PEOPLE OF THE PHILIPPINES v. CONDI WILLIAM INDUSTRIAL CORP. / DANIEL Y. CHUA

CTA Form No. 8 (For DCC) 1111111111111111111111 1111111111 1111111111 11111111111111111111 1111111111 11111111 19-000124-0013 REPUBLIC OF THE PIDLIPPINES COURT OF TAX APPEALS QUEZON CITY SPECIAL FIRST DIVISION CTA CRIM. CASE NO. 0 -712 PEOPLE OF THE PHILIPPINES, Plaintiff, - versus- NOTICE OF RESOLUTION CONDI WILLIAM INDUSTRIAL CORP. I DANIEL Y. CHUA, Accused. To: PROSECUTOR GENERAL BENEDICTO A. MALCONTENTO SR. STATE DEPUTY PROS. RICHARD ANTHONY D. FADULLON ASST. STATE PROS. ZENAMAR J.L. MACHACON-CAPARROS Department of Justice Padre Faura Street, Ermita, Manila COMMISSIONER OF INTERNAL REVENUE Thru: Prosecution Division Room 704, BIR National Office Building Sen. Miriam P. Defensor-Santiago Avenue Diliman, Quezon City DIRECTOR National Bureau of Investigation Taft Avenue, Ermita, Manila PNPCHIEF Thru: CIDG Philippine National Police National Headquarters Camp General Rafael Tagle Crame EDSA, Quezon City CHIEF, WARRANT AND SUBPOENA SECTION Manila Police District United Nations Avenue, Ermita, Manila CHIEF, WARRANT AND SUBPOENA SECTION Antipolo City Police Station Sitio Tanag, Brgy. San Jose Antipolo City GREETINGS: You are hereby notified by these presents that on February 2, 2024, a Resolution was rendered in the above-entitled case, copy of which is attached hereto. Quezon City, Philippines, February 5, 2024. Atty. Maria ~F. Chan-Te Executi~of Court II

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY FIRST DIVISION PEOPLE OF THE CTA Crim. Case No. 0-712 PHILIPPINES, Members: Plaintiff, DEL ROSARIO, P.J. , BACORRO-VILLENA, and -versus- CUI-DAVID, JJ. CONDI WILLIAM INDUSTRIAL CORP. / Promulgated: DANIEL Y. CH~~~sed. FEB 02 202'41J_:(J)A/If ------ 3~ - X- - - - - - - - - - - - - - - - - - - - - - - - - - - -X RESOLUTION In the Resolution promulgated on June 11 , 2020, 1 the Court found that the Warrant of Arrest issued against accused Daniel Y. Chua had been returned unserved since he could not be found at the given address despite diligent efforts and an Alias Warrant of Arrest was already issued. Thus, this Court's Second Division ordered that the instant case be archived so that it may not remain pending for an indefinite period. Meanwhile , upon p eriodic review of archived cases and their factual antecedents, the Court finds that this case should be dismissed on the ground of prescription. Prescription in criminal cases is a matter of substantive law.2 Although prescription has not been raised as an issue, it is well-settled that if the pleadings or the evidence on record show that the claim is barred by prescription, the Court may motu proprio order its dismissal on said ground.3 1 The Resolution dated June II , 2020, was signed by Associate Justice Juanita C. Castat'leda, Associate Justice Ciel ito N. M indaro-Grull a, and Associate Justices Jean Marie A. Bacorro-Villena, Docket, p. 9 1. 2 Reodica v. Court ofAppeals. G.R. No. 125066. 8 .Ju ly 1998. 354 SCRA 90- 111 . 3 Commissioner ofInternal Revenue v. Nippon Express (Phils.) Corp .. G.R. No. 2 12920, 16 September 20 I5, 769 SCRA 86 1-87 1

RESOLUTION CTA Crim. Case No . 0-712 People of the Philippines v. Condi William Industrial Corp. I Daniel Y. Chua x-------------- -- ------ ------- -- ----- --- ----------- ---- -------------- ---- -- ---- ------------x Section 281 of the Na tional Internal Revenue Code (NIRC) of 1997, as amended, provides: SEC. 281 . Prescription for Violations of any Provision of this Code. - All violations of any provision of this Code shall prescribe after five (5) years. Prescription shall begin to run from the day of the commission of the violation of the law, and if the same be not kn own a t the time, from the discovery thereof and the institution of judicial proceedings for its investigation and punishment. The prescript ion sh a ll be interrupted wh en proceedings are instituted against th e guilty per sons and sh all begin to run again if the proceedings are dismissed for reas ons n ot con stituting jeopa rdy. The term of prescription sh a ll n ot ru n wh en th e offender is a bsent from the Philippin e s. [Emphases and underscoring supplied.] In the case of Emilio E. Lim, Sr. and Antonia Sun Lim us. Court of Appeals ("Lim"), 4 the crime of failure to pay tax is committed only after receipt of the final notice and demand for payment, coupled with the willful refusal to pay the taxes due within the allotted period. The Supreme Court ruled as follows : Inasmuch as the final notice and demand for payment of the d eficien cy taxes was served on petitioners on July 3 , 1968, it was only th en th at th e cau se of action on the part of the BIR accrued . This is so because prior to the receipt of the letter-assessment, no violation has yet been committed by the taxpayers. The offense was committed onlv after receipt was coupled with the willful refusal to pay the taxes due within the allotted period. The two criminal informa tions, h aving been filed on June 23, 1970 , a re well-within th e five-year prescriptive period a nd a re n ot time-barred . [Emp hasis and underscoring supplied] The BIR circularized the pronouncement in Lim through the issuance of Revenue Memorandum Circular (RMC) No. 101- 90,5 which states: 4 G.R. Nos. 48 134-3 7. October 18. 1990. 268 PH IL 680-692. 5 SU BJECT: Determination ofWhen Cause of Actionfor Willful f-ailure to Pay Deficiency Tax Occurs ; and Prescription under Section 280 ofthe Tax Code.

RESOLUTION CTA Crim. Case No. 0-71 2 People of the Philippines v . Condi William Industrial Corp . I Daniel Y. Chua x------------------------------------------------------------------------------------------x For the information and guidance of all concerned, the following are the salient features of the decision promulgated by the Supreme Court on October 19, 1990, in the case entitled "Emilio E. Lim} Sr. et al. vs. Court of Appeals} et al. ," G.R. Nos. L-48134-37. 1. When cause of action for willful failure to pay deficiency tax occurs. The cause of action for willful failure to pay deficiency tax occurs when the final notice and demand for the payment thereof is served on the taxpayer. Prior thereto, no violation is committed. The offense is committed only after receipt is coupled with refusal to pay the tax within the allotted period. 2. Prescription under Section 280 of the Tax Code. (a) The 5-year prescriptive period in an offense or willful failure to pay a deficiency tax assessment commences to run only after the receipt of the final notice and demand by the taxpayer, and he refuses to pay. [Emphasis supplied] In this case, accused was charged with violation of Section 255 of the NIRC of 1997, as amended. In the Joint Complaint-Affidavit, 6 it was alleged that the Final Assessment Notice (FAN) was issued to respondent CONDI WILLIAM on January 14, 2013; that it was personally received by the taxpayer's authorized representative; and that on July 12, 2013, a Preliminary Collection Letter was issued to respondent CONDI WILLIAM for the settlement of deficiency taxes.7 The FAN would have attained finality upon the lapse of thirty (30) days from receipt of said notice in accordance with Section 228 of the NIRC of 1997, as amended. 8 Thus, following the allegations of plaintiff, the assessment would have become final on February 14, 2013. 6 Docket, pp. 38-44. 7 Joint Complaint-Affidavit, pars. 12 to 14. 8 SEC. 228. Protesting of Assessment. - When the Commissioner or his duly authorized representative finds that proper taxes should be assessed, he shall first notify the taxpayer of his findings: Provided, however, That a pre-assessment notice shall not be required in the fo llowing cases: Such assessment may be protested administratively bv filing a r equest for reconsideration or reinvestigation within thirty (30) days from receipt of the a ssessment in such form and manner as may be prescribed by implementing ru les and regulations. Within sixty (60) days from filing of the protest, all relevant supporting documents shall have been submined; otherwise, the assessment shall become final.

RESOLUTION CTA Crim. Case No. 0-712 People of the Philippines v. Condi William Industrial Corp. f Daniel Y. Chua Page 4 of6 x-------------------------------- ------------------------------------------------- ---------x In counting the prescriptive period provided under Section 281 of the NIRC of 1997, as amended, Lim, as quoted above, is instructive that it is the filing of the criminal information that must fall within the five-year prescriptive period. The Supreme Court enunciated in Lim that tax criminal cases are basically imprescriptible. However, violations shall nevertheless prescribe if more than five (5) years have lapsed from the time of the commission of the offense if known, and as applicable in this case, i.e., the date of finality of the FANI FLD, up to the date of filing of the Information before the Court. This Court is aware that the Lim case interpreted Section 354 of the 1939 Tax Code. 9 However, such provision was subsequently reproduced in Section 281 of the NIRC of 1997, as amended. We compare: Section 354 of the 1939 Tax Section 281 of the NIRC of 1997 Code SECTION 281. Prescription for SECTION 354. Prescription for Violations of any Provision of this Violations of Any Provisions of this Code. - All violations of any Code. - All violations of a ny provision of this Code shall provisions of this Code shall prescribe after five (5) years. prescribe after five years. Prescription shall begin to run from Prescription shall begin to run from the day of th e commission of the the day of the commission of the violation of the law, a nd if th e same violation of the law, and if th e same be not known at the time, from th e be not known at the time, from the discovery thereof and the discovery thereof and the institution of judicial proceedings institution of judicial proceedings for its investigation and for its investigation and punishment. punishment. The prescription shall be The prescription shall be interrupted when proceedings are interrupted when proceedings a re instituted against the guilty instituted against the guilty persons and shall begin to run persons and shall begin to run agam if the proceedings are again if the proceedings are dismissed for reasons not dismissed for reasons not constituting jeopardy. constituting jeopardy. The term of prescription s h all not The term of prescription shall not run when the offender is a bsent run when the offender is a bsent from the Philippines. from the Philippines 9 Commonwealth Act No. 466, June 15, 1939.

RESOLUTION CTA Crim. Case No. 0-712 People of the Philippines v. Condi William Industrial Corp. I Daniel Y. Chua Page 5 of6 x------------------------------------------------------------------------------------------x Considering that the wording of Section 354 of the 1939 NIRC was adopted and reproduced in Section 281 of the 1997 NIRC, the legislature is presumed to have adopted the construction placed upon such provision by the Supreme Court in Lim.1o Thus, pursuant to Lim, plaintiff had five (5) years counted from February 14, 2013, or until February 14, 2018 , to file the Information before the Court. The Information dated December 18, 2018 was filed with this Court only on March 18, 2019. Clearly, when the present Information was filed on March 18, 2019, the government's right to institute a criminal action against accused had already prescribed for more than one (1) year. Even if the period is counted from the issuance of the Preliminary Collection Notice, plaintiff would have five (5) years from July 12, 2013, or until July 12, 2018, to file the Information in Court. Hence, the filing of the Information on March 18, 2019, is beyond the prescriptive period. In Romualdez v. Marcelo, 11 the Supreme Court thus discussed: Here the State is the grantor, surrendering by act of grace its rights to prosecute, a nd declaring the offense to be no longer the subject of prosecution. The statute is not a sta tute of process, to be scantily and grudgin gly applied, but an amnesty, declaring that after a certa in time oblivion shall be cast over the offense; ...that from henceforth[,] he may cease to preserve the proofs of his innocence, for the proofs of his guilt are blotted ou t. Hen ce[,) it is that statutes of limitation are to be liberally construed in favor of the defendant, not only because such liberality of construction belongs to all acts of amnesty and grace, but because the very existence of the statute, is a recognition and notification by t he legislature of the fact that time, while it gradually wears out proofs of innocence, has assign ed to it fixed and positive periods in which it destroys proofs of guilt. Independently of these views, it must be remembered th at delay in instituting prosecutions is not only productive of expense to t h e State, but of peril to public justice in the attenuation and distortion, even by mere natural lapse of memory, of testimony . It is the policy of the law that prosecutions should be prompt, and that statutes, enforcing such promptitude should be vigorously m aintained. They are not merely a cts of grace, but checks 10 People v. Castillo, CTA � 8 Crim. Case No. 053 (CTA Crim Case No. 0 -663) (Resolution). June 8, 202 1. 11 G.R. Nos. 1655 10-33 (Resolution), July 28,2006,529 PHI L 90-1 19.

RESOLUTION CTA Crim. Case No. 0-712 People of the Philippines v. Condi William Industrial Corp. I Daniel Y. Chua Page 6 of6 X------------------------------------------------------------------------------------------X imposed by the State upon itself, to exact vigilant activity from its subalterns, and to secure for criminal trials the best evidence that can be obtained." Indeed, there is no reason why we should deny petitioner the benefits accruing from the liberal construction of prescriptive laws on criminal statutes. Prescription emanates from the liberality of the State....Any doubt on this matter must be resolved in favor of the grantee thereof, the accused. WHEREFORE, premises considered, CTA Crim Case No. 0-712 is hereby WITHDRAWN from the archives and accordingly DISMISSED on the ground of prescription of the offense charged. The Alias Warrant of Arrest issued against accused 1s hereby RECALLED and SET ASIDE. SO ORDERED. Presiding Justice JEANMA LANE~~1VID Associate Justice