SECOND DIVISION

[C.T.A. CRIM. CASE NO. 0-299. November 16, 2015.]

For: Violation of Section 255, paragraph 1, of the National Internal Revenue
Code, as amended

PEOPLE OF THE PHILIPPINES, plaintiff, vs. GERARDO C.

TEVES, accused.

DECISION

CASANOVA, J : p

Accused Gerardo C. Teves is charged before this Court for violation of

paragraph 1, Section 255 of the 1997 National Internal Revenue Code (1997
NIRC), as amended, for willful failure to supply correct and accurate
information in his Annual Income Tax Return (ITR) for taxable year 2009.
STATEMENT OF FACTS
On July 25, 2012, the prosecution filed an Information dated March 1,
2012 against accused Gerardo C. Teves, which reads as follows:
"That on or about April 15, 2010 in Manila, Philippines, and within
the jurisdiction of this Honorable Court, the above-named accused, a
single proprietor doing business under the trade name GT Trading's Rice
Importation duly registered with the Bureau of Internal Revenue District
Office No. 033 and with Tax Identification Number 209-041-595-000 filed
with said revenue district office BIR Form No. 1701, more commonly
known as the Annual Income Tax Return, for the taxable year 2009,
knowing fully well that he is required by the law and the rules and
regulations to supply correct and correct information within the period
mentioned therein, did then and there, willfully, unlawfully and
feloniously failed to supply correct and correct information in said BIR
Form No. 1701 by stating in paragraphs 29 and 30 thereof that the
amount of his sales/receipts/revenues and cost of sales amounted only
to Two Hundred Forty-One Thousand Eight Hundred Thirty Pesos
(Php241,830.00) and Ninety-Seven Thousand One Hundred Two Pesos
and Fifty Centavos (Php97,102.50), respectively when importation
documents clearly show that he made purchases on various dates in
2009 in the total amount of Ninety-Eight Million Nine Hundred Eighty-
Seven Thousand Seven Hundred Twenty Pesos and Ninety-Six Centavos
(Php98,987,720.96), which willful failure to supply correct and accurate
information resulted in the substantial under-declaration of sales and the
payment of correct taxes.
CONTRARY TO LAW."
To briefly narrate the facts of the instant case, the records showed that a
Warrant of Arrest 1 was issued against the accused on September 27, 2012.
However, the same was recalled and set aside 2 after the accused voluntarily
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 surrendered before this Court and posted the required cash bail for his
provisional liberty on October 5, 2012. Upon arraignment 3 on April 17, 2013,
accused entered a plea of "Not Guilty" to the crime charged.
In a Pre-Trial Order 4 dated June 17, 2013, the parties stipulated on the
following facts and issues:
"A. stipulated Facts:
1. That this Honorable Court has jurisdiction over the case.
2. That accused Gerardo C. Teves is the same person named and
charged in the Information subject of this case.
3. That in 2009, accused operated as a single proprietor and
engaged in business under the trade name GT Trading.
4. That accused was issued Tax Identification Number 209-041-
595-000.
5. That accused's registered business address is 3rd Floor, BF
Condominium, Andres Soriano Avenue, Intramuros, Manila.
6. That on various dates in 2009, accused imported rice.
7. That accused filed his Annual Income Tax Return for taxable year
2009 on 15 April 2010.
B. Stipulated Issues
Legal Issue:
1. Whether or not Accused is liable for the offense charged in the
Information."
Factual Issue:
1. Whether or not the government was prejudiced in the amount of
P129,951,247.02 and P6,121,718.83, for income tax and
VAT due, exclusive of penalties, surcharges and interest."
While the instant case was still on trial, the Bureau of Internal Revenue
sent a Notice of Informal Conference 5 to the accused on July 31, 2013. By
such reason, accused authorized 6 Atty. Eric C. Opriasa to attend the same. The
BIR, thereafter, issued a Preliminary Assessment Notice 7 dated August 2,
2013, which was received by accused himself on August 28, 2013.
Subsequently, the BIR issued a Formal Letter of Demand with Details of
Discrepancies 8 dated October 17, 2013, which was, likewise, received by
accused. CAIHTE

Trial ensued. The prosecution presented the testimonies of the following

witnesses:
The EVIDENCE PRESENTED BY THE PROSECUTION
I. Marcial M. Padilla
The first witness for the prosecution, Mr. Marcial M. Padilla, declared by
way of Judicial Affidavit, 9 that he was a member of the group of examiners
who conducted an investigation to determine the possible tax deficiency or
liabilities of accused and/or GT Trading. In conducting their investigation, his
group followed several procedures: (1) "profiling" of taxpayer, which refers to
the accused's personal circumstances; (2) "third party verification"; (3)
consolidation and evaluation of all data, information and documents that they
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 gathered; and, (4) their findings and recommendations.
During the "profiling" stage, his group accessed the Bureau of Internal
Revenue Integrated Tax System (database of the Bureau), which contains all
relevant taxpayer's information. They learned from the said data that the
accused is a registered taxpayer of Revenue District Office No. 33 (RDO No.
33), Intramuros-Ermita-Malate, with Tax Identification Number 209-041-595-
000, issued on January 15, 2001; and, with address at 3rd Floor BF
Condominium, Andres Soriano Ave., Intramuros, Manila.
He added that part of the profiling process was the issuance of Access
Letters to various agencies and/or entities, particularly RDO No. 33, Bureau of
Customs (BOC) and National Food Authority (NFA). Accordingly, the following
documents were obtained from RDO No. 33: Certified True Copies of Income
Tax Return (ITR), with attached Financial Statements, and VAT Returns filed by
accused/GT Trading for taxable year 2009. They also secured from the NFA
certified true copies of letters addressed to BOC Commissioner, Memorandum
of undertaking (MOU), Certification of Official Importation (COI), Telefax,
Tentative Statement of Account, with photocopies of other supporting
documents such as Import Entry Declaration (IED), Bill of Lading (BL) and
Certificate of Turn-Over (CTO), all pertaining to the business of herein
accused/GT Trading.
And, based on the foregoing importation documents, his group found out
that accused made several rice importations in the total amount of
P98,987,720.96; that the Financial Statements accompanying the ITR will
show that the business operations of accused/GT Trading yield a gross profit
ratio of 40%; that the accused only declared the amount of P97,102.50 as his
total amount of purchases in the said Financial Statements; and, that the
computed undeclared sales when compared to what was declared in the
financial statements resulted to an under-declaration of 128,297%.
Thereafter, his group sent a Memorandum to the Commissioner of
Internal Revenue, recommending that the results of their preliminary
investigation be immediately forwarded to the RATE-Legal Writing &
Appearance Group (LWAG) for evaluation and preparation of the corresponding
pleadings required for the filing of criminal case against the accused. The BIR,
subsequently, issued a Letter of Authority on September 28, 2011, authorizing
the examination of the books of accounts of the accused for taxable years
2008 and 2009. Then, the CIR issued a letter referral dated October 6, 2011 to
the Secretary of Justice for the filing of criminal action against the accused.
Afterwards, his group executed a Joint Complaint-Affidavit dated October 13,
2011.
On cross-examination, the witness admitted that the report was made
on the basis of third party information and from the records available to their
offi ce; 10 that the assessment was based on the gross sales of the accused; 11
and, that he has no knowledge on whether the accused sold all the goods. 12
He added that while the accused may not report the sale, he should, however,
at least report his purchases. 13
II. Jessie M. Juangco
The second witness for the prosecution, Mr. Jessie M. Juangco, by way of
Judicial Affidavit, 14 stated that his group conducted the preliminary
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 investigation on the possible tax violation of the accused. He discussed the
procedural steps undertaken by his group in investigating accused's case. He
stated that they sent access letters to the following: Mr. Danilo C. Mendoza,
the Revenue District Officer of RDO No. 33, BOC and NFA. And, through said
letters, his group was able to obtain the documents mentioned in the previous
testimony of Revenue Officer III Marcial M. Padilla.
On cross-examination, the witness admitted that his group's findings
were based on the documents coming from the BIR, BOC and NFA. 15 DETACa

III. Danilo C. Mendoza

The third witness for the prosecution, testified, by way of Judicial
Affi davit, 16 that he was the Revenue District Officer of RDO No. 33 from
February 2009 until December 31, 2010. He said that he is familiar with the
accused on the ground that he received a letter from the National
Investigation Division requesting the tax returns filed by the accused for
taxable years 2008 and 2009. Thus, he instructed the Chief of the Document
Processing Section of RDO No. 33 to retrieve said returns. Accordingly, accused
filed with RDO No. 33 his 2009 Annual ITR, together with the Financial
Statements, and the latter's 1st, 3rd and 4th quarterly VAT returns for taxable
year 2009.
IV. Ma. Gracia R. Bolutano
The fourth witness, Ms. Ma. Gracia R. Bolutano, testified, by way of
Judicial Affidavit, 17 that she is OIC-Chief of the Data Processing Section of
RDO No. 33 from May 2, 2011 to present. She stated that, upon receipt of the
access letter addressed to RDO Josephine S. Virtucio of Revenue District No.
33, she checked with the ITS if said taxpayer filed a return. Her staff was able
to retrieve the 1st, 3rd and 4th 2009 quarterly VAT returns filed by accused.
After verifying said documents, she photocopied and certified the same as
certified true copies. Then, she forwarded said documents to the Revenue
Officers from the National Investigation Division of the BIR.
V. Manuel Advincula
The presentation of the fifth witness for the prosecution was dispensed
with upon stipulation of the parties that he was the one who certified the
Annual Income Tax Return of accused; that he has no personal knowledge as
to the alleged rice importations made by the accused in this case; and, that he
has no personal knowledge whether the rice imported was actually and
personally received by the accused nor sold by the latter. 18
VI. Veneracion P. Prado
The sixth witness for the prosecution, Ms. Veneracion P. Prado, testified,
by way of Judicial Affidavit, 19 that she is the Intelligence Officer II at the NID
of the BIR. She said that they conducted an investigation on the books of
accounts and other accounting records of accused, pursuant to a Letter of
Authority No. LOA-211-2011-00000338 dated September 28, 2011. Then,
they issued a Memorandum to the CIR, recommending the results of their
preliminary investigation. The CIR, thereafter, issued a letter to the Secretary
of Justice for the filing of criminal case against the accused. After the issuance
of the said letter, they executed their Joint Complaint-Affidavit.
She manifested that, after filing their Joint Complaint-Affidavit, they
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 continued the assessment procedures on the accused. They issued a Notice of
Informal Conference dated July 26, 2013 to the latter. But due to accused's
failure to appear on the said conference, they issued a Preliminary Assessment
Notice (PAN), which was served to the accused on August 28, 2013. In the said
PAN, accused was found liable for deficiency income tax and VAT in the
respective amount of P438,465,823.56 and P16,755,572.63.
She explained how the deficiency income tax was computed. She said
that using the 2009 ITR as basis, she added from the amount of net loss
indicated therein the amount of total undeclared sales based on data derived
from available documents from the BOC and documents presented by the
accused. Meanwhile, the amount of undeclared sales was computed by
considering the amount of the Beginning Inventory as reflected in the 2008
Financial Statements, particularly, the balance sheet of GT Trading. The
purchases as indicated in the VAT Returns for taxable year of 2009 and the
data obtained from the BOC regarding the NFA rice importations of the
accused, plus the NFA service fee of 10,000,000, which was derived from the
computation of P2.00/kg of rice. Total Goods Available for Sale was obtained
through the above figures. Cost of Sales was divided from the cost ratio used
in the ITR for taxable year 2009. She deducted the sales as per accused's 2009
ITR from the total sales as determined through data and documents
mentioned earlier.
The deficiency VAT of P16,755,572.63 was computed by getting the total
purchases declared per VAT returns filed by accused for taxable year 2009,
which amounted to P25,213,303.06. The said amount was divided by the cost
ratio of forty percent (40%), which would result to the amount of total VATable
sales. Afterwards, the total VATable sales of P63,033,257.65 was multiplied by
the applicable VAT rate of twelve percent (12%).aDSIHc

She also testified that the accused himself received the PAN. But since
they did not receive any letter, correspondence or protest from the accused
regarding the PAN, they recommended the issuance of the Final Assessment
Notice or Formal Letter of Demand (FLD). Accordingly, the FLD was received
by accused himself on October 29, 2013.
On cross-examination, the witness affirmed that she has no personal
knowledge (i) as to whether or not the rice imported for the said taxable year
2009 were actually delivered and received by accused; and, (ii) as to whether
or not the purported rice imported were actually sold. 20
VII. Christopher T. Patdo
The witness, by way of Judicial Affidavit, 21 declared that he is presently
holding the position of Grains Operations Officer 1 at the Grains Marketing
Operations-Foreign Operations Division of the NFA. His important functions
consist of the Private Sector Financed (PSF) Rice Importers under Tax
Expenditure Subsidy (TES); preparation of the required Memorandum of
Undertaking (MOU), Certificate of Official Importation (COI) and Tentative
Statement of Accounts; preparation of reply letters/fax/queries and
accommodation of telephone inquiries on rice procedures and requirements;
maintenance of file/copies of documents regarding rice imports; facilitation of
the filing of the necessary custom entry on rice importation through the use
of NFA-TES; and performance of such other related functions as may be
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 assigned to him by his supervisors, pursuant to law and rules and regulations.
He testified that GT Trading is one of the private sector rice importers
who was awarded to participate in the NFA's PSF rice importation using the
NFA's Tax Expenditure Subsidy in the year 2009. Under the PSF, the NFA shall
facilitate the necessary customs entry on said importation, through the use of
the NFA-TES, and it is the authorized signatory on the Import Entry and
Internal Revenue Declaration and other documents related to the release of
the rice importation from the BOC. Accordingly, all documents relative to rice
importation shall be in the name of the NFA for the account of the importer.
The NFA shall facilitate the filing of the necessary Customs entry on said
importation through the use of NFA-TES. The importer and their duly assigned
license broker, on the other hand, shall submit to the NFA the following
documents: Bill of Lading, Commercial Invoice, Certificate of Origin,
Phytosanitary Certificate, Certificate of Weights, and Quantity and all import
related documents, at least five (5) days before the arrival of the
vessel/container at the BOC. The NFA shall then advice the BOC on the
incoming shipment for the account of the importer, the assigned port, and the
estimated time of arrival (ETA) of the vessel. The NFA shall issue to the
importer a Certificate of Turn-Over once documentation has been completed
and the rice shipment has already been approved for release by BOC. ATICcS

He stated that out of the 5,000 metric tons of rice importation awarded
to GT Trading, it imported 4,999.60 metric tons in its sixteen (16) shipments
in 2009. He enumerated the vessels carrying rice importations consigned to
NFA in behalf of GT Trading: (1) MV Ever Golden 452E; (2) MV Wan Hai 510;
(3) MV Hansa Liberty 014; (4) MV Mol Attraction; (5) MV Olympian Racer 0914
(6) MV Bunga Raya Dua; (7) MV Vinashin Freighter; (8) MV Warnow Porpoise;
(9) MV Sinar Banten; (10) MV Bago v. BG881S; (11) MV Magway; (12) MV
Maersk Brooklyn 0909; (13) MV Aegean Express N041; (14) MV YM Earth
71N; (15) MV YM Immense 043B; and, (16) MV Kota Rukun.
To prove that that foregoing shipments carried rice importations
consigned to NFA in behalf of GT Trading, he stated that the importer must
furnish the NFA documents such as the Bill of Lading, Commercial Invoices,
Certificate of Origin, Phytosanitary Certificate, Certificate of Weights and
Quantity and all import related documents which should be submitted before
the NFA could issue Certificates of Turn-Over in all its rice importations.
The witness explained the relevance of Certificate of Turn-Over.
According to him, said document authorizes the importer/consignee to
withdraw/receive the rice from the BOC with the understanding that the
importation has been fully cleared by the BOC in the payment of all fees. It
also indicates that the importer has settled/paid all port and unloading
expenses including stevedoring, wharfage, arrastre, brokerage and other
related expenses attached to the importation except payment of tariff. He also
identified several Certificates of Turn-Over for each corresponding
vessels/carriers carrying rice importations consigned to NFA in behalf of GT
Trading.
To further prove the arrival of the vessel carrying the rice importations
consigned to NFA in behalf of GT Trading, he presented and identified the
following documents: the Memorandum of Undertaking for each vessel
(marked as Exhibits "H", "N", "DD", "JJ", "X", "PP", "TT", "WW", "ZZ", "QQQ",
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 "EEE", "S", "AAAA", "KKK", "WWW", and "GGGG"), the Certification of Official
Importation (marked as Exhibits "I", "O", "EE", "KK", "Y", "QQ", "UU", "XX",
"AAA", "RRR", "FFF", "T", "BBBB", "LLL", "XXX", and "HHHH"), the Letter
addressed to the Commissioner of BOC (marked as Exhibits "WWWW", "X",
"CC", "II", "W", "OO", "ZZZZ", "AAAAA", "CCCCC", "PPP", "DDD", "R", "ZZZ",
"JJJ", "VVV", and "FFFF"), and the Telefax Sheet from the NFA (marked as
Exhibits "J", "XXXX", "FF", "LL", "Z", "RR", "YYYY", "BBBBB", "SSS", "GGG",
"DDDDD", "CCCC", "MMM", "EEEEE", and "FFFFF").
After presenting its witnesses, the prosecution filed its Formal Offer of
Evidence 22 on February 27, 2014, offering therein Exhibits "A" to "NNNNN-1".
However, in a Resolution 23 dated August 14, 2014, only the following Exhibits
were admitted by the Court:
Exhibit Description

BIR-ITS printout of the registration details of GT

"A"
Trading.

Access letter addressed to Revenue District Officer

"B"
Danilo
C. Mendoza of Revenue District Office (RDO) No. 33.

Annual Income Tax Return (ITR) and its required

"E" to "E-4"
attachments
such as Statement of Management's Responsibility and
GT
Trading Statement of Income and Balance Sheet, filed
by
Gerardo C. Teves for taxable year 2009.

"F" to "F-2" Quarterly Value-Added Tax (VAT) Return (ITR) for the
first, third and fourth quarters of 2009.

Joint Complaint Affidavit of Revenue Officers

"JJJJ" to "JJJJ-7"
Veneracion
P. Prado, Jessie M. Juangco, Marcial M. Padilla and
Alberto
S. Enriquez, Jr. (consisting of 8 pages)

"MMMM" National Investigation Division (NID) Memo Assignment

No. RAB-2010-08-05-179 dated August 5, 2010.

Letter of Authority No. LOA-211-2011-00000338

"NNNN"
dated
September 28, 2011 signed by CIR Kim S. Jacinto-
Henares.

Original Copy of Referral Letter of the Complaint

"OOOO"
Affidavit
signed by Commissioner Kim S. Jacinto-Henares dated
6
October 2011 consisting of two pages.
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 "PPPP" to "PPPP-1" Judicial Affidavit of Marcial M. Padilla consisting of nine
(9) pages and the signature of Marcial M. Padilla found
on
page 8 ("PPPP-1").

Judicial Affidavit of Jessie M. Juangco consisting of

"QQQQ"
seven
(7) pages and the signature of Jessie M. Juangco found
on
page 7 ("QQQQ-1")

"RRRR" Judicial Affidavit of Danilo C. Mendoza consisting of six

(6) pages and the signature of Danilo C. Mendoza
found
on page 5 ("RRRR-1")

"SSSS" Notice of Informal Conference dated July 26, 2013

addressed to Gerardo C. Teves including attachment
consisting of three (3) pages.

Preliminary Assessment Notice (PAN) issued by James

"TTTT"
H.
Roldan, Assistant Commissioner, Enforcement Service
against Gerardo C. Teves with its attached details of
discrepancies consisting of five (5) pages.

Formal Letter of Demand (FLD) dated October 17,

"UUUU"
2013
issued to Gerardo C. Teves consisting of two (2)
pages,
with its attached annexes consisting of five (5) pages.

"VVVV" Judicial Affidavit of Veneracion P. Prado consisting of

eleven (11) pages and the signature of Veneracion P.
Prado found on page 10 ("VVVV-1").

Letter of the NFA dated May 25, 2009 addressed to

"WWWW"
the
BOC relating to the arrival of the vessel MV EVER
GOLDEN 452E on May 20, 2009, loaded with 360 MT
Thailand Glutinous Rice 10% Brokens consigned to the
NFA in behalf of GT Trading.

Telefax from the NFA dated May 27, 2009 relating to

"XXXX"
the
arrival of the vessel MV WAN HAI 510 on May 25,
2009,
loaded with 90MT, China White Rice consigned to the
NFA in behalf of GT Trading.

"YYYY" Telefax from the NFA dated July 2, 2009 relating to the
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 arrival of the vessel MV VINASHIN FREIGHTER on June
30, 2009, loaded with 250MT, Vietnam White Rice 25%
Brokens consigned to the NFA in behalf of GT Trading.

Letter of the NFA dated May 25, 2009 addressed to

"ZZZZ"
the
BOC relating to the arrival of the vessel MV VINASHIN
FREIGHTER on June 30, 2009, loaded with 250MT,
Vietnam White Rice 25% Brokens consigned to the
NFA
in behalf of GT Trading.

Letter of the NFA dated July 2, 2009 addressed to the

"AAAAA"
BOC
relating to the arrival of the vessel MV WARNOW
PORPOISE on June 30, 2009, loaded with 250MT,
Vietnam
White Rice 25% Brokens consigned to the NFA in
behalf
of GT Trading.

"BBBBB" Telefax from the NFA dated July 3, 2009 relating to the
expected arrival of the vessel MV SINAR BANTEN July
10,
2009, loaded with 382.50MT, Myanmar Emata Rice
25%
Brokens consigned to the NFA in behalf of GT Trading.

Letter of the NFA dated July 3, 2009 addressed to the

"CCCCC"
BOC
relating to the expected arrival of the vessel MV SINAR
BANTEN July 10, 2009, loaded with 382.50MT Myanmar
Emata Rice 25% Brokens consigned to the NFA in
behalf
of GT Trading.

Telefax from the NFA dated July 20, 2009 relating to

"DDDDD"
the
arrival of the vessel MV MAERSK BROOKLYN 0909 on
May 26, 2009, loaded with 312 MT Thailand Glutinous
Rice 10% Brokens consigned to the NFA in behalf of GT
Trading.

Telefax from the NFA dated July 22, 2009 relating to

"EEEEE"
the
arrival of the vessel MV YM IMMENSE 043B on July 18,
2009, loaded with 75MT Vietnam White Rice consigned
to the NFA in behalf of GT Trading.

"FFFFF" Telefax from the NFA dated August 28, 2009 relating to
the arrival of the vessel MV KOTA RUKUN on July 31,
2009, loaded with 664MT Myanmar White Rice 25%
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 Brokens consigned to the NFA in behalf of GT Trading.

Summary of Rice Importation made by GT Trading for

"LLLLL"
the
year 2009, certified true and correct and based on
official
records/documents of the NFA.

MMMMM" to Judicial Affidavit of Christopher T. Patdo consisting of

"MMMMM-1" thirteen (13) pages and the name and signature of

Christopher T. Patdo found on page 12 ("MMMMM-1").

"NNNNN" to Judicial Affidavit of Ma. Gracia R. Bolutano consisting of

six (6) pages and the name and signature of Ma.

"NNNNN-1"
Gracia R.
Bolutano found on page 5 ("RRRRR-1").

On May 8, 2014, accused filed his Demurrer to Evidence, 24 which was

denied for lack of merit in a Resolution 25 promulgated on July 21, 2014.
Undaunted, accused filed a Motion for Reconsideration (of the Honorable
Court's Resolution dated 21 July 2014) 26 on August 15, 2014, but the same
was denied in October 21, 2014 Resolution. 27
Thereafter, the accused commenced the presentation of his witnesses:
THE EVIDENCE PRESENTED BY THE DEFENSE
I. Romeo L. Maramba
The first witness for the accused, Romeo L. Maramba, testified by way of
Judicial Affidavit, 28 that GT Trading engaged his services sometime in 2009
and 2010, as a bookkeeper thereof on a "project basis" for the purpose of
preparing and filing its ITRs for taxable years 2009 and 2010 and
corresponding financial statements based on the receipts presented to him.
After preparing the same, he would turn over said documents to Mr. Eugene
Caligner, the Operations Manager of GT Trading, for filing. He mentioned that
GT Trading is engaged in general merchandise and trading. It sells furniture
and school supplies like notebooks and reams of bond paper. He claimed that
he was not aware that GT Trading was engaged in the business of rice
importation. He testified that, at the time he prepared GT Trading's ITR for the
year 2009, the latter was operating at a loss as reflected in the documents
presented to him. He said that the accused did not participate in the
preparation of the ITR nor check the entries thereon. The accused merely
signed his name on the said ITR. Since the deadline for the filing of the ITR
was fast approaching, he asked the accused to sign in advance the ITR as well
as the "Statement of Management's Responsibility".
On cross-examination, the witness testified that he is not a Certified
Public Accountant. He mentioned that the contents of the ITRs and Financial
Statements were based on the official receipts, vouchers and other documents
presented to him. He did not require GT Trading to submit its cash ledgers.
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 When he was asked if he explained to the accused the documents he prepared
for the latter before signing the same, he answered, "Actually as I said, I
explained to him about the preparations of the ITR however since he did not
know anything about it he trusted me in this particular preparation." He
stated that he was not aware of any rice importation made by GT Trading
since no document was presented to him relative to the same. 29 cSEDTC

On re-direct examination, he stated that it was Officer Manager Eugene

who gave him all the documents of GT Trading. 30
On re-cross examination, he stated that "he did not know about the rice
importation." 31
II. Atty. Eric C. Opriasa
The second witness for the defense, Atty. Eric C. Opriasa, testified by
way of Judicial Affidavit, 32 that the accused engaged the services of their law
firm in connection with the present criminal case. He also stated that the
accused authorized him, through a Special Power of Attorney, to appear on the
latter's behalf in an Informal Conference called by the National Investigation
Division (NID) of the BIR on August 2, 2013, 9:00 a.m., at Room 211, NID,
BIR, National Office Bldg., Diliman, Quezon City. Upon arrival at the BIR's
office, he went directly to the NID and was referred to BIR Examiner Alex
Manguba, Supervisor of the team handling the case of the accused. He was
told to submit the SPA to the clerk which he did. Thereafter, the BIR
Examiners informed him that they are preparing the Final Assessment Notice
which they will issue to the accused.
On cross-examination, he admitted that he did not submit any
documentary evidence during the said Informal Conference. 33 He mentioned
that he was not aware if the accused received the Final Assessment Notice and
if the latter filed a protest to the same. 34
On March 19, 2015, accused filed his Formal Offer of Exhibits, 35 offering
therein Exhibits "4" to "4-D", "5", "6", "7" to "7-1" and "8", which were all
admitted in a Resolution 36 promulgated on May 11, 2015.
Subsequently, the case was submitted for decision 37 after taking into
consideration the accused's Memorandum 38 filed on June 15, 2015, and
Plaintiff's Memorandum 39 filed on July 23, 2015.
THE ISSUE
The main issue for the resolution of this Court is whether or not Accused
is liable for the offense charged in the Information.
DISCUSSION
The Court is bereft of jurisdiction
over the instant case
Before delving on the merits of this case, We find it imperative to first
and foremost determine whether or not the Court of Tax Appeals (CTA)
properly acquired jurisdiction over the instant criminal case.
Basic is the rule that jurisdiction is conferred by law. Therefore, the CTA,
being a court of special jurisdiction, can take cognizance only of the matters
that are clearly within its jurisdiction. Section 7 (b) (1) of Republic Act No.
9282, 40 amending Republic Act No. 1125, 41 specifically provides:
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 9282, amending Republic Act No. 1125, specifically provides:
"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 National Internal Revenue Code or
Tariff and Customs Code and other laws administered by the Bureau of
Internal Revenue or 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 to the contrary
notwithstanding, the 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 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. (Emphasis supplied) SDAaTC

Further, Section 3, Rule 4 of the 2005 Revised Rules of the Court of Tax
Appeals, as amended, specifically enumerates the cases that fall within the
jurisdiction of the Court of Tax Appeals in Division, to wit:
"SEC. 3. Cases within the jurisdiction of the Court in Divisions. —
The Court in Division shall exercise:
(a) . . .
(b) Exclusive jurisdiction over cases involving criminal offenses, to
wit:
(1) Original jurisdiction over all criminal offenses
arising from violations of the National Internal
Revenue Code or Tariff and Customs Code and other
laws administered by the Bureau of Internal Revenue
or the Bureau of Customs, where the principal
amount of taxes and fees, exclusive of charges
and penalties, claimed is one million pesos or
more; and
(2) Appellate jurisdiction over appeals from the
judgments, resolutions or orders of the
Regional Trial Courts in their original jurisdiction
in criminal offenses arising from violations of the
National Internal Revenue Code or Tariff and Customs
Code and other laws administered by the Bureau of
Internal Revenue or Bureau of Customs, where the
principal amount of taxes and fees, exclusive of
charges and penalties, claimed is less than one million
pesos or where there is no specified amount
claimed; (Emphases supplied)
In this case, while there is no dispute that there is no requirement for
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 the precise computation and assessment of tax before there can be a criminal
prosecution, there is, however, a necessity to allege in the Information,
following the foregoing provisions, that the principal amount of taxes and fees,
exclusive of charges and penalties, claimed is at least one million pesos
(P1,000,000.00) to vest jurisdiction to this Court.
But in this case, there was no mention whatsoever of the principal
amount of taxes and fees claimed in the accusatory portion of the
Information. Consequently, the Information failed to meet the minimum
jurisdictional amount prescribed by law and the rules in order to confer
jurisdiction upon this Court. By such reason, this Court has no recourse but to
dismiss the instant case on account of lack of jurisdiction. The instant
criminal case should therefore be tried by the regular Courts and the
jurisdiction of the CTA shall be appellate.
Settled is the rule that the jurisdiction over the subject matter or nature
of an action is fundamental for a court to act on a given controversy, and is
conferred only by law and not by the consent or waiver upon a court which,
otherwise, would have no jurisdiction over the subject matter or nature of an
action. Also, Section 1, Rule 9 of the Rules of Court states that when it
appears from the pleadings or the evidence on record that the court has no
jurisdiction over the subject matter, the court shall dismiss the claim. Lack of
jurisdiction of the court over an action or the subject matter of an action
cannot be cured by the silence, acquiescence, or even by express consent of
the parties. 42 Therefore, it is of no moment even if the parties in this case
have agreed during the pre-trial conference that this Court has jurisdiction
over the instant case. 43
Considering that this Court is bereft of jurisdiction to hear the instant
criminal case, We cannot, likewise, rule on the alleged civil liability of the
accused.
WHEREFORE, in view of the foregoing, the criminal case against
accused Gerardo C. Teves for violation of paragraph 1, Section 255 of the 1997
National Internal Revenue Code, as amended, is hereby DISMISSED for lack
of jurisdiction.
SO ORDERED.

(SGD.) CAESAR A. CASANOVA

Associate Justice
Amelia R. Cotangco-Manalastas, J., concurs.
Juanito C. Castañeda, Jr., J., with Dissenting Opinion.

Separate Opinions
CASTAÑEDA, JR., J., dissenting opinion:

With due respect to my esteemed colleagues, I dissent as to the finding

that the case be dismissed for lack of jurisdiction.
In my opinion, the attachments to the Information are deemed integral
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 part of the Information filed in Court. Attached to the Information, among
others, are the Resolution of the Prosecutor and the Joint Complaint-Affidavit
of the Revenue Officers of the Bureau of Internal Revenue (BIR), where the
amount of taxes being claimed from the accused are stated.
A complaint is a sworn written statement charging a person with an
offense, subscribed by the offended party, any peace officer, or other public
officer charged with the enforcement of the law violated. 1
On the other hand, an Information is an accusation in writing charging a
person with an offense, subscribed by the prosecutor and filed with the court. 2
A careful perusal of the Joint Complaint-Affidavit of the Revenue Officers
of the Bureau of Internal Revenue (BIR) shows that the basic deficiency
income tax due is P99,325,819.21, 3 and the basic VAT due is P4,525,294.49. 4
The Prosecutor' Resolution also state the allegation of the BIR's claim,
including the interest thereon, of the income tax due and collectible
amounting P129,951,247.02, 5 and VAT for taxable year 2009 in the amount
of P6,121,718.83. 6
Jurisdiction of a court over a criminal case is determined by the
allegations in the complaint o r information. 7 Considering the allegations of
the basic amount of taxes being claimed in this case as stated in the Joint-
Complaint Affidavit and also the total taxes claimed by the BIR as stated in
the Resolution of the Prosecutor, there is no doubt that this Court has
jurisdiction. EcTCAD

It is emphasized that the CTA has exclusive original jurisdiction when

the principal amount of taxes claimed is P1Million and above. 8 In this case,
the amount claimed are P99,325,819.21 and P4,525,294.49 for the basic
deficiency income tax due and the basic VAT due, respectively, thus, CTA has
exclusive original jurisdiction over this case. In view of the foregoing, this case
should not be dismissed for lack of jurisdiction.
Let us now proceed whether or not the accused is liable for violation of
paragraph 1 of Section 255 of the National Internal Revenue Code of 1997
(NIRC of 1997), as amended.
The violation arose from accused's purported failure to supply correct
and accurate information in his Annual Income Tax Return (ITR) for taxable
year 2009. Allegedly, he made various rice importations during 2009 which
were not declared in his Annual ITR resulting in the substantial
underdeclaration of sales, and consequently, causing deficiency taxes.
The accused allegedly committed the crime of willful failure to supply
correct and accurate information in his 2009 Annual ITR, a violation of the
first paragraph of Section 255 of the NIRC of 1997, as amended, 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 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
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 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
The elements of Section 255 of the NIRC of 1997, as amended, are as
follows:
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.
Accused is a person required by law
to pay any tax, make a return, keep
any record, or supply correct and
accurate information.
Accused is required to file a return and declare income tax under
Sections 51 (A) and 74 (A) in relation to Section 32 (A) of the NIRC of 1997, as
amended, to wit:
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;
xxx xxx xxx
(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
Philippines shall file an income tax return, regardless of the
amount of gross income;
xxx xxx xxx
(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: HSAcaE

(a) A resident citizen — on his income from all sources;

(Emphasis supplied)
xxx xxx xxx
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 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;
xxx xxx xxx
Based on the foregoing, the prosecution must prove that accused is an
individual who is required by law to file the tax returns and to pay the
corresponding taxes. In order to prove this element, the prosecution presented
Revenue Officer III Marcial M. Padilla and Special Investigator I Jessie M.
Juangco, who both testified on the process of "profiling". According to them, all
the relevant data/information regarding the accused were accessed via the
BIR's centralized database, i.e., the BIR Integrated Tax System (ITS).
In support of their testimony, the prosecution presented the BIR-ITS
printout 9 of the accused showing the following registration details:
1. Accused is a registered taxpayer of Revenue District Office No.
33 (Intramuros-Ermita-Malate);
2. Accused's Tax Identification Number 209-041-595-000, issued
on January 15, 2001;
3. Accused's registered taxpayer type is Single Proprietor; and
4. Accused's trade/branch name is G.T. Trading located at 3/F BF
Condominium, Andres Soriano Ave., Intramuros, Manila.
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 The same facts were also stipulated by the parties in the Pre-Trial Order.
10 In addition, the prosecution presented accused's 2009 Annual ITR, 11
together with his Financial Statements, 12 and 2009 first, 13 third, 14 and fourth
15 Quarterly VAT Returns. Hence, the first element of the crime was clearly
established.
Accused willfully failed to supply
correct and accurate information in
his 2009 Annual ITR.
A thorough analysis of accused's 2009 Annual ITR, together with his
Financial Statements, in relation to his 2009 first, third and fourth Quarterly
VAT Returns, reveals incorrect, inconsistent and inaccurate reporting of
information.
By just looking at the tables below, there is a manifest showing that
accused failed to supply correct and accurate information in his 2009 Annual
ITR. There is a huge disparity between sales per ITR and Financial Statement
vis-a-vis sales per VAT Returns, to wit: HESIcT

A. Total Sales per 2009 Annual ITR and Financial Statement vis-à-vis
2009 Quarterly VAT Returns
Per VAT
Sales Per Annual Per Financial
Returns
ITR 16 Statement 17

1st quarter 18 P180,094.63

2nd quarter 19 -
3rd quarter 20 12,564,401.00
4th quarter 21 -
–––––––––– ––––––––––– –––––––––––––
Total Sales P241,830.00 P241,830.00 P12,744,495.63
========= ====================

Based on accused's 2009 Annual ITR, his total sales amounted only to
P241,830.00. This is the same amount reported in his Statement of Income
for the Year Ended December 31, 2009. However, the sales total reported in
the 2009 Quarterly VAT Returns amounting to P12,744,495.63 was not
reported in the 2009 Annual ITR. Even assuming that the sales for the third
quarter of 2009 were considered exempt sales for VAT purposes, still, the same
must be reported in his ITR for income tax purposes.
B. Total Cost of Sales/Purchases/Inventory per 2009 Annual ITR and
Financial Statement vis-à-vis 2009 Quarterly VAT Returns
Per
Per Annual ITR Per VAT Returns
Financial
Statement

Purchases Not specifically enumerated P25,213,303.06 22

Ending
0 0
Inventory
Cost of Sales P97,102.50 P97,102.50

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 As per VAT Returns, the total purchases amounted to P25,213,303.06,
while only the amount of P97,102.50 was reflected in the total cost of sales
per Annual ITR and Financial Statement. Supposing not all purchases were
sold, then the remaining purchases should have been reported as part of his
ending inventory, or at least, reported in his "Statement of Income".
We will now determine if the incorrect, inconsistent, and inaccurate
reporting in this case was willful.
An act or omission is "willfully" done, if done voluntarily and
intentionally and with the specific intent to do something the law forbids, or
with the specific intent to fail to do something the law requires to be done;
that is to say, with bad purpose either to disobey or to disregard the law. A
willful act may be described as one done intentionally, knowingly, and
purposely, without justifiable excuse. 23 "Wilful" means "premeditated;
malicious; done with intent, or with bad motive or purpose, or with
indifference to the natural consequence". 24
The totality of actions and inactions of the accused showed that he
willfully failed to supply correct and accurate information in his 2009 Annual
ITR as shown particularly by the following documentary and testimonial
evidence of both parties:
A. Accused admitted his rice importations during 2009.
1. The accused stipulated that in 2009, he operated as a single proprietor
and was engaged in business under the trade name GT Trading; 25
2. The accused stipulated that he imported rice on various dates in 2009;
26 and

3. The 2009 Quarterly VAT Returns showed importation of goods other

than capital goods.
B. Accused imported 4,999.60 metric tons of rice in sixteen (16)
shipments in 2009.
1. Testimony of NFA GOO1 Christopher T. Patdo that GT Trading is one of
the private sector rice importers awarded to participate in the
NFA's PSF rice importation using the NFA's Tax Expenditure
Subsidy in the year 2009. Of the 5,000 metric tons of rice
importation awarded to GT Trading, it actually imported 4,999.60
metric tons in its 16 shipments in 2009; and
2. Various documents 27 (Letters and Telefax of NFA to BOC) relative to
the accused's rice importation, particularly, the "Summary of
Rice Importation made by GT Trading for the year 2009", 28
certified true and correct and based on official records/documents
of the NFA, showing accused's rice importations.
C. Accused did not disclose his rice importations to his bookkeeper.
1. Testimony of the accused's bookkeeper, Mr. Romeo L. Maramba, that
he was not aware of GT Trading's business of rice importations,
and that based on the documents presented to him, he did not see
any document related to rice or the importation of rice; 29 and
2. The signed "Statement of Management's Responsibility" 30 attached
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 to the Financial Statements, showing that accused assumed full
responsibility of the contents of the report. caITAC

From the start, it can be gathered that accused deliberately and

consciously failed to supply the correct and accurate information in his ITR.
During the preparation of the 2009 Annual ITR, accused neither mentioned to
his bookkeeper the rice importations nor provided him with documents of
importations. The accused's bookkeeper, Mr. Romeo L. Maramba, testified that
he was not aware of GT Trading's business of rice importations, and that based
on the documents presented to him, he did not see any document related to
rice or the importation of rice. This representation is inconsistent and in
conflict with accused's earlier admission in court that he imported rice on
various dates in 2009.
In the testimony of accused's bookkeeper, Mr. Romeo L. Maramba, it was
disclosed that he asked the accused to sign in advance the ITR and Statement
of Management's Responsibility in order to avoid the hassle of waiting for him
to sign the documents. He confirmed that accused merely relied on him in the
preparation of the ITR. 31
This contention cannot exonerate the accused from his tax liabilities. At
the time the accused signed the "Statement of Management's Responsibility",
he took full responsibility for all information and representations contained in
the financial statements. Besides, he even made a representation that he
reviewed the statements before the same were approved and submitted to
him.
The signed "Statement of Management's Responsibility" states:
GERARDO C. TEVES
3/F BF Condo Intramuros Manila
STATEMENT OF MANAGEMENT'S RESPONSIBILITY
The management of GT Trading is responsible for all
information and representation contained in the financial
statements for the year ended December 31, 2009. The
Financial Statements have been prepared in conformity with generally
accepted accounting principles and reflect the amounts that are on
actual figures.
In this regard, management a system of accounting and reporting
which provides the necessary internal controls to ensure that
transactions are properly authorized and recorded. Assets are
safeguarded against unauthorized user or disposition and liabilities are
recognized. The management complied with the provisions of PCTGE,
EXPANDED WITHHOLDING TAX AND INCOME TAX and other related
rules and regulations of BIR and released our auditor to any civil or
criminal liabilities that our Financial Statements representation might
bring.
The management reviews the Financial Statements
before such statements are approved and submitted to owner
of the company.
(signed)
GERARDO C. TEVES
Owner-General Manager
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 By principle of estoppel, accused is prevented from denying his acts,
representations or admissions that will prejudice others who rightfully relies
on such representations. 32 Moreso, accused cannot escape the application of
"willful blindness" doctrine which is defined 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". 33 "The
application of this principle is appropriate in instances when a person suspects
a fact, realizes its probability, but refrains from obtaining final confirmation in
order to be able to deny knowledge if apprehended." 34 ICHDca

Also, the credence and weight to the testimony of Christopher T. Patdo,

GOO1 of the NFA, that of the 5,000 metric tons of rice importation awarded to
GT Trading, it actually imported 4,999.60 metric tons in its sixteen (16)
shipments in 2009. His testimony was supported by the "Summary of Rice
Importation made by GT Trading for the year 2009" issued by the NFA, where
the name of the accused appears. Both the testimony and the issuance of
supporting document were performed as part of the official duties that enjoy
the presumption of regularity, 35 "which presumption may be overturned only
if there is clear and convincing evidence to the contrary or that they were
inspired by improper motive." 36
Considering the testimony of Mr. Patdo and the accused's own
admission, it can be concluded that the "GT Trading" mentioned in the
documents is the same entity as the one owned by the accused. The
"Summary of Rice Importation made by GT Trading for the year 2009" issued
by NFA confirms the earlier admission of the accused that he imported rice on
various dates during 2009. Moreover, accused failed to explain what happened
to the purchases made during the third quarter of 2009 amounting to
P25,142,375.61. It was neither reported in the ending inventory nor in the
sales account.
As regards the issue on alleged violation of due process, the same is
untenable. The accused argues that the Complaint was hastily filed on
October 13, 2011 or just one day after the lapse of the period granted to the
accused to submit documents. The accused questions the basis of the
Complaint when the complainants did not even check the documents required
of him.
Records show that the investigating revenue officers obtained
information from third party by sending access letters 37 to various
government agencies. The use of third party information or "Best Evidence
Obtainable" is allowed under Section 6 (B) of the NIRC of 1997, as amended.
Moreover, "the government is allowed to resort to all evidence or resources
available to determine a taxpayer's income and to use methods to reconstruct
his income." 38 cDHAES

In the Memorandum 39 for the accused, he stated that in a letter dated

September 29, 2011, the BIR gave him until October 12, 2011 to comply with
the LOA. In other words, accused was given ample time or two (2) months to
submit the needed documents. Even during investigation, he was able to
submit his counter-affidavit. 40 Hence, the fundamentals of due process were
met.
In view of the established facts taken from the parties' stipulations and
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 the evidence on hand, the prosecution successfully established the guilt of the
accused beyond reasonable doubt as to the crime charged.
Accused's civil liability
It appears that the alleged tax deficiencies (P129,951,247.02 41 for
income tax and P6,121,718.83 42 for VAT, exclusive of penalties, surcharges
and interest) stated in the Pre-Trial Order 43 are initial computations contained
in the Joint Complaint Affidavit. On the other hand, as per FLD/Assessment
Notice, the alleged tax deficiencies were increased to P448,586,408.88 for
income tax and P17,097,009.39 for VAT.
Since there is no requirement for the precise computation and
assessment of the tax before there can be a criminal prosecution, the issuance
of PAN and FAN even after the filing of Information is valid. The Supreme
Court made it clear in the case of Adamson, et al. vs. Court of Appeals, et al .,
44 citing the case of Ungab vs. Cusi, 45 that an assessment is not necessary to a
criminal prosecution, viz.:
An assessment of a deficiency is not necessary to a criminal
prosecution for willful attempt to defeat and evade the income tax. A
crime is complete when the violator has knowingly and willfully filed a
fraudulent return, with intent to evade and defeat the tax. The
perpetration of the crime is grounded upon knowledge on the part of
the taxpayer that he has made an inaccurate return, and the
government's failure to discover the error and promptly to assess has
no connections with the commission of the crime.
As borne by the records, the PAN 46 was issued and received by the
accused on August 28, 2013, followed by the FLD/Assessment Notice 47 dated
October 17, 2013. The witness for the prosecution, Veneracion P. Prado,
Intelligence Officer II of the BIR, testified that the accused himself signed his
name, signature and date of receipt on the receiving copy of the PAN. 48 Since
they did not receive any letter, correspondence or protest from the accused
regarding the PAN, they issued the FLD, 49 which was served to the accused on
October 29, 2013. 50 The FLD was personally served to the accused who
himself affixed his name and signature on the BIR's receiving copy. 51
During cross-examination, Ms. Prado testified that the period allowed for
the accused to protest has not yet lapsed, however, as of the time she testified
she has yet to receive an answer or a protest from the accused:
JUSTICE COTANGCO-MANALASTAS:
Q Was he accorded due process considering that it was filed only on
October 29, 2013?
WITNESS:
A Yes Your Honor.
Q Yes? You investigated Mr. Teves, he was given opportunity to present
evidence before you?
A He presented some documents, Your Honor.
Q When was this?
A During my investigation, Your Honor.
Q When did you conduct the investigation? Based on your affidavit Ms.
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 Witness, answer 41, the Formal Letter of Demand consisting of
seven pages was served to Mr. Teves on October 29, 2013. And
you were asked earlier, does this mean that he has still opportunity
to protest and you said yes?
WITNESS:
A Yes, Your Honor.
JUSTICE COTANGCO-MANALASTAS:
Q So up to October 29 up to today, was there an opportunity for Mr.
Teves to present his evidence, was he called to your office, was he
accorded due process before the filing of this case?
A In the Final Letter of Demand, Mr. Teves has the right to present his
documents.
Q Yes, was he able to do that?
A As of this date, I still have not received an answer from him, Your
Honor.
JUSTICE CASTAÑEDA, JR.:
Q Did he file a protest?
WITNESS
A I have not received any protest.
JUSTICE CASTAÑEDA, JR.:
All right continue. ASEcHI

ATTY. DUEÑAS II:

Q Is it not a fact Mr. Witness, that accused has thirty (30) days within
which to file protest from the service of the Letter of Demand or
Final Notice of Assessment?
WITNESS:
A Yes, sir.
Q And that period has not lapsed?
A Yes, sir. 52

While it is true that the period to file a protest has not yet lapsed at the
time Ms. Prado was presented to testify, the defense, however, did not offer
any proof that accused indeed protested the FLD/Assessment Notice. Based on
the records, accused did not challenge or dispute the assessment in accordance
with the remedies provided by law.
All told, "tax assessments by tax examiners are presumed correct and
made in good faith, and all presumptions are in favor of the correctness of a
tax assessment unless proven otherwise." 53 In the case of Marcos II vs. Court
of Appeals, et al., 54 the Supreme Court held:
. . . the Bureau of Internal Revenue, whose determinations and
assessments are presumed correct and made in good faith. The
taxpayer has the duty of proving otherwise. In the absence of proof of
any irregularities in the performance of official duties, an assessment will
not be disturbed. Even an assessment based on estimates is prima facie
valid and lawful where it does not appear to have been arrived at
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 arbitrarily or capriciously. The burden of proof is upon the complaining
party to show clearly that the assessment is erroneous. Failure to
present proof of error in the assessment will justify the judicial
affirmance of said assessment. . . .
The Penalty
Section 255 of the NIRC of 1997, as amended, provides that upon
conviction, a fine of not less than Ten Thousand Pesos (P10,000.00) and
imprisonment of not less than one (1) year, but not more than ten (10) years,
shall be imposed. There being no showing that accused is disqualified from the
scope of the Indeterminate Sentence Law, the same shall apply. Hence, the
imposable penalty shall not be less than the minimum penalty of one (1)
year, and the maximum penalty shall not exceed ten (10) years, the
maximum prescribed by law. cTDaEH

The imposition of a fine of P10,000.00 and the indeterminate penalty of

one (1) year, as minimum, to two (2) years as maximum term of
imprisonment, is in accordance with law. This is without prejudice to the
application of Section 280 of the NIRC of 1997, as amended, in the event that
the accused has no property with which to meet the fine imposed upon him,
or is unable to pay such fine, in which case, he shall be subject to a subsidiary
personal liability at the rate of one (1) day for each Eight pesos and fifty
centavos (P8.50), subject to the rules established in Article 39 of the Revised
Penal Code.
In this case, the prosecution proved beyond reasonable doubt that
accused Teves is guilty beyond reasonable doubt of the willfull failure to
supply correct and accurate information. The accused should be sentenced to
suffer an indeterminate penalty of imprisonment of one (1) year as
minimum, to two (2) years as maximum, and also to PAY a fine in the
amount of P10,000.00, with subsidiary imprisonment in case accused has no
property with which to meet the said fine, pursuant to Section 280 of the
NIRC of 1997, as amended.
As regards the civil liability, accused should be ORDERED TO PAY
deficiency income tax of FOUR HUNDRED FORTY-EIGHT MILLION FIVE
HUNDRED EIGHTY-SIX THOUSAND FOUR HUNDRED EIGHT PESOS AND
88/100 (P448,586,408.88) and deficiency VAT of SEVENTEEN MILLION
NINETY-SEVEN THOUSAND NINE PESOS AND 39/100
(P17,097,009.39) for taxable year 2009, inclusive of surcharge and interest,
plus twenty percent (20%) delinquency interest per annum counted from
November 16, 2013 55 until fully paid pursuant to Section 249 (C) (3) of the
NIRC of 1997, as amended.
Based on the foregoing discussions, the accused should be held
criminally and civilly liable in this case. ITAaHc

Footnotes
1. Docket (Vol. I), p. 208.

2. Resolution dated October 5, 2012, Docket (Vol. I), p. 219.

3. Docket (Vol. I), p. 301.
4. Docket (Vol. II), pp. 339-347.
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 5. Exhibit "SSSS" and Exhibit "6".
6. Exhibit "7" and "7-1".
7. Exhibit "TTTT" and "TTT-1".

8. Exhibit "UUUU".
9. Docket (Vol. I), pp. 361-370.
10. Transcript of the Stenographic Notes (TSN) dated July 29, 2013, p. 24.

11. TSN dated July 29, 2013, p. 27.

12. TSN dated July 29, 2013, p. 28.
13. TSN dated July 29, 2013, pp. 28-29.
14. Exhibit "QQQQ".

15. TSN dated July 29, 2013, p. 37.

16. Exhibit "RRRR".
17. Exhibit "NNNNN".

18. TSN dated October 21, 2013, pp. 4-5.

19. Docket (Vol. II), pp. 442-452.
20. TSN dated November 25, 2013, pp. 16-17.

21. Docket (Vol. II), pp. 557-569.

22. Docket (Vol. II), pp. 656-681.
23. Docket (Vol. II), pp. 806-807.
24. Docket (Vol. II), pp. 816-845.

25. Docket (Vol. II), pp. 872-883.

26. Docket (Vol. II), pp. 888-902.
27. Docket (Vol. II), pp. 907-908.

28. Docket (Vol. II), pp. 928-937.

29. TSN dated January 28, 2015, pp. 12-18.
30. TSN dated January 28, 2015, p. 20.

31. TSN dated January 28, 2015, p. 23.

32. Docket (Vol. II), pp. 944-951.
33. TSN dated March 4, 2015, p. 13.
34. TSN dated March 4, 2015, p. 14.

35. Docket (Vol. II), pp. 956-960.

36. Docket (Vol. II), pp. 982-983.
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 37. Resolution promulgated on July 29, 2015, Docket (Vol. II), p. 1028.

38. Docket (Vol. II), pp. 984-1001.

39. Docket (Vol. II), pp. 1009-1027.
40. AN ACT EXPANDING THE JURISDICTION OF THE COURT OF TAX APPEALS (CTA),
ELEVATING ITS RANK TO THE LEVEL OF A COLLEGIATE COURT WITH
SPECIAL JURISDICTION AND ENLARGING ITS MEMBERSHIP, AMENDING FOR
THE PURPOSE CERTAIN SECTIONS OR REPUBLIC ACT NO. 1125, AS
AMENDED, OTHERWISE KNOWN AS THE LAW CREATING THE COURT OF
TAX APPEALS, AND FOR OTHER PURPOSES.
41. AN ACT CREATING THE COURT OF TAX APPEALS.

42. Miramar Fish Company, Inc. vs. Commissioner of Internal Revenue, G.R. No.
185432, June 4, 2014.
43. Par. A1, Stipulated Facts and Issues, Pre-Trial Order dated June 17, 2013, Docket
(Vol. I), p. 339.
CASTAÑEDA, JR., J., dissenting opinion:
1. Section 3, Rule 110 of "The Revised Rules on Criminal Procedure."

2. Section 4, Rule 110, "The Revised Rules on Criminal Procedure."

3. Docket, p. 18.
4. Docket, p. 19.

5. Docket, p. 7.
6. Docket, pp. 7-8.
7. Treñas v. People, G.R. No. 195002, January 25, 2012; Rogelio M. Esteban v.
Sandiganbayan and the People, G.R. Nos. 146646-49, March 11, 2005.
8. Sec. 7 (b) (1) of Republic Act (R.A.) No. 1125, as amended by R.A. No. 9282.

9. Exhibit "A", Docket, p. 682.

10. Docket, pp. 339-340.
11. Exhibits "E" to "E-1", Docket, pp. 687-688.

12. Exhibits "E-2" to "E-4", docket, pp. 689-691.

13. Exhibit "F", docket, p. 692.
14. Exhibit "F-1", docket, p. 693.

15. Exhibit "F-2", docket, p. 694.

16. Exhibits "E" to "E-1", docket, pp. 687-688.
17. Exhibits "E-2" to "E-4", docket, pp. 689-691.
18. Exhibit "F", docket, p. 692.

19. For this quarter, there was no VAT Return presented during trial.
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 20. Exhibit "F-1", docket, p. 693.
21. Exhibit "F-2", docket, p. 694.

22. (First Quarter) P70,927.45 + (Third Quarter) P25,142,375.61 = P25,213,303.06.

23. Black's Law Dictionary, 6th Ed., p. 1599.
24. Commissioner of Internal Revenue, et al. vs. The Honorable Court of Appeals, et
al., G.R. No. 119322, June 4, 1996, 257 SCRA 200, 224-225.

25. Pre-Trial Order, docket, p. 340.

26. Ibid.
27. Exhibits "WWWW", "XXXX", "YYYY", "ZZZZ", "AAAAA", "BBBBB", "CCCCC",
"DDDDD", "EEEEE", and "FFFFF", docket, pp. 775-784.
28. Exhibit "LLLLL", docket, p. 785.

29. Exhibit "5", Judicial Affidavit, docket, p. 966.

30. Exhibit "E-2", docket, p. 689.
31. Exhibit "5", Judicial Affidavit, docket, pp. 968-969.

32. GE Money Bank, Inc. (Formerly Keppel Bank Philippines, Inc.) vs. Spouses
Victorino M. Dizon and Rosalina L. Dizon, G.R. No. 184301, March 23, 2015.

33. Black's Law Dictionary, 8th Ed., p. 1630.

34. People of the Philippines vs. Benjamin Kintanar, CTA Crim. Case Nos. O-031 & O-
032, Resolution dated February 23, 2011 affirmed in CTA EB Crim. Case No.
012, May 7, 2012.
35. Section 3 (m), Rule 131 of the Revised Rules on Evidence.

36. People of the Philippines vs. Nieva Alberto Y De Nieva , G.R. No. 179717,
February 5, 2010, 611 SCRA 706, 709.

37. Exhibit "B", docket, p. 683.

38. Bureau of Internal Revenue, as represented by the Commissioner of Internal
Revenue vs. Court of Appeals, Spouses Antonio Villan Manly, and Ruby Ong
Manly, G.R. No. 197590, November 24, 2014.
39. Docket, p. 987.

40. Par. 55, Memorandum for the accused, docket, p. 999.

41. Joint Complaint Affidavit, docket, p. 745.
42. Ibid., docket, p. 746.
43. Docket, p. 340.

44. G.R. Nos. 120935 and 124557, May 21, 2009, 588 SCRA 27, 46.
45. G.R. Nos. L-41919-24, May 30, 1980, 97 SCRA 877.
46. Exhibit "TTTT", docket, pp. 763-767.
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 47. Exhibit "UUUU", docket, pp. 768-774.
48. A36, page 8 of Judicial Affidavit, docket, p. 449.
49. A38, page 9 of Judicial Affidavit, docket, p. 450.

50. A41, page 9 of Judicial Affidavit, docket, p. 450.

51. A42, page 10 of Judicial Affidavit, docket, p. 451.
52. TSN dated November 25, 2013, pp. 20-22.

53. Commissioner of Internal Revenue vs. Gonzalez, et al. , G.R. No. 177279, October
13, 2010, 633 SCRA 139.

54. G.R. No. 120880, June 5, 1997, 273 SCRA 47, 66-67.
55. The due date appearing in the Formal Letter of Demand, docket, p. 768.

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