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

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY THIRD DIVISION PEOPLE OF THE PHILIPPINES, CTA Crim. Case No. 0-753 Plaintiff, (NPS Docket No. XVI-INV-14H-00259) For: Violation of Section 255 of the NIRC of 1997, as amended. -versus- Members: MANAHAN, Chairperson, REYES-FAJARDO, and ANGELES, JJ. EVANGELINE M. SERTESA, (F. Salvador, Jordan Plains Subd., Sta Monica, Novaliches, Promulgated: Quezon City), Accused. AUG 2 9 2024 )(--------------------------L-_-----/-.:-()-" ~~- -- --� - )( RESOLUTION On July 16, 2019, an Information was filed against accused Evangeline M. Sertesa for violation of Section 255 of the 1997 National Internal Revenue Code (NIRC) , as amended, or the crime of Willful Failure to Pay Income Tax for taxable year (TY) 2007. For easy reference, the accusatory portion of the Information reads: "That on or about June 22, 2012 and thereafter, in Quezon City, and within the jurisdiction of this Honorable Court, accused EVANGELINE M. SERTESA, doing business under the name E.M .S . Enterprises , a sole proprietorship with registered address at F. Sa lvador, Jordan Plains Subd., Sta. Monica, Novaliches, Quezon City, required by law to file Income Tax Return (ITR) a nd to pay corresponding income tax, did then and there, knowingly, consciously and willfully fail to pay deficiency income tax in the amount of Fourteen Million Seven Hundred Seventy Six Thousa nd One Hundred Seventy Two Pesos and Nineteen Centavos (Phpl4,776,172.19), exclu sive of interests, surcharges and penalties, for taxable year 2007, despite receipt of the Preliminary Assessment Notice (PAN) and Final Assessment Notice (FAN) issued after tax investigation, including prior and post-notices, and final

RESOLUTION CTA Crim. Case No. 0-753 demands to pay, the last being in the nature of demand before suit issued on June 22, 2012 and her failure to file any protest on said deficiency tax assessment within the prescribed period, to the damage and prejudice of the Government of the Republic of the Philippines. Contrary to Law"l Meanwhile, the following documents were attached to subject Information: 1. Resolution dated April1, 2018 issued by Assistant State Prosecutor John R. Resado, recommending the filing of Information against the accused for violation of Section 255 of the 1997 NIRC, as amended, for the crime of willful failure to pay deficiency income tax and value added tax, all for TY 2007; 2. Investigation Data Form; 3 . Referral Letter dated August 28, 20 14 for preliminary investigation and filing of information against accused, issued by Commissioner of Internal Revenue (CIR) Kim S. Jacinto-Henares; and 4. Joint Complaint-Affidavit of Revenue Officers (ROs) Dayne B. Medina, Cristeta SP Banihit, and Jennifer P. Enriquez, executed on August 28, 2014, with the supporting documents including the Preliminary Assessment Notice (PAN)2 and Final Assessment Notice (FAN) .3 On August 6 , 2019, the Court directed the issuance of the Warrant of Arrest (WOA) against the accused.4 On August 13, 2019, the WOA was issued.s 1 Docket, CTA Crim. Case No. 0-753, Information, pp. 8-9. 2 Id., p. 37. 3 Jd., p. 38. 4 Jd., Resolution dated August 6, 2019, pp. 52-57. 5 Jd., pp. 58-59.

RESOLUTION CTA Crim . Case No. 0 -7 53 On September 5, 2019,6 the WOA was returned but not served because subject accused cannot be located in the indicated address or the whereabouts are unknown. On July 22, 2020, the Chief of Philippine National Police (PNP) and the Director of National Bureau of Investigation (NBI) have yet to make a report even after more than six months after the issuance ofWOA. Thus, the Court archived the instant case on even date.7 On September 3 , 2020, the PNP made a return of the WOA stating therein that the accused is no longer residing in the given address.8 During the pendency of the instant case, this Court revisited and reviewed the records of the case and found that at the time of the filing of the said Information, the case had already prescribed. Section 281 of the 1997 NIRC, as amended , which governs the prescriptive period for criminal tax actions, reads as follows: "SEC. 281. Prescription for Violations of any Provision of this Code. - All violations of a ny provision of this Code sha ll prescribe a fter five (5) years. Prescription s h a ll begin to run from th e day of the commission of the viola tion of t h e law, a nd if the sa m e b e n ot known at th e time, from the discovery thereof and the institution of judicia l proceedings for its investigation and punishmen t. The prescription sh a ll be in terrupted wh en p r oceedings a re instit uted again st the guilty person s a nd sha ll begin to run again if the proceedings a re dismissed for reasons not constituting jeopardy ....." In resolving the issue of prescription, the following shall be considered: (1) the period of prescription for the offense charged; (2) the time the p eriod of prescription started to run; and, (3} the time the prescriptive p eriod wa s interrupte d.9 6 Id. , Mem ora ndum d a ted September 5 , 2 0 19 , p . 6 2. 7 Docket , Resolution dated J u ly 2 2 , 20 20, pp. 70-7 1. 8 Jd., Officer 's Retu rn of Wa r ra nt of Arrest da ted Septembe r 3 , 20 20 , p. 93. 9 Presidential A d H oc Fact -Findi ng Committee on Behest Loans v. H on. Desierto, et al., G.R. No. 1357 15, Apr il1 3 , 20 11.

RESOLUTION CTA Crim. Case No. 0-753 Page 4 of7 Anent the first consideration, the prescriptive period for tax offenses punishable under the 1997 NIRC, as amended, is five (5) years. For the s econd consideration, prescription shall commence from: 1) commission of the tax offense, if known at that time ; or 2) from discovery of such tax offense and institution of judicial proceedings for its investigation and punishment. The third consideration, r. e., interruption of the prescriptive period, is dependent on whether the prescriptive period commenced from commission of the tax offense, or from discovery thereof and institution of judicial proceedings for its investigation and punishment. In Emilio E. Lim, Sr. and Antonia Sun Lim v. Court of Appeals w, accused therein wer e ch arged for their refusal to pay deficiency income tax (IT) due for TYs 1958 and 1959, among others. One of the arguments they advanced is that the criminal actions instituted against them have prescribed. In holding said argument erroneous, the Supreme Court ruled: ". . . Inasmuch as the fina l notice a nd d ema nd for paym en t of t h e d eficien cy taxes was served on p etitioners on July 3 , 1968, it was only t hen th a t the cause of action on the pa r t of t h e BIR accrued. This is so b ecau se prior to t h e receipt of t h e letter-as sessment, n o violation h as yet bee n committed by the taxpayers. The offen se was committed only a fter receipt was coupled wit h the wilful refusal to pay t h e taxes du e within the alloted period. The two criminal informations, having been filed on June 23, 1970, are well-within the five-year prescriptive period and are not time-barred..." (Boldfacing s u p p l ie d) Then came the Petronila C. Tupaz v. Honorable Benedicta B . Ulep, et al. 11 case. There, accused was charged as an officer of El Oro Engravers Corporation for willful failure to pay corporate IT for TY 19 79. Among the d efenses she posed is that said offense had already prescribed. The Supreme Court ruled in the negative, ratiocinating in this wise: ".... Petition er was ch a rged with fa ilure to pay deficien cy income tax after repeated demands by the taxing authority. In Lim, Sr. v. Court of Appeals, we stated that by its n a ture the 10 G.R. Nos. L-48134-37, October 18, 1990. II G.R. No. 127777, October 1, 1999 .

RESOLUTION CTA Crim. Case No. 0-753 viola tion could only be committed after service of notice and dem and for payment of t he deficiency taxes upon the taxpayer. Hence, it cannot be said th at the offen se h as been committed as early as 1980, upon filing of the income tax re turn. This is so becau se prior to the finality of the assessm ent, the taxpaye r h as not committed any violation for nonpayment of the tax. The offense was committed only after th e finality of the assessm ent coupled with taxpayer 's willful refu sal to pay the taxes within the a llotted period. In this case, wh en the notice of assessment was issued on July 16, 1984, the taxpayer still h a d thirty (30) days from receipt thereof to protest or question the assessment. Otherwise, th e assessment would become final and unappeala ble. As he did not protest, the assessment became final and unappealable on August 16, 1984. Consequently, when the complaint for preliminary investigation was filed with the Department of Justice on June 8, 1989, the criminal action was instituted within the five (5) year prescriptive period. ..." Indeed, the Lim case and the Tupaz case were in unison in holding that the offense of willful failure to pay tax is committed upon finality of the assessment, coupled with the taxpayer's deliberate refusal to pay taxes due . However , these cases differ as to when interruption of the five (5)-year prescriptive period under Section 281 of the 1997 NIRC, as amended, occurs. In the Lim case, the prescriptive period was interrupted by the filing of Information in court, whereas in the Tupaz case, said prescriptive period was interrupted by the filing of the Complaint before the Department of Justice (DOJ) for preliminary investigation. On November 22, 2005, the Supreme Court approved A.M. No . 05- 11 -07-CTA otherwise known as the Revised Rules of the Court of Tax Appeals (RRCTA). Section 2, Rule 9 of the RRCTA provides that the institution of the criminal action shall interrupt the running of the period of prescription, to wit: "SEC. 2. Institution of criminal actions. - All criminal actions before the Court in Division in the exercise of its original jurisdiction shall be instituted by the filing of an information in the na me of the People of the Philippines. In crimina l action s involving violation s of t h e National Internal Revenue Code and other laws enforced by the Bureau of Internal Revenue, the Commissioner of Internal Revenue must approve their filin g. In crimina l actions involving violation s of the Tariff and Customs Code and other laws enforced by the Bureau of Customs, the Commissioner of Customs must approve their filing. (Rules of Court, Rule 11 0, sec. 2a; n)

RESOLUTION CTA Crim . Case No. 0 -753 The institution of the criminal action shall interrupt the running of the period of prescription. (Rules of Court, Rule 110, sec. 1, par. 2a)" (Boldfacing supplied) The RRCTA being the special provision that governs the proceedings before this Court, provides that the period of prescription for a tax case shall be tolled by the filing of an Information with this Court. In the instant Information, accused is being charged for failure to pay its IT Deficiency for TY 2007 in the amount of Php14,776,172.19, exclusive of charges and penalties. Likewise, it was also alleged by the Complainants that the Formal Letter of Demand was served through registered mail and failed to make a timely protest. The assessment became final, executory, and demandable. 12 Thus, a Preliminary Collection Letter (PCL) was issued on February 1, 2012. 13 Based on the records of the case, the certified true copies of FAN and the attached Assessment Notice for IT1 4 have no due dates indicated therein. The apparent reckoning point where the subject assessment became delinquent was on the issuance of the PCL on February 1, 2012. Thus, said assessment attained finality on February 1, 2012. Sans payment thereof by accused, the tax offense, 1n this case, was committed on February 1, 2012. Counting from February 1, 2012, the five (5)-year prescriptive period to indict accused for failure to pay income tax lapsed on February 1, 2017. Thus, the right of the government to institute the case against accused had already prescribed when the Information was filed before this Court on July 16, 2019. The failure of the prosecution to timely file the Information in Court, within the five (5)-year prescriptive period renders the present case dismissible on the ground of prescription. 12 Docket, Paragraphs 10 and 11 of Joint Complaint-Affidavit, p . 28. 13 Jd., Paragraph 12 of Joint Complaint-Affidavit, p . 28. 14 Jd., p. 39 .

RESOLUTION CTA Crim. Case No. 0-753 ACCORDINGLY, CTA Crim. Case No. 0-753 1s DISMISSED on the ground of prescription. SO ORDERED. r. c~ Azt.c,....~....."'--- cATHERINE T. MANAHAN Associate Justice (on official business) MARIAN IVY F. REYES-FAJARDO Associate Justice /}P HENRY S. ANGELES Associate Justice