People v. Lumague

FIRST DIVISION [C.T.A. CRIM. CASE NOS. O-707 and O-708. June 29, 2022.] PEOPLE OF THE PHILIPPINES , plaintiff , vs. NOEL M. LUMAGUE , accused . DECISION REYES-FAJARDO , J p : Two (2) Amended Informations both dated May 16, 2019 were filed against accused Noel M. Lumague, indicting him of two (2) counts of violation of Section 255 of the National Internal Revenue Code (NIRC), as amended, the accusatory portions of which respectively state: CTA Crim. Case No. O-707 "That sometime in April 2017 and thereafter, in Quezon City and within the jurisdiction of this Honorable Court, the above-named accused NOEL M. LUMAGUE, being the sole proprietor of NML Merchandise, did then and there willfully and unlawfully fail to pay deficiency Value-Added Tax for taxable year 2009, in the amount of P3,195,313.46 exclusive of charges and penalties , despite final assessment notice, including prior and post notices and demand before suit issued by the Bureau of Internal Revenue on September 18, 2017, to the damage and prejudice of the government." 1 CTA Crim. Case No. O-708 "That sometime in September 2017 and thereafter, in Quezon City and within the jurisdiction of this Honorable Court, the above-named accused NOEL M. LUMAGUE, being the sole proprietor of NML Merchandise, did then and there willfully and unlawfully fail to pay deficiency income tax for taxable year 2009, in the amount of P8,485,835.89 exclusive of charges and penalties , despite final assessment notice, including prior and post notices and demand before suit issued by the Bureau of Internal Revenue on September 18, 2017, to the damage and prejudice of the government." 2 On May 27, 2019, the prosecution filed an Ex-Parte Motion for Consolidation to consolidate CTA Crim. Case No. O-708 with CTA Crim. Case No. O-707. 3 In the Resolutions dated June 6, 2019 4 and June 11, 2019, 5 the Court: 1) admitted the two (2) Amended Informations both dated May 16, 2019; 2) found probable cause against accused on the respective tax offenses charged in CTA Crim. Case Nos. O-707 and O-708; 3) fixed the amount of bail at P60,000.00 for each case; and 4) consolidated CTA Crim. Case No. O-708 with CTA Crim. Case No. O-707. Two (2) warrants of arrest both dated July 18, 2019 were issued against accused in these consolidated cases. 6 Consequently, accused was arrested and initially detained by the Philippine National Police Crime Investigation and Detention Unit. 7 In the Resolution dated August 9, 2019, accused was released from his detention in view of his posting of the required bail bonds in cash. 8 During Arraignment and Pre-Trial held on February 5, 2020, accused pleaded not guilty to the offenses charged in these consolidated cases. 9 On February 20, 2020, the parties filed their Joint Stipulation of Facts and Simplification of Issues. 10 On March 11, 2020, the Court issued a Pre-Trial Order. 11 Trial ensued. The prosecution presented Charlaraine G. Dytioco and Gemina B. Salvador 12 as witnesses. Charlaraine G. Dytioco 13 is a Revenue Officer II (RO Dytioco) at the Bureau of Internal Revenue (BIR). Among her duties and responsibilities is the audit and investigation of taxpayers for the proper determination of tax liabilities. She narrated: On June 28, 2012, a Letter of Authority (LOA) No. LOA-039-2012-00000438 was issued, authorizing her to examine and audit accused's books of account and other accounting record for taxable year (TY) 2009. Said LOA was served to and was received by accused's daughter Maria Aiza B. Lumague. A Notice of Informal Conference (NIC) with Computation Sheet was subsequently served to and was received by accused's daughter Maria Aiza B. Lumague, informing accused of the results of her investigation and affording him of an opportunity to explain. With accused's non-compliance despite several notices, she recommended for and caused the issuance of a Preliminary Assessment Notice (PAN) dated January 3, 2013 addressed to accused, with the following findings: Tax Type Basic Tax Increments Total Income Tax (IT) P8,485,835.89 P8,869,442.17 P17,355,278.06 Value-Added Tax (VAT) P3,195,313.46 P3,479,827.67 P6,675,141.13 As accused failed to refute the findings in the PAN, she submitted accused's tax docket to the Office of the Revenue District Officer for endorsement to the Assessment Division for the issuance of Final Assessment Notice. Acting favorably on her endorsement, the Assessment Division issued Final Assessment Notices and Formal Letter of Demand with Details of Discrepancy all dated January 25, 2013 (FAN/FLD). She personally served such FAN/FLD to accused's registered address. She thereafter prepared a Memorandum Report dated January 28, 2013, stating that she served the FAN/FLD to accused on January 25, 2013, as well as transmitting the receiving copy thereof to the Revenue District Officer of RDO No. 39. The reports on the audit and examination she conducted against accused were compiled in the BIR Tax Docket. On June 7, 2021, the prosecution offered the following pieces of evidence for consideration of the Court: 14 Exhibit Description "P-1" Letter Notice No. 039-RLF-09-00-00016 dated June 1, 2011 "P-2" Letter of Authority No. 039-2012-00000438 dated June 28, 2012 "P-3" Notice of Informal Conference with Computation Sheet "P-4" Memorandum Report issued on July 27, 2012 with Details of Discrepancy "P-5" Preliminary Assessment Notice dated January 4, 2013 "P-6" Assessment Notice for deficiency Income Tax issued on January 25, 2013 for year 2009 "P-6-1" Assessment Notice for deficiency VAT issued on January 25, 2013 for year 2009 "P-6-2" Formal Letter of Demand issued on January 25, 2013 with Details of Discrepancy "P-6-3" Memorandum Report dated January 28, 2013 "P-7" Preliminary Collection Letter dated June 5, 2013 "P-8" Final Notice Before Seizure dated June 10, 2013 "P-12" Joint Complaint Affidavit "P-13" Referral dated December 14, 2017 "P-14" Investigation Data Form "P-15" Judicial Affidavit of Charlaraine Dytioco "P-15-1" Signature of Charlaraine Dytioco "P-16" Judicial Affidavit of Gemina Salvador "P-16-1" Signature of Gemina Salvador By Resolution dated September 22, 2021, 15 Exhibits "P-1," "P-2," "P-3," "P-4," "P-5," "P-6," "P-6-1," "P-6-2," "P-6-3," "P-7," "P-8," "P-12," "P-13," "P-14," "P-15," and "P-15-1" were admitted as evidence for the prosecution. Exhibits "P-16" and "P-16-1" were denied admission as evidence for the prosecution for failure to comply with Section 3 (c) of the Judicial Affidavit Rule. The prosecution then rested its case. For the defense, Noel M. Lumague and his daughter Maria Aiza B. Lumague were presented as witnesses. Noel M. Lumague 16 is the accused in these consolidated cases. He disclaimed knowledge of the existence of NML Merchandise. Specifically, he obtained Certifications from the Securities and Exchange Commission, as well as the Department of Trade and Industry, dated March 6, 2020 and February 26, 2020 respectively, stating that there was no NML Merchandise registered as a corporation, partnership, or single proprietorship with such government offices. He further testified that on 2009, he was selling fish in front of their house at 34 N-3 Maningning Extension, V. Luna, Quezon City. During his stint at said address, he did not receive any letters from the BIR. In 2010, he transferred to No. 4 Matahimik Street, Barangay Malay, V. Luna, Quezon City. It was only in 2017 when he knew that letters from the BIR were received by his daughter Maria Aiza B. Lumague. Maria Aiza B. Lumague 17 is the daughter of accused. She neither knew of NML Merchandise, nor was she an employee of said enterprise. She reaffirmed her father's statement that on 2009, their family was selling fish in front of their house at 34 N-3 Maningning Extension, V. Luna, Quezon City. She admitted that the letters she received from the BIR were put in their house at 34 N-3 Maningning Extension, V. Luna, Quezon City. However, she never gave such letters to accused by reason of her disagreement and differences with him. From the time accused left said address in 2010, until her communication with him in 2017, she never knew the whereabouts of accused. She also failed to give said letters to accused since the same may not be located. On November 5, 2021, the defense offered 18 the following pieces of evidence for consideration of the Court: Exhibit Description "A-1" Judicial Affidavit of Accused Noel M. Lumague "A-1-a" Signature of accused Noel M. Lumague "A-2" Certification of Non-Registration dated March 6, 2020 issued by the Securities and Exchange Commission "A-3" Certification dated February 26, 2020 issued by the Department of Trade and Industry "A-4" Judicial Affidavit of witness Maria Aiza B. Lumague "A-4-a" Signature of Maria Aiza B. Lumague By Resolution dated March 7, 2022, Exhibits "A-1," "A-1-a," "A-2," "A-3," "A-4," and "A-4-a" were admitted as evidence for the defense. 19 On April 13, 2022, accused filed his Memorandum, 20 followed by the prosecution's Memorandum 21 filed on April 18, 2022. In the Resolution dated April 27, 2022, these consolidated cases were submitted for decision. 22 ISSUE Whether accused is guilty of the crimes charged in the Amended Informations provided in CTA Crim. Case Nos. O-707 and O-708. 23 ARGUMENTS The prosecution argues that under Section 255 of the NIRC, as amended, the crime of willful failure to pay tax consists of two (2) elements: first , a person is required by law or by rules and regulations to pay taxes; and second , such person willfully failed to pay the same. According to the prosecution, these elements are present in these cases. For the first element, the prosecution alleges that since accused has realized sales for TY 2009, he is required under Sections 24 (A) and 106 (A) of the NIRC, as amended, to pay IT and VAT respectively. Anent the second element, the prosecution avers that the FAN/FLD was personally served to and received by accused. There being no valid administrative protest filed by the latter, the FAN/FLD attained finality. The failure of accused to pay the deficiency IT and VAT for TY 2009 embodied in the FAN/FLD, despite having received the same shows accused willfully failed to pay such taxes due against him. With the presence of the two (2) elements, the prosecution concludes that conviction of accused of two (2) counts of violation of willful failure to pay taxes under Section 255 of the NIRC, as amended, is warranted. On the other hand, accused counters that he should not be held criminally liable for willful failure to pay IT and VAT for TY 2009 because: first , he is not the owner of NML Merchandise; second , the prosecution failed to establish that the PAN was validly served to him; third , the Letter Notice, LOA and NIC with Computation Sheet were served to and received by an unauthorized person, i.e. , Maria Aiza B. Lumague; and fourth , the FAN/FLD allegedly served to him failed to contain the factual and legal bases of the assessment. On these accounts, accused believes that acquittal of the tax offenses slapped against him is in order. OUR RULING Section 255 of the NIRC, as amended, reads: SEC. 255. Failure to File Return, Supply Correct and Accurate Information, Pay Tax Withhold and Remit Tax and Refund Excess Taxes Withheld on Compensation . Any person required under this Code or by rules and regulations promulgated thereunder to pay any tax make a return, keep any record, or supply correct the accurate information, who willfully fails to pay such tax , make such return, keep such record, or supply correct and accurate information, or withhold or remit taxes withheld, or refund excess taxes withheld on compensation, at the time or times required by law or rules and regulations shall, in addition to other penalties provided by law, upon conviction thereof, be punished by a fine of not less than Ten thousand pesos (P10,000) and suffer imprisonment of not less than one (1) year but not more than ten (10) years. xxx xxx xxx (Boldfacing supplied) Relevantly, our Constitution and our laws dearly value individual life and liberty and require no less than moral certainty or proof beyond reasonable doubt to offset the presumption of innocence. Courts are tasked to determine whether the prosecution has submitted sufficient legally admissible evidence showing beyond reasonable doubt that a crime has been committed, and that accused committed it. 24 Thus, to sustain a conviction for willful failure to pay taxes punishable under Section 255 of the NIRC, as amended, the prosecution must prove beyond reasonable doubt the existence of the following elements: first , a person is required by the NIRC, as amended to pay taxes due; and second , such person willfully failed to pay said taxes. The prosecution charged accused for two (2) counts of willful failure to pay taxes. Allegedly, accused willfully failed to pay the deficiency IT 25 and VAT 26 due against him for TY 2009 embodied in the FAN/FLD, despite repeated attempts to collect such taxes by tax authorities. However, accused is not required by law to pay the IT and VAT for TY 2009 imposed by the BIR against him. To begin with, the data obtained by the BIR from the Bureau of Customs (BOC) Third Party Information (TPI) System reveals a VAT due to accused in the sum of P3,195,313.46. By dividing the latter amount with the 12% VAT rate, the BIR found that accused has undeclared importation amounting to P26,627,612.17, which it treated as additional revenue. As a result, the BIR's FAN/FLD held accused liable for deficiency basic IT and basic VAT for TY 2009 amounting to P8,485,835.89 27 and P3,195,313.46, 28 respectively. 29 Notably, the IT and VAT due imposed by the BIR against accused for TY 2009 stemmed 30 from the TPI acquired by the BIR from the BOC anchored on Revenue Memorandum Order (RMO) No. 13-2012. 31 Yet, by no stretch of imagination can the BIR utilize the BOC TPI as valid factual foundation of accused's IT and VAT due for TY 2009. To expound: During the Hearing held on March 11, 2020, RO Dytioco testified that the taxes due to accused were solely based on the TPI acquired by the BIR from the BOC. 32 However, the BOC TPI obtained by the BIR, from which accused's IT and VAT liability was solely based, was not presented by the prosecution as evidence, thus: JUSTICE MANAHAN Do you have a copy with you of the BOR third party information that you got to check what were the data in data in that TPI (third party information) and whether the name of the Accused appears there? Why is that not part of the attachment to your Judicial Affidavit that is a very important document? ATTY. CELIS Your Honors, it was not included in the ( interrupted ) JUSTICE MANAHAN Not even in your Pre-Trial Brief as part of your documentary exhibits? ATTY. CELIS Apparently, your Honors, it was not part, your Honors. JUSTICE MANAHAN That is the basis of the assessment and it's not found and it's not included it's not even attached to the direct testimony of the witness? ATTY. CELIS It's not part, your Honors. JUSTICE MANAHAN And you do not have a copy of the TPI in your records, in your files? So there's no copy of that vital document in the records of the ( interrupted ) MS. DYTIOCO Your Honors, this is the copy of the Letter Notice. JUSTICE MANAHAN How can the other party be able to impugn when it is not being offered as an exhibit or documentary evidence in this case? You based the computation the assessed income tax from an alleged 26 Million which you derived or imputed based on BOC record of importations. And where is that third party information which will state that it's NML Enterprises and with that amount, where is it? ATTY. CELIS Your Honors, I have to check with the BIR docket, your Honors, why it was not included in the markings, your Honors. JUSTICE DEL ROSARIO Anyway, you did not include that in your Pre-Trial Brief already, correct? ATTY. CELIS Yes, your Honors. xxx xxx xxx 33 Granting, the BOC TPI was presented by the prosecution as evidence, RMO No. 13-2012 mandates that the RO must serve a confirmation request to the TPI source and wait for five (5) days (from service thereof) or ten (10) days (from mailing) before such TPI may be considered by said RO as true and correct. So too must the corresponding registry card be presented if the confirmation request was served through registered mail. 34 In reverse, if no confirmation request was served to the TPI source (and supported by registry card if served through registered mail), then the TPI is unverified and may not be considered by the BIR as true and correct. No such confirmation request was presented by the prosecution as evidence, rendering the BOC TPI unverified. Commissioner of Internal Revenue v. MCC Transport Singapore PTE. LTD . 35 declares the adverse consequence of an unverified TPI in this wise: . . . Even assuming that [RMO No. 13-2012] is applicable, the same likewise provides that the Confirmation Requests sent out to third parties by registered mail must be supported by registry return cards, which were not submitted as evidence in this case. Consequently, the CTA EB was correct in not relying on the third-party information since unverified data cannot be considered as proper factual bases for the assessment against respondent. . . . Therefore, the BIR's findings of IT and VAT liability against accused for TY 2009 are wanting in factual mooring because: first , the BOC TPI used by the BIR to justify such findings was not presented as evidence; and second , the TPI sourced from the BOC is unverified. For these reasons, no IT and VAT liability for TY 2009 is due against accused. Assuming arguendo that the BIR may validly use such BOC TPI, its finding of undeclared importation alone, and nothing more, is not tantamount to accused's undeclared gain and sales subject to IT and VAT, respectively. For instance: Section 24 (A) (1) of the NIRC, as amended, imposes income taxes on individual taxpayers on their taxable income 36 except those specific items of income subject to final income taxes. 37 Among the requisites for income to be taxable is that there must be gain or income realized or received by the taxpayer. 38 "Income may be defined as an amount of money coming to a person or corporation within a specified time, whether as payment for services, interest or profit from investment . Unless otherwise specified, it means cash or its equivalent. Income can also be thought of as a flow of the fruits of one's labor." 39 Indeed, income tax is assessed on income received from any property, activity or service that produces the income. 40 Without proof of receipt of taxable income, the obligation to pay taxes does not arise. 41 Meanwhile, Section 106 (A) of the NIRC, 42 as amended, imposes 12% VAT on every sale of goods and properties to be paid by seller or transferor, inter alia . Thus, before a transaction is imposed VAT, a sale, barter or exchange of goods or properties, or sale of a service is required. 43 Again, the data obtained by the BIR from the BOC TPI System reveals that there was a VAT due to accused in the sum of P3,195,313.46. The BIR then converted such amount to undeclared importation amounting to P26,627,612.17, treated it as additional revenue, and consequently subjected the same to IT and VAT. However, the BIR simply assumed such importation as accused's additional income and sales. To be precise, the evidence on record fell short in demonstrating that the amounts expended on such importation originated from accused's income, and sale of goods or properties. Besides, in importation, money is disbursed , rather than received; and goods or properties are purchased , rather than sold by the taxpayer. These concepts are anathema to the nature of IT as a tax imposed on income received by the taxpayer; and VAT, as a tax imposed on the sale of goods or properties, among others. Hence, accused may not be burdened of IT and VAT merely based on the undeclared importation amounting to P26,627,612.17. Even if the amount of P26,627,612.17 may be considered as taxable income and sales subject to IT and VAT, these findings were encapsulated in a void FAN/FLD. Being void, the assessment never attained finality and does not bear valid fruit. 44 Consider: First , the LOA and NIC with Computation Sheet was served to and received by an unauthorized person, i.e. , Maria Aiza B. Lumague. Maria Aiza B. Lumague received the LOA and NIC. Specifically, her name and signature appeared on the LOA 45 and NIC 46 with Computation Sheet served 47 by RO Dytioco. While there was no express authority from accused that Maria Aiza B. Lumague is authorized to receive BIR notices, RO Dytioco deduced that the latter was the authorized representative of accused in this wise: CROSS-EXAMINATION BY ATTY. JEFFREY L. ONTANGCO ATTY. ONTANGCO Q Ms. Witness, in Question No. 13, you answered that you served the Letter of Authority and was received by his daughter Maria Aiza Lumague. Was the Accused not available at that time? MS. DYTIOCO A Upon service, the Accused is not around. So, I asked for an authorized representative which is his daughter, Maria Aiza Lumague . ATTY. ONTANGCO Q And when you went to, may I know the address Ms. Witness? MS. DYTIOCO A No. 34 Ml Maningning Extension V. Luna, Quezon City. xxx xxx xxx 48 Article 1869 of the Civil Code 49 states that agency may be implied from the acts of the principal, from his silence or lack of action, or his failure to repudiate the agency, knowing that another person is acting on his behalf without authority. Pertinently, the law makes no presumption of agency and proving its existence, nature and extent is incumbent upon the person alleging it. 50 The prosecution failed in this regard. In particular, accused left their home at No. 34 Maningning Extension V. Luna, Quezon City in 2010. 51 Moreover, from 2010 until 2017, there was no communication between him and Maria Aiza B. Lumague. 52 Hence, accused had no knowledge of the service 53 of the LOA 54 and NIC 55 on July 2, 2012 and July 13, 2012. Without accused's knowledge of the representation of the supposed agent at the time such service was made, he may not be faulted from his silence, lack of action, or failure to repudiate the same. As there was no authority to represent emanating from accused, the service of the LOA and NIC made by RO Dytioco to Maria Aiza B. Lumague is not service to accused. Hence, accused's non-receipt of the thereof is offensive to his right to due process on examination 56 and assessment. 57 Second , the prosecution failed to prove that the PAN, and FAN/FLD were duly served and received by accused or his duly authorized representative. Section 228 of the NIRC, as amended, 58 as implemented by Section 3 59 of Revenue Regulations (RR) No. 12-99, 60 as amended by RR No. 18-2013 govern the due process requirement on assessment. In particular, the taxpayer must be afforded the opportunity to contest: first , the PAN, within fifteen (15) days from receipt thereof by way of a reply or response thereto; 61 and second , the FAN/FLD, within thirty (30) days also from receipt thereof through a valid administrative protest. 62 Conversely, the taxpayer's non-receipt of the PAN and FAN/FLD would be transgressive of the right to due process on assessment. RO Dytioco claimed that she caused the issuance of the PAN to accused. 63 However, she made no mention of the circumstances surrounding the service of the PAN and the person who received the same. Even the PAN 64 shows no indication that it was received by accused or his authorized representative. Thus, the prosecution failed to establish accused's receipt of the PAN. RO Dytioco also mentioned that the FAN/FLD was personally served to the registered address of accused on January 25, 2013. 65 This was followed by her Memorandum Report dated January 28, 2013, whereby she stated that the FAN/FLD was served to accused on January 25, 2013. 66 Significantly, the FAN/FLD 67 failed to contain details or notations from accused, indicating his receipt thereof. On top of that, as early as 2010, accused has long left the place 68 where the FAN/FLD was served on January 25, 2013. The only information that may be gathered therefrom is the name and signature of a certain Luz CRA and the date January 25, 2013 sans the latter's designation found in the lower right portion of the FAN for IT covering TY 2009. 69 In the absence of formidable proof that this certain Luz CRA is the authorized representative of accused as obtaining in these cases, it is safe to conclude that the FAN/FLD was not received by accused. In sum, the prosecution failed to establish the valid service and receipt of the PAN and FAN/FLD to accused or his duly authorized representative, veering towards a single conclusion no PAN and FAN/FLD was validly issued to accused or his duly authorized representative. 70 Sans any opportunity for accused to contest the PAN, as well as the FAN/FLD as guaranteed by Section 228 of the NIRC, as amended, as implemented by Section 3 of RR No. 12-99, as amended by RR No. 18-2013, his right to due process on assessment was violated by the BIR, rendering the assessment in these cases a patent nullity. Third , the assessment issued by the BIR to accused is not the assessment contemplated by law. Section 6 (A) of the NIRC, as amended, provides that tax or deficiency tax so assessed shall be paid upon notice and demand from the Commissioner of Internal Revenue (CIR) or his duly authorized representative. 71 Jurisprudence describes an assessment as a written notice and demand made by the BIR on the taxpayer for the settlement of a due tax liability that is there definitely set and fixed. 72 In Commissioner of Internal Revenue v. Fitness by Design, Inc. (Fitness) , 73 the tax assessment therein was declared void for failure to provide a fixed and determinate amount of taxes due since the tax due is subject to modification depending on the date of payment. Similar to Fitness , the FLD dated January 25, 2013, 74 contains a notation "Please note that the interest and the total amount due will have to be adjusted if paid beyond February 25, 2013." Such FLD lacks a definite and determinate amount of taxes due since the amount of taxes therein is predicated upon accused's date of payment. Thus, the assessment issued by the BIR in these cases are void. In fine, the first element is wanting since accused is not required by law and by rules and regulations to pay the deficiency IT and VAT for TY 2009 embodied in a naked 75 and void assessment. The absence thereof negates the presence of the second element as accused is justified in not paying such taxes under a naked and void assessment. Ergo , acquittal of accused on the charges hurled against him in these cases is in order. As regards accused's civil liability arising from the crimes charged in these cases, Section 205 of the NIRC, as amended, states: SEC. 205. Remedies for the Collection of Delinquent Taxes . The civil remedies for the collection of internal revenue taxes, fees or charges, and any increment thereto resulting from delinquency shall be: xxx xxx xxx (b) By civil or criminal action . The judgment in the criminal case shall not only impose the penalty but shall also order payment of the taxes subject of the criminal case as finally decided by the Commissioner . xxx xxx xxx 76 For the Court to order the payment of taxes subject of these cases, the following conditions must be present: first , the tax subject of the criminal case is delinquent; and second , there must be valid final determination thereof by the CIR. None of these conditions were met. To explain: A tax is considered delinquent where an assessment for deficiency tax has become final, executory, and demandable, and that the taxpayer has not paid the same within the period given in the notice of assessment. 77 Contrariwise, where an assessment is void and did not attain finality, the taxes assessed therein may not be considered delinquency taxes. In addition, in People of the Philippines v. Court of Tax Appeals-Third Division and William Villarica , 78 (Villarica) the Supreme Court held that adherence with due process on assessment is crucial in the pursuit of the civil aspect of the criminal case for willful attempt in any manner to evade or defeat any tax imposed in the NIRC, as amended, punishable under Section 254 thereof. Macario Lim Gaw, Jr. v. Commissioner of Internal Revenue 79 further explains that "[u]nder Sections 254 and 255 of the NIRC, the government can file a criminal case for tax evasion against any taxpayer who willfully attempts in any manner to evade or defeat any tax imposed in the tax code or the payment thereof. . . ." Evidently, tax evasion also includes willful failure to pay taxes due punishable under Section 255 of the NIRC, as amended. Just as the validity of an assessment is crucial in pursuing the civil aspect of the crime of willful attempt in any manner to evade or defeat any tax imposed in the NIRC, as amended, punishable under Section 254 thereof, as ruled in Villarica , so too should the same standard be applied in willful failure to pay tax due punishable under Section 255 of the same Code such as the instant cases. The reason being the civil liability arising from both crimes is essentially the same recovery of taxes due from the taxpayer. Adverting to our earlier discussion, the FAN/FLD issued by the BIR to accused pertinent to these cases are void and never attained finality. Therefore: first , the IT and VAT for TY 2009 based thereon did not become delinquent taxes within the purview of the law; and second , the CIR failed to issue a valid final determination of accused's tax liability. For these reasons, the Court may not order the civil liability for payment of taxes arising from the crimes charged herein. WHEREFORE , accused Noel M. Lumague is ACQUITTED of the crimes charged under the two (2) Amended Information both dated May 16, 2019 in CTA Crim. Case Nos. O-707 and O-708 on the ground of reasonable doubt. No pronouncement as to civil liability. SO ORDERED. (SGD.) MARIAN IVY F. REYES-FAJARDO Associate Justice Catherine T. Manahan, J. , concurs. Roman G. del Rosario, P.J. , with concurring opinion. Separate Opinions DEL ROSARIO , P.J., concurring opinion : I concur with the ponencia in acquitting accused Noel M. Lumague of the crimes charged under the two (2) Amended Informations both dated May 16, 2019 in CTA Crim. Case Nos. O-707 and O-708 on the ground of reasonable doubt with no pronouncement as to civil liability. In addition, after careful perusal of the records of the case, I wish to point out that the subject Amended Informations were filed beyond the five (5)-year period provided under Section 281 of the National Internal Revenue Code (NIRC) of 1997, as amended, viz. : "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 . The term of prescription shall not run when the offender is absent from the Philippines." (Emphases supplied) The prescriptive period may only be tolled for reasons explicitly provided by law. 1 Luz M. Zaldivia vs. Hon. Andres B. Reyes, Jr. 2 clarifies that a "case shall be deemed commenced only when it is filed in court"; and, the running of the prescriptive period shall be halted on the date the case is actually filed in court and not on any date before that. The phrase the period of "prescription shall be interrupted when proceedings are instituted against the guilty persons" refers to judicial proceedings as distinguished from administrative proceedings. In Emilio E. Lim, Sr. and Antonia Sun Lim vs. Court of Appeals and People of the Philippines 3 ( Lim case), the Supreme Court elucidated the point when prescription for criminal violation of the provisions of the NIRC, involving taxpayer's refusal to pay the deficiency income taxes due , commences, viz. : "Relative to Criminal Case Nos. 1788 and 1789 which involved petitioners' refusal to pay the deficiency income taxes due , again both parties are in accord that by their nature, the violations as charged could only be committed after service of notice and demand for payment of the deficiency taxes upon the taxpayers . Petitioners maintain that the five-year period of limitation under Section 354 should be reckoned from April 7, 1965, the date of the original assessment while the Government insists that it should be counted from July 3, 1968 when the final notice and demand was served on petitioners' daughter-in-law. We hold for the Government . Section 51 (b) of the Tax Code provides: '(b) Assessment and payment of deficiency tax. After the return is filed, the Commissioner of internal Revenue shall examine it and assess the correct amount of the tax. The tax or deficiency in tax so discovered shall be paid upon notice and demand from the Commissioner of Internal Revenue .' 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 criminal informations, having been filed on June 23, 1970, are well-within the five-year prescriptive period and are not time-barred." (Emphases supplied) Clearly, when the offense charged involves a taxpayer's refusal to pay the taxes due, the date of commission of which is known, the five (5)-year prescriptive period commences to run from the date the assessment notices became final and executory and continues to run until the filing of the Information in Court. Jadewell Parking Systems Corporation vs. Hon. Judge Nelson F. Lidua, Sr., et al. , 4 is categorical anent the necessity of filing the Information in court to toll the running of the period of prescription and the consequence of failing to seasonably file the Information in court, viz. : " The failure of the prosecutor to seasonably file the Information is unfortunate as it resulted in the dismissal of the case against the private respondents. It stands that the doctrine of Zaldivia is applicable to ordinances and their prescription period. It also upholds the necessity of filing the Information in court in order to toll the period. Zaldivia also has this to say concerning the effects of its ruling: The Court realizes that under the above interpretation, a crime may prescribe even if the complaint is filed seasonably with the prosecutor's office if, intentionally or not, he delays the institution of the necessary judicial proceedings until it is too late. However, that possibility should not justify a misreading of the applicable rules beyond their obvious intent as reasonably deduced from their plain language. The remedy is not a distortion of the meaning of the rules but a rewording thereof to prevent the problem here sought to be corrected." (Emphases supplied) In the present case, a perusal of the records shows that the Assessment Notices 5 and Formal Letter of Demand with Details of Discrepancy 6 were issued on January 25, 2013, and the same were served to accused on the same date. 7 Accused therefore had thirty (30) days from January 25, 2013 or until February 24, 2013 within which to file his protest. As alleged by the prosecution, the accused failed to file his protest, thus, the assessments against him became final and executory on February 25, 2013. Counting five (5) years from February 25, 2013, the five (5)-year prescriptive period to indict accused for failure to pay tax lapsed on February 25, 2018. Thus, the right of the government to institute the case against the accused had already prescribed when the Informations were filed before this Court on March 18, 2019. 8 Certainly, the failure of the prosecution to timely file the Amended Informations in Court, within the five (5)-year prescriptive period as provided under Section 281 of the NIRC of 1997, as amended, is fatal to its cause. All told, I CONCUR with the ponencia . Footnotes 1. Docket (CTA Crim. Case No. O-707), p. 51. Underscoring in the original. 2. Docket (CTA Crim. Case No. O-708), p. 62. Underscoring in the original. 3. Docket (CTA Crim. Case No. O-707), pp. 64-65; and docket (CTA Crim. Case No. O-708), pp. 64-65. 4. Docket (CTA Crim. Case No. O-707), pp. 67-69. 5. Docket (CTA Crim. Case No. O-708), pp. 67-69. 6. Docket (CTA Crim. Case No. O-707), pp. 70-71; and docket (CTA Crim. Case No. O-708), pp. 70-71. 7. Certificate of Detention dated August 6, 2019. Docket (CTA Crim. Case No. O-707), p. 81. 8. Docket (CTA Crim. Case No. O-707) pp. 75-76. 9. Minutes of Hearing held on February 5, 2020, id. at pp. 212-214; and Certificate of Arraignment/with Waiver of Reading of the Information dated February 5, 2020, id. at p. 215. 10. Id. at pp. 231-238. 11. Id. at 273-280. 12. Judicial Affidavit of Gemina B. Salvador dated February 11, 2021, exhibits "P-16" and "P-16-1," id. at pp. 311-317. Identified during the Hearing held on May 26, 2021, see minutes thereof, id. at pp. 334-337. However, said exhibits were denied admission as evidence for the prosecution for non-compliance with Section 3 (c) of the Judicial Affidavit Rule, see Resolution dated September 22, 2021, infra note 15. 13. Judicial Affidavit of Charlaraine G. Dytioco dated March 5, 2020, exhibits "P-15" and "P-15-1." Docket (CTA Crim. Case No. O-707), pp. 245-249. This was identified during the Hearing held on March 11, 2020. See Minutes thereof, id. at pp. 265-268. 14. The prosecution's Formal Offer of Evidence. Id. at pp. 348-354. 15. Id. at pp. 372-373. 16. Judicial Affidavit ( of Accused Noel M. Lumague ) dated March 12, 2020, exhibits "A-1" and "A-1-a." Id. at pp. 281-285. This was identified during the Hearing held on October 27, 2021, see Minutes thereof, id. at pp. 377-379. 17. Judicial Affidavit ( of Witness Maria Aiza B. Lumague ) dated March 12, 2020, exhibits "A-4" and "A-1-A." Id. at pp. 288-291. This was identified during the Hearing held on October 27, 2021, see Minutes thereof, id. at pp. 377-379. 18. Formal Offer of Evidence ( For accused ). Id. at pp. 383-388. 19. Id. at pp. 407-408. 20. Id. at pp. 409-424. 21. Id. at pp. 425-434. 22. Id. at p. 435. 23. Supra note 10 and 11. 24. People of the Philippines v. Agustin , G.R. No. 247718, March 3, 2021. 25. Supra note 2. 26. Supra note 1. 27. The formula on the IT due for individuals if taxable income exceeds P500,000.00 under the then Section 24 (A) (2) (a) of the NIRC, as amended is: P125,000 + 32% of the excess over P500,000.00. Thus, the amount of accused's IT liability for TY 2009 per FAN/FLD is: P125,000.00 + (P26,627,612.17 P500,000.00 x 32%) = P8,485,835.89. 28. P26,627,612.17 x 12% VAT = P3,195,313.46. Accused was assessed VAT on goods or properties pursuant to Section 106 of the NIRC, as amended. Infra note 29. 29. Exhibits "P-6," "P-6-1," and "P-6-2." Docket (CTA Crim. Case No. O-845), pp. 146-150. 30. Per Title of the Computation Sheet appended to the Notice of Informal Conference, exhibit "P-3." Id. at p. 141. Letter recommending the issuance of PAN dated July 17, 2012, exhibit "P-4," id. at p. 142. 31. SUBJECT: Revised Guidelines and Procedures in Handling Letter Notices Generated Through Third-Party Information Data Matching with Tax Returns. Also, Roman numeral II of RMO No. 13-2012 states: "This Order shall cover the income, value-added and/or percentage tax liabilities of individual and corporate taxpayers who are issued LNs based on RELIEF, BOC and TRS TPI data matching programs." 32. Transcript of Stenographic Notes (TSN) of Hearing held on March 11, 2020, p. 16. 33. Id. at pp. 21-22. No tax docket per Records Verification dated May 10, 2022. 34. Item No. 9 under Heading "D. Investigating Offices" of RMO No. 13-2012 provides in part: "Send a Confirmation Request from TPI sources attesting to the veracity of the data included in the LN package" (Annexes 'I' and 'I-1'). If no response from the TPI source after the lapse of five (5) days from service of Confirmation Request, the RO may consider the data in the LN package to be true and correct. However, if there is/are TPI source/s located outside of the jurisdiction of the investigating office, the RO shall send the Confirmation Request to the taxpayer through registered mail with Registry Return Card and wait for the lapse of ten (10) days after mailing thereof before proceeding to the next step. . . ." (Boldfacing supplied) 35. G.R. No. 255382, June 28, 2021. Boldfacing supplied. 36. The income of a Non-Resident Alien Not Engaged in Trade or Business is taxed under Section 25 (B) of the NIRC, as amended. 37. SEC. 24. Income Tax Rates . (A) Rates of Income Tax on Individual Citizen and Individual Resident Alien of the Philippines. (1) An income tax is hereby imposed: (a) On the taxable income defined in Section 31 of this Code, other than income subject to tax under Subsections (B), (C) and (D) of this Section, derived for each taxable year from all sources within and without the Philippines be every individual citizen of the Philippines residing therein; (b) On the taxable income defined in Section 31 of this Code, other than income subject to tax under Subsections (B), (C) and (D) of this Section, derived for each taxable year from all sources within the Philippines by an individual citizen of the Philippines who is residing outside of the Philippines including overseas contract workers referred to in Subsection (C) of Section 23 hereof; . . . xxx xxx xxx (Boldfacing supplied) 38. Association of Non-Profit Clubs, Inc. v. Bureau of Internal Revenue (BIR) , G.R. No. 228539, June 26, 2019. ANPC for brevity. Boldfacing in the original. 39. ANPC, supra note 38, citing Conwi v. Court of Tax Appeals , G.R. No. 48532, August 31, 1992. 40. Commissioner of Internal Revenue v. The Court of Appeals, et al. , G.R. No. 108576, January 20, 1999. 41. See Commissioner of Internal Revenue v. Spouses Magaan , G.R. No. 232663, May 3, 2021. 42. SEC. 106. Value-Added Tax on Sale of Goods or Properties . (A) Rate and Base of Tax . There shall be levied, assessed and collected on every sale, barter or exchange of goods or properties, value-added tax equivalent to twelve percent (12%) of the gross selling price or gross value in money of the goods or properties sold, bartered or exchanged, such tax to be paid by the seller or transferor. xxx xxx xxx 43. ANPC, supra note 38, citing Commissioner of Internal Revenue v. Sony Philippines, Inc. , 649 Phil. 519, 533 (2010). 44. Commissioner of Internal Revenue v. Unioil Corporation , G.R. No. 204405, August 4, 2021; Commissioner of Internal Revenue v. Pilipinas Shell Petroleum Corporation , G.R. No. 197945, July 9, 2018; and Commissioner of Internal Revenue v. Reyes , G.R. No. 159694, January 27, 2006. 45. Exhibit "P-2." Docket (CTA Crim. Case No. O-845), p. 139. 46. Exhibit "P-3." Id. at pp. 140-141. 47. Answer to Question Nos. 13 and 14, JA of Charlaraine Dytioco. Exhibits "P-15" and "P-15-a." Id. at p. 246. 48. TSN of Hearing held on March 11, 2020, pp. 12-13. Boldfacing supplied. 49. Republic Act No. 386. 50. Yun Kwang Byun v. Philippine Amusement and Gaming Corporation , G.R. No. 163553, December 11, 2009. 51. Answer to Question Nos. 13 to 15, Judicial Affidavit of Noel M. Lumague, exhibits "A-1" and "A-1-A." Docket (CTA Crim. Case No. O-707), p. 283. 52. Answer to Question Nos. 17 and 18, Judicial Affidavit of Noel M. Lumague, exhibits "A-1" and "A-1-A." Id. at p. 284. Answer to Question Nos. 12 and 13, Judicial Affidavit of Maria Aiza B. Lumague, exhibits "A-4" and "A-4-A." Id. at p. 290. 53. Supra note 47. 54. Supra note 45. 55. Supra note 46. 56. In AFP General Insurance Corporation v. Commissioner of Internal Revenue , G.R. No. 222133, November 4, 2020, the Supreme Court ruled that "In the exercise of power to assess and collect taxes, the BIR has the commensurate duty to uphold the taxpayer's right to due process. Thus, its authority must be understood to take effect only after the CIR or his duly authorized representative issues an LOA and the designated revenue officer serves it upon the intended taxpayer. . . ." (Italics in the original; boldfacing supplied). 57. Section 3.1.1. of RR No. 12-99 provides: SECTION 3. Due Process Requirement in the Issuance of a Deficiency Tax Assessment. 3.1 Mode of procedures in the issuance of a deficiency tax assessment: 3.1.1 Notice for informal conference. The Revenue Officer who audited the taxpayer's records shall, among others, state in his report whether or not the taxpayer agrees with his findings that the taxpayer is liable for deficiency tax or taxes. If the taxpayer is not amenable, based on the said Officer's submitted report of investigation, the taxpayer shall be informed, in writing , by the Revenue District Office or by the Special Investigation Division, as the case may be (in the case Revenue Regional Offices) or by the Chief of Division concerned (in the case of the BIR National Office) of the discrepancy or discrepancies in the taxpayer's payment of his internal revenue taxes, for the purpose of "Informal Conference," in order to afford the taxpayer with an opportunity to present his side of the case . If the taxpayer fails to respond within fifteen (15) days from date of receipt of the notice for informal conference, he shall be considered in default, in which case, the Revenue District Officer or the Chief of the Special Investigation Division of the Revenue Regional Office, or the Chief of Division in the National Office, as the case may be, shall endorse the case with the least possible delay to the Assessment Division of the Revenue Regional Office or to the Commissioner or his duly authorized representative, as the case may be, for appropriate review and issuance of a deficiency tax assessment, if warranted. (Boldfacing supplied) 58. 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: . . . xxx xxx xxx The taxpayers shall be informed in writing of the law and the facts on which the assessment is made; otherwise, the assessment shall be void. Within a period to be prescribed by implementing rules and regulations, the taxpayer shall be required to respond to said notice. If the taxpayer fails to respond, the Commissioner or his duly authorized representative shall issue an assessment based on his findings. . . . xxx xxx xxx (Boldfacing supplied) 59. SECTION 3. Due Process Requirement in the Issuance of a Deficiency Tax Assessment . 3.1 Mode of procedures in the issuance of a deficiency tax assessment: xxx xxx xxx 3.1.2 Preliminary Assessment Notice (PAN). If after review and evaluation by the Assessment Division or by the Commissioner or his duly authorized representative, as the case may be, it is determined that there exists sufficient basis to assess the taxpayer for any deficiency tax or taxes, the said Office shall issue to the taxpayer, at least by registered mail, a Preliminary Assessment Notice (PAN) for the proposed assessment, showing in detail, the facts and the law, rules and regulations, or jurisprudence on which the proposed assessment is based (see illustration in ANNEX A hereof). If the taxpayer fails to respond within fifteen (15) days from date of receipt of the PAN, he shall be considered in default, in which case, a formal letter of demand and assessment notice shall be caused to be issued by the said Office, calling for payment of the taxpayer's deficiency tax liability, inclusive of the applicable penalties. xxx xxx xxx 3.1.4 Formal Letter of Demand and Assessment Notice. The formal letter of demand and assessment notice shall be issued by the Commissioner or his duly authorized representative. The letter of demand calling for payment of the taxpayer's deficiency tax or taxes shall state the facts, the law, rules and regulations, or jurisprudence on which the assessment is based, otherwise, the formal letter of demand and assessment notice shall be void (see illustration in ANNEX B hereof). The same shall be sent to the taxpayer only by registered mail or by personal delivery. If sent by personal delivery, the taxpayer or his duly authorized representative shall acknowledge receipt thereof in the duplicate copy of the letter of demand, showing the following: (a) his name; (b) signature; (c) designation and authority to act for and in behalf of the taxpayer, if acknowledged received by a person other than the taxpayer himself; and (d) date of receipt thereof. 60. SUBJECT: Implementing the Provisions of the National Internal Revenue Code of 1997 Governing the Rules on Assessment of National Internal Revenue Taxes, Civil Penalties and Interest and the Extra-Judicial Settlement of a Taxpayer's Criminal Violation of the Code Through Payment of a Suggested Compromise Penalty. 61. See Commissioner of Internal Revenue v. Yumex Philippines Corporation , G.R. No. 222476, May 5, 2021, whereby the Supreme Court ruled that the service of the PAN, as well as the taxpayer's opportunity to file a reply/response thereto within fifteen (15) days from receipt thereof is mandatory. 62. In Commissioner of Internal Revenue v. T-Shuttle Services, Inc. , G.R. No. 240729, August 24, 2020, the Supreme Court held that "A final assessment is a notice 'to the effect that the amount therein stated is due as tax and a demand for payment thereof.' This demand for payment signals the time 'when penalties and interests begin to accrue against the taxpayer and enabling the latter to determine his remedies[.]' Thus, it must be 'sent to and received by the taxpayer, and must demand payment of the taxes described therein within a specific period.'" 63. Answer to Question Nos. 21 and 22, Judicial Affidavit of Charlaraine Dytioco. Exhibits "P-15" and "P-15-a." Docket (CTA Crim. Case No. O-707) p. 247. 64. Exhibit "P-5." Id. at pp. 143-145. 65. Answer to Question No. 25, Judicial Affidavit of Charlaraine Dytioco. Exhibits "P-15" and "P-15-a." Id. at p. 248. 66. Exhibit "P-6-3." Id. at p. 151. 67. Supra note 29. 68. Per FAN/FLD, the address of accused is at No. 34 M-1, Maningning Extension V. Luna, Quezon City. He left said address in 2010. See supra note 51. 69. Exhibit "P-6." Id. at p. 146. 70. See Commissioner of Internal Revenue v. Bank of the Philippine Islands , G.R. No. 224327, June 11, 2018. 71. SEC. 6. Power of the Commissioner to Make and Prescribe Additional Requirements for Tax Administration and Enforcement . (A) Examination of Return and Determination of Tax Due . After a return has been filed as required under the provisions of this Code, the Commissioner or his duly authorized representative may authorize the examination of any taxpayer and the assessment of the correct amount of tax, notwithstanding any law requiring the prior authorization of any government agency or instrumentality: Provided, however, That failure to file a return shall not prevent the Commissioner from authorizing the examination of any taxpayer. The tax or any deficiency tax so assessed shall be paid upon notice and demand from the Commissioner or from his duly authorized representative . xxx xxx xxx (Boldfacing supplied) 72. Commissioner of Internal Revenue v. Megabucks Merchandising Corp. , CTA EB No. 1974, February 12, 2020, citing Adamson v. Court of Appeals , G.R. No. 120935, May 21, 2009. 73. G.R. No. 215957, November 9, 2016. 74. Exhibit "P-6-2," docket (CTA Crim. Case No. O-707), pp. 148-149. 75. An assessment without any foundation, character, and rational basis. See Commissioner of Internal Revenue v. Spouses Magaan, supra note 41, citing Commissioner of Internal Revenue v. Hantex Trading Co., Inc. , G.R. No. 136975, March 31, 2005. 76. Boldfacing supplied. 77. Atty. Eufrocina M. Sacdalan-Casasola, National Internal Revenue Code (Annotated), Vol. 2, Rex Publishing Company, Inc. (2012), p. 1169. 78. G.R. No. 248802, Resolution dated June 21, 2021. 79. G.R. No. 222837, July 23, 2018. DEL ROSARIO, P.J., concurring opinion: 1. Benjamin ("Kokoy") T. Romualdez vs. Hon. Simeon V. Marcelo, et al. , G.R. Nos. 165510-33, July 28, 2006. 2. G.R. No. 102342, July 3, 1992. 3. G.R. Nos. L-48134-37, October 18, 1990. 4. G.R. No. 169588, October 7, 2013. 5. Exhibits "P-6" and "P-6-1", CTA Crim. Case No. O-707 Docket, pp. 146-147. 6. Exhibit "P-6-2", CTA Crim. Case No. O-707 Docket, pp. 148-150. 7. Exhibit "P-6-3", CTA Crim. Case No. O-707 Docket, p. 151. 8. CTA Crim. Case No. O-707 Docket, p. 8; CTA Crim. Case No. O-708 Docket, p. 8.