PEOPLE OF THE PHILIPPINES v. ERNESTO NEVALGA MILLANES

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY THIRD DIVISION PEOPLE OF THE PHILIPPINES, CTA Crim. Case No. 0-715 Plaintiff, (NPS Dock et No. XVI-INV-14L-004 4 1) For: Violation of Section 2 55 of t he NIRC of 1997, as a m ended . -versu s- Members: MANAHAN, Chairperson, REYES-FAJARDO, and ANGELES, JJ. ERNESTO NEVALGA � Promulgated: MILLANES, Accused. MAY 1 5 2Q24 c.. "2. ~ 0(, /' . ... . ){- - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - ){ RESOLUTION In the Resolution dated July 18, 2019, the Court found the eristence of probable cause to hold the above-named accused for trial. I Trial did not proceed as the accused remains at large in spite of the issuance and service of a warrant of arrest and several alias warrants of arrest in his last known address. The above -c aptioned c ase was then archived pursuant to Administrative Circular No. 7-A-92, to be revived upon the apprehension of the accused.2 A second look a t the r ecords of this case reveals, however, that the case should be dismissed due to prescription of the crime charged. Section 281 of the 1997 National Internal Revenue Code (NIRC) , as amended , r eads a s follows: t Court Docket, pp. 11 4 - 117 . 2 Court Resolu tion dated January 6 , 202 1.

RESOLUTION CTA Crim. Case No. 0-715 "SECTION 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 of judicial proceedings for its investigation and punishment. 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 con stituting jeopardy. The term of prescription shall not run when the offender is absent from th e Philippines." (Emphases supplied) Section 2, Rule 9 of t h e Revised Rules of th e Court of Tax Appeals (RRCTA) relevantly provides, thus : "Section 2. Institution of criminal actions. - All criminal actions before the Court in Division in the exercise of its original jurisdiction shall be ins tituted by t he filing of a n information in the name of the People of the Philippines. In criminal actions involving violations of the National Internal Revenue Code and other laws enforced by the Bureau of Internal Revenue, the Commissioner of Internal Revenue must approve their filing. In criminal actions involving violations of the Tariff and 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 or prescription." The Information filed in Court on April 29, 2019 charged th e accused of willful failure to pay taxes under Section 255 of th e 1997 NIRC, as amended, described as follows: "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 the accurate information, who willfully fails to pay such tax, make such return, keep such record , or supply correct and accurate information, or withhold or remit taxes withheld, or refund excess taxes withheld on compen sation, at the time or times required by law or rules and regulations shall, in addition to other pena lties provided by law, upon conviction thereof, be

RESOLUTION CTA Crim. Case No. 0-71 5 punished by a fine of n ot less t h a n Ten thous and pesos (P10,000) a n d suffer impr isonm en t of n ot less t h a n one (1) year but not m ore th a n ten (10) yea rs." The Joint Complaint-Affidavit dated December 4 , 20143 and the Prosecutor's Resolut ion dated January 8, 2018, 4 contain the allegation that the Bureau of Internal Revenue (BIR), through its authorized representa tives, issued a Preliminary Asse ssment Notice (PAN) on June 5 , 2012 followed by Final Assessment Notices and Formal Letter of Demand (FANs/FLD) on July 19, 201 2, finding a ccused liable for deficiency income t ax and value-added tax (VAT) for taxable year (TY) 2006. The Joint Complaint-Affidavit and the Prosecutor's Resolution further allege tha t the PAN and the FANs/FLD were duly served upon the accused via registered mail but did not specify the d a te s when these were r eceived by the accused. Both the Joint Complain t -Affidavit and the Prosecutor's Resolution assert tha t accu sed did n ot file a n y protests to the PAN a s well as the FANs /FLD d espite r eceiving such official notices via registered mail. With only the d ate of issu a n ce of the FANs/FLD on hand, this Court find s th a t the case sh ould b e dismissed on the ground of prescription . If r eceived by accused on the date of issuance of th e FANs on July 19 , 201 2 without any protest being filed, the a ssessmen t became final and executory on August 18, 201 2 b a s ed on th e provisions of Section 228 of the 1997 NIRC, a s amended , quoted a s follows : "SE C. 228 . Protesting of Asses s ment.- When th e Commission er or his duly a uthorized representa tive find s t h a t proper taxes sh ould be a s se ssed, h e sh a ll first n otify th e taxpayer of his findings: xxx xxx xxx Th e taxpayer s hall be informed in writing of the law and the facts on which th e assessmen t is made; oth erwise, the assessmen t s h a ll be void . Wit hin a period to be prescribed by implementing rules and regu la tions, the taxpayer s h a ll be required to respond to sa id n otice. If th e taxp ayer fa ils to respond, the Commiss ioner or 3 Court Docket, p p. 2 1-25. 4 Court Docket, pp. 10- 15 .

RESOLUTION CTA Crim. Case No. 0-7 15 his duly authorized representative shall issue an assessment based on his findings. Such assessment may be protested administratively by filing a request for reconsideration or reinvestigation within thirty (30) days from receipt of the assessment in such form and manner as may be prescribed by implementing rules and regulations. If the protest is denied in whole or in part, or is not acted upon within one hundred eighty days (180) days from submission of documents, the taxp ayer a dversely affected by the decision or inaction m ay a ppeal to the Court of Tax Appeals within thirty (30) days from receipt of the said decision, or from the lapse of the one hundred eighty (180) day period; otherwise the decision shall becom e fin a l, executory a nd dema ndable." (emphasis supplied) The plaintiff th en had until August 18, 20 17 within which to file an Information in Court. Records show that th e Information was filed in Court only on April 29, 20 19, thu s breach ing the five (5)-year limitation on institution of criminal actions in cou rt. In th e case of Emilio E. Lim) Sr. and Antonia Sun Lim vs. Court of Appeals and People of the Philippines5 t h e Su preme Court, interpreting the above-quoted Section 28 1 of the 1997 NIRC, as amended (previously Section 354 of the NIRC), ruled t h at for as long as the p e riod from the discovery and institution of judicial proceedings for its investigation and pu nishment up to the filin g of the information in court does not exceed five (5) years, th e government's right to file an action will not prescribe. The Supreme Court ruled as follows: ".. .As Section 354 stands in th e statute b ook (and to this day it h as remained unchanged) it would indeed seem that tax cases, such as the present ones, are practically imprescriptible for as long as the period from the discovery and institution of judicial proceedings for its investigation and punishment, up to the filing of the information in court does not exceed five (5) years. XXX XXX XXX Unless a m ended by the Legislature, Section 354 stays in the Tax Code as it was written during the days of the Commonwealth. And as it is, must be a pplied regardless of its s G.R. Nos. 48 134-37, October 18, 1990.

RESOLUTION CTA Crim. Case No . 0 -715 appa ren t one-sidedness in favor of the Governmen t. In criminal cases, s tatutes of limitations are acts of grace, a su rrenderin g by the s overeign of it s right to prosecute. Th ey receive a strict construction in favor of the Government and limitations in such cases will not be presumed in the absence of clear legislation ." (Emphasis supplied) Accordingly, p remises consider ed , CTA Criminal Case No. 0-7 15 is DISMISSED on th e ground of prescrip tion of th e crime c h a r ge d . Let this case b e removed fr om th e archives and consid er the same CLOSED and TERMINATED. SO ORDERED. ~' 7~ ~&1114.~�..~. ~---- CATHERINE T. MANAHAN Associate Justice ~~r.~ F~ MARIAN~ F . REf ES-F.KJARDO Associate Justice HENRY ~~GELES Associa te Justice