Implementing Rules and Regulations of R.A. No. 8560 as amended by R.A. No. 9200

SECOND DIVISION [C.T.A. CRIM. CASE NO. O-013. January 5, 2011.] For: Violation of Section 255 of R.A. No. 8424 PEOPLE OF THE PHILIPPINES , plaintiff, vs . JOEL C. MENDEZ , accused. [C.T.A. CRIM. CASE NO. O-015. January 5, 2011.] For: Violation of Section 255 of R.A. No. 8424 PEOPLE OF THE PHILIPPINES , plaintiff, vs . JOEL C. MENDEZ , accused. DECISION CASTAEDA, JR. , J p : STATEMENT OF FACTS Accused Joel C. Mendez is charged before this Court with the crime of violation of Section 255 of Republic Act (R.A.) No. 8424, otherwise known as the "Tax Reform Act of 1997", as amended, under the following Amended Informations, which read as follows: cCTIaS Criminal Case No. O-013 "That on or about the 15th day of April 2003, at Quezon City, and within the jurisdiction of this Honorable Court, the above-named accused, a duly registered taxpayer, and sole proprietor of 'Weigh Less Center', 'Mendez Body and Face Salon and Spa', and 'Mendez Body and Face Skin Clinic', with principal office at No. 31 Roces Avenue, Quezon City, and with several branches in Quezon City, Makati City, San Fernando, Pampanga and Dagupan City, did then and there, willfully, unlawfully and feloniously, fail to file his income tax return (ITR) with the Bureau of Internal Revenue for taxable year 2002, to the damage and prejudice of the Government in the estimated amount of P1,522,152.14, exclusive of penalties, surcharges and interest. CONTRARY TO LAW." Criminal Case No. O-015 "That on or about the 15th of April 2004, at Dagupan City, and within the jurisdiction of this Honorable Court, the above-named accused, a duly registered taxpayer, and sole proprietor of 'Weigh Less Center', 'Mendez Body and Face Salon and Spa', and 'Mendez Body and Face Skin Clinic', with several branches in Quezon City, Makati City, San Fernando, Pampanga and Dagupan City, engaged in the business of cosmetic surgery and dermatology, willfully, unlawfully and feloniously, did then and there, fail to supply correct and accurate information in his income tax return (ITR) for taxable year 2003 filed in the Revenue District of Calasiao, Pangasinan, by making it appear under oath that his income for taxable year 2003 was derived mainly from his branch in Dagupan City, and failing to declare his consolidated income from his other 'Weigh Less Center', 'Mendez Body and Face Salon and Spa', and 'Mendez Body and Face Skin Clinic' branches, to the damage and prejudice of the Government in the estimated amount of P2,107,023.65, exclusive of penalties, surcharges and interest. CONTRARY TO LAW." On January 30, 2006 1 and March 20, 2006, 2 this Court issued Warrants of Arrest against the accused in Criminal Case Nos. O-013 and O-015, respectively. Accused voluntarily surrendered before this Court and posted the required bail bond for his provisional liberty, by way of cash bonds in the amount of P20,000.00 each, in Criminal Case No. O-013 on February 10, 2006 3 and in Criminal Case No. O-015 on March 29, 2006. 4 Upon arraignment in both cases, accused, assisted by his defense counsel de parte , entered a plea of "Not Guilty" to the crimes charged. 5 On September 27, 2006 and October 2, 2006, the Preliminary Conference were held. During pre-trial, CTA Crim. Case No. O-013 and CTA Crim. Case No. O-015 were consolidated as per agreement by the parties. Trial proceeded, wherein the prosecution presented both testimonial and documentary evidence. The prosecution presented twenty (20) witnesses to establish accused's culpability, namely: Atty. Grace B. Cruz, Ms. Clavelina S. Nacar, Messrs. Romeo E. Naranjo, Von M. Lentejas, Alex C. Perez, Atty. Mahinardo G. Mailig, Messrs. Florante Aninag, Joseph Catapia, Ms. Perlita R. De Lara, Mr. Joseph Rodriguez, Ms. Arabelle O. Petilla, Ms. Emma C. Asusano, Messrs. Jose Villareal, Elias S. Olasiman, Atty. Salvador C. Alcuino, Jr., Ms. Norilyn Caborda, Mr. Benjamin Molina, Jr., Ms. Menchie De Leon, Ms. Josefina Wan Remollo, and Mr. Alexander D. Martinez. The prosecution also presented its documentary evidence marked as Exhibits "A" to "L 6 ", which were admitted by this Court as evidence for the prosecution. 6 On March 24, 2008, accused filed his "Demurrer to Evidence," which the Court denied in a Resolution dated August 15, 2008. 7 For its part, the defense presented evidence, which consists of the testimonies of the accused himself, Ms. Cherry Perez, and Ms. Ma. Lita D. Gregorio; and documentary evidence marked as Exhibits "1" to "39-A." The said exhibits were admitted as evidence for the accused, except Exhibits "17", "20", "32", and "34"; which were denied admission in a Resolution dated January 26, 2010 for failure of the accused's counsel to present the originals thereof for comparison. 8 On October 5, 2010, a Resolution was issued by this Court submitting the case for decision, 9 considering that the accused had already filed his "Memorandum" on March 1, 2010 10 and that the prosecution had also filed its "Memorandum" 11 through registered mail on September 14, 2010 and received by this Court on September 30, 2010. IEDHAT Evidence for the Prosecution Atty. Grace Belarmino-Cruz, one of the Revenue Officers assigned in the National Investigation Division (NID) of the Bureau of Internal Revenue (BIR), testified that in a Memorandum dated September 8, 2004, the NID Chief, Atty. Arnel SD. Guballa, referred to her investigating team the case of taxpayer Dr. Joel C. Mendez for appropriate action. The case was precipitated by a confidential letter-complaint against the subject-taxpayer for alleged non-issuance of official receipts for services rendered. 12 On the basis of the initial investigation and recommendation, a Letter of Authority (LOA) No. 2001-00002438 13 dated November 8, 2004 was issued for the examination of books of accounts and other accounting records for the period covering taxable years 2001, 2002 and 2003 of accused Dr. Joel Cortez Mendez. According to Atty. Cruz, the said LOA was served on November 10, 2004 together with the First Letter-Notice 14 for the production of books of accounts and accounting records. The said LOA was duly received by Cherry Perez, who allegedly represented herself as the authorized representative of accused Dr. Mendez. Despite receipt of the First Letter-Notice, accused Dr. Mendez did not submit the required documents, as specified in the said notice. As a consequence, a Second Letter-Notice 15 and a Final Request 16 for presentation and/or production of the required records/documents were served upon the accused Dr. Mendez, and duly received on November 24, 2004 and January 11, 2005, respectively, thru his accountant and employee named Richard Bianan and Carla Yadao. Due to the failure of the accused to present or produce the needed records and documents for examination despite several notices, the investigation proceeded through "Third Party Information" and the "Best Evidence Obtainable Rule" allowed under Section 5 (B), in relation to Section 6 (A) and (B) of the Tax Code of 1997. In the course of gathering information and best obtainable evidence pertaining to the accused, the team verified certain data and information from the BIR Integrated Tax System (BIR-ITS) and different government agencies, including private offices and entities. Verification of the business activities of accused Dr. Joel C. Mendez disclosed that he has been operating as a single proprietor, doing business for taxable years 2001, 2002, and 2003 under the following trade names and addresses: a. Mendez Body and Face Salon and Spa 31-B A. Roces Avenue, Quezon City, registered with RDO No. 39-South Quezon City on May 6, 2002; 17 b. Mendez Body and Face Salon and Spa B-3, 3/F New Farmers Plaza, Cubao, Quezon City, registered with RDO No. 40-Cubao on October 24, 2003; 18 c. Mendez Body and Face Skin Clinic The Plaza Building, Greenbelt, Ayala Center, Makati City, registered with RDO No. 47-East Makati on April 30, 2004; 19 d. Weigh Less Center SM City, San Fernando, Pampanga, registered with RDO No. 21-San Fernando, Pampanga on January 17, 2003; 20 and e. Mendez Weighless Center 2/F CSI Mall, Lucao District, Dagupan City, registered with RDO No. 4-Calasiao, Pangasinan on May 16, 2003. 21 Verification of the tax records from the BIR-ITS revealed that accused Dr. Mendez did not file his income tax returns for taxable years 2001 and 2002. This was corroborated by the direct testimonies of the following Revenue District Officers who issued the corresponding certifications evidencing the failure of the accused to file his income tax returns for taxable years 2001 and 2002: a. Revenue District Officer Clavelina S. Nacar of RDO No. 39-South Quezon City Certification dated February 22, 2005; 22 b. Revenue District Officer Romeo E. Naranjo of RDO No. 40-Cubao, Quezon City Certification dated March 7, 2005; 23 and c. Revenue District Officer Florante R. Aninag of RDO No. 21-San Fernando, Pampanga Revenue Certification dated February 22, 2005. 24 Mr. Alex C. Perez, Chief of the Document Processing Section of Revenue District No. 39-South Quezon City, corroborated the testimony of Atty. Cruz and identified the Certification dated March 9, 2005, attesting that accused Dr. Mendez has no record on file as to his Annual Income Tax Return for taxable years 1995 to 2000 per its office ITS inquiry despite the existence and operation of his business, Weigh Less Center. 25 cEaTHD During the investigation, it was further gathered that the accused filed his income tax return for taxable year 2003 with Revenue District Office (RDO) No. 4-Calasiao, Pangasinan, for his Mendez Weigh Less Center located at CSI City Mall, Lucao District, Dagupan City despite the existence of his principal place of business at 31 Roces Avenue, Quezon City, as evidenced by the Certification dated February 23, 2005 and the letter dated August 15, 2006 issued by Mr. Joseph M. Catapia, Revenue District Officer of RDO No. 4, and income tax return of the accused. Said certification was also identified during trial by Mr. Joseph M. Catapia himself. 26 The team was also able to establish that the filing by the accused of his income tax return with Revenue District Office No. 4 was irregular and was intended to evade payment of correct taxes since accused Dr. Mendez, operating as a single proprietor of different businesses, is required to file consolidated income tax return, viz. , an income tax return containing the summary of his income from all sources or business operations in and outside Metro Manila in accordance with Section 51 (A) (4) (a) and (B). The team likewise found that the non-filing of accused Dr. Mendez of his income tax returns for taxable years 2001 and 2002 was willful and done with deliberate intent to evade payment of taxes, considering that the accused had been operating several businesses for income and making capital investments as early as 1993. As a result of the investigation and documentary evidence gathered, it was established that despite having practiced his profession through the operation of his businesses, accused failed to file his income tax returns for taxable years 2001 and 2002, and under declared in 2003. Mr. Von Lentejas testified 27 that as a specialist at the Public Reference Unit of the Securities and Exchange Commission (SEC), he signed authenticated copies of documents issued by the said Unit and he had the occasion to examine certified copies of the following documents: 1. SEC Registration No. A1996-06633 of Weigh Less Center, Co., dated September 23, 1996, together with Articles of Partnership of Weigh Less Center Co., dated September 10, 1996; 28 2. SEC Reg. No. AP093-001258 of Sabili Mendez Medical Services Co., dated August 11, 1993, together with Articles of Partnership of Sabili Mendez Medical Services Co., dated August 3, 1993; 29 3. SEC Registration No. AP093-001258 of Mendez Medical Services Co., (formerly Sabili Mendez Medical Services Co.) dated August 8, 1996, together with Articles of Partnership of Mendez Medical Services Co., dated June 5, 1996; 30 4. SEC Registration No. AP096-00270 of Dr. Mendez Industrial and Lying-In Clinic Ltd. Co., dated February 6, 1996, together with Articles of Partnership of Dr. Mendez Industrial and Lying-In Clinic Ltd. Co., dated January 23, 1996; 31 5. SEC Registration No. AS094-000937 of Primehealth Card Services, Incorporated, dated February 1, 1994, together with Articles of Incorporation of Primehealth Card Services, Incorporated, dated January 13, 1994; 32 6. SEC Registration No. AP096-00909 of Oro Cup, Co., dated May 2, 1996, together with Articles of Partnership of Oro Cup, Co., dated April 22, 1996; 33 7. SEC Registration No. AP096-00184 of Oro Glass and Aluminum Supply Ltd. Co., dated January 26, 1996, together with Articles of Partnership of Oro Glass and Aluminum Supply Ltd. Co., dated January 25, 1996; 34 8. SEC Registration No. AP096-00294 of The New Millenium Network Ltd. Co., dated February 7, 1996, together with Articles of Partnership of The New Millenium Network Ltd. Co., dated February 5, 1996; 35 and 9. SEC Registration No. A200111706 of the Big and Small Art Co., dated August 8, 2001, together with Articles of Partnership of the Big and Small Art Co., dated May 24, 2001. 36 The above-enumerated documents, which were derived from the records of the SEC, corroborate Atty. Cruz's testimony that accused Dr. Mendez made several investments as early as the year 1993. AcHCED Also, from the foregoing documents, the prosecution concluded that the accused has been engaged in the practice of his profession since 1996 through Weigh Less Center, Co., registered as a partnership on September 23, 1996 for the purpose of conducting medical program aimed at assisting clients to lose weight and to maintain their ideal body weight afterwards. In connection thereto, Atty. Cruz also testified that when her team conducted ocular inspection of the different Weigh Less Center branches, particularly, the Mendez Medical Group Weigh Less Center located at The Plaza Building, Greenbelt, Ayala Center, Makati City, they noticed a colored poster containing the phrase "Since 1996 Dr. Joel Mendez." 37 The investigating team also obtained from the Notarial Section of the Office of the Clerk of Court of the Regional Trial Court (RTC) of Quezon City a certified true copy of the Contract of Lease that was executed in Quezon City on July 12, 2001, between Dr. Mendez, as Lessee, and Ma. Lita Gregorio, as Lessor; showing that the lease pertains to the period "August 15, 2001 to August 14, 2007", covering the whole building with a total floor area of 220 square meters, more or less, for a monthly rental of P27,000.00, for the purpose of establishing a health clinic and art gallery located at 31-G A. Roces Ave., Quezon City. 38 In order to prove that the accused was earning income from taxable years 2001 to 2003 through operation of his different branches of Weigh Less Center, Body and Face Salon and Spa, and Face Skin Clinic, the prosecution also presented certified true copies of the various advertisement placements made by the accused with different major publications, specifically, those evidencing the sixty (60) advertisements he placed with the Philippines Star from April 16 to October 31, 2001, two hundred thirty-five (235) advertisements from January to December 18, 2002, and ninety-six (96) from January 6 to December 17, 2003. 39 The prosecution likewise submitted in evidence records of newspaper clippings secured from PhilStar Daily, Inc., which revealed that accused Dr. Mendez had Weigh Less Center branches in operation at different addresses as per advertisement in the newspaper, The Philippine Star. 40 Furthermore, the information obtained from the Department of Trade and Industry (DTI) indicated that Dr. Mendez had businesses registered under his name as owner on May 26, 2003, July 31, 2003, and September 17, 2003, based on the Certification issued by Ms. Emma C. Asusano, DTI-NCR Regional Caretaker. Said certification was also presented, identified and admitted by this Court. 41 The prosecution also presented the letter-reply issued by Arabelle O. Petilla, the Chief of the Records Section of the Management Information Division of the Land Transportation Office (LTO) as regards the various vehicles purchased during 1996, 2000, 2001, 2002, and 2003 by the accused duly registered under his name. 42 Ms. Petilla indicated that the information contained therein is based on the LTO Information Technology System database. To further bolster its stance that the accused was earning income from the year 2001 to 2003, the prosecution presented the original copy of the Letter dated July 19, 2005, issued by Atty. Salvador A. Alcuino, Jr., Senior Legal Counsel of the Legal Affairs Department of Philippine Airlines, including the Summary of Gross Fares paid by the accused for his travels abroad for taxable years 2001, 2002, and 2003. 43 In addition, a Certification from the Bureau of Immigration shows that accused Dr. Mendez made forty-one (41) travels from 1995 to 2000; five (5) foreign travels in 2001; five (5) foreign travels in 2002, and twenty-two (22) foreign travels in 2003. 44 Lastly, the prosecution presented the Computation of Expenditures under the Contract of Lease dated July 12, 2001, the Computation of Expenditures under Contract of Lease dated July 18, 2003, and the Computation of Deficiency Tax for December 31, 2002 and December 31, 2003 (with the affidavits attesting to the same), for the purpose of proving the expenditures of the accused, that the accused was earning income from his Weigh Less Center branches for the years 2002 and 2003, and the deficiency income tax liability of the accused based on the best evidence obtainable. 45 On the basis of the data and documentary evidence gathered, the investigating team proceeded to compute the estimated amount of income that accused Dr. Mendez earned for taxable years 2001, 2002, and 2003 based on his net worth and expenditures. SIcCTD Applying the net worth and expenditures method, their computation yielded the following results: "a. For taxable year 2001, accused Dr. Joel C. Mendez earned an income from various sources but did not report the same to the prejudice of the government in the estimated amount of Php1,089,439.08; b. For taxable year 2002 accused Dr. Joel C. Mendez earned an income from various sources but did not report the same to the prejudice of the government in the estimated amount of Php1,522,152.14; c. For taxable year 2003, evidence shows that accused Dr. Joel C. Mendez earned an income from different sources but failed to supply correct information and declared instead a net loss in the amount of Php38,893.91 to the prejudice of the government." Evidence for the Defense The first witness for the accused, Ms. Cherry Perez, an Accounting Staff of Weigh Less Center, Roces Branch, testified 46 that sometime in November of the year 2004, while she was still a medical staff at the said branch, representatives from the Bureau of Internal Revenue came to the center looking for Dr. Mendez. The representatives from the BIR asked her to receive the Letter of Authority and the First Notice to Submit Documents upon learning that the accused was not around, despite informing them that she has no authority to receive it, for and on behalf, of Dr. Mendez. She gave the documents to their then accountant, Mr. Richard Bianan, but he was not able to forward said documents to Dr. Mendez. As a result, Dr. Mendez was surprised to learn that a Letter of Authority and a First Notice were served way back in November 2004, as he came to know of said service only in February 2005. Accused Dr. Mendez testified 47 that he is a doctor by profession and run several clinics under the banner of Mendez Medical Group. He is engaged in medical business. He further testified that Letter of Authority No. 00002438 dated November 8, 2004 was not personally served on him and was only made aware of its existence sometime late February 2005, when he was informed by his staff that persons representing themselves as "assessors" went to his office demanding for a copy of certain assessment. The accused narrated 48 that sometime late of February 2005, as he was leaving his office, he saw the representatives from the BIR in his office. The BIR representatives told him about the said "assessment" to which the accused replied that he has not received any. The BIR representatives went back to his Office and were met by Ms. Rose Zhamar Bejar, his staff, this time with a laptop computer. According to the accused, Melvin Mondigo, a member of the investigating team, then showed Ms. Bejar a file copy of the said LOA from his computer and told her that if she wanted a copy, he could copy it in a diskette. He then instructed Ms. Bejar "kumpletuhin nyo yang mga nakalagay diyan at tawagan mo ako kapag kumpleto na," giving his cell phone number and office number, and secured the telephone numbers of the office. Atty. Grace Belarmino-Cruz, one of the BIR representatives, then tried to contact the accused's accountant/bookkeeper, Mr. Richard Bianan. Based from the testimony 49 of the accused, Mr. Bianan, who was entrusted with all documents and records in relation to the business, deliberately concealed these notices from the accused to avoid discovery that he has not been remitting or paying to the BIR sums of money which the accused entrusted to him to pay the tax obligations of the accused. He further testified that Mr. Richard Bianan has been charged with multiple counts of Estafa. He also stated that he issued checks and vouchers in Mr. Richard Bianan's name for the payment of taxes and other obligations. 50 Furthermore, sometime in February 2005, the accused allegedly caught Mr. Bianan stealing cosmetic products and other valuables from the clinic and consequently filed complaint with the police authorities. According to him, Mr. Bianan was then charged by Inquest Prosecutor Primo G. Sio, Jr. of the Office of the City Prosecutor of Quezon City with the crime of Qualified Theft. 51 It was during one of their jail visits that Mr. Bianan allegedly confessed to them about the non-payment of his tax obligations. In addition, he also testified 52 that he leased the property located in A. Roces Avenue, Quezon City on July 12, 2001, but Weigh Less Center-Roces Avenue Branch only started its operation on or about March 4, 2003. The delay in operation was supposedly due to the fact that the property is a two-floor residential unit that is not designed at all as office space and that he had to cause its renovation as his personal funds would allow. Due to limited funds, the construction took a while before the same was completed. The delay was also caused by the problem with building authorities inasmuch as the renovation was done without a permit. aSTAcH Accused also made a statement that the idea of putting up clinics came up in 1996, but due to financial problems and because his focus then was art, the clinics materialized only after several years. As regards the vehicles he allegedly purchased from the years 2001 to 2003, he said that the said vehicles were obtained through bank loans. He explained that the newspaper advertisements were intended to generate public awareness in the business. While he did attend to some celebrities, he did not charge them any fee. They had a simple understanding that he would do certain medical services for his celebrity clients and in return, they would endorse his future business. The idea is that his future business is advertised through the publicity generated by the treatments of celebrities. 53 The third witness for the defense was Ma. Lita Gregorio who testified that she is the owner and lessor of the 2-storey commercial building with an area of 220 square meters located at 31-G, A. Roces Avenue, Quezon City. 54 She stated that she entered into a six-year contract of lease with Dr. Mendez with a monthly rental of P25,000.00. Ms. Gregorio said that it was on August 15, 2001 that Dr. Mendez actually occupied subject property and started to gradually introduce major improvements. It was not until in the latter part of the year 2002 that the renovation was completed. Ms. Gregorio corroborated the accused's testimony that the operation of the health clinic and art gallery was suspended due to lack of building permit. 55 THE ISSUE WHETHER OR NOT ACCUSED DR. JOEL C. MENDEZ IS LIABLE FOR VIOLATION OF SECTION 255 OF THE 1997 NATIONAL INTERNAL REVENUE CODE, AS AMENDED, FOR FAILURE TO FILE INCOME TAX RETURN AND FOR FAILURE TO SUPPLY CORRECT AND ACCURATE INFORMATION. THE COURT'S FINDINGS AND RULING The offenses allegedly committed by herein accused are violation of the first paragraph of Section 255 of the National Internal Revenue Code (NIRC), which provides: "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 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" Based on the above-mentioned provision, the following elements must be established: Criminal Case No. O-013 1. The accused was a person required to make or file a return; 2. The accused failed to make or file the return at the time required by law; and 3. The failure to make or file the return was willful. Criminal Case No. O-015 1. The accused is a person required under the Tax Code or by rules and regulations to pay any tax, make a return, keep any record, or supply correct and accurate information; 2. The accused failed to supply correct and accurate information at the time or times required by law or rules and regulations; and 3. Such failure to supply correct and accurate information is willful. TCAScE In his defense, accused avers that he was not able to personally receive the notices issued by the BIR. The accused alleges that it was his former accountant, Mr. Richard Bianan, who received the notices and that Mr. Bianan concealed said notices from the accused. It must be pointed out that, as narrated by the accused in his Affidavit and as confirmed by him during the cross-examination, Mr. Richard Bianan was authorized by him to receive documents and notices on his behalf, including the notices issued by the BIR. Hence, the notification requirement was deemed substantially complied with by the BIR, considering that the subject notices were admittedly received by Mr. Bianan. Even assuming, arguendo , that Mr. Bianan concealed said notices from the accused, the BIR is still authorized to subject the accused to an investigation and assess him on the basis of best evidence obtainable and third-party information. In the recent case of Commissioner of Internal Revenue vs. Hon. Raul M. Gonzalez, et al. , 56 the Supreme Court said that the lack of consent of the taxpayer does not make the resort to third-party information and best evidence obtainable illegal. The ruling of the High Court is hereunder quoted in part: "In the Details of Discrepancies attached as Annex B of the PAN, private respondents were already notified that inasmuch as the revenue officers were not given the opportunity to examine LMCEC's books of accounts, accounting records and other documents, said revenue officers gathered information from third parties. Such procedure is authorized under Section 5 of the NIRC, which provides: SEC. 5. Power of the Commissioner to Obtain Information, and to Summon, Examine, and Take Testimony of Persons. In ascertaining the correctness of any return, or in making a return when none has been made, or in determining the liability of any person for any internal revenue tax, or in collecting any such liability, or in evaluating tax compliance, the Commissioner is authorized: (A) To examine any book, paper, record or other data which may be relevant or material to such inquiry; (B) To obtain on a regular basis from any person other than the person whose internal revenue tax liability is subject to audit or investigation , or from any office or officer of the national and local governments, government agencies and instrumentalities, including the Bangko Sentral ng Pilipinas and government-owned or -controlled corporations, any information such as, but not limited to, costs and volume of production, receipts or sales and gross incomes of taxpayers, and the names, addresses, and financial statements of corporations, mutual fund companies, insurance companies, regional operating headquarters of multinational companies, joint accounts, associations, joint ventures or consortia and registered partnerships, and their members; (C) To summon the person liable for tax or required to file a return, or any officer or employee of such person, or any person having possession, custody, or care of the books of accounts and other accounting records containing entries relating to the business of the person liable for tax, or any other person, to appear before the Commissioner or his duly authorized representative at a time and place specified in the summons and to produce such books, papers, records, or other data, and to give testimony; (D) To take such testimony of the person concerned, under oath, as may be relevant or material to such inquiry; . . . (Emphasis supplied) Private respondents' assertions regarding the qualifications of the 'informer' of the Bureau deserve scant consideration. We have held that the lack of consent of the taxpayer under investigation does not imply that the BIR obtained the information from third parties illegally or that the information received is false or malicious. Nor does the lack of consent preclude the BIR from assessing deficiency taxes on the taxpayer based on the documents . In the same vein, herein private respondents cannot be allowed to escape criminal prosecution under Sections 254 and 255 of the NIRC by mere imputation of a 'fictitious' or disqualified informant under Section 282 simply because other than disclosure of the official registry number of the third party 'informer,' the Bureau insisted on maintaining the confidentiality of the identity and personal circumstances of said 'informer'." (Emphasis supplied) EcIaTA Therefore, even if the accused was not notified of the investigation made by the BIR, the information gathered in the course of the said investigation is not deemed illegal and may serve as basis for criminal prosecution. Now, before going one by one with the foregoing elements, it may be relevant to emphasize that direct evidence is not the sole means of establishing guilt beyond reasonable doubt. Established facts that form a chain of circumstances can lead the mind intuitively or impel a conscious process of reasoning towards a conviction. Indeed, rules on evidence and principles in jurisprudence have long recognized that the accused may be convicted through circumstantial evidence. 57 Circumstantial evidence has been defined as such evidence which goes to prove a fact or series of facts, other than the facts in issue, which, if proved, may tend by inference to establish the fact in issue. But for circumstantial evidence to be sufficient for a conviction, the following requisites must be present, namely: (a) there is more than one circumstance; (b) the facts from which the inferences are derived have been proven; and (c) the combination of all the circumstances results in a moral certainty that the accused, to the exclusion of all others, is the one who has committed the crime. 58 Hence, this Court's determination of the accused's culpability shall not be confined with the appreciation of direct evidence submitted by the prosecution but shall also include the consideration of the circumstantial evidence adduced to establish the guilt of the accused beyond reasonable doubt. Criminal Case No. O-013 As to the first element, it is necessary to determine who are those required to file a return and declare income tax. In this regard, this Court found instructive the provisions under Sections 51 (A) and 74 in connection with Section 32 of the NIRC of 1997, as amended. "SEC. 51. Individual Return. (A) Requirements. (1) Except as provided in paragraph (2) of this Subsection, the following individuals are required to file an income tax return: (a) Every Filipino citizen residing in the Philippines; (b) Every Filipino citizen residing outside the Philippines, on his income from sources within the Philippines; (c) Every alien residing in the Philippines, on income derived from sources within the Philippines; and (d) Every nonresident alien engaged in trade or business or in the exercise of profession in the Philippines. (2) The following individuals shall not be required to file an income tax return: (a) An individual whose gross income does not exceed his total personal and additional exemptions for dependents under Section 35: Provided, That a citizen of the Philippines and any alien individual engaged in business or practice of profession within the Philippine shall file an income tax return, regardless of the amount of gross income ; (b) An individual with respect to pure compensation income, as defined in Section 32(A)(1), derived from sources within the Philippines, the income tax on which has been correctly withheld under the provisions of Section 79 of this Code: Provided, That an individual deriving compensation concurrently from two or more employers at any time during the taxable year shall file an income tax return: Provided, further, That an individual whose pure compensation income derived from sources within the Philippines exceeds Sixty thousand pesos (P60,000) shall also file an income tax return; (c) An individual whose sole income has been subjected to final withholding tax pursuant to Section 57(A) of this Code; and TAHCEc (d) An individual who is exempt from income tax pursuant to the provisions of this Code and other laws, general or special. (3) The foregoing notwithstanding, any individual not required to file an income tax return may nevertheless be required to file an information return pursuant to rules and regulations prescribed by the Secretary of Finance, upon recommendation of the Commissioner. (4) The income tax return shall be filed in duplicate by the following persons: (a) A resident citizen on his income from all sources ; (b) A nonresident citizen on his income derived from sources within the Philippines; (c) A resident alien on his income derived from sources within the Philippines; and (d) A nonresident alien engaged in trade or business in the Philippines on his income derived from sources within the Philippines." (Emphasis supplied) "SEC. 74. Declaration of Income Tax for Individuals. (A) In General. Except as otherwise provided in this Section, every individual subject to income tax under Sections 24 and 25(A) of this Title, who is receiving self-employment income, whether it constitutes the sole source of his income or in combination with salaries, wages and other fixed or determinable income, shall make and file a declaration of his estimated income for the current taxable year on or before April 15 of the same taxable year . In general, self-employment income consists of the earnings derived by the individual from the practice of profession or conduct of trade or business carried on by him as a sole proprietor or by a partnership of which he is a member . Nonresident Filipino citizens, with respect to income from without the Philippines, and nonresident aliens not engaged in trade or business in the Philippines, are not required to render a declaration of estimated income tax. The declaration shall contain such pertinent information as the Secretary of Finance, upon recommendation of the Commissioner, may, by rules and regulations prescribe. An individual may make amendments of a declaration filed during the taxable year under the rules and regulations prescribed by the Secretary of Finance, upon recommendation of the Commissioner." (Emphasis supplied) "SEC. 32. Gross Income. (A) General Definition. Except when otherwise provided in this Title, gross income means all income derived from whatever source , including (but not limited to) the following items: (1) Compensation for services in whatever form paid, including, but not limited to fees, salaries, wages, commissions, and similar items; (2) Gross income derived from the conduct of trade or business or the exercise of a profession; (3) Gains derived from dealings in property; (4) Interests; (5) Rents; (6) Royalties; (7) Dividends; (8) Annuities; (9) Prizes and winnings; (10) Pensions; and (11) Partner's distributive share from the net income of the general professional partnership." (Emphasis supplied) It is clear from the foregoing that the prosecution is tasked to establish the fact that the accused is one of those required to file a return on its income for taxable year 2002 and that the accused is not one of those exempted from filing the same. Based on the evidence adduced by the prosecution, it has been sufficiently established that the accused is a Filipino citizen and a resident of the Philippines. 59 It was further established that the accused is the owner/sole proprietor of "Mendez Body and Face Salon and Spa" No. 31-B A. Roces Ave., Quezon City with TIN No. 120-644-683-000 as evidenced by a Certificate of Registration issued by the Revenue District Officer Clavelina S. Nacar of RDO No. 39-South Quezon City on May 6, 2002. cDCSTA To further prove the existence and operation of the business of Dr. Mendez during the subject taxable year, the prosecution presented a certified true xerox copy of the contract of lease dated July 12, 2001 executed between the Accused, as lessee and Ma. Lita Gregorio, as lessor, for the period covering August 15, 2001 to August 14, 2007, for the purpose of establishing a health clinic and art gallery located at 31-G A. Roces Ave., Quezon City. For the taxable year 2002, accused was also found to have spent for advertisement placements with PhilStar Daily, Inc., the total amount of P357,550.46 in the year 2001 and P1,385,108.78 in the year 2002. Also, a list of Ad placements of accused's businesses in the names of "Weigh Less Center", "Body and Face by Mendez", and "Mendez Medical Group" with a total of sixty (60) ad placements in the year 2001 and two hundred thirty-five (235) in the year 2002 was also presented by the prosecution as certified by witness Perlita De Lara, the Chief Accountant of PhilStar Daily, Inc. 60 Moreover, the prosecution also presented a Certification from the Philippine Daily Inquirer, indicating a total amount of P3,798,038.72 of gross sales from the ad placements made by the Weigh Less Center advertising the "Mendez Body and Face Spa", from which the amounts of P966,408.83 and P1,702,871.41, represents the gross sales from ad placements made during the year 2001 and 2002, respectively. Said amounts were also reflected in the Summary of Gross Sales to the Mendez Group of Companies for the year 2001 to 2003 attached to the certification issued by Mr. Jose H. Villareal dated February 26, 2007. The said certification was also duly identified by Mr. Villareal during trial. In addition, the prosecution presented a copy of the advertisement of Weigh Less Center published in the newspaper, The Philippine Star dated September 24, 2001. Even though the accused said that the newspaper advertisements for 2001 and 2002 were made in preparation for his soon-to-open business, nowhere in the advertisements would show that the businesses advertised therein were not yet operational. Likewise, the prosecution presented the letter-reply issued by Arabelle O. Petilla, Chief of the Records Section of the LTO Management Information Division, as regards the various vehicles purchased during 1996, 2000, 2001, 2002, and 2003 and duly registered under the name of the accused. 61 Ms. Petilla herself testified that the information contained therein was based on the LTO Information Technology System database. To further bolster its stance that the accused is earning income from the year 2001 to 2003, the prosecution also presented the original copy of the Letter dated July 19, 2005 issued by Atty. Salvador A. Alcuino, Jr., Senior Legal Counsel, Legal Affairs Department, Philippine Airlines, including the Summary of Gross Fares paid by the accused for his travel abroad for taxable years 2001, 2002 and 2003. In addition, a certification from the Bureau of Immigration shows that accused Dr. Mendez made 41 travels in 1995 to 2000; five (5) foreign travels in 2001; five (5) foreign travels in 2002 and twenty-two (22) foreign travels in 2003. For its part, accused claims that although his business was registered on May 6, 2002, the same was still not operational; hence, there was no income to declare for the year 2002. Also, Ms. Ma. Lita Gregorio, the lessor of the 2-storey commercial building located at 31-G, A. Roces Avenue, Quezon City, testified, among others, that the renovation of the said building was completed only until in the later part of the year 2002 and that the operation of the health clinic and art gallery was suspended due to lack of building permit. The accused also added, during his cross-examination, that his source of income in the year 2002 came from his brothers and that he had financial problems from 1996 to 2002. The accused tried to establish the impossibility of operation of his Roces branch by attributing the non-operation to his building permit problem, which was corroborated by the testimony of the lessor Ms. Lita Gregorio. However, the statements made by Ms. Gregorio failed to show that the Roces branch was not in operation in the year 2002. What Ms. Gregorio merely said is that the operation was suspended, which could mean that the operation already started, only that it was suspended due to the accused's problem with building permit. Also, the testimony of the accused that there was operation in the Roces branch in 2004 despite problems with the said building permit and the on-going renovation of the building only supports the arguments presented by the prosecution of the possibility of operation in the year 2002. The pertinent parts of the accused's testimony 62 given during the hearing held on July 6, 2009 reads: acIHDA "DR. MENDEZ In particular branch, I think, that branch, your Honors, I'm still in my rush to this program and it is still constructing the area. JUSTICE CASTAEDA How many weeks did it take to prepare? DR. MENDEZ If you are referring, your Honors, to the Roces branch, up to now, we are still having a problem with the construction, your Honors. With other branches, it takes me at least two months to prepare the area. And usually, the mall is not charging from that time, but you are supposed to pay ahead of time. ATTY. VELASCO Q. Now, I understand you said that the Roces branch is still going renovation? DR. MENDEZ A. Construction. ATTY. VELASCO Q. Isn't it true that the construction is to add another floor to the building? DR. MENDEZ A. Not, your Honors. This is like we have a pending case under the Quezon City that we cannot proceed until it is being done and all the building permits, your Honors. So, it is not an additional floor because my * roof na po sya . Unless, we took up the roof and we will be adding another floor. There is no another floor. JUSTICE CASTAEDA There is still a problem with the building permit? DR. MENDEZ Yes. JUSTICE CASTAEDA So, there is no occupancy in the building? DR. MENDEZ The way we are paying the rental, your Honors. We are there. My staffs are there also. ATTY. VELASCO Q. Your staff is there, so, that means, even while the construction is on-going, operations are also on-going? DR. MENDEZ A. I'm referring to the staffs that are staying there right now, your Honors/sir. ATTY. VELASCO Q. Are there business operations on-going there? DR. MENDEZ A. We seldom seek operations there right now, but we are having, your Honor. I think, it is every Monday, we are having there, and it's all on sale all the time." (Emphasis supplied) The claims of the accused that he had no income during the year 2002 and that the business registered with the BIR during the year 2002 was not yet operational in 2002 are further belied by his own admission during the pre-trial conference and during the cross-examination. The significant parts of the accused's testimony 63 during the hearing held on July 6, 2009 are hereunder quoted to wit: "ATTY. VELASCO Q. Now, as to the celebrity clients that you operated and even before the opening of the business, you said in your Supplemental Affidavit that just the same, these are also advertisements for your soon-to-open business? DR. MENDEZ A. Yes, sir. ATTY. VELASCO Q. And that you did not derive any source of income here as this was more of an ex-deal? DR. MENDEZ A. Yes, sir." At this juncture, it must be noted that an admission made by a party may be given in evidence against him. Consequently, this very admission of the accused that he rendered services to some celebrities in exchange for the endorsement these celebrities will render in favor of his business actually corroborates the prosecution's evidence that the accused earned income and his business was operational in the year 2002. With the foregoing pieces of evidence presented by the prosecution as against the rather conflicting testimonies proffered for the defense, it may be inferred that the "Mendez Body and Face Spa" branch was already operational even before its registration with the BIR. Based on the foregoing circumstantial evidence presented by the prosecution, it was proved that Dr. Mendez is the sole proprietor of the said branch and that during the taxable year 2002, he was able to spend a large amount of money on advertisements, purchase of vehicles, rent, and foreign travels. It is thus concluded that the amount he used for such purchases and expenditures came from his income earned from the practice of his profession through the operation of his business for taxable year 2002. Accordingly, the accused is deemed to be an individual required by law to file income tax return on his income earned during taxable year 2002. aSTECI After establishing the fact that the accused is one of those required by law to file income tax return, the prosecution now has the burden to prove that the accused failed to make or file a return at the time required by law. Section 51 (B) and (C) (1) of the NIRC of 1997, as amended, also provides for the venue for the filing of the required income tax return and the period within which to file the same to wit: "SEC. 51. Individual Return. xxx xxx xxx (B) Where to File. Except in cases where the Commissioner otherwise permits, the return shall be filed with an authorized agent bank, Revenue District Officer, Collection Agent or duly authorized Treasurer of the city or municipality in which such person has his legal residence or principal place of business in the Philippines, or if there be no legal residence or place of business in the Philippines, with the Office of the Commissioner. (C) When to File. (1) The return of any individual specified above shall be filed on or before the fifteenth (15th) day of April of each year covering income for the preceding taxable year." The prosecution has established that the principal place of business of accused Dr. Mendez is the business address of his "Mendez Body and Face Salon and Spa" in 31-B, A. Roces Avenue, Quezon City, with TIN No. 120-644-683-000 as indicated in his Certificate of Registration with the RDO No. 39-South Quezon City. Accordingly, its income tax return for taxable year 2002 should have been filed with RDO No. 39-South Quezon City. However, based on the evidence presented by the prosecution, it was found that the accused has no records of returns filed for taxable years 2001 and 2002 as certified by Revenue District Officer Clavelina S. Nacar of RDO No. 39-South Quezon City in a Certification dated February 22, 2005. 64 In view thereof, this Court finds that the accused, despite earning income from the operation of its Weigh Less Center branch, failed to file a return for taxable year 2002. Now as to the willfulness of the omission made by the accused, it was mentioned in the Resolution of this Court dated August 15, 2008, which denied the Demurrer to Evidence filed by the accused, that the term "willfully" generally connotes a voluntary, intentional violation of a known legal duty. If a taxpayer in good faith believes that certain income is not taxable and, acting under such belief, does not include the amount received in his return, he does not have willful intent required to be convicted of a tax crime. The findings of this Court on the first two elements apparently show that the accused willfully failed to file his return. In essence, the accused claims that he did not earn any income during taxable year 2002. This assertion was later disproved by the findings of this Court and the result of the investigation of the BIR investigating team that the accused actually has unreported income earnings for the taxable year 2002. His purchases and expenditures such as the ad placements, rents and purchase of vehicles undeniably prove that he has knowledge that he has substantial income which was actually used to spend on the said purchases and expenses. In effect, the accused's denial of his income earned in 2002 obviously connotes the attempt of the accused to conceal said income earnings by not filing his income tax return. In addition, the accused's habitual failure to file his income tax return for the years 2001 and 2002 despite findings that he was earning income during the said taxable years clearly shows the willfulness of his non-filing of tax return for taxable year 2002. Consequently, this Court is convinced that the accused indeed willfully failed to file his return for taxable year 2002. This Court finds the circumstantial evidence adduced by the prosecution sufficient to support a finding that the accused is guilty beyond reasonable doubt of willful failure to file or make a return for taxable year 2002, in violation of Section 255 of the NIRC of 1997, as amended. TDcAaH CRIMINAL CASE NO. O-015 First Element: He is a person required under this code or by rules and regulations to pay any tax, make a return, keep any record, or supply correct and accurate information As earlier discussed, the prosecution has already established that the accused is required by law to file a return and to declare all his income from all sources. Second Element: He fails to supply correct and accurate information at the time or times required by law or rules and regulations. Anent the second element, the prosecution has the burden to prove that the accused, as a duly registered taxpayer and as a sole proprietor of various branches of Weigh Less Center, failed to supply the correct and accurate information in his income tax return for taxable year 2003 due to his failure to declare and indicate in his return all his income from all sources for taxable year 2003. During the investigation, it was found that accused filed his income tax return for taxable year 2003 with Revenue District Office No. 4-Calasiao, Pangasinan, for his Mendez Weigh Less Center located at CSI City Mall, Lucao District, Dagupan City, as evidenced by the Certification dated February 23, 2005 issued by Mr. Joseph M. Catapia, Revenue District Officer of RDO No. 4. In the said Annual Income Tax Return submitted for taxable year 2003, the accused declared a net loss of P38,893.91. However, based on the documents gathered by the BIR Revenue District Officers during the investigation, it was discovered that there are several other branches registered with the BIR having the trade/business names "Weigh Less Center", "Mendez Body and Face Salon and Spa" and "Mendez Body and Face Skin Clinic" under the name of the accused Dr. Mendez as the sole proprietor/owner. This fact was evidenced by the Certifications issued by the duly authorized Revenue District Officers who certified the registration of said branches with the BIR. The trade names and addresses of the said branches are as follows: a. Mendez Body and Face Salon and Spa 31-B Roces Avenue, Quezon City, registered with RDO No. 39-South Quezon City on May 6, 2002; 65 b. Mendez Body and Face Salon and Spa B-3, 3/F New Farmers Plaza, Cubao, Quezon City, registered with RDO No. 40-Cubao on October 24, 2003; 66 c. Mendez Body and Face Skin Clinic The Plaza Building, Greenbelt, Ayala Center, Makati City, registered with RDO No. 47-East Makati on April 30, 2004; 67 d. Weigh Less Center SM City, San Fernando, Pampanga, registered with RDO No. 21-San Fernando, Pampanga on January 17, 2003; 68 and e. Mendez Weighless Center 2/F CSI Mall, Lucao District, Dagupan City, registered with RDO No. 4-Calasiao, Pangasinan on May 16, 2003. 69 Also, the information obtained from the Department of Trade and Industry revealed that accused Dr. Mendez has businesses registered under his name as owner on May 26, 2003, July 31, 2003, and September 17, 2003, proving that the accused made several investments in 2003. It may be deduced from the foregoing that aside from the income generated from the operation of the Dagupan branch, the accused earned income from the operation of its other branches, which accused failed to declare in 2003. As previously mentioned, the prosecution was able to present evidence regarding the accused's purchases and registration of various vehicles in 1996, 2000, 2001, 2002, and 2003, and his foreign travels in taxable years 2001, 2002 and 2003; further proving that said branches of the businesses of the accused were already earning income. The prosecution also presented several lease contracts with the accused's named as the lessee, including the lease contract of the building for the Roces branch, which were rented by the accused for the establishment of its other branches and computed the corresponding rental expense to prove that the foregoing branches of accused's businesses were already earning income. The lease contracts presented also include the one between the accused and The Plaza, Inc., for the lease of its premises in The Plaza Building, Greenbelt, Ayala Center, Makati Metro Manila; with a lease period from September 1, 2003 to December 31, 2005, entered by and between the parties on July 17, 2003. The computation made by the investigating team on the expenditure covering the said contract of lease yields the amount of P510,000.00 as total rentals from the taxable year 2003. Also, the prosecution was able to present the lease contract between the accused and SM Prime Holdings, Inc., for the accused's rental of the lessor's premises in SM City Pampanga with a lease period from October 15, 2002 until April 30, 2004. 70 Furthermore, the certified true copies of the various advertisement placements for the Weigh Less Center branches made by the accused with different major publications, specifically, those evidencing the ninety-six advertisements placed from January 6 to December 17, 2003 with the PhilStar Daily, Inc. were presented to prove that the accused was earning income from taxable years 2001 to 2003 through the operation of his different branches of Weigh Less Center, Body and Face Salon and Spa, and Face Skin Clinic. Also, a Certification from the Vice President for Finance of the Philippine Daily Inquirer shows that Weigh Less Center had advertising placements for the year 2001 to 2003 with the Philippine Daily Inquirer and all the gross sales amounting to P3,798,038.72 from the said ad placements were reported with the BIR; the P1,128,758.48 of which represents the amount of sales made to the Mendez Group of Companies for the year 2003. Taking into consideration the bulk of circumstantial evidence proving the accused's ability to spend on the foregoing expenditures and purchases during the taxable year 2003, it can be concluded that the accused earned substantial income during the said year. Such findings that the accused earned substantial income for taxable year 2003 clearly contradicts the declaration made by the accused in his income tax return filed with RDO No. 4 that he suffered a net loss during taxable year 2003. The said declaration of net loss by the accused is further disproved by his own admission in his Supplemental Affidavit and his testimony during cross-examination that he was able to put up several branches and was able to spend over five million pesos on the same in taxable year 2003. The pertinent statements of the accused during cross-examination 71 are hereunder quoted as follows: "ATTY. VELASCO Q. How do you sustain yourself then in 2002 if you were not given any money? DR. MENDEZ A. Well, some people are giving me money, my brothers. HETDAa ATTY. VELASCO Q. How much? DR. MENDEZ A. Well, sometimes, they send 200 dollars, 300 dollars. ATTY. VELASCO Q. May we know who this brother is? DR. MENDEZ A. Dr. Hector Mendez, Dr. Oscar Mendez. ATTY. VELASCO Q. They are based in the United States? DR. MENDEZ A. In the United States. ATTY. VELASCO Q. Now, as you said, you are having financial problems from 1996 to 2002 and that nobody gave you money in 2002 except Dr. Hector Mendez and Dr. Oscar Mendez ranging from 200 to 300 dollars, how were you able to spend more than 5 million in less than a year to put up all these branches in 2003? DR. MENDEZ A. I did not mention that I'm having financial problem. Is that your question? You mentioned that I'm having financial problem. ATTY. VELASCO Q. Yes. You affirmed it on cross and it is stated in your Judicial Affidavit. DR. MENDEZ A. May I see where that is? ATTY. VELASCO Q. In Question and Answer 9, it was pointed out to you that the idea of putting up the clinics came up in 1996, but because of the financial problems, you were only able to put them up later and you even reiterated, even if we ask the Stenographer to read it back . . . (interrupted) ATTY. CAABAY May I object, your Honors. JUSTICE ENRIQUEZ The Public Prosecutor is not finished yet. Let him finish first. ATTY. VELASCO Q. Even if the Court reads back what you said, you even reiterated the term, yes, financial problems. So, the question is, if you were having these financial problems in 1996 to 2002, and in 2002, your parents did not give you any money because they passed away, I'm sorry about that, and that Dr. Oscar and Hector Mendez only gave you 200/300 dollars for 2002, how were you able to spend over five million and still going up to put up these six (6) branches in a little over a year? DR. MENDEZ A. The financial problem I mentioned is my medical problem. It's not a hard question. That's what I mentioned. If you want me to read it again, I could." Moreover, if the accused claims that he suffered a net loss from the operation of his Mendez Weigh Less Center Dagupan branch during taxable year 2003, then the substantial income found to have been earned by the accused during the same year can be attributed to the operation of his other branches for taxable year 2003; which were not reflected in the Annual Income Tax Return submitted by the accused for the same year. HECTaA Furthermore, verification of the tax records from the BIR Integrated Tax System revealed that accused Dr. Mendez did not file his income tax returns for taxable year 2003 on its income earned from these other branches. The Certifications issued by the following Revenue District Officers would show the failure of the accused to file his income tax returns for its income earned from the operation of its branches located in A. Roces Ave., Quezon City; Cubao, Quezon City; and San Fernando, Pampanga for taxable year 2003: a. Revenue District Officer Clavelina S. Nacar of RDO No. 39-South Quezon City Certification dated February 22, 2005; 72 b. Revenue District Officer Romeo E. Naranjo of RDO No. 40-Cubao, Quezon City Certification dated March 7, 2005; 73 c. Revenue District Officer Simplicio A. Madulara of RDO No. 47-East Makati dated March 2, 2005; 74 and d. Revenue District Officer Florante R. Aninag of RDO No. 21-San Fernando, Pampanga Certification dated February 22, 2005. 75 In view of the foregoing circumstances, the Court is convinced that the prosecution was able to establish that the accused failed to supply the correct and accurate information on its Annual Income Tax Return filed for taxable year 2003 by making it appear that the operation of his Dagupan branch is his only source of income during taxable year 2003. Third Element: Such failure is willful. As regards the third element, this Court finds the failure of the accused to supply the correct information in his return to be willful. In case of People of the Philippines vs. Estelita delos Angeles , 76 this Court defined the term "willful" in this wise: "Willful in the tax crimes statutes means a voluntary, intentional violation of a known legal duty and bad faith or bad purpose need not be shown [Mertens (Law of Federal Income Taxation) Chapter 47.05, page 28, Volume 13, see U.S. v. Green, 757 F2d 116, 85-1 USTC 9178 (CA 1985), in which the Court, citing U.S. v. Moore, 627 F2d 830 (CA 1980) and U.S. v. Verkuilen, 690 F2d 648, 82-2 USTC 9618 (CA7 1982), upheld the conviction of a tax protester for willful failure to file returns] ." In this case, the accused is considered to have knowledge that he has the obligation to declare and file income tax return for taxes from all sources. This may be confirmed by his act of filing his income tax return declaring his income from the operation of his Dagupan branch. Notwithstanding said knowledge of the operation of his other branches as well as his obligation to file income tax return or at least consolidate and reflect his income from his other branches in his income tax return filed in taxable year 2003, the accused still failed to file his income tax return on his income from these other Weigh Less Center branches for taxable year 2003; making it appear that his only source of income was from the operation of his Weigh Less Center in Dagupan City. The accused attempted to justify the under declaration by blaming his former accountant and book keeper, Mr. Richard Bianan, averring that Mr. Bianan is the one who has not been remitting or paying to the BIR the sums of money which he entrusted to him to pay his tax obligations. He further identified documentary evidence to prove the alleged embezzlement of money by Mr. Bianan which was intended for payment to the BIR, such as the checks and vouchers he allegedly issued. The defense also presented a copy of the Resolution of the Inquest Prosecutor dated March 15, 2005 and a copy of a Memo of Preliminary Investigation with Affidavit of Complaint as proof that he filed a case for Qualified Theft and Estafa, respectively, against Mr. Bianan. However, as correctly pointed out by the prosecution in its Memorandum, the said documents only show that Mr. Bianan took clinic inventories, business and mayor's permit fees, and 2004 withholding tax remittances of accused's employees. No evidence at all on the supposed income tax payments for 2003, which is the subject of the present criminal case. Even conceding that the accused was made to believe by his then accountant, Mr. Bianan, that he was able to comply with his tax obligations, the same is not sufficient to prove that the failure of the accused to declare all his income is not willful. Under the circumstances, the accused, despite knowledge that he is earning from his other Weigh Less Center branches, failed to inquire as to his compliance with his tax obligations. The accused should have inquired if he was able to declare his income from his other branches considering that the only income declared in his income tax return for 2003 was for his income earned from the Dagupan branch. Such refusal or failure of the accused to verify his compliance with his tax obligation constitutes "willful blindness" on his part. ASTcEa "Willful Blindness" is defined in Black's Law Dictionary as "deliberate avoidance of knowledge of a crime, esp. by failing to make a reasonable inquiry about suspected wrongdoing despite being aware that it is highly probable." It "creates an inference of knowledge of the crime in question." 77 In this case, even if the allegations of the accused were true, his failure to examine his income tax return for 2003 and verify whether the same contains correct and accurate information would still render the commission of the offense charged willful. It must be emphasized that denials by the accused of the crimes herein charged, while failing to provide clear and convincing evidence to support the same, clearly deserve no weight and should not be given any probative value. In the case of People vs. Baniega , 78 the Supreme Court had the occasion to expound on the evidentiary weight of the denials made by the accused which were unsubstantiated by clear and convincing evidence, to wit: "Between the categorical statements of the prosecution witnesses, on the one hand, and the bare denial of accused-appellant, on the other hand, the former must perforce prevail. An affirmative testimony is far stronger than a negative testimony especially when the former comes from the mouth of a credible witness. Alibi and denial, if not substantiated by clear and convincing evidence, are negative and self-serving evidence undeserving of weight in law. It is considered with suspicion and always received with caution, not only because it is inherently weak and unreliable but also because it is easily fabricated and concocted. " 79 (Emphasis supplied) Even though the accused in this case tried to substantiate his denial of the crimes charged against him by submitting evidence to prove his innocence, an evaluation of the said evidence was later found by this Court to have glaring inconsistencies. In this regard, the accused failed to show any credible evidence to support his denial. Thus, denial by the accused of the offense charged should not be given evidentiary weight. The necessity for proof beyond reasonable doubt lies in the fact that "(i)n a criminal prosecution, the State is arrayed against the subject; it enters the contest with a prior inculpatory finding in its hands; with unlimited means of command with counsel usually of authority and capacity, who are regarded as public officers, and therefore as speaking semi-judicially, and with an attitude of tranquil majesty often in striking contrast to that of defendant engaged in a perturbed and distracting struggle for liberty if not for life. These inequalities of position, the law strives to meet by the rule that there is to be no conviction when there is a reasonable doubt of guilt. 80 However, proof beyond reasonable doubt does not mean such a degree of proof as, excluding possibility of error, produces absolute certainty. Suffice it to say that the law requires only moral certainty or that degree of proof which produces conviction in an unprejudiced mind. 81 That the guilt of an accused must be proved beyond reasonable doubt is the cardinal rule in our adversarial system of justice. Before he is convicted, there should be moral certainty a certainty that convinces and satisfies the reason and conscience of those who are to act upon it. 82 After careful consideration of the testimonial and documentary evidence presented by both parties, this Court finds that the prosecution was able to establish the guilt of the accused beyond reasonable doubt of the crimes charged in these consolidated cases for violation of Section 255 of the NIRC of 1997, as amended. As to the civil aspect of these consolidated cases, the same is deemed instituted herewith pursuant to Section 7 (b) (1) of Republic Act No. 9282, which provides that "criminal action and the corresponding civil action for the recovery of civil liability for taxes and penalties shall at all times be simultaneously instituted with, and jointly determined in the same proceeding by the CTA, the filing of a criminal action being deemed to necessarily carry with it the filing of the civil action, and no right to reserve the filing of such civil action separately from the criminal action will be recognized." The Computations of Deficiency Tax for Taxable Years 2002 and 2003 presented by the prosecution to prove accused's civil liabilities for taxable years 2002 and 2003 are illustrated as follows: I. Computation of Deficiency Tax for Taxable Year 2002 83 1. ADVERTISEMENTS Philippine Star (Exhibits "R" to "R-7") P1,385,108.78 Philippine Daily Inquirer (Exhibit "Z5") 1,702,871.41 2. RENTALS Roces branch (Exhibits "N" to "N-5") (P27,000 x 12 months) 324,000.00 SM City Pampanga (Exhibits "H6" to "H6-1") - (P400/sq.m. x 205.64 sq.m. x 2 1/2 months) P205,640.00 - security deposit (Oct. 15, 2002) 493,536.00 Total SM City Pampanga branch 699,176.00 3. HONDA CR-V (Exhibit "PP") Plate No. JCM-707 Honda Cars Makati, Inc. Invoice No. 030252 dated April 30, 2002 909,950.00 4. FOREIGN TRAVEL Philippine Airlines (Exhibits "Z" to "Z-10") MLA/HK/MLA (2/12/2002) Ticket No. 079-3621239887 US$397 at P53.51/dollar 21,247.24 TOTAL P5,037,353.43 Less: Source of Funds NONE Adjusted Gross Income 5,037,353.43 Less: Personal Exemption (Single) P20,000.00 10% Optional Standard Deduction 503,735.34 Total Deductions (523,735.34) Corrected Taxable Income 4,513,618.09 Less: Reported Taxable Income NONE UNREPORTED TAXABLE INCOME P4,513,618.09 Tax Due Thereon P500,000.00 P125,000.00 P4,013,618.09 x 32% 1,284,357.79 2002 DEFICIENCY INCOME TAX (BASIC) P1,409,357.79 =========== II. The Computation of Deficiency Tax for Taxable Year 2003 84 1. ADVERTISEMENTS Philippine Star (Exhibits "R" to "R-7") P703,221.75 Philippine Daily Inquirer (Exhibit "Z5") 1,128,258.48 2. RENTALS Roces branch (Exhibits "N" to "N-5") (P27,000 x 12 months) 324,000.00 The Plaza Bldg., Greenbelt branch (Exhibits "III" to "III-15") - (P75,000.00 x 4 months) P300,000.00 - security deposit 210,000.00 Total Greenbelt branch 510,000.00 SM City Pampanga branch (Exhibits "H6" to "H6-1") - (P400/sq.m. x 205.64 sq.m. x 10 months) (January to October 2003) 822,560.00 - (P440/sq.m. x 205.64 sq.m. x 2 months) (November to December 2003) 180,963.20 Total SM City Pampanga branch 1,003,523.20 3. CAPITAL INVESTMENTS Capital per DTI (Roces Branch) (Exhibit "ZZ") 45,000.00 Capital per DTI (Farmer's branch) (Exhibit "DDD") 50,000.00 Capital per DTI (Greenbelt branch) (Exhibit "HHH") 45,000.00 Capitalization Dagupan branch (Exhibits "NNN" to "NNN-15") 750,000.00 Total Capital Investment 890,000.00 4. HONDA CR-V (Exhibit "LLL") Plate NO. XLF-105 Honda Cars Balintawak, Inc. Invoice No. 24775 dated October 24, 2003 1,035,500.00 5. FOREIGN TRAVEL Philippine Airlines (Exhibits "Z" to "Z-10") a. MLA/HK/MLA Ticket No. 079-912975719 October 2, 2003 21,855.00 b. MLA/BKK/MLA Ticket No. 079-9129518586 August 2, 2003 US$317 17,432.27 c. MLA/BKK/MLA Ticket No. 079-3622218396 April 3, 2003 US$345 18,218.35 d. BKK/MLA Ticket No. 079-9130539210 Baht 15,180.00 Total foreign Travels 72,685.62 TOTAL P5,667,189.05 Less: Source of Funds NONE Adjusted Gross Income 5,667,189.05 Less: Personal Exemption (Single) P20,000.00 Net Loss per Return (Exhibits "NNN" to "NNN-15") 38,893.91 Total Deductions (58,893.91) Corrected Taxable Income 5,608,295.14 Less: Reported Taxable Income NONE UNREPORTED TAXABLE INCOME P5,608,295.14 Tax Due Thereon P500,000.00 P125,000.00 P5,108,295.14 x 32% 1,634,654.44 2003 DEFICIENCY INCOME TAX (BASIC) P1,759,654.44 =========== According to the prosecution, the foregoing amount of alleged civil liabilities were arrived at by utilizing the net worth and expenditures method. The prosecution maintains that the said method had to be resorted to since accused did not present his books and accounting records in compliance with the Letter of Authority, First Letter-Notice, Second Letter-Notice and Final Request for Presentation of Records served by the BIR Investigating Team. The prosecution cited as its basis Sections 5 (B) and 6 (B) of the National Internal Revenue Code, as amended. "SEC. 5. Power of the Commissioner to Obtain Information, and to Summon, Examine, and Take Testimony of Persons. In ascertaining the correctness of any return, or in making a return when none has been made, or in determining the liability of any person for any internal revenue tax, or in collecting any such liability, or in evaluating tax compliance, the Commissioner is authorized: xxx xxx xxx (B) To obtain on a regular basis from any person other than the person whose internal revenue tax liability is subject to audit or investigation, or from any office or officer of the national and local governments, government agencies and instrumentalities, including the Bangko Sentral ng Pilipinas and government-owned or controlled corporations, any information such as, but not limited to, costs and volume of production, receipts or sales and gross incomes of taxpayers, and the names, addresses, and financial statements of corporations, mutual fund companies, insurance companies, regional operating headquarters of multinational companies, joint accounts, associations, joint ventures or consortia and registered partnerships, and their members; xxx xxx xxx SEC. 6. Power of the Commissioner to Make Assessments and Prescribe Additional Requirements for Tax Administration and Enforcement. xxx xxx xxx (B) Failure to Submit Required Returns, Statements, Reports and other Documents. When a report required by law as a basis for the assessment of any national internal revenue tax shall not be forthcoming within the time fixed by laws or rules and regulations or when there is reason to believe that any such report is false, incomplete or erroneous, the Commissioner shall assess the proper tax on the best evidence obtainable. In case a person fails to file a required return or other document at the time prescribed by law, or willfully or otherwise files a false or fraudulent return or other document, the Commissioner shall make or amend the return from his own knowledge and from such information as he can obtain through testimony or otherwise, which shall be prima facie correct and sufficient for all legal purposes." CSIDEc From the foregoing provision cited by the prosecution, it is clear that the best evidence obtainable may be resorted to in making an assessment of the proper tax. However, in this case, there was no showing that an assessment was made by the BIR on the accused's deficiency tax for the taxable years 2002 and 2003. What the prosecution provided are mere computations of the alleged tax deficiencies of the accused for the taxable years 2002 and 2003. While it is true that the foregoing approximation of the alleged income earned by the accused for taxable years 2002 and 2003 were relied upon by this Court in finding the accused guilty beyond reasonable doubt of the crimes charged in the information, the said computation made by one of the Revenue Officers who took part in the investigation of the accused's unreported income may not be used as basis to impose the civil liabilities prayed for by the prosecution. In the case of Ungab vs. Cusi, Jr. , 85 the Supreme Court said: "While there can be no civil action to enforce collection before the assessment procedures provided in the Code have been followed, there is no requirement for the precise computation and assessment of the tax before there can be a criminal prosecution under the Code." 86 Plainly, an assessment of the tax before there can be a criminal prosecution is not necessary. Whereas, in case of a civil action for collection of the tax, the assessment procedures provided by the NIRC of 1997, as amended, should be complied with. Accordingly, considering that there was no assessment issued by the BIR against the accused, the foregoing computations presented by the prosecution to prove the civil liabilities of the accused for the taxable years 2002 and 2003 may not be used by this Court as its basis to impose the civil liabilities prayed for by the prosecution. Therefore, a proper determination of the civil liabilities for the non-payment of tax based on the computations submitted by the prosecution may not be achieved. Moving on to the ascertainment of the penalties to be imposed, this Court found instructive the pertinent portion of Section 255 of the NIRC of 1997, as amended, which 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 and 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 ." (Emphasis supplied) Here, since there are two Informations filed against the accused, docketed as CTA Crim. Case Nos. O-013 and O-015, one for the failure to file income tax return for taxable year 2002 and the other for failure to supply the correct and accurate information in the return for taxable year 2003, respectively, the imposition of a fine of P10,000.00 for each case is proper. Furthermore, the imposition of the indeterminate penalty of imprisonment of one (1) year as minimum, to two (2) years as maximum for each crime charged was also found to be proper under the circumstances. This, however, is without prejudice to Section 280 of the NIRC of 1997, as amended, which provides for the imposition of subsidiary penalty in the event that the accused has no property with which to meet the fine imposed upon him by the Court or is unable to pay such fine. WHEREFORE , premises considered, judgment is hereby rendered: 1. In Criminal Case No. O-013, finding the accused Joel Cortez Mendez GUILTY beyond reasonable doubt for violation of Section 255 of the National Internal Revenue Code of 1997, as amended, and is hereby SENTENCED to suffer an indeterminate penalty of one (1) year, as minimum, to two (2) years, as maximum, and is ORDERED TO PAY a fine in the amount of P10,000.00, with subsidiary imprisonment in case accused has no property with which to meet such fine, pursuant to Section 280 of the NIRC of 1997, as amended; and 2. In Criminal Case No. O-015, finding the accused Joel Cortez Mendez GUILTY beyond reasonable doubt for violation of Section 255 of the National Internal Revenue Code of 1997, as amended, and is hereby SENTENCED to suffer an indeterminate penalty of one (1) year, as minimum, to two (2) years, as maximum, and is ORDERED TO PAY a fine in the amount of P10,000.00, with subsidiary imprisonment in case accused has no property with which to meet such fine, pursuant to Section 280 of the NIRC of 1997, as amended. ScTIAH SO ORDERED . (SGD.) JUANITO C. CASTAEDA, JR. Associate Justice Cielito N. Mindaro-Grulla, J., concurs. Caesar A. Casanova, J., with dissenting opinion. Separate Opinions CASANOVA , J., dissenting opinion : With due respect to my esteemed colleagues, I dissent as to the finding that the accused is guilty beyond reasonable doubt for willful failure to file his income tax return (ITR) for the taxable year 2002 and his willful failure to supply correct and accurate information in his ITR for the taxable year 2003, both in violation of Section 255 of the Republic Act (R.A.) No. 8424 (NIRC). I am dissenting from the majority opinion for the following reasons: 1. The Court does not have jurisdiction over the instant cases. Both Informations filed against the accused state an ESTIMATED AMOUNT, thus due to the lack of certainty in the amount alleged in both Informations, it is impossible to determine which Court has jurisdiction over these two cases. 2. The accused Dr. Joel Mendez was not identified in open court by the prosecution witnesses. 3. The prosecution was not able to prove beyond reasonable doubt, the amount of the alleged tax deficiency. 4. The amounts stated in both Informations are bloated or swelled, thus cannot be relied upon. 5. There are circumstances that raised grave and serious doubts about the truthfulness and credibility of prosecution witnesses' story. Some witnesses are not competent to attest to the truth of the matters on which they are testifying. The records of the case, provides, among others, that: "THE CHARGE" Accused Joel C. Mendez is charged before this Court with the crime of Violation of Section 255 of Republic Act (R.A.) No. 8424, otherwise known as the "Tax Reform Act of 1997", as amended, under the following Amended Informations, which read as follows: "INFORMATION" Criminal Case No. O-013 "That on or about the 15th day of April 2003, at Quezon City, and within the jurisdiction of this Honorable Court, the above-named accused, a duly registered taxpayer, and sole proprietor of 'Weigh Less Center', 'Mendez Body and Face Salon and Spa', and 'Mendez Body and Face Skin Clinic', with principal office at No. 31 Roces Avenue, Quezon City, and with several branches in Quezon City, Makati City, San Fernando, Pampanga and Dagupan City, did then and there, willfully, unlawfully and feloniously, fail to file his income tax return (ITR) with the Bureau of Internal Revenue for taxable year 2002, to the damage and prejudice of the Government in the estimated amount of P1,522,152.14, exclusive of penalties, surcharges and interest. CONTRARY TO LAW." Criminal Case No. O-015 "That on or about the 15th of April 2004, at Dagupan City, and within the jurisdiction of this Honorable Court, the above-named accused, a duly registered taxpayer, and sole proprietor of 'Weigh Less Center', 'Mendez Body and Face Salon and Spa', and 'Mendez Body and Face Skin Clinic', with several branches in Quezon City, Makati City, San Fernando, Pampanga and Dagupan City, engaged in the business of cosmetic surgery and dermatology, willfully, unlawfully and feloniously, did then and there, fail to supply correct and accurate information in his income tax return (ITR) for taxable year 2003 filed in the Revenue District of Calasiao, Pangasinan, by making it appear under oath that his income for taxable year 2003 was derived mainly from his branch in Dagupan City, and failing to declare his consolidated income from his other 'Weigh Less Center', 'Mendez Body and Face Salon and Spa', and 'Mendez Body and Face Skin Clinic' branches, to the damage and prejudice of the Government in the estimated amount of P2,107,023.65, exclusive of penalties, surcharges and interest.' HCDAac CONTRARY TO LAW." To briefly narrate the facts of the instant cases, the records showed that Warrants of Arrest against the accused in Criminal Case Nos. O-013 and O-015 was issued by this Court. The accused voluntarily surrendered before this Court and posted the required bail bond for his provisional liberty, by way of cash bonds. Upon arraignment in both cases, accused entered a plea of "Not Guilty" to the crimes charged. During pre-trial, CTA Crim. Case No. O-013 and CTA Crim. Case No. O-015 were consolidated as per agreement by the parties. Trial proceeded, wherein the prosecution presented both testimonial and documentary evidence. The prosecution called its twenty (20) witnesses to the witness stand. The accused filed his "Demurrer to Evidence", which the Court denied in a Resolution. Thereafter, the defense presented its evidence, calling to the witness stand its three (3) witnesses. In addition, the defense presented its documentary evidence. After the Court received the respective Memorandum of the parties, a Resolution was issued submitting the case for decision. THE EVIDENCE PRESENTED BY THE PROSECUTION The prosecution presented the following witnesses: I. ATTY. GRACE BELARMINO-CRUZ Atty. Belarmino-Cruz, the first witness for the prosecution, testified that she is a Revenue Officer assigned at the National Investigation Division ("NID") of the Bureau of Internal Revenue ("BIR") and among her functions are the following: (a) to audit and investigate books of accounts and other accounting records of taxpayers for internal revenue purposes and to submit corresponding reports thereon; and (b) to investigate individuals and entities that may have committed violation of tax laws and recommend criminal prosecution of violators. She further testified that pursuant to a Memorandum dated September 8, 2004 issued by their NID Chief, Atty. Arnel Guballa, referring the case of Dr. Joel Mendez for alleged non-issuance of official receipts, she, together with others, conducted an investigation on Dr. Mendez, a medical practitioner in the field of bariatric medicine and other beauty and cosmetic services, and on the basis of their initial findings, caused the issuance of a Letter of Authority ("LOA") No. 00002438 dated November 8, 2004, authorizing the examination of the books of accounts and other accounting records of Dr. Mendez for the period covering the taxable years 2001, 2002 and 2003. Pursuant to the LOA, a First Letter-Notice for the production of books of accounts and other accounting records was served and duly received by the authorized representative of Dr. Mendez. Despite the receipt of the First Letter-Notice, Dr. Mendez did not submit the required documents, hence a Second Letter-Notice and thereafter, a Final Request for the presentation and/or production of required records/documents were served upon Dr. Mendez and were duly received by his authorized representatives. Atty. Belarmino-Cruz further stated that due to the failure of Dr. Mendez to present or produce the needed records and documents for examination, their team was constrained to proceed with the investigation using "Third Party Information" and pursuant to the "Best Evidence Obtainable Rule" allowed under Section 5 (B), in relation to Section 6 (A) and (B) of the Tax Code. The investigation team then gathered information on the accused, verifying certain data and information from different government agencies and private entities. Verification of the business activities of Dr. Mendez revealed that he has been operating as a single proprietor doing business for the taxable years 2001, 2002 and 2003 under the following trade names and businesses: a. Mendez Body and Face Salon and Spa No. 31-B Roces Avenue, Quezon City Registered with RDO No. 39-South Quezon City on May 6, 2002 b. Mendez Body and Face Salon and Spa B-3 3/F New Farmer's Plaza, Cubao, Quezon City Registered with RDO No. 40-Cubao on October 24, 2003, with business permit from the Office of the Mayor of Quezon City earlier issued on September 15, 2003 covering the said branch. HEcIDa c. Mendez Body and Face Skin Clinic The Plaza Building, Greenbelt, Ayala, Makati City Registered with RDO No. 47-East Makati on April 30, 2004 d. Weigh Less Center SM City, San Fernando, Pampanga Registered with RDO No. 21-San Fernando, Pampanga on January 17, 2003 e. Mendez Weigh Less Center 2/F CSI Mall, Lucao District, Dagupan City Registered with RDO No. 4-Calasiao, Pangasinan on May 16, 2003 The testimony of Atty. Belarmino-Cruz further stated that the verification of the tax records from the BIR Integrated Tax System ("ITS") revealed that Dr. Mendez did not file his income tax returns for the taxable years 2001 and 2002, as evidenced by the following documents: a. Certification of Revenue District Clavelina S. Nacar of RDO No. 39-South Quezon City dated February 22, 2005; b. Certification of Revenue District Officer Romeo E. Naranjo of RDO No. 40-Cubao, Quezon City dated March 7, 2005; c. Certification of Revenue District Officer Simplicio A. Madulara of RDO No. 49-East Makati dated March 2, 2005; d. Letter-certification of Revenue District Officer Florante R. Aninag of RDO No. 21-San Fernando, Pampanga dated February 22, 2005; e. Certification of Assistant Commissioner Alberto A. Pio de Roda, Information Systems Operation Service dated February 28, 2005; A Certification from Alex C. Perez, Chief of Document Processing Section of Revenue District No. 39-South Quezon City dated March 9, 2005 stating that as per inquiry with the BIR ITS, there is no record on file of the Annual Income Tax Return of Dr. Mendez for the taxable years 1995-2000, was likewise obtained by the team of Atty. Belarmino-Cruz. Furthermore, the investigation showed that Dr. Mendez filed his Annual Income Tax Return for the taxable year 2003 with Revenue District Office No. 4-Calasiao, Pangasinan for his Weigh Less Center located at the CSI City Mall, Lucao District, Dagupan City, as evidenced by a Certification dated February 23, 2005 issued by Mr. Joseph Catapia, Revenue District Officer RDO No. 4, despite of the existence of his principal place of business at 31 Roces Avenue, Quezon City. In her testimony, Atty. Belarmino-Cruz further stated that their team was able to establish that the filing of Dr. Mendez of his income tax return with RDO No. 4 was irregular and was intended to evade payment of correct taxes since Dr. Mendez, a single proprietor of different businesses, is required to file a consolidated income tax return. Moreover, the non-filing of Dr. Mendez of his income tax returns for the taxable years 2001 and 2002 was willful and done with deliberate to evade payment of taxes considering that Dr. Mendez has been operating several business for income and making capital investments since 1993. Atty. Belarmino-Cruz testified that the verification with the records of the Securities and Exchange Commission revealed that Dr. Mendez has been engaged in the practice of his profession since 1996 through Weigh Less Center Co., a registered as a Partnership on September 23, 1996. Their investigation further revealed that as early as 1993, Dr. Mendez made investments in the following business: (a) Sabili Mendez Medical Services Co. (1993); (b) Mendez Medical Services Co. (1996); (c) Dr. Mendez Industrial and Lying-in Clinic Ltd. Co. (1996); (d) Primehealth Card Services, Incorporated (1994); (e) Oro Cup, Co. (1996); (f) Oro Glass and Aluminum Supply Ltd., Co. (1996); (g) The New Millenium Network Ltd. Co. (1996); and (h) The Big and Small Art, Co. (2001). The investigation also showed that advertisements of Mendez Medical Group Weigh Less Center located at Greenbelt, Makati City stated that the Dr. Mendez has been practicing since 1996. The team was also able to obtain a copy of the Lease Contract between Miss Lita Gregorio, lessor and Dr. Mendez, lessee, executed on the former's property located at Roces Avenue, Quezon City, where the health clinic and art gallery of Mendez was located. The said lease contract was found to cover the period August 2001-August 2007. Likewise, a Certification from the Mr. Caballero, the Chief Accountant of The Plaza, on the Lease Contract executed between The Plaza, Inc., lessor and Dr. Mendez, lessee, covering the period September 2003-December 2005, on the former's property located at Greenbelt, Makati City, which is being used by the latter as an out-patient derma clinic, was also obtained by the team. Atty. Belarmino-Cruz's testimony also stated that the investigating team was able to obtain information from PhilSTAR Daily, Inc. that Dr. Mendez has placed a total of sixty (60) advertisements of his different businesses with the Philippine Star from April 16 to October 31, 2001, two hundred thirty-five (235) advertisements from January to December 18, 2002 and ninety-six (96) advertisements from January 6, 2003 to December 17, 2003, thus establishing that the businesses of Dr. Mendez were in operation during those years, and thus he was earning income from the said establishments. The investigating team also obtained information from the Department of Trade and Industry that the following businesses were registered under the name of Dr. Mendez: (a) Mendez Body and Face Salon & Spa; (b) Mendez Body and Face Salon & Spa-Farmers Branch; and (c) Mendez Body and Face Skin Clinic. acCTIS Atty. Belarmino-Cruz further testified that her team also obtained certification from the Land Transportation Office as to the various vehicles purchased by Dr. Mendez during 1996, 2000, 2001, 2002 and 2003, duly registered under his name. Certified true copies of the certificates of registration, official receipts, vehicle sales invoice, confirmation certificate, deed of sale, promissory note and certification covering the said vehicles were also obtained by the team. Also, the testimony of Atty. Belarmino-Cruz stated that her team gathered information from the Bureau of Immigration and Philippine Airlines regarding the foreign travels of Dr. Mendez for the years 1995-2003, which reached a total of seventy-three (73) trips. Certified copies of plane tickets from Philippine Airlines which were paid by the accused in connection with these travels were likewise obtained by the team. Moreover, the team obtained information on the purchase of Dr. Mendez of a condominium unit at One Wilson Place Condominium in San Juan, Metro Manila. Finally, Atty. Belarmino-Cruz stated that on the basis of the data and documentary evidence that they gathered, they computed the estimated amount of income that Dr. Mendez earned for the taxable years 2001, 2002 and 2003 based on his net worth and expenditures. Applying these methods, the investigating team computed that Dr. Mendez earned income from various sources but did not report the same to the prejudice of the government for the taxable years 2001, 2002 and 2003. II. MISS CLAVELINA S. NACAR Miss Clavelina S. Nacar, the prosecution's second witness, testified that as part of her functions as the incumbent Revenue District Officer of Revenue District Office No. 39, South Quezon City, she issued a Certified Copy of the Certificate of Registration OCN 3RC0000327953 dated May 6, 2002 in the name of Mendez, Joel Cortez, under the trade name Mendez Body and Face Salon & Spa. She further testified that she caused the issuance of a Certification dated February 22, 2005, which substantially states that upon verification with the BIR Integrated Tax Systems ("ITS"), it was shown that the taxpayer Mendez has filed its registration on May 6, 2002 and that he has no records of returns filed for taxable years 2001, 2002 and 2003 as of the issuance of the Certification. Lastly, she stated that she also issued a Certification dated October 18, 2006, stating that per ITS, Dr. Mendez registered the following: TIN BUSINESS ADDRESS DATE STATUS NAME REGISTERED 120-644- JOEL C. # 31 Roces 05/06/02 Professional 683-000 MENDEZ, M.D. Avenue, QC MENDEZ BODY Single AND FACE Proprietor SALON & SPA 120-644- MENDEZ BODY #31-B Roces 10/24/03 Single 683-004 AND FACE Avenue, QC Proprietor SALON & SPA 120-644- MENDEZ BODY #18 V. Luna 03/30/04 Single 683-005 AND FACE Rd., Brgy. Proprietor SALON & SPA Pinyahan, QC III. MR. ROMEO NARANJO Mr. Romeo Naranjo, the prosecution's third witness, testified that he is the incumbent Revenue District Officer of Revenue District Office No. 40, Cubao, Quezon City and that as part of his functions as such, he caused the issuance of Certificate of Registration OCN 3RC0000345927 dated October 24, 2003 in the name of Mendez, Joel Cortez, under the trade name of Mendez Body and Face Salon & Spa-Farmers. He also stated that he issued a Certification dated March 7, 2005, which says that according to the records of the BIR, Dr. Mendez, with TIN 120-644-683-003 and business address at B-3 3rd Flr. New Farmer's Plaza, Cubao, Quezon City was registered as a branch with RDO 40 on October 24, 2003 and that the said taxpayer has not filed any return except for the Payment Form for Registration Fee for the year 2004. Finally, Mr. Naranjo testified that he caused the issuance of a Certification dated October 17, 2006 which substantially states that Dr. Mendez was registered as an individual/sole proprietor under the trade name Mendez Body & Face Salon & Spa-Farmers and is liable only to pay Annual Registration Fee as the tax type of his registered activity. IV. MR. ALEX PEREZ Mr. Alex Perez, the prosecution's fourth witness, testified that as the Documentary Processing Section Chief of the Revenue District Office No. 39, South Quezon City, he is authorized to issue certifications as to the status of the taxpayers within his area of jurisdiction. He further testified that he caused the issuance of the following certifications: (a) Certification dated March 9, 2005, stating among others, that from the available records on the file, taxpayer Dr. Joel Mendez, with TIN 120-644-683-000 did not file any annual income tax return for the taxable years 1995-2000; and (b) Certification dated August 28, 2006, which states that a verification with the BIR records revealed that Weigh Less Center Co., with TIN 222-822-458-000 has been registered on March 4, 2003 and that it did not file any Withholding Tax Return for the taxable years 2003, 2004 and 2005. EDIHSC V. MR. VON M. LENTEJAS Mr. Von Lentejas, the fifth witness for the prosecution, testified that pursuant to his responsibilities as the PSRU Specialist in the Securities and Exchange Commission, he examined the following documents: a. SEC Registration No. A1996-06633 of Weigh Less Center, Co., dated September 23, 1996, together with Articles of Partnership of Weigh Less Center Co., dated September 10, 1996; b. SEC Registration No. AP093-001258 of Sabili Mendez Medical Services Co., together with Articles of Incorporation of Sabili Mendez Medical Services Co., dated August 3, 1993; c. SEC Registration. No. AP093-001258 of Mendez Medical Services Co. (formerly Sabili Mendez Medical Services Co.) dated August 8, 1996, together with the Articles of Incorporation of Sabili Medical Services Co. dated June 5, 1996; d. SEC Registration No. AP096-00270 of Dr. Mendez Industrial and Lying-In Clinic Ltd. Co. dated February 6, 1996, together with the Articles of Partnership of Dr. Mendez Industrial and Lying-In Clinic Ltd. Co. dated January 23, 1996; e. SEC Registration No. AS094-000937 of Prime Health Card Services, Incorporated dated February 1, 1994, together with the Articles of Incorporation of Prime Health Card Services, Incorporated dated January 13, 1994; f. SEC Registration No. AP096-000909 of Oro Cup, Co. dated May 2, 1996, together with Articles of Partnership of Oro Cup, Co. dated April 22, 1996; g. SEC Registration No. AP096-00184 of Oro Glass and Aluminum Supply Ltd. Co. dated January 26, 1996, together with Articles of Partnership of Oro Glass and Aluminum Supply Ltd. Co. dated January 25, 1996; h. SEC Registration No. AP096-00294 of The Millenium Network Ltd. Co. dated February 7, 1996, together with Articles of Partnership of The New Millenium Network Ltd. dated February 5, 1996; and i. SEC Registration No. A200111706 of The Big and Small Art Co. dated August 8, 2001 together with the Articles of Partnership of the Big and Small Art Co. dated May 24, 2001. Mr. Lentejas further testified that he affirms and confirms that the above-mentioned documents were issued at the Public Reference Unit of the SEC and that he certified and attested that the said documents are faithful reproduction of the original. VI. MR. MAHINARDO MAILIG Mr. Mahinardo Mailig, the prosecution's sixth witness, testified that he is the incumbent Revenue District Officer, Revenue District Office No. 47, East Makati and that his duties and responsibilities include, among others, administering and implementing the assessment, collection, registration, administrative, document processing and taxpayer service programs of the BIR within his area of jurisdiction; and referring to Special Investigation Division cases which were discovered to have an indication of tax fraud and submitting report thereon for consolidation and submission to the BIR National Office. He further testified that he is also authorized to issue certifications on the status of all the taxpayers in his area of jurisdiction based on the Integrated Tax System (ITS) of his office. Mr. Mailig confirmed that the certification dated March 2, 2005 and the Certificate of Registration dated April 30, 2004, both issued by his predecessor Simplicio A. Madulara, contain accurate and correct data, which are also among the data included in the Certification dated October 18, 2006 that he himself issued. The Certification issued by Mr. Mailig states that based on the BIR records, Dr. Joel Mendez, with TIN 120-644-683-007 and with business address at The Plaza Bldg., Greenbelt, Ayala Ctr., San Lorenzo Village, Makati City was registered as a branch with RDO 47 on April 30, 2004 under Certificate of Registration No. OCN-9RC0000121488; and that Dr. Mendez was registered as an individual/sole proprietor under the trade name Mendez Body & Face Skin Clinic and the registered tax types are Annual Registration Fee, Miscellaneous Tax and Documentary Stamp Tax-Regular. VII. MR. FLORANTE ANINAG Mr. Florante Aninag, the prosecution's seventh witness, testified that as the Revenue District Officer, Revenue District Office No. 21, San Fernando, Pampanga, it is among his duties to administer and implement the assessment, collection, registration, administrative, document processing and taxpayer service programs of the BIR within his area of jurisdiction, as well as to refer to Special Investigation Division cases which were discovered to have an indication of tax fraud and submit report thereon for consolidation and submission to the BIR National Office. He is also authorized to issue certifications as to the status of the taxpayers in his area of jurisdiction. He stated that he confirms the accuracy and the correctness of the data contained in the Certificate of Registration dated January 17, 2003 and his letter dated February 22, 2005. The same data are also found in the Certification dated October 17, 2006, which states that Dr. Mendez with TIN 120-644-683-001, with registered address at AX1 164-166 SM City Pampanga was registered in RDO 21 under the business trade name Weigh Less Center SM City Pampanga on January 17, 2003. VIII. MR. JOSEPH M. CATAPIA Mr. Joseph M. Catapia, the eighth witness for the prosecution, testified that he is the Revenue District Officer of Revenue District Office No. 4, Calasiao, Pangasinan and that among his responsibilities as such is administering and implementing the assessment, collection, registration, administrative, document processing and taxpayer service programs of the BIR within his area of jurisdiction as well as referring to Special Investigation Division cases which were discovered to have an indication of tax fraud and submit report thereon for consolidation and submission to the BIR National Office. He states that he is authorized to issue certifications as to the status of all the taxpayers in his area of jurisdiction. He further testified that he caused the issuance of a Certification dated February 23, 2005 which substantially states that Mr. Joel Cortez Mendez, with head office at #31 Roces Avenue, Quezon City, is registered as a branch in RDO 4, on May 16, 2003, with Certificate of Registration No. 004B-0305-000274 as Mendez Weighless Center, which is located at CSI City Mall, Lucao District, Dagupan City, with the following tax types: Withholding Tax-Compensation, Withholding Tax-Expanded and Registration Fee. In addition, Mr. Catapia stated that he caused the issuance of a Letter dated August 15, 2006 with attachments consisting of certified true copies of the following documents: a. Annual Income Tax Return for the taxable year 2003; b. Independent Auditor's Report and accompanying Balance Sheet, Income Statement, Statement of Cash Flows; Schedule of Properties and Equipments and Accumulated Depreciation and Schedule of Taxes and Licenses of Mendez Weighless Center as of December 31, 2003; c. BIR Form Nos. 1601C and 1601E for May 2003; d. List of disposed forms/papers destroyed by termites; e. VAT Taxpayer Ledger Card; f. Taxpayer Withholding Tax Remittance Ledger Card; and g. Certificate of Creditable Tax Withheld at Source. Finally, Mr. Catapia testified that he prepared a letter dated May 8, 2006, explaining that the original source documents filed by the taxpayer concerned which were made the basis of the entries in Exhibits NNN-13 (VAT Taxpayer Ledger Card) and NNN-14 (Tax Payer Withholding Tax Remittance Card) were already destroyed by termites and considered disposable materials and the existing documents on file merely consist of certified true copies reproduced and submitted to the BIR Head Office prior to the termite infestation of the source documents. DCcHAa IX. MISS PERLITA R. DE LARA Miss Perlita de Lara, the prosecution's ninth witness, testified that as the Chief Accountant of PhilSTAR Daily, Inc., she is tasked to keep account of all transactions of PhilSTAR Daily, Inc. and to certify all documents issued by their office concerning ad placement records. Pursuant to her responsibilities as such officer, she issued a Certification dated February 28, 2006, which states that based on the Ad Placement Records, Dr. Joel Cortez Mendez of #31 Roces Avenue, Quezon City had requested the Philippine Star to advertise his businesses in the names of Weighless Center/Body and Face by Mendez/Mendez Medical Group and other related beauty schemes from April 16 to October 31, for the taxable year 2001; from January to December 18, for the taxable year 2002; and from January 6 to December 17 for the taxable year 2004. She further testified that she caused the issuance of the following documents: a. List of Ad placements of Joel Mendez's businesses covering the years 2001 to 2004; b. List of Ad placements of Joel Mendez's businesses covering January 2001-May 1-20, 2005 with cost of advertisements paid by Dr. Mendez; and c. Official Receipt (Advertising Receivables) No. 130203 dated May 26, 2001 issued by the Philippine Star Daily to Weigh Less Center. Miss de Lara further affirmed and confirmed that the aforementioned documents were issued by the Accounting Department of PhilSTAR Daily, Inc.; that the entries contained therein are were based on the ad placement billed, collected and kept in their office and that she personally certified and attested, by affixing her signature on each and every page of the documents, that the said documents are true and correct reproduction of the official file thereof in the custody of PhilSTAR Daily, Inc. X. MR. JOSEPH RODRIGUEZ Mr. Joseph Rodriguez, the prosecution's tenth witness, testified that he is a Library Staff at the Photo Library Department of PhilSTAR Daily, Inc. and as such, he is in-charge of filing and clipping everyday newspapers and the issuance of the certified copies of newspaper publication filed in their office. Pursuant to the responsibilities of his position, he caused the issuance of certified true copies of the following advertisements of Dr. Mendez's businesses in the Philippine Star: a. Article entitled "Weighing in for the Holidays" published in the Phil. Star Dec. 19, 2000 Tuesday edition; b. Advertisement of Weigh Less Center published in the Phil. Star Daily, Inc. dated April 16, 2001 Monday edition; c. Advertisement of Weigh Less Center published in the Phil. Star Daily, Inc. dated Sept. 24, 2001 Monday edition; d. Advertisement of Weigh Less Center published in the Phil. Star Daily Inc. dated Jan. 16, 2002 Wednesday edition; e. Article entitled "Dr. Joel Mendez: Weight and see" published in the Phil. Star Daily, Inc. dated July 14, 2002 Sunday edition; and f. Advertisement of Weigh Less Center published in the Phil. Star Daily, Inc. dated January 6, 2003. Lastly, Mr. Rodriguez testified that he affirms and confirms that the aforementioned documents were issued at the Photo Library Department of PhilSTAR Daily, Inc. and that he was the one who certified and attested, by affixing his signature on each and every page of the documents, that the said documents are true and correct reproduction of the official file thereof in the custody of the PhilSTAR Daily, Inc. XI. MISS ARABELLE O. PETILLA Miss Arabelle Petilla, the eleventh witness of the prosecution, testified that as the Chief, Records Section, Management Information Division of the Land Transportation Office, it is among her duties to issue verifications as to motor vehicles registration. Pursuant to this function, she caused the issuance of a letter-reply dated February 28, 2005 concerning motor vehicle registration under the name of Joel Cortez Mendez, which contains the following information: STHAID Name JOEL C. MENDEZ Name JOEL C. MENDEZ Address 194 Wilson St., Wilson Address 3 Pugo St., Valilia, Palace, Greenhills, Novaliches, QC San Juan Plate No. XPD-662 Plate No. JCM-707 Make/Type Mitsubishi Lancer Make/Type Honda CRV JTMXI MV File No. 1384-200223 MV File No. 1336-137636 Engine No. 4G18AA2767 Engine No. PRL03222000088 Chassis No. MMBSRCS3A2F002938 Chassis No. PADRD4702V000078 Model 2004 Model 2002 Denomination Car Denomination Utility Vehicle LTO DO San Juan District Office LTO DO Mandaluyong District Office Name JOEL C. MENDEZ Name JOEL C. MENDEZ Address 31 Roces Ave., QC Address 3 Pugo St., Valilia, Novaliches, QC Plate No. XLF-105 Plate No. XAR-979 Make/Type Honda CRV Make/Type Ford Lynx MV File No. 1344-111958 MV File No. 1308-229788 Engine No. PRLD83-3110917 Engine No. 7D5FF-001652 Chassis No. PADRD48303V110870 Chassis No. PE1BVFK11AD00810 Model 2003 Model 2001 Denomination Utility Vehicle Denomination Car LTO DO Manila North LTO DO Camp Aguinaldo District Office District Office Name JOEL C. MENDEZ Name JOEL C. MENDEZ Address 14 Kamagong St., Address 3 Puso St., Valilia Vill., Dona Amparo, Nova. Nova. Proper, QC Proper, QC Plate No. UMY-498 Plate No. WNN-575 Make/Type Nissan Sentra Make/Type Ford Lynx MV File No. 1340-179364 MV File No. 1312-201191 Engine No. GA14-619810B Engine No. 7D5FF-000631 Chassis No. BAVALDFB14-B6723 Chassis No. PE1BVHN1- Y1AB00419 Model 1996 Model 2000 Denomination Car Denomination Car LTO DO Manila East District LTO DO Diliman District Office Office Name JOEL C. MENDEZ Name JOEL C. MENDEZ Address 3 Puso St., Valilia Vill., Address 3 Pugo St., Valilia Vill., Nova Proper, QC Nova., QC Plate No. XJK-531 Plate No. TMP 10 Make/Type Kia KC2700 Make/Type Hyundai Coupe MV File No. 1356-37656 MV File No. 1340-335557 Engine No. J2-375609 Engine No. G4GC3832598 Chassis No. KNCSD211247985057 Chassis No. KMHHN61DP4 U124639 Model 2004 Model 2004 Denomination Utility Vehicle Denomination Car LTO DO Marikina District Office LTO DO Manila East District Office Name JOEL C. MENDEZ Address 3 Pugo St., Valilia Vill., Nova. Quezon City Plate No. XPP-722 Make/Type Peugeot 206CC MV File No. 1308-280057 Engine No. 10fx4x2197528 Chassis No. VF32DNFUR4Y060816 Model 2004 Denomination Car LTO DO Camp Aguinaldo District Office Finally, Miss Petilla testified that she caused the issuance of the Certification dated February 5, 2007, which substantially states that all the information contained in her letter-reply to Mr. Arnel Guballa of the BIR dated February 28, 2005 were all taken from the LTO-IT System database. XII. MISS EMMA C. ASUSANO Miss Emma Asusano, the twelfth witness for the prosecution, testified that she is the NCR Regional Caretaker of the Department of Trade and Industry and that part of her functions as such, is the issuance of certifications on business registration on file with their office. She stated that in view of the voluminous requests for certifications on business registration, she authorized Assistant Regional Director Ferdinand Manfoste to perform said function on her behalf in case she is absent or unable to do the same due to concurring need for her to do equally important functions and duties. That in view of this authorization, Assistant Regional Director Manfoste issued three (3) certifications, all dated February 17, 2005 covering the business name owned by Dr. Joel Mendez. The said certifications substantially state that Mendez Body and Face Salon & Spa, with Certificate Number 00106572 registered on May 26, 2003; Mendez Body and Face Salon & Spa-Farmers Branch, with Certificate Number 00158794 registered on July 31, 2003; and Mendez Body and Face Clinic, with Certificate No. 00193096 registered on September 17, 2003, are all registered under the name of Dr. Joel Cortez Mendez. Miss Susano confirms and affirms that the subject certifications were duly issued with her authority and that the same are based on record filed with their office. XIII. MR. JOSE VILLAREAL Mr. Jose Villareal, the prosecution's thirteenth witness, testified that as the Vice President-Finance of the Philippine Daily Inquirer, Inc., his functions include the management of financial resources and services of the corporation, the overseeing of the financial records and accounting systems and human resources of the finance division, the preparation of financial projections and budgets and the issuance of certifications and attestation to documents in compliance with government regulations. Pursuant to his duties as such, he caused the issuance of a Certification dated February 26, 2007, together with attachments, which substantially states that Weighless Center has made advertising placements for the year 2001 to 2003 with Philippine Daily Inquirer, Inc. and that all the gross sales from ad placements were reported to the BIR by the Philippine Daily Inquirer during the required period. Finally, Mr. Villareal confirms and affirms that the information and data contained in the subject certifications, and its related attachments, are based on the official computer file of the Philippine Daily Inquirer and that he personally caused the reproduction of the attachments to these certifications. DCAEcS XIV. MR. ELIAS S. OLASIMAN Mr. Elias Olasiman is the fourteenth witness of the prosecution. He testified that he is an Immigration Officer and Authorizing Signing Officer of the Verification and Certification Unit of the Bureau of Immigration and among the functions of his position is the issuance of certifications on immigration status, travel records, not the same person, derogatory records, BI clearance pending applications and certified true copy of derogatory records. He confirmed that the Letter-reply dated April 5, 2005 issued by Atty. Roy Almoro, the Executive Director of the Bureau of Immigration contain accurate and correct data. The same data is found in the Certification dated October 11, 2006, issued by Mr. Olasiman, which contains the travel records of Dr. Mendez as appearing in the Bureau of Immigration Computer Database File. Lastly, Mr. Olasiman affirms and confirms that his Certification dated October 11, 2006 are true and correct reproduction of the official records on file with the Verification & Certification Unit of Bureau of Immigration. XV. MISS JOSEFINA WAN-REMOLLO Miss Josefina Wan-Remollo, the prosecution's fifteenth witness, testified that as the Vice-President for Legal Operations of SM Legal Department, she works closely with the Leasing Department of the SM Prime Holdings, Inc. and review its operations including the various lease contracts which it enters with the tenants in its different branches, including SM City Pampanga. She further testified that in compliance with the subpoena issued by the BIR, copies of the Lease Contract entered into by SM Prime Holdings, Inc. with Dr. Mendez dated December 28, 2002 and Letter to Dr. Joel Mendez dated May 11, 2004 were furnished to the BIR. Finally, she stated that in compliance with the subpoena issued by the Honorable Court and for purposes of comparison, she brought the originals of the aforementioned documents in order to establish the existence and authenticity thereof. XVI. MR. ALEXANDER MARTINEZ Mr. Alexander Martinez, the prosecution's sixteenth witness, testified that as a Revenue Officer of the BIR assigned at the NID, he is tasked to conduct audit/investigation of books of accounts and other accounting records of taxpayers for internal revenue tax purposes and submit corresponding reports; and to investigate individuals and entities that may have committed violation of tax laws and recommend criminal prosecution of violators. He further testified that pursuant to a Memorandum dated March 3, 2005 issued by their NID Chief Atty. Arnel Guballa, their investigating team was directed to assist in the examination for all internal revenue tax purposes, of the books of accounts and related accounting records covering the taxable years 2001 to 2003 of Dr. Joel Mendez pursuant to Letter of Authority ("LOA") No. 2001-00002438 dated November 8, 2004. The said LOA, together with First Letter-Notice for the production of books of accounts and accounting records was served on November 10, 2004 and was duly received by Cherry Perez, who represented herself as the authorized representative of Dr. Mendez. Despite receipt of the First Notice, Dr. Mendez did not submit the required documents. Hence, subsequent notices for the presentation and/or production of the required records/documents were served by the investigating team upon Dr. Mendez and were duly received on November 24, 2004 and January 11, 2005 by his accountant and employee, Richard Bianan and Carla Yadao, respectively. Mr. Martinez further testified that due to the failure of Dr. Mendez to present or produce the needed records and documents for examination despite several notices, the investigating team, headed by Atty. Grace Belarmino-Cruz, was constrained to proceed with the investigation through "Third Party Information" and pursuant to the "Best Evidence Obtainable Rule" allowed under Section 5(B), in relation to Section 6(A) and (B) of the Tax Code. Mr. Martinez stated that his team assisted in collating and evaluating the documents obtained by the investigating team from various government offices and private entities and that he, being the Group Supervisor, was specifically tasked to prepare the computation of the income from all sources derived by the accused based on all the documents, data and information obtained by the investigating team for taxable years 2002 and 2003 and the computation of the taxes that the accused should have paid in relation to the income that he derived for the said taxable years. Finally, Mr. Martinez testified that in computing the aforementioned income and tax due, he employed the expenditure method, which is based on the theory that if the taxpayer's expenditures during a given year exceeded his reported income or when there was no income reported at all and the sources of such expenditures is unexplained, it may be inferred that such expenditures represent unreported income. The legal basis for the use of expenditure method in determining the income of the taxpayer is found in Section 6(B) of the Tax Code, providing a broad general investigatory power to assess the proper tax on the "best evidence obtainable", whenever there is reason to believe that the required report, that is, the taxpayer's return, is not forthcoming or when such report is false, incomplete or erroneous. Mr. Martinez stated that in computing based on the expenditure method, he collated, evaluated and analyzed the documents, data and information to get the items of expenses and deducted the optional standard deductions and personal exemptions, and arrived at the basis of the computation of the tax. XVII. MISS MENCHIE DE LEON-ALEA Miss Menchie De Leon-Alea, the seventeenth witness for the prosecution, testified that she is the Record Officer of Land Transportation Office (LTO) Mandaluyong Extension Office and that among her duties as such are the following: (a) to keep records on file with our office; (b) to issue certifications as well as to issue reply to confirmation/s upon request; and (c) to perform other functions that may be asked of, or directed to me, by my superior officers, in relation to my being a Record Officer. She further testified that in connection with her duties as Record Officer, she caused the issuance of certified true copies of the following documents covering a 2002 Honda CR-V with plate no. JCM-707 registered under the name of Joel C. Mendez: (a) Certificate of Registration No. 78338103 issued June 04, 2002; and (b) Honda Cars Makati, Inc. Vehicle Sales Invoice No. 030252, for the purpose of establishing that said documents are faithful reproductions of the original documents on file with and under the custody of LTO Mandaluyong. CAacTH XVIII. MR. BENJAMIN M. MOLINA, JR. Mr. Benjamin Molina, Jr., the prosecution's eighteenth witness, testified that as the Records Officer in LTO Manila North District Office, he is tasked, among his other duties, to keep records on file with their office and issue certifications and replies to confirmation requests. Mr. Molina stated that he has in his possession, certified true copies of the following documents pertaining to a 2003 Honda CR-V with plate no. XLF-105 registered under the name of Joel C. Mendez: (a) Letter-reply to BIR dated March 7, 2005; (b) Certificate of Registration No. 02080664 issued on November 11, 2003; and (c) Honda cars Kalookan Vehicle Sales Invoice No. 24775. These documents were duly certified by Chief Land Transportation District Officer of LTO Manila North District Office Corazon A. Ang. XIX. MISS NORILYN CABORDA Miss Norilyn Caborda, the nineteenth witness for the prosecution, testified that she is the Chief Accountant of The Plaza and her responsibilities as such include keeping in her custody and possession the lease contracts entered into by The Plaza, Inc. for the lease premises at The Plaza building, Greenbelt, Ayala Center, Makati City. She further testified that her predecessor Mr. Vic Caballero issued a Certification dated April 19, 2005, in connection with the Lease Contract entered into by The Plaza with Joel C. Mendez. She stated that the Lease Contract, containing the following terms and conditions, attached to the said certification, is the faithful reproduction of the original copy on file and under the custody of her office. XX. MR. SALVADOR C. ALCUINO Mr. Salvador Alcuino, the twentieth witness for the prosecution, testified that he is the Senior Legal Counsel of Philippine Airlines and that his duties as such include issuing certifications based on their company records and supervising the disposition and release of company records or documents. He further testified that he caused the issuance of the summary of gross fares paid by Joel C. Mendez for his travels abroad, dated July 19, 2005, with attachments of certified true copies of the passenger tickets. Mr. Alcuino affirmed that the said summary was issued at the Legal Affairs Department of the Philippine Airlines and that he was the one who certified and attested, by affixing his signature on each and every page, that the said document are true and correct reproduction of the official file in custody of the Philippines. THE EVIDENCE PRESENTED BY THE DEFENSE: The defense presented the following witnesses: I. MISS CHERRY PEREZ Miss Cherry Perez, the first witness for the defense, testified that she is an employee of Weigh Less Center and Spa and that on November 8, 2004 and January 11, 2005, she, together with her co-employee Miss Carla Yadao, received a Letter of Authority and Final Request for Presentation of Records, respectively from the Bureau of Internal Revenue, addressed to their employer, Dr. Joel Mendez. She further testified that upon receipt of the said documents, they immediately forwarded the same to Mr. Richard Bianan, their accountant/bookkeeper, who is the officer-in-charge of all transactions and compliance requirements of Dr. Joel Mendez and Weighless Center with the different government agencies. II. DR. JOEL MENDEZ The defense presented Dr. Joel Mendez, the accused himself, as its second witness. Dr. Mendez testified that he is a doctor by profession, engaged in the practice of bariatric medicine, and that he runs several clinics under the banner of Mendez Medical Group. He further testified that the imputations against him for the violation of the Section 255 of RA 8424 for the years 2002 and 2003 are false and baseless. He stated that he was not aware of the Letter of Authority No. 00002438 ("LOA") dated November 8, 2004 issued by the BIR against him; that it was only sometime late February 2005 that came to know about the LOA when the BIR employees came to my office and inquired about the LOA with my staff. Dr. Mendez stated that it was only then that he discovered that there were notices addressed to him, requiring for the submission of books of accounts and other accounting records, pursuant to LOA No. 00002438. He stated further that the reason why these notices never reached his knowledge is that Mr. Richard Bianan, his former accountant/bookkeeper, whom he trusted with all the documents and records in relation to his business, deliberately concealed these notices in fear that his non-payment of the tax obligations of my businesses will be discovered. Dr. Mendez also recounted that upon knowledge of what Mr. Bianan had done, he authorized his staff Miss Rose Bejar-De Vera to file a case for Estafa against Mr. Bianan with the Office of City Prosecutor of Quezon City, as evidenced by the duly filed Memo of preliminary Investigation and Affidavit of Complainant. Dr. Mendez also presented the Temporary Employment Contract and Employees Information Sheet of Mr. Bianan to prove that he was the Accountant of WeighLess Center. He described Mr. Bianan as a good employee at the start, and that this is the reason why he trusted him with the payment of the taxes and other obligations of his businesses. However, Mr. Bianan turned out to be a dishonest employee as in February 2005, he was caught stealing cosmetic products and other valuables from the clinic. Dr. Mendez filed a Complaint for Qualified Theft against Mr. Bianan. It was during one of their visits in jail that Mr. Bianan confessed about the non-payment of Dr. Mendez's tax obligations and his deliberate withholding of the LOA and the related Letter-Notices. It was then that Dr. Mendez authorized the filing of the Estafa case against Mr. Bianan. cSaCDT Dr. Mendez testified how he entrusted Mr. Bianan with the record keeping and the payment of his tax obligations, the latter being his accountant/bookkeeper. He further testified that he issued checks in the name of Mr. Bianan for the payment of the tax obligations of his businesses and trusted that the latter properly used the funds to make such payments. Dr. Mendez stated that he was willing to pay his tax obligations and it was Mr. Bianan, by embezzling the funds entrusted to him for the payment of his taxes, who prevented him from being compliant with our tax laws. In response to the allegations of the BIR on the income that Dr. Mendez should have earned, as determined from the third party information gathered by the BIR investigation team, Dr. Mendez claims that the same has no basis. He said that the lease contracts, copies of which were obtained by the BIR from the lessors, cannot be used to approximate his income from his clinics as the clinics took some time to be operational, for renovations have to be made after the lease contracts were executed. Weigh Less Center, SM City, Pampanga. Mendez WeighLess Center, Dagupan City and Mendez Body and Face Salon, Farmers, Cubao commenced operations in 2003 while Mendez Body & Face Salon, V. Luna, QC and Mendez Body & Face Clinic, Greenbelt, Makati became operational since 2004. Dr. Mendez further stated that as regards the trips abroad, no inference can be drawn that the same were paid from the income that he should have earned from his businesses, the trips were paid with funds from his personal wealth, priorly existing, credit and/or gratuitous title. Regarding the vehicles found to be registered his name, Dr. Mendez claimed that it cannot be inferred that those vehicles were purchased with his supposed income for the years 2002 and 2003. He said that the said vehicles were obtained through bank loans. On the investments that he allegedly made, Dr. Mendez testified that these are relatively modest investments, obtained using funds from his personal wealth existing prior to 2001. Finally, Dr. Mendez testified that there was no deliberate attempt to evade taxes on his part. Being a doctor by profession who has no accounting background, he was constrained to employ an accountant/bookkeeper to prepare, process and file the required income tax returns for all the clinics. It was for this reason that he employed Mr. Bianan and trusted him to comply with the tax laws and settle all his tax obligations. He was shocked to discover that Mr. Bianan abused his trust, misappropriated the funds entrusted to him and did not pay the tax obligations of his businesses. Dr. Mendez stated that there was no willful attempt to evade or defeat taxes on his part and that it was Mr. Bianan who was responsible for the non-payment of his taxes. III. MISS MA. LITA D. GREGORIO Miss Ma. Lita Gregorio is the third witness for the defense. She testified that she is the owner and lessor of the 2-storey commercial building with an area of 220 square meters located at 31-G, A. Roces Avenue, Quezon City. She stated that she entered into a six-year contract of lease with Dr. Mendez with a monthly rental of P25,000.00. Ms. Gregorio said that it was on August 15, 2001 that Dr. Mendez actually occupied subject property and started to gradually introduce major improvements. It was not until in the latter part of the year 2002 that the renovation was completed. Ms. Gregorio corroborated the accused's testimony that the operation of the health clinic and art gallery was suspended due to lack of building permit. THE ISSUE WHETHER OR NOT ACCUSED DR. JOEL C. MENDEZ IS LIABLE FOR VIOLATION OF SECTION 255 OF THE 1997 NATIONAL INTERNAL REVENUE CODE, AS AMENDED, FOR FAILURE TO FILE INCOME TAX RETURN AND FOR FAILURE TO SUPPLY CORRECT AND ACCURATE INFORMATION. THE RULING OF THE COURT After analyzing carefully all the evidence on record both testimonial and documentary, the court finds it strange the fact that as alleged in the AMENDED INFORMATION in the Criminal Case No. O-013, the accused failed to file his Income Tax Return for the year 2002 to the damage and prejudice of the government in the ESTIMATED AMOUNT of P1,522,152.14 exclusive of penalties, surcharges and interest, also in the AMENDED INFORMATION in Criminal Case No. O-015, the accused failed to supply correct and accurate information in his Income Tax Return for the taxable year 2003 to the damage and prejudice of the government in the ESTIMATED AMOUNT of P2,107,023.65 exclusive of penalties, surcharges and interest. From the above, it is very evident and glaring in both cases that the AMOUNTS of the taxes being claimed as alleged in the INFORMATIONS are both ESTIMATED AMOUNT and NOT EXACT NOR CERTAIN which the Court cannot ACCEPT or ENTERTAIN. It must be noted that in case the amount of tax deficiency is alleged in the Information, the same must be accurate and the truth, for the amount being claimed plays an important role . The amount claimed determines which Court has jurisdiction over the case. Accordingly, the amount must not be based on ESTIMATES NOR PRESUMPTIONS for it will give undue power to the complainants to select the court they feel will be in their favor. This fact holds true in the advent of the law creating the Court of Tax Appeals, Republic Act No. 1125 as amended by Republic Act No. 9282 otherwise known as the "The Expanded Jurisdiction of the Court of Tax Appeals". Sec. 7 (b) (1) of the said law specifically provides as follows: AIaSTE " Sec. 7. JURISDICTION. The CTA shall exercise: a) . . . b) Jurisdiction over cases involving Criminal Offenses as herein provided: 1) Exclusive Original jurisdiction over all criminal offenses arising from violations of the NIRC or Tariff and Customs Code and other laws administered by the Bureau of Internal Revenue and the Bureau of Customs: Provided, however, That offenses or felonies mentioned in this paragraph where the principal amount of taxes and fees, exclusive of charges and penalties claimed is less than One Million Pesos (P1,000,000.00) or where there is no specified amount claimed shall be tried by the regular courts and the jurisdiction of the CTA shall be appellate. Any provision of law or the Rules of Court on the contrary notwithstanding, the criminal action and the corresponding civil action for the recovery of the civil liability for taxes and penalties shall at all times be simultaneously instituted with and jointly determined in the same proceedings by the CTA, the filing of the criminal action being deemed to necessarily carry with it the filing of the civil action, and no right to reserve the filing of such civil action separately from the criminal action will be recognized." From the above, it is crystal clear that before a taxpayer can be prosecuted for criminal offenses arising from violations of the NIRC or Tariff and Customs Code and other laws administered by the Bureau of Internal Revenue and the Bureau of Customs, the principal amount of taxes being claimed as alleged in the Information should only either be definite or no specified amount at all at the time of the filing of the case in Court. This is so because it determines the jurisdiction of the Court . In case the claim is One Million Pesos (P1,000,000.00) or more, the CTA has exclusive original jurisdiction over the case. On the other hand, if the claim is less than One Million Pesos (P1,000,000.00), or where no specified amount is claimed, the cases shall be tried before the Regular Courts and the jurisdiction of the CTA shall be appellate. Considering that the amounts alleged in both Informations are ESTIMATED AMOUNTS and are not definite nor lack of certainty that will determine as to which Court will have jurisdiction over the cases, the Court has no recourse but to dismiss both cases for lack of jurisdiction. Even assuming that the Court has jurisdiction over the cases, the accused is still entitled to acquittal for the Court finds that the prosecution evidence failed to prove the guilt of the accused beyond reasonable doubt. Placing the conflicting testimonies of the witnesses for the prosecution and the defense side by side and after examining their relative merits, the Court is inclined to give more credence to the version of the accused. Certain circumstances had given this Court reasons to doubt the truthfulness of the accusation. For one, the Court finds as odd the fact that not even one of the twenty (20) prosecution witnesses was able to identify the accused Dr. Joel Mendez in OPEN COURT. It is a well-settled rule that the identification of the offender is very essential and his identity must be determined with certainty in OPEN COURT specially so if accused was not apprehended and coupled with non-stipulation of facts as to the identity of the accused at the Pre-trial as in the instant cases. For another, the Court would like to emphasize that when an amount of tax deficiency is being claimed and alleged in the Information, it does not only determine the jurisdiction of the Court, it becomes one of the elements of the crime that must be proven beyond reasonable doubt by the prosecution. So the prosecution is under obligation to supply the correct and accurate information as to the amount of the tax deficiency being claimed and alleged in the INFORMATION . But in the instant cases, this has not been observed. Instead an ESTIMATED AMOUNTS have been alleged in the Informations and not with certainty. In Crim. Case. No. O-013 an ESTIMATED AMOUNT of P1,522,152.14 tax due to the government has been alleged in the Information while in Crim. Case No. O-015, an ESTIMATED AMOUNT of P2,107,023.65 tax due to the government has been alleged in the Information. How can the prosecution now reconcile these ESTIMATED AMOUNTS TO THE TRUE OR CORRECT AMOUNTS which are missing in the INFORMATIONS if ever there were, being one of the elements of the crime that has not been proven by the prosecution beyond reasonable doubt. Lastly, the evidence for the prosecution marked as Exhibits "JJJJJJ-4, JJJJJJ-5 and JJJJJJ-6" referring to the Computation of Deficiency Tax for Taxable Years 2002 and 2003, respectively, which became the BASIS or LED to the filing of these cases against the accused Dr. Joel Mendez, cannot be relied upon by the Court for the following reasons: SDEHCc a) In both Informations, the amounts alleged therein, although ESTIMATED AMOUNTS were BLOATED or SWELLED as observed by the Court, compared to the ESTIMATED AMOUNTS of Tax Deficiency reflected on the Computation for Tax Deficiency formally offered by the prosecution marked as Exhibits "JJJJJJ-4, JJJJJJ-5 and JJJJJJ-6." In Criminal Case No. O-013, the ESTIMATED AMOUNT alleged in the Information is P1,522,152.14 while as reflected in the Computation of Deficiency Tax for the taxable year 2002 is only P1,409,357.79. The same is true in Crim. Case No. O-015, the ESTIMATED AMOUNT alleged in the Information is P2,107,023.65 but in the evidence identified and submitted by the prosecution, the ESTIMATED AMOUNT is only P1,759,654.44. Questions from the Court: Who caused the BLOATING or SWELLING OF THE AMOUNT in the two INFORMATIONS? Why those two amounts were BLOATED in the TWO INFORMATIONS? Remember, the AMOUNTS alleged in the Informations play an important role in the instant cases. First, it determines the JURISDICTION OF THE COURT and second, it becomes an element of the crime . Considering that these questions are still unanswered, to the mind of the Court, the accused is entitled to an acquittal. b) In the same evidence by the prosecution, it was stated therein that accused Dr. Mendez spent for ADVERTISEMENT in the year 2002 and 2003 the total amount of P3,791,201.94. The breakdown is as follows: Philippine Star for the year 2002 P1,385,108.78 Philippine Daily Inquirer for the year 2002 P1,702,871.41 Philippine Star for the year 2003 P703,221.75 Philippine Daily Inquirer for the year 2003 P1,128,258.48 But when prosecution witnesses, Miss Perlita de Lara, an accounting supervisor of Philippine Star, testified in Court, she admitted during cross-examination that it was an AGENCY who placed the advertisement in Philippine Star and not Dr. Joel Mendez . (TSN p. 19, January 29, 2007) So it is very clear that the total amount of P2,088,330.53 paid for advertisement in Philippine Star in the years 2002 and 2003 was not paid for by the accused Dr. Mendez. The same is true with respect to the advertisement paid for the years 2002 and 2003 with the Philippine Daily Inquirer. Prosecution witness Jose Villareal, Vice President for Finance of the Philippine Daily Inquirer, testified in Court during cross-examination "that based on the transactions that they had experienced, the ad agency pays and the payment come from the client, in this, case Dr. Mendez." From the testimony of this witness, the Court cannot rely on the truthfulness of what he stated for being HEARSAY. He is an incompetent witness who has no personal knowledge as to whether the accused was really the one who paid for the advertisement, in fact he stated that it was the ad agency who made the payment. It is crystal clear that the above-mentioned witnesses cannot prove beyond reasonable doubt that the accused was the one who paid for the advertisement. c) Again, in the same evidence for the prosecution, it was stated therein that a HONDA CRV was purchased by Accused Dr. Joel Mendez as evidenced by Sales Invoice No. 030252 dated April 30, 2002, marked as Exhibit "PP", in the amount of P909,950.00 while in the year 2003, another Honda CRV was again purchased by accused Dr. Mendez in the amount of P1,035,500.00 as evidenced by Sales Invoice No. 24775 dated October 24, 2003, marked as Exhibit "LLL". According to the prosecution, the purposes for presenting these evidences are: first, to prove that Accused had earned income in 2002 for being able to purchase these two (2) vehicles and second, to prove that the accused has been engaged in the practice of his profession and has been operating his business during the taxable years 2002 and 2003. Although the above evidences may be relevant for two or more purposes, it is still necessary for the prosecution to satisfy the requirements of the particular purposes for which it is being offered. Otherwise, it will be rejected even if it fulfills the requirements of the other purposes . Like in the instant cases, these evidences are inadmissible for the purpose for which they are being offered. The said documents were not properly identified by a competent witness and their due execution and authenticity were not properly established. The competent witness who can prove the amount stated in the sales invoices for the prosecution could have been a representative from a CAR DEALER who knew personally the business transaction that transpired before the prosecution can presume that those are earned income for the year 2002 by the accused, and not Miss Menchie de Leon-Alea, who is a record officer of the Land Transportation Office who just attested to the fact that the sales invoices of the two Honda CRV of the accused Dr. Mendez are the faithful reproduction of the original documents on file with the LTO. What the witness was able to prove is only the existence of the said documents or that the said documents have been submitted to the LTO. So the amount of P909,950.00 as the purchase price of Honda CRV for the year 2002 and the amount of P1,035,500.00 also as the purchase price of Honda CRV for the year 2003 cannot be the basis for the prosecution to presume that they came from the earned income of Dr. Mendez for the years 2002 and 2003 from the practice of his profession, wherein the Court has rejected these evidence. So if the Court will now recompute the Deficiency Tax for taxable year 2002 of the accused Dr. Mendez based from the prosecution's evidence and without touching yet on the OTHER expenses for RENTALS and FOREIGN TRAVELS of the Accused, it will show that from the ORIGINAL GROSS INCOME of P5,037,353.43, the amount left now is P1,039,423.24 after deducting P3,087,980.19 for advertisement which was not paid by the accused and P909,950.00 the purchase price of the Honda CRV in the Sales Invoice which was declared by the Court to be inadmissible evidence. DAHSaT The same is true in Criminal Case No. O-015, if the Court will recompute the Deficiency Tax for the taxable year 2003 of the accused Dr. Mendez based from the prosecution's evidence and without touching yet on the other expenses for RENTALS, FOREIGN TRAVELS and CAPITAL INVESTMENTS of the accused, it will show that from the ORIGINAL GROSS INCOME of P5,667,189.05, the amount left now is P2,800,208.82 after deducting P1,831,480.23 for an ADVERTISEMENT which was not paid by the accused and P1,035,500.00 the purchase price of the Honda CRV in the sales invoice which was declared by the Court to be an inadmissible evidence. How can the Court now rely on this evidence, which is full of uncertainties, being presented by the prosecution? It is a well-settled rule in our jurisdiction that the prosecution should rely on the strength of their evidence. In the instant cases, the prosecution failed to prove the guilt of the accused beyond reasonable doubt, in fact, the defense's version is even more believable than the prosecution's. The circumstances above raise grave and serious doubts about the truthfulness and credibility of the prosecution witnesses' story. On the other hand, the defense's version stands strong that the accused Dr. Joel Mendez's businesses were not yet operational in the year 2002 since all of the businesses were registered at the BIR in the years 2003 and 2004, except one, Mendez Body and Face Salon & Spa. Although Mendez Body and Face Salon & Spa was registered on May 6, 2002, still the prosecution failed to prove that it was in operation for the year 2002. Not even a single receipt from customers in the year 2002 was presented as prosecution evidence, also even if no single receipt was presented as prosecution evidence, at least one of the customers was presented as a witness for the year 2002, nor any of the employees of the accused in the year 2002 was presented as prosecution witness that can convince the Court that the businesses of accused Dr. Mendez were in operation during 2002. So it follows that the allegations of the prosecution that the accused Dr. Joel Mendez willfully, unlawfully and feloniously failed to file his income tax return with the BIR for the taxable year 2002 in Criminal Case No. O-013 and also failed to supply correct and accurate information in his income tax return for the taxable year 2003 filed in the Revenue District Office of the BIR were not proven by the prosecution beyond reasonable doubt. It follows too, that no civil liability can be imputed against the accused Dr. Joel Mendez. WHEREFORE , in view of the foregoing, the Undersigned finds that the prosecution has failed to establish the guilt of the accused Dr. Joel Mendez beyond reasonable doubt in Criminal Cases Nos. O-013 and O-015 and, accordingly, votes to ACQUIT him of the crimes for which he has been charged herein. With cost de office, no civil liability is attached. Footnotes 1. CTA Crim. Case No. O-013, docket, p. 179. 2. CTA Crim. Case No. O-015, docket, p. 176. 3. CTA Crim. Case No. O-013, docket, p. 191. 4. CTA Crim. Case No. O-015, docket, p. 185. 5. Resolutions dated March 22, 2006 and April 19, 2006. 6. CTA Crim. Case Nos. O-013 and O-015, Vol. 3, docket, pp. 1942-1944 and 2039-2040. 7. Ibid. , pp. 2073-2083. 8. Ibid. , pp. 2405-2406 and 2476-2478. 9. Ibid. , p. 2563. 10. Ibid. , pp. 2444-2461. 11. Ibid. , pp. 2509-2562. 12. Exhibit "WWW"; TSN. November 6, 2006, pp. 6-11. 13. Exhibit "A". 14. Exhibit "B". 15. Exhibit "C". 16. Exhibit "D". 17. Exhibit "O". 18. Exhibit "EEE". 19. Exhibit "RRR". 20. Exhibit "AAA". 21. Exhibit "MMM". 22. Exhibit "G"; TSN, November 13, 2006, pp. 11-16. 23. Exhibit "EEE"; TSN, November 13, 2006, pp. 33-34. 24. Exhibit "BBB"; TSN, November 27, 2006, pp. 21-23. 25. Exhibit "F 5 "; TSN, November 13, 2006, pp. 59-60. 26. Exhibits "MMM", "NNN", and "K 5 "; TSN, January 22, 2007, pp. 14-23. 27. TSN, November 20, 2006, pp. 14-21. 28. Exhibits "QQ" to "QQ-6". 29. Exhibits "RR" to "RR-6". 30. Exhibits "SS" to "SS-6". 31. Exhibits "TT" to "TT-6". 32. Exhibits "UU" to "UU-13". 33. Exhibits "VV" to "VV-6". 34. Exhibits "WW" to "WW-6". 35. Exhibits "XX" to "XX-6". 36. Exhibits "YY" to "YY-6". 37. TSN, November 6, 2006, pp. 6-11; Exhibit "WWW-4", par. 18, p. 617, Division Docket. 38. Exhibit "N". 39. Exhibits "P" to "R-7". 40. Exhibits "T", "U", "V", "W", "X" to "X-2" and "OOO". 41. Exhibits "ZZ", "DDD" and "HHH". 42. Exhibits "AA" to "AA-3". 43. Exhibits "Z" to "Z-10". 44. Exhibits "Y" to "Y-3". 45. Exhibits "J 6 " to "J 6 -6". 46. TSN, January 14, 2009, pp. 7-9; TSN, February 16, 2009, pp. 8-11. 47. Exhibit "38"; TSN, May 4, 2009, pp. 9-19. 48. Ibid. 49. Ibid. 50. Exhibits "7" to "21"; ibid. 51. Exhibit "35"; TSN, May 4, 2009, pp. 9-19. 52. Exhibit "39"; TSN, June 17, 2009. 53. Ibid. 54. Exhibit "23". 55. Exhibit "24". 56. G.R. No. 177279, October 13, 2010. 57. Amora vs. People , G.R. No. 154466, January 28, 2008, 542 SCRA 485, 491. 58. Ibid. 59. Stipulated during the pre-trial conference, docket, p. 499; Exhibit "N". 60. Exhibit "P". 61. Exhibits "AA" to "AA-3". 62. TSN, July 6, 2009, pp. 19-22. 63. Ibid. , pp. 25-26. 64. Exhibit "G". 65. Exhibit "O". 66. Exhibit "EEE". 67. Exhibit "RRR". 68. Exhibit "AAA". 69. Exhibit "MMM". 70. Exhibit "H 6 -H 1 ". 71. Supra , at note 62, pp. 37-41. 72. Exhibit "G". 73. Exhibit "EEE". 74. Exhibit "RRR". 75. Exhibit "BBB". 76. CTA Crim. Case No. O-027, November 25, 2009. 77. People of the Philippines vs. Benjamin G. Kintanar , CTA Crim. Case No. O-030, August 11, 2010. 78. G.R. No. 139578, February 15, 2002, 377 SCRA 170. 79. People vs. Baniega , ibid. , at note 69, citing People vs. Crisanto , G.R. No. 120701, June 19, 2001, 358 SCRA 647. 80. People vs. Berroya , G.R. No. 122487, December 12, 1997, 283 SCRA 111, 122 citing Francisco, Evidence, 3rd Ed. P. 577, citing Wharton's Criminal Procedure. 81. Ibid. , citing People vs. Gapasan , 243 SCRA 53 [1995]. 82. People vs. Abujan , G.R. No. 140870, February 11, 2004, 422 SCRA 449, 457 citing People vs. Caedo , G.R. No. 128382, July 5, 2000, 335 SCRA 81, 99 citing U.S. vs. Reyes , 3 Phil. 3, 6 (1903). 83. Exhibit "J 6 -4". 84. Exhibit "J 6 -5" to "J 6 -6". 85. G.R. Nos. L-41919-24, May 30, 1980, 97 SCRA 877. 86. Ibid. , 883-884.