THIRD DIVISION
[G.R. No. 220094-95. February 19, 2018.]
MA. CARLA BEATRICE CORONA-CASTILLO, petitioner,vs. COURT OF TAX APPEALS, FIRST DIVISION, and PEOPLE OF THE PHILIPPINES, respondents.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, Third Division, issued a Resolution datedFebruary 19, 2018, which reads as follows:
"G.R. No. 220094-95 (MA. CARLA BEATRICE CORONA-CASTILLO, Petitioner, v. COURT OF TAX APPEALS, FIRST DIVISION, and PEOPLE OF THE PHILIPPINES, Respondents.) — The Court NOTES petitioner's Manifestation and Motion dated November 10, 2017 stating that on November 3, 2017, the Court of Tax Appeals granted her Demurrer to Evidence as shown in the attached Resolution of November 3, 2017, and praying for the dismissal of the petition for review on certiorari for being moot.
By petition for certiorari and prohibition, the petitioner assails the resolutions promulgated in Criminal Case No. O-409 and Criminal Case No. O-410 on May 28, 2015 1 and August 28, 2015, 2 whereby the Court of Tax Appeals (CTA), First Division, denied her motion to quash the information and motion for reconsideration, respectively.
The pertinent facts follow.
On August 30, 2012, the Bureau of Internal Revenue (BIR) filed in the Department of Justice (DOJ) a joint complaint-affidavit 3 charging the petitioner with a violation of Section 255, 4 in relation to Section 254, 5 of the National Internal Revenue Code (NIRC), 6 alleging that she had attempted to evade the payment of her taxes, and did not file a return for taxable year 2010; 7 that using the Expenditure Method, the BIR learned that her expenses in 2010, which mainly centered on her purchase of a 1,200-square meter property in La Vista Subdivision, Quezon City (worth P18,329,000.00, including documentary stamp taxes) 8 exceeded her declared income amounting to P228,040.00 for taxable years 2008 to 2009; 9 that her ability to purchase the La Vista property indicated that she had made a substantial under declaration of her income in 2010; 10 and that her income tax liability for taxable year 2010 amounted to P9,927,684.18, inclusive of interests and surcharges. 11
Prior to the institution of the criminal complaint, the BIR had not yet issued any tax assessment against the petitioner for any supposed deficiency taxes. It was only on May 14, 2013 that the BIR issued a Notice of Informal Conference 12 to her. On November 6, 2013, the BIR issued a Preliminary Assessment Notice (PAN) 13 to her stating therein her deficiency income tax totaling P11,783,530.59, inclusive of interests and surcharges. 14 CAIHTE
On May 30, 2014, the DOJ Panel of Prosecutors (Task Force on the BIR) rendered its resolution 15 finding against the petitioner probable cause for violation of Section 254 and Section 255 of the NIRC. She moved for reconsideration but before her motion could be resolved, two separate informations for violation of Section 254 and Section 255 of the NIRC were filed in the CTA, docketed as Criminal Case No. O-409 and Criminal Case No. O-410, respectively.
The information in Criminal Case No. O-409 reads:
That on or about April 2011, in Quezon City and within the jurisdiction of this Honorable Court, the above-named accused, as a Filipino citizen residing in the Philippines, and required by law, rules and regulations to file her annual income tax return did, then and there, willfully, unlawfully and feloniously attempt to evade or defeat tax, as said accused did not file her annual income tax return for taxable year 2010, which resulted to a basic deficiency income tax of Five Million Eight Hundred Thirty Thousand Two Hundred Eighty Pesos (P5,830,280.00) for taxable year 2010, exclusive of surcharge and interest, to the damage and prejudice of the Government of the Republic of the Philippines.
CONTRARY TO LAW. 16
The information in Criminal Case No. O-410 states:
That on or about April 2011, in Quezon City and within the jurisdiction of this Honorable Court, the above-named accused, as a Filipino citizen residing in the Philippines, and required by law, rules and regulations to file her annual income tax return did, then and there, willfully, unlawfully and feloniously fail to file her annual income tax for taxable year 2010, in violation of the provisions of the National Internal Revenue Code of 1997, as amended, to the damage and prejudice of the Government of the Republic of the Philippines in the amount of Five Million Eight Hundred Thirty Thousand Two Hundred Eighty Pesos (P5,830,280.00), as basic income tax deficiency, exclusive of interests and surcharges.
CONTRARY TO LAW. 17
The petitioner filed a Motion for Judicial Determination of Probable Cause, 18 but the CTA denied the motion on July 31, 2014. 19
Due to the inaction of the DOJ Panel on her Motion for Reconsideration, the petitioner filed a petition for review in the Office of the Secretary of Justice. 20 However, the Secretary of Justice dismissed the appeal on June 16, 2015. 21 She moved for reconsideration, which has remained pending and unresolved to this date.
On January 26, 2015, the petitioner moved to quash the informations 22 in the CTA on the grounds that the facts charged in the informations did not constitute criminal offenses and that the officers who filed the complaint and the informations had no authority to do so. She contended, among others, that the informations: (1) contained allegations that were bare conclusions of law for merely restating the provisions of the NIRC; (2) did not allege the specific facts that had resulted in her supposed deficiency income tax; (3) failed to state that a prior assessment had been made pursuant to a valid grant of authority; and (4) did not specify overt acts of fraud. She claimed that the DOJ erred in filing separate informations for violation of Section 254 and Section 255 of the NIRC considering that the allegations were based on her single act of failing to file an income tax return for the taxable year 2010. She questioned the authority of the BIR officers who filed the criminal complaint because they did not hold the rank equivalent to a division chief or higher, contrary to Section 7 of the NIRC. DETACa
On May 28, 2015, the CTA denied the petitioner's Motion to Quash for lack of merit. It found and held that the informations contained material allegations charging the petitioner with violations of Section 254 and Section 255 of the NIRC; that citing Ungab v. Cusi23 and later jurisprudence, a prior assessment of a tax deficiency was not necessary to a criminal prosecution for willful attempt to defeat and evade taxes; and the lack of authority of the BIR officers to institute the criminal complaint was of no moment considering that the Commissioner of Internal Revenue herself had approved the filing of the necessary criminal charges against the petitioner.
After the CTA denied the petitioner's motion for reconsideration on August 28, 2015, she has come to the Court on certiorari, submitting that:
THE COURT OF TAX APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN ISSUING THE ASSAILED RESOLUTIONS AND DENYING PETITIONER'S MOTION TO QUASH, CONSIDERING THAT:
I. THE FACTS CHARGED IN THE INFORMATIONS AGAINST PETITIONER DO NOT CONSTITUTE A CRIMINAL OFFENSE; AND
II. THE OFFICER WHO FILED THE INFORMATIONS AGAINST PETITIONER HAS NO AUTHORITY TO DO SO.24
Inasmuch as the Court did not issue any restraining order, the proceedings in the CTA ensued. In due time, the CTA granted the petitioner's Demurrer to Evidence, and eventually dismissed Criminal Case No. O-409 and Criminal Case No. O-410.
Ruling of the Court
The Court RESOLVES TO DISMISS the petition for certiorari on the ground of mootness.
On November 3, 2017, the CTA granted the petitioner's Demurrer to Evidence, observing in its resolution that:
x x x The prosecution failed to show that accused was a resident of the Philippines in taxable year 2010. Neither was there a proof of the possible or likely source of income of the accused in 2010, nor proof of accused's taxable income derived therefrom.
The prosecution found probable cause against the accused in this case holding that the use of the expenditure method is a valid tool to determine a taxpayer's alleged liability citing as basis Section 43 of the NIRC of 1997, as amended and the ruling in William Li Yao vs. Commissioner of Internal Revenue. The prosecution further states that the expenditure method, together with the net worth method, is utilized by the BIR in order to track undeclared income of taxpayers.
There is no denying that the Commissioner of Internal Revenue is allowed to employ methods to compute the income of a taxpayer pursuant to Section 43 of the NIRC of 1997, as amended, and in fact, it is settled that in civil case[s] the application of the net worth method does not require identification of the sources of the alleged unreported income and the determination of the tax deficiency by the government is prima facie correct. Nevertheless, in criminal case[s], as in the cases at bar, the prosecution has to identify the likely source of the unreported or undeclared income. The requirement to prove the likely source of income to justify the use of the expenditure method was enunciated in Bureau of Internal Revenue vs. Court of Appeals x x x. aDSIHc
xxx xxx xxx
Without evidence on the likely source of income and the corresponding income derived therefrom by the accused during the concerned taxable year, the Court casts a serious doubt as to the veracity of the offenses charged against the accused. The acquisition made by accused of the La Vista property in 2010 could not conclusively be presumed as arising from her receipts of undeclared income in 2010 as the consideration involved therein may likewise be presumed to have been sourced from donations, borrowings and/or from income subjected to final tax consistent with an accused's right to the presumption of innocence.
It is basic truism that the prosecution has the burden of proving beyond reasonable doubt each element of the crime as its case will rise or fall on the strength of its own evidence, never on the weakness or even absence of that of the defense. Failing to prove the required quantum of evidence, the presumption of innocence must prevail and accused should be acquitted.
All told, as there is absence of proof showing that accused is a resident of the Philippines in 2010 and that there was a likely source of income of accused in 2010 vis-à-vis the income she derived therefrom during the same year, the present Demurrer to Evidence should rightly be granted.
In view of the foregoing, the Court deems it no longer necessary to discuss the other issues raised.
WHEREFORE, premises considered, accused's Demurrer to Evidence is GRANTED. Accordingly, CTA Criminal Case Nos. O-409 and O-410 are DISMISSED for failure of the prosecution to present sufficient evidence to warrant conviction beyond reasonable doubt.
SO ORDERED. 25
The order granting the petitioner's Demurrer to Evidence amounted to an acquittal. 26 As the consequence of the acquittal, the issues being raised in this Court have become moot. A case is moot when it ceases to present a justiciable controversy by virtue of supervening events, so that any declaration thereon will be of no practical use or value. Indeed, her acquittal by the grant of her Demurrer to Evidence has removed the need for the Court to still resolve her challenge through certiorari of the denial of the Motion to Quash. It is pointless for the Court to still resolve the petition for certiorari. 27 ETHIDa
WHEREFORE, the Court DISMISSES the petition for certiorari for being now moot and academic. No pronouncement on costs of suit.
SO ORDERED."
Very truly yours,
(SGD.) WILFREDO V. LAPITANDivision Clerk of Court
Footnotes
1.Rollo, pp. 43-52; penned by Associate Justice Roman G. Del Rosario with Associate Justice Cielito N. Mindaro-Grulla concurring and Associate Justice Erlinda P. Uy on leave.
2.Id. at 55-58.
3.Id. at 105-111.
4. SEC. 255. Failure to File Return, Supply Correct and Accurate Information, Pay Tax Withhold and Remit Tax and Refund Excess Taxes Withheld on Compensation. — Any person required under this Code or by rules and regulations promulgated thereunder to pay any tax make a return, keep any record, or supply correct the accurate information, who willfully fails to pay such tax, make such return, keep such record, or supply correct and accurate information, or withhold or remit taxes withheld, or refund excess taxes withheld on compensation, at the time or times required by law or rules and regulations shall, in addition to other penalties provided by law, upon conviction thereof, be punished by a fine of not less than Ten Thousand Pesos (P10,000) and suffer imprisonment of not less than one (1) year but not more than ten (10) years.
Any person who attempts to make it appear for any reason that he or another has in fact filed a return or statement, or actually files a return or statement and subsequently withdraws the same return or statement after securing the official receiving seal or stamp of receipt of internal revenue office wherein the same was actually filed shall, upon conviction thereof, be punished by a fine of not less than Ten Thousand Pesos (P10,000) but not more than Twenty Thousand Pesos (P20,000) and suffer imprisonment of not less than one (1) year but not more than three (3) years.
5. Section 254. Attempt to Evade or Defeat Tax. — Any person who willfully attempts in any manner to evade or defeat any tax imposed under this Code or the payment thereof shall, in addition to other penalties provided by law, upon conviction thereof, be punished by a fine not less than Thirty thousand (P30,000) but not more than One hundred thousand pesos (P100,000) and suffer imprisonment of not less than two (2) years but not more than four (4) years: Provided, That the conviction or acquittal obtained under this Section shall not be a bar to the filing of a civil suit for the collection of taxes.
6.Rollo, p. 7.
7.Id. at 105-107.
8.Id. at 119-122.
9.Id. at 107-108.
10.Id. at 108.
11.Id. at 123
12.Id. at 230.
13.Id. at 233-234.
14.Id. at 9.
15.Id. at 241-256.
16.Id. at 289.
17.Id. at 294.
18.Id. at 299-328.
19.Id. at 329-332.
20. Id. at 333-368.
21. Id. at 378-379.
22. Id. at 59-80.
23. L-41919-24, May 30, 1980, 97 SCRA 877, 883-884.
24. Rollo, p. 12.
25. Id. at 809-812.
26. People v. Go, G.R. No. 191015, August 6, 2014, 732 SCRA 216-238.
27. Galicto v. Aquino III, G.R. No. 193978, February 28, 2012, 667 SCRA 150, 177.