PEOPLE OF THE PHILIPPINES v. TRANSTECH SHUTTLE SERVICE, INC. FILSYN Compound, Brgy. Don Jose Sta. Rosa, Laguna JOSE NAPLIS MAGCALAYO 128 Bulusan Street, PhVi San Jos Village LTAI Bi?an Laguna HENRY V. LI, and 74 AT Reyes Street Mandaluyong City LORNA LI MAGCALAYO 128 Bulusan Street, PhVi San Jose Village LTAI Bi?an, Laguna (All at large)

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY THIRD DIVISION PEOPLE OF THE CTA Crim. Case. 0-1049 Plaintiff PHILIPPINES, (NPS Docket No. XVI-INV-19F- 00210) -versus- For: Violation of Section 255 (Failure to Pay Tax) of the 1997 NIRC, as amended TRANSTECH SHUTTLE SERVICE, INC. Members: FILSYN Compou nd, Brgy. Don Jose, Sta. Rosa, Laguna JOSE NAPLIS MAGCALAYO, 128 Bulusan Street, PhVi Sa n Jose Village, MANAHAN, Chairperson and LTAI Binan, Laguna, REYES-FAJARDO lL HENRYV. LI 74 AT Reyes Street Mandalu yong C ity LORNALIMAGCALAYO Promulgated: 128 Bulusan Street, PhVi Sa n Jose Village, JUN 16 2.023 LTAJ Binan, Lagu na, /0, (JCJ z:;._,, (All a t large) Accused. )(- - - - - -- -- - - - - - -- -- - - - - - - - - - - - - - - -- - - -- - - - - - -- - - - - - - -)( RESOLUTION On April 20, 2023, an Information was filed against accused Transtech Shuttle Service, Inc., Jose Naplis Magcalayo, Henry V. Li and Lorna Li Magcalayo, indicting them of violation of Section 255 of the National Internal Revenue Code (NIRC) of 1997, as amended. The accusatory portion of which states: That on or abou t March 28, 2016 and thereafter, in the City of Sta . Rosa, Laguna, Philippines, and within the jurisdiction of this Honorable Court, accused JOSE NAPU S MAGCALAYO, HENRY V. U AND LORNA U MAGCALAYO, all Filipino citizens, president, secretary and treasurer, respectively, of accused Trans tcch Shuttle Scn �icc, Inc. (Transtcch) wh ich \\'llS engaged in the business of land transportation and carriage of passenger, goods and merchandise to any place in the Philippine with Tax

RESOLUTION CTA Crim Case No. 0-1049 Identification No. 239-400-066-000, and therefore subject and liable to file tax returns and to pay the corresponding tax due thereon, pursuant to Section 255 of the National Internal Revenue Code of 1997, as amended, did then and there knowingly, unlawfully and willfully fail and refuse to pay their percentage tax deficiency in the amount of Php1,673,931.74, exclusive of surcharges and interests, for the taxable year 2010 despite receipt of several notices and demands as specified under the law and regulations, the last of which are the Preliminary Assessment Notice (PAN) and Formal Letter of Demands, including the Final Notice Before Seizure dated March 28, 2016 issued by the Bureau of Internal Revenue, to the damage and prejudice of the government. CONTRARY TO LAW. In support thereof, the following documents were attached to said Information: 1. Resolution dated January 15, 2020 issued by Assistant State Prosecutor Jeannette M. Dacpano, recommending that Transtech Shuttle Service, Inc., Jose Naplis Magcalayo, Henry V. Li and Lorna Li Magcalayo be charged for violation of Section 255 of the National Internal Revenue Code of 1997, as amended; 2. A letter of the then Commissioner of Internal Revenue (CIR) Caesar R. Dulay to the Secretary of the Department of Justice (DOJ) stating the authority and approval for the filing and institution of criminal Complaint against accused Transtech Shuttle Service, Inc., Jose Naplis Magcalayo, Henry V. Li and Lorna Li Magcalayo; and 3. Joint Complaint Affidavit OCA) of Grace Gonzaga, Nimpha Malaguit, Chona D. De Ramos and Don Johnson F. Guevarra dated June 6, 2019 and filed with the DOJ on even date, with the following attachments: a. BIR Integrated Tax System Printout;1 dated b. General Information Sheet; 2 c. Letter of Authority dated September 6, 2011;3 d. First Request for Presentation of Records September 20, 2011;4 Annex "A," )CA. Annex "B," JCA. Annex "C," )CA. Annex "D," JCA.

RESOLUTION CTA Crim Case No. 0-1049 e. Second and Final Request for Presentation of Records dated October 10, 2011;5 f. Notice of Informal Conference dated July 9, 2012;6 g. Details of Discrepancies/ h. Preliminary Assessment Notice dated September 17, 20138 1. Details of Discrepancies;9 j. Formal Letter of Demand dated November 7, 2013;10 k. Details of Discrepancies;!! I. Audit Result/ Assessment Notice;12 m. Registry Return Receipt;B n. Letter to Regional Director Mr. Jose N. Tan dated November 25, 2013;14 o. Letter to Ms. Lorna L. Magcalayo, Managing Director of Transtech Shuttle Service, Inc. dated December 12, 2013;15 p. Registry Return Receipt;16 q. Letter to Regional Director Mr. Jose N. Tan dated February 4, 2014;17 r. Final Decision on Disputed Assessment dated April 27, 2015;18 s. Preliminary Collection Letter dated February 23, 2016;19 t. Final Notice before Seizure d'ated March 28, 2016;20 u. Warrant of Distraint and/ or Levy dated June 24, 2016;21 and v. Warrants of Garnishment.22 OUR RULING This case merits outright dismissal. Section 2, Article III of the 1987 Constitution espouses the inviolability of the people's right to be secured against unreasonable seizures on their persons, among others. In balancing the scales between the power of the State to tax and its inherent right to Annex "E," JCA. Annex "F," JCA. Annex "F-1," )CA. Annex "G," JCA. 9 Annex "G-1 ," JCA. 10 Annex "H," JCA. II Annex "H-1," )CA. 12 Annexes "I" to "l-4," JCA. 13 Annex "J," JCA. 14 Annex "K," JCA. 15 Annex "L," JCA. 16 Annex "L-1," JCA. 17 Annex ''M," JCA. 18 Annex "N," JCA. JO Annex "0," )CA. 20 Annex "P," )CA 21 Annex "Q," )CA 22 Annexes "R" to "R-15," JCA

RESOLUTION CTA Crim Case No. 0-1049 prosecute perceived transgressors of the law on one side, and the constitutional rights of a citizen to due process of law and the equal protection of the laws on the other, the scales must tilt in favor of the individual, for a citizen's right is amply protected by the Bill of Rights under the Constitution. Thus, while "taxes are the lifeblood of the government," the power to tax has its limits, in spite of all its plenitude.z3 Jurisprudence24 holds that the offense of willful failure to pay tax is committed after service of notice and demand for payment of deficiency taxes upon the taxpayer. SEC. 281. Prescription for Violations of any Provision 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 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. In resolving the issue of prescription, the following shall be considered: (1) the period of prescription for the offense charged; (2) the time the period of prescription started to run; and (3) the time the prescriptive period was interrupted.zs Anent the first consideration, the prescriptive period for tax offenses punishable under the NIRC, as amended is five (5) years. For the second consideration, prescription shall commence from: 1) commission of the tax offense, if known at that time; or 2) from " Commissioner of Internal Revenue v. Metro Star Superama, Inc., G.R. No. 185371, December 8, 2010. 24 Tupaz v. Ulcp, G.R. No. 127777, October 1, 1999; and Lilli, Sr. v. C!\, G.R. Nos. L-48134-37, October 18, 1990. 25 Presidential Ad Hoc Fact-Finding Committee on Behest Loans v. Han. Desierto, et al., G.R. No. 135715, April13, 2011.

RESOLUTION CTA Crim Case No. 0-1049 discovery of such tax offense and institution of judicial proceedings for its investigation and punishment. The third consideration, i.e., interruption of prescriptive period, is dependent on whether the prescriptive period commenced from commission of the tax offense, or from discovery thereof and institution of judicial proceedings for its investigation and punishment. To expound: In Emilio E. Lim, Sr. and Antonia Sun Lim v. Court of Appeals 26 case, accused therein were charged for their refusal to pay deficiency income tax (IT) due for taxable years (TY) 1958 and 1959, among others. One of the arguments they advanced is that the criminal actions instituted against them have prescribed. In holding said argument erroneous, the Supreme Court ruled: Inasmuch as the 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. ,,27 Then came the Petronila C. Tupaz vs. Honorable Benedicta B. Ulep, et al. 28 case. There, accused was charged as an officer of El Oro Engravers Corporation for willful failure to pay corporate IT for TY 1979. Among the defenses she posed is that said offense had prescribed. The Supreme Court ruled in the negative, ratiocinating in this wise: .... Petitioner was charged with failure to pay deficiency income tax after repeated demands by the taxing authority. In Lim, Sr. v. Court of Appeals, we stated that by its nature the violation could only be committed after service of notice and demand for 26 G.R. Nos. L-48134-37, October 18, 1990. 27 Boldfacing supplied. 28 G.R. No. 127777, October 1, 1999.

RESOLUTION CTA Crim Case No. 0-1049 payment of the deficiency taxes upon the taxpayer. Hence, it cannot be said that the offense has been committed as early as 1980, upon filing of the income tax return. This is so because prior to the finality of the assessment, the taxpayer has not committed any violation for nonpayment of the tax. The offense was committed only after the finality of the assessment coupled with taxpayer's willful refusal to pay the taxes within the allotted period. In this case, when the notice of assessment was issued on July 16, 1984, the taxpayer still had thirty (30) days from receipt thereof to protest or question the assessment. Otherwise, the assessment would become final and unappealable. As he did not protest, the assessment became final and unappealable on August 16, 1984. Consequently, when the complaint for preliminary investigation was filed with the Department of Justice on June 8, 1989, the criminal action was instituted within the five (5) year prescriptive period. 29 Indeed, the Lim case and the Tupaz case were in unison in holding that the offense of willful failure to pay tax is committed upon finality of the assessment, coupled with the taxpayer's deliberate refusal to pay taxes due. However, these cases differ as to when interruption of the five (5)-year prescriptive period under Section 281 of the NIRC, as amended occurs. In the Lim case, the prescriptive period was interrupted by the filing of Information in court, whereas in the Tupaz case, said prescriptive period was interrupted by the filing of the Complaint before the DOJ for preliminary investigation. On November 22, 2005, the Supreme Court approved A.M. No. 05-11-07-CTA otherwise known as the Revised Rules of the Court of Tax Appeals (RRCTA). Section 2, Rule 9 of the RRCTA provides that the institution of the criminal action shall interrupt the running of the period of prescription, to wit: SEC. 2. Institution of criminal nctions. - 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. (Rules of Court, Rule 110, sec. 2a; n) 29 Citations omitted. Boldfacing supplied.

RESOLUTION CTA Crim Case No. 0-1049 The institution of the criminal action shall interrupt the running of the period of prescription. (Rules of Court, Rule 110, sec. 1, par. 2a) (Boldfacing supplied). The RRCTA being the special provisiOn that governs the proceedings before this Court provides that the period of prescription for a tax case shall be tolled by the filing of an Information with this Court. As claimed by the BIR in its Joint Complaint Affidavit, the Formal Letter of Demand (FLD) dated November 7, 2013 covering the taxable year 2010 was served to and received by accused on November 15, 2013. On May February 4, 2014, accused filed its protest. Acting on the protest, a Final Decision on Disputed Assessment (FDDA) was issued on April 27, 2015. The Tupaz case held that the offense of willful failure to pay tax is committed after service of notice and demand for payment of deficiency taxes upon the taxpayer. Clearly, based on the receipt of the FLD and the FDDA, the offense charged had already prescribed when the Information was filed before this Court on April20, 2023. The failure of the prosecution to timely file the Information in Court, within the five (5)-year prescriptive period renders the present case dismissible on the ground of prescription. WHEREFORE, the Court finds no probable cause to issue a warrant of arrest, on the ground of prescription of the offense charged. Likewise, on the same ground, the instant Information docketed as CTA Crim. Case No. 0-1049, is DISMISSED. SO ORDERED. tJ.a-.; /. ;t,..~"tc ~ CATHERINE T. MANAHAN Associate Justice ~ L ~~w/="~~ MARIAN IV~. REYE~FAJARDO Associate Justice