People v. Cross Country Oil & Petroleum Corp.

EN BANC [C.T.A. EB CRIM. CASE NO. 050. August 1, 2019.] (C.T.A. Crim. Case No. O-619) PEOPLE OF THE PHILIPPINES , petitioner , vs. CROSS COUNTRY OIL & PETROLEUM CORP., ARTURO M. ZAPATA AND JACOB VALERIANO, JR. , respondents . DECISION RINGPIS-LIBAN , J p : Before the Court En Banc is a Petition for Review filed by petitioner People of the Philippines seeking nullification of the Resolution 1 dated December 5, 2017, the dispositive portion of which reads: IAETDc WHEREFORE , premises considered, the Demurrer to Evidence is hereby GRANTED . Accordingly, the instant CTA Criminal Case No. O-619 is hereby DISMISSED . SO ORDERED. " and the Resolution on the Motion for Reconsideration 2 dated February 26, 2018, of the Second Division of the Court (Court in Division) denying petitioner's "Motion for Reconsideration (Re: Resolution promulgated December 05, 2017)." THE FACTS Filed before the Court in Division is the Information for violation of Section 255, in relation to Sections 253 (d) and 256, of the NIRC of 1997, as amended, allegedly committed as follows: "1st AMENDED INFORMATION The undersigned Prosecution Attorney of the Department of Justice hereby accuses, CROSS COUNTRY OIL AND PETROLEUM CORPORATION and its responsible officers ARTURO M. ZAPATA, as President and JACOB VALERIANO, JR. as Treasurer, respectively with TIN No. 007-120-826, of the crime of "Willful Failure to Pay Taxes on Value Added Tax" for the taxable year 2009 under Section 255, in relation to Sections 253 (d) and 256, of the National Internal Revenue Code (NIRC) of 1997, as amended, committed as follows: "That on August 2013 and thereafter, in Metro Manila, and within the jurisdiction of this Honorable Court, accused CROSS COUNTRY OIL AND PETROLEUM CORPORATION, ARTURO M. ZAPATA AND JACOB VALERIANO, JR. , respectively, conspiring and confederating with one another, did then and there willfully, unlawfully, and feloniously fail to pay the corporation's basic deficiency value added tax for the taxable year 2009 in the amount of Two Hundred Ninety Three Million One Hundred Thirty Thousand Nine Hundred Fifty Four and Ninety Six Hundred Forty One Million Eight Hundred Nineteen Thousand Four Hundred Sixty Two Pesos and Eighty Seven Centavos (sic) (Php293,130,954.96) exclusive of penalties, surcharges and interest, despite final assessment, including prior and post notices and demands to pay, the latest of which was issued by the BIR on August 23, 2013, to the damage and prejudice of the government. CONTRARY TO LAW." When arraigned on April 5, 2017, 3 both accused, assisted by their counsel de parte , Atty. Khristine Jane R. Lui, pleaded not guilty to the crime charged. The pre-trial was conducted on May 11, 2017 and the Pre-Trial Order was issued on June 9, 2017. 4 DcHSEa During the trial of the case, the prosecution 5 presented Ms. Vilma V. Caronan, Ms. Ma. Paz Arcilla, Ms. Maricol O. Domingo, and Mr. Marlon Josue B. Garong, as witnesses to establish its case against the accused. On September 4, 2017, the prosecution filed its Formal Offer of Evidence. 6 On September 29, 2017, the Court in Division issued a Resolution on the Formal Offer of Evidence. 7 During the hearing on October 9, 2017, Atty. Khristine Jane R. Liu, counsel for both accused, moved that accused be allowed to file Demurrer to Evidence. Accordingly, the oral Motion for Leave to File Demurrer to Evidence was granted, and both accused were allowed to file the Demurrer to Evidence. 8 On October 9, 2017, both accused through their counsel, filed the "Demurrer to Evidence (filed with Leave of the Honorable Court)." 9 October 19, 2017, the prosecution filed its "Opposition (to Accused Demurrer to Evidence)." 10 On December 5, 2017, the Court in Division issued the questioned Resolution, granting the "Demurrer to Evidence." On December 20, 2017, the prosecution filed its "Motion for Reconsideration (Re: Resolution promulgated December 5, 2017)." 11 On January 15, 2018, both accused, through their counsel, filed an Opposition (To Plaintiff's Motion for Reconsideration dated 12 December 2017). 12 On February 26, 2018, the Court in Division issued the assailed Resolution denying for lack of merit, the plaintiff's "Motion for Reconsideration (Re: Resolution promulgated December 5, 2017)." On March 16, 2018, petitioner filed before the Court En Banc a "Motion for Extension of Time to File Petition for Review" stating that the petitioner received on March 2, 2018 the Court in Division's Resolution denying petitioner's Motion for Reconsideration; that due to voluminous workload, petitioner prayed that it be given an additional fifteen (15) days from March 17, 2018, or until April 1, 2018 within which to file a Petition for Review. 13 In the Minute Resolution of the Court En Banc 14 dated March 20, 2018, the Court En Banc granted petitioner's motion for extension of time. Hence, petitioner was given until March 12, 2016 to file its Petition for Review. On March 28, 2018, petitioner filed the instant Petition for Review. 15 In the Resolution 16 dated April 12, 2018, respondents were directed by the Court En Banc to file their Comment in this case within ten (10) days from notice. On May 16, 2018, respondents filed their Comment/Opposition (To the Petition for Review dated 26 March 2018), 17 and sought for this Court En Banc to dismiss this Petition for Review for lack of merit. SCaITA Thereafter, both parties were ordered to file their respective Memoranda. 18 Petitioner filed its Memorandum 19 on August 10, 2018, while respondents filed their Memorandum 20 on August 16, 2018. Hence, in the Resolution dated September 5, 2018, this case was deemed submitted for decision. 21 ISSUE Whether or not the Court in Division erred in holding that petitioner failed to establish that the Final Decision on Disputed Assessment (FDDA), was validly served and actually received by respondent corporation or by its duly authorized representative. PETITIONER'S ARGUMENTS Petitioner argues that the Court in Division erred in holding that petitioner failed to establish that the FDDA had been actually served and received by respondent corporation or by its duly authorized representative; that the Resolutions of the Court in Division failed to categorically make a finding as to the civil aspect of the case; that petitioner was able to present pieces of evidence to establish preponderance of evidence of the fact of receipt of the FDDA by the respondents; and that petitioner presented registry receipt No. 904559 to prove that the FDDA dated February 21, 2013 was issued and served to respondent Corporation on February 21, 2013 at its registered address at Rm. 3105 World Trade Exchange Bldg., 215 Juan Luna Street, Binondo, Manila. RESPONDENTS' ARGUMENTS On the other hand, respondents counter-argue that Registry Receipt No. 904559 is insufficient to prove that respondents received the FDDA; that the said registry receipt failed to prove that it actually pertains to the mailing of FDDA to respondent corporation; that there is no indication nor inscription therein that will show that the said registry receipt pertains to the mail matter containing the FDDA; and that petitioner failed to present evidence that there was a final and executory assessment of the VAT. RULING OF THE COURT EN BANC The evidence of the petitioner failed to establish that FDDA was validly served upon respondent corporation The alleged deficiency Value-Added Tax (VAT) arose from an assessment, as stated in the information, hence, it becomes necessary for the petitioner to prove that there was a valid assessment against the respondents. In its attempt to overturn the Court in Division's Resolution denying petitioner's Motion for Reconsideration (Re: Resolution promulgated December 5, 2017), petitioner argues that petitioner presented Registry Receipt No. 904559 to prove that the FDDA dated February 21, 2013 was issued and served to respondent Corporation on February 21, 2013 at its registered address at Rm. 3105 World Trade Exchange Bldg., 215 Juan Luna Street, Binondo, Manila. Hence, petitioner was able to establish preponderance of evidence of the fact of receipt of the FDDA by the respondents. aTHCSE Section 228 of the 1997 NIRC, as amended, in relation to Section 3 of Revenue Regulations No. 12-99, provides the due process requirements for an assessment. Section 228 states: "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: x x x xxx xxx xxx The taxpayer shall be informed in writing of the law and the facts which the assessment is made; otherwise, the assessment shall be void . xxx xxx xxx" In the case of Estate of the Late Juliana Diez Vda. De Gabriel vs. Commissioner of Internal Revenue , 22 the Supreme Court held that it is a requirement of due process that the taxpayer must actually receive the assessment, to wit: "Respondent argues that an assessment is deemed made for the purpose of giving effect to such assessment when the notice is released, mailed or sent to the taxpayer to effectuate the assessment, and there is no legal requirement that the taxpayer receive said notice x x x Although there is no specific requirement that the taxpayer should receive the notice within said period, due process requires at the very least that such notice actually be received." In Commissioner of Internal Revenue v. Pascor Realty and Development Corporation , we had occasion to say: An assessment contains not only a computation of tax liabilities, but also a demand for payment within a prescribed period. It also signals the time when penalties and interests begin to accrue against the taxpayer. To enable the taxpayer to determine his remedies thereon, due process requires that it must be served on and received by the taxpayer. xxx xxx xxx. It appearing that the person liable for the payment of the tax did not receive the assessment, the assessment could not become final and executory. (citations omitted; underscoring ours)" To emphasize the importance of due process in sending the assessment notices, the Supreme Court in the case of Barcelon Roxas Securities, Inc., (now known as UBP Securities, Inc.) vs. Commissioner of Internal Revenue , 23 ruled that: "Jurisprudence is replete with cases holding that if the taxpayer denies ever having received an assessment from the BIR, it is incumbent upon the latter to prove by competent evidence that such notice was indeed received by the addressee. The onus probandi was shifted to respondent to prove by contrary evidence that the Petitioner received the assessment in the due course of mail. The Supreme Court has consistently held that while a mailed letter is deemed received by the addressee in the course of mail, this is merely a disputable presumption subject to controversion and a direct denial thereof shifts the burden to the party favored by the presumption to prove that the mailed letter was indeed received by the addressee (Republic vs. Court of Appeals, 149 SCRA 351) . cAaDHT xxx xxx xxx x x x. What is essential to prove the fact of mailing is the registry receipt issued by the Bureau of Posts or the Registry return card which would have been signed by the Petitioner or its authorized representative. And if said documents cannot be located, Respondent at the very least, should have submitted to the Court a certification issued by the Bureau of Posts and any other pertinent document which is executed with the intervention of the Bureau of Posts . x x x. xxx xxx xxx In Protector's Services, Inc. v. Court of Appeals , this Court ruled that when a mail matter is sent by registered mail, there exists a presumption, set forth under Section 3(v), Rule 131 of the Rules of Court, that it was received in the regular course of mail. The facts to be proved in order to raise this presumption are: (a) that the letter was properly addressed with postage prepaid; and (b) that it was mailed. While a mailed letter is deemed received by the addressee in the ordinary course of mail, this is still merely a disputable presumption subject to controversion, and a direct denial of the receipt thereof shifts the burden upon the party favored by the presumption to prove that the mailed letter was indeed received by the addressee ." (Emphasis supplied) Contrary to the position taken by the petitioner, the Court in Division did not err in holding that there was no competent proof that the FDDA was duly sent to and received by respondent corporation. A perusal of the records of this case shows that the prosecution failed to prove the actual receipt of the assessment notices. As correctly found by the Court in Division: 24 "To prove that the FDDA dated February 21, 2013 was sent, via registered mail, to the registered business address of respondent corporation, it offered in evidence Registry Receipt No. 904559 dated February 21, 2013 and Registry Return Receipt, respectively. While the foregoing evidence were positively identified by Mr. Marlon Josue B. Garong, OIC-Section Chief of the Administrative Division, Revenue Region No. 6 of BIR-Manila, the Court agrees with the observation of the accused that the Registry Return Receipt, marked as Exhibit "P-22", is inconclusive to prove that the FDDA was in fact mailed to respondent Corporation on the ground that the same does not bear the Registry Receipt No. 904559, marked as Exhibit "P-21". xxx xxx xxx The Court, likewise, observed that the plaintiff made no effort to either present the testimony/affidavit of the postman/postmaster or even a certification issued by the latter showing that the notice was duly issued and delivered to respondent Corporation. The plaintiff also failed to authenticate or identify the signature on the registry return card. Thus, the Court cannot ascertain of the name of the person appearing on the said return was the duly authorized representative of the respondent Corporation. The presentation of the said registered letter and the registry receipt, with an unauthenticated signature, therefore, do not meet the required proof beyond reasonable doubt that the respondent Corporation or the accused herein received such notice. In the same vein, the Court cannot ascertain the date of receipt of the subject FDDA since the portion of the date of delivery on the said Registry Return receipt was not filled up. Plaintiff must prove the actual receipt of said FDDA because the fact of service provided for in the law is reckoned from receipt of such notice. HCaDIS We stress that, ordinarily, preponderance of evidence is sufficient to prove notice. But in criminal cases, the quantum of proof required is proof beyond reasonable doubt. But based thereon, the prosecution failed to establish, that the FDAA had been actually served and received by respondent Corporation or by its duly authorized representative. Thus, the accused's right to due process in the issuance of the subject assessment was deemed violated. This leads to the conclusion that no valid assessment was issued. Consequently, there is no basis for the issuance of PCL, Warrant of Distraint and/or Levy and Warrants of Garnishment against the respondent Corporation." Thus, the petitioner was not able to establish that herein respondents were informed in writing of the law and the facts on which the assessments were made. Accordingly, the assessments in this case did not become final and executory. Respondents' civil liability was extinguished by their acquittal The assailed Resolutions of the Court in Division exonerated respondents Arturo M. Zapata and Jacob Valeriano from criminal liability because petitioner was not able to establish willfulness on the part of the respondents in refusing to pay the assessed deficiency taxes. The crime of which the respondents was acquitted involves willful failure to pay deficiency VAT arising from Assessment Notice No. 30-09-VT-3655. The acquittal was due to petitioner's failure to prove the fact of mailing of the FDDA and the absence of evidence to prove that respondents actually received the FDDA. Thus, Assessment Notice No. 30-09-VT-3655 cannot be considered as final, demandable and executory which would give rise to an obligation to pay the assessed deficiency taxes on the part of the respondents. In case of acquittal, the accused may still be adjudged civilly liable. The extinction of the penal action does not carry with it the extinction of the civil action where: (a) the acquittal is based on reasonable doubt as only preponderance of evidence is required; (b) the court declares that the liability of the accused is only civil; and (c) the civil liability of the accused does not arise from or is not based upon the crime of which the accused was acquitted. 25 However, in this case, the Court En Banc finds no reason to hold respondents liable for any civil liability since their civil liability was extinguished by their acquittal. There was a pronouncement in the assailed Resolution 26 that the obligation to pay the deficiency taxes did not arise. Accordingly, the government cannot collect the alleged deficiency taxes due from respondent. In fine, petitioner has not sufficiently established its case. The petitioner's appeal on the civil aspect of the case must therefore, fail. The Court in Division did not commit a reversible error in denying petitioner's "Motion for Reconsideration (Re: Resolution promulgated December 5, 2017)." WHEREFORE , premises considered, the Petition for Review is DENIED for lack of merit. Accordingly, the Resolutions dated December 5, 2017 and February 26, 2018 are AFFIRMED. AHCETa SO ORDERED. (SGD.) MA. BELEN M. RINGPIS-LIBAN Associate Justice Roman G. del Rosario, P.J., Juanito C. Castaeda, Jr., Erlinda P. Uy, Esperanza R. Fabon-Victorino, Cielito N. Mindaro-Grulla, Catherine T. Manahan, Jean Marie A. Bacorro-Villena and Maria Rowena Modesto-San Pedro, JJ. , concur. Footnotes 1. Rollo , CTA EB CRIM. NO. 050, pp. 31-44. 2. Rollo , pp. 45-50. 3. Order, CTA Crim. Case No. O-619, Docket, pp. 160-161. 4. CTA Crim. Case No. O-610, Docket, pp. 186-192. 5. Petitioner in this case. 6. Docket, pp. 341-356, with Annexes. 7. Ibid. , pp. 436-437. 8. Ibid. , p. 440. 9. Ibid. , pp. 441-450. 10. Ibid. , pp. 451-456. 11. Docket, pp. 473-481. 12. Docket, CTA CRIM. Case No. O-619, pp. 484-490. 13. Rollo , pp. 1-3. 14. Ibid. , p. 4. 15. Ibid. , pp. 5-22, with Annexes. 16. Ibid. , pp. 52-53. 17. Ibid. , pp. 68-69. 18. Ibid. , pp. 46-47. 19. Ibid. , pp. 70-85. 20. Ibid. , pp. 86-95. 21. Ibid. , pp. 97-98. 22. G.R. No. 155541, January 27, 2004. 23. G.R. No. 157064, August 7, 2006. Citations omitted. 24. Rollo , CTA EB CRIM. CASE No. 00-050, pp. 40-42. 25. Hun Hyung Park vs. Eung Won Choi , G.R. No. 165496, February 12, 2007. 26. Dated February 26, 2018, page 2.