PEOPLE OF THE PHILIPPINES v. LILIBETH RAMOS ARAGON On-Line Janitorial Services No. 134 Kamias Road, East Kamias Quezon City (AT-LARGE)

CTA Form No.8 (For DCC) lllllllllllllll llllllll llll lllllllllllllllllllllllllllll lllllll llll l llll 22-000204-0013 REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY FIRST DIVISION CTA CRIM. CASE NO. 0-904 PEOPLE OF THE PHILIPPINES, Plaintiff, -versus- LILIBETH RAMOS ARAGON, NOTICE OF RESOLUTION On-Line Janitorial Services No. 134 Kamias Road, East Kamias, Quezon Ci~, Accused. To: PROSECUTOR GENERAL RICHARD ANTHONY D. FADULLON ASST. STATE PROSECUTORMOISES YAO ACAYAN Department ofJustice Padre Faura Street, Errnita 1000 Manila COMMISSIONER OF INTERNAL REVENUE Thru: Prosecution Division Room 704, BIR National Office Building Sen. Miriam. P. Defensor-Santiago Avenue Diliman, Quezon City DIRECTOR Thru: General Services Division National Bureau of Investigation Building C and D, Filinvest Cyberzone Bay City, Pasay City PNPCIDEF Thru: CIDG Philippine National Police National Headquarters Camp BGen Rafael Tagle Crame EDSA, Quezon City CHIEF, WARRANT AND SUBPOENA SECTION Quezon City Police District Camp BGen Tomas Karingal Sikatuna Village, Diliman Quezon City GREETINGS: You are hereby notified by these presents that on January 8, 2025, a Resolution was rendered in the above-entitled case, copy of which is attached hereto. Quezon City, Philippines, January 8, 2025. Atty. Maria J~ F. Chan-Te Executive"cterK-of Court II

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY FIRST DIVISION PEOPLE OF THE CTA Crim. Case No. PHILIPPINES, 0-904 Plaintift For: Violation of Section 255 of the NIRC of 1997, as amended (Willful -versus- Failure to Pay Deficiency Value-Added Tax) Members: DEL ROSARIO, P.J. , Chairperson, LILIBETH RAMOS ARAGON, BACORRO-VILLENA, and On-Line Janitorial Services CUI-DAVID, JJ. No . 134 Kamias Road, East Kamias, Quezon City (AT- Promulgated: LARGE), JAN os ~q:-oo.AM Accused. -~ ~ X- - - - - - - - - - - - - - - - - - - - - - - - - - - - '; - - - - - - -X RESOLUTION In the Information1 filed on May 5, 2022, and the Amended Information2 filed on June 15, 2022, accused Lilibeth Ramos Aragon was charged with a violation of Section 255' of the National Internal Revenue Code (NIRC) of 1997, as amended, allegedly committed as follows: That on or about 27 April 2017, in Quezon City, and within the jurisdiction of this Honorable Court, accused LILIBETH RAMOS ARAGON, the owner of On-Line Janitorial Services, an entity engaged in the business of providing janitorial services, with Tax Identification Number 175-076- 476, and required by law, rules and regulations to file correct and accurate value-added tax returns and to pay the corresponding value-added tax due pursuant to Sections 105 and 106 of the National Internal Revenue Code (NIRC) of 1997, as amended, did then and there, knowingly, willfully and unlawfully fail to pay deficiency value-added tax in the amount of One Million Seven Hundred Four Thousand One Docket, p. 5- 7. 2 !d. at 54-56.

RESOLUTION CTA Crim. Case No. 0-904 People of the Philippines vs. Lilibeth Ramos Aragon x------------------------------------------------------------------------------------------x Hundred Seventy-Seven and 30/100 Pesos (Php 1,704,177 .30), exclusive of surcharge and interest, for taxable year 2014, despite receipt of the Preliminary Assessment Notice and Formal Letter of Demand, with Details of Discrepancies, issued on 02 March 20 17 and 28 March 2017, respectively, including prior and post-notices and demands to pay, the latest of which being in the nature of the Final Notice Before Seizure dated 24 October 2017, and her failure to file protest on said assessment within the prescribed period, thereby resulting to damage and prejudice to the Government of the Republic of the Philippines in the above amount. CONTRARY TO LAW. In a Resolution dated May 20, 2022, 3 the Court found probable cause for the issuance of a Warrant of Arrest against accused, setting the amount of bail at P60,000.00. However, as of this date, accused remains at large. Meanwhile, during a periodic review of active criminal cases and their factual antecedents, the Court noted that plaintiff failed to submit proof of mailing and/ or receipt of the Final Assessment Notice and Formal Letter of Demand and (FAN/FLD) by accused. In Lim, Sr. v. Court of Appeals4 (Lim), the Supreme Court ruled that the crime of failure to pay taxes is committed only after the taxpayer's receipt of a final notice and demand for payment, coupled with a willful refusal to pay the taxes due within the allotted period: Inasmuch as the final notice and demand for payment of the deficiency taxes was served on petitioners on July 3, 1968, it was only then that the cause of action on the part of the BIR accrued. This is so because prior to the receipt of the letter-assessment, no violation has yet been committed by the taxpayers. The offense was committed only after receipt was coupled with the wilful refusal to pay the taxes due 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. (Emphasis added) Thus, the actual receipt of the FAN/FLD is indispensable in cases involving willful failure to pay tax. !d. at 47-50. G.R.l\os. L-48134-37, October 18,1990 [PerC.J. Feman. Third Division].

RESOLUTION CTA Crim. Case No. 0-904 People of the Philippines vs. Lilibeth Ramos Aragon x------------------------------------------------------------------------------------------x This interpretation was reaffirmed in Tupaz v. Ulep, 5 where the Supreme Court held that a violation for willful failure to pay taxes "could only be committed after service of notice and demand for payment of the deficiency taxes upon the taxpayer." In the present case, as alleged in the Complaint-Affidavit,6 the FAN/FLD issued on March 28, 2017, was purportedly served on accused via registered mail, and an Affidavit of Service was executed as proof of service of the FAN/FLD.7 Photocopies of the registry receipts were likewise attached to the records.s However, the record is bereft of any evidence/proof that the FAN/FLD was actually received by the accused. The prosecution failed to attach or even submit the Registry Return Receipt to prove that the mailed FLD/FAN was actually r:eceived by the accused-addressee. To be sure, the Registry Return Receipt confirms whether or not a mailed matter was received by the addressee. As stated earlier, actual receipt of the FAN /FLD is indispensable in cases involving willful failure to pay taxes. Even if the FAN/FLD was received, the FAN/FLD 1s nevertheless void for failure to indicate a due date. It is axiomatic that an assessment does not only include a computation of tax liabilities; it also includes a demand for payment within a period prescribed.9 In Commissioner of Internal Revenue v. Pascor Realty and Development Corporation, et al.,Io the Supreme Court held: An assessment contains not only a computation'of tax liabilities, but also a demand for payment within a prescribed period. It also signals the time when penalties and interests begin to accrue against the taxpayer. To enable the taxpayer to determine his remedies thereon, due process requires that it must be served on and received by the taxpayer.... [Emphasis and underscoring supplied.] Further, in Commissioner ofInternal Revenue v. Fitness By Design, Inc. (Fitness by Design), 11 the Supreme Court is unambiguous when it declared, viz: G.R. No. 127777, October I, 1999 [Per J. Pardo, First Division]. Docket. pp. 18-23. fd at 40. Jd.at41. Tupaz vs. Ulep, G.R. No. 127777, October 1, 1999 [Per J. Pardo, First Division]. 10 G.R. No. 128315, June 29, 1999 [Per J. Panaganiban. Third Division]. II G.R. No. 215957. November 9, 2016, 799 SCRA 391-420 [Per J. Leonen, Second Division].

RESOLUTION CTA Crim. Case No. 0-904 People of the Philippines vs. Lilibeth Ramos Aragon Page 4 of7 x------------------------------------------------------------------------------------------x A final assessment notice provides for the amount of tax due with a demand for payment. ... The issuance of a valid formal assessment is a substantive prerequisite for collection of taxes. Neither the National Internal Revenue Code nor the revenue regulations provide for a "specific definition or form of an assessment." However, the National Internal Revenue Code defines its explicit functions and effects. An assessment does not only include a computation of tax liabilities; it also includes a demand for payment within a period prescribed. Its main purpose is to determine the amount that a taxpayer is liable to pay. A final assessment is a notice "to the effect that the amount therein stated is due as tax and a demand for payment thereof." This demand for payment signals the time "when penalties and interests begin to accrue against the taxpayer and enabling the latter to determine his remedies[.]" Thus, it must be "sent to and received by the taxpayer, and must demand payment of the taxes described therein within a specific period." The disputed Final Assessment Notice is not a valid assessment. First, it lacks the definite amount of tax liability for which respondent is accountable. It does not purport to be a demand for payment of tax due, which a final assessment notice should supposedly be. An assessment, in the context of the National Internal Revenue Code, is a "written notice and demand made by the [Bureau of Internal Revenue] on the taxpayer for the settlement of a due tax liability that is there definitely set and fixed." Although the disputed not~ce provides for the computations of respondent's tax liability, the amount remains indefinite. It only provides that the tax due is still subject to modification, depending on the date of payment. Thus: The complete details covering the aforementioned discrepancies established during the investigation of this case are shown in the accompanying Annex 1 of this Notice. The 50% surcharge and 20% interest have been imposed pursuant to Sections 248 and 249 (B) of the� [National Internal Revenue Code], as amended. Please note, however, that the interest and the total amount due will have to be adjusted if prior or beyond April 15, 2004.

RESOLUTION CTA Crim. Case No. 0-904 People of the Philippines vs. Lilibeth Ramos Aragon Page 5 of7 X------------------------------------------------------------------------------------------X Contrary to petitioner's view, April 15, 2004 was the reckoning date of accrual of penalties and surcharges and not the due date for payment of tax liabilities. The total amount depended upon when respondent decides to pay. The notice, therefore, did not contain a definite and actual demand to pay. [Emphasis and underscoring supplied; citations omitted] Following the Fitness by Design case, the Supreme Court has then consistently nullified assessments that do not contain a definite due date, as seen in Republic v. First Gas Power Corp. 12 and Commissioner of Internal Revenue v. T Shuttle Services, Inc.t3 In fact, reference to the due date in an assessment is found in Section 249(C) of the NIRC of 1997, as amended. We quote: Section 249- Interest. (C) Delinquency Interest. - In case of failure to pay: (3) A deficiency tax, or any surcharge or interest thereon on the due date appearing in the notice and demand of the Commissioner, there shall be assessed and collected on the unpaid amount, interest at the rate prescribed in Sub~ection (A) hereof until the amount is fully paid, which interest shall form part of the tax. [Emphasis and underscoring supplied. J Accordingly, indicating the due date in an assessment is directly related to the requirement of indicating the definite amount that is assessed. The delinquency interest may not be properly computed if a due date does not appear in the FAN/FLD as in this case. It bears stressing that an assessment, in the context of the NIRC, is a "written notice and demand made by the BIR on the taxpayer for the settlement of a due tax liability that is there definitely set and fixed." 14 In the instant case, the Assessment Notices attached to the FLD do not have due dates. One of the Assessment Notices is reproduced below: 12 G.R. No. 214933. February 15, 2022lPer J. Lopez, J., First Division]. 13 G.R. No. 240729 (Resolution), August 24, 2020 [Per J. Inting, Second Division]. 14 Adamson v. Court ofAppeals, G.R. Nos. 120935 & 124557, May 21, 2009 [Per C.J. Puno, First Division].

RESOLUTION CTA Crim. Case No. 0-904 People of the Philippines vs. Lilibeth Ramos Aragon __ x------------------------------------------------------------------------------------------x ;.) , _ , 19111u:.o.it~ IW'I-~Of!Dn:.UMiilllWI 1708 ASSESSMENT NOTICE As such, failure to indicate the due date negates the BIR's demand for payment. 15 Well-settled is the rule that an assessment that fails to strictly comply with the due process requirements is void and produces no effect. 16 A void assessment bears no valid fruit.1 7 Considering that the FAN is void, there is no FAN to speak of and accused is not obliged to pay the taxes assessed therein. The Court thus arrives at the conclusion that there is no basis to charge accused for the crime of willful failure to pay tax. 15 !d. "' Prime Steel Jlil!, Inc. r Commissioner of lntcmal Rct�cnuc. G.R. No. 149153. September 12, 2022 [Per J. Dimaampao, Third Division]. Commissioner oflnternaf Revenue v. South Entertainment Gallery, Inc., G.R. 1\'o. 223767. April24, 2023 [Per C.J. Gesmundo, First Division]; Samar-! Electric Cooperative v. Commissioner ofInternal Revenue, G.R. No. 193100, December 10, 2014 [Per J. Vil!arama, Jr., Third Division]

RESOLUTION CTA Crim. Case No. 0-904 People of the Philippines vs. Lilibeth Ramos Aragon x------------------------------------------------------------------------------------------x WHEREFORE, premises considered, CTA Crim. Case No. 0-904 is hereby DISMISSED. Accordingly, the Alias Warrant of Arrest issued against accused is RECALLED and SET ASIDE. SO ORDERED. Presiding Justice ~~;;; LANEE S. CUI-DAVID Associate Justice