CTA Decisions CTA Case No. O-1133O-1133 2026-09-24

PEOPLE OF THE PHILIPPINES v. BACUSANON ARC MULTI-PURPOSE COOPERATIVE, ALVIN B. MANLUNAS and ANALIZA M. VIOLETA

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY SECOND DIVISION PEOPLE OF THE CTA CRIM. CASE NO. 0-1133 PHILIPPINES, Plaintiff, Members: BACORRO-VILLENA, Chairperson, -versus- CUI-DAVID, and TESTON, JJ. BACUSANON ARC MULTI-PURPOSE COOPERATIVE, ALVIN B. Promulgated: MANLUNAS and ANALIZA M. VIOLETA, Accused. _SEP_ Z4 ZOZ6 _ _/:_ _ _ :'lr ~' flrl X- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -IIIIR-"4) DECISION CUI-DAVID, J.: Before the Court is an Information 1 filed on March 13, 2024 by the People of the Philippines (plaintiff) against Bacusanon ARC Multi-Purpose Cooperative (BARC-MPC), together with its Chairman, Alvin B. Manlunas (Manlunas), and Treasurer, Analiza M. Violeta (Violeta), charging them with violation of Section 255, in relation to Sections 253(d) and 256, of the National Internal Revenue Code (NIRC) of 1997. The accusatory portion of the Information reads: That on or about September 15, 2020, in Bacusanon, Pangantucan, Bukidnon, and within the jurisdiction of this Honorable Court, accused Bacusanon Arc Multi-Purpose Cooperative [sic], a registered taxpayer, with obligation under the law to pay the correct value added tax, through its co- accused, Alvin B. Manlunas, its chairman, [sic] and Analiza M. Violeta, its treasurer, [sic] did then and there, willfully, unlawfully, and feloniously fail to pay the correct value added Docket- Vol. I, p.5-6. v

DECISION CTA Crim. Case No. 0-1133 People of the Philippines v. Bacusanon ARC Multi-Purpose Cooperative, Alvin B. Manlunas and Analiza M. Violeta x--------------------------------------------------------------------------------------------------------x on October 4, 2024, while accused filed the Pre-Trial Brief of Defense13 on November 12, 2024. During their arraignment conducted via videoconference on November 13, 2024, accused Manlunas and Violeta entered pleas of "not guilty." 14 Thereafter, the Court issued a Pre-Trial Orderls on January 17, 2025. After the hearing was reset, plaintiff commenced the presentation of its evidence on March 12, 2025. 16 Plaintiff presented Revenue Officer (RO) Paul Albert Pereda (RO Pereda), 17 RO Azelea Leslie R. Zulu eta (RO Zulueta), 18 and Atty. Rainidah M. Ismael (Atty. Ismael), 19 whose Judicial Affidavits were marked as Exhibits ~~P-31 P-32 and P-33 11 11 11 11 11 ' ' ' respectively. As counsel for accused failed to appear despite due notice, the Court, upon plaintiff's motion, deemed the accused to have waived their right to cross-examine plaintiff's witnesses. 20 Plaintiff thereafter filed its Formal Offer of Evidence (FOE) on March 17, 2025.21 On March 19, 2025, accused filed an Omnibus Motion to Cross Examine the Prosecution's Witnesses and Defer the Ruling of the Formal Offer of Exhibits. 22 Plaintiff filed its Comment/ Opposition [Re: Omnibus Motion to Cross Examine the Prosecution's Witness and Defer the Ruling ofthe Formal Offer of Exhibits dated March 19, 2025} 2 3 on April 15, 2025. In a Resolution dated June 27, 2025,2 4 the Court granted the motion and allowed the cross-examination of plaintiffs witnesses. On August 27, 2025, RO Pereda and RO Zulueta were recalled to the witness stand and cross-examined by counsel for accused. The substance of their testimonies is summarized below: \{ 13 !d. at 344-347. 14 !d. at 336-339, Order dated November 13, 2024. IS fd. at391-405. 16 !d. at413-415,0rderdatedMarch 12,2025. 17 !d. at 270-282. 18 /d. at 289-296. 19 !d. at 304-308. 20 !d. at 417 -a-417 -c, Order dated March 12, 2025. 21 /d. at 419-427. 22 !d. at 432-435. 23 !d. at 446-451. 24 !d. at 464-469.

DECISION CTA Crim. Case No. 0-1133 People of the Philippines v. Bacusanon ARC Multi-Purpose Cooperative, Alvin B. Manlunas and Analiza M. Violeta X--------------------------------------------------------------------------------------------------------X Testimony of RO Pereda RO Pereda, a Certified Public Accountant and Revenue Officer III, testified that he and Group Supervisor Geraldine Jadap were authorized under Letter of Authority (LOA) No. LOA-099-2019-00000105 dated May 21, 2019 to audit BARC- MPC for taxable year (TY) 2017. The LOA was served on June 11, 2019 through the cooperative's manager, Herminia D. Bantollo (Bantollo), together with a Checklist of Documentary Requirements. Due to the cooperative's noncompliance, a First Notice was issued and received by accused Violeta on June 26, 20 19, followed by a Second and Final Notice received by Bantollo on August 14, 2019. After the cooperative partially complied with the documentary requirements, a Notice of Informal Conference (NIC) was issued and received by Bantollo on June 18, 2020. RO Pereda testified that accused Manlunas and other cooperative officers thereafter met with BIR personnel to discuss the NIC findings but failed to submit documents sufficient to refute them. Consequently, a Preliminary Assessment Notice (PAN) was issued and received by Manlunas on August 18, 2020. No reply was filed. The BIR thereafter issued a Final Assessment Notice and Formal Letter of Demand (FAN/FLD), which Manlunas personally received on October 21, 2020. As the cooperative neither paid nor protested the assessments within the prescribed period, the assessments became final and executory on November 20, 2020. RO Pereda identified the unpaid deficiency taxes forTY 2017 as P32,150.02 in Income Tax, P8,586.95 in Percentage Tax, P2,208,176.27 in Value-Added Tax, and P89,058.23 in Expanded Withholding Tax. He opined that the accused's failure to pay despite receipt of BIR notices constituted willful failure to pay taxes under Section 255 of the NIRC, as amended. He further testified that a Joint Complaint-Affidavit was filed with the Department of Justice (DOJ) on February 2, 2023 against BARC-MPC and its responsible officers, and that the DOJ subsequently found probable cause to indict the accused.25 On cross-examination, however, RO Pereda admitted that he had no personal knowledge of BARC-MPC's operations, finances, or tax compliance during TY 2017, as his findings were based solely on documents submitted during the audit. He also admitted that the LOA was not personally served on Manlunas or Violeta and that he did not know who the cooperative's officers were during TY 2017. Significantly, he acknowledged that Manlunas became Chairman only on February 25, 2019 and was not Chairman during TY 2017. He explained that he dealt only with the cooperative's incumbent officers when the audit commenced in 2019. RO Pereda further admitted that he had no personal knowledge that 25 Judicial Affidavit of Paul Albert Pereda, Docket- Vol. I, pp. 270-288, Exhibit "P-31 ". v

DECISION CTA Crim. Case No. 0-1133 People of the Philippines v. Bacusanon ARC Multi-Purpose Cooperative, Alvin B. Manlunas and Analiza M. Violeta x--------------------------------------------------------------------------------------------------------x either accused intentionally refused to pay the assessed taxes. He maintained, however, that the criminal complaint was filed because no protest was filed and the assessments had become final and executory. He also testified that BARC-MPC failed to secure the required Certificate of Tax Exemption from the BIR. On redirect examination, RO Pereda reiterated that Manlunas became Chairman only in 20 19, that the FAN I FLD was served on him in 2020, and that BARC-MPC had no BIR Certificate of Tax Exemption. No recross-examination was conducted.26 Testimony of RO Zulueta RO Zulueta, a Revenue Officer III with almost 28 years of BIR service, testified that she was tasked with implementing post-assessment remedies against BARC-MPC. She identified accused Manlunas and Violeta as the cooperative's responsible officers, as Chairman and Treasurer, respectively. She testified that a Warrant of Distraint and Levy (WDL) was served on the cooperative, followed by Warrants of Garnishment (WOGs) issued to several banks. As no funds or assets were recovered, the matter was referred to the Legal Division of Revenue Region No. 16 for criminal prosecution. On February 2, 2023, she, together with RO Pereda and Seizure Agent Gloribel Resma, filed a Joint Complaint-Affidavit with the DOJ against BARC-MPC and its responsible officers for violation of Section 255, in relation to Sections 253(d) and 256, of the NIRC, as amended.27 On cross-examination, RO Zulueta clarified that her participation was limited to post-assessment collection and that she had no involvement in the audit of BARC-MPC forTY 20 17. She confirmed that no funds were recovered through garnishment. She further testified that she personally served the WDL at the cooperative's office in February 2021 and that BARC-MPC was then still operating. She received no formal notice that the cooperative had ceased operations. No redirect or recross-examination was conducted.28 During the same hearing, the Court deemed accused to have waived their right to present evidence for failure to submit their judicial affidavits.29 On September 19, 2025, accused filed a Motion for Reconsideration30 seeking reconsideration of the Court's Order declaring their right to present evidence as waived. In a 26 27 Transcript of Stenographic Notes (TSN), Cross Examination ofRO Pereda, August 27, 2025, pp. 20-34. Judicial Affidavit of Azelea Leslie R. Zulueta, Docket- Vol. I, pp. 289-303, Exhibit "P-32". \t' 28 TSN, Cross Examination ofRO Zulueta, August 27, 2025, pp. 37-45. 29 Docket- Vol. II. pp. 520-521, Order dated August 27, 2025. 30 !d. at 531-533.

DECISION CTA Crim. Case No. 0-1133 People of the Philippines v. Bacusanon ARC Multi-Purpose Cooperative, Alvin B. Manlunas and Analiza M. Violeta X--------------------------------------------------------------------------------------------------------X The Court likewise denied accused's motion for postponement pursuant to the Revised Guidelines on Continuous Trial of Criminal Cases. The presentation of accused evidence proceeded, with accused Manlunas and Viol eta taking the witness stand in their own behalf. 35 Their respective testimonies may be summarized as follows: Testimony of accused Manlunas Accused Manlunas testified through his Judicial Affidavit dated March 19, 2026. 36 He stated that he became Chairman of the accused cooperative only on February 25, 20 19, whereas the taxable year involved in the case was 20 17, when Mr. Danilo Caballero served as Chairman. He testified that his duties as Chairman were limited to presiding over board meetings and approving policies, while the cooperative's Manager handled its day-to-day accounting, disbursements, and financial affairs. He further stated that neither he nor the cooperative intended to violate tax laws and that the cooperative had attempted to secure a tax exemption and negotiate a settlement with the BIR but was unable to do so because of an existing "Open Case." He likewise testified that the cooperative was composed mainly of small farmers and workers and had no in-house lawyers, accountants, or personnel with technical expertise in tax matters. According to him, the cooperative eventually exhausted its funds and permanently ceased operations in March 2021 due to the effects of the COVID-19 pandemic, losses in agricultural production, and mass withdrawals of members' capital contributions. Accused Manlunas also testified that he is a small farmer who completed only elementary education and has no training in accounting or taxation. He stated that he previously earned only P700, had to borrow money to post bail, and neither he nor the cooperative had the financial capacity to pay the alleged tax liabilities exceeding P2 million. On cross-examination, Manlunas confirmed that he served as Chairman of the cooperative from 20 19 to 2022 and was its Chairman when the assessment became final in 2020. He testified that the cooperative earned income from farming, lending activities, and a sari-sari store; that its application for tax exemption was denied due to an existing BIR case; that the cooperative's manager exercised financial control over its operations; and that despite efforts to negotiate with the BIR, the cooperative could not pay its tax liabilities because of insufficient funds, resulting in its closure. He likewise acknowledged that the Certificate of No Outstanding Tax 35 !d. at 650-651, Minutes of Hearing. y 36 !d. at 476-488, Exhibit "A-5".

DECISION CTA Crim. Case No. 0-1133 People of the Philippines v. Bacusanon ARC Multi-Purpose Cooperative, Alvin B. Manlunas and Analiza M. Violeta x--------------------------------------------------------------------------------------------------------x Liability covered only taxable year 2020, not 2017. On redirect, he explained that the cooperative failed to pay the 2017 tax liability because it was still attempting to collect receivables from its members and reiterated that the cooperative ceased operations in 2022. No recross- examination followed. 37 Testimony of accused Violeta Accused Violeta testified through her Judicial Affidavit dated March 19, 2026." 3 8 She stated that, in 2017, her participation in the cooperative was limited to basic manual tasks and she had no involvement in its accounting, financial management, or decision-making. She was formally designated as Treasurer only in March 2018. A high school graduate with no formal accounting training, she testified that, in performing her duties, including collecting payments from members and assisting with records, she relied on the Cooperative Manager and bookkeeper to handle the cooperative's accounting matters and BIR compliance. She further stated that she never intended to violate tax laws or defraud the government and, in good faith, believed that the cooperative was tax-exempt because it served marginalized farmers and other underserved sectors. She added that she served primarily out of community spirit, received little or no compensation, never personally benefited from the cooperative's revenues, and currently lacks the financial means to pay the assessed tax liabilities. She likewise testified that the cooperative ceased operations in March 2021 due to financial losses, mounting debts, mass withdrawals by members, and the effects of the COVID-19 pandemic. On cross-examination, Violeta confirmed that she served as Treasurer from 2018 until December 2020. She testified that her duties were limited to collecting member payments, issuing official receipts, and assisting in accounting matters. She also stated that she was unfamiliar with the requirements for tax exemption, was not involved in management meetings, and had no knowledge of any measures taken to settle the cooperative's tax liabilities, except for its application for tax exemption. She further testified that the cooperative's insolvency was evidenced by a closure document issued by the Municipal Mayor. No redirect or recross-examination followed. 39 After the completion of their testimonies, accused orally offered their documentary exhibits. The Court admitted all of the exhibits for the purposes for which they were offered, 37 38 39 TSN, Cross-Examination of Alvin B. Man lunas, May 20, 2026, pp. 39-49. !d. at 502-509.Exhibit "A-6". t{ TSN, Cross-Examination of Analiza M. Violeta, May 20, 2026, pp. 52-57.

DECISION CTA Crim. Case No. 0-1133 People of the Philippines v. Bacusanon ARC Multi-Purpose Cooperative, Alvin B. Manlunas and Analiza M. Violeta x--------------------------------------------------------------------------------------------------------x Accused also argue that BARC-MPC has a juridical personality separate and distinct from that of its officers. They contend that the unpaid tax assessments pertain to the cooperative and that its officers cannot be held criminally liable absent proof of personal fraud, malicious participation, or personal benefit from the cooperative's 2017 revenues. Accused maintain that the element of willfulness, which is essential to a violation of Section 255, is absent. They claim that they acted in good faith, citing as an example accused Manlunas' s alleged personal borrowing of funds to settle the tax liabilities incurred during his administration in 2020. According to accused, BARC-MPC's failure to settle the 2017 deficiency taxes was caused by genuine financial insolvency, compounding debts, pandemic disruptions, and eventual involuntary dissolution/permanent closure in March 2021, rather than from a willful refusal to pay. Further, accused argue that plaintiff merely established that they signed administrative BIR notices, such as the PAN and FAN/FLD, in their capacities as incumbent officers. Such circumstance, according to the accused, is insufficient to prove that they were the persons responsible for the tax obligations arising during taxable year 2017. THE COURT'S RULING The Court has jurisdiction over the instant case. Section 7(b)(1) of RA No. 1125, 4 5 as amended by RA No. 9282, 46 vests the Court with exclusive original jurisdiction over criminal offenses arising from violations of the NIRC of 1997, as amended, where the principal amount of taxes and fees claimed, exclusive of charges and penalties, is at least Pl ,000,000.00, thus: SEC. 7. Jurisdiction. -The CTA shall exercise: (b) Jurisdiction over cases involving criminal offenses as herein provided: \(' 45 An Act Creating the Court of Tax Appeals, June 16, 1954. 46 An Act Expanding the Jurisdiction of the Court of Tax Appeals (CTA), Elevating Its Rank to the Level of a Collegiate Court with Special Jurisdiction and Enlarging Its Membership, Amending for the Purpose Certain Sections of Republic Act No. 1125. as Amended. Otherwise Known as the Law Creating the Court of Tax Appeals, and for Other Purposes, March 30, 2004.

DECISION CTA Crim. Case No. 0-1133 People of the Philippines v. Bacusanon ARC Multi-Purpose Cooperative, Alvin B. Manlunas and Analiza M. Violeta X--------------------------------------------------------------------------------------------------------X therein is a nonstock, nonprofit private organization (irrespective of the disposition of its net income and whether or not it sells exclusively to members or their guests), or government entity. Here, the deficiency VAT assessment arose from BARC- MPC's reported sales from its "Consumer Store, Service Income, Rent Income, and Management Fee, as reported in [its] financial statements. "4 7 The Court is not unmindful that cooperatives may enjoy VAT exemptions under Section 109 of the NIRC of 1997, as amended. 48 Among others, the law exempts certain sales by duly registered agricultural cooperatives, gross receipts from lending activities of duly registered credit or multi-purpose cooperatives, and qualifying sales by certain non-agricultural, non-electric, and non-credit cooperatives. Articles 60 and 61 of Republic Act No. 9520, otherwise known as the Philippine Cooperative Code of 2008, 49 likewise grant duly registered cooperatives specified tax exemptions, y 47 Docket- Vol. I, p. 216, Exhibit "P-14"; 228, Exhibit "P-17". 48 SEC. I 09. Exempt Transactions.- (I) Subject to the provisions of Subsection (2) hereof, the following transactions shall be exempt from the value-added tax: (L) Sales by agricultural cooperatives duly registered with the Cooperative Development Authority to their members as well as sale of their produce, whether in its original state or processed form, to non-members; their importation of direct farm inputs, machineries and equipment, including spare parts thereof, to be used directly and exclusively in the production and/or processing of their produce; (M) Gross receipts from lending activities by credit or multi-purpose cooperatives duly registered with the Cooperative Development Authority; (N) Sales by non-agricultural, non- electric and non-credit cooperatives duly registered with the Cooperative Development Authority: ... 49 ART. 60. Tax Treatment of Cooperative. -Duly registered cooperatives under this Code which do not transact any business with non-members or the general public shall not be subject to any taxes and fees imposed under the internal revenue Jaws and other tax laws. Cooperatives not falling under this article shall be governed by the succeeding section. ART. 61. Tax and Other Exemptions. Cooperatives transacting business with both members and non-members shall not be subjected to tax on their transactions with members. In relation to this, the transactions of members with the cooperative shall not be subject to any taxes and fees, including not limited to final taxes on members' deposits and documentary tax. Notwithstanding the provisions of any law or regulation to the contrary, such cooperatives dealing with nonmembers shall enjoy the following tax exemptions: (b) Value-Added Tax- On transactions with non-members: Provided, however, That cooperatives duly registered with the Authority; are exempt from the payment of value-added tax; subject to Section I 09, sub-sections L, M and N of Republic Act No. 9337, the National Internal Revenue Code, as amended: Provided, That the exempt transaction under Section 109 (L) shall include sales made by cooperatives duly registered with the Authority organized and operated by its member to undertake the production and processing of raw materials or of goods produced by its members into finished or process products for sale by the cooperative to its members and non- members: Provided, further, That any processed product or its derivative arising from the raw materials produced by its members, sold in then name and for the account of the cooperative: Provided , finally, That at least twenty- five per centum (25%) of the net income ofthe cooperatives is returned to the members in the form of interest and/or patronage refunds:

DECISION CTA Crim. Case No. 0-1133 People of the Philippines v. Bacusanon ARC Multi-Purpose Cooperative, Alvin B. Manlunas and Analiza M. Violeta x--------------------------------------------------------------------------------------------------------x depending upon the nature of their transactions and whether they transact with members or non-members. However, the mere fact that BARC-MPC is a cooperative does not automatically exempt all of its transactions from VAT. Tax exemption is never presumed. A taxpayer claiming exemption bears the burden of proving that it clearly falls within the terms of the law granting the exemption. Accordingly, a claim of exemption must rest upon a clear and unequivocal statutory basis. Here, accused did not establish that the sales or receipts upon which the deficiency VAT assessment was based fell within any of the exemptions under Section 109 of the NIRC or Articles 60 and 61 of RA No. 9520. In particular, no evidence was presented demonstrating that the assessed Consumer Store, Service Income, Rent Income, and Management Fee constituted transactions qualifying for the exemptions invoked by law. Indeed, accused did not directly contest the substantive bases of the FAN/FLD or present evidence refuting the BIR's treatment of these transactions as subject to VAT. Tax exemptions are construed strictissimi juris against the taxpayer and liberally in favor of the taxing authority. It is the taxpayer's duty to justify the exemption by words too plain to be mistaken and too categorical to be misinterpreted. so Accused did not, at the very least, attempt to establish any exemption in their favor. In fact, glaringly, accused offer no counterarguments as to the merits of the FAN/FLD issued against accused cooperative. Accordingly, the Court finds that the first element 1s satisfied. The second element likewise is present: The assessed VAT liability remained unpaid. The records show that on September 15, 2020, the BIR issued a FAN/ FLD assessing BARC-MPC for basic deficiency I( 50 Radio Communications of the Philippines, Inc. v. Provincial Assessor of South Cotabato, G.R. No. 144486, April 13,2005 [Per J. Carpio, First Division].

DECISION CTA Crim. Case No. 0-1133 People of the Philippines v. Bacusanon ARC Multi-Purpose Cooperative, Alvin B. Manlunas and Analiza M. Violeta x--------------------------------------------------------------------------------------------------------x (d) In the case of associations, partnerships or corporations, the penalty shall be imposed on the partner, president, general manager, branch manager, treasurer, officer-in-charge, and the employees responsible for the violation. Accused Manlunas and Violeta argue that they may not be held criminally liable because they were not yet officers of BARC-MPC during taxable year 20 17, the taxable year covered by the audit. The argument, standing alone, does not convince. In People v. E & D Parts Supply, Inc., 5 4 (E & D Parts) the Supreme Court explained that although corporate officers may be held criminally liable for acts attributable to the corporation, their criminal liability stems from their active participation in the commission of the wrongful act. Thus, the controlling consideration is not simply whether accused Manlunas and Violeta were officers during taxable year 2017, but whether they were the officers responsible for the violation actually charged and whether plaintiff proved their personal participation therein with the criminal intent required by law. To resolve this issue, an examination of the Information is therefore necessary. The Information does not charge accused Manlunas and Violeta with the failure to correctly declare or pay VAT for taxable year 20 17. Rather, they are specifically charged with willfully failing to pay the assessed deficiency VAT after the assessment had become final and executory, despite service of notices and demand letters. Consequently, the fact that accused Manlunas became Chairman only in 20 19 and accused Violeta became Treasurer only in 2018 does not, by itself, absolve them from liability. The offense charged pertains to the alleged willful nonpayment of the deficiency VAT after the FAN/ FLD had become final and executory. As earlier discussed, the FAN/FLD was received on October 21, 2020, and the assessed tax became due and 54 G.R. No. 259284, January 24, 2024 [Per J. M.V. Lopez, Second Division], citing Suarez v. People, G.R. No. 253429, October 6, 2021 [Per J. Carandang, Third Division], and ABS-CBN Corporation v. Gozon, G.R. No. v 195956, March II, 2015 [Per J. Leonen, Second Division].

DECISION CTA Crim. Case No. 0-1133 People of the Philippines v. Bacusanon ARC Multi-Purpose Cooperative, Alvin B. Manlunas and Analiza M. Violeta X--------------------------------------------------------------------------------------------------------X relevant to their official positions and their awareness of the assessment, but it does not independently establish that either accused knowingly and deliberately chose to withhold payment of the tax obligation. Significantly, plaintiff failed to present evidence that funds sufficient to satisfy the assessment remained available to the cooperative after the tax became due but were deliberately withheld; that either accused directed that available funds not be applied to the assessment; or that either concealed, diverted, or transferred cooperative assets to frustrate collection. These circumstances are not indispensable elements of Section 255, but their absence is significant because plaintiff otherwise relies principally upon the accused's positions, their knowledge of the assessment, and the fact of nonpayment to infer willfulness. In sum, plaintiff succeeded in proving the existence of the tax liability and the cooperative's failure to satisfy it. What plaintiff failed to prove was the critical link between such nonpayment and a conscious and deliberate decision by accused Manlunas and Violeta to disregard the Government's demand for payment. \v" Q. Just for redirect, you mentioned earlier that the assessment became final. When was that again? What year did the assessment become final? A TTY. ISMAEL: A. Thirty (30) days after the receipt of the FLD. ATTY. CAGAMPAN-TALATALA: Q. What is the year in the receipt of the final assessment notice? ATTY. ISMAEL: A. It was in the year 2020. ATTY. CAGAMPAN-TALATALA: Q. Year 2020. Thank you for that. And can I know who were the chairman and treasurer, or responsible cooperative officers ofBacusanon in the year 2020 when the assessment became final? ATTY. !SMAEL: A. It was the accused, Alvin Manlunas and Analiza Violeta. ATTY. CAGAMPAN-TALATALA: Q. And last question, is there a difference between a taxable year mentioned in the Letter of Authority and the date or the year when the assessment became final? ATTY. ISMAEL: A. Yes, there was a difference. ATTY. CAGAMPAN-TALATALA: Q. Can you enlighten the Honorable Court? ATTY. !SMAEL: A. It could be a possibility that at the time the FLD or the notices from the BIR were issued, the responsible officer at that time, the taxable year subject to the audit, were different. So, every year or every two years, there could be a change of leadership of the corporation, and we cannot run after the responsible officers because there's a possibility that they are no longer connected with the corporation or the cooperative at the time the notices were issued by the BIR.

DECISION CTA Crim. Case No. 0-1133 People of the Philippines v. Bacusanon ARC Multi-Purpose Cooperative, Alvin B. Manlunas and Analiza M. Violeta X--------------------------------------------------------------------------------------------------------X More tellingly, her testimony on cross-examination did not establish that her formal title translated into actual authority over the cooperative's response to the assessment. When asked what measures were undertaken to settle the tax liability, Violeta explained that the plans were not communicated to her and that she was not included in the meetings where those matters were discussed. 63 Her testimony also corroborated the cooperative's financial deterioration. She testified that BARC-MPC eventually closed because of lack of funds, heavy debts, and mass withdrawals by members, circumstances worsened by the pandemic. This A: I was tasked to help with accounting and collecting payments from members. But honestly, I had no formal I{ training and relied entirely on our bookkeeper and Coop Manager. (Gisugo ko nga motabang sa accounting ug pagdawat sa bayad samga miyembro. Apan, sa tinuod lang, wala ko formal nga training ug gisaligan ra nako ang among bookkeeper ug Coop Manager.) 6. Q: Did you have knowledge about the tax obligations of the cooperative while you were Treasurer? (Aduna ba kay kahibalo kabahin sa mga obligasyon sa buhis sa kooperatiba sa panahon nga ikaw Treasurer?) A: I truly did not know then. I did not understand the BIR process or the requirements. We relied on our Coop Manager and bookkeeper to handle those matters. ( Wala gyud ko kabalo niadto. Wala ko kasabot sa prose so sa BIR ug wala koy kahibalo unsay mga requirements. Gasalig rami nga ang Coop Manager ug bookkeeper maoy naghimo ana.) 7: Q: Did you attempt to seek help for accounting or taxes? (Nakasulay ba ka og pangita og tabang sa accounting o sa buhis?) A: Yes, I asked help from other cooperatives and friends. But we couldn't afford an accountant. I also didn't know the requirements for exemptions. (Oo, nangayo ko og tabang sa uban nga cooperatives ug sa mga kai!a. Pero wala gyud mi naka-afford og accountant. Wala pud ko kahibalo sa mga requirements sa requirements) 8. Q: What have you finished why you had not known the basic accounting? (Unsa man diay imuhang nahuman nga dili man ka kahibalo sa mga basic nga accounting?) A: Only High School Graduate (High School graduate lang) 63 TSN, Analiza M. Violeta, May 20, 2026, pp. 53-54. ATTY. CAGAMPAN-TALATALA: Q. Sa Question No. 7, nabanggit po din ninyo na hindi niyo alam ang requirements para rna-exempt ang kooperatiba. Tama po ba? MS. VIOLET A: A. Tama po. ATTY. CAGAMPAN-TALATALA: Q. Bakit po kaya hindi natin alam? MS. VIOLET A: A. Basta pina-apply lang kami. Wala naman po sinabi. ATTY. CAGAMPAN-TALATALA: Q. Nag-apply po ba ang kooperatiba nasi BAMC ng exemption kay BIR? MS. VIOLET A: A. Hindi ko na po alam yun, ma'am, kasi hindi na naman kami kasali kapag nagmi-meeting sila. ATTY. CAGAMPAN-TALATALA: Q. So, aside sa application po ng exemption ng kooperatiba, may iba pa po bang ginawa ang BAMC? Bilang Treasurer po, para rna-settle ang tax liability kay BIR? MS. VIOLETA: A. Hindi naman po nila sinasabi ang mga plano, ma'am. Kasi kapag nagplano sila, ako ay nasa opisina. Hindi naman po kami kasama.

DECISION CTA Crim. Case No. 0-1133 People of the Philippines v. Bacusanon ARC Multi-Purpose Cooperative, Alvin B. Manlunas and Analiza M. Violeta x--------------------------------------------------------------------------------------------------------x MPC's failure to satisfy it, the evidence fell short of proving that such nonpayment was attended by the willfulness required for conviction under Section 255 of the NIRC of 1997, as amended. The acquittal pertains only to the criminal aspect of the case. It does not negate the existence of the underlying tax obligation. It is well-settled that the acquittal of the accused does not necessarily preclude a judgment on the civil aspect of the case. The extinction of the penal action does not carry with it the extinction of the civil liability. In E & D Parts, the Supreme Court reiterated that the civil liability arising from crime is distinct from the civil liability to pay taxes. The latter does not arise from the criminal act but is an obligation independently created and imposed by law. Citing Proton Pilipinas Corporation v. Republic, 64 the Supreme Court explained: While it is true that according to the aforesaid Section 4, of Republic Act No. 8249, the institution of the criminal action automatically carries with it the institution of the civil action for the recovery of civil liability, however, in the case at bar, the civil case for the collection of unpaid customs duties and taxes cannot be simultaneously instituted and determined in the same proceedings as the criminal cases before the Sandiganbayan, as it cannot be made the civil aspect of the criminal cases filed before it. It should be borne in mind that the tax and the obligation to pay the same are all created by statute; so are its collection and payment governed by statute. The payment of taxes is a duty which the law requires to be paid. Said obligation is not a consequence of the felonious acts charged in the criminal proceeding nor is it a mere civil liability arising from crime that could be wiped out by the judicial declaration of non-existence of the criminal acts charged. Hence, the payment and collection of customs duties and taxes in itself creates civil liability on the part of the taxpayer. Such civil liability to pay taxes arises from the fact, for instance, that one has engaged himself in business, and not because of any criminal act committed by him. (Emphasis supplied) Thus, two distinct matters are involved: the criminal liability for willful nonpayment of the tax and the statutory obligation to pay the tax itself. The former requires proof beyond 64 G.R. No. 165027, October 16,2006 [Per J. Chico-Nazario, First Division]. ¥

DECISION CTA Crim. Case No. 0-1133 People of the Philippines v. Bacusanon ARC Multi-Purpose Cooperative, Alvin B. Manlunas and Analiza M. Violeta X--------------------------------------------------------------------------------------------------------X reasonable doubt of all the elements of the offense, including willfulness. The latter arises by operation of the tax laws and is not extinguished merely because the plaintiff failed to establish the criminal offense. This distinction squarely applies here. The Court's acquittal of accused is not predicated upon a finding that no deficiency VAT was due from BARC-MPC. Neither is the acquittal based on a finding that the assessment was void, that the assessed amount had been paid, or that BARC-MPC was not subject to the assessed tax. Rather, the acquittal rests on plaintiffs failure to establish beyond reasonable doubt the willfulness attending the nonpayment. Accordingly, the finding that plaintiff failed to prove the third element of the criminal offense does not foreclose the Court from determining, under the applicable evidentiary standard, whether BARC-MPC remains liable for the underlying deficiency VAT. In the instant case, plaintiff sufficiently established accused BARC-MPC's liability for the assessed deficiency VAT. Plaintiff presented, among others, documentary evidence, 65 all of which were admitted by the Court. 66These documents establish the conduct of the audit, the issuance and service of the PAN and the FAN/FLD, and BARC-MPC's receipt of the assessment notices. t( 65 The documentary evidence are: I. Letter of Authority (LOA-099-20I9-00000105) dated May 2I, 20I9 signed by Regional Director Nuzar N. Balatero authorizing RO Pereda and Group Supervisor (GS) Geraldine Jadap to audit accused BARC-MPC's books of accounts and other accounting records (Exhibit "P-9"); 2. Checklist of Documentary Requirements signed by GS Jadap (Exhibit "P-I 0"); 3. First Notice dated June 25, 2019 signed by GS Jadap (Exhibit "P-11 "); 4. Second and Final Notice dated July 17,2019 signed by Revenue District Officer Atty. Ma. Janelle S. Faune (RDO Faune) (Exhibit "P-12"); 5. Notice of Informal Conference with Details of Discrepancies dated June 15, 2020 signed by RDO Faune (Exhibit "P-13"); 6. PAN with Details of Discrepancy dated August 3, 2020 signed by Regional Director Florante R. Aninag (RD Aninag) consisting of six (6) pages (Exhibit "P-14"); 7. Acknowledgment of Receipt for the PAN dated August 16, 2020 signed by accused Manlunas and RO Pereda (Exhibit "P-I 5"); 8. Final Assessment Notice (FAN- BIR Form 0401) dated September 15, 2020 signed byRD Aninag consisting of five (5) pages (Exhibit "P-16"); 9. FLD with Details of Computation dated September 15, 2020 signed byRD Aninag consisting of six (6) pages (Exhibit "P-17"); and I 0. Acknowledgment of Receipt for the FAN/FLD dated October 21, 2020 signed by accused Man lunas and RO Pereda ((Exhibit "P-18"). 66 Docket- Vol. I, pp. 42 I -422, Formal Offer of Evidence; Docket- Vol. II, pp. 650-65 I, Minutes of Hearing.

DECISION CTA Crim. Case No. 0-1133 People of the Philippines v. Bacusanon ARC Multi-Purpose Cooperative, Alvin B. Manlunas and Analiza M. Violeta x--------------------------------------------------------------------------------------------------------x More importantly, BARC-MPC did not file a timely protest against the FAN/FLD. Consequently, the deficiency VAT assessment became final, executory, and demandable. Neither is there any dispute that the assessed deficiency VAT remains unpaid. The accused, for their part, did not directly challenge the factual or legal bases of the deficiency VAT assessment. They did not dispute the taxability of the transactions subject of the assessment, establish any error in the assessment, question the validity of the service of the PAN or FAN/FLD, or show that the assessed deficiency VAT had been paid. Neither did they refute plain tiffs allegation that no Reply to the PAN was filed or, more significantly, that no Protest against the FAN/FLD was filed, thereby allowing the assessment to become final, executory, and demandable. Rather, their evidence was principally directed at negating the criminal liability of Manlunas and Violeta and demonstrating that BARC-MPC's failure to satisfy the assessment was attributable to financial incapacity rather than a willful or deliberate refusal to pay. The Court has considered such evidence in resolving the criminal aspect of the case. Indeed, BARC-MPC's deteriorating financial condition, together with the BIR's unsuccessful collection efforts, contributed to reasonable doubt as to whether the nonpayment was willful. Financial incapacity, however, bears differently upon the criminal and tax aspects of the case. For purposes of the criminal charge, financial incapacity is relevant in determining whether the failure to pay was voluntary and intentional. In the circumstances of this case, it militates against the inference that the nonpayment resulted from a conscious and deliberate decision to disregard a known legal duty. For purposes of the underlying tax obligation, however, financial incapacity does not, by itself, extinguish a tax that has otherwise become due and demandable. Neither does the absence of willfulness invalidate an otherwise final and executory assessment. v

DECISION CTA Crim. Case No. 0-1133 People of the Philippines v. Bacusanon ARC Multi-Purpose Cooperative, Alvin B. Manlunas and Analiza M. Violeta x--------------------------------------------------------------------------------------------------------x separate juridical personality or convert its tax debt into their personal obligation. Accordingly, the Court holds that the liability for the assessed deficiency VAT remains with BARC-MPC. Manlunas and Violeta cannot be held personally liable therefor merely by reason of their positions in the cooperative. WHEREFORE, in light of the foregoing, accused Bacusanon ARC Multi-Purpose Cooperative, Alvin B. Manlunas, and Analiza M. Violeta are hereby ACQUITTED of the offense charged for failure of plaintiff to prove their guilt beyond reasonable doubt. Accordingly, the cash bail bonds posted by accused Alvin B. Manlunas and Analiza M. Violeta in the amount of P60,000.00 each for their provisional liberty are hereby CANCELLED and DISCHARGED, and the corresponding amounts are ordered RELEASED to them upon presentation of proper documents, in accordance with the usual accounting and auditing rules and regulations. Notwithstanding the acquittal, the Court finds that the deficiency VAT assessment against accused Bacusanon ARC Multi-Purpose Cooperative had become final, executory, and demandable. Consequently, accused Bacusanon ARC Multi- Purpose Cooperative is ORDERED TO PAY the Bureau of Internal Revenue the deficiency Value-Added Tax for taxable year 2017 in the aggregate amount ofP2,232,197.85, inclusive of the 25°/o surcharge, deficiency and delinquency interests imposed under Sections 248(A)(3), 249(B) and (C) of the NIRC of 1997, as amended, 69 computed as follows: Basic tax 1 ,405,108.59 Surcharge (25%) 351,277.15 Deficiency interest (12%xP1,405,108.59x 1,030/365 days) (January 26,2018 to November 20, 2020) 475,812.11 Total amount due as of November 20, 2020 2,232,197.85 l{ 69 As amended by by Republic Act (RA) No. I 0963, also known as Tax Reform for Acceleration and Inclusion (TRAIN), as implemented by Revenue Regulations (RR) No. 21-2018,

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY SECOND DIVISION PEOPLE OF THE PHILIPPINES, CTA Crim. Case No. 0-1133 Plaintiff, Members: -versus- BACORRO-VILLENA, Chairperson, CUI-DAVID, TESTON,fl. BACUSANON ARC MULTI- PURPOSE COOPERATIVE, ALVIN B. MANLUNAS AND ANALIZA M. VIOLETA, Promulgated: Accused. SEP Z4 2026 x---------------------------------------------------- SEPARATE OPINION BACORRO-VILLENA, L_: I concur in the result acquitting accused Bacusanon ARC Multi- Purpose Cooperative (BARC-MPC), Alvin B. Manlunas (Manlunas) and Analiza M. Violeta (Violeta) (collectively, "accused") ofwillful failure to pay deficiency tax under Section 255, 1 in relation to Sections 253( d) 2 and 256,3 of the National Internal Revenue Code (NIRC) of 1997, as amended, because plaintiff People of the Philippines (plaintiff) failed to prove their guilt beyond reasonable doubt.t SEc. 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 correct and accurate information, who willfully fails to pay such tax, make such return, keep such record, or supply such 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 (P 10,000) and suffer imprisonment of not less than one (I) year but not more than ten (I 0) years. (Emphasis and underscoring supplied) SEC. 253. General Provisions. (d) In the case of associations, partnerships or corporations, the penalty shall be imposed on the partner, president, general manager, branch manager, treasurer, officer-in-charge, and employees responsible for the violation. (Emphasis and underscoring supplied) SEC. 256. Penal Liability of Corporations.

SEPARATE OPINION CTA EB Crim. No. 108 (CTA Crim. Case No. 0-929) People of the Philippines v. Bacusanon ARC Multi-Purpose Cooperative, Alvin B. Manlunas and Analiza M. Violeta x--------------------------------------------------------------------x With due respect, however, I wish to take exception from certain portions of the ponencia insofar as the indispensable element of "willfulness" is concerned and elaborate on what constitutes willful failure to pay the assessed deficiency tax under Section 255 4 of the NIRC of 1997, as amended, as distinguished from Section 254s of the NIRC of 1997, as amended, or "attempt to evade or defeat tax." At the outset, I disagree with the ponencia insofar as it invokes the concept of"tax evasion" discussed in Commissioner of Internal Revenue v. The Estate of Benigno P. Toda, ]r. 6 (Estate ofToda) to determine the existence of willfulness in the present case. Estate of Toda described tax evasion as involving an accompanying state of mind characterized as "evil," in "bad faith," "willful," or "deliberate and not accidental." That formulation properly pertains to tax evasion or an attempt to evade or defeat tax. Accused, however, do not stand charged under Section 254 of the NIRC of 1997, as amended. Plaintiff charged them with "willful failure to pay tax" under Section 255 of the NIRC of 1997, as amended. Although both offenses employ the term "willful," Sections 254 and 255 punish distinct acts and require separate consideration of the conduct that each provision proscribes. Section 254 punishes a person who willfully attempts in any manner to evade or defeat a tax or its payment. Section 255, on the other hand, punishes a person who, although required by law or the applicable rules and regulations to perform a specified tax obligation, willfully fails to perform that obligation at the time required by law. Thus, the former contemplates an attempt to evade or defeat a tax or its payment, while the latter focuses on a knowing and voluntary failure to perform a duty that the tax law affirmatively requires. For this reason, I agree that nonpayment alone cannot automatically establish willfulness. Nevertheless, the Court should not examine nonpayment in isolation from the circumstances surrounding it. Rather, the Court should determine willfulness by considering whether accused possessed the volition to omit the act that the law required them to perform- that is, whether they knowingly and voluntarily failed to cause payment of the tax despite their knowl~ of the obligation and their responsibility and authority to act upon it. 4 Supra at note I. 0 SEc. 254. Attempt to Evade or Defeat Tax.- Any person who willfully attempts in any manner to evade or defeat any tax imposed under this Code or the payment thereof shall, in addition to other penalties provided by law, upon conviction thereof, be punished with a fine of not less than Five hundred thousand pesos (P500,000) but not more than Ten million pesos (PI 0,000,000), and imprisonment of not less than six (6) years but not more than ten (I 0) years: Provided, That the conviction or acquittal obtained under this Section shall not be a bar to the filing of a civil suit for the collection of taxes. (Emphasis and underscoring supplied) G.R. No. 147188, 14 September 2004.

SEPARATE OPINION CTA EB Crim. No. 108 (CTA Crim. Case No. 0-929) People of the Philippines v. Bacusanon ARC Multi-Purpose Cooperative, Alvin B. Manlunas and Analiza M. Violeta X--------------------------------------------------------------------X To secure a conviction under Section 255/ in relation to Sections 253(d) 8 and 256,9 of the NIRC of1997, as amended, plaintiff must establish that: (1) the corporate taxpayer was required by law to pay the tax; (2) the corporate taxpayer failed to pay the tax at the time required by law or the applicable rules and regulations; and (3) accused, as the officer or employee responsible for the violation, willfully failed to pay such tax at the time required by law or the applicable rules and regulations. In People of the Philippines v. joel C. Mendez (Mendez), the Supreme 10 Court explained, in the context of another violation of Section 255 of the NIRC of 1997, as amended, that "willfulness" entails a knowing, voluntary, and intentional failure to perform a duty that the law requires. Thus, mere inadvertence, mistake, or negligence does not satisfy the element of willfulness. Courts, however, may determine the existence of willfulness from the totality of the circumstances surrounding the prohibited act or omission. Additionally, as stressed in Christian Pantonial Acharon v. People of the Philippines, 11 the word "willfulness" connotes an active exertion of effort. Thus, for criminal liability to attach, the prosecution must prove that the accused willfully refused or consciously denied the obligation and did so intentionally. The Supreme Court emphasized that the penalized act must be deliberate, intentional, and purposeful, not merely the result of inability, negligence, mistake, or circumstances beyond the accused's control. The Supreme Court's pronouncement in Felix G. Valenzona v. The People of the Philippines 12 (Valenzona) further illuminates the nature of the intent that the prosecution must establish. There, the Supreme Court distinguished criminal intent from the intent to perpetrate the prohibited act. Criminal intent concerns the guilty state of mind traditionally associated with crimes mala in se. In contrast, intent to perpetrate the prohibited act concerns the accused's conscious volition to perform the act- or, when the law commands affirmative action, to omit the act - that the statute proscribes. tot Accordingly, even when the law dispenses with proof of criminal intent, plaintiff must still prove that accused freely and consciously . committed the prohibited act or omission. The absence of a requirement Supra at note I. Supra at note 2. Supra at note 3. 10 G.R. Nos. 208310-11 and 208662, 28 March 2023. II G.R. No. 224946, 09 November 2021. 12 G.R. No. 248584, 30 August 2023.

SEPARATE OPINION CTA EB Crim. No . .1.QJl (CTA Crim. Case No. 0-929) People of the Philippines v. Bacusanon ARC Multi-Purpose Cooperative, Alvin B. Manlunas and Analiza M. Violeta X--------------------------------------------------------------------X prove an evil motive does not eliminate the element ofvoluntariness. Rather, in offenses mala prohibita, the law focuses on whether accused consciously intended to perform, or consciously omitted to perform, the act that constitutes the offense. Applied to Section 255 13 of the NIRC of 1997, as amended, plaintiff need not prove that accused harbored an evil motive, intended to defraud the Government, concealed or diverted assets, falsified records, or devised a scheme to evade taxation. Such circumstances may strongly demonstrate willfulness, but Section 255 of the NIRC of 1997, as amended, does not invariably require them. Plaintiff must instead establish beyond reasonable doubt that accused responsible officers knew of the tax obligation and of their corresponding duties in relation thereto, possessed the authority or responsibility to act on behalf of the corporate taxpayer (in this case, the accused BARC-MPC), and knowingly and voluntarily failed to cause payment of the tax when the law required payment. Thus, respectfully, I cannot subscribe to the ponencia insofar as it requires proof of a "critical link" between nonpayment and a conscious and deliberate decision to disregard the Government's demand for payment, if such link demands evidence akin to an affirmative scheme to evade tax. Requiring plaintiff to prove that responsible officers expressly directed nonpayment despite the availability of corporate funds, instructed subordinate officers to withhold payment, concealed or diverted corporate assets, or otherwise undertook affirmative acts demonstrating a deliberate effort to defeat collection would effectively import into Section 255 of the NIRC of 1997, as amended, particularly the offense of "willful failure to pay tax," indicia more appropriately associated with an "attempt to evade or defeat tax" under Section 25414 of the NIRC of 1997, as amended. I must caution that the foregoing proposition may unwittingly set a bad precedent by conflating two (2) distinct offenses. Critically, the offense of "willful failure to pay tax" under Section 255 of the NIRC of 1997, as amended, may be committed by omission alone - that is, by knowingly and voluntarily failing to pay a tax that has become due and demandable. It does not necessarily require an affirmative act of concealment, deception, or obstruction.t 13 Supra at note I. 14 Supra at note 5.

SEPARATE OPINION CTA EB Crim. No. 108 (CTA Crim. Case No. 0-929) People of the Philippines v. Bacusanon ARC Multi-Purpose Cooperative, Alvin B. Manlunas and Analiza M. Violeta X--------------------------------------------------------------------X In contrast, an "attempt to evade or defeat tax" under Section 25415 of the NIRC of 1997, as amended, entails more than mere nonpayment. It contemplates affirmative conduct undertaken to evade or defeat the tax or its payment, such as acts designed to mislead the Government, conceal assets or transactions, or otherwise frustrate tax assessment or collection. The distinction is therefore material and must remain clear. Otherwise, requiring Section 254-type affirmative acts as proof of willfulness under Section 255 would effectively blur the statutory line between willful nonpayment and an affirmative attempt to evade or defeat tax. It must also be recognized that responsible officers rarely document or expressly manifest a decision not to pay a tax. As with other states of mind, the Court may infer volition from established facts and the reasonable inferences arising from them. Thus, while nonpayment alone does not establish willfulness, the Court may consider it together with accused's knowledge of the assessment, receipt of BIR notices and demands, participation in the taxpayer's financial or tax affairs, authority to cause or facilitate payment, and subsequent conduct concerning the outstanding liability. Be that as it may, the prosecution's evidence remains insufficient to sustain a finding of guilt. As discussed below, the facts proven in this case do not establish beyond reasonable doubt that accused consciously, deliberately, and intentionally chose not to cause payment of the assessed tax. Accordingly, the element of willfulness has not been adequately shown. In this case, plaintiff established that accused Manlunas and Viol eta, in their capacities as Chairman and Treasurer, respectively, were responsible officers of accused BARC-MPC when the subject deficiency value-added tax (VAT) assessment became final and executory on 21 November 2020, after accused BARC-MPC failed to file a protest against the Formal Letter of Demand and Final Assessment Notice (FLD/FAN). As for accused Manlunas, he testified that he served as Chairman of accused BARC-MPC from 2019 to 2022, thereby confirming that he occupied that position when the assessment became final in November 2020. Records likewise establish that he personally received both the Preliminary~ Assessment Notice (PAN) and the FLO/FAN. Despite receiving these BIRU IS Supra at note 5.

SEPARATE OPINION CTA EB Crim. No. 108 (CTA Crim. Case No. 0-929) People of the Philippines v. Bacusanon ARC Multi-Purpose Cooperative, Alvin B. Manlunas and Analiza M. Violeta x--------------------------------------------------------------------x issuances, accused Manlunas did not cause the filing of a reply to the PAN or a protest against the FLO/FAN, thereby allowing the assessment to lapse into finality. Moreover, the Letter of Authority (LOA) covering accused BARC- MPC's internal revenue taxes for the taxable year (TY) 2017 was served on n June 2019, after accused Manlunas had already assumed office as Chairman on 25 February 2019, as he himself declared in his Judicial Affidavit dated 18 November 2024- He also acknowledged his awareness that accused cooperative had attempted to secure a tax exemption and negotiate a settlement with the BIR but failed to do so because of an existing "Open Case." These circumstances establish substantially more than accused Manlunas's mere occupancy of the position of Chairman. Under Republic Act (RA) No. 9520, or the Philippine Cooperative Code of 2oo8, and its implementing rules/6 the Board of Directors (BOD) exercises direction and management over the affairs of a cooperative, while the Chairperson presides over the BOD and performs functions authorized by it. Thus, his position placed him within the governing body that exercised authority over accused cooperative's affairs. His personal receipt of the assessment notices and admitted awareness of accused cooperative's dealings with the BIR further demonstrate his actual knowledge of the tax controversy. As for accused Violeta, she testified that she served as Treasurer of accused BARC-MPC from 2018 until December 2020, thereby confirming that she remained Treasurer when the assessment became final in November 2020. In her Judicial Affidavit dated 18 November 2024, she admitted that, as Treasurer, she signed documents originating from the BIR to acknowledge their receipt, which led to the BIR's examination of accused cooperative's books and other records. Hence, throughout the audit and until the issuance and finality of the FLO/FAN, accused Violeta remained the officer principally concerned with accused cooperative's financial affairs. Accused Violeta's functions as Treasurer directly connect her to accused cooperative's ability to address the assessed deficiency VAT. The applicable cooperative rules entrust the Treasurer with custody of the cooperative's funds and documentation relating to its assets, liabilities, income, and expenditures and require the Treasurer to monitor and review its financial management operations. Although plaintiff presented circumstances that could ordinarily~ support an inference of knowing and voluntary nonpayment, the U 16 See Rules and Regulations Implementing Certain Provisions of the Philippine Cooperative Code of 2008 (Republic Act No. 9520).

SEPARATE OPINION CTA EB Crim. No. 108 (CTA Crim. Case No. 0-929) People of the Philippines v. Bacusanon ARC Multi-Purpose Cooperative, Alvin B. Manlunas and Analiza M. Violeta x--------------------------------------------------------------------x entire body of evidence leaves reasonable doubt as to whether accused responsible officers consciously chose simply to disregard accused BARC-MPC's tax obligation. The defense presented evidence of accused BARC-MPC's serious financial incapacity and, more significantly, of affirmative efforts inconsistent with a deliberate resolve to ignore its tax liabilities. Records show that accused BARC-MPC attempted to address its tax situation rather than simply abandon its obligation. Accused BARC-MPC sought recognition of its claimed tax-exempt status, explored the possibility of negotiating a settlement with the BIR, and attempted to collect outstanding receivables from its members. These acts do not, by themselves, extinguish the tax liability or conclusively negate willfulness. They nevertheless form part of the circumstances that the Court must consider in determining whether accused knowingly and voluntarily chose not to cause payment of the assessed tax. The evidence regarding accused BARC-MPC's financial condition likewise assumes significance when considered together with these efforts. Records show, by way of testimonial evidence, that accused BARC-MPC settled a separate tax liability for another TY only after securing funds borrowed from friends and relatives. This circumstance tends to demonstrate not simply an unwillingness to devote available funds to the Government, but an actual difficulty in obtaining funds with which to satisfy its tax obligations. To be clear, financial incapacity does not, by itself, negate willfulness under Section 25517 of the NIRC of 1997, as amended. A taxpayer cannot defeat criminal liability merely by asserting that it lacked funds. Neither does an officer's knowledge that the corporation or cooperative lacks sufficient funds automatically render nonpayment involuntary. Otherwise, financial distress would invariably excuse the knowing nonperformance of a statutory duty. Financial incapacity becomes relevant here because the surrounding evidence goes beyond a bare assertion that accused BARC-MPC lacked money. The evidence shows that accused BARC-MPC attempted to resolve its tax situation, explored settlement with the BIR, pursued receivables from its members, and even resorted to borrowing from friends and relatives to satisfy t a separate tax liability. Considered together, these circumstances create reasonable doubt as to whether accused responsible officers consciously chose to disregard accused BARC-MPC's obligation or whether the 17 Supra at note I.

SEPARATE OPINION CTA EB Crim. No. 108 (CTA Crim. Case No. 0-929) People of the Philippines v. Bacusanon ARC Multi-Purpose Cooperative, Alvin B. Manlunas and Analiza M. Violeta X--------------------------------------------------------------------X nonpayment instead resulted from its genuine inability to obtain the funds necessary to satisfy the assessment. The evidence concerning accused Violeta, who is charged in her capacity as Treasurer of accused BARC-MPC, warrants separate consideration. Her unrebutted testimony shows that the persons who discussed possible settlement of the tax liability did not communicate those plans to her and that she did not participate in the meetings concerning such matters. Thus, although her position as Treasurer connected her directly to accused BARC-MPC's financial affairs, her title and general functions alone do not conclusively establish that she personally made, participated in, or possessed sufficient knowledge of a conscious decision not to pay the particular tax assessment at issue. Relevantly, in the case of Genoveva S. Suarez v. People of the Philippines and the Bureau of Internal Revenue18 (Suarez), the Supreme Court found an evidentiary deficiency because plaintiff failed to show that therein Executive Vice-President's duties and responsibilities gave her the authority either to participate in or prevent the corporation's nonpayment of taxes. The High Court emphasized that criminal liability attaches to corporate officers who actively participate in the wrongful act or who, by reason of their relationship to the juridical entity, possess the power to prevent its commission. The crucial inquiry therefore concerns not merely the title held by an officer, but the officer's actual functions, authority, knowledge, and connection to the prohibited omission. Moreover, as similarly held in Valenzona, the criminal liability of a responsible corporate officer cannot rest solely on the fact that the juridical entity violated the law and that accused occupied a particular position within it. Plaintiff must still establish the officer's connection to the prohibited act or omission and the officer's volition in perpetrating it. In determining that volition, the Court must consider not merely formal authority but also what accused actually knew and did, or consciously failed to do, under the circumstances. The same analytical framework applies to accused Manlunas, who stands charged by reason of his capacity as Chairman of accused BARC-MPC. Accordingly, his designation as Chairman, standing alone, cannot establish criminal liability. Plaintiff must further demonstrate that his actual functions and authority sufficiently connected him to accused BARC-MPC's tax~ obligations and that, with knowledge of the tax liability, he knowingly and U 18 G.R. No. 253429, 06 October 2021.

SEPARATE OPINION CTA EB Crim. No . .1.ill! (CTA Crim. Case No. 0-929) People of the Philippines v. Bacusanon ARC Multi-Purpose Cooperative, Alvin B. Manlunas and Analiza M. Violeta X--------------------------------------------------------------------X voluntarily failed to perform, or cause the performance of, the duty required by law. Plaintiff established that he occupied a position of authority during the material period, personally received the PAN and FLD/FAN, knew of the BIR audit and resulting assessment, and remained Chairman when accused BARC-MPC allowed the assessment to become final and executory. Those circumstances strongly establish his knowledge of the tax liability and his institutional authority to act upon it. Standing alone and absent credible countervailing evidence, they could support an inference that his continued failure to cause payment constituted a knowing and voluntary omission. The Court, however, must consider these circumstances together with the evidence showing accused BARC-MPC's attempts to address its tax liabilities and its inability to obtain sufficient funds. Viewed in their totality, the circumstances do not establish beyond reasonable doubt that accused Manlunas consciously elected to disregard the Government's demand despite an ability or realistic opportunity to cause payment. At the very least, the evidence admits a reasonable inference that accused BARC-MPC's failure to pay resulted from genuine financial incapacity despite efforts to address its tax obligations. Thus, I reach the same ultimate conclusion as the ponencia, but for a materially different reason. Plaintiff established that accused Manlunas and Violeta occupied positions of authority during the material period; that their respective functions bore a direct relationship to the governance and financial affairs of accused BARC-MPC; that they knew of the BIR audit and ensuing assessment; that accused Manlunas, as Chairman, personally received the PAN and FLD/FAN; that accused Violeta acknowledged BIR documents in her capacity as Treasurer; that accused responsible officers allowed the assessment to become final and executory without filing the appropriate protest; and that the assessed deficiency VAT thereafter remained unpaid. These circumstances constitute relevant evidence of willfulness and, in the absence of countervailing evidence, could support an inference that responsible officers, accused Manlunas and Violeta, knowingly and voluntarily allowed the tax obligation to remain unpaid. Plaintiff need not additionally prove an evil motive, fraudulent design, concealment o~~ assets, diversion of funds, or affirmative instructions to subordinate U

SEPARATE OPINION CTA EB Crim. No. 108 (CTA Crim. Case No. 0-929) People of the Philippines v. Bacusanon ARC Multi-Purpose Cooperative, Alvin B. Manlunas and Analiza M. Violeta x--------------------------------------------------------------------x personnel not to pay before the Court may find willfulness under Section 255 19 of the NIRC of 1997, as amended. Here, however, the inquiry cannot end with those circumstances. The defense presented evidence that accused BARC-MPC suffered from genuine financial incapacity, attempted to resolve its tax situation with the BIR, pursued receivables in an effort to generate funds, and had to borrow money from friends and relatives even to settle another tax liability. As regards accused Violeta, evidence further shows that other officers did not communicate the proposed settlement arrangements to her and excluded her from the meetings where they discussed those matters. Taken together, I submit that these circumstances preclude a conclusion with moral certainty that herein accused Manlunas and Violeta knowingly and voluntarily chose not to cause payment of the subject deficiency VAT. They raise reasonable doubt as to the element of willfulness, which doubt the Court must resolve in favor of accused. Importantly, this conclusion does not shift to accused the burden of disproving willfulness. Plaintiff bears, and at all times retains, the burden of proving every element of the offense beyond reasonable doubt. The evidence for the accused merely forms part of the entire evidentiary record against which the Court must determine whether plaintiff discharged that burden. In a prosecution for willful failure to pay tax under Section 255 of the NIRC of 1997, as amended, the burden remains on the prosecution to establish beyond reasonable doubt every element of the offense, including the element of willfulness. The prosecution may not rely on the weakness of the defense or on the accused's inability to explain nonpayment. Rather, consistent with settled jurisprudence, the prosecution's case must stand on its own merits and must produce moral certainty that the accused knowingly, intentionally, and deliberately failed to pay a tax legally due and demandable. 20 After considering the prosecution and defense evidence as a whole, I find that plaintiff failed to establish the requisite willfulness with the degree of moral certainty necessary to sustain a conviction.t 19 Supra at note I. 20 See People of the Philippines v. Court of Tax Appeals-Third Division and William R. Villarica, G.R. No. 248802 (Notice), 21 June 2021; Dante Lopez y Atanacio v. People of the Philippines, G.R. No. 249196, 28 April 2021; Capistrano Daayata, eta!. v. People ofthe Philippines, G.R. No. 205745, 08 March 2017.

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PEOPLE OF THE PHILIPPINES v. BACUSANON ARC MULTI-PURPOSE COOPERATIVE, ALVIN B. MANLUNAS and ANALIZA M. VIOLETA

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