people v. gloria kintanar

REPUBLIC OF THE PHILIPPINES

Court ofT ax Appeals QUEZON CITY

ENBANC

PEOPLE OF THE PHILIPPINES, Respondent,

-versus-

GLORIA V. KINTANAR, Petitioner.

C.T.A. EB CRIM. NO. 006 (C.T.A. CRIM. CASE NOS. 0-033 & 0-034)

Present:

ACOSTA, Presiding Justice, CASTANEDA, JR., BAUTISTA, UY, CASANOVA, PALANCA-ENRIQUEZ, PABON-VICTORINO, MINDARO-GRULLA, and COTANGCO-MANALASTAS, JJ .

Promulgated:

X --------------------------- ------------------------------------------------------------- X

DECISION

PALANCA-ENRIQUEZ, J.:

THE CASE

This is a Petition for Review filed by petitioner Gloria V. Kintanar

from the Decision dated August 26, 2009 rendered by the Former Second w

C.T.A. EB CRIM. NO. 006 (C.T.A. CRIM. CASE NOS. 0-033 & 0-34) DECISION

2

Division of this Court in C.T.A. Crim. Case Nos. 0-033 and 0-034, both for

Violation of Section 255 of RA 8424, otherwise known as the Tax Reform

Act of 1997, the dispositive portion of which reads, as follows:

"WHEREFORE, judgment is hereby rendered:

1) In Criminal Case No. 0-033, finding accused Gloria V. Kintanar, GUlL TY beyond reasonable doubt of 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 the said fine, or unable to pay such fine, pursuant to Section 280 of the NIRC of 1997, as amended.

As regards the civil liability, accused is ORDERED to PAY deficiency income tax for taxable year 2000, the amount of P3,156,470.22, inclusive of penalties, surcharges and interests, plus 20% interest per ann~1m counted from April 12, 2005 until full payment thereof, pursuant to Section 249 (C ) (3) of the NIRC of 1997, as amended; and

2) In Criminal Case No. 0-034, finding accused Gloria V. Kintanar, GUlL TY beyond reasonable doubt of 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

(j)v


imprisonment in case accused has no property with which to meet the said fine, or unable to pay such fine, pursuant to Section 280 of the NIRC of 1997, as amended.

As regards the civil liability, accused is ORDERED TO PAY deficiency income tax for taxable year 2001, the amount of P3,147,518.77, inclusive of penalties, surcharges and interests, plus 20% delinquency interest per annum counted from April 12, 2005 until full payment thereof, pursuant to Section 249 (C ) (3) of the NIRC of 1997, as amended. No costs.

SO ORDERED."

THE FACTS

The facts of the case, as culled from the records, are as follows:

3

In two (2) separate Informations, both dated February 7, 2006, Gloria

V. Kintanar (hereafter "petitioner") was charged with Violation of Section

255 ofRA No. 8424, the accusatory portions of which read, as follows:

CRIMINAL CASE NO. 0 -033

"That on or about the 161h day of April, 2001, in

Paranaque City, Philippines, and within the jurisdiction of this Honorable Com1, the above named-accused, a Filipino citizen residing in the Philippines, who is engaged in business and earning income as distributor of Forever Living Products Philippines, Inc., with obligation under the law to file her Income Tax Return (ITR) for the taxable year 2000 on or before

~


the 15th day of April 2001, did, then and there, willfully, unlawfully and feloniously fail to file her ITR with the Bureau of Internal Revenue for the year 2000, to the damage and prejudice of the Government in the estimated amount of Pl ,329,319.95 exclusive ofpenalties, surcharges and interest.

CONTRARY TO LAW."

CRIMINAL CASE NO. 0 -034

"That on or about the 16th day of April, 2002, in Paraiiaque City, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused, a Filipino citizen residing in the Philippines, who is engaged in business and earning income as distributor of Forever Living Products Philippines, Inc., with obligation under the law to file her Income Tax Return {ITR) for the taxable year 2001 on or before the 15th day of April 2002, did, then and there, willfully, unlawfully and feloniously fail to file her ITR with the Bureau of Internal Revenue for the year 2001, to the damage and prejudice of the Government in the estimated amount of Pl ,517,242.12 exclusive of penalties, surcharges and interest.

CONTRARY TO LAW."

4

When arraigned, petitioner pleaded "not guilty" to the crimes charged.

Trial ensued.

THE PROSECUTION'S EVIDENCE

From the evidence adduced by the prosecution, particularly the

testimony of seven witnesses, namely: Simplicio Cabantac, Romeo Naranjo, w


5

Atty. Christina Ban·oga, Julio Alcasabas, Michael Cajandab, Carmencita

Flores and Assistant Commissioner Alberto A. Pio de Roda, and

documentary evidence presented, the following facts have been established :

Based on a confidential information received by the National

Investigation Division of the BIR on the alleged tax evasion scheme of

spouses Benjamin G. Kintanar Jr. and Gloria V. Kintanar for non-filing of

income tax returns, Armando R. Rosimo ("Chief Rosimo"), Chief of the Tax

Fraud Division, issued an Access Letter dated July 18, 2002, addressed to

the Revenue District Officer of RDO 52, Paraiiaque City. In said letter, the

Revenue District Officer was requested to furnish revenue

officers/investigating team of Simplicia V. Cabantac, Evangeline Catotal,

Aurelio Agustin Zamora and Section Chief Sixto C. Dy Jr. with photocopies

of spouses Kintanar's 1) income tax return (ITR), with Financial Statements;

2) Value Added Tax (VAT) Returns (monthly & qumierly); 3) Percentage

Tax Returns (monthly & quarterly); and 4) BIR Registration Ce1iificate.

Chief Rosimo issued another Access Letter dated July 19, 2002,

addressed to the Managing Director of Forever Living Products Philippines,

Inc. ("FLPPI") to furnish the named revenue officers with certification of the w

C.T.A. EB CRIM. NO. 006 (C.T.A. CRlM. CASE NOS. 0-033 & 0-34) DECISION

6

total income payments/commissions and bonuses earned by spouses

Kintanar, together with the amount of taxes withheld for calendar years 1996

to 2001, as distributors or independent contractors of FLPPI.

Granting the request of Chief Rosimo, Revenue District Officer

Carmelita R. Bacod of RDO No. 52 issued a Certification, dated September

17, 2002, stating therein that spouses Kintanar have no record or file for the

years 1999 to 2001. On the other hand, Michael T. Cajandab, Comptroller of

FLPPI, sent a letter-reply dated January 30, 2003 to Chief Rosimo,

indicating therein the total income of Gloria V. Kintanar for calendar years

1999 to 2001.

On December 12, 2002, Chief Rosimo issued a Memorandum of

Assignment to Revenue Officer Evangeline S. Catotal, thru the group

supervisor Sixto C. Dy Jr., to conduct a thorough preliminary investigation

and to ascertain the veracity of the confidential information filed against the

spouses Kintanar on their alleged tax evasion scheme.

After the initial investigation, the investigating team found that

spouses Kintanar were able to generate a large amount of income, as

distributors or independent contractors ofFLPPI.

C.T.A. EB CRIM. NO. 006 (C.T.A. CRIM. CASE NOS .. 0-033 & 0-34) DECISION

7

As a result of said investigation, a Letter of Authority No. 00029663,

dated March 28, 2003, together with the list of documents required to be

submitted, were issued by the BIR, authorizing the investigating team to

examine the books of accounts and other accounting records for all internal

revenue taxes for taxable years 1999 to 2002 of spouses Kintanar. Said LOA

was received by petitioner's husband on April 3, 2003. However, spouses

Kintanar failed to submit the required documents; thus, a Second Request

for Presentation of Records, dated April 21, 2003, was issued by Sixto C.

Dy, Jr., addressed to spouses Kintanar, which letter was received by a

cetiain S/G George Llorente on April 23, 2003.

Thereafter, a Final Notice, dated May 5, 2003, was issued by Chief

Rosimo demanding from spouses Kintanar to present the needed documents

for examination, and failure to comply therewith will cause the issuance of a

subpoena duces tecum . Said notice was received by S/G George Llorente.

Despite several notices, spouses Kintanar failed to submit the required

documents; thus, on June 11, 2003 a subpoena duces tecum was issued by

Internal Revenue Officer Milagros V. Regalado, ordering spouses Kintanar

to appear before the Chief Prosecution Division on June 25, 2002 at 10:00

(}»

C.T.A. EB CRLM. NO. 006 (C.T.A. CRTM. CASE NOS. 0-033 & 0-34) DECISION

8

a.m. and to bring their books of accounts and other accounting records for

taxable years 1999 to 2002.

Again, spouses Kintanar failed to comply with said order. Chief

Rosimo sent another letter dated September 3, 2003 and informed spouses

Kintanar that the result of the investigation conducted by the Tax Fraud

Division on both internal revenue tax liabilities for taxable years 1999 to

2002 had already been submitted to the Tax Fraud Division and requested

them to appear; failing which shall be deemed a waiver of their right to

conference.

On December 9, ·2003, a Preliminary Assessment Notice, together

with the details of discrepancies, for taxable years 1999 to 2002, were issued

by the BIR and sent to spouses Kintanar, giving them 15 days to explain the

discrepancies.

Again , spouses Kintanar failed to comply. Consequently, a

Memorandum dated February 26, 2004 was submitted by the investigating

team, addressed to the Deputy Commissioner stating that spouses Kintanar

failed to file their protest, within 15 days and recommended the issuance of a

Formal Demand Letter and Assessment against the spouses. ~


9

A Fonnal Letter of Demand, dated February 26, 2004, together with

Assessment Notices Nos. ES-IT-1999-0083 , ES-VAT-1999-0084, ES-IT-

2000-0085, ES-VAT-2000-86, ES-IT-2001-0087, ES-VAT-2001-0088, ES-

IT-2002-0089, ES-VAT-2002-0090, were issued against the spouses

requesting them to pay their deficiency income and VAT liabilities.

On August 31, 2004, a letter of protest, together with photocopies of

their joint income tax return for 2000 to 2002, were sent to Atty. Arnel

Guballa, Chief of the National Investigation Division by petitioner's

husband, who undertook to submit additional documents and agreements,

within 60 days thereof.

In response thereto, a letter dated September 30, 2004, of Chief

Guballa was sent to spouses Kintanar, informing them that no documents

have yet been received by the NID and spouses Kintanar have 60 days from

the time the protest was filed , or until November 3, 2004, within which to

submit supporting documents; otherwise, the assessment shall become final ,

executory and demandable.

Again, spouses Kintanar failed to comply with said demand. As a

result, a Final Decision on Disputed Assessment, dated December 13 , 2004,

(UJ


10

was issued by the BIR, indicating therein that spouses' protest against their

alleged deficiency income tax and VAT was denied for failure to submit the

r~quired documents, within the 60 day reglementary period; thus, the

assessment had become final, executory and demandable.

The prosecution also presented the heads of three BIR RDOs, namely:

Christina C. Barroga of RDO No. 52, Paranaque, and Romeo E. Naranjo of

RDO No. 40 of Cubao, who both testified that no record of any ITRs was

filed by petitioner, nor her husband for taxable years 2000 and 2001.

Revenue District Officer Julio G. Alcasabas of RDO No. 54 Trece Martires

City, Cavite, was also presented, and testified that petitioner has no record

of any ITRs filed, except that she is registered as a "one-time transaction

taxpayer" on June 28, 2000, representing a one-time transaction for capital

gains tax and documentary stamp tax. Also, Assistant Commissioner

Alberto A. Pio de Roda of the Information Systems Operation Services of

the BIR issued a Certification and testified that BIR has no record of

petitioner having filed her ITRs for the years 1999 to 2001.

Based on said investigation, and the documents obtained, the

prosecution found that petitioner failed to file her ITRs for the years 1999 to

w

C.T.A. EB CRlM. NO. 006 (C.T.A. CRIM. CASE NOS. 0-033 & 0-34) DECISION

11

2001 and found her liable for deficiency income taxes, arising from income

earned from FLPPI.

THE DEFENSE'S EVIDENCE

On the other haud, the defense presented petitioner herself and her

husband, Benjamin G. Kintanar, and documentary evidence, such as

Certificate of Creditable Tax Withheld for the years 2000 and 2002 (Exhibits

"1" to "8") , Joint Annual Income Tax Returns (Exh ibits "9" & "10 ''), BPI

checks nos. 0013649 dated March 15, 2000 (Exhibit "I 1'') and 0101844 dated

March 15, 2002 (Exhibit "12''), and 2 identical Certifications issued by a

certain Revenue District Officer Emesto T. Kho of RDO No. 28,

Novaliches (Exh ibits "13" & "14 ''), which tend to establish the following:

Petitioner Gloria V. Kintanar, the first witness for the defense,

substantially testified that she filed her ITRs for taxable years 2000 and 2001

on March 28, 2001 and April 5, 2002 respectively, and denies having

willfully, unlawfully and feloniously failed to file her ITRs on said years;

that she has no personal knowledge of actual filing of said returns because it

was her husband who filed their ITRs; that she receives commission from

FLPPI from 1996 up to the present, through check payments, and encashed

~


12

or cleared them at BPI-North Greenhills Branch, where she maintains an

account no. 257004248; and that she knows Michael Cajandab, the

Comptroller of FLPPI; at present, her address is at Unit 122 Dona Juana

Townhomes, Dona Juana Subdivision, Rosario, Pasig City; however, from

the years 2000 to 2001, she resided at No. 2 Granada St., Merville Park

Subdivision, Paranaque City.

Benjamin G. Kintanar Jr., the second witness for the defense,

substantially testified that he is the husband of petitioner; that he was born at

St. Francis II, Pasig City, and resided thereat from 1972 to 1997; thereafter,

he bought a house in Merville, Paranaque, where he resided from 1997 to

2005; at present, they reside at Pasig City in the address mentioned by the

petitioner, wherein they are registered taxpayers; that he is involved in

networking business; and is one of the top dealers of FLPPI and obtained his

income from said company from years 1999 to 2001; that he was the one

who filed their ITRs; that they filed joint ITRs from years 1997 to 2004,

through their hired accountant, Marina Mendoza; that it was Mendoza who

prepared the ITRs; that he gave all the documents necessary for filing the

ITRs, specifically W2 Forms (Creditable Tax Withheld Cetiificates) to

(J)JJ


13

Mendoza; that he relied on Mendoza in preparing their ITRs; that he just

browsed the ITRs; thus, he has no knowledge of the amount and address

stated therein and where their ITRs were filed.

THE FORMER SECOND DIVISION'S RULING

In its Decision, the Former Second Division gave credence to the

testimonial and documentary evidence adduced by the prosecution and

found petitioner guilty beyond reasonable doubt of Violation of Section 2 55

of the NIRC of 1997, as amended, in both C.T.A. Crim. Case Nos. 0-033

and 0-034.

Not satisfied, petitioner filed her "Motion for Reconsideration", which

the Former Second Division denied in its Resolution dated November 26,

2009.

Hence, this instant Petition for Review assigning the following:

ASSIGNMENT OF ERRORS

I

THE SECOND DIVISION OF THE HONORABLE COURT OF TAX APPEALS ERRED IN FINDING THE ACCUSED GUILTY BEYOND REASONABLE DOUBT OF

w


VIOLATION OF SECTION 255 OF THE 1997 NATIONAL INTERNAL REVENUE CODE, AS AMENDED.

II

THE SECOND DIVISION OF THIS HONORABLE COURT OF TAX APPEALS ERRED IN FINDING THAT THERE WAS EVIDENT LACK OF CONCERN OF THE ACCUSED FOR INTENTIONALLY DISREGARDING HER TAX RESPONSIBILITIES TO THE GOVERNMENT.

14

On February 1, 2010, without necessarily giving due course to the

petition, We required respondent to file comment, not a motion to dismiss,

within ten (1 0) days from notice.

On February 15, 2010, respondent filed a "Motion for Extension of

Time to File Comment", which was granted in a Resolution dated February

17,2010.

On April 5, 2010, without respondent' s comment, the Comi En Bane

ordered both parties to submit their simultaneous memoranda, within thitiy

days from notice; afterwhich, the petition shall be deemed submitted for

decision.

C.T.A. EB CRIM. NO. 006 (C .T.A. CRIM. CASE NOS. 0-033 & 0-34) DECISION

15

On April 14, 2010, respondent filed a "Motion to Admit Attached

Comment (Re: Petition for Review En Bane)", which the Court granted and

respondent's "Comment" was admitted in a Reso ll}tion dated April 26, 2010.

On May 5, 2010, petitioner filed her "Comment/Opposition (Motion

to Admit attached Comment Re: Petition for Review En Bane)" .

On May 12, 2010, respondent filed its "Memorandum of the People of

the Philippines".

On June 16, 2010, the Court En Bane noted petitioner' s

"Comment/Opposition" to respondent's "Motion to Admit Attach

Comment" and submitted the case for decision, without petitioner's

memorandum.

On July 12, 2010, petitioner filed her "Motion for Reconsideration

with Leave of Court to file Memorandum", which the Court granted.

Accordingly, the Resolution dated June 16, 2010 submitting the case for

decision was recalled and set aside in a Resolution dated July 29, 2010.

On August 4, 2010, petitioner's "Motion for Leave of Comi to Admit

Attached Memorandum" was granted, and her Memorandum was admitted.

The case was deemed submitted for decision on August 16, 2010.

(W

C.T.A. EB CRIM. NO. 006 (C.T.A. CRJM. CASE NOS. 0-033 & 0-34) DECISION

THE COURT EN BANC'S RULING

The petition is without merit.

16

After a careful review and study of the evidence on record, We find

nothing that would compel us to reverse the decision of the Former Second

Division of this Court.

In both C.T.A. Crim. Case Nos. 0-033 and 0-034 petitioner was

charged with Violation of Section 255 of the NIRC of 1997, as amended,

which provides, as follows:

"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, mal{e a return , keep any record, or supply correct and accurate information, who willfully fails to keep any record, or supply such 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." (Emphasis supplied)


17

Section 255 of the NIRC of 1997, as amended, contemplates four

different situations punishable by law, each of which constitutes failure to

perf01m in a timely manner, an obligation imposed by the NIRC of 1997, as

amended, to wit:

1) To pay any tax;

2) To make a return;

3) To keep any record; and

4) To supply correct and accurate information.

In the case at bench, petitioner is being charged under said provision

for failure to make or file a return. The elements of Violation of Section 255

of the NIRC of 1997, as amended, for failure to make or file a return, are, as

follows:

1) The accused is 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) That failure to make or file the return was willful.

As proven by the prosecution, all the aforementioned

present in this case.


, PERSON REQUIRED TO MAKE OR FILE A RETURN

18

As regards the first element, the prosecution has established that

petitioner is duty bound to make or file a return.

Section 51 of the NIRC of 199 7, as amended, provides:

"SEC. 51. Individual Return.

(A) Requirements.-

(l)Except as provided in paragraph (2) of this Subsection, the following individuals are required to fi le an income tax return:

(a) Every Filipino citizen residing in the Philippines;

XXX XXX

(4) The income tax return shall be filed in duplicate by the following persons:

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

XXX XXX

(D) Husband and Wife. - Married individuals, whether citizens, resident or nonresident aliens, who do not derive income purely from compensation, shall file a return for the taxable year to include the income of both spouses, but where it is impracticable for the spouses to file one return, each spouse may file a separate return of income but the returns so filed shall be consolidated by the Bureau for purposes of verification for the taxable year."


Corollary thereto, Section 7 4 of the same Code provides:

"SEC. 74. Declaration of Income Tax for Individuals.-

19

(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 cunent 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 canied 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."

On direct examination, petitioner testified that she and her husband

were engaged in business and earned income in the form of commissions, as

distributors or independent contractors of FLPPI. Petitioner's testimony was

amply conoborated by Michael Cajandab, Comptroller of FLPPI, who

testified that FLPPI paid petitioner her commissions, thrm~ecks, for the


20

years 1999, 2000 and 2001 (TSN dated January 14, 2008, pp. 37-39). Petitioner

admitted that she received the checks issued by FLPPI, as her

payment/commission, which she encashed or cleared at the BPI Nmih-

Greenhills, wherein she maintains an Account no. 257004248 (TSN dated June

4, 2008, pp. 21-23).

Considering that petitioner earned a substantial mcome, as

distributor/independent contractor of FLPPI; she is, therefore, required to

make or file her annual income tax return, pursuant to the aforequoted

prov1s1ons.

PETITIONER FAILED TO MAKE OR FILE THE RETURN AT THE TIME REQUIRED BYLAW

As regards the second element, the testimonial and documentary

evidence adduced by the prosecution shows that petitioner failed to make or

file her ITRs for taxable years 2000 and 2001.

Pursuant to Section 51, subsections (B) and (C) (1) , of the NIRC of

1997, as amended, a person with legal residence or principal place of

business in the Philippines, shall file his return with an authorized agent

bank, Revenue District Officer, Collection Agent or duly authorized

(VV


21

Treasurer of the city or municipality. The return shall be filed on or before

the 15th day of April of each year covering income for the preceding taxable

year.

Under the above-provision, petitioner was supposed to register, file

her ITR and pay the corresponding income taxes due with the authorized

agent bank, RDO, Collection Agent or duly authorized Treasurer of the city,

where she has her legal residence or principal place of business. However,

upon thorough investigation and from the evidence adduced by the

prosecution, petitioner has no record of filing of the required ITRs, within

the reglementary period, with any of the RDOs of the BIR.

The prosecution has established that petitioner was a resident of No.2

Granada St., Merville Park Subdivision, Paranaque, for the years 2000 and

2001. Therefore, petitioner should have filed her ITRs in Paranaque City.

However, there is no record of filing of the required ITRs. In fact, a

Certification dated September 17, 2002 was issued by Carmelita R. Bacod,

Revenue District Officer of RDO No. 52 of Paranaque City, stating that

petitioner has no record on file for the years 1999 to 2001. Another

Certification, dated July 20, 2007, was issued by Atty. C~a C. Barroga,


22

OIC-Assistant Revenue District Officer of RDO No. 52 of Paranaque City,

who testified that petitioner, with TIN 206-631-823, is not a registered

taxpayer of said revenue district.

Fmihennore, upon verification of Assistant Commissioner Alberto A.

Pio de Roda of the Infonnation Systems Operations Service of the BIR,

there is no record showing that petitioner has filed her ITRs for years 1999

to 2001. The only existing record of petitioner is that she was registered as a

"one-time transaction taxpayer" for capital gains and documentary stamp

tax, at RDO No. 54 of Trece Martires City, Cavite. A Certification was

issued by Julio G. Alcasabas, Revenue District Officer of RDO No. 54,

confirming that no record of petitioner's ITRs has been fi led before said

RDO.

For her defense, petitioner presented 2 ITRs for taxable years 2000

and 2001, respectively, as well as 2 undated Certifications issued by a

certain Ernesto T. Kho, allegedly the Revenue District Officer of RDO No .

28, Novaliches City.

C.T.A . EB CRIM. NO. 006 (C.T.A. CRIM. CASE NOS. 0-033 & 0-34) DECISION

23

Upon a careful examination of said documentary evidence, We cannot

gtve credence to said exhibits and sustain the following findings of the

Former Second Division:

"A careful examination of the ITRs presented by accused reveals that the same are of doubtful authenticity, materially flawed with the following irregularities surrounding its existence to wit:

1) The subject lTRs are incomplete in itself, as both failed to indicate the TIN of the accused, and the Community Tax Certificate (CTC) Number, Place and Date of issuance and the Amount paid (Boxes 6, I 07-110, respectively);

2) The subject ITRs contain an address (Bik. 73, Lot 24 Lagro Subdivision, Quezon City) which, as admitted by the Kintanar spouses, had never been their legal residence;

3) The subject ITRs bear the stamping "Received" by ROO No. 40 of Cubao, Quezon City, which is NOT the district office that has jurisdiction over the spouses' given address (Lagro Subdivision, Quezon City) in the subject ITRs, hence, even if authentic, were filed at the wrong venue; and

4) The husband of the accused, who purportedly caused the preparation of the subject ITRs, clearly admitted that he did not even read the contents of the subject ITRs and does not know up to the present where these were supposedly filed by Marina Mendoza.

Furthermore, the prosecution was able to prove that no ITR was filed, either by the accused or her husband , or by anyone on their behalf, for the taxable years 2000 and 2001 at RDO No. 40, as testified to by Romeo E. Naranjo, the highest ranking official ofRDO No. 40, which has jurisdiction over Cubao, Quezon City, where the supposed ITRs were purportedly filed. This was further verified by Geraldine C. Marinas, Chief of Document Processing Section of said dis~


As regards the two undated, identically worded Certifications from RDO No. 28, Novaliches, Quezon City, the same are tainted with various defects, to wit:

I) On the face of the document; it IS undated and does not bear the official dry seal ofthe BIR;

2) Although RDO No. 28, Novaliches, Quezon City, is the revenue district which has jurisdiction over the address (Bik. 73 , Lot 24, Novaliches, Quezon City) reflected in accused's JTRs for taxable years 2000 and 200 l, it appears however that said lTRs were filed at RDO No. 40 Cubao, Quezon City, as shown by the stamping "Bureau of Internal Revenue, Received, RDO 40, Cubao, Quezon City" . Thus, RDO No. 28 is not the proper revenue district to verify and process the said ITRs. The Certifications did not mention what returns were indeed verified and processed by the signatory, hence, no evidentiary value; and

3) The defense did not present, nor was there an attempt to present Ernesto T. Kho , the supposed signatory of the Certifications to attest to the truthfulness, authenticity and due execution of the same.

In the light of the foregoing inconsistencies, the Ce1iifications are accorded no probative value. Moreover, granting for the sake of argument that the Certifications were validly issued, the same nevertheless have no favorable effect upon herein accused Gloria Y. Kintanar because said Certifications refer only to her husband, Benjamin G. Kintanar, Jr. , and not to the spouses Kintanar."

24

For all the foregoing, the Court is convinced that petitioner failed to

make or fjJe a return, within the period required by law.

C.T.A. EB CRIM. NO. 006 (C.T.A. CRIM. CASE NOS. 0-033 & 0-34) DEClSION

THE FAILURE TO MAKE OR FILE A RETURN WAS WILLFUL

25

As regards the third element of "willfulness", the prosecution has

sufficiently proven beyond reasonable doubt that petitioner deliberately

failed to make or file a return.

Willful in the tax crimes statutes means 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 7 1985), in which the Court, Citing

U.S. v. Moore, 627 F2d 830 (CA 7 1980) and U.S. v. Verkuilen, 690 F2d 648, 82-2 USTC

9618 (CA 7 1982), upheld the conviction of a tax protester for willful failure to file

returns}.

An act or om1sswn 1s "willfully" done if done voluntarily and

intentionally and with specific intent to do something the law forbids , or

with specific intent to fail to do something the law requires to be done; that

is, with bad purpose to either disobey or disregard the law. A willful act may

be described as one done intentionally, knowingly and purposely, without

justifiable excuse (Black's Law Dictionary, 51h ed., p . I 434).

. ~

. .

C.T.A. EB CRIM . NO. 006 (C.T.A. CRIM. CASE NOS . 0-033 & 0-34) DECISION

26

Petitioner claims that she did not actively participate in the filing of

her joint ITRs with her husband in the years 2000 and 2001 and entrusted

the fulfillment of such duty to her husband; that her husband hired a certain

Marina Mendoza, an accountant, who was tasked by her husband to handle

the filing and payment of their tax obligations; thus, there was no voluntary,

intentional, deliberate, or malicious failure to file a return on her part.

Petitioner's contention cannot be sustained.

First, the prosecution has clearly established that under the law,

petitioner and her husband, as manied individuals, who do not derive

income purely from compensation, are obliged to file their ITRs for taxable

years 2000 and 2001 for the income they earned, as distributors/independent

contractors of FLPPI. Thus, petitioner's sole reliance on her husband to file

their ITRs is not a valid reason to justify her non-filing, considering that she

knew from the start that she and her husband are mandated by law to file

their ITRS.

Second, being an experienced businesswoman, and having been an

independent distributor/contractor of FLPPI since 1996, petitioner ought to

know and understand all the matters concerning her business. This includes


27

knowledge and awareness of her tax obligation in connection with her

business. Petitioner should know how much are her tax dues, the details

stated on the ITRs, where the same are filed, and other important facts

related to the filing of her ITRs; after all, these matters concern her finances.

Under Rule 131, Section (3) (d) of the Rules on Evidence, it is

presumed that a person takes ordinary care of his concern.

Hence, the natural presumption is that petitioner knows what are her

tax obligations under the law. As a businesswoman, she should have taken

ordinary care of her tax duties and obligations and she should know that

their ITRs should be filed, and she should have made sure that their ITRs

were filed. She cannot just left entirely to her husband the filing of her ITRs.

In fact, one of the stipulated facts in the Pr~-Trial Order dated October 1,

2007, which petitioner admitted is that "as married individuals who do not

derived income purely from compensation, accused and her spouse are

obligated under the Tax Code, in particular Section 51 (A) (1 ), 51 (B), 51 (C) ,

5J(D), 74(A) and 74(B), to file income tax returns for taxable years 2000. In

2001, on or before the 15th day of April 2001 & 15th day of April 2002,

respectively, to include the income of both spouses".

~


28

Petitioner cannot find solace on her claim that her husband hired an

accountant, who was tasked to handle the filing and payment of their tax

obligations. This allegation was a bare testimony of petitioner's husband,

and yields nothing, but mere uncorroborated statements. Mere allegations

are definitely not evidence (Coronel vs Court ofAppeals, 263 SCRA 35); thus, it

cannot be used as basis for a court's decision.

Furthermore, the Court finds no affirmative acts on the part of the

petitioner to make sure that her obligation to file her ITRs had been fully

complied with. Petitioner testified that she does not even know how much

was her tax obligation, nor did she bother to inquire or determine the facts

surrounding the filing of her ITRs. Such neglect or omission, as aptly found

by the Former Second Division, is tantamount to "deliberate ignorance" or

"conscious avoidance".

The evidence adduced by the prosecution has also established that

petitioner was duly informed that no ITRs were filed, nor recorded under her

name. There were several notices sent to her by the BIR to comply with her

tax obligations, but she opted not to comply. The prosecution has clearly

C.T.A. EB CRlM. NO. 006 (C.T.A. CRTM. CASE NOS. 0-033 & 0-34) DECISION

29

established that the following notices of the BIR were sent and received by

petitioner:

1) LOA No. 00029663, dated March 28, 2003, which was received by

petitioner's husband on April 3, 2003;

2) Second Request for Presentation of Records, dated April21, 2003 ,

was received by a certain George Llorente on April23, 2003;

3) Final Notice, dated May 5, 2003, was received by George

Llorente;

4) Subpoena Duces Tecum, dated June 11, 2003;

5) Letter by ChiefRosimo, dated September 3, 2003;

6) Preliminary Assessment Notice, dated December 9, 2003, together

with the Details of Discrepancies, for taxable years 1999 to 2002;

7) Memorandum, dated February 26, 2004;

8) Formal Letter of Demand, dated February 26, 2004, together with

Assessment Notices;

9) Letter of Chief Guballa, dated September 30, 2004; and

10)Final Decision on Disputed Assessment, dated December 13,

2004.


30

Despite the several notices given to petitioner starting from April 3,

2003, the evidence on record shows that only a protest letter made by

petitioner's husband dated August 31, 2004 was the reply given by the

petitioner. It took petitioner more than one year to send said reply.

Evidently, such non-compliance with the BIR's notices clearly shows

petitioner's intent not to file her ITRs.

For all the foregoing, this Court is convinced that the prosecution has

established the guilt of petitioner beyond reasonable doubt.

Finding no reversible error, the Court En Bane affirms the assailed

decision and Resolution of the Former Second Division of this Court.

WHEREFORE, premises considered, the present Petition for Review

IS hereby DENIED. The assailed Decision dated August 26, 2009 and

Resolution dated November 26, 2009 of the Former Second Division are

hereby AFFIRMED.

SO ORDERED.

~~-&R~EZ Associate Justice

. ·•

C.T.A. EB CRTM. NO. 006 (C.T.A. CRTM. CASE NOS. 0-033 & 0-34) DECISION

WE CONCUR:

~v-~ ERNESTO D. ACOSTA

Presiding Justice

( ~hCAA; -~.(]-~dO" . "_}~: ) \\4£h Co~-~urrmg an 1ssentmg Cf(>imon

JUANITO C. CASTANEDA, JR. Associate Justice

'

31

ERL~P.UY Associate J ice

(Concurs with ustice Castafieda,Jr.) CAESAR A. CASANOVA

Associate Justice

~ N.M~.G"'~ CIELITO N. MINDARO-GRULLA

Associate Justice

~~J-c:4~-AMELIA R. COTANGCO-MANALASTAS

Associate Justice

CERTIFICATION Pursuant to Section 13 , Article VIII of the Constitution, it is hereby

certified that the above Decision has been reached in consultation with the members of the Court En Bane before the case was assigned to the writer of the opinion ofthe Comt.

G{9- D~ ERNESTO D. ACOSTA

Presiding Justice

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS

QUEZON CITY

En Bane

PEOPLE OF THE PHILI PPINES, Respomic:rrt CI"J.\ EB Rlf\1 1'0. 0-006

(CI-A Crim Case Nos. 0-033 & 0-034)

-versus-

GLORIA V. I<INTANAR, Petitioner.

X- - - - - - - - - - - - - - - - - - -

Concurring and Dissenting Opinion

CASTANEDA, JR., J.:

- - X

That the guilt of an accused rn ust be proved beyond reasonable doubt

is the card inal rul e in our adversarial system of justice. Before he is convicted,

there should be moral certainty - a ce rtainty that convinces and sa ti sfi es the.

reason and conscience of those vv l1o are to act upon it. 1

With due respect to my esteemed co lleagues, I reiterate my dissent as

to the findi ng tllat petiti oner· Glor·ia V. f<in tanar (petitioner, fm brevity) rs

guilty beyond rea sonable doubt for willful failur·e to fil e her income ta x r·eturns

(ITRs) for u-re year 2000 dild 20Ul Uf'IC!e r· Section 255 of tile National In te rnal 't&

People vs. Abu}an G.R. r~ o . H0870Jebruary 11, 200-4,422 SCRA -449, '1 57 citing People vs. Canedo, G.R. No. 128382, 5 Ju ly 2000, 335 SG<A 81, 99 citing U.S. v. Reyes, 3 Ph il. 3, 6 (1903).

Concurr·in0 d i\cl D1sseming Opmion CIA EB Cnm. No 006 (CTA C1 1rn . Case Nus O·OJ ~) c:, 0·034) f.'agc 2 ol l o

Reven ue Code ("N I RC" ) and at tile sarne time concur t lla t pet itioner is civ ill y

liable for the reason so le ly that the assessments are already f ina l and

executory.

Based on the al lega ti ons in the informati on w hich are quoted

hereunder, petitioner is chargee! with willful fa1lure to fi le the i1 1eorne tax

returns for taxable years 2000 and 200 1.

Tile infor·mation in CTA Cmn . CJse No. 0-033 reacls:

"That on or about L11e 16u1 day or Apri l, 200 1, in Paranaque City, Phi lippines, and within the ju ri sd iccion of n·,is Honorab le Court, the above- named accused, 21 Filipino citizen residing in the Philippines, who is engaged in business ancl ea rning income as distributor of Forever Living Products Philippines, lnc., with ob li ga ti on under the law to file her Income Tax Return ( ITR) for the taxab le year 2000 on or before the 15l11 day of April 200 1, did, then and there, willfully, unlawfully and fe lon iou sly __lill[ to_lll~_jler ITR witil tile Bureau of Internal Revenue fo r the _ys,oc1r 2QD.Q, to Ll1c· dcmlage and JX~Juclice of the Governmem in chc estima ce~.J amuunt uf Pl ,329,319.95 exclusive of penalties, surcl1arges and irllf:l est." (Underline Ours).

On the other hancl, tt1 e information in CIA Crirn . Case No . 0-034 reads:

"That on or aboul Lile 16u1 day of A1-xil, 2002, in Paranaque City, Phi li ppines, and wi thin the jurisdiction of th is Honorable Court , th~ above- named accused, a Filipino citi zen res iding in the Philippines, who is engaged in business ancJ ea rning income as distributor of Forever Li ving Products Philipp ines, Inc., with ob ligation under the law to file her lncome Tax Retum (lTR) for the ta xa bl e year 2001 on or befor·e the 15u' day of Apri l 2002, did, Lhen and tlw re, willfullyL unlawfully and felonious!~ Fail to fil e htr ITR wi th the Bur·eau qf lnternal Revenue fo r the_ &_2': ~QQ L. w the cJ2mcJgc ar1d pr CJu di c,~ of lhe Government in Llw esri r11ated amoum of Pl,5i7,2 2 .12 exclusive of penalties, surchar·ges and interest." (Underline Ows). c;t-.

CollCLHTillcJ a11u D1ssen ti1 19 Upi>llo, , CfA EB Crilll . ~Jo. 006 (CTA Cr1 111 . Cas, · I'll, _, ,, ·. id ~. v l}j"lJ Page 3 of 16

l n these conso lidated u irnir ra l cases, the Frna l [Jecision on Disputed

Assessment 2 dated December U, L004, vv Js r·eceived on Ajx il 12, 2005.

Petitioner did not appeal such adve r·se decision to tile Cou rt of Tax Appea ls

(CTA) within thirty (30) days from rece ipt of the decis ion denying the protest

as sta ted in the fifth paragraph, Section 2283 of the 1997 f\JIRC, pertinen t part

of whicl1 provides :

If the protest is denied in whole or in part, or is nol acted upon within one hundr·ed eighty (180) days from submission of documents, th e taxpayer actverscly Cifl'ected by the decision or inacti on may appeal to tlk Court of Tax Appears ~{ilbilLJllirty_QO)

days rrom receipl of the scdcl clecision, or fmrn Lhe lapse ol the one hundred eighty (180)-day period; otherwise, the decision shall becom e final, executory and demandable . (Underline Ours).

Thus, the assessments in these cases have become final and executory.

Accordingl y, petiti oner is li able to pay t ile income tax deficiencies fo:- taxable

years 2000 and 2001 , in the amount of P3,156,470.22 and P3 ,H 7,5 18.77,

respectively, plus 20% de li nquer rcy interest per annurn counted from April 12,

2005 until payment th ereof , pur·suarr t to Section 249 (C)(3) of the 1997 NIRC,

as amended.

As to the crim ina l aspect , r ag r·ee w it1·1 th e majority decis ion t hat the

elements for the offense of w ill ful farlure to make or f il e a return are th e

following:

(1) That the accused vvc1S a person required to make or fil e a return; (2) That accused fail ecl tu make or fi le tile return at th e time req uir·ed

by law ; and (3) That fai lu re to make u1 lii e (/rc relur n was ~o\i ili fui. ~

Ex l1i bi ts Q- Q5, Divrsion DocktL (C.T .. :~. Crim. No . 0-03.3), pp. 732 -73b

Protesli11g of f'.ssessment.

Concurriny a11o Dissc:mir llJ C;pirlrorl CTA EB Crim. No. 006 (CIA Cr·r rlr C rsc I\.;: .. ,;,))_,'· u·JJ·rJ Page 4 of l o

The first two (2) elernents were duly establ ished by t1'1e prosecution

that petitioner was liable to make the returns in taxab le years 2000 and 200 1

but fa iled to file th ese returns at U1e [ime required by law.

However, as to the element of "wi ll fulness, " no proof was presented to

show beyond reasonable doubt tllJ( petiti oner deliberately failed to file the

income tax retu rn s. Thus, I di ssent fmm th e majority opinion that petiti oner

Gloria V. l<intanar is guilty of wr lllul rail urc to fil e 11er income tax returns for

taxable yea rs 2000 and 2001.

Wi llfulness is an essent ial elemer t

Wi llful in the tax crim es statutes means a voluntary, intentional

violation of a known lega l duty ancl bad faith or bad purpose need not be

shown. '1

In this connection , th e fac t th at th e 1997 N I RC is a specia l law does

not necessarily result in tl1e conclusion that the tax offenses/crimes

mentioned there in are already mala prohibita.

1 n his Concurri ng Op inion in th e case of People vs. QUijada, ) Justice

Hermosisima, Jr. stated that : i'The ir1dex of whether or not a crime is malum

prohibitum is not its form, th at is, whether or not it is found in the Revised ('c-

IVI e rtl~ l lS (Law of Fedc~ r·a l lncoml: 121xa lion) §'11.05, CIE!pter ·.P iJi:lCJe 28, Volun"2 13, see U. S. v. Gr·een, 757 F:Zcr l l L, 85-l lb!C ~~Jl78 (CA7 l 9El5), in whicll til t: Court, citing U. S. v. IVJ oor e, 62/ 12d b30 (C~/ l9tl0) and U. S. v. Verkuilen, 690 F2d 6'18, 82 -2 us·J C ,19618 ( CA 7 1982 ), upl1e1cl the co1w icrion of a tax protester fm wil lful failure to fil e return s G.R. Nos. 115008-09 , Ju ly 24. 1996, 2:J9 SCRA 191, 265-279.

Concurr·ing ancl Dissenting Oprnro r1 CTA EB Crirn . IJ G. OOo (Cf A Cr 1111. Case: fJ os ,J·JJ J .:. U ,)j-1) Page 5 of 16

Pena l Code or in a special penal stJtute, IJut the legislative intent that

underli es its continu ing existence as pa rt of tile law of the land. "6

In tl1i s case, consider·ing that tne word "willful " is present rn Section

255 of NIRC, the question of whether or- not the law is violated should be

followed by the question whether there wa s deliberate intent to violate the

law. If wi llfulness is not shown, petitioner ca nnot be guilty of the sa id crime.

The husband ;;: dm ittC;cl filing the return an assumed responsibility

Every crim inal conviction requires of the prosecution to prove two

things: the fact of the crime, I. c:., the presence of all the elements of the

crime fo r which tile accused stands cha rgee!, and the fact that the accused is

the perpetrator of the crim e/

l n thi s case, petitioner believed that her husband fil ed their joint

income ta x rc turn s.B Tl12 rcJii(l\'•l irrg l:l'Slimun'>' of ti lE' pe ti tione r sl1 ovvs such

bel ief:

6

XXX XX X XXX

ATIY FRANCJ A

Q Madam Wilness, irl your· Judi cial Affida vil, you stated that you filed your Inconie Tax Returns covering the ta xable years 2001 and 2002 011 March 28, 2001 and Apri l 5, 2002, is lll at co rrect '~ ~

People vs. ()uijada, 1iJicl , 269 People vs. Ayala, C.R- . 1\J o . l3~l9h, :-)e pre rnber "l , 200 1, 3G· l SCRA LISl , Ll60 citing People t'S . Santo:,~ 333 SCRf. 319 , 2000 ). TSN, Ju11e 4, 2008, pp. 13-1 G.

Concurriny anu Dissent ing Opinion CIA EB Clim. No. 006 (CTA Cr1111 . Case Nos. 0-0J J & 0-0JLl) Page 6 of 16

I'~S . KlhJTANAR

A Actual ly, my husband fil ed Uwl.

AnY FRAN CIA

Q So that meclllS, :;o, l\1adam Wicncss, so, you confirm lhat you did not personally tile the returns !

MS KINTANAR

A No, my husband.

A TIY. FRANCIA

Q So, suffice it tu Si:l)', you ha 1.·e no perso11dl knowledge ol acwal filin~ uf Lhe sarcl r·ewmsl

MS. KINTANAR

A Yes .

XXX XXX XXX

JUSTICE CASTANEDA

All right, clari f ication.

Did you fi le the return7

MS. KINTANAR

1'1y husband

XXX XXX XXX

The above testimony of petitioner was corrobo ratecl by her husband,

Benjam in Kintanar, who admitted t itc t it vvCJ s he who filed tile JOint I ncome

Tax Retu rns thru an accountant: 9

XXX XXX XXX ~

TSN, July 2, 2008, pp . 33 3'J.

Co,l cu n·ing ar1d Dissentmg Oprnron CrA EB Cr im. f~o. 006 (CTA Crtr1L Cast.: ~IuS 0-U..;.:; 0.ll·U3'1) Paye 7 of l G

JU STICE CASTANEDA

xxx xxx Be fur e ) ,·Ju pr,!L•.?l.'l1 , l )LiS t l.fiirll t, l

ash. a clanficaror-,: quesLvn.

The essence of your· testimony fo r· these years 2000 and 200 1 is that you filed I ncome Tax Relum as joinrly spouses. So, it l'vas you who iileu 011 behalf of the.::: spouses!

MR. KII'JTANAR

A. My accoun tanl.

JUSTICE CASTANEDA

Your clCcuuntant lJut is rl upcm your instruction?

~·1 R. KI NTANAR

A. I just give my docum ents to rny accountanc and he was the Orlt' wl10 li lecl.

JUSTICE CASTANEDA

So, it was you, not yo Ut· w ife, Ms. Gloria Kintanar, on your· behalf! (sic)

MR. KINTANAR

A. Yes, your· Honors.

XXX XXX >-.XX

All-Y . ORTIZ XXX XXX XXX

Q. fv1r . Wimess, you statecl also in your Atfidav ir Lhat you jointly fi lecl your ITR, if I may presumed, your wife. How long have you been fii i n~J /OUr JOint ITR's"?

XXX XXX XX>-.

MR. KINTANAR

A. We fi led the jo int ITR since vve got married . ~

Cu11cur-rrng ar1u L!issentrng upinron CTA EB Crirn. 1\Jo. 006 (CTA Crrm. Cas\2 Nos J-JJJ 0. 0-0J-l) Page 8 of 16

ATTY ORT lZ

Q. And wher1 did you get nlar·ried!

fVIR. KJNTANAR

A . 1097.

ATfY ORTIZ

Q. So, is it safe to assume thal since 1997, you t1ave been filing vour· joint ITR until Lhe present'?

MR. KINTANAR

A. T think up to 2004 only .

AllY . ORTI Z

Q. So, fmm 2005, you I ill·d yu,lr l TP's sc:pJr cJt t:i '('

MR. I<INTANAR

A. Yes, your Honors.

ATIY. ORTIZ

Q. And you also stareo that >'OU fil ed you r JOim ITR's thr'Lr an accountant. I s th at correct?

H R. KINTANAR

A. Yes, your Honors.

All'r' . ORTIZ

Q. And may we Knovv the nL.irllC of tir e AccOLII ltant'~

fVlR . KINTANAR

h.. Your Hor1ors, fv\rs. ~- 1 Jr ir1a fv1t:rrdcza.

ATlY ORTIZ

Q. An d is it safe to presume again, Hr . Witness, that in filing your joint ITR from J 997 m 1995, she l1as beer1 ass isting you in the filing of you!' JOint TTR's·; ~

Concun ing d l ill l)JSSc ll lJI IQ UpJIIIOil

CTA EB Cwn. l~v 006 (CT,\ \.:1<~ 1 ~ CoS<c fJ.v: , ,, l ;:: ,, ·J u ;,) fJage 9 or 16

~1 R. I<INTANAR

A. In fact, we hired !'v1rs. IVJarina !VIelldoza in 1998.

XXX XXX

Hindi ko na matanL1aanr :Jng tagal na. Hindi ko na , uaa/a!a, 53 tag a/ na po ralaga.

XXX .

In tll is case, the 11usoand aCimicted ll1al he is tile one who assumecl t il e

responsibility of filing the alleged jo int income tax returns. It is ce rtain ly

within the realm of probabi li ty for a person to rely or1 one's spouse in filing a

joint income tax return. Althougll L11 ere may be negligence or inadvertence on

the part of tile petitioner, will fu lness in the fai lure to file the returns is absent.

Inadvertence has been saicl t,) conscicucc: justifi ca ck.m fur failure to file a

retUITl. lO

Proof beyond re sonable doubt 1s necessa ry for conviction

In all criminal prosecutions, the burden of proof is on the prosecution

to establish the gui lt of the accused beyoncl reasonable cloub t. It has the duty 9£-

10 "178 C.J .S. page 580, 1985 t(iiCIOil , l<lclilOk 1 as follo ws

U. S. v. Burton, C.ATt:x . l ':lo-1, 131 1' .2cl -U~ U.S. v . Bura~, C.A . LJ I.1980, 633 F.2d 1356 - U.S . v. Wi lsoll , C./I. flil. 19/7, 5'-iCJ F-.2Li 2S9- U.S. v. IVIcCoi kle, C.A .III.1975, 511 F.2d Ll82, cerlima ri den iecl 9G S.CL. LJ3, 423 U.S. 826, 46 L.Ed .2d 43 - U.S. v. Rosenfie iCJ , C.A.Pu.l972, 469 F. 2d 598, ce1tiorari denied 93 S.Ct. 1899, 411 U.S. 932, 36 L.Ecl. 2d 391.

Negligence Willfulness requi1es then railu1 e IJC committecl pu1pose ly wilh awa 1eness of

action, not just neglige11tly or i1Jadverte11lly.

U.S. v . Merritt, C.A.Tex. 1981, 63'3 F.2d 254.

Co!lcurriny c1 1 Kl Dissen tir1g uprr1ru rr CTA EB Cr 11n. l·lo 006 (Cr A Crrm. Case r·rus. u-ujJ "' t)-034) Page 10 of 16

to prove each and every element or t11e u irne charged in til e information to

wa rrant a finding of guilt for the sa id crime or for any other crim e necessari ly

included th erein. 11

Only substantial ev idence, or tt1ac releva nt ev iclence that a reasona ble

mind might accept as adequate Lo supporT tl-re concl usion, is needed to find

the taxpayer civ i ll y liable for dc:Ji ciency taxes, inclusive of reg ular civi l

penalti es, befor·e this Court. 1 ~ Pcrtinenc po rti on of the Commissioner of

internal Revenue vs. Manila Nacl7inely & Supply Company 3 reads, as foll ows:

It is we ll settled that in passing upon petitions for rev iew of the decisions of the Cour·t of Tax Appeals, thi s Court is genera lly confined to questions o( la vv . Tile rinding s of facL of said Court are not to be disturbed unless clear ly shown to be unsupported by substantial evidence (Rules of Court, Rul e 44, Section 2. Republic Act 1125, Sections 18-19.) Substantial evidence has been constr·ued to mean not necessarily preponder-ant proo f as is required irr ordinary civil action, but such kind of "relevant evidence as a rea sonable rnan might accept as adequate in support of a GHKiusion. " (De Lamera vs . Court of Agrariarl Relations, et al ., 17 SCRA 36~.) 14

On th e other 11and, to make the taxpayer civ ill y li ab le for fraud

penalti es, clear and co nvincing proof is necessary Th e rul e in fraud cases is

that proof "must be clear ancl convincing", 1r; tllat is, it must be stronger than

th e "mere preponderance of ev idence" w lli ch wou ld IJe sufficient to sustain a F

11

12

\J

1·1

15

[Jatula!IOII liS. Pe:Jplc, c;y, )')(j l JSth/ Sl-: pt~nil!e r [ ~,, 2ll06' LJlJ2 SC I~ /\ 3) , 51 c: icing People vs. Caingat, "126 P!-,il . 782, 7:J:l; 3~'6 SU~A 387, 396 (2002) . Commisstoner of internal Revenue vs. Tours Specialists, inc., G.R. No. 66416, 21 fv1arcll 1990, 183 SCRA 40 2, ·107; r'nson vs. Court of Appeals, 327 Phil. 191 , 207 ( 1996). See also Commissioner of Internal Revenue vs. Baier-Nickel, GR 153793, August 29, 2006, 500 SG~A tl7, 101 citing Ttansglobe !mernattonal, inc. v. Court of r1ppea!s, 36 1 Plr il. /27, 738; 302 SCRt1 S/, t)8 ( 1999). f~o. L-256jJ, 1-ellrllar·y 28, 193'J , 13') SO~/\ 8. Comrmsstoner of internal /h":1 'dll!t' ,,_,-. Nant!a Nachtllery 8 SL~op!y Company;tbicl., 14. Gnffiths vs. Commisstoner of internal Revenue, 50 F [2d) 78 2.

Concurr·inlJ a110 Dlsselll111cJ l!plliiOI1 CT . .'\ EB C1 1111 . flo. ll06 (CTA Cllln Case f iu~. u u3 -, t, d u_i -l 1

Page 11 of l C

judgment on the issue of correctness of tne deficiency itse lf apart from the

fraud penalty. 16

In the hierarctw of eviclemiary values, substamial evidence is

somewhat less than prepondera nce vvhile clea r and conv incing evidence is

more than mere 1xeponder·arKe of eviclence but is less than the highest

degr-ee of proo f lJeyond reasonaiJie clou lx r·cq uired rn crimirkll cases 17, the

Supreme Court ruled, as fo llows:

Clear and convirK1119 p:-uur 1S "x x x more than mere preponderance, but nor LCJ L~XLL~r1t or such certarr1cy as is requirecl beyond reasonable doubt as in Ui111 inal cc:Jses x x x" wl1ile substantial evidence "x x x consists of more than a mere scintilla of ev idence but may be somewha t less than a preponderance x x x x" Consequently, in the hierarchy of evidentiary va lues, We find proof beyond reasonable doubt at the highest leve l, fol lowed by clear and convincing ev idence, preponderance of evidence, and substantia l evidence, in that order. 10

I n a criminal case, the accused is entitl ed to an acqu ittal, un less hi s

gu ilt is shown beyond r·easonab le doubt. Proof beyond reasonable doubt does

not mean suct·1 a deg ree o f pmof as, exclucli ng possib ili ty of error, produces

absolute certainty. fvtoral certa1 1lcy omy is req ui red, or that deg ree of proof

wh ich produces convinion in an unprejudiceci m ind. (Sec. 2, Rule 133 of the

Rev ised Ru les of Evidence) .

For purposes of determin ing merely til e civil liabi li ty of the taxpayer for

fraud penalt ies ar ising from w illful fai lur-e to file return s, the Supreme Cou rt,

in the case of Comm/ss/oner or" /;~rrnui Pr:!t 'r:!nue vs. Ali lm7;~7, 1( ' ruled : ~

i6

11

IG

fvladas vs. Commissioner of !ntema! Nc: venue, "10 BTA 572. f\1annlo 115. Roldan -C:Onfesor; GY. l~o. 102358, November 19, 1992, 215 SCRA 808. lbtd., 819 (Citations om itted ; r~o. L-724'-13 , Janucwy 29, l 9B8, L'J7 SCVA G-18

Concurring ci1 1Ll D1sseming l!pllliOII

CTA EB (rirn . f\) O. 006 (CT/'1 ( I IIli. Case r! u', 1)--Jj i 0. •h.JJ-, ,'

Page 12 of 16

The tax liability of th e pnvace respondent thus settled, We

come now Lo tile propricly Gi lill:' SO% surcharge Jnd the interest

imposed up011 it by the Comn1issioner of Intemal Revenue.

T he 50% su rcharge or· fr·aud penalty provided in Sectron 72 of

th e Na ti onal Intern al Reven ue Code is imposed on a de linquen t tax payer w ho w ill full y neg lects to file the r·equi red tax return wilh in the period p rescribed lJ)' the law, or Wllo w illfully files a false or fraudulent tax return, to wil --

"Sec. 72. Surcharges fo1 failure to render retums and for rendering fa l~~ f!JlQ f.c21JQI,JJ.~o.t r.~LWD_~- - In case of will ful neg lect to fil e the return or list req ui red under this Title witl1i r1 t11e rime prescr ibed by law, or in case a false or fr·audulenr reLum ur lrsl is wrllfull y made, L11e Co rn1nissroner of Intemai l~evenue shall acJci Ld lilt.' U \ ui ro l11t.' dcfiCi t:'i ,cy La:. , Ill case ClllY payment 1121 s been made on ti 1<..: txus of Jucl1 return bel ore LIK~ discovery of the fa lsily or fraucJ, J surcharge or fifly f..Jt.'t centum of the arnou11t of such tax or deficiency ta x. In case ol ar1y fallur·e w make and fi le a return or list w ithin tile time prescribed by law or by Lhe Comm issione1· or other· inter·nal revenue officer, ncl cJue Lo V\'illful r1 eg lecL, ti1e Commissioner of 1 nlerna l Reverllle sha ll add to tl1e tax twenry-five pr.:r centum of ils amount, except tl1at, when a return is voluncaril y ar1d Wl tllour notice fmm the Commissioner or other officer filed aft er sucl1 uml', dilcl it 1s sllown t llal l11e fai iLII·e Lo file il was due to a reasonab le cause, no such acJdition shall IJe macle Lo the tax. The amount so added to any tax s11a ll be co llected at tt1e same lime in t ile same manner and as pa rt of the tax unless the tax has been paid before the discovery of t he neg lect, falsity, m fraud , in which case the amount so added sha ll be col lected in the same manner as the tax."

On the other hand, tile same Sectio n prov ides t hat if the

fail ure to lil e l he requ ir·eci Lc:1 x 1 elurr1 is not du e to willful neglect, a penalty of 25% is to be aclcJE'Li to ll 1l-: Ziil10lllrt ur rlw tax clue frorn th e

taxpayer.

We have gone t11rougl1 til e allegations of the pe t itioner as we ll

as Llle Memorand um su bm itted by t ile Sol icito r General on behalf o f

t he Commiss ioner and Oil the basis of t he same . We are not

convinced that the pri va te r·esponclent can be consider-ed to have

w il lful ly neglected to fi le til e reqllirecl ta x return Ulereby w arranting

th e imposition of the SCJ~o fraud lkllalty proviciecl i11 Section 72. At

the most there is the barren claim that such fa1lure was frauclulent 1n

ch aracter, wi t hou t any ev idence or j ustifica ti on fo r the same . The

w ill fu l neglect to fil e th e requi1·ed tax retu rn o r the fraudul ent in tent to

evade th e paym ent of taxes, cons idering that the same is

accompan ied by lega l COibequCI1Ces, cannot be presumed. At th is

point , We cal l attention to the pror1ouncement of t h is Cou rt in AznCJr v. Court of Tax Appeals/ to vv ic -

"Tile lowe1· court's conclusion r·egardinq lhe exis tence of fraudulent in tem to evade payn 1ent of uxe:, was b21seci 1 nerely 0 1·1 a p1 eS lll nptron and noL on evide11ce estab lish ing a wi llful filing cf fal se ancl rraudulen l retums so as to warran t llle rmpositior1 or tl1c: fralrc.i penalty . Tile fraud contemplated by law is aclua l and r1ol corlSCiliCtive. Il must be intent ional fraud, consisti ng of clecept1or1 will fully anci cl eliiJer·ately clone or resorted to in order ~

LO IK LIIT IIlQ arrJ Uissent i119 UpiiiiOII

CTA EB Crirn . f~o . 006 (CT.ll, Cnm CiJSl' I'HJS . I) uJJ & u-034) Page lJ of 16

to induce anotller to grve up somt: legal r·rgln. Negl igence, w lletller slight m gross, is not eq ui va lent to the fraud w itll intent ro give up some lega l right f\Jeg ligence, whether slight m gross, is r1 ot equi valent to Lhe fraud w ith intent to evade th e tax contemplated tJy (he lavv. It must amount to in tentiona l w rongdoir1g vvitil t/ 1e sole ollJl.'U ,J t avoicJin CJ til e ta>; . lt r1ec:essa rily follows t llac 3 mer·e mistake c:arlnot he ,or,s i d.:~ r eci 215 rr·aud ulem irlterl t, i:1 1ld if both pet itioner and respor1dem '~o mr11r ssio n e r of l r1ternal Reve r1ue commr tted mistakes in maki ng entries in tile 1·eturn s and in t ile assessmer1t, respeccive ly, under the inve11tor·y rnechod of determining tax liabili ty, it would be unfair to t reat the mistakes of the pet itioner as ta inted w it li fraud and those of the respondent as made in good fa ith. "

Ttlere being no cogen t ba sis to find willful neg lect to fi le the requi red cax return 011 tl1 e part of tile pri vate respondent, the 50% sur·cllarge or fraud penalty imposed upon it is improper. 20 (Citation Omitted)

l n the case of Comm;~ss/oner of lntemal Revc:nue tiS. Japan A;r Lines,

li7c. / 1 thi s r·uling was rettet·atc:cl.

21

Nowhere in the rc>co rcls of t1 1e case can be found that JAL deli berately fa il ed to fil e its income ta x retu rns for the years covered by the assessment. There was not even an at tempt by peti tioner· to prove the sa me or just ify the imposition of the 50% surcharge. Al l tll at petit ioner did was to cite u-,e prov ision of law upon w hicll the surcharge was based w ithout expla in ing why it was applicab le to respondent 's case . Such ca nnot be countenanced for mer·e al legations are defin itely rlot acceptable. The wi llful negl ect to file the required tax re tu rn or tl1 e fl·au clul em ir1 tc:t1L to f:Vci de the pa yme11t of Laxes, consid er-mg that the st~mc is <Kcompar11ed tJy le~jiJ I const.:quences, cannot be p1·esurned (CJR vs Air India, sup1a). The fraud con templated by law is actu al c.1nd constru ctive . It rnusl be intentional f raud, consisti ng of deception will fu ll y and deli berate ly done ·or reso rted to in order to induce another to give up sorne lega l r ight Neg ligence, wh ether s l ig~1t or gross, is nol equ ival ent Lo ch e fraud with intent to evade the ta >- contemplated by the law . lt must amount to intent ional wmtlgcloi ng wi th the sole obJ CC( of evad ing the ta x (Azn ar· v . Courl of Tax Appea ls, G.r\ . No. L-20 569, Augusl 23, 197L\, 58 SCRA

519) Y ~

LOII I!I li:;sioner o( !n tr:rfhii 1-{r:vr-:;ue t'.). •Iii l!H!;a iiJ;d ;J:y/ 6.J6 G.l~ . No . 607 H , October 4, l 'iCJ1 ::'02 SUU\ -150 . Commic;s;oner ollntemal Revenue vs . .Japan ,~ ;r L!!?es, inc., ib id., "158.

Concurring and Oissen tir1g Oprn ron Cl A EB Cr 11 11. r.J o. OOll (CT/\ Cnill. Cusc r!vS. J-UJ' ~' U-03<1) t>ag.; l"l of 16

Jn t il is ca se, rhe: pru::,~.-:c uri u r l 11k1 ely irlUuJuceo ev icJence that

petitioner· failed to fi le her lTf<s lur the years 2000 ancJ 200 l wi thout proving

deliberate intent on tile failure tu make or fil e the returns. Evidence

introduced by the proseculior l rrr tl ri s case falls Far short uf the clear and

convincing ev idence crite ria for the imposition of civil fraud pena lties, much

less the higher deg ree of proof beyond reasona ble doubt requ ired in cri minal

cases .

No evidence was presenred to show t hat petitioner wil lfu ll y f iled to fil e the j oi 1t income tax returns

Since "wilfulness", enmesl1cd 21s it must vvitl'r " intent" and "state of

mind" is hard ly susceptib le of proof by direct evidence, circumstanti al

ev idence is admissib le on that issue. n

The test to determine wlletr1er or not the circumsta ntial evidence on

record are sufficient to convict the accused is that the se ri es of circumstances

duly proved must lJe consistenl '.viLli eaclr otl1er ar1d tl 121t each and every

ci1·cumstance rnust be consistent with the accused 's guilt and inconsistent Jt---

L3 Ba iter, 1-LG ., Fraud Under Federal Tax L'lt v, Second Eclition-1953, p. 394 cicing U.S. v. Commerford, (CCA-2, 1933) 6-l F. (2cl) 28, 30, 1933 CCH ,19255; Paschen v. U.S. , (CCA-7, 1934) 70 F. (2d) '191 , 193·1 CCH ,1923"1; Tinkoff v. U. S., (CCA-7, 1936) 86 F. (2d) 368, '37 -1 USTC ,!9057; US v. Rosenblun\ (CA-7 , 1949) 176 F. (2d) 321, 329, "1 9-1 USTC ,19314. Gaunt v . US. (CA-l, 1950) 184 F. (2d) 284, 50-2 USTC ~941 2,

cert . <len. (1951) 95 L. Eli. 280, where the court held that whi le ev idence of mere under·starement of irrcome, stancliri CJ Cllor1e, is not pmof of wilfulness, such evidence may, however, suppor·t a cor rv1 clior, i1i Lik' il cJ IH of oil Lil t' circu rrbl:IIKC:S uncler vvhich the urxierstatell1 L-:r1 l of ir1 G' II k· l,l,JL 1,1i"c:

Concurring and Dissenting Opinion CTA EB (lim. No. 006 (CrA Cnm. Case f~os O-OJ3 8" U-03"lJ Page 15 of 16

w ith his innocence .24 It must exclude the possib ility that some other person

has commi tted the offc::nse:' '>

In thi s case, the ev1de1lCi2 for Llil: prost>cution fJ il ed to meet the test on

circumstant ial evidence. The c::vioence: rm tl1e prosecution has proven that

petitioner has the duty to fil e income tax returns and that there was fa ilu re to

fil e sucll return s for taxab le years 2000 anci 2001 but t1·1ere is no proof that

the petiti oner was the one responsible for the om iss ion either directly or

ind irectly.

Consiclering thal tile tlusl)<1n cl assumed respullsiiJilily for wcparation

and for filing the retuiTlS and even hl!'1.::cl an account.:mt2i' to rile the income

tax returns, it is nm rn al for a person like petitioner in thi s case to rely on her

spouse for t he prepa rat ion and fil1119 of tr1 e income ta >< returns. The husba nd

fil ed that disputed income tax retums. Under th e ci1·cumstances, it can not be

sa id that petitioner deliberately fail ed to fil e her 2000 and 2001 lTRs.

What has been estab lished by unrebutted evidence, cons isting of the

testimony of the Kintanar ::.;pouses, is lhat peti ti oner d id not acti ve ly

participa te in tl1c fil ing of their jl) ir·lL LOUU arK! 2001 ITI<.s, l1aving rel ied on her

husband to do so . There is r1o clea 1· sl1owing tl1at peti t ioner willfully,

de libet·ately or- intentiona lly tailt.:rj Lo file sucl1 re turns w itll reasonable

certainty. c;v

/·1

L~

20

Supra, f\Jote 7,p.462 ci tlllQ Pc:ople tiS. Ro!IC!em, 320 SCRA 383 ( 1999). Supra., Note 7, p.462. Supra., Note 9 .

,.

Concurring a11Li UISSe llling Opinion CfA EB C11111. f\J u. 006 (CfA Cn m. Case [\h,s. LHB3 G. 0-03-l) Page 16 of 16

"willfulness" req ui reme nt. Co tlsequentl y, pet it ionet- Gloria V. Kinta nar, whi le

civi lly liable for deficiency income taxes, srJ ould be acqu itted of th e crime of

willful fa ilure co f il e r1er 2000 c:md 20U 1 ITRs due to reasonable doubt.

I CONCUR:

CAESAR A. CASANOVA Associate Justice

Q~~o. .~ Q , o5LiA I~ITO c. CASTAN EDA()R.

Associate Justi ce

people v. gloria kintanar

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