. The petitioner assails two resolutions of the Court of Tax Appeals that allowed the prosecution to amend the information after he had already been arraigned and had pleaded not guilty. The case matters because it draws the line between a formal amendment, which the Rules allow even after plea, and a substantial amendment, which they forbid once the accused has entered his plea — and it shows how that line is tested against the accused's right to be informed of the nature and cause of the accusation against him.

Procedural History

The Bureau of Internal Revenue filed a complaint-affidavit with the Department of Justice against the petitioner. After preliminary investigation, the State Prosecutor found probable cause, and an information for violation of Section 255 of the Tax Reform Act of 1997 was filed with the Court of Tax Appeals. The petitioner was arraigned and pleaded not guilty. The prosecution then filed a Motion to Amend Information with Leave of Court. The petitioner failed to file his comment within the required period, and the First Division of the Court of Tax Appeals granted the motion, ruling that the amendment was merely formal. The petitioner moved for reconsideration, which was denied. He then filed the present petition for certiorari and prohibition with the Supreme Court, questioning both resolutions of the Court of Tax Appeals.

Facts

The Bureau of Internal Revenue alleged that the petitioner had been operating as a single proprietor, doing business and exercising his profession for taxable years 2001 to 2003, under several trade names registered with different revenue district offices, including Mendez Body and Face Salon and Spa, Mendez Body and Face Skin Clinic, Weigh Less Center, and Mendez Weigh Less Center. The Bureau claimed that he failed to file his income tax returns for those years and thereby evaded his obligation to pay the correct taxes.

In his defense, the petitioner admitted operating as a single proprietor under these trade names in Quezon City, Makati, Dagupan and San Fernando. He countered, however, that his business establishments were registered only in 2003 at the earliest, so they were not yet in existence at the time of his alleged failure to file his return.

After preliminary investigation, the State Prosecutor found probable cause for non-filing of income tax returns for taxable years 2001 and 2002 and for failure to supply correct and accurate information as to his true income for taxable year 2003. An information was filed charging him with violation of Section 255 of the Tax Reform Act of 1997, alleging that on or about the fifteenth day of April, 2002, he willfully failed to file his income tax return for taxable year 2001. He was arraigned and pleaded not guilty. The prosecution then moved to amend the information, changing the alleged branches of his business, adding the phrase "doing business under the name and style of Weigh Less Center and Mendez Medical Group," and adding the phrase "for income earned." The Court of Tax Appeals allowed the amendment as merely formal, and denied reconsideration.

Issues

• Whether or not the remedy of certiorari is the proper remedy to question the resolutions of the Court of Tax Appeals.
• Whether or not the amendments made by the prosecution after the petitioner's arraignment are substantial in nature and must therefore be denied.

Applicable Provisions

Section 14, Rule 110 of the Revised Rules of Criminal Procedure governs the amendment of an information:

Amendment or substitution. — A complaint or information may be amended, in form or in substance, without leave of court, at any time before the accused enters his plea. After the plea and during the trial, a formal amendment may only be made with leave of court and when it can be done without causing prejudice to the rights of the accused.

This is the provision the Court construes, because the amendment here was sought and allowed only after the petitioner had already entered his plea.

Section 255 of the National Internal Revenue Code defines the offense charged:

Section 255. Failure to File Return, Supply Correct and Accurate Information, Pay Tax Withhold and Remit Tax and Refund Excess Taxes Withheld on Compensation. - Any person required under this Code or by rules and regulations promulgated thereunder to pay any tax, make a return, keep any record, or supply any correct and accurate information, who wilfully fails to pay such tax, make such return, keep such record, or supply correct and accurate information, or withhold or remit taxes withheld, or refund excess taxes withheld on compensation, at the time or times required by law or rules and regulations shall, in addition to other penalties provided by law, upon conviction thereof, be punished by a fine of not less than Ten thousand pesos and suffer imprisonment of not less than one year but not more than ten years.

This is the crime charged in both the original and the amended information, and the Court uses it to test whether the amendments changed the offense.

Ruling

On the first issue, the Court held that certiorari was the correct remedy. The remedy of appeal to the Court of Tax Appeals en banc is available only against a judgment or a final order. A judgment or order is final if it disposes of the action completely or terminates a particular stage of it. If the order merely resolves an incidental matter and leaves something more to be done on the merits, it is interlocutory, and the aggrieved party's only remedy after reconsideration is a petition for certiorari under Rule 65. The resolutions allowing the amendment were interlocutory.

On the second issue, the Court held that the amendments were merely formal. It explained that there is no precise definition of a substantial amendment, but that substantial matters consist of the recital of facts constituting the offense charged and determinative of the jurisdiction of the court. Amendments that do not charge another offense different from that charged in the original, or do not alter the prosecution's theory of the case so as to cause surprise to the accused and affect the form of defense he has or will assume, are merely formal.

The Court found that the change in the alleged date from 2001 to 2002 was no change at all, because the original information already alleged the fifteenth day of April, 2002, and the taxable year 2001. The addition of the phrase "for income earned" merely stated with additional precision something already contained in the original information. As to the branches and the name Mendez Medical Group, the Court noted that a sole proprietorship has no juridical personality of its own, and that a sole proprietor files a consolidated return in his principal place of business regardless of the number and location of his branches. The prosecution's theory — that the petitioner failed to file his income tax return for taxable year 2001 — remained unchanged. The Court distinguished Matalam versus Sandiganbayan, where the amendment altered the recital of facts constituting the offense and rendered the accused's defense unavailable.

Doctrine

A Bar candidate should retain these rules. Before plea, the prosecution may amend the information in form or in substance without leave of court. After plea and during trial, only a formal amendment may be made, with leave of court, and only when it can be done without causing prejudice to the rights of the accused. An amendment is formal if it does not charge another offense different from that charged in the original, or does not alter the prosecution's theory of the case so as to cause surprise to the accused and affect the form of defense he has or will assume. Prejudice exists when a defense under the original information would no longer be available after the amendment, and when any evidence the accused might have would be inapplicable to the information as amended. An order allowing an amendment is interlocutory, so the remedy is certiorari under Rule 65, not appeal.

Disposition

The petition was dismissed. The Court upheld the resolutions of the Court of Tax Appeals allowing the amended information, for failure to show grave abuse of discretion.

Remember This

Memorize the test: an amendment after plea is formal if it does not charge a different offense or alter the prosecution's theory so as to cause surprise and affect the form of defense. Examiners use this case to test the distinction between formal and substantial amendments, and the rule that an interlocutory order is questioned by certiorari, not appeal.