PEOPLE OF THE PHILIPPINES v. EVANGELINE M. SERTESA (F. Salvador,Jordan Plains Subd., Sta. Monica, Novaliches, Quezon City)

CTA Fonn No. 8 (For DCC) 1111111111111111111111 111111111111111 11111 11111111111111111111 111111111111111111 19-000317-001 0 REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY FIRST DIVISION CTA CRIM. CASE NO. 0-752 PEOPLE OF THE PHILIPPINES, Plaintiff, -versus- NOTICE OF RESOLUTION EVANGELINE M. SERTESA, Accused. To: SR. DEPUTY STATE PROS. RICHARD ANTHONY FADULLON ASST. STATE PROSECUTOR JOHN R. RESADO Department of Justice Padre Faura Street, Ennita Manila 1000 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 oflnvestigation Taft Avenue, Ennita, Manila PNPCHIEF Thru: CIDG Philippine National Police National Headquarters Camp General Rafael Tagle Crame EDSA, Quezon City CHIEF, WARRANT AND SUBPOENA SECTION Quezon City Police District Camp BGen Tomas Karingal Sikatuna Village, Diliman Quezo City GREETINGS: You are hereby notified by these presents that on January 31, 2024, a Resolution was rendered in the above-entitled case, copy of which is attached hereto. Quezon City, Philippines, February 1, 2024. Atty. Maria Jo~ ' Chan-Te Executive C~ourt II

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY FIRST DIVISION PEOPLE OF THE CTA CRIM. CASE NO. 0 -752 PHILIPPINES, For: Violation of Section 255 of the NIRC of 1997, as amended Plaintiff, Members: -versus- DEL ROSARIO, P.J., Chairperson, BACORRO-VILLENA, and CUI-DAVID, JJ. EVANGELINE M. SERTESA (F. Salvador, Jordan Plains Subd., Sta. Promulgated: Monica, Novaliches, Quezon City), Accused. )C- - - - - - - - - - - - - - - - - - - - - - - - -w~~~~ RESOLUT ON On July 16, 20 19, the prosecution filed an lnformation1 ch arging accused Evangeline M. Sert esa for willful failure to pay t~es under Section 255 of the National Internal Revenue Code (NIRC) of 1997, as amended, allegedly committed as follows: That on about June 22, 2012, and thereafter, in Quezon City, and within the jurisdiction of this Honorable Court, accused EVANGELINE M. SERTESA, doing business under the name E.M.S. Enterprises, a sole proprietorship with registered address at F. Salvador, Jordan Plains Subd., Sta. Monica, Novaliches, Quezon City, required by law to file Value-Added Tax (VAT) Returns and to pay corresponding VAT, did then and there, knowingly , consciously and willfully fail to pay the aggregate deficiency VAT in the amount ofTen Million One Hundred Thirty Two [sic] and Two Hundred Thirty Two Pesos and Thirty Six Centavos (Php10, 132,232,036.00) [sic], exclusive of interests, surcharges and penalties, corresponding to the four (4) qua rter s of taxable year 2007, 1 Docket, p. 6.

RESOLUTION CTA Crim. Case No. 0-752 People of the Philippines v. Evangeline M. Se rtesa x------------------------------------------------------------------------------------------x despite receipt of the Preliminary Assessment Notice (PAN) and Final Assessment Notice (FAN) issued after tax investigation, including prior and post-notices a nd final demands to pay, the latest of which being in the nature of demand before suit issued on June 22, 2012 and her fa ilure to file any protest on said deficiency tax assessment within the prescribed period, to the damage and prejudice of the Government of the Republic of the Philippines. CONTRARY TO LAW. In the Resolution promulgated on July 31 , 2019, the Court found probable cause to issue a warrant of arrest against accused with a bail bond for her provisional liberty fixed at P20,000.00 .2 On August 5, 2019, a Warrant of Arrest and thereafter,3 on October 4 , 2019, an Alias Warrant of Arrest4 were issued against accused. On August 26, 2020, the Court archived the case as it appeared from the records that the Warrant of Arrest issued against accused had been returned unserved since "accused could not be found at said given address despite diligent efforts exerted" and in order that the case shall not remain pending for an indefinite period.s Meanwhile, upon periodic review of archived cases and their factual antecedents, the Court finds that this case should be dismissed on the ground of prescription. Section 281 of the NIRC of 1997, as amended, governs the prescriptive period for filing a criminal action for violation of t he Tax Code, to wit: 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 known at the time, from the discovery thereof and the institution ofjudicial proceedings for its investigation and punishment. 2 /d.. pp. 52-54. 3 /d. , p. 55. 4 !d.. p. 61. s Resolution, Docket, p. 64.

RESOLUTION CTA Crim. Case No. 0-752 People of the Philippines v. Evan geline M. Sertesa x---- -- --------------------------------- -------- ------------------- --- ------ ---- -----------x The prescription shall be interrupted when proceedings are instituted against the guilty persons and shall begin to run again if the proceedings are dismissed for reasons not constituting jeopardy. The term of prescription sh all not run when the offender is absent from the Philippines. (Emphasis supplied) The foregoing provision presents two (2) m odes for the commencement of the period of prescription: 1. First Mode: From the day of the commission of the violation of the law; or 2. Second Mode: When the day of the commission 1s unknown, from the discovery of the commission and the institution of judicial proceedings for its investigation and punishment. In Emilio E. Lim, Sr. et al. us. Court ofAppeals, et al. (Lim),6 the Supreme Court discussed that in willful refusal to pay deficiency taxes, the prescription runs from the finality of assessment, viz.: Relative to Criminal Cases Nos. 1788 and 1789 which involved petitioners' refusal to pay the deficiency income taxes due, again both parties are in accord that by their nature, the violations as charged could only be committed after service of notice and demand for payment of the deficiency taxes upon the taxpayers. Petitioners maintain that the five-year period of limitation under Section 354 should be reckoned from April 7, 1965, the date of the original assessment while the Government insists that it should be counted from July 3 , 1968 when the final notice and demand was served on petitioners' daughter-in-law. We hold for the Government. Section 51 (b) of the Tax Code provides: "(b) Assessment and payment of deficiency tax. - After the return is filed, the Commissioner of Internal Revenue shall examine it and assess the correct amount of the tax. The tax or deficiency in tax so discovered shall be paid upon notice and demand from the Commissioner of Internal Revenue." (Emphasis on the originan 6G.R. Nos. L-48 134-37, October 18, 1990.

RESOLUTION CTA Crim. Case No. 0-752 People of the Philippines v. Evangeline M. Sertesa x------------------------------------------------------------------------------------------x Inasmuch as the final notice and demand for payment of the deficiency taxes was served on petitioners on July 3, 1968, it was only then that the cause of action on the part of the BIR accrued. This is so because prior to the receipt of the letter-assessment, no violat ion has yet been committed by the taxpayers. The offense was committed only after receipt was coupled with the willful refusal to pay the taxes due within the allotted period. The two criminal informations, having been filed on June 23, 1970, are well-within the five-year prescriptive period and are not time-barred. (Emphasis supplied) The Bureau of Internal Revenue (BIR) circularized the pronouncement in Lim through the issuance of Revenue Memorandum Circular (RMC) No. 101-90,7 which states: 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. us. Court of Appeals, et al.," G.R. Nos. L-481 34-37. 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) As to what interrupts prescription, Section 281 of the NIRC of 1997, as amended, provides that it is "when proceedings are instituted against the guilty persons." This is explained in Lim to mean the time when the information is filed with the Court. 7 SUBJECT: Determination ofWhen Cause ofActionfor Willful Failure lo Pay Deficiency Tax Occurs; and Prescription under Section 280 ofthe Tax Code.

RESOLUTION CTA Crim . Case No. 0-752 People of the Philippines v. Evangeline M. Sertesa X------------------------------------------------------------------------------------------X On November 22,2005, the Supreme Court approved A.M. No. 05-11-07-CTA, otherwise known as the Revised Rules of the Court of Tax Appeals (RRCTA), declaring that the institution of criminal action is done by filing an information with the Court, which, in turn, interrupts the prescriptive period: RULE 9 PROCEDURE IN CRIMINAL CASES SEC. 2. Institution of criminal actions. -All criminal actions before the Court in Division in the exercise of its original jurisdiction shall be instituted by the filing of an information in the name of the People of the Philippines. In criminal actions involving violations of the Na tional Intern al Revenue Code and other laws enforced by th e Bureau of Internal Revenue, the Commissioner of Intern al Revenue must a pprove th eir filing. In criminal actions involving violations of the Tariff a nd Customs Code and other laws enforced by the Bureau of Customs, the Commissioner of Customs must approve their filing. The institution of the criminal action shall interrupt the running of the period of prescription. [Emphasis supplied] Reading the law, jurisprudence, and rules altogether , when the offense charged involves a taxpayer's refusal to pay the taxes due, the five (5) -year prescriptive period b egins to run from the time the payment p eriod had lapsed without any paym ent or appeal b eing m a de by the taxpayer. Simply put, the prescription runs when the assessment notice becomes final and executory and continues to run until the filing of the Information in Court. As alleged in the Joint Complaint-Affidavit filed by the revenue officers of the BIR, the Final Assessment Notice (FAN) dated April 1, 20 11 was sent to accused through registered mail. 8 Under prevailing regulations, service of the FAN may be m ade through registered mail, and there is created a disputable presumption that such assessment notices were received by the a ddressee in the regular course of the mail.9 8 Par. I0, Joint Complaint-Affidavit, Docket, p. 28: Department of Justice Resolution dated April I. 20 18, Docket, p. 12. 9 Commissioner ofInternal Revenue v. T Shuttle Services, Inc.. G.R. No. 240729 (Resoluti on), August 24, 2020.

RESOLUTION CTA Crim. Case No. 0-752 People of the Philippines v. Evangeline M. Sertesa x------------------------------------------------------------------------------------------x The estimated turnaround time for such registered mail to be delivered is seven (7) working days . l O Even if the Court assumes that the FAN was received by accused thirty (30) days from its mailing, or on May 1, 20 11 , and no protest was filed within thirty (30) days from such date , the assessment became final and executory on June 1, 2011. Plaintiff had five (5) years from June 1, 201 1, or until June 1, 2016 to file an information in Court. Clearly, when the present Information was filed on July 16, 2019, the government's right to institute a criminal action had already prescribed by more than three (3) years. WHEREFORE, premises considered, CTA Crim. Case No. 0-752 is WITHDRAWN from the archives and is DISMISSED on the ground of prescription. The Alias Warrant of Arrest dated October 4, 2019 issued against accused is RECALLED and SET ASIDE. SO ORDERED. Presiding Justice ' ~~VILLENA JEAN MA~�i!te Justice LANiA&usA~'c~ui~-DAVID Associate Justice 10 Philippine Postal Corporation, Post Office Delivery Lead Time, Estimated Tum Around Time fo r Domestic Mai l Services, available at https://phlpost.gov.ph/postal-office-delivery-lead-time (last accessed on January 29, 2024).