PEOPLE OF THE PHILIPPINES v. LLOYD NEILSEN BATBATAN CHIONG (at-large), Green Dot Boutique, Unit AXS06 MCS Annex, C-4 Road, Longos, Malabon City

CTA Form No. 8 (For DCC) 111111111111 111111111111111 111111111111111 11111111111111111111111111111111111111 22-00 0634-00 I I REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY FIRST DIVISION CTA CRIM. CASE NO. 0-1007 PEOPLE OF THE PHILIPPINES, Plaintiff, -versus- LLOYD NEILSEN BATBATAN NOTICE OF RESOLUTION CHIONG, Green Dot Boutique, Unit AXS06 MCS Annex, C-4 Road, Longos, Malabon City, Accused. To: PROSECUTOR GENERAL BENEDICTO A. MALCONTENTO ASST. STATE PROS. MICHAEL JOHN M. HUMARANG DEPARTMENT OF JUSTICE Padre Faura Street, Ermita 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 N ational Bureau of Investigation Taft Avenue, Ermita, Manila PNPCHIEF Thru: CIDG Philippine National Police National Headquarters Camp General Rafael Tagle Crame EDSA, Quezon City CHIEF, WARRANT AND SUBPO ENA SECTION Malabon City Police Station F. Sevilla Boulevard Malabon City GREETINGS: You are hereby notified by these presents that on August 5, 2024, a Resolution was rendered in the above-entitled case, copy of which is attached hereto. Quezon City, Philippines, August 6, 2024. Atty. Maria Jo~ F. Chan-Te Executive ~Court II

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY FIRST DIVISION PEOPLE OF THE CTA Crim. Case No. 0-1007 PHILIPPINES, For: Violation of Section 255 of the NIRC Plaintiff, of 1997, as amended Members: -versus- DEL ROSARIO, P.J., Chairperson, BACORRO-VILLENA, and CUI-DAVID, JJ. LLOYD NEILSEN BATBATAN CHIONG, (At- Large), Green Dot Boutique, Unit Promulgated: AXS06 MCS Annex, C-4 Road, Longos Malabon City Accused. X- - - - - - - - - - - - - - - - - - - - - - - - /I'A~/~~ RESOLUTION In the Resolution promulgated on 10 January 2023, 1 the Court ordered the issuance of a warrant of arrest against accused Lloyd Neilsen Batbatan Chiong upon a finding of the existence of a probable cause that he committed the crime of violation of S ection 255 of the National Internal Reve nue Code (NIRC) of 1997, as amended. On 7 March 2023, an Alias Warrant of Arrest was issued against accused. After a second hard look at the Information, Resolution, Joint Complaint-Affidavit, and supporting documents filed or submitted by the Prosecution Attorney in the instant case, the Court finds that the offense charged has already prescribed. We discuss. 1 Docket, pp. 78-8 1.

RESOLUTION CTA Crim. Case No. 0-1007 People of the Philippines v. Lloyd Neilsen Batbatan Chiong X------------------------------------------------------------------------------------------X In the Information filed on 6 December 2022, accused was charged with violation of Section 255 of the NIRC of 1997, as amended, allegedly committed as follows: "That on or about 8 February 2018, in Malabon City and within the jurisdiction of this Honorable Court, the above-named accused, who is the sole proprietor of Green Dot Boutique and engaged in the business of retail of RTW and related goods, with Tax Identification No. 406-518-388, and who is required by law, rules, and regulations to pay the correct amount of income tax, did then and there, knowingly, willfully and unlawfully fail and refuse to pay his deficiency income tax in the amount of One Million Nine Hundred Thirty One Thousand Two Hundred Forty-Five and 40/100 (PHP1,931 ,245.40) Pesos, exclusive of interests and surcharges, for the taxable year 20 14, despite receipt of assessment notices and repeated demands to pay the said deficiency tax, without filing any protest to the damage and prejudice of the Government of the Republic of the Philippines in the aforesaid amount." CONTRARY TO LAW." In support of the indictment, the prosecution attached the following documents: 1. Resolution issued by the Department of Justice - Manila, dated 19 January 2022; 2. Undated Referral Letter, signed by Commissioner of Internal Revenue Caesar R. Dulay, recommending the criminal prosecution of accused; 3. Joint Complaint-Affidavit of Cheryl Arbues, Jeserie F. Dela Cueva and Sancho D. Maducdoc dated 27 May 2021, with the following annexes and attachments: a. Letter of Authority No. eLA20 1100098659 dated 19 May 2016; b . First Request for Presentation of Records dated 16 June 2016; c. Second and Final Request for Presentation of Records dated 6 September 2016; d. Subpoena Duces Tecum addressed to accused, dated 6 October 2016; e. Undated Memorandum forwarding the entire docket to the Regional Director signed by Revenue District Officer Alfredo P. Santos; f. Preliminary Assessment Notice dated 30 June 2017; g. Formal Letter of Demand and Assessment Notices dated 31 August 20 17; h . Preliminary Collection Letter dated 7 December 20 17; 1. Final Notice Before Seizure dated 14 February 2018; J. Warrants of Garnishment addressed to various banks, dated 12 July 2018, and, k. Demand Before Suit dated 10 September 2019.

RESOLUTION CTA Crim. Case No. 0-1007 People of the Philippines v. Lloyd Neilsen Batbatan Chiong x------------------------------------------------------------------------------------------x Prescription in criminal cases is a matter of substantive law.2 Although prescription has not been raised as an issue, it is well-settled that if the pleadings or the evidence on record show that the claim is barred by prescription, the Court may motu proprio order its dismissal on said ground.3 Section 281 of the National Internal Revenue Code (NIRC) of 1997, as amended, provides: 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 dav 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 and underscoring supplied.] To reiterate, in this case, accused was charged with violation of Section 255 of th e NIRC of 1997, as amended, or willful failure to pay tax. In the case of Emilio E. Lim, Sr. and Antonia Sun Lim us. Court of Appeals ("Lim"),4 failure to pay tax is committed only after receipt of the final notice and demand for payment, coupled with the willful refusal to pay the taxes due within the allotted period. The Supreme Court ruled as follows: 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 willful refusal to pay the taxes due within the allotted period. The two 2 Reodica v. Court ofAppeals, G.R. No. 125066, 8 July 1998, 354 SCRA 90-11 1. 3 Commissioner ofInternal Revenue v. Nippon Express (?hils.) Corp., G. R. No. 2 12920, 16 September 20 15, 769 SCRA 861-87 1 4 G.R. Nos. 481 34-37, October 18, 1990, 268 PHIL 680-692.

RESOLUTION CTA Crim. Case No. 0-1007 People of the Philippines v. Lloyd Neilsen Ba tbatan Chiong x------------------------------------------------------------------------------------------x criminal informations, having been filed on June 2 3, 1970, are well-within the five-year prescriptive period and are not time-barred. [Emphasis and underscoring supplied] The BIR circularized the pronouncement in Lim through the issuance of Revenue Memorandum Circular (RMC) No. 101- 90,5 which states: For the information and guidance of all concerned, the following are the salient features of the decision promulgated by the Supreme Court on October 19, 1990, in the case entitled "Emilio E. Lim, Sr. et al. vs. Court of Appeals, et al.," G.R. Nos. L-48134-37. 1. When cause of action for willful failure to pay deficiency tax occurs. The cause of action for willful failure to pay deficiency tax occurs when the final n otice and demand for the payment thereof is served on the taxpayer. Prior thereto, no violation is committed. The offense is committed only after receipt is coupled with refusal to pay the tax within the allotted period. 2. Prescription under Section 280 ofthe Tax Code. (a) The 5-year prescriptive period in an offense or willful failure to pay a deficiency tax assessment commences to run only after the receipt of the final notice and demand bv the taxpaver. and he refuses to pay. [Emphasis supplied] This interpretation was applied by the Supreme Court in Petronila C. Tupaz v. Honorable Benedicta B. Ulep, Presiding Judge of RTC Quezon City, Branch 105, and People of the Philippines,6 where it was ruled that the crime of willful failure to pay tax, "by its nature[,] the violation could only be committed after service of notice and demand for payment of the deficiency taxes upon the taxpayer." In a Resolution dated March 3, 2023, in CTA Crim Case No. 0-966,7 the Court, citing Lim, declared the indispensability of actual receipt of final notice and demand, to wit: 5 SUBJECT: Determination ofWhen Cause ofActionfor Willful Failure to Pay Deficiency Tax Occurs; and Prescription under Section 280 ofthe Tax Code. 6 G.R. No. 127777, October I, 1999. 7 People ofthe Philippines vs. C/irefEnterprises, Inc., Alfredo V. Pagarigan and Luz N. Pagarigan (Km. 326 Wil/arey Avenue, Urbano Velasco Extension, Pinagbuhatan, Pasig City).

RESOLUTION CTA Crim. Case No. 0-1007 People of the Philippines v. Lloyd Neilsen Batbatan Chiong x----------------- ----------- --------------------------------------------------------------x ... absent any proof that the final notice and demand for payment was received by the taxpayer, it cannot be said that the offense has been committed because prior to the receipt of the letter-assessment, no violation has yet been committed. In the Complaint-Affidavit,8 it was alleged that the Final Assessment Notice and Formal Letter of Demand (FAN/FLD) was issued to accused on August 31 , 2017, that it was served by way of substituted service, and that a certain Jeanne Leen De Guzman, the alleged "store-in-charge," received it on September 6, 2017.9 The FAN would have attained finality upon the lapse of thirty (30) days from receipt of said notice in accordance with Section 228 of the NIRC of 1997, as amended. 1o Thus, following the allegations of plaintiff, the assessment would have become final on October 7, 2017. In counting the prescriptive period provided under Section 281 of the NIRC of 1997, as amended, Lim, as quoted above, is instructive that the filing of the criminal information must fall within the five (5)-year prescriptive period. The Supreme Court enunciated in Lim that tax criminal cases are basically imprescriptible. However, violations shall nevertheless prescribe if more than five (5) years have lapsed from the time of the commission of the offense if known, and as applicable in this case, i.e., the date of finality of the FAN/FLD, up to the date of filing of the Information before the Court. This Court is aware that the Lim case interpreted Section 354 of the 1939 Tax Code. 11 However, such provision was subsequently reproduced in Section 281 of the NIRC of 1997, as amended. We compare: 8 Docket, pp. 18-22. 9 Joint Complaint-Affidavit, par 8.8. 10 SEC. 228. Protesting of Assessment. - When the Commissioner or his duly authorized representative finds that proper taxes should be assessed, he shall first notify the taxpayer of his findings: Provided, however, That a pre-assessment notice shall not be required in the following cases: ... . .. Such assessment mav be protested administrativclv bv filing a request for reconsideration or reinvestigation within thirty (30) days from receipt of the assessment in such form and manner as may be prescribed by implementing rules and regulations. Within sixty (60) days from filing of the protest, all relevant supporting documents shall have been submitted; otherwise, the assessment shall become fin a l. 11 Commonwealth Act No. 466, June 15, 1939.

RESOLUTION CTA Crim. Case No. 0-1007 People of the Philippines v. Lloyd Neilsen Batbatan Chiang Page 6 of8 X---------------------------- ---------- ----------- ----------------------------- ------------X Section 354 of the 1939 Tax Section 281 of the NIRC of 1997 Code SECTION 281 . Prescription for SECTION 354. Prescription for Violations of any Provision of this Violations of Any Provisions of this Code. - All violations of any Code. - All violations of any provision of this Code shall provisions of this Code shall prescribe after five (5) years. prescribe after five years. Prescription shall begin to run from Prescription shall begin to run from the day of the commission of the the day of the commission of the violation of the law, and if the same violation of the law, and if the same be not known at the time, from the be not known at the time, from the discovery thereof a nd the discovery thereof and the institution of judicial proceedings institution of judicial proceedings for its investigation and for its investigation and punishment. punishment. The prescription shall be The prescription shall be interrupted when proceedings are interrupted when proceedings are instituted against the guilty instituted against the guilty persons and shall begin to run persons and shall begin to run again if the proceedings are agam if the proceedings are dismissed for reasons not dismissed for reasons not constituting jeopardy. constituting jeopardy. The term of prescription shall not The term of prescription shall not run when the offender is absent run when the offender is absent from the Philippines. from the Philippines. Considering that the wording of Section 354 of the 1939 NIRC was adopted and reproduced in Section 281 of the 1997 NIRC, the legislature is presumed to have adopted the construction placed upon such provision by the Supreme Court in Lim.12 Thus, pursuant to Lim, plaintiff had five (5) years counted from October 7, 2017, or until October 7, 2022, to file the Information before the Court. The Information dated January 19, 2022, was filed with this Court only on December 6, 2022. Clearly, when the present Information was filed on December 6, 2022, the government's right to institute a criminal action against accused had already prescribed for almost two (2) months. 12 People v. Castillo, CTA EB Crim. Case No. 053 (CTA Crim Case No. 0-663) (Resolution), June 8, 2021 .

RESOLUTION CTA Crim. Case No. 0- 1007 People of the Philippines v. Lloyd Neilsen Batbatan Chiong x------------------------------------------------------------------------------------------x In People v. Moran, 13 cited in Romualdez v. Marcelo, 14 the Supreme Court discussed: ... Here th e State is the grantor, surrendering by act of grace its rights to prosecute, and declaring the offense to be no longer the subject of prosecution. The statute is not a statute of process, to be scantily and grudgingly applied, but an amnesty, declaring that after a certain time oblivion shall be cast over the offense; ...that from henceforth[,] he may cease to preserve the proofs of his innocence, for the proofs of his guilt are blotted out. Hence[,] it is that statutes of limitation are to be liberally construed in favor of the defendant, not only because such liberality of construction belongs to all acts of amn esty and grace, but because the very existence of the statute, is a recognition and notification by the legislature of the fact that time, while it gradually wears out proofs of innocence, has assigned to it fixed a nd positive periods in which it destroys proofs of guilt. Independently of these views, it must be remembered that delay in instituting prosecutions is not only productive of expense to the State, but of peril to public justice in the attenuation and distortion, even by mere natural lapse of memory, of testimony. It is the policy of the law that prosecutions should be prompt, a nd that statutes, enforcing such promptitude should be vigorously maintained. They are not merely acts of grace, but ch ecks imposed by the State upon itself, to exact vigilant activity from its subalterns, a nd to secure for criminal trials the best evidence that can be obtained." Indeed, there is no reason why we should deny petitioner the benefits accruing from the liberal construction of prescriptive laws on criminal statutes. Prescription emanates from the liberality of the State....Any doubt on this matter must be resolved in favor of the grantee thereof, the accused. [Emphasis supplied.] WHEREFORE, premises considered, CTA Crim. Case No. 0-1007 is DISMISSED on the ground of prescription of the offense charged. The Alias Warrant of Arrest issued against accused Lloyd Nielsen Batbatan Chiong is RECALLED and SET ASIDE. 13 G.R. No. 17905, January 27, 1923, 44 PHIL 387-437, quoting Wharton on Criminal Pleading & Practice, 9th ed., 1889. 14 G.R. Nos. 165510-33 (Reso lution), July 28, 2006, 529 PHIL 90- 119.

RESOLUTION CTA Crim. Case No. 0- 1007 People of the Philippines v. Lloyd Neilsen Batbatan Chiong x-- ------- ---- ------------------ -- ---------------------------------------------------------x SO ORDERED. Presidin g Justice LAJ~l4[-f{~~~~tUtIr-Dn~i D Associate Justice