BACHE & CO. (PHIL.), INC. and FREDERICK E. SEGGERMAN v. HON.
JUDGE  After the session had adjourned, Judge Ruiz was informed that the
VIVENCIO M. RUIZ, MISAEL P. VERA, in his capacity as Commissioner of
Internal Revenue, ARTURO LOGRONIO, RODOLFO DE LEON, GAVINO
VELASQUEZ, MIMIR DELLOSA, NICANOR ALCORDO, JOHN DOE, JOHN
DOE, JOHN DOE, and JOHN DOE
February 27, 1971 | Villamor, J. | Corporate Powers
SUMMARY: At the request of the CIR, Judge Ruiz issued a search warrant
against Bache & Co. for violations of the NIRC. On account of said warrant,
agents of the BIR were able to seize six boxes of documents from the
company's office in Makati. Said documents became the basis of the tax
assessments issued subsequently by the BIR against Bach & Co. The SC held
that the search warrant issued by Judge Ruiz was in violation of the
Constitution and the ROC. As such, the assessments springing from the
illegally seized documents should not be enforced.
DOCTRINE: A corporation is entitled to immunity against unreasonable
searches and seizures. A corporation is, after all, but an association of
individuals under an assumed name and with a distinct legal entity. In
organizing itself as a collective body it waives no constitutional immunities
appropriate to such body. Its property cannot be taken without
compensation. It can only be proceeded against by due process of law, and is
protected against unlawful discrimination.
FACTS:
 On February 24, 1970, Misael P. Vera, Commissioner of Internal Revenue,
wrote a letter addressed to Judge Vivencio M. Ruiz requesting the
issuance of a search warrant against Bache & Co. (Phils.) for violation of
Section 46(a) of the NIRC, in relation to all other pertinent provisions
thereof, particularly Sections 53, 72, 73, 208 and 209. The said letter
likewise authorized Revenue Examiner Rodolfo de Leon to make and file
the application for search warrant.
 In the afternoon of the following day, De Leon and his witness, Arturo
Logronio, went to the CFI of Rizal. They brought with them the following
papers: Vera’s aforesaid letter-request; an application for search warrant
already filled up but still unsigned by De Leon; an affidavit of Logronio
subscribed before De Leon; a deposition in printed form of Logronio
already accomplished and signed by him but not yet subscribed; and a
search warrant already accomplished but still unsigned by Judge Ruiz.
 At that time, Judge Ruiz was still hearing a different case. So by means of
a note, he instructed his Deputy Clerk of Court to take the depositions of
De Leon and Logronio.
depositions had already been taken. The stenographer, upon request of
Judge Ruiz, read to him her stenographic notes; and thereafter, Judge Ruiz
asked Logronio to take the oath and warned him that if his deposition was
found to be false and without legal basis, he could be charged for perjury.
Judge Ruiz then signed De Leon’s application for search warrant and
Logronio’s deposition. Search Warrant No. 2-M-70 was then sign by Judge
Ruiz and accordingly issued.
 Three days later, or on February 28, 1970, which was a Saturday, the BIR
agents served the search warrant against Bache & Co. at their Ayala
Avenue office in Makati. The company's lawyers protested the search on
the ground that no formal complaint or transcript of testimony was
attached to the warrant. The agents nevertheless proceeded with their
search which yielded six boxes of documents.
 On March 3, 1970, Bache & Co. filed a petition before the CFI of Rizal
praying that the search warrant be quashed, dissolved or recalled, that
preliminary prohibitory and mandatory writs of injunction be issued,
that the search warrant be declared null and void, and that the BIR and
Judge Ruiz be ordered to pay Bache & Co. jointly and severally, damages
and attorney’s fees. This petition was denied.
 On April 16, 1970, the BIR made tax assessments on Bache & Co. in the
total sum of P2,594,729.97, partly, if not entirely, based on the documents
thus seized.
 Hence, the instant petition for certiorari, prohibition and mandamus,
with prayer for a writ of preliminary mandatory and prohibitory
injunction..
RULING: Petition granted. Search warrant issued by Judge Ruiz is declared
null and void. Respondents are permanently enjoined from enforcing the said
search warrant. The documents, papers and effects seized thereunder are
ordered to be returned to Bache & Co. Officials of the BIR and their
representatives are permanently enjoined from enforcing the assessments
based on the documents, papers and effects seized under the search warrant
herein nullified, and from using the same against Bache & Co. in any criminal
or other proceeding. No pronouncement as to costs.
Whether the search warrant issued by Judge Ruiz is valid. – NO.
 Search Warrant No. 2-M-70 issued by Judge Ruiz is null and void on three
grounds:
Judge Ruiz failed to personally examine the complainant and his witness.
 The participation of Judge Ruiz in the proceedings which led to the
issuance of Search Warrant No. 2-M-70 was limited to listening to the
stenographer’s readings of her notes, to a few words of warning against
the commission of perjury, and to administering the oath to the
complainant and his witness. This cannot be considered a personal
examination. If there was an examination at all of the complainant and his
witness, it was the one conducted by the Deputy Clerk of Court.
 Judge Ruiz's omission was in violation of the Constituion and the ROC.
Art. III, Sec. 1, Constitution provides that:
The right of the people to be secure in their persons, houses,
papers and effects against unreasonable searches and
seizures shall not be violated, and no warrants shall issue but
upon probable cause, to be determined by the judge after
examination under oath or affirmation of the complainant
and the witnesses he may produce, and particularly
describing the place to be searched, and the persons or things
to be seized.
 Rule 126 of the Revised ROC provides that:
A search warrant shall not issue but upon probable cause in
connection with one specific offense to be determined by the
judge or justice of the peace after examination under oath or
affirmation of the complainant and the witnesses he may
produce, and particularly describing the place to be searched
and the persons or things to be seized (Sec. 3) and that the
judge or justice of the peace must, before issuing the warrant,
personally examine on oath or affirmation the complainant
and any witnesses he may produce and take their
depositions in writing, and attach them to the record, in
addition to any affidavits presented to him (Sec. 4).
 The examination of the complainant and the witnesses he may produce,
required by Art. III, Sec. 1, par. 3, of the 1935 Constitution, and by Secs. 3
and 4, Rule 126 of the Revised Rules of Court, should be conducted by the
judge himself and not by others. The phrase "which shall be determined
by the judge after examination under oath or affirmation of the
complainant and the witnesses he may produce," appearing in the said
constitutional provision, was introduced by Delegate Francisco as an
amendment to the draft submitted by the Sub-Committee of Seven. Part
of the deliberations provided that:
MR. LAUREL. . . . The reason why we are in favor of this
amendment is because we are incorporating in our
constitution something of a fundamental character. Now,
before a judge could issue a search warrant, he must be
under the obligation to examine personally under oath
the complainant and if he has any witness, the witnesses
that he may produce . . .
 It was precisely on account of the intention of the delegates to the
Constitutional Convention to make it a duty of the issuing judge to
personally examine the complainant and his witnesses that the question
of how much time would be consumed by the judge in examining them
came up before the Convention.
 As applied in the instant case, the reading of the stenographic notes to
Judge Ruiz did not constitute sufficient compliance with the
constitutional mandate and the rule; for by that manner Judge Ruiz did
not have the opportunity to observe the demeanor of the complainant
and his witness, and to propound initial and follow-up questions which
the judicial mind, on account of its training, was in the best position to
conceive. These were important in arriving at a sound inference on the
all-important question of whether or not there was probable cause.
The search warrant was issued for more than one specific offense.
 Sec. 3 of Rule 126 of the Revised ROC provides that "No search warrant
shall issue for more than one specific offense."
 In the instant case, Search Warrant No. 2-M-70 was issued for "violation
of Sec. 46(a) of the National Internal Revenue Code in relation to all other
pertinent provisions thereof particularly Secs. 53, 72, 73, 208 and 209."
 As can be seen, the search warrant in question was issued for at least four
distinct offenses under the Tax Code. The first is the violation of Sec.
46(a), Sec. 72 and Sec. 73 (the filing of income tax returns), which are
interrelated. The second is the violation of Sec. 53 (withholding of income
taxes at source). The third is the violation of Sec. 208 (unlawful pursuit of
business or occupation); and the fourth is the violation of Sec. 209 (failure
to make a return of receipts, sales, business or gross value of output
actually removed or to pay the tax due thereon). Even in their
classification the six above-mentioned provisions are embraced in two
different titles: Secs. 46(a), 53, 72 and 73 are under Title II (Income Tax);
while Secs. 208 and 209 are under Title V (Privilege Tax on Business and
Occupation).
The search warrant does not particularly describe the things to be seized.
 Art III, Sec. 1, of the 1935 Constitution, and Sec. 3, Rule 126 of the Revised
ROC require that the warrant should particularly describe the things to
be seized. The evident purpose and intent of this requirement is to limit
the things to be seized to those, and only those, particularly described in
the search warrant — to leave the officers of the law with no discretion
 regarding what articles they shall seize, to the end that "unreasonable
searches and seizures" may not be made, — that abuses may not be
committed.
 A search warrant may be said to particularly describe the things to be
seized when the description therein is as specific as the circumstances
will ordinarily allow; or when the description expresses a conclusion of
fact — not of law — by which the warrant officer may be guided in
making the search and seizure; or when the things described are limited
to those which bear direct relation to the offense for which the warrant
is being issued.
 This requirement was not met by Judge Ruiz's issuance of Search Warrant
No. 2-M-70. In fact, the documents, papers and effects sought to be seized
are described in the Search Warrant in such general terms as follows:
"Unregistered and private books of accounts (ledgers,
journals, columnars, receipts and disbursements books,
customers ledgers); receipts for payments received;
certificates of stocks and securities; contracts, promissory
notes and deeds of sale; telex and coded messages; business
communications, accounting and business records; checks
and check stubs; records of bank deposits and withdrawals;
and records of foreign remittances, covering the years 1966
to 1970."
 The Search Warrant tends to defeat the major objective of the Bill of
Rights, i.e., the elimination of general warrants, for the language used
therein is so all-embracing as to include all conceivable records of Bache
& Co., which, if seized, could possibly render its business inoperative.
[TOPIC]
Whether Bache & Co. is entitled to protection against unreasonable
searches and seizures. – YES.
 BIR: A corporation is not entitled to immunity against unreasonable
searches and seizures. An officer of a corporation which is charged with
a violation of a statute of the country of its creation, or of an act of
Congress passed in the exercise of its constitutional powers, cannot
refuse to produce the books and papers of such corporation.
 SC: A corporation is entitled to immunity against unreasonable searches
and seizures. A corporation is, after all, but an association of individuals
under an assumed name and with a distinct legal entity. In organizing
itself as a collective body it waives no constitutional immunities
appropriate to such body. Its property cannot be taken without
compensation. It can only be proceeded against by due process of law,
and is protected against unlawful discrimination.
 The tax assessments made by the BIR against Bache & Co. were entirely,
or at least partly, based on the documents seized by virtue of Search
Warrant No. 2-M-70. Furthermore, the fact that the assessments were
made some one and one-half months after the search and seizure on
February 25, 1970, is a strong indication that the documents thus seized
served as basis for the assessments.
 On account of the Court's findings that the subject Search Warrant was
issued in violation of the Constitution and the ROC, the BIR's assessments
springing from the illegally seized documents belonging to Bache & Co.
should necessarily be rendered invalid and should therefore not be
enforced.
[PROCEDURAL]
Whether certiorari lies in the instant case despite Bache & Co.'s failure
to file a motion for reconsideration of Judge Ruiz's order. – YES.
 First, when the questions raised before the SC are the same as those
which were squarely raised in and passed upon by the lower court, the
filing of a motion for reconsideration in said court before certiorari can
be instituted in the SC is no longer a prerequisite.
 Second, the rule requiring the filing of a motion for reconsideration
before an application for a writ of certiorari can be entertained was never
intended to be applied without considering the circumstances. In the case
at bar time is of the essence in view of the tax assessments sought to be
enforced by respondent officers of the Bureau of Internal Revenue
against petitioner corporation, On account of which immediate and more
direct action becomes necessary.
 And third, the rule does not apply where, as in this case, the deprivation
of Bache & Co.'s fundamental right to due process taints the proceeding
against them in the CFI not only with irregularity but also with nullity.
NOTES:
CENTRAL AZUCARERA DON PEDRO vs. COURT OF TAX APPEALS and
COMMISSIONER OF INTERNAL REVENUE (f8)
G.R. Nos. L-23236 and L-23254 || May 31, 1967 || REYES, J.B.L., J.:
FACTS:
This is a consolidation of two cases filed by P:
Case #1:
P had been filing its income tax returns on the "fiscal year" basis ending
August 31, of every year. For the fiscal year 1954, it filed its ITR for which P
paid P491,038.00. R-CIR assessed P167,935.00 as deficiency income tax but
DID NOT assess and impose any interest. P protested the deficiency
assessment, which R modified to P10,062.00. Aside from modifying the
amount, R also added the sum of P1,509.30 as ½% monthly interest,
pursuant to Section 51 (d) of the NIRC, as amended by RA 2343 (effective June
20, 1959). The interest was computed from June 20, 1959 to December 20,
1961 which was the date of the revised assessment.
P paid the P10,062.00 but objected to the first-time imposition of interest. R
maintained that such was correct and valid. P appealed to CTA, saying that
the imposition of interest on income tax earned prior to the effectivity of the
amendatory law (Rep. Act 2343) will be tantamount to giving it retroactive
application. CTA upheld R.
Case # 2:
P filed its ITR for the years 1955-1958. R assessed deficiency income taxes in
the amount of P21,330.00 and interest of P2,307.10, such interest imposed
pursuant to the same provision above. P paid the deficiency and the interests
but subsequently claimed a refund of the P2,307, alleging the same grounds
as in the first case.
R was not able to decided immediately the claim. Because the end of the two-
year prescriptive period was already looming, P filed a petition for review in
CTA, disputing the legality and validity of the imposition of interest on taxable
incomes earned prior to, although assessed after, the effectivity of RA 2343.
CTA: Congress had power to impose interest on deficiency income tax due on
income earned prior to the amendatory law, but assessed after its enactment.
The deficiency income tax was assessed after the effectivity of the new law
(RA 2343), and inasmuch as the interest imposed has been computed only
from June 20, 1959 (which was the date of effectivity of said law), RA 2343 is
not being applied retroactively. It also ruled that the provision of Section 13
providing that its new tax rates should apply to income earned in 1959, did
not indicate that Congress intended to limit the applicability of the interest
prescribed in Section 51 (d) of the NIRC, to the deficiency income tax on
income earned after the effectivity of the new law, since said Section 51 (d)
does not distinguish between taxable income earned prior to, or after, the
effectivity of said Republic Act No. 2343.
ISSUE:
W/N RA 2343 is ex post facto law and therefore unconstitutional - NO
RATIO:
Under the old Section 51 (a), the CIR was required to assess the tax due, based
on the taxpayer's return, and notify the taxpayer of said assessment. Under
subsection (b) of the same old Section 51, the time prescribed for the
payment of tax was fixed, whether or not a notice of the assessment was given
to the taxpayer. However, under the new provision, the time of payment is
also fixed and pre-determined (usually coinciding with the filing of the
return) without the necessity of giving notification of the assessment to the
taxpayer by the Commissioner.
Under the old Section 51 (e), the interest on deficiency was imposed from the
time the tax became due; while under the new Section 51 (d), said interest is
imposed on the deficiency from the date prescribed for the payment of the
tax.
P's contention is that interest accrues only upon non-payment of the tax
within the period prescribed. However, looking at the new rules, such interest
also accrues not only upon non-payment of the basic income tax but also on
the deficiency tax, since the deficiency was part and parcel of petitioner's
income tax liability.
The new Section 51 (d) expressly provides that the interest on deficiency
shall be assessed at the same time as the deficiency income tax; and that R
imposed and sought to collect the interest only from June 20, 1959, which was
the date of effectivity of said RA 2343; that the deficiency income taxes in
question were assessed and unpaid when said Act was already in force, CTA
correctly held that said Section 51 (d), as amended, is not being applied
retroactively as contended by petitioner herein.
Also, such application of the new law worked in favor of P because instead of
imposing the rate of 1% monthly interest as prescribed in the old section 51
(e) from the time the tax became due, i.e., from January 15, — 1955, 1956,
1957, 1958 and 1959, respectively, R merely imposed the new ½% monthly
interest from January 20, 1959, which interests, as computed, are less than
what would be due under the old law.

Re: RA 2343 as ex post facto law

It is to be noted that the collection of interest in these cases is not penal in

nature, thus —
the imposition of . . . interest is but a just compensation to the state for the
delay in paying the tax, and for the concomitant use by the taxpayer of funds
that rightfully should be in the government's hands. The fact that the interest
charged is made proportionate to the period of delay constitutes the best
evidence that such interest is not penal but compensatory.

and we had already held that —

This prohibition applies only to criminal or penal matters, and not to laws
which concern civil matters or proceedings generally, or which affect or
regulate civil or private rights

Finally, section 13 of the amendatory Republic Act No. 2343 refers only to the
basic tax rates, which are made applicable to income received in 1959
onward, but does not affect the interest due on deficiencies, which are left to
be governed by section 51 (d).
COLLECTOR OF INTERNAL REVENUE, (now Commissioner),
petitioner,
vs.
ALBERTO D. BENIPAYO, respondent.
Office of the Solicitor General for petitioner.
Carlos J. Antiporda for respondent.
DIZON, J.:
This is an appeal taken by the Collector of Internal Revenue from
the decision of the Court of Tax Appeals dated January 23, 1948,
reversing the one rendered by the former, thereby relieving
respondent Alberto D. Benipayo from the payment of the deficiency
amusement tax assessed against him in the total amount of
P12,093.45.
Respondent is the owner and operator of the Lucena Theater
located in the municipality of Lucena, Quezon. On October 3, 1953
Internal Revenue Agent Romeo de Guia investigated respondent's
amusement tax liability in connection with the operation of said
theater during the period from August, 1952 to September, 1953.
On October 15, 1953 De Guia submitted his report to the Provincial
Revenue Agent to the effect that respondent had
disproportionately issued tax-free 20-centavo children's
tickets. His finding was that during the years 1949 to 1951 the
average ratio of adults and children patronizing the Lucena Theater
was 3 to 1, i.e., for every three adults entering the theater, one child
was also admitted, while during the period in question, the
proportion is reversed - three children to one adult. From this he
concluded that respondent must have fraudulently sold two tax-
free 20-centavo tickets, in order to avoid payment of the
amusement tax prescribed in Section 260 of the National Internal
Revenue Code. Based on the average ratio between adult and
children attendance in the past years, Examiner de Guia
recommended a deficiency amusement tax assessment against
respondent in the sum of P11,193.45, inclusive of 25%
surcharge, plus a suggested compromise penalty of P900.00 for
violation of section 260 of the National Internal Revenue Code, or a
total sum of P12,093.45 covering the period from August, 1952 to
September, 1953 inclusive. On July 14, 1954, petitioner issued a
deficiency amusement tax assessment against respondent,
demanding from the latter the payment of the total sum of
P12,152.93 within thirty days from receipt thereof. On August 16,
1954, respondent filed the corresponding protest with the
Conference Staff of the Bureau of Internal Revenue. After due
hearing, the Conference Staff submitted to petitioner Collector of
Internal Revenue its finding to the effect that the "meager reports
of these fieldmen (Examiner de Guia and the Provincial Revenue
Agent of Quezon) are mere presumptions and conclusions, devoid
of findings of the fact of the alleged fraudulent practices of the
herein taxpayer". In view thereof, and as recommended by the
Conference Staff, petitioner referred the case back to the
Provincial Revenue Agent of Quezon for further investigation.
The report submitted by Provincial Revenue Officer H.I. Bernardo
after this last investigation partly reads as follows:.
The returns from July 1 to July 11, showed that 31.43% of the entire
audience of 12,754 consisted of adults, the remaining 68.57% of
children. During this said period due, perhaps, to the absence of
agents in the premises, subject taxpayer was able to manipulate the
issuance of tickets in the way and manner alleged in Asst. De Guia's
indorsement report mentioned above. But during the period from
July 14 to July 24, 1955, when agents of this Office supervised in the
sales of admission tickets the sales for adults soared upwards to
76% while that for children dropped correspondingly to 24%.
It is opined without fear of contradiction that the ratio of three (3)
adults to every one (1) child in the audience or a proportion of
75:25 as reckoned in Asst. De Guia's indorsement report to this
Office's new findings of a proportion of 76:24, represents and
conveys the true picture of the situation under the law of averages,
provided that the film being shown is not a children's show. There
is no hard and fast rule in this regard, but this findings would seem
to admit no contradiction.
Please note that the new findings of this Office is not a direct proof
of what has transpired during the period investigated by Asst. De
Guia and now pending before the Conference Staff", . . (Exh. 3, BIR
Record, p. 137-138).
After considering said report, the Conference Staff of the Bureau
of Internal Revenue recommended to the Collector of Internal
Revenue the issuance of the deficiency amusement tax
assessment in question.
The only issue in this appeal is whether or not there is sufficient
evidence in the record showing that respondent, during the period
under review, sold and issued to his adult customers two tax-free
20-centavo children's tickets, instead of one 40-centavo ticket for
each adult customer; to cheat or defraud the Government. On this
question the Court of Tax Appeals said the following in the
appealed decision:.
To our mind, the appealed decision has no factual basis and must be
reversed. An assessment fixes and determines the tax liability of a
taxpayer. As soon as it is served, an obligation arises on the part of
the taxpayer concerned to pay the amount assessed and demanded.
Hence, assessments should not be based on mere presumptions
no matter how reasonable or logical said presumptions may be.
Assuming arguendo that the average ratio of adults and children
patronizing the Lucena Theater from 1949 to 1951 was 3 to 1, the
same does not give rise to the inference that the same conditions
existed during the years in question (1952 and 1953). The fact that
almost the same ratio existed during the month of July, 1955 does
not provide a sufficient inference on the conditions in 1952 and
1953. . .
In order to stand the test of judicial scrutiny, the assessment must
be based on actual facts. The presumption of correctness of
assessment being a mere presumption cannot be made to rest on
another presumption that the circumstances in 1952 and 1953 are
presumed to be the same as those existing in 1949 to 1951 and July
1955. In the case under consideration there are no substantial
facts to support the assessment in question. ...
A review of the records has not disclosed anything sufficient to
justify a reversal of the above finding made by the Court of Tax
Appeals. It should be borne in mind that to sustain the deficiency
tax assessed against respondent would amount, in effect, to a
finding that he had, for a considerable period of time, cheated and
defrauded the government by selling to each adult patron two
children's tax-free tickets instead of one ticket subject to the
amusement tax provided for in Section 260 of the National Internal
Revenue Code. Fraud is a serious charge and, to be sustained, it
must be supported by clear and convincing proof which, in the
present case, is lacking.
The claim that respondent admitted having resorted to the
anomalous practice already mentioned is not entirely correct. What
respondent appears to have admitted was that during a certain
limited period he had adopted a sort of rebate system applicable to
cases where adults and children came in groups and were al
anomalous practice already mentioned is not entirely correct. What
respondent appears to have admitted was that during a certain
limited period he had adopted a sort of rebate ystem applicable to
cases where adults and children came in group and were all charged
20 centavo admission tickets. This practice was, however,
discontinued when he was informed by the Bureau of Internal
Revenue that it was not in accordance with law.
WHEREFORE, the appealed judgment is hereby affirmed with costs.