BUREAU OF INTERNAL REVENUE 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.llO PHILIPPINES, (CTA CRIM. CASE NO. 0-950) For: Violation of Section 254 of the Petitioner, National Internal Revenue Code (NIRC) of 1997, as amended. Present: -versus - DEL ROSARIO, P.J., RINGPIS-LIBAN, MANAHAN, BACORRO-VILLENA, MODESTO-SAN PEDRO, REYES-FAJARDO, CUI-DAVID, FERRER-FLORES, and ANGELES, JJ. Promulgated: ZIEGFRIED LOO TIAN, Respondent. x - -- --- - - ---- - ----- - - -- - ---- - -- - --- - --- - ---- - -- - ------ - - - --- x DECISION FERRER-FLORES, J.: Before this Court is the Amended Verified Petition for Review (of the Resolution dated February 08, 2023) (Amended Verified Petition for Review) filed on July 5, 2023 via registered mail by the People of the Philippines (petitioner) against Ziegfried Loo Tian (respondent) appealing the Resolution dated December 12, 2022 (P t assailed Resolution),1 dismissing the case on the ground of prescription, and the Resolution dated February 8, 2023 (2"' assailed Resolution),' denying the motion forl 1 Rollo, pp. 29 to 35. 2 Rollo, pp. 36 to 39.

DECISION CTA EB Crim. No. 110 (CTA Crim. Case No. 0-950) People ofthe Philippines vs. Ziegfried LaoTian reconsideration, both rendered by the then First Division of this Court3 (Court in Division). The dispositive portions of the assailed Resolutions read as follows: JS1 assailed Resolution 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. 0-950, is DISMISSED. SO ORDERED. 2nd assailed Resolution WHEREFORE, the prosecution's Motion for Reconsideration is DENIED. XXX XXX XXX SO ORDERED. THE ANTECEDENT FACTS On October 26, 2022, an Information4 was filed against respondent 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 April 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 first ( P') 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 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 Three Million One Hundred Seventy Two Thousand Three Hundred Five Pesos and Fifty Eight [sic} (Php3,172,305.58), 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 JS1 assailed Resolution on December 12, 2022 dismissing the above Information for failure of the prosecution to 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.

DECISION CTA EB Crim. No. 110 (CTA Crim. Case No. 0-950) People ofthe Philippines vs. Ziegfried LaoTian timely file the Information in Court within the five (5)-year prescriptive period. 5 Aggrieved, petitiOner moved for reconsideration6 which was still denied for lack of merit on February 8, 2023 through the 2"d assailed Resolution issued by the Court in Division. 7 Hence, this Petition. THE PROCEEDINGS BEFORE THE COURT EN BANC On March 10, 2023, this Court received petitioner's Verified Petition for Review (of the Resolution dated February 08, 2023) filed via registered mail on March 6, 2023.8 Petitioner then filed its Manifestation with Motion on March 15, 2023 praying that the title ofthe case be corrected from "BUREAU OF INTERNAL REVENUE" to "PEOPLE OF THE PHILIPPINES" as the plaintiff- appellant.9 On June 26, 2023, this Court granted the same and directed the petitioner to submit an amended Verified Petition for Review. 10 In compliance with the Resolution dated June 26, 2023, petitioner filed on July 5, 2023 the instant Amended Verified Petition for Review reflecting the corrected title of the case. 11 Meanwhile, the counsel for respondent filed a Notice ofAppearance12 on July 12, 2023, which was noted by the Court on July 14, 2023. 13 On July 27, 2023, respondent filed his Comment/Opposition (Re: Verified Petition for Review ofthe Resolution dated 08 February 2023). 14 \ 5 Docket, pp. 213 to 219. 6 Motion for Reconsideration (a/Resolution dated December I 2, 2022). attached to petitioner's Formal Entry ofAppearance with Motion for Reconsideration, Docket, pp. 225 to 235. 7 Docket, pp. 237 to 240. 8 Raila, pp. I to 23. 9 Filed via registered mail on March 15, 2023 and received by the Court on March 21, 2023; Rollo, pp. 246 to 249. 10 Rolin. pp. 253 to 256. 11 Raila, pp. 257 to 280. 12 Raila, pp. 510 to 511. 13 Raila, p. 512. 14 Rollo. pp. 513 to 532.

DECISION CTA EB Crim. No. 110 (CTA Crim. Case No. 0-950) People ofthe Philippines vs. Ziegfried LaoTian The Court noted petitioner's Amended Verified Petition for Review and respondent's Comment/Opposition on August 14, 2023. On even date, the case was also submitted for decision. 15 THE ISSUES In petitioner's Amended 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 being filed out of time; and, II. The Court in Division erred when it found no probable cause to charge respondent Loo Tian for Section 254 of the NIRC of 1997, as amended, or willful attempt to evade or defeat payment of value-added tax (VAT) for the first quarter of taxable year (TY) 2010. THE ARGUMENTS Petitioner interposes the following arguments in support of its petition: A. Its motion for reconsideration was timely filed on January 10, 2023, as the fifteen (15)-day period for filing of the motion pursuant to pertinent provisions of the Revised Rules of the Court of Tax Appeals (RRCTA), as amended, is the proper rule applicable to this case; B. 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, on July 5, 2012, or the date of filing of complaint with the Department of Justice (DOJ); and, C. Respondent should be held liable for willful attempt to evade or defeat tax for the first quarter of TY 2010 in violation of Section 254 nftho NJRC of 1997," =ondod. \ 15 Minute Resolution dated August 14, 2023. Rollo. p. 533.

DECISION CTA EB Crim. No. II 0 (CTA Crim. Case No. 0-950) People ofthe Philippines vs. Ziegfried LaoTian On the other hand, respondent 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 (10) years from the filing of the complaint to the filing of the Information in the Court of Tax Appeals (CTA). THE RULING OF THE COURT The Amended Verified Petition for Review lacks merit. As will be explained in the succeeding discussions, while we find that the Motion for Reconsideration of the 151 assailed Resolution was timely filed, we nevertheless uphold the Court in Division's ruling dismissing the case as the right of the government to institute a criminal action has prescribed. The Motion for Reconsideration of the 1'1 assailed Resolution was timely filed; hence, the present Amended Verified Petition for Review filed before the Court En Bane was also timely filed. Petitioner claims that, contrary to the ruling of the Court in Division, the five (5)-day period in Item III(2)(C) of the Revised Guidelines for Continuous Trial of Criminal Cases, is not applicable in this case. Instead, Section 1 of Rule 15 ofthe RRCTA is the proper rule applicable to the case. We find for the petitioner. Item III(2)(c) of the Revised Guidelines for Continuous Trial of Criminal Cases16 provides as follows: III. Procedure XXX XXX XXX 2. Motions (c) Meritorious Motions. -- Motions that allege plausih/e grounds supported by relevant documents and/or 16 A.M. No. 15-06-10-SC (Resolution), April25, 2017. \

DECISION CTA EB Crim. No. II 0 (CTA Crim. Case No. 0-950) People ofthe Philippines vs. Ziegfried LaoTian competent evidence, except those that are already covered by the Revised Guidelines, are meritorious motions, such as: XXX XXX XXX The motion for reconsideration of the resolution of a meritorious motion shall be filed within a non- extendible period of five (5) calendar days from receipt of such resolution, and the adverse party shall be given an equal period of five (5) calendar days from receipt of the motion for reconsideration within which to submit its comment. Thereafter, the motion for reconsideration shall be resolved by the court within a non-extendible period of five (5) calendar days from the expiration of the five (5)-day period to submit the comment. (Emphasis and underscoring supplied) Based on the above rule, the motion for reconsideration of the resolution of a meritorious motion shall be filed within five (5) calendar days from receipt of such resolution. In this case, the motion for reconsideration filed by the petitiOner pertains to the resolution of the Court dismissing the case motu proprio on the ground ofprescription and not a resolution of any meritorious motion. Clearly, the aforecited rule finds no application in this case. In relation thereto, the applicable rule is Section 1 of Rule 15 of the RRCTA, which states: RULE15 MOTION FOR RECONSIDERATION OR NEW TRIAL SECTION l. Who may and when to file motion. - Any aggrieved party may seek a reconsideration or new trial of any decision, resolution or order of the Court by filing a motion for reconsideration or new trial within fifteen days from the date of receipt of notice of the decision, resolution or order of the Court in question. (Emphasis supplied) A scrutiny of the records would show that the DOJ received the JS' assailed Resolution on January 5, 2023. At the time the Jst assailed Resolution was issued on December 12, 2022, there were no deputized special prosecutors yetP As such, the DOJ remained to be the counsel for the pm,ocutioo to whom ootico ;, "md. ~ 17 It was only on January I0, 2023 that the counsels from the BIR National Office- Prosecution Division filed their Formal Entry of Appearance as Deputized Special Prosecutors which was noted by the Court only on February 8, 2023.

DECISION CTA EB Crim. No. II 0 (CTA Crim. Case No. 0-950) People ofthe Philippines vs. Ziegfried Loa Tian Considering that the counsel for the prosecution remained to be the DOJ at that time, the fifteen (15)-day reglementary period to file a motion for reconsideration should be reckoned from the date of receipt by the DOJ on January 5, 2023. Counting fifteen (15) days therefrom, petitioner had until January 20, 2023 within which to file a motion for reconsideration against the JSI assailed Resolution. Petitioner, thus, timely filed its motion for reconsideration on January 10, 2023. The Court shall now evaluate the timeliness of the Petition for Review before the Court En Bane. Section 9(b) of Rule 9 ofthe 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) To recall, on February 8, 2023, the Court in Division issued the 2"d assailed Resolution denying petitioner's motion for reconsideration. The 2nd assailed Resolution was received by petitioner on February 20, 2023. 18 Accordingly, petitioner had fifteen (15) days therefrom, or until March 7, 2023, within which to file its Petition for Review. Petitioner, thus, timely filed the instant Verified Petition for Review on March 6, 2023. 19 That having been settled, the Court shall now proceed to the main issue in tho P"""' pctitinn. \ 18 Notice ofResolution dated February 13,2023, Docket, p. 236. 19 Filed via registered mail on March 6, 2023 and received by the Court on March 10, 2023; Rollo, p. I.

DECISION CTA EB Crim. No. II 0 (CTA Crim. Case No. 0-950) People ofthe Philippines vs. Ziegfried LaoTian 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 prescriptive period is interrupted.20 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, however, 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. Prescription/or 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) yea~ "' pmvidod "hove. \ 20 Romualdez vs. Marcelo, G.R. Nos. 165510-33, July 28, 2006, citing the case of Domingo vs. Sandiganbayan.

DECISION CTA EB Crim. No. 110 (CTA Crim. Case No. 0-950) People ofthe Philippines vs. Ziegfried Loo Tian Second: The dav o{the commission of the subject violation is unknown; hence, the prescriptive period bezan to run upon its discovery and the institution of judicial proceedings on July 5, 2012. As to the second consideration (i.e., commencement of the prescriptive period), Section 281 of the NIRC of 1997, as amended, provides for two (2) reckoning points from when the period of prescription begins to run: (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 petitioner likewise avers in its Amended Verified Petition for Review to be applicable. 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 first ( 151) 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 of the 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 Philippines21 (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 i to evade the assessment decreed by law, petitioners contend that the said crimes have likewise prescribed. They advance the view that the five-year 21 G.R. Nos. L-48134-37, October 18, 1990. \

DECISION CTA EB Crim. No. II 0 (CTA Crim. Case No. 0-950) People ofthe Philippines vs. Ziegfried Lao Tiun 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 ofthe assessment and therefore required the petitioners to pay !'1,237,190.55 in deficiency taxes that the tax infractions were discovered. 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: (1) 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 was not known, the prescriptive period began to run when the violation was discovered and the case was indorsed by the CIR for preliminary investigation to the DOJ on July \ 5, 2012.

DECISION CTA EB Crim. No. 110 (CTA Crim. Case No. 0-950) People ofthe Philippines vs. Ziegfried LaoTian Third: The prescriptive period was interrupted bv the filing of the InfOrmation with the CTA. The present controversy is with the third consideration, particularly, when the period of prescription is interrupted. Petitioner claims that the discovery and the institution of judicial proceedings not only trigger the commencement of the prescriptive period but also trigger the interruption of the same prescriptive period pursuant to Section 281 ofthe NIRC of 1997, as amended. It likewise invokes Section 1 of Rule 110 ofthe 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 I 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, petitioner 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. This Court cannot subscribe to such interpretation. As early as 1990, the Supreme Court has held in the Lim case22 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 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. l 12 !d.

DECISION CTA EB Crim. No. 110 (CTA Crim. Case No. 0-950) People ofthe Philippines vs. Ziegfried LaoTian In 2005, the Supreme Court approved A.M. No. 05-11-07-CTA, otherwise known as the RRCTA, which provided that the prescriptive period for violations of the NIRC of 1997, inter alia, is interrupted by the filing of an Information before the Court, consistent with the pronouncement in the Lim case.23 Specifically, Section 2 ofRu1e 9 of the 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 tiling. 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, petitioner's reliance on Rule 110 of the Revised Rules on Criminal Procedure is misplaced considering that it only applies suppletorily to the RRCTA24 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 and the institution ofjudicial proceedings 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 s, :�~: 2017. Cl"dy, when the in,.ant Informntion wn< filed before thie Court 1 24 Section 3 of Rule 1 of the RRCTA provides that "[t]he Rules of Court in the Philippines shall apply supp1etorily to these Rules."

DECISION CTA EB Crim. No. II 0 (CTA Crim. Case No. 0-950) People ofthe Philippines vs. Ziegfried LaoTian on October 26, 2022, more than five (5) years have passed smce the government's right to institute a criminal action prescribed. In fine, the Court En Bane finds no compelling reason to reverse the Court in Division's assailed Resolutions. WHEREFORE, premises considered, petitioner's Amended Verified Petition for Review (of the Resolution dated February 08, 2023) is DENIED for lack of merit. Accordingly, the assailed Resolutions dated December 12, 2022 and February 8, 2023 in CTA Crim. Case No. 0-950 are AFFIRMED. SO ORDERED. ORES WE CONCUR: Presiding Justice ~. AJ.-. -/'--- MA. BELEN M. RINGPIS-LIBAN Associate Justice ~ 'r_ ~~"..-.. .e;...~-- CATHERINE T. MANAHAN Asso.fiate Justice

DECISION CTA EB Crim. No. ll 0 (CTA Crim. Case No. 0-950) People ofthe Philippines vs. Ziegfried LaoTian 10n Official Business) MARIAN IVY F. REYES-FAJARDO Associate Justice htun!J~ LANEE S. cui~itAVID Associate Justice HENRY Y.~NGELES 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. ROMAN G. DEL ROSARIO Presiding Justice