PEOPLE OF THE PHILIPPINES v. ZIEGFRIED LOO TIAN, (No. 1013, Juan Luna Street, Brgy. 27, Zone 1, Tondo, Manila)

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY ENBANC PEOPLE OF THE CTA EB CRIM. NO. 111 PHILIPPINES, (CTA CRIM. CASE NO. 0-952) For: Violation of Section 254 of the Plaintiff-Appellant, National Internal Revenue Code (NIRC) of 1997, as amended. Present: - versus - DEL ROSARIO, P.J., RINGPIS-LIBAN, ZIEGFRIED LOO TIAN, MANAHAN, (No. 1013 , Juan Luna Street, BACORRO-VILLENA, Brgy. 27, Zone 1, Tondo, Manila), MODESTO-SAN PEDRO, REYES-FAJARDO, Accused-Appellee. CUI-DAVID, FERRER-FLORES, and ANGELES, JJ. Promulgated: x-- --- ---------------- --- ----------- -------- ---------------x DECISION FERRER-FLORES, J. : Before this Court is the Verified Petition for Review (of the Resolution dated February 09, 2023) (Verified Petition for Review) filed on March 6, 2023 via registered mail by the People of the Philippines (plaintiff- appellant) against accused Ziegfried Loo Tian (accused-appellee) appealing the Resolution dated December 15, 2022 (1st assailed Resolution), 1 dismissing the case on the ground of prescription, and Resolution dated February 9, 2023 (2"d assailed Resolution),2 denying the motion for 1 Rollo, pp. 25 to 28. 2 Rollo, pp. 29 to 3 1.

DECISION CTA EB Crim. No. Ill (CTA Crim. Case No. 0-952) People ofthe Philippines vs. Ziegfried Lao Tian reconsideration, both rendered by the then First Division ofthis Court3 (Court in Division). The dispositive portions ofthe assailed Resolutions read as follows: 1'1 assailed Resolution WHEREFORE, the instant CIA Criminal Case No. 0-952 ts DISMISSED due to prescription. SO ORDERED. 2nd assailed Resolution WHEREFORE, the plaintiffs Motion for Reconsideration lS DENIED for lack of merit. SO ORDERED. THE ANTECEDENT FACTS On October 26, 2022, an lnformation4 was filed against accused- appellee for violation of Section 254 of the National Internal Revenue Code (NIRC) of 1997, as amended, the accusatory portion of which reads: That on or before October 20. 2010, in Quezon City, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused, a Filipino citizen, required by law to file his Quarterly Value- Added Tax Return (VAT return), did, then and there, willfully, unlawfully and feloniously attempt to evade and defeat payment of VAT for the third (3'd) quarter of taxable year 20 I 0, by stating in the entry fields of the said return the word "exempt", when in truth and in fact said accused is not exempted as he failed to comply with the substantiation and reporting requirement under the tax law and revenue regulations, which resulted to deficiency tax in the amount of Two Million Eight Hundred Sixty Eight Thousand Five Hundred Forty Three Pesos and Sixteen Centavos (Php2,868,543 .16), exclusive of interests, penalties and surcharges to the damage and prejudice of the Government of the Republic of the Philippines. Thereafter, the Court issued the F' assailed Resolution on December 15, 2022 dismissing the above Information for failure of the prosecution to timely file the Information in Court within the five (5)-year prescriptive pe<iod.' \ \ 3 Composed of Presiding Justice Roman G. Del Rosario, Associate Justice Catherine T. Manahan, and Associate Justice Marian Ivy F. Reyes-Fajardo. 4 Docket, p. 5. 5 Docket, pp. 208 to 211.

DECISION CTA EB Crim. No. Ill (CTA Crim. Case No. 0-952) People ofthe Philippines vs. Ziegfried Loa Tian Aggrieved, the plaintiff-appellant moved for reconsideration6 which was still denied for lack of merit in the 2nd assailed Resolution of the Court in Division. 7 Hence, this Petition. THE PROCEEDINGS BEFORE THE COURT EN BANC On March 10, 2023, this Court received plaintiff-appellant's Verified Petition for Review filed via registered mail on March 6, 2023.8 Plaintiff-appellant then filed its Manifestation with Motion on March 15, 20239 praying that the title of the case be corrected from "BUREAU OF INTERNAL REVENUE" to "PEOPLE OF THE PHILIPPINES" as the plaintiff-appellant. On May 18, 2023, this Court granted the same and ordered the accused-appellee to file his comment/opposition to the Verified Petition for Review. 10 Thereafter, the counsel for accused-appellee filed a Notice of Appearance11 on July 12, 2023 which was noted by the Court on July 17, 2023. 12 On July 27, 2023, accused-appellee filed his Comment/Opposition (Re: Verified Petition for Review ofthe Resolution dated 09 February 2023). 13 This case was submitted for decision on August 14, 2023. 14 THE ISSUES In plaintiff-appellant's Verified Petition for Review, the following assignment of errors were raised: I. The Court in Division erred when it denied the Motion for Reconsideration for lack of merit; and, ~ 6 Motion for Reconsideration (of Resolution dated December 15, 20\2;, attached to petitioner's Formal Enlly ofAppearance with Motion for Reconsideration, Docket, pp. 217 to 226. 7 Docket, pp. 229 to 231. 8 Rollo. pp. I to 19. 9 Filed via registered mail on March 15,2023 and received by the Court on March 21, 2023; Rollo, pp. 241 to 244. 10 Rolin. pp. 248 to 250. 11 Rollo, pp. 251 to 252. 12 Minute Resolution dated July 17, 2023, Rollo, p. 255. 13 Rollo, pp. 256 to 275. 14 Minute Resolution dated August 14, 2023, Rollo, p. 276.

DECISION CTA EB Crim. No. 111 (CTA Crim. Case No. 0-952) People ofthe Philippines vs. Ziegfried LaoTian II. The Court in Division erred when it found no probable cause to charge accused-appellee Loo Tian for Section 254 of the NIRC of 1997, as amended, or willful attempt to evade or defeat tax for the third (3'd) quarter of taxable year (TY) 2010. THE ARGUMENTS Plaintiff-appellant interposes the following arguments in support of its petition: A. Prescription has not set in as the period of discovery and the institution ofjudicial proceedings for violation of Section 254 of the NIRC of 1997, as amended, not only triggers the commencement of the prescriptive period but, at the same time, triggers the interruption of the same prescriptive period; and, B. Accused-appellee should be held liable for willful attempt to evade or defeat tax for the third (3'ct) quarter of TY 2010 in violation of Section 254 of the NIRC of 1997, as amended. On the other hand, accused-appellee counter-argues that: A. The right of the government to prosecute him has prescribed under Section 281 of the NIRC of 1997, as amended; and, B. The case must be dismissed for violation of the accused's right to speedy disposition of cases as the plaintiff took more than ten (1 0) years from the filing of the complaint to the filing ofthe Information in the Court of Tax Appeals (CTA). THE RULING OF THE COURT The Verified Petition for Review lacks merit. The instant Verified Petition for Review was timely filed. Records show that, on January 5, 2023, 15 plaintiff-appellant received the pt assailed Resolution, dismissing the case on the ground of prescription~ 15 Notice ofResolution dated December 19, 2022, Docket, p. 207.

DECISION CTA EB Crim. No. Ill (CTA Crim. Case No. 0-952) People ofthe Philippines vs. Ziegfried LaoTian to which plaintiff-appellant timely moved for reconsideration on January 10, 2023. 16 On February 9, 2023, the Court in Division issued the 2nd assailed Resolution denying plaintiff-appellant's Motion for Reconsideration which resolution was received by the latter on February 20, 2023. 17 Section 9(b) of Rule 9 of the Revised Rules of Court of Tax Appeals (RRCTA) provides: SEC. 9. Appeal; period to appeal. -XXX XXX XXX (b) An appeal to the Court en bane in criminal cases decided by the Court in Division shall be taken by filing a petition for review as provided in Rule 43 of the Rules of Court within fifteen days from receipt of a copy of the decision or resolution appealed from. The Court may, for good cause, extend the time for filing of the petition for review for an additional period not exceeding fifteen days. (Emphasis supplied) Based on the foregoing, plaintiff-appellant had fifteen (15) days from receipt of the 2nd assailed Resolution on February 20, 2023, or until March 7, 2023, within which to file its Petition for Review. Plaintiff-appellant, thus, timely filed the instant Verified Petition for Review on March 6, 2023. 18 That having been settled, the Court shall now proceed to the main issue in the present petition. The government's right to prosecute the case has already prescribed. In resolving the issue of prescription of the offense charged, the following should be considered: (1) the period of prescription for the offense charged; (2) the time the period of prescription starts to run; and, (3) the time the pre<eciptivo pociod i< inteccupted." \ 16 Formal Ent1y nfAppearance with Mnthmfnr Recnnsideratinn. Docket. pp. 212 to 226. 17 Notice o[Resolution dated February 13,2023, Docket, p. 228. 18 Filed via registered mail on March 6, 2023 and received by the Court on March 10, 2023; Rollo, p. I. 19 Romualdez vs. Marcelo, G.R. Nos. 165510-33, July 28, 2006, citing the case of Domingo vs. Sandiganbayan.

DECISION CTA EB Crim. No. Ill (CTA Crim. Case No. 0-952) People ofthe Philippines vs. Ziegfried LaoTian There is no dispute as to the first and second considerations. The issue, however, lies with the third consideration. For an orderly disposition of the issues, the Court will briefly discuss the first and second considerations before proceeding to the third consideration. First: The prescriptive period of subject violation under the NIRC of 1997, as amended, is five (5) years. The first consideration may be found in Section 281 of the NIRC of 1997, as amended, which provides for the five (5)- year prescriptive period as follows: SEC. 281. Prescriptionfor Violations ofany Provision ofthis Code. - All violations of any provision of this Code shall prescribe after five (5) years. Prescription shall begin to run from the day of the commission of the violation of the law, and if the same be not known at the time, from the discovery thereof and the institution of judicial proceedings for its investigation and punishment. The prescription shall be interrupted when proceedings are instituted against the guilty persons and shall begin to run again if the proceedings are dismissed for reasons not constituting jeopardy. The term of prescription shall not run when the offender is absent from the Philippines. (Emphasis supplied) Inasmuch as accused-appellee was charged for violation of Section 254 of the NIRC of 1997, as amended, the applicable prescriptive period is five (5) years as provided above. Second: The day ofthe commission of the subject violation is unknown: hence, the prescriptive period began to run upon its discovery and the institution of judicial proceedings on July 5, 2012. As to the second consideration (i.e., commencement ofthe prescriptive =' ' \ period), Section 281 of the NIRC of 1997, as amended, provides for two (2) reckoning point; from when lho peciod of pre;ctiption begin; to

DECISION CTA EB Crim. No. 111 (CTA Crim. Case No. 0-952) People ofthe Philippines vs. Ziegfi�ied Loo Tian (1) If the day of commission is known, prescription begins to run from the day of the commission of the violation of the law; or (2) If the day of the commission is unknown, from its discovery and the institution ofjudicial proceedings for its investigation and punishment. In the assailed Resolutions, the Court in Division applied the second rule which the plaintiff-appellant likewise avers to be applicable in its Verified Petition for Review. A perusal of the Information shows that the violation alleged therein is that the accused "willfully, unlawfully and feloniously attempt to evade and defeat payment of VAT for the third (3'd) quarter of taxable year 2010, by stating in the entry fields of the said return the word 'exempt', when in truth and in fact said accused is not exempted [... ]". Such being an omission and misrepresentation on the part of the accused, the day of the commission of the violation is unknown until the same is discovered. Thus, the Court En Bane agrees with the finding of the Court in Division that the commencement ofthe prescriptive period is from the discovery ofthe commission and the institution ofjudicial proceedings for its investigation and punishment. In Emilio E. Lim, Sr. and Antonia Sun Lim vs. Court of Appeals and People of the Philippines20 (Lim case), the Supreme Court discussed the commencement ofthe prescriptive period where the day of the commission of the violation is not known and what is contemplated by the term "judicial proceedings", to wit: With regard to Criminal Cases Nos. 1790 and 1791 which dealt with petitioners' filing of fraudulent consolidated income tax returns with intent to evade the assessment decreed by law, petitioners contend that the said crimes have likewise prescribed. They advance the view that the five-year period should be counted from the date of discovery of the alleged fraud which, at the latest, should have been October 15, 1964, the date stated by the Appellate Court in its resolution of April 4, 1978 as the date the fraudulent nature of the returns was unearthed. On behalf of the Government, the Solicitor General counters that the crime of filing false returns can be considered 'discovered' only after the manner of commission, and the nature and extent of the fraud have been definitely ascertained. It was only on October 10, 1967 when the BIR rendered its final decision holding that there was no ground for the reversal of the assessment and therefore required the petitioners to pay PI ,237,190.55 io defioimey "'"' "'"' <he �~ iofr,o<io~ wm diec o ' " ' ' \ 20 G.R. Nos. L-48134-37, October 18, 1990.

DECISION CTA EB Crim. No. Ill (CTA Crim. Case No. 0-952) People ofthe Philippines vs. Ziegfried LaoTian Not only that. The Solicitor General stresses that Section 354 speaks not only of discovery of the fraud but also institution of judicial proceedings. Note the conjunctive word 'and' between the phrases 'the discovery thereof and 'the institution of judicial proceedings for its investigation and proceedings.' In other words, in addition to the fact of discovery, there must be a judicial proceeding for the investigation and punishment of the tax offense before the five-year limiting period begins to run. It was on September 1, 1969 that the offenses subject of Criminal Cases Nos. 1790 and 1791 were indorsed to the Fiscal's Office for preliminary investigation. Inasmuch as a preliminary investigation is a proceeding for investigation and punishment of a crime, it was only on September 1, 1969 that the prescriptive period commenced. XXX The Court is inclined to adopt the view of the Solicitor General. For while that particular point might have been raised in the Ching Lak case, the Court, at that time, did not give a definitive ruling which would have settled the question once and for all. As Section 354 stands in the statute book (and to this day it has remained unchanged) it would indeed seem that tax cases, such as the present ones, are practically imprescriptible for as long as the period from the discovery and institution of judicial proceedings for its investigation and punishment, up to the filing of the information in court does not exceed five (5) years. (Emphasis supplied) Based on foregoing discussions, if the day of the commission of the violation ofthe law is not known, the five (5)-year prescriptive period begins to run from: (I) Discovery; and, (2) Institution ofjudicial proceedings (i.e., offense is indorsed to the Prosecutor's Office for preliminary investigation). In the instant case, since, by the nature of the violation charged against the accused, the day of the commission of the violation is not known, the prescriptive period begins to run when the violation is discovered and the case was indorsed by the CIR for preliminary investigation to the DOJ on July 5, 2012. Third: The prescriptive period was interrupted by the filing of the Information with the CTA. The present controversy is with the third consideration, particularly, when the period of prescription is interrupted. Plaintiff-appellant claims that the discovery and the institution of judicial proceedings not only trigger the commencement of the prescriptive I

DECISION CTA EB Crim. No. Ill (CTA Crim. Case No. 0-952) People ofthe Philippines vs. Ziegfried LaoTian period but also trigger the interruption of the same prescnpt1ve period pursuant to Section 281 of the NIRC of 1997, as amended. It likewise invokes Section 1 of Rule 110 of the Revised Rules on Criminal Procedure which provides: SECTION I. Institution of criminal actions. ~ Criminal actions shall be instituted as follows: (a) For offenses where a preliminary investigation is required pursuant to Section 1 of Rule 112, by filing the complaint with the proper officer for the purpose of conducting the requisite preliminary investigation; (b) For all other offenses, by filing the complaint or information directly with the Municipal Trial Courts and Municipal Circuit Trial Courts, or the complaint with the office of the prosecutor. In Manila and other chartered cities, the complaint shall be filed with the office of the prosecutor unless otherwise provided in their charters. The institution of the criminal action shall interrupt the running of the period of prescription of the offense charged unless otherwise provided in special laws. As such, plaintiff-appellant maintains that prescription has not set in as the filing of the complaint with the DOJ for the conduct of preliminary investigation triggered both the commencement and interruption of the running of the prescriptive period. On the other hand, in the 2nd assailed Resolution, the Court in Division held that it is the filing of the criminal action before the CTA that interrupts the prescriptive period. This Court agrees with the Court in Division. As early as 1990, the Supreme Court has held in the Lim case21 that the prescriptive period is interrupted by the filing of Information in court. Specifically, it was declared therein that tax cases are practically imprescriptible for as long as the period from the discoverv and institution of judicial proceedings for its investigation and punishment, up to the filing of the information in court does not exceed five (5) years. In 2005, the Supreme Court approved A.M. No. 05-11-07-CTA, otherwise known as the RRCTA, which provided that the prescriptive period :o:,violatioM of U>e NIRC of 1997, inta alia, '' intenupted by the fil/i;g of~

DECISION CTA EB Crim. No. Ill (CTA Crim. Case No. 0-952) People ofthe Philippines vs. Ziegfried Loo Tian an information before the Court, consistent with the pronouncement in the Lim case.22 Specifically, Section 2 of Rule 9 ofthe RRCTA reads: 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 name of the People of the Philippines. In criminal actions involving violations of the National Internal Revenue Code and other laws enforced by the Bureau of Internal Revenue, the Commissioner of Internal Revenue must approve their filing. In criminal actions involving violations of the Tariff and Customs Code and other laws enforced by the Bureau of Customs, the Commissioner of Customs must approve their filing. The institution of the criminal action shall interrupt the running of the period of prescription. (Emphasis supplied) Based on the foregoing, criminal cases falling within the jurisdiction of the Court in Division is instituted by the filing of the information before the said Court. Such institution of the criminal action before the Court shall interrupt the running ofthe period of prescription. Evidently, plaintiff-appellant's reliance on Rule 110 of the Revised Rules on Criminal Procedure is misplaced considering that it only applies suppletorily to the RRCTA23 and that the latter specifically provides that criminal actions are instituted by the filing of an information before the CTA which filing shall interrupt the running of the prescriptive period. In view of the foregoing disquisitions, the running of the prescriptive period is interrupted by the filing of the information before the Court and not by the filing of the complaint before the DOJ. As correctly found by the Court in Division, the right to prosecute the criminal action herein has prescribed. Counting from the discovery of the violation of the NIRC of 1997, as amended, and the institution of the judicial proceeding for preliminary investigation (i.e., CIR's referral of the case to the DOJ) on July 5, 2012, the Information should have been filed before this Court within five (5) years from July 5, 2012, or until July 5, 2017. Clearly, when the instant Information was filed before this Court on October 26, 2022, more than five (5) years have passed since the government's right to institute a criminal action prescribed. \ 22 Jd. 23 Section 3 of Rule I of the RRCTA provides that "[t]he Rules of Court in the Philippines shall apply suppletorily to these Rules."

DECISION CTA EB Crim. No. 111 (CTA Crim. Case No. 0-952) People ofthe Philippines vs. Ziegfried Lao Tian In fine, the Court En Bane finds no compelling reason to reverse the Court in Division's assailed Resolutions. WHEREFORE, premises considered, plaintiff-appellant's Verified Petition for Review (of the Resolution dated February 09, 2023) is DENIED for lack of merit. Accordingly, the assailed Resolutions dated December 15, 2022 and February 9, 2023 in CTA Crim. Case No. 0-952 are AFFIRMED. SO ORDERED. ES WE CONCUR: Presiding Justice 9Jv. ~ ...,_ MA. BELEN M. RINGPIS-LIBAN Associate Justice ~"7� Au.~""---- CATHERINE T. MANAHAN Associate Justice \ ON LEAVE MARIAN IVY F. REYES-FAJARDO Associate Justice

DECISION CTA EB Crim. No. Ill (CTA Crim. Case No. 0-952) People ofthe Philippines vs. Ziegfried LaoTian LA~/d!!J.vm Associate Justice HENRY ~~~GELES 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