PEOPLE OF THE PHILIPPINES v. EUGENIO DELA MERCED in his capacity as proprietor of ECD BUILDING RENOVATION SERVICES 211 J. Manuel Street, Pag-Ibig ng Nayon, Brgy. 105, Caloocan City

CTA Form No. 8 (For DCC) 1111111111111111111111 111111111111111 1111111111111111111111111 111111111111111111 24..()()008 1-0003 REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY FIRST DIVISION CTA CRIM CASE NO. 0-1132 PEOPLE OF THE PHILIPPINES, Plaintiff, -versus- EUGENIO DELA MERCED in his NOTICE OF RESOLUTION capacity as proprietor of ECD BUILDING RENOVATION SERVICES, 211 J. Manuel Street, Pag-ibig ng Nayon, Brgy. 105, Caloocan City, Accused. To: OIC MA. AILEEN D. GUNO SR. ASST. CITY PROSECUTOR JOHN QUINCY D. CARANDANG Office of the City Prosecutor 3rd Floor, Judicial Complex lOth Avenue, Caloocan City ATTY. LORNA SB CRUZ ATTY. LEI ADRIAN V. GAPOY Bureau ofInternal Revenue - Revenue Region No. 5 Regional Office Building 10 Concepcion Street, Brgy. 134 Caloocan City GREETINGS: You are hereby notified by these presents that on March 20, 2024, a Resolution was rendered in the above-entitled case, copy of which is attached hereto. Quezon City, Philippines, March 21, 2024. AttyE. xMeacruitia~ ~Fo. uCrthaIIn-Te

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY FIRST DIVISION PEOPLE OF THE CTA CRIM. CASE NO. 0-1132 PHILIPPINES, For: Violation of Section 255, in relation to Sections 253(d) & 256 of the NIRC of Plaintiff, 1997, as amended -versus- Members: EUGENIO DELA MERCED, in his capacity DEL ROSARIO, P.J. , Chairperson, BACORRO-VILLENA, and as proprietor of ECD BUILDING RENOVATION CUI-DAVID, JJ. SERVICES, 211 J. �Manuel Street, Pag-ibig ng Nayon, Brgy. 105, Promulgated: Caloocan City (AT LARGE), Accused. - - - - - - - - - -}C On February 19, 2024, the prosecution filed an Information charging accused Eugenio Dela Merced of ECD Building Renovation Services for willful failure to pay t~es under Section 255, in relation to Sections 253(d) and 256 of the National Internal Revenue Code (NIRC) of 1997, as amended, allegedly committed as follows: That sometime in the year 2014, in Ca loocan City, Metro Manila, and within the jurisdiction of this Honorable Court, the above-n a m ed accused, a duly registered taxpayer and sole proprietor of ECD Building Renovation Services, did then and there, willfully, unlawfully, and feloniously fail to pay the following taxes to wit: Income Tax------ -- Php87,012.88 Va lue Added Tax---- 1,046,946 .67 with a n aggregate total of Php1 , 133,959 .55 more or less, exclu sive of interests, surch arges a nd penalties to the Bureau of Internal Revenue for the taxable year 2009, to t h e damage and prejudice of the governmen t in the a forem ention ed amounts.

RESOLUTION CTA Crim. Case No. 0-1132 People of the Philippines v. Eugenio Dela Merced Page 2 of6 x------------------------------------------------------------------------------------------x CONTRARY TO LAW. In support thereof, the following documents were attached to said Information: 1. Review Manifestation dated July 8, 2021, issued by the Office of the City Prosecutor, Caloocan City; 2. Resolution dated December 14, 2020, issued by Senior Assistant City Prosecutor John Quincy D. Carandang, recommending that accused be charged for violation of Section 255 of the NIRC of 1997, as amended; 3. Department of Justice (DOJ) National Prosecution Service Investigation Data Form dated June 19, 2019; 4. Authority and approval for the filing and institution of criminal action against the accused issued by the Regional Director of Revenue Region No . 5 - Caloocan City dated April 30, 20 19; and 5. Joint Complaint-Affidavit of Revenue Officers Marites Esguerra, Marites Baladad and Khaterine S. Capa dated June 20, 2019, with the following attachments: a. Letter of Authority dated March 18, 2013; b. Final Notice Before Seizure dated February 13, 2015; c. First Notice for Presentation of Records dated May 22, 2013; d. Second and Final Request for Presentation of Records before the Issuance of Subpoena Duces Tecum dated June 18, 20 13; e. Five (5) Day Notice Before Issuance of Subpoena Duces Tecum dated October 18, 2013; f. Subpoena Duces Tecum dated March 19, 2014; g . Affidavit of Service of Subpoena Duces Te cum d a ted March 26, 2014; h . Preliminary Assessment Notice dated September 24, 2014; 1. Assessment Notice and Formal Letter of Demand dated November 4, 2014; and J. Preliminary Collection Letter dated January 30, 2015. After a judicious review of the records filed by the City Prosecutor, the Court finds sufficient basis to dismiss the case. Section 281 of the NIRC of 1997, as amended, governs the prescriptive period for filing a criminal action for violation of the Tax Code, to wit:

RESOLUTION CTA Crim. Case No. 0 -1132 People of t he Philippines v. Eu gen io Dela Merced x----- -------------------------------- -- ------------- --- ---------- ------- ----- ----- --------x SEC . 28 1. Prescription f or Violations of any Pro vis ion of this 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 sa me be n ot known a t th e time, from the d iscovery th ereof 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 ru n wh en th e offender is a b sen t from the Philippines . (Emp hasis s upplied) The foregoing provision pres ents two (2) modes for the commencement of the period of prescription: 1. First Mode: From the day of the commission of the violation of the law; or 2 . Second Mode: When the day of the commission IS unknown, from the discovery of the commission and the institution of judicial proceedings for its investigation and punishment. In Lim, Sr. et al. v. Court ofAppeals, et al. (Lim) ,1 failure to pay tax is committed only after receipt of the final notice and demand for paym ent, coupled with the willful refusal to pay the taxes due within the allotted period. The Suprem e Court ruled a s follow s: 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 becau se prior to the r eceipt of t h e letter-assessm en t, no violation h as yet been committed by th e taxpayers. The offense was committed only after receipt was coupled with the willful refusal to pay the taxes due within the allotted 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. (Emp hasis supplied) 1 G.R. Nos. L-48 134-37, October 18, 1990.

RESOLUTION CTA Crim. Case No. 0-1132 People of t h e Philippines v. Eugenio Dela Merced x-------------- ---------------------- ------------ ---- --- ---------------- -------------------x This doctrine was reiterated in Tupaz v. Ulep,2 where the Supreme Court ruled that the willful failure to pay tax "could only be committed after s ervice of notice and demand for payment of the deficiency taxes upon the taxpayer." As to what interrupts prescription, Section 281 of the NIRC of 1997, as amended, provides that it is "when proceedings are instituted against the guilty persons." This is explained in Lim to mean the time when the information is filed with the Court. Consequently, the Supreme Court approved A.M. No. 05- 11 -07-CTA, otherwise known as the Revised Rules of the Court of Tax Appeals (RRCTA) , declaring that the institution of criminal action is done by filing an information with the Court, which, in turn, interrupts the prescriptive period: RULE 9 PROCEDURE IN CRIMINAL CASES 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 crimina l actions involving violations of the National Internal Revenue Code and other laws enforced by th e Bureau of Internal Revenue, the Commissioner of Intern a l 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) Reading the law, jurispruden ce, and rules together, when the offense charged involves a taxpayer's refusal to pay the taxes due , the five (5) -year prescriptive period b egins to run from the time the payment period lapses with out any payment or appeal being made by the taxpayer. Simply put, the prescription runs when the assessment notice becomes final and executory and continues until the Information in Court is filed . 2 G.R. No. 127777, October I, 1999.

RESOLUTION CTA Crim. Case No. 0-1132 People of the Philippines v. Eugenio Dela Merced x----- ---------------------------------------------- ------------------- --------------------x As alleged in the Joint Complaint-Affidavit filed with the DOJ on June 19, 2019, the Final Assessment Notice and Formal Letter of Demand (FAN/FLD) dated November 4, 2014, was served to accused via registered mail at his registered business address. 3 However, nothing in the records and the FAN /FLD indicates the accused's receipt date. Under prevailing regulations, service of the FAN /FLD may be made through registered mail, and there is created a disputable presumption that such assessment notices were received by the addressee in the regular course of the mail.4 The estimated turnaround time for such registered mail to be delivered is seven (7) working days. s Even if the Court assumes that the FAN was received by accused thirty (30) days from its mailing, or on December 4 , 2014, and no protest was filed within thirty (30) days from such date, or until January 3, 2015, the assessment became final and executory on January 4, 2015, in accordance with Section 2286 of the NIRC of 1997, as amended. The Joint Complaint-Affidavit also alleged that the FAN/FLD had become final and executory for accused's failure to make a timely protest. 7 For that reason, a Preliminary Collection Letter dated January 30, 2015, and a Final Notice Before Seizure dated February 13, 2015 were issued to accused to demand payment of his deficiency taxes.s Thus, following plaintiffs allegations, the assessment became final on January 4, 2015. Considering the foregoing, plaintiff had five (5) years from January 4, 2015, or until January 4, 2020, to file an information in Court. Clearly, when the present Information was filed on February 19, 2024, the government's right to institute a criminal action had already prescribed for more than four (4) years. 3 Joint Complaint-Affidavit, par. 5.5 ; DOJ Resolution dated December 14, 2020, par. 6. 4 Commissioner ofInternal Revenue v. T Shuttle Services, Inc. , G.R. No. 240729 (Resolution), August 24, 2020. 5 Philippine Postal Corporation, Post Office Delivery Lead Time, Estimated Tum Around Time for Domestic Mail Serv ices, available at https://phlpost.go v.ph/postal-office-deli very-lead-time. 6 SEC. 228. Protesting ofAssessment. - The taxpayers shall be informed in writing of the law and the facts on which the assessment is made; otherwise, the assessment shall be vo id. Within a period to be prescribed by impl ementi ng rules and regulations, the taxpayer shall be required to respond to said noti ce. If the taxpayer fa ils to respond, the Commissioner or his duly authorized representative shall issue an assessment based on his fi ndi ngs. Such assessment may be protested admini stratively by fi ling a request for reconsideration or reinvestigation wi thin thi rty (30) days from receipt of the assessment in such form and manner as may be prescribed by implementing rules and r e g u lations. 7 Joint Complaint-Affi davit, pars. 5.6-5 .7. 8 Joint Complaint-Affidavit, par. 5.8.

RESOLUTION CTA Crim. Case No. 0 - 1132 People of the Philippines v. Eugenio Dela Merced x------------------------------------------------------------------------------------------x WHEREFORE, premises considered, the Information filed on February 19, 2024 is DISMISSED. SO ORDERED. Presiding Justice ON LEAVE JEAN MARIE A. BACORRO-VILLENA Associate Justice LAN~l"kl.~A~A~4UJIh-lD~AVID Associate Justice