CTA Case No. 16 (Decision)

CT A Fonn o. R 1111111111111111111111 11111 11111111111111111111111111111111111111111111111111111 22-000575-0005 REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON C ITY SPECIAL FIRST DIVISION CTA CRIM. CASE NO. A-16 PEOPLE OF THE PHILIPPINES, Plaintiff, - versus - NOTICE OF DECISION DEXTER MAGTAAN y MASANGKAY, Accused. To: DEXTER M. MAGTAA Bryg. Sta. Rosa 13inmalcy, Pangasinan RAG UDO LAW OFFIC E Unit 3, Ariel Apartment Ronua n Tonda ligan. Dagupan City OFFICE OF THE SOLICITOR GE 'ERAL 134 Amorsolo Street, Legazp i Village. Maka ti City OFFI CE OF THE PROVI CJAL PROSECUTOR Lingaycn, Pa ngasina n ATTY. ELMA T. GUIT I ERREZ Burea u ot' In ternal Revenue 2nd Floor, 131R 13uilding, Me Arthur Highway San Miguel, Calasiao, Pangasinan HO . LOR ETO S. ALOG, JR. Presiding Judge Thru: Branch C lerk of Court Regional Trial Court First Judicial Region Branch 69, Lingaycn, Pangasinan GREETINGS: You are hereby notified by these presents that on February 28, 2024, a Dec ision was rendered in the above-entitled case, copy of which is attached hereto. Quezon City, Phi li ppines, February 29, 2024. Atty. Ma garette Y. zman Execut' Clerk of Cour ITT Page I of I

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY SPECIAL FIRST DIVISION PEOPLE OF THE CTA Crim. Case No. A-16 PHILIPPINES, Plaintiff-Appelle, Members: -versus- DEL ROSARIO, P.J. , Chairperson, MANAHAN, and REYES-FAJARDO, JJ. DEXTER MAGTAAN y Promulgated: MASANGKAY, - - - - - -}{ Accused-Appellant. }{- - - - - - - - - - - - - - - - - - - - - - - - - - MANAHAN, J.: This is an appeal by accused-appellant from the Decision dated August 30, 20221 and Resolution dated September 30, 20222 rendered by the Regional Trial Court - Branch 69, Lingayen, Pangasinan (RTC- Branch 69), in Crim. Case No. L- 13865, entitled "People of the Philippines, Plaintiff versus Dexter Masangkay Magtaan, Accused'', finding him guilty beyond reasonable doubt of the crime of violation of Section 255 of the 1997 National Internal Revenue Code (NIRC), as amended. The dispositive portion of the assailed Decision reads as follows: ''WHEREFORE, premises considered, the accused is found guilty beyond reasonable doubt of three (3) counts of violation of Section 255 of the National Internal Revenue Code - one for willful failure to pay income tax, the other for willful failure to pay percentage tax, and lastly for willful failure to pay value added tax, and is accordingly adjudged: ,...,,' - - - -- - - - - ..... 1 Docket, pp. 267 to 280. 2 Docket, pp. 321 to 323-a. ~

DECISION CTA Crim. Case No. A-16 1. to suffer, for each count, the penalty of imprisonment ranging from two (2) years, as minimum, to six (6) years, as maximum, and 2. to pay fine in the following amounts: (a) relative to income tax - p 1,682,061.32 (b) relative to percentage -p 10,000.00 and tax (c) relative to value- - p 1,325,223.48 added tax subject to subsidiary imprisonment in case of failure, or incapacity, to pay the same at the rate of one (1) day for every eight (8) pesos and fifty (50) centavos but not to exceed one (1) year. The accused is additionally adjudged liable to pay the total amount of P1,505, 168.25 consisting of the deficiency income, value added and percentage taxes, plus the additions thereto, with the 12% interest; respectively imposed thereon continuing to run from March 26, 2020 until full payment. SO ORDERED." Anent the Resolution dated September 30, 2022, RTC - Branch 69 denies, in effect, the accused-appellant's Motion for Reconsideration of the assailed Decision. ANTECEDENTS (ADMINISTRATIVE LEVEL) Accused-appellant is the owner of Dex-Than Trading, a retail business, registered with the Bureau of Internal Revenue (BIR) Revenue District Office (RDO) No. 5, Alaminos City, Pangasinan, as a non-VAT taxpayer under Tax Identification Number (TIN) 463-385-798-000 on January 30, 20 15. 3 Accused-appellant filed his Annual Income Tax Retum (AITR) for taxable year (TY) 2016 on April 17, 2017,4 while his Monthly Percentage Tax Returns for the same year were filed on the following dates: 3 Exhibit "A", Docket , p. 3 1. 4 Exhibit "1" to "1-j", Docke t , pp . 225 to 235. ~

DECISION CTA Crim. Case No. A- 16 Period Actual date of filing of January 2016 Monthly Percentage Tax February 2016 Returns March 2016 February 19, 20165 April 2016 May 2016 March 21, 20166 June 2016 April 20, 20167 July 2016 May 20, 20168 August 2016 June 20, 20169 September 2016 No date of r eceipt10 October 2016 August 22, 201611 September 20, 201612 October 21, 2016 13 November 21 , 201 614 On September 10, 2018, a Letter ofAuthority15 (LOA) was issued by Ms. Clavelina S. Nacar, OIC Regional Director of RR1-Calasio, authorizing Revenue Officer (RO) Jonalyn Oviedo and Group Supervisor (GS) Imelda Rejano, to examine accused-appellant's books of accounts and other accounting records for internal revenue taxes, including documentary stamp tax, and other taxes (miscellaneous tax) for the period from Janu ary 1, 2016 to December 31, 2016. The said LOA was received by the accused-appellant himself on September 25, 2018. Accused-appellant then received a Notice of Informal Conference dated May 15, 2019,16 with attached Computation of Deficiency Taxes, on May 16, 20 19. After wh ich, accused- appellant received an Amended Notice of Informal Conference dated Au gust 2, 20 19, 17 with appended Amended Computation ofDeficiency Taxes on August 7, 2019. s Exhibit "3-i", Docket, p. 246. 6 Exhibit "3-h", Docket, p . 245. 7 Exhibit "3-G", Docket, p. 244. s Exhibit "3-F", Docket, p. 243. 9 Exhibit "3-e", Docket , p. 242 . 1o Exhibit "3-d", Docket, p . 241. u Exhibit "3-c", Docket, p . 240. 12 Exhibit "3-b", Docke t , p . 239 13 Exhibit "3 -a ", Dock et , p . 2 38. 14 Exhibit "3 ", Docket, p . 23 7. 1s Exhibit "B- 1", Docket, p . 32. 16 Exhibit "C", Docket, pp. 16 0 to 162. 17 Exhibit "C- 1", Docke t , pp. 148 to 150. U1W-

DECISION CTA Crim . Case No. A-1 6 On February 7, 2020, accused-appellant received a copy of Preliminary Assessment Notice (PAN) dated January 20, 2020, 18 with Details of Discrepancies, issued by Regional Director Thelma S. Milabao, informing the accused-appellant that after investigation, there has been found due from him deficiency income tax, percentage tax, value-added tax (VAT), and miscellaneous taxes, forTY 2016, in the aggregate amount ofP1,556,521.19, inclusive ofinterests and surcharge. Thereafter, accused-appellant was notified of the Formal Letter of Demand and Assessment Notices (FLD/FANs) dated February 24 , 202019 on February 28, 2020, which required him to pay deficiency income tax, percentage tax, VAT, and miscellaneous taxes, for TY 2016, in the total amount of P1,569,168 .25, inclusive of interests and surcharge. Accused-appellant, through his sister, Ms. Marissa Tadeo, was subsequently furnished with a copy of the Warrant of Distraint and/ or Levy (WDL) dated November 25, 2020 on December 1, 2020.20 On April 8, 2021, then Officer-In-Charge (OIC)-Regional Director Josephine S. Virtucio wrote a letter to the Office of the Provincial Prosecutor of Lingayen Pangasinan,21 referring the Joint Complaint-Affidavit dated April 8, 2021,22 executed by Ms. Elma L. Gutierrez and Ms. Grace May DG. Pacanas, BIR officers assigned at the Collection Division, Revenue Region No. 1, Calasiao, Pangasinan, for preliminary investigation and the filing of the appropriate information in Court, if the evidence so warrants. Senior Assistant Provincial Prosecutor Nicolas R. Reintar, Jr. issued the Resolution dated June 14, 2021,23 which was approved by Senior Asst. Provincial Prosecutor Raul B. Campos, finding probable cause , and recommending the filing of information against the accused-appellant. 18 Exhibits "D" to "D- 1", Docket, pp. 33 to 38. 19 Exhibits "E" to "E- 1" and "E-4", pp. 4 1 to 46, and 49 to 52. 20 Exhibit "F", Docket, p. 53. 21 Docket, p p . 24 to 25. 22 Docket , p p . 26 to 30. 23 Docket , p. 22 . ~

DECISION CTA Crim. Case No. A- 16 PROCEEDINGS BEFORE THE COURT A QUO (RTC - Branch 69) On February 4, 2022, the Information dated June 14, 202124 was filed against Mr. Dexter Magtaan y Masangkay, docketed as Crim. Case No. L-13865, charging him for violation of Section 255 of the 1997 NIRC, as amended. The said Information r eads: "INFORMATION The undersigned accuses DEXTER MAGTAAN y MASANGKAY in the commission of violation of the National Internal Revenue Code of 1997 as amended, as fo ll ows: 'That sometime in 2016 at Brgy. Sta. Rosa, Binmaley, Pangasinan and within the jurisdiction of this Honorable Court, the above- named accused, while engaged in the business of retail sale in specialized stores under the trade name 'Dex-Th an Trading' and required by law to pay income, value added and percentage taxes in the total amount of Php 1,505,168.25 as per preliminary assessment notice, did, then and there, wilfully, unlawfully and feloniously commit an act in violation of Section 255 of the National Internal Revenue Code of 1997 as amended by failing to pay the above said taxes despite due receipt of the aforementioned notice, demand to pay and final notice to pay the said taxes.' Contrary to Section 255 of the National Internal Revenue Code of 1997 as amended. Lingayen, Pangasinan, June 14, 2021." In the Order dated February 8, 2022,25 the court a quo found probable cause. As such, Presiding Judge Loreto S. Alog, Jr. directed the issuance of a warrant of arrest against the accused-appellant and flxed the bail in the amount of P60 ,000.00. 24 Docket, p. 19. 2s Docket, p. 86. ~

DECISION CTA Crim. Case No. A-16 On February 9, 2022, accused-appellant filed a Motionfor Reduction of Bail Bond, praying that the amount of bail be reduced from P60 ,000.00 to P30,000.00.26 On even date, accused-appellant was arrested by PSSG Peter Carpizo and PCPI Florentino Delos Reyes,27 and was detained at Pangasinan Maritime Police Station, Dagupan City.28 In the Order dated February 11, 2022,29 the court a quo granted accused- appellant's Motion for Reduction of Bail. After posting a cash bail bond on even date, accused-appellant was granted provisionalliberty.3o Thereafter, arraignment was held on February 22, 2022, and the accused-appellant pleaded not guilty of the crime charged. 31 During trial, plaintiff-appellee presente d documentary and testimonial evidence. It offered the testimonies of the following individuals, namely: (1) Ms. Elma L. Gutierrez,32 Chief of the Arrears Management Section, Collection Division; (2) Ms . Grace M ay d e Guzman Pacanas,33 then Seizure Agent, Arrears Management Section, Collection Division, BIR Revenue Region 1; (3) Ms. Jonalyn A. Oviedo,34 the n RO, Assessment Section, RDO No. 5, Alaminos City, Pangasinan; (3) Ms. Ime lda Rejano,3s then RO V and Group Supervisor, Alaminos City; and (4) Ms. Kimberly Mae Alvendia,36 then Reviewer, Review and Evaluation S ection, Asse ssment Division, BIR Revenue Region 1. 26 Docket, p. 92. 27 Joint Affidavit ofArrest dated February 9, 2022, Docket, pp. 100 to 101; Memorandum dated February 9, 2022 of Police Major Denny R. Torres, Docket, pp. 102 to 104. 28 Certificate ofDetention dated February 9, 2022, Docket, p. 105. 29 Docket, p. 113. 30 CashBailbond Undertaking dated February 11, 2022, Docket, p. 116. 31 Minutes of the Session held on, and Order dated, February 22, 2022, Docket, pp. 127 and 123 to 125, respectively; Certificate ofArraignment, Docket, p. 126. 32 Minutes of the Session held on, and Order dated, March 22, 2022, Docket, pp. 130 and 128, respectively; Minutes of the Session held on, and Order dated March 29, 2022, Docket, pp. 132 and 131, respectively; Minutes of the Session held on, and Order dated, April 12, 2022, Docket, pp. 134 and 133, respectively. 33 Minutes of the Session held on, and Order dated, April 12, 2022, Docket, pp. 134 and 133, respectively. 34 Minutes of the Session held on, and Order dated, April 19, 2022, Docket, pp. 165 and 164, respectively. 35 Minutes of the Session held on, and Order dated, April 26, 2022, Docket, pp. 190 and 18 7, respectively. 36 Minutes of the Session held on, and Order dated, May 31, 2022, 2022, Docket, pp. 213 and 211 , respectively; Minutes of the Session held on, and Order dated, June 7, 2022, Docket, pp. 218 and 217, respectively. ~

DECISION CTA Crim. Case No. A- 16 During the hearing held on June 21, 2022, plaintiff- appellee formally offered its documentary evidence, which were all admitted by the Court a quo.37 In the same hearing, accused-appellant appeared for himself as witness, and formally offered his documentary evidence, which were all admitted by the Court a quo. 38 On July 1, 2022, the Memorandum For the Plaintiffwas filed .39 Subsequently, RTC - Branch 69 issued the assailed Decision on August 30, 2022.40 In the Order dated August 30, 2022,41 the Court a quo, upon motion of accused-appellant's counsel, with the conformity of the plaintiff-appellee, accused-appellant was allowed to post bail in the amount oLP30,000.00 in each of the three (3) counts of violation of Section 255 of the 1997 NIRC, as amended, of which he was convicted under judgment. On the same day, he was granted provisional liberty after filing an additional cash bond in the total amount of P60,000.00.42 Thereafter , accused-appellant filed a Motion for Reconsideration on September 15, 2022 ,43 which was denied by the Court a quo in its Resolution dated September 30, 2022 .44 Undeterred, accused-appellant filed a Notice of Appeal before RTC- Branch 69 on October 12, 2022.45 In the Order dated October 13, 2022,46 RTC-Branch 69 gave due course to the said Notice of Appeal and ordered that the entire records in Crim. Case No. L-13865 be forwarded to this Court. 37 Minutes of t h e Session h eld on , and Order dated, Jun e 2 1, 2022, Docket, pp. 2 49 and 247 to 248, respectively. 38 Ibid. 39 Docket , pp . 250 to 266. 40 Docket , pp. 267 to 280. 41 Docket, p. 281. 42 Order dated Au gu s t 30, 2 022, Docket, p. 301. 43 Docket, pp . 3 10 to 3 15. 44 Docket, pp . 321 to 323-a. 45 Docket, p. 324. 46 Docket, p. 329. ~

DECISION CTA Crim. Case No. A-16 PROCEEDINGS BEFORE THIS COURT Accused-Appellant filed his Appellant's Brief on February 23, 2023,47 while plaintiff-appellee failed to file the required brief.48 On April 18, 2022,49 the present appeal was deemed submitted for decision. ASSIGNMENT OF ERRORS In his Brief, the accused-appellant assigns the following error, to wit: "THE HONORABLE REGIONAL TRIAL COURT ERRED IN CONVICTING THE ACCUSED BEYOND REASONABLE DOUBT."5o Accused-appellant's arguments: Accused-appellant argues that the institution of the criminal action against him and the issuance of the LOA were made without valid authority since the referral of the joint complaint-affidavit and the LOA were merely signed by the OIC-Regional Director, and not by the Commissioner of Internal Revenue (CIR). He likewise argues that the subject assessments had already prescribed as there was no valid waiver executed for failure to indicate the nature and the amount of tax, in violation of the provisions of Revenue Memorandum Order (RMO) No. 20-90, and Revenue Delegation Authority Order (RDAO) No. 05-01. THE COURT'S RULING For an orderly disposition of the present case, the Court shall first address the issues raised by accused-appellant relative to the authority of the OIC-Regional Director to 47 Docket, pp. 337 to 35 1. 48 Records Verification dated April 11, 2023 issued by the Judicial Records Division this Court, Docket, p. 373. 49 Minute Resolution dated April 18, 2022, Docket, p. 374. so Assignment of Errors, Appellant's Brief, Docket p. 339. ~

DECISION CTA Crim. Case No. A-16 approve and refer the filing of the criminal action and to issue an LOA, and the alleged invalidity of the Waiver of the Defense of Prescription due to its failure to state the particular taxes to be assessed and the amount thereof, before resolving the substantial aspect of the criminal charge filed against him. The OIC-Regional Director has the authority to approve the filing of a criminal case and to issue an LOA. Accused-appellant argues that Ms. Josephine S. Virtucio, OIC-Regional Director, has no authority to institute and approve the filing of the criminal action against him through the letter referral dated April 8, 2021. He further avers that even granting for the sake of argument that the Regional Director may exercise the power of the CIR by delegated authority, such power does not automatically extend to Ole- Regional Director. The Court disagrees with accused-appellant. The authority of the CIR to file a civil or criminal action for the recovery of taxes emanates from the provision of Section 220 of the 1997 NIRC, as amended, which states: "SEC. 220. Form and Mode of Proceeding in Actions Arising under this Code. - Civil and criminal action s a nd p roceedings instituted in behalf of the Government under the authority of this Code or oth er law enforced by the Bureau of Internal Revenue sh a ll be brought in the name of t h e Government of the Philippines a nd shall be conducted by legal officers of the Bureau of Intern a l Revenue but no civil or criminal action for the recovery of taxes or the enforcement of any fine, penalty or forfeiture under this Code shall be filed in court without the approval of the Commissioner." (Emphases supplied) Rela tive to the foregoing provision, Section 7 of the NIRC of 1997 reads as follows: "SEC. 7. Authority of the Commis sioner to Delegate Power. - The Commissioner may delegate the powers vested in him under the pertinent provisions of this Code to any or such subordinate officials with the rank ~

DECISION CTA Crim. Case No. A-16 equivalent to a division chief or higher, subject to such limitations and restrictions as may be imposed under rules and regulations to be promulgated by the Secretary of Finance, upon recommendation of the Commissioner: Provided, however, That the following powers of the Commissioner shall not be delegated: (a) The power to recommend the promulgation of rules and regulations by th e Secretary of Finance; (b) The power to issue rulings of first impression or to reverse, revoke or modify any existing ruling of the Bureau ; (c) The power to compromise or abate, under Sec. 204 (A) and (B) of this Code, any tax lia bility: Provided, however, That assessments issued by the regional offices involving basic deficiency taxes of Five hundred thou sand pesos (PSOO,OOO) or less, a nd minor criminal violations, as may be determined by rules a nd regulations to be promulgated by the Secretary of Finance, upon recommendation of the Commissioner, discovered by regional a nd district officials, may be compromised by a regional evaluation board which shall be composed of th e Regiona l Director as Chairman, the Assistant Regional Director, the h eads of the Legal, Assessm ent and Collection Divisions and the Revenue District Officer h aving jurisdiction over the taxpayer , as members; and (d) The power to assign or reassign internal revenue officers to establishments where articles subject to excise tax are produced or kept." (Emphases and underscoring added) Based on the foregoing provision, the general rule is that the CIR may delegate any power vested upon him by law to Division Chiefs or to officials of higher rank.51 The CIR cannot, however, delegate the four (4) powers granted to him or her under the 1997 NIRC , as amended, enumerated in Section 7 .52 Notably, the approval of filing of a criminal action is not one of the non-delegable functions of the CIR.53 RDAO No. 02-07 dated March 1, 200754 specifically enumerates the officers authorize to approve and sign the s1 Oceanic Wireless Network, Inc. vs. Commissioner of Internal Revenue, et al., G.R. No . 148380, December 9, 2005. 52 Id. 53 People ofthe Philippines vs. Tess S. Valeriano, G.R. No. 199480, October 12, 2016. 54 SUBJECT: Delegation of Authority with Regard to Institution of Civil and Criminal Actions/Cases to Effect Recovery of Taxes or the Enforcement of Any Fine, Penalty or Forfeiture Under the Tax Code, with Regard to the Defense/ s of the Bureau of Internal Revenue in Cases/ Actions Instituted Against it, and with Regard to Other Cases.lfl/lflt/'

DECISION CTA Crim. Case No. A-16 referral letters for the filing of civil, administrative and criminal actions/ cases, and one of them is the Regional Director, viz.: "1. Delegated Authority Pursuant to Section 7 of the Tax Reform Act of 1997 ('Tax Code') authorizing the Commissioner of Internal Revenue ('CIR') to delegate the powers vested in him under the Tax Code, his authority is hereby delegated to officials of the BIR, with regard to the institution of civil, administrative and criminal actions/cases for among others, the recovery of taxes or the enforcement of any fine, penalty or forfeiture under the Tax Code, with regard to defenses of the Bureau of Internal Revenue ('BIR') with respect to cases instituted against it, and with regard to other cases, as follows: XXX XXX XXX B. The Regional Directors are likewise authorized to approve and sign the same documents as mentioned above, with respect to civil, administrative and criminal actions/ cases and other cases of whatever kind and nature, emanating from their respective Regional Offices, with the courts, government agencies or quasi-judicial bodies, xxx." (Emphases and underscoring added) Thus, the Regional Director is duly authorized to institute and approve the filing of a criminal action for the recovery of taxes. Moreover, Section 10 of the NIRC of 1997 states as follows, to wit: "SEC. 10. Revenue Regional Director. - Under rules and regulations, policies and standards formulated by the Commissioner, with the approval of the Secretary of Finance, the Revenue Regional Director shall, within the region and district offices under his jurisdiction, among others: XXX XXX XXX (c) Issue Letters of Authority for the examination of taxpayers within the region; XXX XXX xxx." (Emphases added) ~

DECISION CTA Crim. Case No. A-16 Based on the foregoing provision, there is no doubt that the Revenue Regional Director is a BIR official who is authorized by law to issue an LOA. This brings Us to this question: Whether the power of the Regional Director to institute a criminal action and to issue an LOA extend to OIC-Regional Director? Such query is answered in the affirmative. RMO No. 9-2016 dated March 10, 201655 categorically states the following, to wit: "For the uniform understanding of all concerned, it is hereby reiterated and clarified that all internal revenue personnel holding positions in an OIC capacity shall exercise authority and discharge duties and assume responsibilities as if they are holding the employment item for the particular office, subject to the limita tions under the law and pertinen t intern a l revenue issuances." (Emphasis added) Correspondingly, as a rule, any internal revenue personnel holding position in an OIC capacity exercises authority, discharges duties, and assumes responsibilities, as if he or she is holding the employment item for the particular office. Thus, considering that Ms. Josephine S. Virtucio and Ms. Clavelina S. Nacar were then holding the position of Ole- Regional Director when they respectively issued the subject Referral Letter dated April 8, 202156 and the Letter ofAuthority dated September 10, 2018,57 it is only logical to conclude that they issued the same with full authority in the same way that they could have been performed by the Regional Director. Thus, the alleged lack of authority of the OIC-Regional Director to institute criminal action and to issue an LOA has no leg to stand on. 55 SUBJECT: Duties a n d Responsibilities of Personnel Holding Position in an Officer- In-Charged (OIC) Ca pacity 56 Exhibit "G", Dock et, pp. 55 to 5 6. 57 Exhibit "B", Dock e t , p . 32. ~

DECISION CTA Crim. Case No . A-16 The subject Waiver need not specify the particular taxes to be assessed nor the amount thereof The Court shall proceed to discuss the argument of the accused-appellant that the subject assessments had already prescribed as there was no valid waiver issued in the instant case. Section 203 of the 1997 NIRC, as amended, reads as follows : "SEC. 203. Period of Limitation upon Assessment and Collection. - Except as provided in Section 222, internal revenue taxes shall be assessed within three (3) years after the last day prescribed by law for the filing of the return, and no proceeding in court without assessment for the collection of such taxes shall be begun after the expiration of such period: Provided, That in a case where a return is filed beyond the period prescribed by law, the three-year period sh a ll be counted from th e day th e return was filed. For purposes of this Section, a return filed before the last day prescribed by law for the filing thereof shall be considered as filed on such last day." (Emphases and underscoring added) Under the foregoing prov1s1on, internal revenue taxes must be assessed within three (3) years counted from the period fixed by law for the filing of the tax return or the actual date of filing, whichever is later. This mandate governs the question of prescription of the government's right to assess internal revenue taxes primarily to safeguard the interests of taxpayers from unreasonable investigation. Hence, an assessment notice issued after the three (3)-year prescriptive period is not valid and effective.ss However, an exception to the three (3)-year prescriptive period on the assessment of taxes is Section 222(b) of the NIRC of 1997, which provides as follows: sa Commissioner of Internal Revenue vs. Next Mobile, Inc. (formerly Nextel Communications Phils., Inc.), G.R. No. 2 12825, December 7, 2015 . ~

DECISION CTA Crim. Cas e No. A- 16 "SEC. 222 . Exceptions as to Period of Limitation of A ssessment and Collection of Taxes. - XXX XXX XXX (b) I f before the expiration of the time prescribed in Section 203 for the assessment of the tax, both the Commissioner and the taxpayer have agreed in writing to its assessment after such time, the tax may be assessed within the period agreed upon. The period so agreed upon may be extended by subsequent written agreement made before the expiration of the period previously agreed upon." (Emphasis added) The above provision authorizes the extension of the original three-year period by the execution of a valid waiver, where the taxpayer and the BIR agreed in writing that the period to issue an assessment and collection of taxes due is extended to an agreed upon date.s9 To be sure, it must be emphasized that a Waiver of the Defense of Prescription is a bilateral agreement between a taxpayer and the BIR to extend the period of assessment and collection to a certain date.60 Records show that accused-appellant executed a Waiver ofthe Defense ofPrescription61 on May 20, 2019, giving the BIR a period of assessment and/ or collection until December 31, 2021 , which was accepted by Revenue District Officer Tohammie L. Yahya of Revenue District No. 5 on May 21, 2019 .62 Accused-appellant, however, argues that the said Waiver of the Defense of Prescription failed to indicate the nature and the amount of tax, in violation of the prescribed form in RMO No. 20-90 and RDAO No. 05-01. Such failure, accordingly, renders the waiver defective, citing the case of Commissioner of Internal Revenue vs. Systems Technology Institute, Inc.63 The Court does not agree. 59 Commissioner of Internal Revenu e vs. FMF Develop ment Corporation, G.R. No. 16 7765, June 3 0, 2008. 60 Commissioner of Internal Revenue vs. A von Produ cts Manufacturing, Inc. , etseq., G.R. Nos. 2 01 398 -99 a n d 20 141 8 - 19 , Octob er 3, 2 0 18. 61 See Note 1, p . 275; Dock et , p . 18 0. 62 Exhibit "H", Docket , p. 2 10. 63 G .R. No. 220835, July 26, 2 01 7. ~

DECISION CTA Crim. Case No. A-16 It bears noting that, at time of the execution of the subject waiver on May 20, 2019, the relevant issuance of the BIR that is applicable is RMO No. 14-2016 dated April 4, 2016,64 which revised the guidelines relative to the execution of the Waiver of the Statute ofLimitations under Section 222, in relation to Section 203 of the 1997 NIRC, as amended, as prescribed by RMO No. 20-90 dated April 4, 1990 and RDAO No. 05-01. RMO No. 14-2016 states: "2. Except for waiver of collection of taxes which shall indicate the particular taxes assessed, the waiver need not specify the particular taxes to be assessed nor the amount thereof, and it may simply state 'all internal revenue taxes' considering that during the assessment stage, the Commissioner of Internal Revenue or her duly authorized representative is still in the process of examining and determining the tax liability of the taxpayer. XXX XXX xxx." (Emphasis and underscoring added) Based on the foregoing provision, it is evident that the Waiver need not specify the particular taxes to be assessed and the amount thereof and may simply state ((all internal revenue taxes", as in the present case. Thus, the alleged invalidity of the subject Waiver of the Defense of Prescription due to failure to indicate the nature and the amount of tax due likewise holds no water. Having settled the foregoing issues raised by accused- appellant, the Court shall now ascertain whether or not the Court a quo erred in convicting the accused-appellant of the crime charged. Elements of the crime of willful failure to pay tax under Section 255 of the NIRC of 1997 To recall, accused-appellant was charged under Section 255 of the 1997 NIRC, as amended, for failure to pay the deficiency 1ncome tax, VAT and percentage tax, and 64 SUBJECT: Guidelines for the Execution of Waivers from the Defense of Prescription Pursuant to Section 222 of the National Internal Revenue Code of 1997, as Amended. ~

DECISION CTA Crim. Case No. A-16 miscellaneous taxes, for TY 20 16. The said section IS reproduced as follows, to wit: "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 (P10,000) and suffer imprisonment of not less than one (1) year but not more than ten (10) years. Any person who attempts to make it appear for any reason that he or another has in fact filed a return or statement, or actually files a return or statement and subsequently withdraws the same return or statement after securing the official receiving seal or stamp of receipt of the internal revenue office wherein the same was actually filed shall, upon conviction therefor, be punished by a fine of not less than Ten thousand pesos (P10,000) but not more than Twenty thousand pesos (P20,000) and suffer imprisonment of not less than one (1) year but not more than three (3) years." (Boldfacing and underscoring supplied) From the foregoing, to sustain a conviction for the offense of Failure to Pay Tax under Section 255 of the 1997 NIRC, as amended, the following elements must be established by the plaintiff-appellee beyond reasonable doubt: 1. Accused-appellant is required under the NIRC or its rules and regulations to pay any tax; 2. Accused-appellant failed to pay the required tax at the time required by law or rules and regulations; and, 3. Such failure is willful. ~

DECISION CTA Crim. Case No. A-16 First Element: Accused- Appellant is required under the NIRC of 1997, as amended, or its rules and regulations to pay the deficiency income tax, VAT and percentage taxes. Based on the BIR Certificate of Registration dated January 30, 2015,65 accused-appellant is the owner or sole proprietor of Dex-Than Trading, engaged in retail sale in specialized stores under TIN No. 463-385-798-000; and that he is obligated to pay both income and percentage taxes for the said registered business activity. Relative to the accused-appellant's income tax liability, Section 24 of the 1997 NIRC, as amended, by RA No. 9504,66 reads as follows: "SEC. 24. Income Tax Rates.- (A) Rates of Income Tax on Individual Citizen and Individual Resident Alien ofthe Philippines. - (1) An income tax is hereby imposed; (a) On the taxable income defined in Section 31 of this Code, other than income subject to tax under Subsections (B), (C) and (D) of this Section, derived for each taxable year from all sources within and without the Philippines by every individual citizen of the Philippines residing therein; (b) On the taxable income defined in Section 31 of this Code, othe r than inc ome subject to t ax unde r Subsections (B), (C) and (D) of this Section, derived for each taxable year from all sources within the Philippines by an individual citizen of the Philippines who is residing outside of the Philippines including overseas contract workers referred to in Subsection (C) of Section 23 hereof; and (c) On the taxable income defined in Section 31 of this Code, other than income subject to tax under Subsections (B), (C) and (D) of this Section, derived for each taxable year from all sources within the Philippines by an individual alien who is a resident of the Philippines. 65 Exhibit "A", Docket, p. 31. 66 AN ACT AMENDING SECTIONS 22, 24, 34, 35, 51, AND 79 OF REPUBLIC ACT NO. 8424, AS AMENDED OTHERWISE KNOWN AS THE NATIONAL INTERNAL REVENUE CODE OF 1997, dated June 17, 2008. ~

DECISION CTA Crim. Case No. A-16 (2) Rates of Tax on Taxable Income of Individuals. - The tax shall be computed in accordance with and at the rates established in the following schedule: Not over PlO,OOO 5% Over PlO,OOO but not over P30,000 P500+ 10% of the excess over P10,000 Over P30,000 but not over P70,000 P2,500+ 15% of the excess over P30,000 Over P70,000 but not over P8,500+20% of the P140,000 excess over P70,000 Over P140,000 but not over P22,500+25% of the P250 ,0 0 0 excess over P 140,000 Over 250,000 but not over P50,000+30% of the P500,000 excess over P250,000 Over P500,000 P125,000+32% of the excess over P500,000 XXX XXX xxx." Moreover, as a non-VAT registered person, accused- appellant is required under Section 116 of the 1997 NIRC, as amended, by RA No. 9337, to pay percentage tax, to wit: "SEC. 116. Tax on Persons Exempt from Value-Added Tax (VAT}. -Any person whose sales or receipts are exempt under Section 109 (BB) of this Code from the payment of value-added tax and who is not a VAT-registered person shall pay a tax equivalent to three percent (3%) of his gross qua rterly s a les of receipts: Provided, That cooperatives shall be exempt from the three percent (3%) gross receipts tax herein imposed." Accused-appellant was aware of the foregoing tax obligations and, in fact, presented Dex-Than Trading's 2016 AITR,67 ] st Quarterlu Income Tax Return for TY 2016;68 and Monthlu Percentage Tax Returns from January to October 201669 to prove his compliance thereon. However, as per report investigation of RO Jonalyn Oviedo, she discovered that Dex-Than Trading had total sales from different Local Government Units (LGUs), in the amount of P5,484, 128.48, for the period from January to October 2016, which exceeded the then VAT threshold in the amount of P1,919,500.00, as shown in the below quoted Schedule of 67 Exhibits " 1" t o " 1-j", Docket, pp . 225 to 2 3 5 . 68 Exhibit "2", Docket , p . 23 6 . 69 Exhibits "3" to "3-i", Docke t, pp. 237 to 246 . ~

DECISION CTA Crim. Case No. A- 16 Sales per Reconciliation of Third Party Information For TY 2016,70 to wit: TIN CUSTOMER PER BIR PER TPI WHICHEVER IS HIGHER FORM NO. (RDC DATA) 73,410.00 2307/SAWT 38,479.00 000631782 LGU-BINMALEY 89,400.00 73,4 10.00 387,252.49 004010058 BARANGAY COUNCIL 38,479.00 OF SAN ISIDRO SUR 84,500.00 387,252.49 497,356.49 004010138 BINMALEY 144,850.00 497,356.49 40,000.00 BARANGAY COUNCIL 182,955.00 40,000.00 004010218 OFLOMBOY 104,000.00 305,354.50 305,354.50 004010226 BINMALEY 309,743.00 99,992 .00 004010362 LINOC BARANGAY 397,494.00 99,992.00 COUNCIL 92,760.00 322,933.00 397,494 .00 004010589 BARANGAY COUNCIL 99,165.00 193,000.00 322,933.00 004010636 OF BIEC BINMALEY 89,090.00 359,469.00 193,000.00 004010716 BARANGAY COUNCIL 85,995.00 249,682.00 359,469.00 004011938 OF BUENLAG 154,600.00 208,665.00 249,682.00 004011996 BINMALEY 40,000.00 220,726.00 208,665.00 004012001 PARAYAO BARANGAY 244,704.00 220,726.00 004012027 COUNCIL 249,698.00 00401 2035 PALLAS BARANGAY 184, 100.00 69,300.00 85,995 .00 004012042 COUNCIL 64,890.00 249,698.00 004012549 BALAGAN BARANGAY 40,000.00 004014526 COUNCIL 403,202.00 69,300.00 BASING BARANGAY 108,730.00 004014702 COUNCIL 244,704.00 00557365 1 TOMBOR BARANGAY 87,000.00 40,000.00 005573694 COUNCIL PAPAGUEYAN 403,202.00 005575027 BARANGAY COUNCIL 108,730.00 005575 147 CAMALEY BARANGAY 005578334 COUNCIL 184,100.00 006075663 DULAG BARANGAY 64,890.00 COUNCIL 87,000.00 SABANGAN BARANGAY COUNCIL STA. ROSA BARANGAY COUNCIL BARANGAY COUNCIL CALOOCAN NORTE BIN MALEY MALINDONG BARANGAY COUNCIL BARANGAY COUNCIL OF MANAT BINMALEY BARANGAY COUNCIL OF BAYBAY LOPEZ BINMALEY BARANGAY COUNCIL OF CANAOALAN BINMALEY SALAPINGAO BARANGAY COUNCIL BALOGO BARANGAY COUNCIL BARANGAY COUNCIL OF NAGUILAYAN BINMALEY 70 Exhibit "E-2", Docket, p. 47. ~

DECISION CTA Crim. Case No. A-1 6 006077519 GAYAMAN BARANGAY 124,988.00 124,988.00 256334239 COUNCIL 197,360.00 197,360.00 296463296 CALOOCAN DUPO 230,348.00 BARANGAY COUNCIL 230,348.00 BARANGAY COUNCIL P5,484, 128.48 OF NAGPALANGAN BINMALEY TOTAL SALES PER AUDIT In view of the foregoing, accused-appellant was not only assessed of deficiency income and percentage taxes, but was also subjected to VAT and miscellaneous taxes, as shown in the below quoted Details of Discrepancies attached to the FLO dated February 24, 2020,71 to wit: ((Income Tax Assessment No. IT-eLA30344-05-16-463385798 1. Undeclared Gross Profit from Sales per Reconciliation of Third Party Information -investigation report disclosed that reconciliation of sales on a per customer basis of the sales per Third Party Information vis-a-vis BIR Form Nos. 2307 / 2306 and Summary Alphalist of Withholding Taxes {'SAWT1 resulted to total sales of P5,484, 128.48. Since sales declared per Annual Income Tax Return is only P780,900.00, there is a total undeclared sale of P4,703,228.48. Such undeclared sales have related to undeclared gross profit of P1 ,679,9 18.05, which was computed using the gross profit ratio per Financial Statements pursuant to Sec. 6 of the 1997 NIRC, as amended. This was added to taxable net income and subject to income tax per audit pursuant to Sections 24(A) and 32(A) of the 1997 NIRC, as amended. (See Annex 11- Schedule of Sales per Reconciliation of Third Party Information) 2. Disallowed Deductions based on Best Evidence Obtainable Rule- During investigation, you have failed to provide any supporting documents or evidence to support your claimed deductions in violation of Section 348 of the Tax Code. Since such costs and expenses constitute the deductions in conducting a business and there having been no means by which to ascertain the correctness and accuracy of the said deductions, fifty percent (50%) of such deductions claimed were disallowed pursuant to Section 2(2.4) (c) of Revenue Memorandum Circular No . 23-2000. The assessment was based on BEST EVIDENCE OBTAINABLE RULE for your failure and refusal to make certain records available per issued Subpoena Duces Tecum {SDT No. RR1-05- 2019-016) dated January 21, 2019 and resulted in the subsequent filing of criminal case pursuant to Sections 5 and 14, penalized under Section 266, in relation to Sections 253(D) and 256 of the National Internal Revenue Code ('NIRC1, as amended. 71 Exhibit "E-1", Docket, pp. 44 to 46.~

DECISION CTA Crim. Case No. A-16 Account Amount per 50% Income Tax Disallowan Purchases Salaries , Return , ce Communication, Light 501,975.00 250,987.50 and Water 113,000.00 56,500.00 Fuel & Oil 8,480.00 4,240.00 Taxes and Licenses Transportation 7,650.00 3,825.00 Repairs and Maintenance 24,318.00 12,159.00 Miscellaneous 2,930 .00 1,465.00 10,680.00 5,340.00 10,337.00 5,168.50 Total Disallowed p 339.685.00 Perce ntage Tax Assessment No. :PT-eLA30344-05-16-463385798 3. Tax Credits Allowed - during investigation tax credits duly supported by BIR Form No. 2306 only amounted to P66,257.50 while the amount claimed per percentage tax returns is P67,305.00. The difference of P1,047.50 was thus disallowed per audit for your failure to provide the necessary certificates to support such tax credits as required under Section 4.114 of Revenue Regulations No. 2-98, as amended. Sales Subject to Percentage Tax Month/s Sales per Cumulative January Percentage Sales Totals Tax Returns 171,581.00 , Filed 384,566.00 171,581.00 494,316.00 681,216.00 February 212,985 .00 795,316.00 1,093,616.00 March 109,750.00 1,230,483.00 1,599,595.00 April 186,900.00 1,775,500.00 2,243,500.00 May 114,100.00 no return June 298,300.00 filed July 136,867.00 August 369,112.00 September 175,905.00 October 468,000.00 month P1,919.500 was exceeded November month to update registration to VAT Value Added Tax Assessment No. VT-eLA30344-05-16-463385798 4. Vatable Sales - investigation report disclosed that your accumulated sales for the months of January to October have exceeded the vat threshold of P1,919,500 therefore you are mandated to register as a VAT taxpayer. In accordance with Republic Act 7716 implemented by Revenue Regulations No. 7- 1995, which states that 'Sec. 1 07(c) Pers ons becoming liable to value added tax- Any persons whose gross sales or receipts in any 12-month period exceeds the amount prescribed under section ~

DECISION CTA Crim. Case No. A-16 103(t) of this code for exemption from the value added tax shall register and pay the annual registration fee prescribed under paragraph (a) of this section within thirty (30) days after the end of the last month of that period, and shall be liable to the value added tax commencing from the first day of the month following his registration.' as amended by Revenue Regulations No. 6-1997 in relation to Sections 236 and 106 of the 1997 NIRC, as amended. Your sales for the month of December amounting to P3,240,628.48 is hereby subjected to value added tax per audit. Sales Subject to Value Added Tax Month/s Sales per Cumulative Sales December Totals Percentage Tax no return filed start of mandatory Returns Filed VAT liability p Total Sales per p 5,484,128.48 Reconciliation of Third Party Information Sales Subject to 2,243,500.00 Percentage Tax Sales Subject to p 3,240,628.48 VAT per Audit 5. Input Taxes- No input tax was allowed as you failed to update your registration to value added tax pursuant to Section 236(G)(2) of th e 1997 NIRC, as amended, and Section 4.110-1 and 2 of Revenue Regulations No. 16-2005, as amended. Miscellaneous Tax Assessment No. MC-eLA30344-05-16-463385798 6. Failure to File Certain Information/Returns - Penalties were imposed on failure to file /submit the disclosure requirements under Revenue Regulations No. 15-2010, Financial Statements failed to conform with Revenue Regulations No. 7-2007, Books of Accounts, Alphalist of Employees, 2nd and 3rd Qtrs. Income Tax Returns, Percentage Tax Returns for June, November and December and for failure to register as VAT taxpayer at the time prescribed by tax rules and regulations. Hence, compromise penalties were proposed, in relation and in addition to the violations penalized under Section 250 of the 1997 NIRC, as amended for non-filing of said schedules, lists, or information required under Section 255 of the NIRC, as amended. The compromise penalties imposed were based on RMO No. 7-2015, and are suggested to be paid in lieu of criminal prosecution. Pursuant to the provisions of Section 228 of the National Internal Revenue Code of 1997, as amended , and its implementing revenue regulations, you are hereby given th e opportunity to present your side of the case, through filing at this office a valid protest letter as defined under Revenue Regulations No. 18-2013, within thirty (30) calendar days from receipt of this Formal Letter of Demand. Otherwise, the internal revenue tax liabilities shall become final, executory, and demandable." ~

DECISION CTA Crim. Case No. A-16 Since the accused-appellant had gross-sales of P5,484,128.48, which exceeded the then P1,919,500 .00 VAT threshold, he should have, indeed, registered as a VAT taxpayer as early as December 2016, and be suqjected to VAT, pursuant to Section 9.236-1 (b)(i) of Revenue Regulations (RR) No. 16-2005, as amended by RR No. 16-2011, which reads: "SECTION 9.236-1. Registration of VAT Taxpayers. - (a) In general. -Any person who, in the course of trade or business, sells, barters, exchanges goods or properties, or engages in the sale of services subject to VAT imposed in Sees. 106 and 108 of the Tax Code shall register with the appropriate RDO using the appropriate BIR forms and pay an annual registration fee in the amount of Five Hundred Pesos (P500) using BIR Form No. 0605 for every separate or distinct establishment or place of business (save a warehouse without sale transactions) before the start of such business and every year thereafter on or before the 31st day of January. XXX XXX XXX 'VAT-registrable person' refers to any person who is required to register under the provisions of this section but failed to register. (b) Mandatory: Any person who, in the course of trade or business, sells, barters or exchanges goods or properties or engages in the sale or exchange of services shall be liable to register if: i. His gross sales or receipts for the past twelve (12) months, other than those that are exempt under Sec. 109 (1)(A) to (U) of the Tax Code, have exceeded One million five hundred thousand pesos (P1,500,000.0072); or XXX XXX xxx." Thus, as for the first element, pursuant to the foregoing provisions and since the accused-appellant is the sole proprietor of Dex-Than Trading, which had gross sales of P5,484,128.48 for the period from January to October 2016, which he failed to declare in full in his 20 16 AITR, he is deemed liable to pay the alleged deficiency income and percentage taxes. Further, he should have registered as a VAT 72 P1,919,500.00 starting January 1, 2012, as per Revenue Regulations No. 16-2011. t.J/6--

DECISION CTA Crim. Case No. A-16 person, as his sales forTY 2016 exceeded the P1,919,500.00 VAT threshold, and is therefore required to file VAT returns and pay the corresponding VAT thereon which, unfortunately, he failed to do. Consequently, the plaintiff-appellee has shown compliance with the said .first element under Section 255 of the 1997 NIRC, as amended. Second Element: Accused- appellant failed to pay the income tax, VAT and percentage taxes at the time required by law or rules and regulations. As a consequence of his income and VAT liabilities, accused-appellant is mandated to file the pertinent tax returns and pay the corresponding taxes, pursuant to the following provisions of the 1997 NIRC, as amended, and implementing rules and regulations: Income Tax: "SEC. 51. Individual Return.- (A) Requirements. - XXX XXX XXX (4) The income tax return shall be filed in duplicate by the following persons: (a) A resident citizen - on his mcome from all sources; (b) A nonresident citizen - on his income derived from sources within the Philippines; (c) A resident alien - on his income derived from sources within the Philippines; and (d) A nonresident alien engaged in trade or business in the Philippines - on his income derived from sources within the Philippines. XXX XXX

DECISION CTA Crim. Case No. A-16 (B) Where to File. - Except in cases where the Commissioner otherwise permits, the return shall be filed with an authorized agent bank, Revenue District Officer, Collection Agent or duly authorized Treasurer of the city or municipality in which such person has his legal residence or principal place of business in the Philippines, or if there be no legal residence or place of business in the Philippines, with the Office of the Commissioner. (C) When to File.- (1) The return of any individual specified above shall be filed on or before the fifteenth (15th) day of April of each year covering income for the preceding taxable year. XXX XXX xxx." VAT: "SEC. 114. Return and Payment of Value-Added Tax. (A) In General. - Every person liable to pay the value-added tax imposed under this Title shall file a quarterly return of the amount of his gross sales or receipts within twenty-five (25) days following the close of each taxable quarter prescribed for each taxpayer: Provided, however, That VAT-registered persons shall pay the value- added tax on a monthly basis. xxx" (Emphasis added) As pointed out earlier, accused-appellant failed to register as a VAT taxpayer and failed to pay the assessed deficiency taxes. And, his sole defense was that, he "did not earn that big amount during those times."73 However, other than this bare allegation, records disclosed that he did not present any documentary evidence to prove the same. Surely, accused-appellant's bare allegation without corroborating evidence cannot overturn the presumption of the correctness of the subject assessments.74 Moreover, to prove accused-appellant's failure to pay the assessed deficiency income tax, VAT, and percentage taxes, at the time required by law or rules and regulations, plaintiff- 73 Transcript of Stenographic Notes (TSN) taken at the hearing held on June 21, 2022, Docket, p. 86. 74 Rizal Commercial Banking Corporation us. Commissioner of Internal Revenue, (Resolution), G.R. No. 168498, April 24 , 2007, citing Commissioner of Internal Revenue vs. Hantex Trading Co., Inc., G.R. No. 136975, March 31, 2005. ~

DECISION CTA Crim. Ca se No. A- 16 appellee presented the following documents, which have been received by the accused-appellant himself, namely: (1) LOA dated September 10, 2018;75 (2) Notice of Informal Conference dated May 15, 2019 , with Computation of De_ficiencu Taxes;76 (3) Amended Notice ofInformal Conference dated May 15,2019, with Amended Computation of De_ficiencu Taxes;77 (4) PAN dated January 20, 2020,78 with Details of Discrepancies; and (5) FLD /FANs dated February 24, 2020,79 with Details of Discrepancies. As to the collection efforts, plaintiff-appellee presented a copy of the WDL dated November 25, 2020,80 which was received by the sister of accused-appellant, Ms. Marissa Tadeo, on December 1, 2020. It can be inferred from the foregoing that accused- appellant had b een duly notified of the assessment notices, and yet he did not file any protest against the subject tax assessments, pursuant to Section 228 of the 1997 NIRC, as amended.8 1 It is already settled that failure to file an administrative protest within thirty (3 0) days from r eceipt of 75 Exhibit "B-1 ", Docket, p. 32. 76 Annex "C", Docket, pp. 160 to 162. 77 Exhibit "C-1 ", Docket , pp . 148 to 150. 78 Exh ibits "D" a nd "D- 1", Docket, pp. 33 to 38. 79 Exhib its "E" to "E- 1" a n d "E-4", Docket, pp. 4 1 to 46, and 49 to 52. 80 Exhibit "F", Docket, p. 53. 81 "Section 228. Protesting of Assessment. - When t h e Comm ission er or his d uly au th orized rep resentative finds tha t prop er taxes s h ould b e assessed, h e sh a ll first n otify t h e taxpayer of h is fin dings: xxx XXX XXX XXX Th e taxpayer s h a ll be informed in writing of th e law an d th e facts on wh ich the assessm en t is m ad e; otherwise, the assessment sha ll be void. Within a p eriod to be prescribed by im plementing rules a nd regula t ion s, the taxpayer sh a ll be required to r espond to said notice. If the taxp ayer fails to respon d , th e Com m is sioner or his duly authorized represen tative sh a ll issu e a n assessm ent based on his findin gs . Su ch assessmen t may be protested administ ratively by filing a request for reconsideration or reinvestigation within thirty (30) days from receipt of the assessm en t in such form and m a n ner as may be prescribed by implementing rules a n d regula tion s . Within sixty (60) days from filing of t he protest , a ll r elevant supporting documen ts sh a ll h ave b een s ubmitted; oth erwise, the assessm ent sh a ll becom e fina l. If th e pr otest is den ied in wh ole or in part, or is n ot acted upon within one hundred eighty (1 80) days from submission of document s, the taxpayer a dversely affected by th e decision or inaction may appeal to the Court of Tax Appeals wit h in thirty (30) d ay s from receip t of t h e said d ecision, or from th e la p se of the on e h u ndred eigh ty (1 80)-day period; oth erwise, the decision s h a ll become final, execu tory and~ d em a nda ble."

DECISION CTA Crim. Case No. A-16 the FLD/FAN will render the assessment final, executory, and demandable. 82 Correspondingly, since accused-appellant failed to file a valid protest, the subject tax assessments have become final, executory and demandable and, thus, can no longer be contested. 83 Moreover, accused-appellant was very much aware that the due date for payment of the assessed deficiency taxes was on March 25, 2020,84 as stated in the subject FLD /FANs. But still, no payment was made by him. Thus, based on foregoing pieces of evidence, plaintiff- appellee has sufficiently proven that accused-appellant failed and continuously fail to pay the alleged deficiency taxes at the time required by law or rules and regulations. Consequently, plaintiff-appellee's compliance with the second element of Section 255 of the 1997 NIRC, as amended, has been duly established. Third Element - The accused- appellant's failure to pay the income tax, VAT and percentage taxes is willful. The word "willful", or its variant "wilful", means premeditated; malicious; done with intent, or with bad motive or purpose, or with indifference to the natural consequence.ss Thus, to attribute to the accused a ((wil(ful.failure to pau" the tax, it must be shown that such failure or omission by accused was done knowingly, intentionally, and with the specific intent not to pay the tax. 82 Commissioner of Internal Revenue vs. Transitions Optical Philippines, Inc., G.R. No. 227544, November 22, 2017. 83 Oceanic Wireless Network, Inc. vs. Commissioner of Internal Revenue, et al. , G.R. No. 148380, December 9, 2005. 84 Annex "D -4", Docket, p. 51. 85 Refer to Commis sioner of Internal Revenue, et al. vs. The Honorable Court of Appeals, et al., G.R. No. 119322, June 4 , 1996. ~

DECISION CTA Crim. Case No. A-16 In this case, it has been duly established that upon learning that the BIR found discrepancies in his sales for taxable year 2016, accused-appellant immediately visited the assigned RO for a possible compromise agreement, and likewise offered to settle the same on installment basis, as shown in his testimony hereunder quoted for ready reference: "A'ITY. JUAN: Q Now you testified that you received the Assessment Notices from the Bureau of Internal Revenue, did you exert any effort to communicate with the BIR as to the settlement of your levy notices? A Yes, sir. Q Do you remember having communicated with a specific Revenue Officer in the settlement of your tax levy notices? A In Calasiao Office sir? Q Yes in Calasiao. A There is someone whom I talked too, sir. Q How many times did you go to Calasiao? A For three (3) times, sir. Q In communicating with the BIR, you were made aware that you can apply for compromise settlement of your tax levy, is that correct? A Yes, sir. Q And despite having known such remedy that you can apply for compromise, you did not apply with the BIR for any compromise settlement, is th at right Mr. Dexter? A Yes, sir. Q You did apply? A Yes before, sir. Q Do you have any proof of your a pplication for compromise settlement? A I do not have any as of now, sir."86 Notably, the foregoing facts were even confirmed by no less than the plaintiff-appellee's own witness, Ms. Imelda Rejano, in her testimony during the cross-examination. The following are the excerpts of Ms. Rejano's testimony, viz.: 86 TSN taken at the hearing held on June 21, 2022, RTC Docket (Crim. Case No. L- 13865), pp. 96 to 97. ~

DECISION CTA Crim. Case No. A-16 "Q This Notice of Informal Conference is principally an invitation for the accused to settle his claim with the BIR, is that correct? A The Notice of Informal Conference is the result of the audit and then binibigyan namin within thirty (30) days ang taxpayer to give him time to protest kung tama po ang Assessment, sir. Q But in this case, the accused did not protest? A Yes, sir. Q But when you invited him for the Notice of Informal Conference, he tried to settle his alleged liabilities, is that correct? A Wala nga po sir, kasi wala siyang pambayad, sir. Q But he tried? A Yes we explained sa kanya para matulungan naman siyang magbayad, sir. Q So according to you, wala nga po sir because wala po siyang pambayad, meaning to say, he tried to settle this tax liabilities as early as during the sending of the Notice of Informal Conference only that his financial status permitted him to do so? A Yes, sir. Q So to be clear, as early as this Notice of Informa l Conference, the accused is already manifesting his willingness to pay? A Yes, sir. Q And this allowed under the National Internal Revenue Code, correct? A Yes, sir. Q Then again, because of the none payment, you proceeded with the Preliminary Assessment Notice, correct? A Yes, sir. Q And, I'm also correct to tell that again, the accused is really desirous to settle his tax liabilities only that again, he is prevented by his financial capacity? A Yes, sir. Q And because the BIR is asking the payment of the full amount, the BIR is not allowing the accused to pay this liabilities on installment basis? A Sir we are allowing the tax payer to h ave an installment, but you said earlier that we have a prescription period, so kami naman and mababalikan pag hindi namin ginawa yong mga a:.

DECISION CTA Crim. Case No. A-16 procedures at the end of our Assessment Section, so hindi po mag push through doon sa kanyang installment, efoforward pa rin namin po and then after na mag bayad po sya efoforward din namin po yong payment, sir. Q That installment madam witness, what could be the possible terms? A Depende po yon kasi syempre sa laki ng Assessment sa kanya, kaya ang ginawa namin para hindi naman kami po yong kasi diba may administratively liable din kasi kami once na hindi namin na aksiyunan yong docket, meron syang intention to pay an installment pero hindi naman nag push through doon, sir. Q This Notice of Informal Conference madam witness was send to the accused on May 15, 20 19? A Yes, sir. Q So in other words madam witness, you affirm before this Honorable Court that there was really this intention of the accused to pay the taxes even on installment basis, but only that is not permitted by his pocket and the case that you filed before this Honorable Court is willful non payment of tax cases, is that correct, are you familiar with that willful? A Yes, sir."87 It cannot be denied from the foregoing that the accused- appellant attempted to settle the subject deficiency taxes through possible compromise agreement, and to pay the supposed compromise amount by installment. But he was prevented from doing so due to his financial incapacity, as he was still required by RO Rejano to pay the full amount of the assessed deficiency taxes, on the ground that they were bound by the prescriptive period given to them to act on the case docket. Failure on their part to do so shall, accordingly, make them administratively liable for inaction thereon. For this Court, however, this creates a reasonable doubt as to the indicia of willfulness on the part of the accused-appellant not to pay his tax liabilities, since it is evident that accused- appellant merely failed to pay the subject tax assessments due to his financial incapacity. 87 TSN taken at the hearing held on April 26, 2022, RTC Docket (Crim. Case No. L- 13865), pp. 55 to 57. ~

DECISION CTA Crim. Case No. A-16 Consequently, plaintiff-appellee failed to present sufficient evidence to prove beyond reasonable doubt that the accused-appellant willfully failed to pay the deficiency income tax, VAT, percentage tax, and miscellaneous taxes for TY 2016. Such being the case, accused-appellant must perforce be acquitted. However, accused-appellant is civilly liable to pay the assessed deficiency taxes. In Nuguid us. Nicdao,BB the Supreme Court ruled as follows: "...the basic principle in civil liability ex delicto is that every person criminally liable is also civilly liable, crime being one of the five sources of obligations under the Civil Code. A person acquitted of a criminal charge, however, is not necessarily civilly free because the quantum of proof required in criminal prosecution (proof beyond reasonable doubt) is greater than that required for civil liability (mere preponderance of evidence). In order to be completely free from civil liability, a person's acquittal must be based on the fact that he did not commit the offense. If the acquittal is based merely on reasonable doubt, the accused may still be held civilly liable since this does not mean he did not commit the act complained of. It may only be that the facts proved did not constitute the offense charged." Thus, it is already settled that an accused acquitted of a criminal charge may, nevertheless, be held in the same case civilly liable, where the facts established by the evidence so warrants. As pointed out earlier, considering that accused- appellant failed to protest the subject assessment within thirty (30) days from receipt of the FLD /FANs89 on February 28, 2020, the subject assessments had become final, executory and demandable on March 29, 2020. Thus, despite of the acquittal h erein decreed, accused-appellant is still civilly liable for the subject deficiency taxes, as stated in the aforementioned FLD/FANs, plus any surcharge and interests that have accrued thereon. 88 G.R. No. 150785, September 15, 2006. 89 Exhibits "E" to "E-4", Docket, pp. 41 to 52. ~

DECISION CTA Crim. Case No. A-16 WHEREFORE, finding merit on accused-appellant's appeal, the assailed August 30, 2022 Decision and September 30, 2022 Resolution of the RTC, Branch 69, Lingayen, Pangasinan, in Crim. Case No. L-13865 are hereby PARTIALLY REVERSED AND SET ASIDE. Accused-appellant Dexter Magtaan y Masangkay is ACQUITTED of the offense of violation of Section 255 of the 1997 NIRC, as amended, his guilt not having been established beyond reasonable doubt. However, accused-appellant is ORDERED TO PAY the aggregate amount of P1,718,861.77, representing basic deficiency income tax, VAT and percentage taxes, plus 50�/o surcharge imposed under Section 248(B) of the 1997 NIRC, as amended, the 20o/o deficiency interest, and the 20o/o delinquency interest imposed under Section 249(A) and (C) of the same Code, respectively, computed as follows: Basic Tax Due Income Tax Percentage VAT Miscellaneo us Total p 596,440.88 Tax p 388,875.42 Taxes t> 1,050,36 3.80 Add: 25% Surcha rge Income Tax: 20% 149,110.22 p 1,047.50 97,218.86 t> 64,000 .00 246,590.96 84,972.40 Deficiency Interest 1 5 9 ,8 1 3 . 4 7 26 1.88 84,972.40 from April 16 , 2017 159,8 13.47 to December 3 1, P990 ,336.97 195.15 20 17 {P596,440.88 X 280.67 195.1 5 280.67 20% x 260/3 65 days} 72,448.02 72,448.02 12% Deficiency 104,1 97.30 P64 ,000.00 104,197.30 Interest from January P l,785.20 P662,7 3 9 .60 1, 2018 to March 25, --- P l ,718,861.77 I.a. 2020 {?596,440.88 X 12% x 81 5/365 days} Percentage Tax: 20% Deficiency Interest from January 26 , 2017 to December 31 , 2017 {?1 ,047.50 X 20% X 340/365 days} 12% Deficiency Interest from January 1, 2018 to March 25, 202 0 [P1 ,047.50x 12% x 815/ 365 datts/ VAT: 20% Deficiency Interest from January 26, 2017to December 31, 2017 {P388,875.42 X 20% X 340/365 daus/ 12% Deficiency Interest from January 1, 2018 to March 25, 2020 {P388,875.42 x 12% x 815/ 365 days/ Total Amount Due, March 25 2 0 2 0

DECISION CTA Crim. Case No. A-16 In addition, accused-appellant is ORDERED TO PAY delinquency interest at the rate of twelve percent (12�/o) on the unpaid deficiency taxes due as of March 25, 2020 in the amount of P1 ,718,861.77 for TY 2016, or equivalent to P565.1190 per day, computed from March 26, 2020 until full payment thereof pursuant to Section 249(C) of the 1997 NIRC, as amended, by RA No. 10963, also known as Tax Reform for Acceleration and Inclusion (TRAIN), as implemented by RR No. 21-2018. SO ORDERED. ~'~-~ CATHERINE T. MANAHAN Associate Justice WE CONCUR: Presiding Justice r. n ~ MARIAN Ii~i1~��. R~~iA~~F, A~(R~DO Associate Justice CERTIFICATION Pursuant to Article VIII, Section 13 of the Constitution, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court. Presiding Justice 90 P1,7 18,86 1.77 x 12% 1 365 d ays.