CTA Case No. O-56 (Resolution)

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY FIRST DIVISION ********* THE PEOPLE OF THE PHILIPPINES, CTA CRIM CASE N o. 0- 056 Plaintiff, (l.S. No. 05F -14102) -versus- For: Violation of Sec. 255 of the 1997 Tax Code Members: Acosta, Chairman, Bautista, and Casanova, JL ALICIA PAGUIO, BRENDA PAGUIO, Promulgated: DIANA PAGUIO, EVELYN PAGUIO, FREDERICK PAGUIO, CARMENCITA 10 2008 ;C) .'JD0 PAGUIO, All of No. 141 Cordillera St., Quezon City, Accused X------------ - --- - --- - -- -- ------ -- - -- -- -- -- -- --- --------- -- - RESOLUTION ACOSTA, PJ: With the preliminary hearing held last October 29, 2008, where the basic amount of deficiency Documentary Stamp Tax and Withholding Stamp Tax have been settled by .the admission of respondent to be P145,500.00 and P727,552.00, respectively, now for resolution is the "Motion to Dismiss and/ or Mo tion to Quash Information" filed by the accused on August 4, 2008, with Comment/ Opposition thereto filed by the plaintiff on August 13, 2008 and the corresponding Reply filed by the accused on August 26, 2008. The accused avers that in the Information charging them of violation of Section 255 of the N ational Internal Revenue Code (NIRC) , they allegedly incurred, for their 1997 real property transaction, deficiency expanded withholding tax of P1 ,687,11 2.04 and deficiency documentary stamp tax of P218,250.00. However, according to the

RESOLUTION CTA CRJM CASE No. 0-056 Page 2 of6 accused, an examination of the documents, which the prosecutors have presented, will readily reveal that the principal/basic amount of deficiency taxes being claimed by the Bureau of Internal Revenue is less than One Million pesos. Citing Section 3(2)(b) of the Revised Rules of Court, in relation with Section 7(1)(b) of Republic Act No. 9282, the accused argues that this Court has no jurisdiction over the case, as its original jurisdiction in criminal cases is only in cases where the principal amount of taxes and fees, exclusive of charges and penalties claimed is One Million pesos and more. This, the accused contends, warrants the immediate dismissal of this case and the grant of the Motion to Quash the Information. On the other hand, the plaintiff maintains that this Court has jurisdiction to take cognizance of the case. First, all the accused have voluntarily appeared and submitted themselves to the jurisdiction of the Court by posting cash bail bond for their provisional liberty and by entering their respective pleas. And second, while the Revised Rules of the Court of Tax Appeals (CTA) provides that the Court in division shall exercise exclusive original jurisdiction over cases involving criminal cases arising from violations of the NIRC, where the principal amount of taxes and fees, exclusive of charges and penalties claimed is One Million pesos or more, there is nothing in the said rules which deprive the CTA of jurisdiction in cases where the principal amount of taxes and fees claimed is less. Lastly, the prosecutors submit that taxes are the lifeblood of the government and should be collected without unnecessary hindrance. In their Reply, the accused argue, among others, that the jurisdiction of the courts over the subject matter is conferred exclusively by the Constitution and by law. Thus, the fact that the accused posted bond and submitted themselves for arraignment, did not in any manner confer jurisdiction to the court. The Court finds for the accused. Sec. 7, (b) (1) of Republic Act No. 1125, as amended by Republic Act No. 9282 endows this Court with jurisdiction over criminal cases in this manner:

RESOLUTION CTA CRIM CASE No. 0-056 Page 3 of6 (1) Exclusive original jurisdiction over all criminal offenses arising from violations of the National Internal Revenue Code or Tariff and Customs Code and other laws administered by the Bureau of Internal Revenue and the Bureau of Customs: Provided, however, That offenses or felonies mentioned in this p aragraph where the princip al am o unt of taxes and fees, exclusi ve o f charges and p enalties, claimed is less than One Million p esos (Pl, OOO, OOO) or where there is no sp ecified amount claimed sh all b e tried by the regular Co urts and the jurisdiction of th e CTA sh all b e appellate. Any provision of law or the Rules of Court to the contrary notwithstanding, the criminal action and the corresponding action for the recovery of civil liability for taxes and penalties shall at all times be simultaneously instituted with, and jointly determined in the same proceeding by the CTA, the filing of the criminal action being deemed to necessarily carry with it the filing of such civil action separately from the criminal action will be recognized. (Emphasis Supplied) Clearly, it is only where the amount basic or principal amount being claimed is One Million pesos or more that the CTA has original exclusive criminal jurisdiction. \Vhere the amount is less, or where there is no specified amount, it is the regular courts that has original jurisdiction. In the latter case, the CTA's jurisdiction is appellate. Here, the basic or principal amount of taxes and fees, exclusive or charges and penalties being claimed are not disputed. The prosecutors and the accused both offered the same pieces of evidence to show that the amount of taxes and charges involved. In the Preliminary Assessment Notice marked as Exhibit "]" for the plaintiff, and "E" for the accused, show that the basic deficiency taxes being claimed are: P727 ,552.00 as creditable withholding tax due and P145,500.00 as documentary stamp taxes, these deficiency taxes totals P873,052.00. These deficiency taxes, as stated in the Information only amount to P2,008,487.99, when surcharges and interest are included in the computation. Note that the same amounts were being claimed in the Assessment Notice issued by the Bureau of Internal Revenue marked as Exhibits "L" and "N" for the plaintiff and "7" and "9" for the accused, as well as the 2"d Notice of Delinquent Account marked as Exhibits "S" for the plaintiff and "11" for the accused. Verily, the amount of the basic deficiency taxes in this case does not amount to One Million pesos, over which, under the law the CTA's jurisdiction is only appellate.

RESOL UTION CTA CRJM CASE No. 0-056 Page 4 of6 T he arguments o f the plaintiff that thi s Court has already taken cognizance and may th erefore continu e to assume jurisdiction, because all the accused have voluntarily appeared and submitted them selves to this Court's jurisdictio n by pos ting bo nd and entering their plea; and that th ere is no provision o f law denying this Court the authority to assume jurisdiction over cases the amount o f w hich is less th an One Million pesos, is bereft o f m erit. It is a basic in rem edial law that there are three elements o f criminal jurisdiction: first, territorial jurisdictio n; second, jurisdiction over the subj ect matter; and third, jurisdiction over th e person of the accused. T erritorial jurisdictio n is determined by the geographical area over which the court presides. Jurisdictio n over the subj ect m atter is determined by the allegations of the complaint or information in accordance with the law in force at the time o f the institution o f the action, no t at the time o f its commissio n. It therefore, does no t depend upon th e co nsent or omissions o f th e parties to th e action. It is a m atter o f legislative enactment which no o ne, but th e legislature may change. Jurisdiction over the p erson is acquired by the voluntary appearance or surrender by th e accused or b y his arres t. In the case, while th e plaintiff correctly argued that th e Court acquired jurisdiction over the persons of the accused, by their arraignm ent, and posting o f bo nd, the jurisdiction o f th e Court on the subject m atter does no t necessarily follow. Here, it was ques tio ned and attacked with the filing o f th e Mo tion to Dismiss and / or Quash. A nd as discussed above, a careful examination o f the law bestowing this Court o f its criminal jurisdiction vis-a-vis the Information and the documen ts supporting it, will show that this Court is without jurisdiction to hear and decide the case. Further, it is elem entary that jurisdiction over the subj ect m atter canno t be derived by implication. Courts that exercise jurisdiction are expressly designa ted; such authority has always been conferred, either by the Constitution or by law, and th e question o f jurisdictio n over the subj ect matter can be rai sed at any time even for th e

RESOLUTION CTA CRIM CASE No. 0-056 Page 5 of6 first time on appeal. 1 This kind of jurisdiction is not for the courts, let alone the parties, to themselves determine or conveniently set aside. 2 In France/ Realty Corporation vs. Ricardo T. Sycip1 the Supreme Court, speaking through no less than ChiefJustice Panganiban, explained that: "The ruling in Sibonghano/ on the matter of jurisdiction is, however, the exception rather than the rule. Estoppel by laches may be invoked to bar the issue of lack of jurisdiction only in cases in which the factual milieu is analogous to that in the cited case. In such controversies, laches should be clearly present; that is, lack of jurisdiction must have been raised so belatedly as to warrant the presumption that the party entitled to assert it had abandoned or declined to assert it. That Sibonghanqy applies only to exceptional circumstances is clarified in Calimlim v. Ramire;v which we quote: 'A rule that had been settled by unquestioned acceptance and upheld in decisions so numerous to cite is that the jurisdiction of a court over the subject-matter of the action is a matter of law and may not be conferred by consent or agreement of the parties. The lat'k ofjurisdit'tion of a murt mqy be raised at a'!Y stage of the proceedings, even on appeal. This doctrine has been qualified by recent pronouncements which stemmed principally from the ruling in the cited case of Sibonghanqy. It is to be regretted, however, that the holding in said case had been applied to situations which were obvious!J not contemplated therein. The exceptional circumstance involved in Sibonghanqy which justified the departure from the accepted concept of non-waivability of objection to jurisdiction has been ignored and, instead a blanket doctrine had been repeatedly upheld that rendered the supposed ruling in Sibonghanqy not as the exception, but rather the general rule, virtually overthrowing altogether the time-honored principle that the issue of jurisdiction is not lost by waiver or by estoppel.' 1 Roxas vs. Rafferty, 37 Phil. 95 7. 2 La Naval Drug Corporation vs. The Honorable Court of Appeals and Wilson C. Yao, G.R. No. 103200. August 31, 1994. 3 G.R. No. 154684, September 8, 2005. ~ In this case estoppel by laches, has been used quite successfully in a number of cases to thwart dismissals based on lack ofjurisdiction. It was in this case, Tijam v. Sibonghanoy, where this doctrine was espoused, and it was held that a party may be barredfrom questioning a court's jurisdiction after being invoked to secure affirmative relief against its opponent. In fine, the Supreme Court held that laches prevents the issue of lack ofjurisdiction from being raised for the first time on appeal by a litigant whose purpose is to annul everything done in a trial in which it has actively participated.

RESOLUTION CTA CRIM CASE No. 0 -056 Page 6 of6 Indeed, the general rule remains: a court's lack of jurisdiction may be raised at any s tage of the proceedings, even on appeal. The reason is that jurisdic tion is conferred by law, and lack of it a ffects the very authority o f th e co urt to tak e cognizance of and to render judg m ent on the action. Moreover, jurisdiction is de termined by the avermen ts o f the complaint, not by the de fenses contained in the answer." (Citations Omitted) In th e sam e France! case the Suprem e Court enunciated that Rule 9 of th e Rules o f Court requires that all defenses and obj ections -- excep t lack of jurisdiction over th e subj ect m atter, litis pendentia, bar by prior judgment and / or prescrip tion -- must be pleaded in a m otion to di smiss or in an answer; otherwise, they are deemed waived. As to the excep ted grounds, the court m ay di smiss a claim or a case at any tim e "when it appears from the pleadings o r the evidence o n record" that any o f those grounds exists. WH E RE FORE, having no jurisdiction over the subject m atter of the case, this Court is constrained to GRANT the instant Motion to D ismiss and / or Q uash. T his dismissal o f the case is however withou t prejudice to its re- filing with the proper court. Following Section 22 Rule 114 o f the Revised Rules o f Court, the personal/ cash bail bond pos ted by the accused above-enumerated, are hereby cancelled. SO ORDERED . ERNESTO D . ACOSTA Presiding J ustice ~ CAESAR A. CASANOVA Associate Ju stice