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Gly
REPUBliC OF THE PHiliPPINES
Caun al Tax Appeals
QUEZON CITY
SECOND DIVISION
PEOPLE OF THE PHILIPPINES, CTA CRIM. CASE NO. 0 -013
-versus-
JOEL C. MENDEZ,
Plaintiff, For: Violation of Section 255 of R.A. No.
8424
Accused.
X -- - --------------------- X
PEOPLE OF THE PHILIPPINES,
-versus-
JOEL C. MENDEZ,
Plaintiff. CTA CRIM. CASE NO. 0 -015
1
For: Violation of Section 255 of R.A. No.
8424
Members:
CASTANEDA, JR., Chairperson
CASANOVA, and
MINDARO-GRULLA, JJ.
Accused. Promulgated:
JAN 0 5
X
DECISION
CASTANEDA, JR., J. :
STATEMENT OF FACTS
Accused Joel C. Mendez is charged before this Court with the crime of
violation of Section 255 of Republic Act (R.A.) No. 8424, otherwise known as
the "Tax Reform Act of 1997", as amended, under the following Amended
Informations, which read as follows: jh--'
243
'
/
DECISION
CTA CRIM. CASE NOS. 0-013 and 0 -015
Page 2 of 52
Criminal Case No. 0-013
"That on or about the 15th day of April 2003, at
Quezon City, and within the jurisdiction of this Honorable
Court, the above-named accused, a duly registered
taxpayer, and sole proprietor of 'Weigh Less Center',
'Mendez Body and Face Salon and Spa', and 'Mendez Body
and Face Skin Clinic', with principal office at No. 31 Roces
Avenue, Quezon City, and with several branches in Quezon
City, Makati City, San Fernando, Pampanga and Dagupan
City, did then and there, willfully, unlawfully and feloniously,
fail to file his income tax return (ITR) with the Bureau of
Internal Revenue for taxable year 2002, to the damage and
prejudice of the Government in the estimated amount of
P1 ,522, 152.14, exclusive of penalties, surcharges and
interest.
CONTRARY TO LAW."
Criminal Case No. 0-015
"That on or about the 15th of April 2004, at Dagupan
City, and within the jurisdiction of this Honorable Court, the
above-named accused, a duly registered taxpayer, and sole
proprietor of 'Weigh Less Center', 'Mendez Body and Face
Salon and Spa', and 'Mendez Body and Face Skin Clinic',
with several branches in Quezon City, Makati City, San
Fernando, Pampanga and Dagupan City, engaged in the
business of cosmetic surgery and dermatology, willfully,
unlawfully and feloniously, did then and there, fail to supply
correct and accurate information in his income tax return
(ITR) for taxable year 2003 filed in the Revenue District of
Calasiao, Pangasinan, by making it appear under oath that
his income for taxable year 2003 was derived mainly from
his branch in Dagupan City, and failing to declare his
consolidated income from his other 'Weigh Less Center' ,
'Mendez Body and Face Salon and Spa', and 'Mendez Body
and Face Skin Clinic' branches, to the damage and prejudice
of the Government in the estimated amount of
P2,1 07,023.65, exclusive of penalties, surcharges and
interest.'
CONTRARY TO L A W . " ~
244
,.
DECISION
CTA GRIM. CASE NOS. 0 -013 and 0 -015
Page 3 of 52
On January 30, 2006
1
and March 20, 2006
2
, this Court issued Warrants
of Arrest against the accused in Criminal Case Nos. 0-013 and 0-015,
respectively.
Accused voluntarily surrendered before this Court and posted the
required bail bond for his provisional liberty, by way of cash bonds in the
amount of P20,000.00 each, in Criminal Case No. 0-013 on February 10,
2006
3
and in Criminal Case No. 0-015 on March 29, 2006
4
.
Upon arraignment in both cases, accused, assisted by his defense
counsel de parte, entered a plea of "Not Guilty" to the crimes charged.
5
On September 27, 2006 and October 2, 2006, the Preliminary
Conference were held. During pre-trial, CTA Grim. Case No. 0-013 and CTA
Grim. Case No. 0-015 were consolidated as per agreement by the parties.
Trial proceeded, wherein the prosecution presented both testimonial
and documentary evidence.
The prosecution presented twenty (20) witnesses to establish
accused's culpability, namely: Atty. Grace B. Cruz, Ms. Clavelina S. Nacar,
Messrs. Romeo E. Naranjo, Von M. Lentejas, Alex C. Perez, Atty. Mahinardo
G. Mailig, Messrs. Florante Aninag, Joseph Catapia, Ms. Perlita R. De Lara,
Mr. Joseph Rodriguez, Ms. Arabelle 0 . Petilla, Ms. Emma C. Asusano,
Messrs. Jose Villareal, Elias S. Olasiman, Atty. Salvador C. Alcuino, Jr. , Ms.
Norilyn Caborda, Mr. Benjamin Molina, Jr., Ms. Menchie De Leon, Ms.
Josefina Wan Remollo, and Mr. Alexander D. Martinez. The prosecution also r--
1
2
3
4
CTA Grim. Case No. 0 -013, docket, p. 179.
CTA Grim. Case No. 0-015, docket, p. 176.
CTA Grim. Case No. 0-013, docket , p. 191 .
CTA Grim. Case No. 0 -015, docket, p. 185.
Resolutions dated March 22, 2006 and April19, 2006.
245
DECISION
CTA CRIM. CASE NOS. 0-013 and 0-015
Page 4 of 52
presented its documentary evidence marked as Exhibits "A" to "L
6
", which
were admitted by this Court as evidence for the prosecution.
6
On March 24, 2008, accused filed his "Demurrer to Evidence," which
the Court denied in a Resolution dated August 15, 2008.
7
For its part, the defense presented evidence, which consists of the
testimonies of the accused himself, Ms. Cherry Perez, and Ms. Ma. Uta D.
Gregorio; and documentary evidence marked as Exhibits "1" to "39-A. " The
said exhibits were admitted as evidence for the accused, except Exhibits "17",
"20", "32", and "34"; which were denied admission in a Resolution dated
January 26, 2010 for failure of the accused's counsel to present the originals
thereof for comparison.
8
On October 5, 2010, a Resolution was issued by this Court submitting
the case for decision,
9
considering that the accused had already filed his
"Memorandum" on March 1, 2010
10
and that the prosecution had also filed its
"Memorandum"
11
through registered mail on September 14, 2010 and
received by this Court on September 30, 2010.
Evidence for the Prosecution
Atty. Grace Belarmino-Cruz, one of the Revenue Officers assigned in
the National Investigation Division (NID) of the Bureau of Internal Revenue
(BIR), testified that in a Memorandum dated September 8, 2004, the NID
Chief, Atty. Arnel SD. Guballa, referred to her investigating team the case of jk-
6
8
9
10
11
CTA Grim. Case Nos. 0 -013 and 0-015, Vol. 3, docket, pp. 1942-1944 and 2039-2040.
Ibid., pp, 2073-2083.
Ibid., pp. 2405-2406 and 2476-2478.
Ibid., p. 2563.
Ibid., pp. 2444-2461 .
Ibid., pp. 2509-2562.
246
DECISION
CTA GRIM. CASE NOS. 0 -013 and 0 -015
Page 5 of 52
taxpayer Dr. Joel C. Mendez for appropriate action. The case was precipitated
by a confidential letter-complaint against the subject-taxpayer for alleged non-
issuance of official receipts for services rendered.
12
On the basis of the initial investigation and recommendation, a Letter of
Authority (LOA) No. 2001 -00002438
13
dated November 8, 2004 was issued
for the examination of books of accounts and other accounting records for the
period covering taxable years 2001, 2002 and 2003 of accused Dr. Joel
Cortez Mendez. According to Atty. Cruz, the said LOA was served on
November 10, 2004 together with the First Letter-Notice
14
for the production of
books of accounts and accounting records. The said LOA was duly received
by Cherry Perez, who allegedly represented herself as the authorized
representative of accused Dr. Mendez. Despite receipt of the First Letter-
Notice, accused Dr. Mendez did not submit the required documents, as
specified in the said notice. As a consequence, a Second Letter-Notice
15
and
a Final Request
16
for presentation and/or production of the required
records/documents were served upon -the accused Dr. Mendez, and duly
received on November 24, 2004 and January 11, 2005, respectively, thru his
accountant and employee named Richard Bianan and Carla Yadao.
Due to the failure of the accused to present or produce the needed
records and documents for examination despite several notices, the
investigation proceeded through "Third Party Information" and the " B e s t ~
12
13
14
15
16
Exhibit "I/IMIW"; TSN. November 6, 2006, pp. 6-11 .
Exhibit "A".
Exhibit "8".
Exhibit "C".
Exhibit "0".
247
DECISION
CTA CRIM. CASE NOS. 0 -013 and 0 -015
Page 6 of 52
Evidence Obtainable Rule" allowed under Section 5(B), in relation to Section
6(A) and (B) of the Tax Code of 1997.
In the course of gathering information and best obtainable evidence
pertaining to the accused, the team verified certain data and information from
the BIR Integrated Tax System (BIR-ITS) and different government agencies,
including private offices and entities.
Verification of the business activities of accused Dr. Joel C. Mendez
disclosed that he has been operating as a single proprietor, doing business
for taxable years 2001 , 2002, and 2003 under the following trade names and
addresses:
a. Mendez Body and Face Salon and Spa - 31-B A. Roces
Avenue, Quezon City, registered with ROO No. 39-South
Quezon City on May 6, 2002;
17
b. Mendez Body and Face Salon and Spa - B-3, 3/F New
Farmers Plaza, Cubao, Quezon C i t ~ , registered with ROO
No. 40-Cubao on October 24, 2003;
8
c. Mendez Body and Face Skin Clinic - The Plaza Building,
Greenbelt, Ayala Center, Makati City, registered with ROO
No. 47-East Makati on April 30, 2004;
19
d. Weigh Less Center - SM City, San Fernando, Pampanga,
registered with ROO No. 21-San Fernando, Pampanga on
January 17, 2003;
20
and
e. Mendez Weighless Center - 2/F CSI Mall , Lucao District,
Dagupan City, registered with ROO No. 4-Calasiao,
Pangasinan on May 16, 2003.
21
Verification of the tax records from the BIR-ITS revealed that accused
Dr. Mendez did not file his income tax returns for taxable years 2001 and )L-
17
18
19
20
21
Exhibit "0 ".
Exhibit "EEE".
Exhibit "RRR".
Exhibit "AAA".
Exhibit "MMM".
248
DECISION
CTA GRIM. CASE NOS. 0 -013 and 0 -015
Page 7 of 52
2002. This was corroborated by the direct testimonies of the following
Revenue District Officers who issued the corresponding certifications
evidencing the failure of the accused to file his income tax returns for taxable
years 2001 and 2002:
a. Revenue District Officer Clavelina S. Nacar of ROO No.
39-South Quezon City - Certification dated February 22,
2005
22
'
b. Revenue District Officer Romeo E. Naranjo of ROO No.
40-Cubao, Quezon City - Certification dated March 7,
2005
23
and
'
c. Revenue District Officer Florante R. Aninag of ROO No.
21-San Fernando, - Revenue Certification
dated February 22, 2005.
4
Mr. Alex C. Perez, Chief of the Document Processing Section of
Revenue District No. 39-South Quezon City, corroborated the testimony of
Atty. Cruz and identified the Certification dated March 9, 2005, attesting that
accused Dr. Mendez has no record on file as to his Annual Income Tax
Return for taxable years 1995 to 2000 per its office ITS inquiry despite the
existence and operation of his business, Weigh Less Center.
25
During the investigation, it was further gathered that the accused filed
his income tax return for taxable year 2003 with Revenue District Office
(ROO) No. 4-Calasiao, Pangasinan, for his Mendez Weigh Less Center
located at CSI City Mall, Lucao District, Oagupan City despite the existence of
his principal place of business at 31 Races Avenue, Quezon City, as
evidenced by the Certification dated February 23, 2005 and the letter dated
August 15, 2006 issued by Mr. Joseph M. Catapia, Revenue District Officer ft-
22
23
24
25
Exhibit "G"; TSN, November 13, 2006, pp. 11 -16.
Exhibit "EEE"; TSN, November 13, 2006, pp. 33-34.
Exhibit "888"; TSN, November 27, 2006, pp. 21 -23.
Exhibit "F
5
"; TSN, November 13, 2006, pp. 59-60.

DECISION
CTA CRIM. CASE NOS. 0-013 and 0 -015
Page 8 of 52
of ROO No. 4, and income tax return of the accused. Said certification was
also identified during trial by Mr. Joseph M. Catapia himself.
26
The team was also able to establish that the filing by the accused of his
income tax return with Revenue District Office No. 4 was irregular and was
intended to evade payment of correct taxes since accused Dr. Mendez,
operating as a single proprietor of different businesses, is required to file
consolidated income tax return, viz., an income tax return containing the
summary of his income from all sources or business operations in and outside
Metro Manila in accordance with Section 51 (A)(4)(a) and (B) .
The team likewise found that the non-filing of accused Dr. Mendez of
his income tax returns for taxable years 2001 and 2002 was willful and done
with deliberate intent to evade payment of taxes, considering that the accused
had been operating several businesses for income and making capital
investments as early as 1993.
As a result of the investigation and documentary evidence gathered, it
was established that despite having practiced his profession through the
operation of his businesses, accused failed to file his income tax returns for
taxable years 2001 and 2002, and under declared in 2003.
Mr. Von Lentejas testified
27
that as a specialist at the Public Reference
Unit of the Securities and Exchange Commission (SEC) , he signed
authenticated copies of documents issued by the said Unit and he had the
occasion to examine certified copies of the following documents:
26
27
1. SEC Registration No. A 1996-06633 of Weigh Less Center,
Co., dated September 23, 1996, together with Articles otf<-
Exhibits "MMM", "NNN", and "K
5
"; TSN, January 22, 2007, pp. 14-23.
TSN, November 20, 2006, pp. 14-21 .
250
DECISION
CTA CRIM. CASE NOS. 0 -013 and 0 -015
Page 9 of 52
28
29
30
31
32
33
34
35
Partnership of Weigh Less Center Co., dated September
10 1996
28
I I
2. SEC Reg. No. AP093-001258 of Sabili Mendez Medical
Services Co., dated August 11 , 1993, together with Articles
of Partnership of Sabili Mendez Medical Services Co. ,
dated August 3, 1993;
29
3. SEC Registration No. AP093-001258 of Mendez Medical
Services Co. , (formerly Sabili Mendez Medical Services
Co.) dated August 8, 1996, together with Articles of
Partnership of Mendez Medical Services Co., dated June
5 1996
30
I I
4. SEC Registration No. AP096-00270 of Dr. Mendez
Industrial and Lying-In Clinic Ltd. Co., dated February 6,
1996, together with Articles of Partnership of Dr. Mendez
Industrial and Lying-In Clinic Ltd. Co., dated January 23,
1996'
31
I
5. SEC Registration No. AS094-000937 of Primehealth Card
Services, Incorporated, dated February 1, 1994, together
with Articles of Incorporation of Primehealth Card Services,
Incorporated, dated January 13, 1994;
32
6. SEC Registration No. AP096-00909 of Oro Cup, Co., dated
May 2, 1996, together with Articles of Partnership of Oro
Cup, Co., dated April 22, 1996;
33
7. SEC Registration No. AP096-00184 of Oro Glass and
Aluminum Supply Ltd. Co., dated January 26, 1996,
together with Articles of Partnership of Oro Glass and
Aluminum Supply Ltd. Co., dated January 25, 1996;
34
8. SEC Registration No. AP096-00294 of The New Millenium
Network Ltd. Co., dated February 7, 1996, together with
Articles of Partnership of The New Millenium Network Ltd.
Co, dated February 5, 1996;
35
and
9. SEC Registration No. A200111706 of The Big and Small Art
Co., dated August 8, 2001 , together with Articles o f ~
Exhibits "QQ" to "QQ-6".
Exhibits "RR" to "RR-6".
Exhibits "SS" to "SS-6".
Exhibits "TT" to "TT-6".
Exhibits "UU" to "UU-13".
Exhibits "W" to "W-6".
Exhibits "VWJ" to "VW.J-6".
Exhibits "XX" to "XX-6".
251
DECISION
CTA CRIM. CASE NOS. 0 -013 and 0 -015
Page 10 of 52
Partnership of the Big and Small Art Co., dated May 24,
2001 .
36
The above-enumerated documents, which were derived from the
records of the SEC, corroborate Atty. Cruz's testimony that accused Dr.
Mendez made several investments as early as the year 1993.
Also, from the foregoing documents, the prosecution concluded that
the accused has been engaged in the practice of his profession since 1996
through Weigh Less Center, Co., registered as a partnership on September
23, 1996 for the purpose of conducting medical program aimed at assisting
cl ients to lose weight and to maintain their ideal body weight afterwards.
In connection thereto, Atty. Cruz also testified that when her team
conducted ocular inspection of the different Weigh Less Center branches,
particularly, the Mendez Medical Group Weigh Less Center located at The
Plaza Building, Greenbelt, Ayala Center, Makati City, they noticed a colored
poster containing the phrase "Since 1996 Dr. Joel Mendez.'
137
The investigating team also obtained from the Notarial Section of the
Office of the Clerk of Court of the Regional Trial Court (RTC) of Quezon City a
certified true copy of the Contract of Lease that was executed in Quezon City
on July 12, 2001 , between Dr. Mendez, as Lessee, and Ma. Lita Gregorio, as
Lessor; showing that the lease pertains to the period "August 15, 2001 to
August 14, 2007", covering the whole building with a total floor area of 220
square meters, more or less, for a monthly rental of P27,000.00, for the r
36
37
Exhibits "YY" to "YY-6".
TSN, November 6, 2006, pp. 6-11 ; Exhibit "W W W-4", par. 18, p. 61 7, Division Docket.
252
DECISION
CTA GRIM. CASE NOS. 0 -013 and 0-015
Page 11 of 52
purpose of establishing a health clinic and art gallery located at 31-G A.
Races Ave., Quezon, City.
38
In order to prove that the accused was earning income from taxable
years 2001 to 2003 through operation of his different branches of Weigh Less
Center, Body and Face Salon and Spa, and Face Skin Clinic, the prosecution
also presented certified true copies of the various advertisement placements
made by the accused with different major publications, specifically, those
evidencing the sixty (60) advertisements he placed with the Philippines Star
from April 16 to October 31 , 2001, two hundred thirty-five (235)
advertisements from January to December 18, 2002, and ninety-six (96) from
January 6 to December 17, 2003.
39
The prosecution likewise submitted in evidence records of newspaper
clippings secured from PhiiStar Daily, Inc., which revealed that accused Dr.
Mendez had Weigh Less Center branches in operation at different addresses
as per advertisement in the newspaper, The Philippine Star.
40
Furthermore, the information obtained from the Department of Trade
and Industry (DTI) indicated that Dr. Mendez had businesses registered under
his name as owner on May 26, 2003, July 31 , 2003, and September 17, 2003,
based on the Certification issued by Ms. Emma C. Asusano, DTI-NCR
Regional Caretaker. Said certification was also presented, identified and
admitted by this Court.
41
The prosecution also presented the letter-reply issued by Arabelle 0 .
Petilla, the Chief of the Records Section of the Management Information fo-
38
39
40
41
Exhibit "N".
Exhibits "P" to "R-7" .
Exhibits "T", "U", "V", "W", "X" to "X-2", and "000".
Exhibits "ZZ", "DOD", and "HHH".
., !f.! ')
c...;:) , .l
DECISION
CTA GRIM. CASE NOS. 0-013 and 0 -015
Page 12 of 52
Division of the Land Transportation Office (L TO) as regards the various
vehicles purchased during 1996, 2000, 2001, 2002, and 2003 by the accused
duly registered under his name.
42
Ms. Petilla indicated that the information
contained therein is based on the L TO Information Technology System
database.
To further bolster its stance that the accused was earning income from
the year 2001 to 2003, the prosecution presented the original copy of the
Letter dated July 19, 2005, issued by Atty. Salvador A. Alcuino, Jr., Senior
Legal Counsel of the Legal Affairs Department of Philippine Airlines, including
the Summary of Gross Fares paid by the accused for his travels abroad for
taxable years 2001, 2002, and 2003.
43
In addition, a Certification from the
Bureau of Immigration shows that accused Dr. Mendez made forty-one (41)
travels from 1995 to 2000; five (5) foreign travels in 2001; five (5) foreign
travels in 2002, and twenty-two (22) foreign travels in 2003.
44
Lastly, the prosecution presented the Computation of Expenditures
under the Contract of Lease dated July 12, 2001, the Computation of
Expenditures under Contract of Lease dated July 18, 2003, and the
Computation of Deficiency Tax for December 31, 2002 and December 31 ,
2003 (with the affidavits attesting to the same), for the purpose of proving the
expenditures of the accused, that the accused was earning income from his
Weigh Less Center branches for the years 2002 and 2003, and the deficiency
income tax liability of the accused based on the best evidence obtainable.
45
~
42
43
44
45
Exhibits "AA" to "AA-3".
Exhibits "Z" to "Z-10".
Exhibits "Y" to "Y-3".
Exhibits "J
6
" to "J
6
-6".
254
DECISION
CTA CRIM. CASE NOS. 0 -013 and 0 -015
Page 13 of 52
On the basis of the data and documentary evidence gathered, the
investigating team proceeded to compute the estimated amount of income
that accused Dr. Mendez earned for taxable years 2001 , 2002, and 2003
based on his net worth and expenditures.
Applying the net worth and expenditures method, their computation
yielded the following results:
"a. For taxable year 2001 , accused Dr. Joel C. Mendez earned
an income from various sources but did not report the
same to the prejudice of the government in the estimated
amount of Php1 ,089,439.08;
b. For taxable year 2002 accused Dr. Joel C. Mendez earned
an income from various sources but did not report the
same to the prejudice of the government in the estimated
amount of Php1 ,522, 152.14;
c. For taxable year 2003, evidence shows that accused Dr.
Joel C. Mendez earned an income from different sources
but failed to supply correct information and declared
instead a net loss in the amount of Php38,893.91 to the
prejudice of the government.
Evidence for the Defense
The first witness for the accused, Ms. Cherry Perez, an Accounting
Staff of Weigh Less Center, Roces Branch, testified
46
that sometime in
November of the year 2004, while she was still a medical staff at the said
branch, representatives from the Bureau of Internal Revenue came to the
center looking for Dr. Mendez. The representatives from the SIR asked her to
receive the Letter of Authority and the First Notice to Submit Documents upon
learning that the accused was not around, despite informing them that she
has no authority to receive it , for and on behalf, of Dr. Mendez. She gave the j:-
46
TSN, January 14, 2009, pp. 7-9; TSN, February 16, 2009, pp. 8-11.
255
DECISION
CTA CRIM. CASE NOS. 0 -013 and 0 -015
Page 14 of 52
documents to their then accountant, Mr. Richard Bianan, but he was not able
to forward said documents to Dr. Mendez. As a result , Dr. Mendez was
surprised to learn that a Letter of Authority and a First Notice were served way
back in November 2004, as he came to know of said service only in February
2005.
Accused Dr. Mendez testified
47
that he is a doctor by profession and
run several clinics under the banner of Mendez Medical Group. He is
engaged in medical business. He further testified that Letter of Authority No.
00002438 dated November 8, 2004 was not personally served on him and
was only made aware of its existence sometime late February 2005, when he
was informed by his staff that persons representing themselves as
"assessors" went to his office demanding for a copy of certain assessment.
The accused narrated
48
that sometime late of February 2005, as he
was leaving his office, he saw the representatives from the BIR in his office.
The BIR representatives told him about the said "assessment" to which the
accused replied that he has not received any. The BIR representatives went
back to his Office and were met by Ms. Rose Zhamar Bejar, his staff, this time
with a laptop computer. According to the accused, Melvin Mandigo, a
member of the investigating team, then showed Ms. Bejar a file copy of the
said LOA from his computer and told her that if she wanted a copy, he could
copy it in a diskette. He then instructed Ms. Bejar "kumpletuhin nyo yang mga
nakalagay diyan at tawagan mo ako kapag kumpleto na," giving his cell phone
number and office number, and secured the telephone numbers of the office.,9t:-
47
48
Exhibit "38"; TSN, May 4, 2009, pp. 9-19.
Ibid.
25G
DECISION
CTA CRIM. CASE NOS. 0-013 and 0 -015
Page 15 of 52
Atty. Grace Belarmino-Cruz, one of the BIR representatives, then tried to
contact the accused's accountant/bookkeeper, Mr. Richard Bianan.
Based from the testimonl
9
of the accused, Mr. Bianan, who was
entrusted with all documents and records in relation to the business,
deliberately concealed these notices from the accused to avoid discovery that
he has not been remitting or paying to the BIR sums of money which the
accused entrusted to him to pay the tax obligations of the accused.
He further testified that Mr. Richard Bianan has been charged with
multiple counts of Estafa. He also stated that he issued checks and vouchers
in Mr. Richard Bianan's name for the payment of taxes and other
obligations.
50
Furthermore, sometime in February 2005, the accused allegedly
caught Mr. Bianan stealing cosmetic products and other valuables from the
clinic and consequently filed complaint with the police authorities. According
to him, Mr. Bianan was then charged by Inquest Prosecutor Primo G. Sio, Jr.
of the Office of the City Prosecutor of Quezon City with the crime of Qualified
Theft.
51
It was during one of their jail visits that Mr. Bianan allegedly
confessed to them about the non-payment of his tax obligations.
In addition, he also testified
52
that he leased the property located in A.
Roces Avenue, Quezon City on July 12, 2001 , but Weigh Less Center-Roces
Avenue Branch only started its operation on or about March 4, 2003. The
delay in operation was supposedly due to the fact that the property is a two-
floor residential unit that is not designed at all as office space and that he had jk-
49
50
51
52
Ibid.
Exhibits "7" to "21"; ibid.
Exhibit "35"; TSN, May 4, 2009, pp. 9-19.
Exhibit "39";TSN, June 17, 2009 ..
t:5 "1
DECISION
CTA GRIM. CASE NOS. 0 -01 3 and 0 -015
Page 16 of 52
to cause its renovation as his personal funds would allow. Due to limited
funds, the construction took a while before the same was completed. The
delay was also caused by the problem with building authorities inasmuch as
the renovation was done without a permit.
Accused also made a statement that the idea of putting up clinics came
up in 1996, but due to financial problems and because his focus then was art,
the clinics materialized only after several years. As regards the vehicles he
allegedly purchased from the years 2001 to 2003, he said that the said
vehicles were obtained through bank loans. He explained that the newspaper
advertisements were intended to generate public awareness in the business.
While he did attend to some celebrities, he did not charge them any fee. They
had a simple understanding that he would do certain medical services for his
celebrity clients and in return, they would endorse his future business. The
idea is that his future business is advertised through the publicity generated
by the treatments of celebrities.
53
The third witness for the defense was Ma. Lita Gregorio who testified
that she is the owner and lessor of the 2-storey commercial building with an
area of 220 square meters located at 31 -G, A. Races Avenue, Quezon City. 5
4
She stated that she entered into a six-year contract of lease with Dr. Mendez
with a monthly rental of P25,000.00. Ms. Gregorio said that it was on August
15, 2001 that Dr. Mendez actually occupied subject property and started to
gradually introduce major improvements. It was not until in the latter part of
the year 2002 that the renovation was completed. Ms. Gregorio corroborated Jk--
53
54
Ibid.
Exhibit "23".
258
DECISION
CTA CRIM. CASE NOS. 0 -013 and 0 -015
Page 17 of 52
the accused's testimony that the operation of the health clinic and art gallery
was suspended due to lack of building permit. 5
5
THE ISSUE
WHETHER OR NOT ACCUSED DR. JOEL C. MENDEZ IS
LIABLE FOR VIOLATION OF SECTION 255 OF THE 1997
NATIONAL INTERNAL REVENUE CODE, AS AMENDED, FOR
FAILURE TO FILE INCOME TAX RETURN AND FOR
FAILURE TO SUPPLY CORRECT AND ACCURATE
INFORMATION.
THE COURT'S FINDINGS AND RULING
The offenses allegedly committed by herein accused are violation of
the first paragraph of Section 255 of the National Internal Revenue Code
(NIRC) , which provides:
"SEC. 255. Failure to File Return, Supply Correct and
Accurate Information, Pay Tax, Withhold and Remit Tax and
Refund Excess Taxes Withheld on Compensation. - Any
person required under this Code or by rules and regulations
promulgated thereunder to pay any tax, make a return, keep
any record, or supply correct accurate information, who
willfully fails to pay such tax, make such return, keep such
record, or supply correct and accurate information, or withhold
or remit taxes withheld, or refund excess taxes withheld on
compensation, at the time or times required by law or rules
and regulations shall, in addition to other penalties provided by
law, upon conviction thereof, be punished by a fine of not less
than Ten thousand pesos (P1 0,000) and suffer imprisonment
of not less than one (1) year but not more than ten (1 0) years.
XXX XXX xxx"
Based on the above-mentioned provision, the following elements must
be established: ?z--
55
Exhibit "24".
259
DECISION
CTA CRIM. CASE NOS. 0 -01 3 and 0 -015
Page 18 of 52
Criminal Case No. 0-013
1. The accused was a person required to make or file a
return;
2. The accused failed to make or file the return at the time
required by law; and
3. The failure to make or file the return was willful.
Criminal Case No. 0-015
1. The accused is a person required under the Tax Code or
by rules and regulations to pay any tax, make a return,
keep any record, or supply correct and accurate
information;
2. The accused failed to supply correct and accurate
information at the time or times required by law or rules
and regulations; and
3. Such failure to supply correct and accurate information is
willful.
In his defense, accused avers that he was not able to personally
receive the notices issued by the BIR. The accused alleges that it was his
former accountant , Mr. Richard Bianan, who received the notices and that Mr.
Bianan concealed said notices from the accused.
It must be pointed out that, as narrated by the accused in his Affidavit
and as confirmed by him during the cross-examination, Mr. Richard Bianan
was authorized by him to receive documents and notices on his behalf,
including the notices issued by the BIR. Hence, the notification requirement
was deemed substantially compl ied with by the BIR, considering that the
subject notices were admittedly received by Mr. Bianan.
Even assuming, arguendo, that Mr. Bianan concealed said notices
from the accused, the BIR is still authorized to subject the accused to an /1L-
260
'.
DECISION
CTA GRIM. CASE NOS. 0 -013 and 0 -015
Page 19 of 52
investigation and assess him on the basis of best evidence obtainable and
third-party information. In the recent case of Commissioner of Internal
Revenue vs. Han. Raul M. Gonzalez, eta/.,
56
the Supreme Court said that the
lack of consent of the taxpayer does not make the resort to third-party
information and best evidence obtainable illegal. The ruling of the High Court
is hereunder quoted in part:
56
"In the Details of Discrepancies attached as Annex B of
the PAN, private respondents were already notified that
inasmuch as the revenue officers were not given the
opportunity to examine LMCEC's books of accounts,
accounting records and other documents, said revenue
officers gathered information from third parties. Such
procedure is authorized under Section 5 of the NIRC, which
.provides:
SEC. 5. Power of the Commissioner to Obtain
Information, and to Summon, Examine, and Take
Testimony of Persons. - In ascertaining the
correctness of any return, or in making a return when
none has been made, or in determining the liability of
any person for any internal revenue tax, or in
collecting any such liability, or in evaluating tax
compliance, the Commissioner is authorized:
(A) To examine any book, paper, record
or other data which may be relevant or material
to such inquiry;
(B) To obtain on a regular basis from
any person other than the person whose
internal revenue tax liability is subject to
audit or investigation, or from any office or
officer of the national and local governments,
government agencies and instrumentalities,
including the Bangko Sentral ng Pilipinas and
government-owned or -controlled corporations,
any information such as, but not limited to,
costs and volume of production, receipts or
sales and gross incomes of taxpayers, and the
names, addresses, and financial statements of
corporations, mutual fund companies, J't--
G.R. No. 177279, October 13, 2010.
261
DECISION
CTA CRIM. CASE NOS. 0-01 3 and 0 -015
Page 20 of 52
insurance companies, regional operating
headquarters of multinational companies, joint
accounts, associations, joint ventures or
consortia and registered partnerships, and their
members;
(C) To summon the person liable for tax
or required to file a return, or any officer or
employee of such person, or any person
having possession, custody, or care of the
books of accounts and other accounting
records containing entries relating to the
business of the person liable for tax, or any
other person, to appear before the
Commissioner or his duly authorized
representative at a time and place specified in
the summons and to produce such books,
papers, records, or other data, and to give
testimony;
(D) To take such testimony of the
person concerned, under oath, as may be
relevant or material to such inquiry; x x x
(Emphasis supplied)
Private respondents' assertions regarding the
qualifications of the 'informer' of the Bureau deserve scant
consideration. We have held that the lack of consent of the
taxpayer under investigation does not imply that the BIR
obtained the information from third parties illegally or that
the information received is false or malicious. Nor does
the lack of consent preclude the BIR from assessing
deficiency taxes on the taxpayer based on the documents.
In the same vein, herein private respondents cannot be
allowed to escape criminal prosecution under Sections 254
and 255 of the NIRC by mere imputation of a 'fictitious' or
disqualified informant under Section 282 simply because other
than disclosure of the official registry number of the third party
'informer,' the Bureau insisted on maintaining the
confidentiality of the identity and personal circumstances of
said 'informer." (Emphasis supplied)
Therefore, even if the accused was not notified of the investigation
made by the BIR, the information gathered in the course of the said r--
262
DECISION
CTA GRIM. CASE NOS. 0 -013 and 0 -015
Page 21 of 52
investigation is not deemed illegal and may serve as basis for criminal
prosecution.
Now, before going one by one with the foregoing elements, it may be
relevant to emphasize that direct evidence is not the sole means of
establishing guilt beyond reasonable doubt. Established facts that form a
chain of circumstances can lead the mind intuitively or impel a conscious
process of reasoning towards a conviction. Indeed, rules on evidence and
principles in jurisprudence have long recognized that the accused may be
convicted through circumstantial evidence.
57
Circumstantial evidence has been defined as such evidence which
goes to prove a fact or series of facts, other than the facts in issue, which, if
proved, may tend by inference to establish the fact in issue. But for
circumstantial evidence to be sufficient for a conviction, the following
requisites must be present , namely: (a) there is more than one circumstance;
(b) the facts from which the inferences are derived have been proven; and (c)
the combination of all the circumstances results in a moral certainty that the
accused, to the exclusion of all others, is the one who has committed the
crime.sa
Hence, this Court's determination of the accused's culpability shall not
be confined with the appreciation of direct evidence submitted by the
prosecution but shall also include the consideration of the circumstantial
evidence adduced to establish the guilt of the accused beyond reasonable
doubt. ~
57
58
Amara vs. People , G.R. No. 154466, January 28, 2008, 542 SCRA 485, 491 .
Ibid.
26 3
DECISION
CTA CRIM. CASE NOS. 0 -013 and 0 -015
Page 22 of 52
Criminal Case No. 0-013
As to the first element, it is necessary to determine who are those
required to file a return and declare income tax. In this regard , this Court
found instructive the provisions under Section 51 (A) and 7 4 in connection with
Section 32 of the NIRC of 1997, as amended.
"SEC. 51 . Individual Return. -
(A) Requirements. -
(1) Except as provided in paragraph (2) of this
Subsection, the following individuals are required to file an
income tax return:
(a) Every Filipino citizen residing in the
Philippines;
(b) Every Filipino citizen residing outside the
Philippines, on his income from sources within
the Philippines;
(c) Every alien residing in the . Philippines, on
income derived from sources within the
Philippines; and
(d) Every nonresident alien engaged in trade or
business or in the exercise of profession in the
Philippines.
(2) The following individuals shall not be required to file
an income tax return;
(a) An individual whose gross income does not
exceed his total personal and additional
exemptions for dependents under Section 35:
Provided, That a citizen of the Philippines
and any alien individual engaged in
business or practice of profession within
the Philippine shall file an income tax
return, regardless of the amount of gross
income;
(b) An individual with respect to pure
compensation income, as defined in Section
32(A)(1 ), derived from sources within the
Philippines, the income tax on which has been
correctly withheld under the provisions of
Section 79 of this Code: Provided, That an 9z--
264
DECISION
CTA CRIM. CASE NOS. 0 -01 3 and 0 -015
Page 23 of 52
individual deriving compensation concurrently
from two or more employers at any time during
the taxable year shall file an income tax return:
Provided, further, That an individual whose
pure compensation income derived from
sources within the Philippines exceeds Sixty
thousand pesos (P60,000) shall also file an
income tax return;
(c) An individual whose sole income has been
subjected to final withholding tax pursuant to
Section 57(A) of this Code; and
(d) An individual who is exempt from income tax
pursuant to the provisions of this Code and
other laws, general or special.
(3) The foregoing notwithstanding, any individual not
required to file an income tax return may nevertheless be
required to file an information return pursuant to rules and
regulations prescribed by the Secretary of Finance, upon
recommendation of the Commissioner.
(4) The income tax return shall be filed in duplicate by
the following persons:
(a) A resident citizen - on his income from all
sources;
(b) A nonresident citizen - on his income derived
from sources within the Philippines;
(c) A resident alien - on his income derived from
sources within the Philippines; and
(d) A nonresident alien engaged in trade or
business in the Philippines - on his income
derived from sources within the Philippines."
(Emphasis supplied)
"SEC. 7 4. 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 fz--
265
' '
. DECISION
CTA CRIM. CASE NOS. 0 -013 and 0 -015
Page 24 of 52
of the earnings derived by the individual from the practice
of profession or conduct of trade or business carried on
by him as a sole proprietor or by a partnership of which
he is a member. Nonresident Filipino citizens, with respect to
income from without the Philippines, and nonresident aliens
not engaged in trade or business in the Philippines, are not
required to render a declaration of estimated income tax. The
declaration shall contain such pertinent information as the
Secretary of Finance, upon recommendation of the
Commissioner, may, by rules and regulations prescribe. An
individual may make amendments of a declaration filed during
the taxable year under the rules and regulations prescribed by
the Secretary of Finance, upon recommendation of the
Commissioner." (Emphasis supplied)
"SEC. 32. Gross Income. -
(A) General Definition. - Except when otherwise
provided in this Title, gross income means all income
derived from whatever source, including (but not limited to)
the following items:
(1) Compensation for services in whatever
form paid, including, but not limited to fees,
salaries, wages, commissions, and similar
items;
(2) Gross income derived from the conduct of
trade or business or the exercise of a
profession;
(3) Gains derived from dealings in property;
(4) Interests;
(5) Rents;
(6) Royalties;
(7) Dividends;
(8) Annuities;
(9) Prizes and winnings;
(1 0) Pensions; and
(11) Partner's distributive share from the net income
of the general professional partnership."
(Emphasis supplied)
It is clear from the foregoing that the prosecution is tasked to establish
the fact that the accused is one of those required to file a return on its income
for taxable year 2002 and that the accused is not one of those exempted from
filing the same. r
266
DECISION
CTA GRIM. CASE NOS. 0 -01 3 and 0 -015
Page 25 of 52
Based on the evidence adduced by the prosecution, it has been
sufficiently established that the accused is a Filipino citizen and a resident of
the Philippines.
59
It was further established that the accused is the
owner/sole proprietor of "Mendez Body and Face Salon and Spa" No. 31-B A.
Races Ave., Quezon City with TIN No. 120-644-683-000 as evidenced by a
Certificate of Registration issued by the Revenue District Officer Clavelina S.
Nacar of ROO No. 39-South Quezon City on May 6, 2002.
To further prove the existence and operation of the business of Dr.
Mendez during the subject taxable year, the prosecution presented a certified
true xerox copy of the contract of lease dated July 12, 2001 executed
between the Accused, as lessee and Ma. Lita Gregorio, as lessor, for the
period covering August 15, 2001 to August 14, 2007, for the purpose of
establishing a health clinic and art gallery located at 31 -G A. Races Ave.,
Quezon City.
For the taxable year 2002, accused was also found to have spent for
advertisement placements with PhiiStar Daily, Inc., the total amount of
P357,550.46 in the year 2001 and P1 ,385,108.78 in the year 2002. Also, a
list of Ad placements of accused's businesses in the names of "Weigh Less
Center", "Body and Face by Mendez", and "Mendez Medical Group" with a
total of sixty (60) ad placements in the year 2001 and two hundred thirty-five
(235) in the year 2002 was also presented by the prosecution as certified by
witness Perlita De Lara, the Chief Accountant of PhiiStar Daily, Inc. 5 jl-
59
60
Stipul ated during the pre-tri al conference, docket , p. 499; Exhibit "N".
Exhibit "P".
267
DECISION
CTA CRIM. CASE NOS. 0 -013 and 0 -015
Page 26 of 52
Moreover, the prosecution also presented a Certification from the
Philippine Daily Inquirer, indicating a total amount of P3,798,038.72 of gross
sales from the ad placements made by the Weigh Less Center advertising the
"Mendez Body and Face Spa", from which the amounts of P966,408.83 and
P1 ,702,871.41 , represents the gross sales from ad placements made during
the year 2001 and 2002, respectively. Said amounts were also reflected in the
Summary of Gross Sales to the Mendez Group of Companies for the year
2001 to 2003 attached to the certification issued by Mr. Jose H. Villareal
dated February 26, 2007. The said certification was also duly identified by Mr.
Villareal during trial.
In addition, the prosecution presented a copy of the advertisement of
Weigh Less Center published in the newspaper, The Philippine Star dated
September 24, 2001 . Even though the accused said that the newspaper
advertisements for 2001 and 2002 were made in preparation for his soon-to-
open business, nowhere in the advertisements would show that the
businesses advertised therein were not yet operational.
Likewise, the prosecution presented the letter-reply issued by Arabelle
0 . Petilla, Chief of the Records Section of the LTO Management Information
Division, as regards the various vehicles purchased during 1996, 2000, 2001 ,
2002, and 2003 and duly registered under the name of the accused.
61
Ms.
Petilla herself testified that the information contained therein was based on
the L TO Information Technology System database.
To further bolster its stance that the accused is earning income from
the year 2001 to 2003, the prosecution also presented the original copy of t h e ~
61
Exhibits "AA" to "AA-3".
268
DECISION
CTA CRIM. CASE NOS. 0 -013 and 0 -015
Page 27 of 52
Letter dated July 19, 2005 issued by Atty. Salvador A. Alcuino, Jr., Senior
Legal Counsel , Legal Affairs Department, Philippine Airlines, including the
Summary of Gross Fares paid by the accused for his travel abroad for taxable
years 2001, 2002 and 2003. In addition, a certification from the Bureau of
Immigration shows that accused Dr. Mendez made 41 travels 1995 to 2000;
five (5) foreign travels in 2001 ; five (5) foreign travels in 2002 and twenty-two
(22) foreign travels in 2003.
For its part, accused claims that although his business was registered
on May 6, 2002, the same was still not operational ; hence, there was no
income to declare for the year 2002. Also, Ms. Ma. Lita Gregorio, the lessor of
the 2-storey commercial building located at 31-G, A. Roces Avenue, Quezon
City, testified, among others, that the renovation of the said building was
completed only until in the later part of the year 2002 and that the operation of
the health clinic and art gallery was suspended due to lack of building permit.
The accused also added, during his cross-examination, that his source
of income in the year 2002 came from his brothers and that he had financial
problems from 1996 to 2002.
The accused tried to establish the impossibility of operation of his
Roces branch by attributing the non-operation to his building permit problem,
which was corroborated by the testimony of the lessor Ms. Lita Gregorio.
However, the statements made by Ms. Gregorio failed to show that the Roces
branch was not in operation in the year 2002. What Ms. Gregorio merely said
is that the operation was suspended, which could mean that the operation
already started, only that it was suspended due to the accused's problem with
building permit. Also, the testimony of the accused that there was operation Jk--
269
DECISION
CTA GRIM. CASE NOS. 0 -013 and 0 -015
Page 28 of 52
in the Races branch in 2004 despite problems with the said building permit
and the on-going renovation of the building only supports the arguments
presented by the prosecution of the possibility of operation in the year 2002.
The pertinent parts of the accused's testimonl
2
given during the hearing held
on July 6, 2009 reads:
62
"DR. MENDEZ
In particular branch, I think, that branch, your Honors, I'm
still in my rush to this program and it is still constructing the
area.
JUSTICE CASTANEDA
How many weeks did it take to prepare?
DR. MENDEZ
If you are referring, your Honors, to the Races branch, up
to now, we are still having a problem with the construction,
your Honors. With other branches, it takes me at least two
months to prepare the area. And usually, the mall is not
charging from that time, but you are supposed to pay
ahead of time.
ATTY. VELASCO
Q. Now, I understand you said that the Races branch is still
going renovation?
DR. MENDEZ
A. Construction.
ATTY. VELASCO
Q. Isn't it true that the construction is to add another floor to
the building?
DR. MENDEZ r
TSN, July 6, 2009, pp. 19-22.
270
DECISION
CTA CRIM. CASE NOS. 0 -013 and 0 -015
Page 29 of 52
A. Not, your Honors. This is like we have a pending case
under the Quezon City that we cannot proceed until it is
being done and all the building permits, your Honors. So, it
is not an additional floor because my roof na po sya.
Unless, we took up the roof and we will be adding another
floor. There is no another floor.
JUSTICE CASTANEDA
There is still a problem with the building permit?
DR. MENDEZ
Yes.
JUSTICE CASTANEDA
So, there is no occupancy in the building?
DR. MENDEZ
The way we are paying the rental , your Honors. We are
there. My staffs are there also.
ATTY. VELASCO
Q. Your staff is there, so, that means, even while the
construction is on-going, operations are also on-
going?
DR. MENDEZ
A. I'm referring to the staffs that are staying there right
now, your Honors/sir.
ATTY. VELASCO
Q. Are there business operations on-going there?
DR. MENDEZ
A. We seldom seek operations there right now, but we
are having, your Honor. I think, it is every Monday,
we are having there, and it's all on sale all the time. "
(Emphasis supplied)
The claims of the accused that he had no income during the year 2002
and that the business registered with the BIR during the year 2002 was not ~
271
..
DECISION
CTA CRIM. CASE NOS. 0 -013 and 0 -015
Page 30 of 52
yet operational in 2002 are further belied by his own admission during the
pre-trial conference and during the cross-examination. The significant parts of
the accused's testimonl
3
during the hearing held on July 6, 2009 are
hereunder quoted to wit:
"ATTY. VELASCO
Q. Now, as to the celebrity clients that you operated and
even before the opening of the business, you said in
your Supplemental Affidavit that just the same, these
are also advertisements for your soon-to-open
business?
DR. MENDEZ
A. Yes, sir.
ATTY. VELASCO
I
Q. And that you did not derive any source of income here
as this was more of an ex-deal?
DR. MENDEZ
A. Yes, sir."
At this juncture, it must be noted that an admission made by a party
may be given in evidence against him. Consequently, this very admission of
the accused that he rendered services to some celebrities in exchange for the
endorsement these celebrities will render in favor of his business actually
corroborates the prosecution's evidence that the accused earned income and
his business was operational in the year 2002.
With the foregoing pieces of evidence presented by the prosecution as
against the rather conflicting testimonies proffered for the defense, it may be ?z-
63
Ibid., pp. 25-26.
27 2
DECISION
CTA CRIM. CASE NOS. 0-013 and 0 -015
Page 31 of 52
inferred that the "Mendez Body and Face Spa" branch was already
operational even before its registration with the BIR.
Based on the foregoing circumstantial evidence presented by the
prosecution, it was proved that Dr. Mendez is the sole proprietor of the said
branch and that during the taxable year 2002, he was able to spend a large
amount of money on advertisements, purchas'e of vehicles, rent , and foreign
travels. It is thus concluded that the amount he used for such purchases and
expenditures came from his income earned from the practice of his profession
through the operation of his business for taxable year 2002. Accordingly, the
accused is deemed to be an individual required by law to file income tax
return on his income earned during taxable year 2002.
After establishing the fact that the accused is one of those required by
law to file income tax return, the prosecution now has the burden to prove that
the accused failed to make or file a return at the time required by law.
Section 51 (B) and (C)(1) of the NIRC of 1997, as amended, also
provides for the venue for the filing of the required income tax return and the
period within which to file the same to wit:
"SEC. 51 . Individual Return. -
XXX XXX XXX
(B) Where to File. - Except in cases where the
Commissioner otherwise permits, the return shall be filed with
an authorized agent bank, Revenue District Officer, Collection
Agent or duly authorized Treasurer of the city or municipality in
which such person has his legal residence or principal place of
business in the Philippines, or if there be no legal residence or
place of business in the Philippines, with the Office of the
Commissioner.
(C) When to File. - ~
273
DECISION
CTA CRIM. CASE NOS. 0 -013 and 0-015
Page 32 of 52
(1) The return of any individual specified above shall be
filed on or before the fifteenth (15th) day of April of each year
covering income for the preceding taxable year."
The prosecution has established that the principal place of business of
accused Dr. Mendez is the business address of his "Mendez Body and Face
Salon and Spa" in 31-B, A. Races Avenue, Quezon City, with TIN No. 120-
644-683-000 as indicated in his Certificate of Registration with the ROO No.
39-South Quezon City. Accordingly, its income tax return for taxable year
2002 should have been filed with ROO No. 39-South Quezon City.
However, based on the evidence presented by the prosecution, it was
found that the accused has no records of returns filed for taxable years 2001
and 2002 as certified by Revenue District Officer Clavelina S. Nacar of ROO
No. 39-South Quezon City in a Certification dated February 22, 2005.
64
In view thereof, this Court finds that the accused, despite earning
income from the operation of its Weigh Less Center branch, failed to file a
return for taxable year 2002.
Now as to the willfulness of the omission made by the accused, it was
mentioned in the Resolution of this Court dated August 15, 2008, which
denied the Demurrer to Evidence filed by the accused, that the term "willfully"
generally connotes a voluntary, intentional violation of a known legal duty. If a
taxpayer in good faith believes that certain income is not taxable and, acting
under such belief, does not include the amount received in his return, he does
not have willful intent required to be convicted of a tax crime.
The findings of this Court on the first two elements apparently show
that the accused willfully failed to file his r e t u r n . ~
64
Exhibit "G".
274
DECISION
CTA CRIM. CASE NOS. 0 -013 and 0 -015
Page 33 of 52
In essence, the accused claims that he did not earn any income during
taxable year 2002. This assertion was later disproved by the findings of this
Court and the result of the investigation of the BIR investigating team that the
accused actually has unreported income earnings for the taxable year 2002.
His purchases and expenditures such as the ad placements, rents and
purchase of vehicles undeniably prove that he has knowledge that he has
substantial income which was actually used to spend on the said purchases
and expenses. In effect , the accused's denial of his income earned in 2002
obviously connotes the attempt of the accused to conceal said income
earnings by not filing his income tax return. In addition, the accused's
habitual failure to file his income tax return for the years 2001 and 2002
despite findings that he was earning income during the said taxable years
clearly shows the willfulness of his non-filing of tax return for taxable year
2002. Consequently, this Court is convinced that the accused indeed willfully
failed to file his return for taxable year 2002.
This Court finds the circumstantial evidence adduced by the
prosecution sufficient to support a finding that the accused is guilty beyond
reasonable doubt of willful failure to file or make a return for taxable year
2002, in violation of Section 255 of the NIRC of 1997, as amended.
CRIMINAL CASE NO. 0-015
First Element:
He is a person required under this
code or by rules and regulations to
pay any tax, make a return, keep any
record, or supply correct and
accurate information ~
275
DECISION
CTA CRIM. CASE NOS. 0 -013 and 0 -015
Page 34 of 52
As earlier discussed, the prosecution has already established that the
accused is required by law to file a return and to declare all his income from
all sources.
Second Element:
He fails to supply correct and
accurate information at the time or
times required by law or rules and
regulation.
Anent the second element, the prosecution has the burden to prove
that the accused, as a duly registered taxpayer and as a sole proprietor of
various branches of Weigh Less Center, failed to supply the correct and
accurate information in his income tax return for taxable year 2003 due to his
failure to declare and indicate in his return a// his income from all sources for
taxable year 2003.
During the investigation, it was found that accused filed his income tax
return for taxable year 2003 with Revenue District Office No. 4-Calasiao,
Pangasinan, for his Mendez Weigh Less Center located at CSI City Mall ,
Lucao District, Dagupan City, as evidenced by the Certification dated
February 23, 2005 issued by Mr. Joseph M. Catapia, Revenue District Officer
of ROO No. 4. In the said Annual Income Tax Return submitted for taxable
year 2003, the accused declared a net loss of P38,893.91.
However, based on the documents gathered by the BIR Revenue
District Officers during the investigation, it was discovered that there are
several other branches registered with the BIR having the trade/business
names "Weigh Less Center", "Mendez Body and Face Salon and Spa" and fk-
276
DECISION
CTA GRIM. CASE NOS. 0 -013 and 0-015
Page 35 of 52
"Mendez Body and Face Skin Clinic" under the name of the accused Dr.
Mendez as the sole proprietor/owner. This fact was evidenced by the
Certifications issued by the duly authorized Revenue District Officers who
certified the registration of said branches with the BIR. The trade names and
addresses of the said branches are as follows:
a. Mendez Body and Face Salon and Spa - 31-B Races
Avenue, Quezon City, registered with ROO No. 39-South
Quezon City on May 6, 2002;
65
b. Mendez Body and Face Salon and Spa - B-3, 3/F New
Farmers Plaza, Cubao, Quezon C i t ~ , registered with ROO
No. 40-Cubao on October 24, 2003;
6
c. Mendez Body and Face Skin Clinic - The Plaza Building,
Greenbelt, Ayala Center, Makati City, registered with ROO
No. 47-East Makati on April 30, 2004;
67
d. Weigh Less Center - SM City, San Fernando, Pampanga,
registered with ROO No. 21-San Fernando, Pampanga on
January 17, 2003;
68
and
e. Mendez Weighless Center - 2/F CSI Mall, Lucao District,
Dagupan City, registered with ROO No. 4-Calasiao,
Pangasinan on May 16, 2003.
69
Also, the information obtained from the Department of Trade and
Industry revealed that accused Dr. Mendez has businesses registered under
his name as owner on May 26, 2003, July 31, 2003, and September 17, 2003,
proving that the accused made several investments in 2003.
It may be deduced from the foregoing that aside from the income
generated from the operation of the Dagupan branch, the accused earned jk-
65
66
67
68
69
Exhibit "0 ".
Exhibit "EEE".
Exhibit "RRR".
Exhibit "AAA".
Exhibit "MMM".
21'1
DECISION
CTA CRIM. CASE NOS. 0 -013 and 0 -015
Page 36 of 52
income from the operation of its other branches, which accused failed to
declare in 2003.
As previously mentioned, the prosecution was able to present evidence
regarding the accused's purchases and registration of various vehicles iri
1996, 2000, 2001 , 2002, and 2003, and his foreign travels in taxable years
2001 , 2002 and 2003; further proving that said branches of the businesses of
the accused were already earning income.
The prosecution also presented several lease contracts with the
accused's named as the lessee, including the lease contract of the building for
the Races branch, which were rented by the accused for the establishment of
its other branches and computed the corresponding rental expense to prove
that the foregoing branches of accused's businesses were already earning
mcome. The lease contracts presented also include the one between the
accused and The Plaza Inc., for the lease of its premises in The Plaza
Building, Greenbelt, Ayala Center, Makati Metro Manila; with a lease period
from September 1, 2003 to December 31 , 2005, entered by and between the
parties on July 17, 2003. The computation made by the investigating team on
the expenditure covering the said contract of lease yields the amount of
P510,000.00 as total rentals from the taxable year 2003. Also, the prosecution
was able to present the lease contract between the accused and SM Prime
Holdings, Inc., for the accused's rental of the lessor's premises in SM City
Pampanga with a lease period from October 15, 2002 until April 30, 2004.
70
Furthermore, the certified true copies of the various advertisement
placements for the Weigh Less Center branches made by the accused with tz-
70
Exhibit "H
6
-H
6
-
1
" .
278
DECISION
CTA CRIM. CASE NOS. 0 -013 and 0 -015
Page 37 of 52
different major publications, specifically, those evidencing the ninety-six
advertisements placed from January 6 to December 17, 2003 with the
PhiiStar Daily, Inc. were presented to prove that the accused was earning
income from taxable years 2001 to 2003 through the operation of his different
branches of Weigh Less Center, Body and Face Salon and Spa, and Face
Skin Clinic. Also, a Certification from the Vice President for Finance of the
Philippine Daily Inquirer shows that Weigh Less Center had advertising
placements for the year 2001 to 2003 with the Philippine Daily Inquirer and all
the gross sales amounting to P3,798,038.72 from the said ad placements
were reported with the BIR; the P1,128,758.48 of which represents the
amount of sales made to the Mendez Group of Companies for the year 2003.
Taking into consideration the bulk of circumstantial evidence proving
the accused's ability to spend on the foregoing expenditures and purchases
during the taxable year 2003, it can be concluded that the accused earned
substantial income during the said year.
Such findings that the accused earned substantial income for taxable
year 2003 clearly contradicts the declaration made by the accused in his
income tax return filed with ROO No. 4 that he suffered a net loss during
taxable year 2003. The said declaration of net loss by the accused is further
disproved by his own admission in his Supplemental Affidavit and his
testimony during cross-examination that he was able to put up several
branches and was able to spend over five million pesos on the same in Y--
279
DECISION
CTA CRIM. CASE NOS. 0 -013 and 0-015
Page 38 of 52
taxable year 2003. The pertinent statements of the accused during cross-
examination
71
are hereunder quoted as follows:
71
"ATTY. VELASCO
Q. How do you sustain yourself then in 2002 if you were not
given any money?
DR. MENDEZ
A. Well , some people are giving me money, my brothers.
ATTY. VELASCO
Q. How much?
DR. MENDEZ
A. Well , sometimes, they send 200 dollars, 300 dollars.
ATTY. VELASCO
Q. May we know who this brother is?
DR. MENDEZ
A. Dr. Hector Mendez, Dr. Oscar Mendez.
ATTY. VELASCO
Q. They are based in the United States?
DR. MENDEZ
A. In the United States.
ATTY. VELASCO
Q. Now, as you said, you are having financial problems from
1 996 to 2002 and that nobody gave you money in 2002
except Dr. Hector Mendez and Dr. Oscar Mendez
ranging from 200 to 300 dollars, how were you able to
spend more than 5 million in less than a year to put up all
these branches in 2003? flv-
Supra., at note 62, pp. 37-41 .
2SO
DECISION
CTA CRIM. CASE NOS. 0 -013 and 0 -015
Page 39 of 52
DR. MENDEZ
A. I did not mention that I'm having financial problem. Is that
your question? You mentioned that I'm having financial
problem.
ATTY. VELASCO
Q. Yes. You affirmed it on cross and it is stated in your
Judicial Affidavit.
DR. MENDEZ
A. May I see where that is?
ATTY. VELASCO
Q. In Question and Answer 9, it was pointed out to you that
the idea of putting up the clinics came up in 1996, but
because of the financial problems, you were only able to
put them up later and you even reiterated, even if we ask
the Stenographer to read it back ... (interrupted)
ATTY. CAABAY
May I object, your Honors.
JUSTICE ENRIQUEZ
The Public Prosecutor is not finished yet. Let him finish
first.
ATTY. VELASCO
Q. Even if the Court reads back what you said, you even
reiterated the term, yes, financial problems. So, the
question is, if you were having these financial problems
in 1996 to 2002, and in 2002, your parents did not give
you any money because they passed away, I'm sorry
about that , and that Dr. Oscar and Hector Mendez only
gave you 200/300 dollars for 2002, how were you able to
spend over five million and still going up to put up these
six (6) branches in a little over a year?
DR. MENDEZ
A. The financial problem I mentioned is my medical problem.
It's not a hard question. That's what I mentioned. If you
want me to read it again, I
281.
' I
DECISION
CTA GRIM. CASE NOS. 0 -013 and 0-015
Page 40 of 52
Moreover, if the accused claims that he suffered a net loss from the
operation of his Mendez Weigh Less Center Dagupan branch during taxable
year 2003, then the substantial income found to have been earned by the
accused during the same year can be attributed to the operation of his other
branches for taxable year 2003; which were not reflected in the Annual
Income Tax Return submitted by the accused for the same year.
Furthermore, verification of the tax records from the SIR Integrated Tax
System revealed that accused Dr. Mendez did not file his income tax returns
for taxable year 2003 on its income earned from these other branches.
The Certifications issued by the following Revenue District Officers
would show the failure of the accused to file his income tax returns for its
income earned from the operation of its branches located in A. Roces Ave,
Quezon City; Cubao, Quezon City; and San Fernando, Pampanga for taxable
year 2003:
72
73
74
75
a. Revenue District Officer Clavelina S. Nacar of ROO No.
39-South Quezon City - Certification dated February 22,
2005
72
'
b. Revenue District Officer Romeo E. Naranjo of ROO No.
40-Cubao, Quezon City - Certification dated March 7,
2005.7
3
'
c. Revenue District Officer Simplicia A. Madulara of ROO No.
47-East Makati dated March 2, 2005;
74
and
d. Revenue District Officer Florante R. Aninag of ROO No.
21 -San Fernando, Pampanga - Certification dated
February 22, 2005?
5
1---
Exhibit "G".
Exhibit "EEE".
Exhibit "RRR".
Exhibit "888".
282
DECISION
CTA CRIM. CASE NOS. 0 -013 and 0-015
Page 41 of 52
In view of the foregoing circumstances, the Court is convinced that the
prosecution was able to establish that the accused failed to supply the correct
and accurate information on its Annual Income Tax Return filed for taxable
year 2003 by making it appear that the operation of his Dagupan branch is his
only source of income during taxable year 2003.
Third Element:
Such failure is willful.
As regards the third element , this Court finds the failure of the accused
to supply the correct information in his return to be willful.
In case of People of the Philippines vs. Estelita Delos Angeles,
76
this
Court defined the term "willful " in this wise:
"Willful in the tax crimes statutes means a voluntary,
intentional violation of a known legal duty and bad faith or
bad purpose need not be shown [Mertens (Law of Federal
Income Taxation) Chapter 47.05, page 28, Volume 13, see
U.S. v. Green, 757 F2d 116, 85-1 USTC 9178 (CA 1985), in
which the Court, citing U.S. v. Moore, 627 F2d 830 (CA
1980) and U.S. v. Verkuilen, 690 F2d 648, 82-2 USTC 9618
(CA 7 1982), upheld the conviction of a tax protester for
willful failure to file returns]. "
In this case, the accused is considered to have knowledge that he has
the obligation to declare and file income tax return for taxes from all sources.
This may be confirmed by his act of filing his income tax return declaring his
income from the operation of his Dagupan branch. Notwithstanding said
knowledge of the operation of his other branches as well as his obligation to
file income tax return or at least consolidate and reflect his income from his
other branches in his income tax return filed in taxable year 2003, the tr-'
76
CTA Crim. Case No. 0 -027, November 25, 2009.
283
..
DECISION
CTA CRIM. CASE NOS. 0 -013 and 0 -015
Page 42 of 52
accused still failed to file his income tax return on his income from these other
Weigh Less Center branches for taxable year 2003; making it appear that his
only source of income was from the operation of his Weigh Less Center in
Dagupan City.
The accused attempted to justify the under declaration by blaming his
former accountant and book keeper, Mr. Richard Bianan, averring that Mr.
Bianan is the one who has not been remitting or paying to the BIR the sums of
money which he entrusted to him to pay his tax obligations. He further
identified documentary evidence to prove the alleged embezzlement of money
by Mr. Bianan which was intended for payment to the BIR, such as the checks
and vouchers he allegedly issued. The defense also presented a copy of the
Resolution of the Inquest Prosecutor dated March 15, 2005 and a copy of a
Memo of Preliminary Investigation with Affidavit of Complaint as proof that he
filed a case for Qualified Theft and Estafa, respectively, against Mr. Bianan.
However, as correctly pointed out by the prosecution in its
Memorandum, the said documents only show that Mr. Bianan took clinic
inventories, business and mayor's permit fees, and 2004 withholding tax
remittances of accused's employees. No evidence at all on the supposed
income tax payments for 2003, which is the subject of the present criminal
case.
Even conceding that the accused was made to believe by his then
accountant , Mr. Bianan, that he was able to comply with his tax obligations,
the same is not sufficient to prove that the failure of the accused to declare all
his income is not willful. Under the circumstances, the accused, despite
knowledge that he is earning from his other Weigh Less Center branches, ~
28 4
. .
DECISION
CTA CRIM. CASE NOS. 0 -013 and 0-015
Page 43 of 52
failed to inquire as to his compliance with his tax obligations. The accused
should have inquired if he was able to declare his income from his other
branches considering that the only income declared in his income tax return
for 2003 was for his income earned from the Dagupan branch. Such refusal
or failure of the accused to verify his compliance with his tax obligation
constitutes "willful blindness" on his part.
"Willful Blindness" is defined in Black's Law Dictionary as "deliberate
avoidance of knowledge of a crime, esp. by failing to make a reasonable
inquiry about suspected wrongdoing despite being aware that it is highly
probable." It "creates an inference of knowledge of the crime in question."
77
In this case, even if the allegations of the accused were true, his failure
to examine his income tax return for 2003 and verify whether the same
contains correct and accurate information would still render the commission of
the offense charged willful.
It must be emphasized that denials by the accused of the crimes herein
charged, while failing to provide clear and convincing evidence to support the
same, clearly deserve no weight and should not be given any probative value.
In the case of People vs. Baniega,
78
the Supreme Court had the
occasion to expound on the evidentiary weight of the denials made by the
accused which were unsubstantiated by clear and convincing evidence, to wit:
77
78
"Between the categorical statements of the
prosecution witnesses, on the one hand, and the bare denial
of accused-appellant, on the other hand, the former must
perforce prevail. An affirmative testimony is far stronger than
a negative testimony especially when the former comes from
the mouth of a credible witness. Alibi and denial, if not Jt-
People ofthe Philippines vs. Benjamin G. Kintanar, CTA Crim. Case No. 0 -030,
August 11 , 2010.
G.R. No. 139578, February 15, 2002, 377 SCRA 170.
285
..
DECISION
CTA CRIM. CASE NOS. 0-013 and 0-015
Page 44 of 52
substantiated by clear and convincing evidence, are
negative and self-serving evidence undeserving of
weight in law. It is considered with suspicion and always
received with caution, not only because it is inherently
weak and unreliable but also because it is easily
fabricated and concocted. "
79
(Emphasis supplied)
Even though the accused in this case tried to substantiate his denial of
the crimes charged against him by submitting evidence to prove his
innocence, an evaluation of the said evidence was later found by this Court to
have glaring inconsistencies. In this regard, the accused failed to show any
credible evidence to support his denial. Thus, denial by the accused of the
offense charged should not be given evidentiary weight.
The necessity for proof beyond reasonable doubt lies in the fact that
"(i)n a criminal prosecution, the State is arrayed against the subject; it enters
the contest with a prior inculpatory finding in its hands; with unlimited means
of command with counsel usually of authority and capacity, who are regarded
as public officers, and therefore as speaking semi-judicially, and with an
attitude of tranquil majesty often in striking contrast to that of defendant
engaged in a perturbed and distracting struggle for liberty if not for life. These
inequalities of position, the law strives to meet by the rule that there is to be
no conviction when there is a reasonable doubt of guilt.
80
However, proof beyond reasonable doubt does not mean such a
degree of proof as, excluding possibility of error, produces absolute certainty. Jt_
79
80
People vs. Baniega , ibid., at note 69, citing People vs. Crisanto, G.R. No. 120701 , June 19,
2001 , 358 SCRA 647.
People vs. Berroya, G.R. No. 122487, December 12, 1997, 283 SCRA 111 , 122 citing
Francisco, Evidence, 3'd. Ed. P. 577, citing Wharton's Criminal Procedure.
28G
DECISION
CTA GRIM. CASE NOS. 0 -013 and 0-015
Page 45 of 52
Suffice it to say that the law requires only moral certainty or that degree of
proof which produces conviction in an unprejudiced mind.
81
That the guilt of an accused must be proved beyond reasonable doubt
is the cardinal rule in our adversarial system of justice. Before he is convicted,
there should be moral certainty - a certainty that convinces and satisfies the
reason and conscience of those who are to act upon it.
82
After careful consideration of the testimonial and documentary
evidence presented by both parties, this Court finds that the prosecution was
able to estab'lish the guilt of the accused beyond reasonable doubt of the
crimes charged in these consolidated cases for violation of Section 255 of the
NIRC of 1997, as amended.
As to the civil aspect of these consolidated cases, the same is deemed
instituted herewith pursuant to Section 7(b)(1) of Republic Act No. 9282,
which provides that "criminal action and the corresponding civil action for the
recovery of civil liability for taxes and penalties shall at all times be
simultaneously instituted with, and jointly determined in the same proceeding
by the CTA, the filing of a criminal action being deemed to necessarily carry
with it the filing of the civil action, and no right to reserve the filing of such civil
action separately from the criminal action will be recognized."
The Computations of Deficiency Tax for Taxable Years 2002 and 2003
presented by the prosecution to prove accused's civil liabilities for taxable
years 2002 and 2003 are illustrated as follows: r
81
82
Ibid., citing People vs. Gapasan, 243 SCRA 53 [1995] .
People vs. Abujan, G.R. No. 140870, February 11 , 2004, 422 SCRA 449, 457 citing People vs.
Canedo, G.R. No. 128382, July 5, 2000, 335 SCRA 81 , 99 citing U.S. vs. Reyes, 3 Phil. 3, 6
(1903) .
287.
.
DECISION
CTA GRIM. CASE NOS. 0-013 and 0 -015
Page 46 of 52
I. Computation of Deficiency Tax for Taxable Year 2002
83
1. ADVERTISEMENTS

Philippine Star (Exhibits "R" to "R-7")

Philippine Daily Inquirer (Exhibit "Z
5
" )
2. RENTALS

Races branch (Exhibits "N" to "N-5")
(P27,000 x 12 months)

SM City Pampanga (Exhibits "H
6
" to "H
6
-1")
-(P400/sq.m. x 205.64 sq.m. x 2 Y2 months)
P205,640.00
-security deposit (Oct. 15, 2002)
493,536.00

Total SM City Pampanga branch
3. HONDA CR-V (Exhibit "PP")

Plate No. JCM-707
Honda Cars Makati, Inc.
Invoice No. 030252 dated April 30, 2002
4. FOREIGN TRAVEL

Philippine Airlines (Exhibits "Z" to "Z-1 0")
MLAIHKIMLA (2/12/2002)
Ticket No. 079-3621239887
US$ 397 at P53.51/dollar
TOTAL
Less: Source of Funds
Adjusted Gross Income
Less:

Personal Exemption (Single) P20,000.00

1 0% Optional Standard Deduction
503,735.34

Total Deductions
Corrected Taxable Income
Less: Reported Taxable Income
UNREPORTED TAXABLE INCOME
Tax Due Thereon

P500,000.00

P4,013,618.09 X 32%
2002 DEFICIENCY INCOME TAX (BASIC)
II. The Computation of Deficiency Tax for Taxable Year 2003
84
83
84
1.


2.




ADVERTISEMENTS
Philippine Star (Exhibits "R" to "R-7")
Philippine Daily Inquirer (Exhibit Z
5
" )
RENTALS
Races branch (Exhibits "N" to "N-5")
(P27,000 x 12 months)
The Plaza Bldg., Greenbelt branch
(Exhibits "Ill " to 111-15")
-(P75,000.00 x 4 months)
P300,000.00
-security deposit
210,000.00
Total Greenbelt branch
SM City Pampanga branch
(Exhibits "H
6
" to "H
6
-1")
Exhibit "J
6
-4".
Exhibit "J
6
-5" to "J
6
-6".
288
P1,385,108.78
1,702,871.41
324,000.00
699,176.00
909,950.00
I
21,247.24
P5,037,353.43
NONE
5,037,353.43
(523,735.34)
4,513,618.09
NONE
P4,513,618.09
P125,000.00
1,284,357.79
P1 ,409,357. 79
P703,221 .75
1,128,258.48
324,000.00
510,000.00
~
. .
DECISION
CTA CRIM. CASE NOS. 0 -013 and 0 -015
Page 47 of 52
-(P400/sq.m. x 205.64 sq.m x 10 months)
(January to October 2003)
-(P440/sq.m. x 205.64 sq.m. x 2 months)
(November to December 2003)

Total SM City Pampanga branch
3. CAPITAL INVESTMENTS

Capital per DTI (Races Branch)
(Exhibit "ZZ")

Capital per DTI (Farmer's branch)
(Exhibit "ODD")

Capital per DTI (Greenbelt branch)
(Exhibit "HHH")

Capitalization- Dagupan branch
(Exhibits "NNN" to "NNN-15")

Total Capital Investment
4. HONDA CR-V (Exhibit "LLL")

Plate NO. XLF-1 05
Honda Cars Bal intawak, Inc.
Invoice No. 24775 dated October 24, 2003
5. FOREIGN TRAVEL

Philippine Airlines (Exhibits "Z" to "Z-10")
a. MLAIHK!MLA
Ticket No. 079-912975719
October 2, 2003
b. MLAIBKK!MLA
Ticket No. 079-9129518586
August 2, 2003
us $317
c. MLA!BKKIMLA
Ticket No. 079-3622218396
April 3, 2003
us $345
d. BKKIMLA
Ticket No. 079-913053921 0
Baht

Total foreign Travels
TOTAL
Less: Source of Funds
Adjusted Gross Income
Less:

Personal Exemption (Single)

Net Loss per Return
(Exhibits "NNN" to "NNN-15")

Total Deductions
Corrected Taxable Income
Less: Reported Taxable Income
UNREPORTED TAXABLE INCOME
Tax Due Thereon

P500,000.00
P5,108,295.14 X 32%
2003 DEFICIENCY INCOME TAX (BASIC)
289
822,560.00
180,963.20
1,003,523.20
45,000.00
50,000.00
45,000.00
750,000.00
890,000.00
1,035,500.00
21 ,855.00
17,432.27
18,218.35
15,180.00
72,685.62
P5,667,189.05
NONE
5,667,189.05
P20,000.00
38,893.91
(58,893.91)
5,608,295.14
NONE
P5,608,295.14
P125,000.00
1,634,654.44
P1,759,654.44
fv
..
DECISION
CTA GRIM. CASE NOS. 0 -013 and 0 -01 5
Page 48 of 52
According to the prosecution, the foregoing amount of alleged civil
liabilities were arrived at by utilizing the net worth and expenditures method.
The prosecution maintains that the said method had to be resorted to since
accused did not present his books and accounting records in compliance with
the Letter of Authority, First Letter-Notice, Second Letter-Notice and Final
Request for Presentation of Records served by the 81R Investigating Team.
The prosecution cited as its basis Sections 5(8) and 6(8) of the National
Internal Revenue Code, as amended.
"SEC. 5. Power of the Commissioner to Obtain
Information, and to Summon, Examine, and Take Testimony
of Persons. - In ascertaining the correctness of any return, or
in making a return when none has been made, or in
determining the liability of any person for any internal revenue
tax, or in collecting any such liability, or in evaluating tax
compliance, the Commissioner is authorized:
XXX XXX XXX
(B) To obtain on a regular basis from any person other
than the person whose internal revenue tax liability is subject
to audit or investigation, or from any office or officer of the
national and local governments, government agencies and
instrumentalities, including the Bangko Sentral ng Pilipinas
and government-owned or controlled corporations, any
information such as, but not limited to, costs and volume of
production, receipts or sales and gross incomes of taxpayers,
and the names, addresses, and financial statements of
corporations, mutual fund companies, insurance companies,
regional operating headquarters of multinational companies,
joint accounts, associations, joint ventures or consortia and
registered partnerships, and their members;
XXX XXX XXX
SEC. 6. Power of the Commissioner to Make
Assessments and Prescribe Additional Requirements for Tax
Administration and Enforcement. -
XXX XXX
XXX r
290
DECISION
CTA CRIM. CASE NOS. 0 -013 and 0 -015
Page 49 of 52
(B) Failure to Submit Required Returns, Statements,
Reports and other Documents. - When a report required by
law as a basis for the assessment of any national internal
revenue tax shall not be forthcoming within the time fixed by
laws or rules and regulations or when there is reason to
believe that any such report is false, incomplete or erroneous,
the Commissioner shall assess the proper tax on the best
evidence obtainable.
In case a person fails to file a required return or other
document at the time prescribed by law, or willfully or
otherwise files a false or fraudulent return or other document,
the Commissioner shall make or amend the return from his
own knowledge and from such information as he can obtain
through testimony or otherwise, which shall be prima facie
correct and sufficient for all legal purposes."
From the foregoing provision cited by the prosecution, it is clear that
the best evidence obtainable may be resorted to in making an assessment of
the proper tax. However, in this case, there was no showing that an
assessment was made by the BIR on the accused's deficiency tax for the
taxable years 2002 and 2003. What the prosecution provided are mere
computations of the alleged tax deficiencies of the accused for the taxable
year 2002 and 2003.
While it is true that the foregoing approximation of the alleged income
earned by the accused for taxable years 2002 and 2003 were relied upon by
this Court in finding the accused guilty beyond reasonable doubt of the crimes
charged in the information, the said computation made by one of the Revenue
Officers who took part in the investigation of the accused's unreported income
may not be used as basis to impose the civil liabilities prayed for by the
prosecution. r
29 1
DECISION
CTA CRIM. CASE NOS. 0 -01 3 and 0 -015
Page 50 of 52
In the case of Ungab vs. Cusi, Jr.,
85
the Supreme Court said:
"While there can be no civil action to enforce collection
before the assessment procedures provided in the Code have
been followed, there is no requirement for the precise
computation and assessment of the tax before there can be a
criminal prosecution under the Code."
86
Plainly, an assessment of the tax before there can be a criminal
prosecution is not necessary. Whereas, in case of a civil action for collection
of the tax, the assessment procedures provided by the NIRC of 1997, as
amended, should be complied with.
Accordingly, considering that there was no assessment issued by the
BIR against the accused, the foregoing computations presented by the
prosecution to prove the civil liabilities of the accused for the taxable years
2002 and 2003 may not be used by this Court as its basis to impose the civil
liabilities prayed for by the prosecution. Therefore, a proper determination of
the civil liabilities for the non-payment of tax based on the computations
submitted by the prosecution may not be achieved.
Moving on to the ascertainment of the penalties to be imposed, this
Court found instructive the pertinent portion of Section 255 of the NIRC of
1997, as amended, which reads:
85
86
"SEC. 255. Failure to File Return, Supply Correct and
Accurate Information, Pay Tax, Withhold and Remit Tax and
Refund Excess Taxes Withheld on Compensation. - Any
person required under this Code or by rules and regulations
promulgated thereunder to pay any tax, make a return, keep
any record , or supply correct and accurate information, who
willfully fails to pay such tax, make such return, keep such
record, or supply correct and accurate information, or withhold
or remit taxes withheld, or refund excess taxes withheld on
compensation, at the time or times required by law or rules jk-
G.R. No. L-41919-24, May 30, 1980, 97 SCRA 877.
Ibid., 883-884.
292
DECISION
CTA GRIM. CASE NOS. 0 -013 and 0 -01 5
Page 51 of 52
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 (P1 0,000) and
suffer imprisonment of not less than one (1) year but not
more than ten (1 0) years."(Emphasis supplied)
Here, since there are two Informations filed against the accused,
docketed as CTA Grim. Case Nos. 0 -013 and 0 -015, one for the failure to file
income tax return for taxable year 2002 and the other for failure to supply the
correct and accurate information in the return for taxable year 2003,
respectively, the imposition of a fine of P1 0,000.00 for each case is proper.
Furthermore, the imposition of the indeterminate penalty of imprisonment of
one (1) year as minimum, to two (2) years as maximum for each crime
charged was also found to be proper under the circumstances. This, however,
is without prejudice to Section 280 of the NIRC of 1997, as amended, which
provides for the imposition of subsidiary penalty in the event that the accused
has no property with which to meet the fine imposed upon him by the Court or
is unable to pay such fine.
WHEREFORE, premises considered, judgment is hereby rendered:
1. In Criminal Case No. 0 -013, finding the accused Joel Cortez
Mendez GUll TV beyond reasonable doubt for violation of
Section 255 of the National Internal Revenue Code of 1997, as
amended, and is hereby SENTENCED to suffer an
indeterminate penalty of one (1) year, as minimum, to two (2)
years, as maximum, and is ORDERED TO PAY a fine in the
amount of P1 0,000.00, with subsidiary imprisonment in case
accused has no property with which to meet such fine, pursuant
to Section 280 of the NIRC of 1997, as amended; and
2. In Criminal Case No. 0 -015, finding the accused Joel Cortez
Mendez GUll TV beyond reasonable doubt for violation of
Section 255 of the National Internal Revenue Code of 1997, as
amended, and is hereby SENTENCED to suffer an
indeterminate penalty of one (1) year, as minimum, to two (2)
years, as maximum, and is ORDERED TO PAY a fine in the
amount of P1 0,000.00, with subsidiary imprisonment in case jh-
293
' T
DECISION
CTA CRIM. CASE NOS. 0-013 and 0-015
Page 52 of 52
accused has no property with which to meet such fine, pursuant
to Section 280 of the NIRC of 1997, as amended.
SO ORDERED.
WE CONCUR:
(With
CAESAR A. CASANOVA
Associate Justice
C2.. ..
Aiu.ANYro C. . .
Associate Justice
WU: t.J.
CIELITO N. MINDARO-GRULLA
Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision were reached in
consultation before the case was assigned to the writer of the opinion of the
Court's Division.
<;;)..
.fiiANITO C.
Associate Justice
Chairperson
CERTIFICATION
Pursuant to Article VIII , Section 13 of the Constitution, and the Division
Chairperson's Attestation, it is hereby certified that the conclusions in the
above Decision were reached in consultation before the case was assigned to
the writer of the opinion of the Court.
294
Q__.
ERNESTO D. ACOSTA
Presiding Justice
..
REPUBLIC OF THE PHILIPPINES
Courtol Tixlppeals
QUEZON CITY
SECOND DIVISION
PEOPLE OF THE PHILIPPINES, CTA CRIM. CASE NO. 0-013
-versus-
JOEL C. MENDEZ,
Plaintiff, For: Violation of Section 255 of R.A. No.
8424
Accused.
X -- - -- -- -- - ---- ----- -- ---X
PEOPLE OF THE PHILIPPINES,
-versus-
JOEL C. MENDEZ,
Plaintiff. CTA CRIM. CASE NO. 0 -015
1
For: Violation of Section 255 of R.A. No.
8424
Members:
CASTANEDA, JR. , Chairperson
CASANOVA, and
MINDARO-GRULLA, JJ.
Accused. Promulgated:
JAN 0 5 20\\
L
11 111
X -------------------------------------------------------------------------------------------------------------X
DISSENTING OPINION
CASANOVA, J:
With due respect to my esteemed colleagues, I dissent as to the finding that the
accused is guilty beyond reasonable doubt for willful failure to file his income tax return
(ITR) for the taxable year 2002 and his willful failure to supply correct and
295
.
DISSENTING OPINION
Criminal. Case Nos. 0 -013 & 0 -015
Page 2 of 32
information in his ITR for the taxable year 2003, both in violation of Section 255 of the
Republic Act (R.A.) No. 8424 (NIRC) .
I am dissenting from the majority opinion for the following reasons:
1. The Court does not have jurisdiction over the instant
cases. Both Informations filed against the accused state an
ESTIMATED AMOUNT, thus due to the lack of certainty in the
amount alleged in both Informations, it is impossible to determine
which Court has jurisdiction over these two cases.
2. The accused Dr. Joel Mendez was not identified in open
court by the prosecution witnesses.
3. The prosecution was not able to prove beyond reasonable
doubt, the amount of the alleged tax deficiency.
4. The amounts stated in both Informations are bloated or
swelled, thus cannot be relied upon.
5. There are circumstances that raised grave and serious
doubts about the truthfulness and credibility of prosecution witnesses'
story. Some witnesses are not competent to attest to the truth of the
matters on which they are testifying.
The records of the case, provides, among others, that:
"THE CHARGE"
Accused Joel C. Mendez is charged before this Court with the crime of Violation
of Section 255 of Republic Act (R.A.) No. 8424, otherwise known as the "Tax Reform
Act of 1997", as amended, under the following Amended Informations, which read as
follows:
"INFORMATION"
Criminal Case No. 0-013
"That on or about the 15th day of April 2003, at Quezon City,
and within the jurisdiction of this Honorable Court, the above-named
accused, a duly registered taxpayer, and sole proprietor of ' W e i g h ~
296
DISSENTING OPINION
Criminal. Case Nos. 0-013 & 0-015
Page 3 of 32
Less Center' , 'Mendez Body and Face Salon and Spa', and 'Mendez
Body and Face Skin Clinic', with principal office at No. 31 Roces
Avenue, Quezon City, and with several branches , in Quezon City,
Makati City, San Fernando, Pampanga and Dagupan City, did then
and there, willfully, unlawfully and feloniously, fail to file his income tax
return (ITR) with the Bureau of Internal Revenue for taxable year 2002,
to the damage and prejudice of the Government in the estimated
amount of P1 ,522, 152.14, exclusive of penalties, surcharges and
interest.
CONTRARY TO LAW."
Criminal Case No. 0 -015
"That on or about the 15th of April 2004, at Dagupan City, and
within the jurisdiction of this Honorable Court, the above-named
accused, a duly registered taxpayer, and sole proprietor of 'Weigh Less
Center', 'Mendez Body and Face Salon and Spa' , and 'Mendez Body
and Face Skin Clinic', with several branches in Quezon City, Makati
City, San Fernando, Pampanga and Dagupan City, engaged in the
business of cosmetic surgery and dermatology, willfully, unlawfully and
feloniously, did then and there, fail to supply correct and accurate
information in his income tax return (ITR) for taxable year 2003 filed in
the Revenue District of Calasiao, Pangasinan, by making it appear
under oath that his income for taxable year 2003 was derived mainly
from his branch in Dagupan City, and failing to declare his consolidated
income from his other 'Weigh Less Center' , 'Mendez Body and Face
Salon and Spa', and 'Mendez Body and Face Skin Clinic' branches, to
the damage and prejudice of the Government in the estimated amount
of P2, 107,023.65, exclusive of penalties, surcharges and interest. '
CONTRARY TO LAW. "
To briefly narrate the facts of the instant cases, the records showed that Warrants
of Arrest against the accused in Criminal Case Nos. 0-013 and 0 -015 was issued by
this Court . The accused voluntarily surrendered before this Court and posted the
required bail bond for his provisional liberty, by way of cash bonds. Upon arraignment in
both cases, accused entered a plea of "Not Guilty" to the crimes charged.
During pre-trial , CTA Crim. Case No. 0-013 and CTA Crim. Case No. 0-015
were consolidated as per agreement by the parties. Trial proceeded, wherein the$
297
DISSENTING OPINION
Criminal. Case Nos. 0 -013 & 0 -015
Page 4 of 32
prosecution presented both testimonial and documentary evidence. The prosecution
called its twenty (20) witnesses to the witness stand.
The accused filed his "Demurrer to Evidence", which the Court denied in a
Resolution.
Thereafter, the defense presented its evidence, calling to the witness stand its
three (3) witnesses. In addition, the defense presented its documentary evidence.
After the Court received the respective Memorandum of the parties, a Resolution
was issued submitting the case for decision.
THE EVIDENCE PRESENTED BY THE PROSECUTION
The prosecution presented the following witnesses:
I. ATTY. GRACE BELARMINO-CRUZ
Atty. Belarmino-Cruz, the first witness for the prosecution,
testified that she is a Revenue Officer assigned at the National
Investigation Division (" NID") of the Bureau of Internal revenue ("BIR")
and among her functions are the following: (a) to audit and investigate
books of accounts and other accounting records of taxpayers for
internal revenue purposes and to submit corresponding reports
thereon; and (b) to investigate individuals and entities that may have
committed violation of tax laws and recommend criminal prosecution
of violators. She further testified that pursuant to a Memorandum dated
September 8, 2004 issued by their NID Chief, Atty. Arnel Guballa,
referring the case of Dr. Joel Mendez for alleged non-issuance of
official receipts, she, together with others, conducted an investigation
on Dr. Mendez, a medical practitioner in the field of bariatric medicine
and other beauty and cosmetic services, and on the basis of their initial
findings, caused the issuance of a Letter of Authority ("LOA") No.
00002438 dated November 8, 2004, authorizing the examination of the
books of accounts and other accounting records of Dr. Mendez for the
period covering the taxable years 2001 , 2002 and 2003. Pursuant to
the LOA, a First Letter-Notice for the production of books of accounts
and other accounting records was served and duly received by the
authorized representative of Dr. Mendez. Despite the receipt of the
First Letter-Notice, Dr. Mendez did not submit the required documents,
hence a Second Letter-Notice and thereafter, a Final Request for the
presentation and/or production of required records/documents w e r e ~
298
DISSENTING OPINION
Criminal. Case Nos. 0 -013 & 0 -015
Page 5 of 32
served upon Dr. Mendez and were duly received by his authorized
representatives.
Atty. Belarmino-Cruz further stated that due to the failure of Dr.
Mendez to present or produce the needed records and documents for
examination, their team was constrained to proceed with the
investigation using "Third Party Information" and pursuant to the "Best
Evidence Obtainable Rule" allowed under Section 5 (B) , in relation to
Section 6 (A) and (B) of the Tax Code. The investigation team then
gathered information on the accused, verifying certain data and
information from different government agencies and private entities.
Verification of the business activities of Dr. Mendez revealed that he
has been operating as a single proprietor doing business for the taxable
years 2001 , 2002 and 2003 under the following trade names and
businesses:
a. Mendez Body and Face Salon and Spa
No. 31-B Races Avenue, Quezon City
Registered with ROO No. 39 - South Quezon City on May 6, 2002
b. Mendez Body and Face Salon and Spa
B-3 3/F New Farmer's Plaza, Cubao, Quezon City
Registered with ROO No. 40 - Cubao on October 24, 2003, with
business permit from the Office of the Mayor of Quezon City earlier
issued on September 15, 2003 covering the said branch.
c. Mendez Body and Face Skin Clinic
The Plaza Building, Greenbelt, Ayala, Makati City
Registered with ROO No. 47- East Makati on April 30, 2004
d. Weigh Less Center
SM City, San Fernando, Pampanga
Registered with ROO No. 21 - San Fernando, Pampanga on
January 17, 2003
e. Mendez Weigh Less Center
2/F CSI Mall , Lucao District, Dagupan City
Registered with ROO No. 4 - Calasiao, Pangasinan on May 16,
2003
The testimony of Atty. Belarmino-Cruz further stated that the
verification of the tax records from the BIR Integrated Tax System
("ITS") revealed that Dr. Mendez did not file his income tax returns for
the taxable years 2001 and 2002, as evidenced by the following

299
DISSENTING OPINION
Criminal. Case Nos. 0-013 & 0-015
Page 6 of 32
a. Certification of Revenue District Clavelina S. Nacar of ROO No. 39
-South Quezon City dated February 22, 2005;
b. Certification of Revenue District Officer Romeo E. Naranjo of ROO
No. 40- Cubao, Quezon City dated March 7, 2005;
c. Certification of Revenue District Officer Simplicia A. Madulara of
ROO No. 49- East Makati dated March 2, 2005;
d. Letter-certification of Revenue District Officer Florante R. Aninag of
ROO No. 21 -San Fernando, Pampanga dated February 22, 2005;
e. Certification of Assistant Commissioner Alberto A. Pio de Roda,
Information Systems Operation Service dated February 28, 2005;
A Certification from Alex C. Perez, Chief of Document
Processing Section of Revenue District No. 39 - South Quezon City
dated March 9, 2005 stating that as per inquiry with the BIR ITS, there
is no record on file of the Annual Income Tax Return of Dr. Mendez for
the taxable years 1995-2000, was likewise obtained by the team of
Atty. Belarmino-Cruz. Furthermore, the investigation showed that Dr.
Mendez filed his Annual Income Tax Return for the taxable year 2003
with Revenue District Office No. 4- Calasiao, Pangasinan for his Weigh
Less Center located at the CSI City Mall , Lucao District , Dagupan
City, as evidenced by a Certification dated February 23, 2005 issued
by Mr. Joseph Catapia, Revenue District Officer - ROO No. 4, despite
of the existence of his principal place of business at 31 Races Avenue,
Quezon City. In her testimony, Atty. Belarmino-Cruz further stated that
their team was able to establish that the filing of Dr. Mendez of his
income tax return with ROO No. 4 was irregular and was intended to
evade payment of correct taxes since Dr. Mendez, a single proprietor
of different businesses, is required to file a consolidated income tax
return. Moreover, the non-filing of Dr. Mendez of his income tax returns
for the taxable years 2001 and 2002 was willful and done with
deliberate to evade payment of taxes considering that Dr. Mendez has
been operating several business for income and making capital
investments since 1993.
Atty. Belarmino-Cruz testified that the verification with the
records of the Securities and Exchange Commission revealed that Dr.
Mendez has been engaged in the practice of his profession since 1996
through Weigh Less Center Co., a registered as a Partnership on
September 23, 1996. Their investigation further revealed that as early
as 1993, Dr. Mendez made investments in the following business: (a)
Sabili Mendez Medical Services Co.( 1993); (b) Mendez Medical
Services Co.(1996); (c) Dr. Mendez Industrial and Lying-in Clinic Ltd.
Co.(1996); (d) Primehealth Card Services, Incorporated (1994); (e) O r ~
300
DISSENTING OPINION
Criminal. Case Nos. 0-013 & 0-015
Page 7 of 32
Cup, Co. (1996) ; (f) Oro Glass and Aluminum Supply Ltd., Co. (1996) ;
(g) The New Millenium Network Ltd. Co. (1996) ; and (h) The Big and
Small Art, Co.(2001 ).
The investigation also showed that advertisements of Mendez
Medical Group Weigh Less Center located at Greenbelt, Makati City
stated that the Dr. Mendez has been practicing since 1996.
The team was also able to obtain a copy of the Lease Contract
between Miss Lita Gregorio, lessor and Dr. Mendez, lessee, executed
on the former's property located at Races Avenue, Quezon City, where
the health clinic and art gallery of Mendez was located. The said lease
contract was found to cover the period August 2001-August 2007.
Likewise, a Certification from the Mr. Caballero, the Chief Accountant
of The Plaza, on the Lease Contract executed between The Plaza,
Inc., lessor and Dr. Mendez, lessee, covering the period September
2003-December 2005, on the former's property located at Greenbelt,
Makati City, which is being used by the latter as an out-patient derma
clinic, was also obtained by the team.
Atty. Belarmino-Cruz's testimony also stated that the
investigating team was able to obtain information from PhiiSTAR Daily,
Inc. that Dr. Mendez has placed a total of sixty (60) advertisements of
his different businesses with the Philippine Star from April 16 to
October 31 , 2001 , two hundred thirty-five (235) advertisements from
January to December 18, 2002 and ninety-six (96) advertisements
from January 6, 2003 to December 17, 2003, thus establishing that the
businesses of Dr. Mendez were in operation during those years, and
thus he was earning income from the said establishments.
The investigating team also obtained information from the
Department of Trade and Industry that the following businesses were
registered under the name of Dr. Mendez: (a) Mendez Body and Face
Salon & Spa; (b) Mendez Body and Face Salon & Spa-Farmers
Branch; and (c) Mendez Body and Face Skin Clinic.
Atty. Belarmino-Cruz further testified that her team also
obtained certification from the Land Transportation Office as to the
various vehicles purchased by Dr. Mendez during 1996, 2000, 2001 ,
2002 and 2003, duly registered under his name. Certified true copies
of the certificates of registration, official receipts, vehicle sales invoice,
confirmation certificate, deed of sale, promissory note and certification
covering the said vehicles were also obtained by the team.
Also, the testimony of Atty. Belarmino-Cruz stated that her team
gathered information from the Bureau of Immigration and Philippine
Airlines regarding the foreign travels of Dr. Mendez for the years 1 9 9 ~
301
I
DISSENTING OPINION
Criminal. Case Nos. 0 -013 & 0 -015
Page 8 of 32
2003, which reached a total of seventy-three (73) trips. Certified copies
of plane tickets from Philippine Airlines which were paid by the
accused in connection with these travels were likewise obtained by the
team.
Moreover, the team obtained information on the purchase of Dr.
Mendez of a condominium unit at One Wilson Place Condominium in
San Juan, Metro Manila.
Finally, Atty. Belarmino-Cruz stated that on the basis of the data
and documentary evidence that they gathered, they computed the
estimated amount of income that Dr. Mendez earned for the taxable
years 2001 , 2002 and 2003 based on his net worth and expenditures.
Applying these methods, the investigating team computed that Dr.
Mendez earned income from various sources but did not report the
same to the prejudice of the government for the taxable years 2001 ,
2002 and 2003.
II. MISS CLAVELINA S. NACAR
Miss Clavelina S. Nacar, the prosecution's second witness,
testified that as part of her functions as the incumbent Revenue District
Officer of Revenue District Office No. 39, South Quezon City, she
issued a Certified Copy of the Certificate of Registration OCN
3RC0000327953 dated May 6, 2002 in the name of Mendez, Joel
Cortez, under the trade name Mendez Body and Face Salon & Spa.
She further testified that she caused the issuance of a Certification
dated February 22, 2005, which substantially states that upon
verification with the BIR Integrated Tax Systems ("ITS"), it was shown
that the taxpayer Mendez has filed its registration on May 6, 2002 and
that he has no records of returns filed for taxable years 2001 , 2002 and
2003 as of the issuance of the Certification. Lastly, she stated that she
also issued a Certification dated October 18, 2006, stating that per ITS,
Dr. Mendez registered the following:
TIN
120-644-
683-000
120-644-
683-004
120-644-
683-005
BUSINESS
NAME
JOEL C.
MENDEZ, M.D.
MENDEZ BODY
AND FACE
SALON & SPA
MENDEZ BODY
AND FACE
SALON & SPA
MENDEZ BODY
AND FACE
SALON & SPA
ADDRESS DATE
REGISTERED
# 31 Roces 05/06/02
Avenue, QC
#31 -B Roces 1 0/24/03
Avenue, QC
#18 V. Luna 03/30/04
Rd, Brgy
Pinyahan, QC ~
30 2
STATUS
Professional
Single
Proprietor
Single
Proprietor
Single
Proprietor
DISSENTING OPINION
Criminal. Case Nos. 0 -013 & 0-015
Page 9 of 32
Ill. MR. ROMEO NARANJO
Mr. Romeo Naranjo, the prosecution's third witness, testified
that he is the incumbent Revenue District Officer of Revenue District
Office No. 40, Cubao, Quezon City and that as part of his functions as
such, he caused the issuance of Certificate of Registration OCN
3RC0000345927 dated October 24, 2003 in the name of Mendez, Joel
Cortez, under the trade name of Mendez Body and Face Salon & Spa-
Farmers. He also stated that he issued a Certification dated March 7,
2005, which says that according to the records of the BIR, Dr. Mendez,
with TIN 120-644-683-003 and business address at B-3 3rd Fir. New
Farmer's Plaza, Cubao, Quezon City was registered as a branch with
ROO 40 on October 24, 2003 and that the said taxpayer has not filed
any return except for the Payment Form for Registration Fee for the
year 2004. Finally, Mr. Naranjo testified that he caused the issuance of
a Certification dated October 17, 2006 which substantially states that
Dr. Mendez was registered as an individual/sole proprietor under the
trade name Mendez Body & Face Salon & Spa-Farmers and is liable
only to pay Annual Registration Fee as the tax type of his registered
activity.
IV. MR. ALEX PEREZ
Mr. Alex Perez, the prosecution's fourth witness, testified that as
the Documentary Processing Section Chief of the Revenue District
Office No. 39, South Quezon City, he is authorized to issue
certifications as to the status of the taxpayers within his area of
jurisdiction. He further testified that he caused the issuance of the
following certifications: (a) Certification dated March 9, 2005, stating
among others, that from the available records on the file, taxpayer Dr.
Joel Mendez, with TIN 120-644-683-000 did not file any annual income
tax return for the taxable years 1995-2000; and (b) Certification dated
August 28, 2006, which states that a verification with the BIR records
revealed that Weigh Less Center Co., with TIN 222-822-458-000 has
been registered on March 4, 2003 and that it did not file any
Withholding Tax Return for the taxable years 2003, 2004 and 2005.
V. MR. VON M. LENTEJAS
Mr. Von Lentejas, the fifth witness for the prosecution, testified
that pursuant to his responsibilities as the PSRU Specialist in the
Securities and Exchange Commission, he examined the following
documents:
a. SEC Registration No. A 1996-06633 of Weigh Less
Center, Co., dated September 23, 1996, together with Articles of
Partnership of Weigh Less Center Co., dated September 10, 1 9 9 6 ~
30 3
DISSENTING OPINION
Cri minal. Case Nos. 0 -013 & 0 -01 5
Page 10 of 32
b. SEC Registration No. AP093-001258 of Sabili Mendez
Medical Services Co., together with Articles of Incorporation of Sabili
Mendez Medical Services Co., dated August 3, 1993;
c. SEC Registration No. AP093-001258 of Mendez Medical
Services Co. (formerly Sabili Mendez Medical Services Co.) dated
August 8, 1996, together with the Articles of Incorporation of Sabili
Medical Services Co. dated June 5, 1996;
d. SEC Registration No. AP096-00270 of Dr. Mendez
Industrial and Lying-In Clinic Ltd. Co. dated February 6, 1996,
together with the Articles of Partnership of Dr. Mendez Industrial and
Lying-In Clinic Ltd. Co. dated January 23, 1996;
e. SEC Registration No. AS094-000937 of Prime Health
Card Services, Incorporated dated February 1, 1994, together with the
Articles of Incorporation of Prime Health Card Services, Incorporated
dated January 13, 1994;
f . SEC Registration No. AP096-000909 of Oro Cup, Co.
dated May 2, 1996, together with Articles of Partnership of Oro Cup,
Co. dated April 22, 1996;
g. SEC Registration No. AP096-00184 of Oro Glass and
Aluminum Supply Ltd. Co. dated January 26, 1996, together with
Articles of Partnership of Oro Glass and Aluminum Supply Ltd. Co.
dated January 25, 1996;
h. SEC Registration No. AP096-00294 of The Millenium
Network Ltd. Co. dated February 7, 1996, together with Articles of
Partnership of The New Millenium Network Ltd dated February 5,
1996; and
i. SEC Registration No. A200111706 of The Big and Small
Art Co. dated August 8, 2001 together with the Articles of Partnership
of the Big and Small Art Co. dated May 24, 2001.
Mr. Lentejas further testified that he affirms and confirms that
the above-mentioned documents were issued at the Public Reference
Unit of the SEC and that he certified and attested that the said
documents are faithful reproduction of the original.
VI. MR. MAHINARDO MAILIG
Mr. Mahinardo Mailig, the prosecution's sixth witness, testified
that he is the incumbent Revenue District Officer, Revenue District
~
30 4
DISSENTING OPINION
Criminal. Case Nos. 0-013 & 0 -015
Page 11 of 32
Office No. 47, East Makati and that his duties and responsibilities
include, among others, administering and implementing the
assessment, collection, registration, administrative, document
processing and taxpayer service programs of the BIR within his area of
jurisdiction; and referring to Special Investigation Division cases which
were discovered to have an indication of tax fraud and submitting
report thereon for consolidation and submission to the BIR National
Office. He further testified that he is also authorized to issue
certifications on the status of all the taxpayers in his area of jurisdiction
based on the Integrated Tax System (ITS) of his office. Mr. Mailig
confirmed that the certification dated March 2, 2005 and the Certificate
of Registration dated April 30, 2004, both issued by his predecessor
Simplicia A. Madulara, contain accurate and correct data, which are
also among the data included in the Certification dated October 18,
2006 that he himself issued. The Certification issued by Mr. Mailig
states that based on the Bl R records, Dr. Joel Mendez, with Tl N 120-
644-683-007 and with business address at The Plaza Bldg, Greenbelt,
Ayala Ctr., San Lorenzo Village, Makati City was registered as a
branch with ROO 47 on April 30, 2004 under Certificate of Registration
No. OCN-9RC0000121488; and that Dr. Mendez was registered as an
individual/sole proprietor under the trade name Mendez Body & Face
Skin Clinic and the registered tax types are Annual Registration Fee,
Miscellaneous Tax and Documentary Stamp Tax-Regular.
VII. MR. FLORANTE ANINAG
Mr. Florante Aninag, the prosecution's seventh witness, testified
that as the Revenue District Officer, Revenue District Office No. 21,
San Fernando, Pampanga, it is among his duties to administer and
implement the assessment, collection, registration, administrative,
document processing and taxpayer service programs of the BIR within
his area of jurisdiction, as well as to refer to Special Investigation
Division cases which were discovered to have an indication of tax
fraud and submit report thereon for consolidation and submission to
the BIR National Office. He is also authorized to issue certifications as
to the status of the taxpayers in his area of jurisdiction. He stated that
he confirms the accuracy and the correctness of the data contained in
the Certificate of Registration dated January 17, 2003 and his letter
dated February 22, 2005. The same data are also found in the
Certification dated October 17, 2006, which states that Dr. Mendez
with TIN 120-644-683-001, with registered address at AX1 164-166
SM City Pampanga was registered in ROO 21 under the business
trade name Weigh Less Center - SM City Pampanga on January 17,
2 0 0 3 ~ ..
305
DISSENTING OPINION
Criminal. Case Nos. 0 -013 & 0 -015
Page 12 of 32
VIII. MR. JOSEPH M. CATAPIA
Mr. Joseph M. Catapia, the eighth witness for the prosecution,
testified that he is the Revenue District Officer of Revenue District
Office No. 4, Calasiao, Pangasinan and that among his responsibilities
as such is administering and implementing the assessment , collection,
registration, administrative, document processing and taxpayer service
programs of the BIR within his area of jurisdiction as well as referring
to Special Investigation Division cases which were discovered to have
an indication of tax fraud and submit report thereon for consolidation
and submission to the BIR National Office. He states that he is
authorized to issue certifications as to the status of all the taxpayers in
his area of jurisdiction. He further testified that he caused the issuance
of a Certification dated February 23, 2005 which substantially states
that Mr. Joel Cortez Mendez, with head office at #31 Races Avenue,
Quezon City, is registered as a branch in ROO 4, on May 16, 2003,
with Certificate of Registration No. 0048-0305-00027 4 as Mendez
Weighless Center, which is located at CSI City Mall , Lucao District,
Dagupan City, with the following tax types: Withholding Tax-
Compensation, Withholding Tax-Expanded and Registration Fee. In
addition, Mr. Catapia stated that he caused the issuance of a Letter
dated August 15, 2006 with attachments consisting of certified true
copes of the following documents:
a. Annual Income Tax Return for the taxable year 2003;
b. Independent Auditor's Report and accompanying Balance Sheet,
Income Statement, Statement of Cash Flows; Schedule of
Properties and Equipments and Accumulated Depreciation and
Schedule of Taxes and Licenses of Mendez Weighless Center as
of December 31 , 2003;
c. BIR Form Nos. 1601 C and 1601 E for May 2003;
d. List of disposed forms/papers destroyed by termites;
e. VAT Taxpayer Ledger Card;
f. Taxpayer Withholding Tax Remittance Ledger Card; and
g. Certificate of Creditable Tax Withheld at Source.
Finally, Mr. Catapia testified that he prepared a letter dated May
8, 2006, explaining that the original source documents filed by the
taxpayer concerned which were made the basis of the entries in
Exhibits NNN-13 (VAT Taxpayer Ledger Card) and NNN-14 (Tax
Payer Withholding Tax Remittance Card) were already destroyed by
termites and considered disposable materials and the existing
documents on file merely consist of certified true copies reproduced
and submitted to the BIR Head Office prior to the termite infestation of
the source
306
DISSENTING OPINION
Criminal. Case Nos. 0-013 & 0-015
Page 13 of 32
IX. MISS PERLITA R. DE LARA
Miss Perlita de Lara, the prosecution's ninth witness, testified
that as the Chief Accountant of PhiiSTAR Daily, Inc. , she is tasked to
keep account of all transactions of PhiiSTAR Daily, Inc. and to certify
all documents issued by their office concerning ad placement records.
Pursuant to her responsibilities as such officer, she issued a
Certification dated February 28, 2006, which states that based on the
Ad Placement Records, Dr. Joel Cortez Mendez of #31 Races Avenue,
Quezon City had requested the Philippine Star to advertise his
businesses in the names of Weighless Center/Body and Face by
Mendez/Mendez Medical Group and other related beauty schemes
from April 16 to October 31 , for the taxable year 2001 ; from January to
December 18, for the taxable year 2002; and from January 6 to
December 17 for the taxable year 2004. She further testified that she
caused the issuance of the following documents:
a. List of Ad placements of Joel Mendez's businesses covering the
years 2001 to 2004;
b. List of Ad placements of Joel Mendez's businesses covering
January 2001 - May 1-20, 2005 with cost of advertisements
paid by Dr. Mendez; and
c. Official Receipt (Advertising Receivables) No. 130203 dated
May 26, 2001 issued by the Philippine Star Daily to Weigh Less
Center.
Miss de Lara further affirmed and confirmed that the
aforementioned documents were issued by the Accounting Department
of PhiiSTAR Daily, Inc.; that the entries contained therein are were
based on the ad placement billed, collected and kept in their office and
that she personally certified and attested, by affixing her signature on
each and every page of the documents, that the said documents are
true and correct reproduction of the official file thereof in the custody of
PhiiSTAR Daily, Inc.
X. MR. JOSEPH RODRIGUEZ
Mr. Joseph Rodriguez, the prosecution's tenth witness, testified
that he is a Library Staff at the Photo Library Department of PhiiSTAR
Daily, Inc. and as such, he is in-charge of filing and clipping everyday
newspapers and the issuance of the certified copies of newspaper
publication filed in their office. Pursuant to the responsibilities of his
position, he caused the issuance of certified true copies of the
following advertisements of Dr. Mendez's businesses in the Philippine
S t a r : ~
307
DISSENTING OPINION
Criminal. Case Nos. 0 -013 & 0 -015
Page 14 of 32
a. Article entitled "Weighing in for the Holidays" published in the
Phil. Star Dec. 19, 2000 Tuesday edition;
b. Advertisement of Weigh Less Center published in the Phil. Star
Daily Inc. dated April 16, 2001 Monday edition;
c. Advertisement of Weigh Less Center published in the Phil. Star
Daily Inc. dated Sept. 24, 2001 Monday edition;
d. Advertisement of Weigh Less Center published in the Phil. Star
Daily Inc. dated Jan. 16, 2002 Wednesday edition;
e. Article entitled "Dr. Joel Mendez : Weight and see" published in
the Phil. Star Daily Inc. dated July 14, 2002 Sunday edition; and
f. Advertisement of Weigh Less Center published in the Phil. Star
Daily, Inc. dated January 6, 2003.
Lastly, Mr. Rodriguez testified that he affirms and confirms that
the aforementioned documents were issued at the Photo Library
Department of PhiiSTAR Daily, Inc. and that he was the one who
certified and attested, by affixing his signature on each and every page
of the documents, that the said documents are true and correct
reproduction of the official file thereof in the custody of the PhiiSTAR
Daily, Inc.
XI. MISS ARABELLE 0. PETILLA
Miss Arabelle Petilla, the eleventh witness of the prosecution,
testified that as the Chief, Records Section, Management Information
Division of the Land Transportation Office, it is among her duties to
issue verifications as to motor vehicles registration. Pursuant to this
function, she caused the issuance of a letter-reply dated February 28,
2005 concerning motor vehicle registration under the name of Joel
Cortez Mendez, which contains the following information:
Name JOEL C. MENDEZ Name JOEL C.
MENDEZ
Address 194 Wilson St. , Wilson Address 3 Pugo St. ,
Palace, Greenhills, San Valilia,
Juan Noval iches, QC
Plate No. XPD-662 Plate No. JCM-707
Make/Type Mitsubishi Lancer Make/Type Honda CRV
JTMXI
MV File 1384-200223 MV File No. 1336-137636
No.
Engine No. 4G18AA2767 Engine No. PRL032220000
88
Chassis No MMBSRCS3A2F00293 Chassis No PADRD4702VO
8 00078
Model 2004 Model 2002
Denominati Car Denomination Util ity Vehicle
on
LTO DO San Juan District Office LTO DO Mandaluyong
~
308
I
'
DISSENTING OPINION
Criminal. Case Nos. 0-013 & 0 -015
Page 15 of 32
Name JOEL C. MENDEZ
Address 31 Races Ave., QC
Plate No. XLF-105
Make/Type Honda CRV
MV File 1344-111958
No.
Engine No. PRLD83-311 091 7
Chassis No PADRD48303V11 0870
Model 2003
Denominati Utility Vehicle
on
LTO DO Manila North District
Office
Name JOEL C. MENDEZ
Address 14 Kamagong St. ,
Dona Amparo, Nova.
Proper, QC
Plate No. UMY-498
Make/Type Nissan Sentra
MVFile 1340-179364
No.
EnQine No. GA14-619810B
Chassis No BAVALDFB14-B6723
Model 1996
Denominati Car
on
LTO DO Manila East District
Office
Name JOEL C. MENDEZ
Address 3 Puso St. , Val ilia Viii. ,
Nova Proper, QC
Plate No. XJK-531
Make/Type Kia KC2700
MV File 1356-37656
No.
Engine No. J2-375609
Chassis No KNCSD211247985057
Model 2004
Denominati Uti lity Vehicle
on
District Office
Name JOEL C.
MENDEZ
Address 3 Pugo St. ,
Val ilia,
Novaliches, QC
Plate No. XAR-979
Make/Type Ford Lynx
'
MV File No. 1308-229788
Engine No. 7D5FF-001652
Chassis No PE1 BVFK11AD
00810
Model 2001
Denomination Car
LTO DO Camp
Aguinaldo
District Office
Name JOEL C.
MENDEZ
Address 3 Puso St. ,
Val ilia Viii. ,
Nova. Proper,
QC
Plate No. WNN-575
Make/Type Ford Lynx
MV File No. 1312-201191
Engine No. 7D5FF-000631
Chassis No PE1 BVHN1 -
Y1AB00419
Model 2000
Denomination Car
LTO DO Diliman District
Office
Name JOEL C.
MENDEZ
Address 3 Pugo St. ,
Valilia Viii. ,
Nova., QC
Plate No. TMP10
Make/Type Hyundai Coupe
MV File No. 1340-335557
EnQine No. G4GC3832598
Chassis No KMHHN61DP4
U124639
Model 2004
Denomination Car
et
309
DISSENTING OPINION
Criminal. Case Nos. 0 -013 & 0 -015
Page 16 of 32
LTO DO Marikina District Office
Name JOEL C. MENDEZ
Address 3 Pugo St. , Valilia Viii. ,
Nova. Quezon City
Plate No. XPP-722
Make/Type 206CC
MV File 1308-280057
No.
Engine No. 1 Ofx4x2197528
Chassis No VF32DNFUR4Y060816
Model 2004
Denominati Car
on
LTO DO Camp Aguinaldo
District Office
LTO DO Manila East
District Office
Finally, Miss Petilla testified that she caused the issuance of the
Certification dated February 5, 2007, which substantially states that all
the information contained in her letter-reply to Mr. Arnel Guballa of the
BIR dated February 28, 2005 were all taken from the L TO-IT System
database.
XII. MISS EMMA C. ASUSANO
Miss Emma Asusano, the twelfth witness for the prosecution,
testified that she is the NCR Regional Caretaker of the Department of
Trade and Industry and that part of her functions as such, is the
issuance of certifications on business registration on file with their
office. She stated that in view of the voluminous requests for
certifications on business registration, she authorized Assistant
Regional Director Ferdinand Manfoste to perform said function on her
behalf in case she is absent or unable to do the same due to
concurring need for her to do equally important functions and duties.
That in view of this authorization, Assistant Regional Director Manfoste
issued three (3) certifications, all dated February 17, 2005 covering the
business name owned by Dr. Joel Mendez. The said certifications
substantially state that Mendez Body and Face Salon & Spa, with
Certificate Number 00106572 registered on May 26, 2003; Mendez
Body and Face Salon & Spa-Farmers Branch, with Certificate Number
00158794 registered on July 31 , 2003; and Mendez Body and Face
Clinic, with Certificate No. 00193096 registered on September 17,
2003, are all registered under the name of Dr. Joel Cortez Mendez.
Miss Susana confirms and affirms that the subject certifications were
duly issued with her authority and that the same are based on record
filed with their
310
DISSENTING OPINION
Criminal. Case Nos. 0 -013 & 0 -015
Page 17 of 32
XIII. MR. JOSE VILLAREAL
Mr. Jose Villareal , the prosecution's thirteenth witness, testified
that as the Vice President-Finance of the Philippine Daily Inquirer, Inc.,
his functions include the management of financial resources and
services of the corporation, the overseeing of the financial records and
accounting systems and human resources of the finance division, the
preparation of financial projections and budgets and the issuance of
certifications and attestation to documents in compliance with
government regulations. Pursuant to his duties as such, he caused the
issuance of a Certification dated February 26, 2007, together with
attachments, which substantially states that Weighless Center has
made advertising placements for the year 2001 to 2003 with Philippine
Daily Inquirer, Inc. and that all the gross sales from ad placements
were reported to the BIR by the Philippine Daily Inquirer during the
required period. Finally, Mr. Villareal confirms and affirms that the
information and data contained in the subject certifications, and its
related attachments, are based on the official computer file of the
Philippine Daily Inqui rer and that he personally caused the
reproduction of the attachments to these certifications.
XIV. MR. ELIAS S. OLASIMAN
Mr. Elias Olasiman is the fourteenth witness of the prosecution.
He testified that he is an Immigration Officer and Authorizing Signing
Officer of the Verification and Certification Unit of the Bureau of
Immigration and among the functions of his position is the issuance of
certifications on immigration status, travel records, not the same
person, derogatory records, Bl clearance pending applications and
certified true copy of derogatory records. He confirmed that the Letter-
reply dated April 5, 2005 issued by Atty. Roy Almoro, the Executive
Director of the Bureau of Immigration contain accurate and correct
data. The same data is found in the Certification dated October 11 ,
2006, issued by Mr. Olasiman, which contains the travel records of Dr.
Mendez as appearing in the Bureau of Immigration Computer
Database File. Lastly, Mr. Olasiman affirms and confirms that his
Certification dated October 11 , 2006 are true and correct reproduction
of the official records on file with the Verification & Certification Unit of
Bureau of Immigration.
XV. MISS JOSEFINA WAN-REMOLLO
Miss Josefina Wan-Remollo, the prosecution's fifteenth
witness, testified that as the Vice-President for Legal Operations of
SM Legal Department, she works closely with the Leasing
Department of the SM Prime Holdings, Inc. and review its operations
including the various lease contracts which it enters with the tenantk-
311.
'DISSENTING OPINION
Criminal. Case Nos. 0 -013 & 0-015
Page 18 of 32
in its different branches, including SM City Pampanga. She further
testified that in compliance with the subpoena issued by the BIR,
copies of the Lease Contract entered into by SM Prime Holdings, Inc.
with Dr. Mendez dated December 28, 2002 and Letter to Dr. Joel
Mendez dated May 11 , 2004 were furnished to the BIR. Finally, she
stated that in compliance with the subpoena issued by the Honorable
Court and for purposes of comparison, she brought the originals of the
aforementioned documents in order to establish the existence and
authenticity thereof.
XVI. MR. ALEXANDER MARTINEZ
Mr. Alexander Martinez, the prosecution's sixteenth witness,
testified that as a Revenue Officer of the BIR assigned at the NID, he
is tasked to conduct audiUinvestigation of books of accounts and other
accounting records of taxpayers for internal revenue tax purposes and
submit corresponding reports; and to investigate individuals and
entities that may have committed violation of tax laws and recommend
criminal prosecution of violators. He further testified that pursuant to a
Memorandum dated March 3, 2005 issued by their NID Chief Atty.
Arnel Guballa, their investigating team was directed to assist in the
examination for all internal revenue tax purposes, of the books of
accounts and related accounting records covering the taxable years
2001 to 2003 of Dr. Joel Mendez pursuant to Letter of Authority
("LOA") No. 2001-00002438 dated November 8, 2004. The said LOA,
together with First Letter-Notice for the production of books of accounts
and accounting records was served on November 10, 2004 and was
duly received by Cherry Perez, who represented herself as the
authorized representative of Dr. Mendez. Despite receipt of the First
Notice, Dr. Mendez did not submit the required documents. Hence,
subsequent notices for the presentation and/or production of the
required records/documents were served by the investigating team
upon Dr. Mendez and were duly received on November 24, 2004 and
January 11 , 2005 by his accountant and employee, Richard Bianan
and Carla Yadao, respectively.
Mr. Martinez further testified that due to the failure of Dr.
Mendez to present or produce the needed records and documents for
examination despite several notices, the investigating team, headed by
Atty. Grace Belarmino-Cruz, was constrained to proceed with the
investigation through "Third Party Information" and pursuant to the
"Best Evidence Obtainable Rule" allowed under Section 5(B) , in
relation to Section 6(A) and (B) of the Tax Code. Mr. Martinez stated
that his team assisted in collating and evaluating the documents
obtained by the investigating team from various government offices
and private entities and that he, being the Group Supervisor, was
specifically tasked to prepare the computation of the income from a ~
31 2
' DISSENTING OPINION
Criminal. Case Nos. 0 -013 & 0 -015
Page 19 of 32
sources derived by the accused based on all the documents, data and
information obtained by the investigating team for taxable years 2002
and 2003 and the computation of the taxes that the accused should
have paid in relation to the income that he derived for the said taxable
years. Finally, Mr. Martinez testified that in computing the
aforementioned income and tax due, he employed the expenditure
method, which is based on the theory that if the taxpayer's
expenditures during a given year exceeded his reported income or
when there was no income reported at all and the sources of such
expenditures is unexplained, it may be inferred that such expenditures
represent unreported income. The legal basis for the use of
expenditure method in determining the income of the taxpayer is found
in Section 6(8) of the Tax Code, providing a broad general
investigatory power to assess the proper tax on the "best evidence
obtainable", whenever there is reason to believe that the required
report, that is, the taxpayer's return, is not forthcoming or when such
report is false, incomplete or erroneous. Mr. Martinez stated that in
computing based on the expenditure method, he collated, evaluated
and analyzed the documents, data and information to get the items of
expenses and deducted the optional standard deductions and personal
exemptions, and arrived at the basis of the computation of the tax.
XVII. MISS MENCHIE DE LEON-ALEA
Miss Menchie De Leon-Aiea, the seventeenth witness for the
prosecution, testified that she is the Record Officer of Land
Transportation Office (L TO) Mandaluyong Extension Office and that
among her duties as such are the following: (a) to keep records on file
with our office; (b) to issue certifications as well as to issue reply to
confirmation/s upon request; and (c) to perform other functions that
may be asked of, or directed to me, by my superior officers, in relation
to my being a Record Officer. She further testified that in connection
with her duties as Record Officer, she caused the issuance of certified
true copies of the following documents covering a 2002 Honda CR-V
with plate no. JCM-707 registered under the name of Joel C. Mendez:
(a) Certificate of Registration No. 78338103 issued June 04, 2002; and
(b) Honda Cars Makati , Inc. Vehicle Sales Invoice No. 030252, for the
purpose of establishing that said documents are faithful reproductions
of the original documents on file with and under the custody of L TO
Mandaluyong.
XVIII. MR. BENJAMIN M. MOLINA, JR.
Mr. Benjamin Molina, Jr., the prosecution's eighteenth witness,
testified that as the Records Officer in L TO Manila North District Office,
he is tasked, among his other duties, to keep records on file with their
office and issue certifications and replies to confirmation requests. Mr.
~
313
DISSENTING OPINION
Criminal. Case Nos. 0 -013 & 0 -015
Page 20 of 32
Molina stated that he has in his possession, certified true copies of the
following documents pertaining to a 2003 Honda CR-V with plate no.
XLF-1 05 registered under the name of Joel C. Mendez: (a) Letter-reply
to BIR dated March 7, 2005; (b) Certificate of Registration No.
02080664 issued on November 11 , 2003; and (c) Honda cars
Kalookan Vehicle Sales Invoice No. 24775. These documents were
duly certified by Chief Land Transportation District Officer of L TO
Manila North District Office Corazon A. Ang.
XIX. MISS NORIL YN CABORDA
Miss Norilyn Caborda, the nineteenth witness for the
prosecution, testified that she is the Chief Accountant of The Plaza and
her responsibilities as such include keeping in her custody and
possession the lease contracts entered into by The Plaza, Inc. for the
lease premises at The Plaza building, Greenbelt, Ayala Center, Makati
City. She further testified that her predecessor Mr. Vic Caballero
issued a Certification dated April 19, 2005, in connection with the
Lease Contract entered into by The Plaza with Joel C. Mendez. She
stated that the Lease Contract, containing the following terms and
conditions, attached to the said certification, is the faithful reproduction
of the original copy on file and under the custody of her office.
XX. MR.SALVADOR C. ALCUINO
Mr. Salvador Alcuino, the twentieth witness for the prosecution,
testified that he is the Senior Legal Counsel of Philippine Airlines and
that his duties as such include issuing certifications based on their
company records and supervising the disposition and release of
company records or documents. He further testified that he caused the
issuance of the summary of gross fares paid by Joel C. Mendez for his
travels abroad, dated July 19, 2005, with attachments of certified true
copies of the passenger tickets. Mr. Alcuino affirmed that the said
summary was issued at the Legal Affairs Department of the Philippine
Airlines and that he was the one who certified and attested, by affixing
his signature on each and every page, that the said document are true
and correct reproduction of the official file in custody of the Philippines.
THE EVIDENCE PRESENTED BY THE DEFENSE:
The defense presented the following witnesses:
I. MISS CHERRY PEREZ
Miss Cherry Perez, the first witness for the defense, testified that
she is an employee of WeighLess Center and Spa and that on
-6L
314
b iSSENTING OPINION
Criminal. Case Nos. 0 -013 & 0 -015
Page 21 of 32
November 8, 2004 and January 11 , 2005, she, together with her co-
employee Miss Carla Yadao, received a Letter of Authority and Final
Request for Presentation of Records, respectively from the Bureau of
Internal Revenue, addressed to their employer, Dr. Joel Mendez. She
further testified that upon receipt of the said documents, they
immediately forwarded the same to Mr. Richard Bianan, their
accountanUbookkeeper, who is the officer-in-charge of all transactions
and compliance requirements of Dr. Joel Mendez and Weighless
Center with the different government agencies.
II. DR. JOEL MENDEZ
The defense presented Dr. Joel Mendez, the accused himself,
as its second witness. Dr. Mendez testified that he is a doctor by
profession, engaged in the practice of bariatric medicine, and that he
runs several clinics under the banner of Mendez Medical Group. He
further testified that the imputations against him for the violation of the
Section 255 of RA 8424 for the years 2002 and 2003 are false and
baseless. He stated that he was not aware of the Letter of Authority
No. 00002438 ("LOA") dated November 8, 2004 issued by the BIR
against him; that it was only sometime late February 2005 that came to
know about the LOA when the BIR employees came to my office and
inquired about the LOA with my staff. Dr. Mendez stated that it was
only then that he discovered that there were notices addressed to him,
requiring for the submission of books of accounts and other accounting
records, pursuant to LOA No. 00002438. He stated further that the
reason why these notices never reached his knowledge is that Mr.
Richard Bianan, his former accountanUbookkeeper, whom he trusted
with all the documents and records in relation to his business,
deliberately concealed these notices in fear that his non-payment of
the tax obligations of my businesses will be discovered. Dr. Mendez
also recounted that upon knowledge of what Mr. Bianan had done, he
authorized his staff Miss Rose Bejar-De Vera to file a case for Estafa
against Mr. Bianan with the Office of City Prosecutor of Quezon City,
as evidenced by the duly filed Memo of preliminary Investigation and
Affidavit of Complainant. Dr. Mendez also presented the Temporary
Employment Contract and Employees Information Sheet of Mr. Bianan
to prove that he was the Accountant of WeighLess Center. He
described Mr. Bianan as a good employee at the start, and that this is
the reason why he trusted him with the payment of the taxes and other
obligations of his businesses. However, Mr. Bianan turned out to be a
dishonest employee as in February 2005, he was caught stealing
cosmetic products and other valuables from the clinic. Dr. Mendez filed
a Complaint for Qualified Theft against Mr. Bianan. It was during one of
their visits in jail that Mr. Bianan confessed about the non-payment of
Dr. Mendez's tax obligations and his deliberate withholding of the LOA
df:A
315
DISSENTING OPINION
Criminal. Case Nos. 0-013 & 0 -015
Page 22 of 32
and the related Letter-Notices. It was then that Dr. Mendez authorized
the filing of the Estafa case against Mr. Bianan.
Dr. Mendez testified how he entrusted Mr. Bianan with the
record keeping and the payment of his tax obligations, the latter being
his accountant/bookkeeper. He further testified that he issued checks
in the name of Mr. Bianan for the payment of the tax obligations of his
businesses and trusted that the latter properly used the funds to make
such payments. Dr. Mendez stated that he was willing to pay his tax
obligations and it was Mr. Bianan, by embezzling the funds entrusted
to him for the payment of his taxes, who prevented him from being
compliant with our tax laws.
In response to the allegations of the BIR on the income that Dr.
Mendez should have earned, as determined from the third party
information gathered by the BIR investigation team, Dr. Mendez claims
that the same has no basis. He said that the lease contracts, copies of
which were obtained by the BIR from the lessors, cannot be used to
approximate his income from his clinics as the clinics took some time
to be operational , for renovations have to be made after the lease
contracts were executed. Weigh Less Center, SM City, Pampanga.
Mendez Weigh Less Center, Dagupan City and Mendez Body and Face
Salon, Farmers, Cubao commenced operations in 2003 while Mendez
Body & Face Salon, V. Luna, QC and Mendez Body & Face Clinic,
Greenbelt, Makati became operational since 2004. Dr. Mendez further
stated that as regards the trips abroad, no inference can be drawn that
the same were paid from the income that he should have earned from
his businesses, the trips were paid with funds from his personal wealth,
priorly existing, credit and/or gratuitous title. Regarding the vehicles
found to be registered his name, Dr. Mendez claimed that it cannot be
inferred that those vehicles were purchased with his supposed income
for the years 2002 and 2003. He said that the said vehicles were
obtained through bank loans. On the investments that he allegedly
made, Dr. Mendez testified that these are relatively modest
investments, obtained using funds from his personal wealth existing
prior to 2001 .
Finally, Dr. Mendez testified that there was no deliberate
attempt to evade taxes on his part. Being a doctor by profession who
has no accounting background, he was constrained to employ an
accountant/bookkeeper to prepare, process and file the required
income tax returns for all the clinics. It was for this reason that he
employed Mr. Bianan and trusted him to comply with the tax laws and
settle all his tax obligations. He was shocked to discover that Mr.
Bianan abused his trust , misappropriated the funds entrusted to him
and did not pay the tax obligations of his businesses. Dr. Mendez
stated that there was no willful attempt to evade or defeat taxes on h i ~
316
DISSENTING OPINION
Criminal. Case Nos. 0 -013 & 0 -015
Page 23 of 32
part and that it was Mr. Bianan who was responsible for the non-
payment of the his taxes.
Ill. MISS MA. LIT A D. GREGORIO
Miss Ma. Lita Gregorio is the third witness for the defense. She
testified that she is the owner and lessor of the 2-storey commercial
building with an area of 220 square meters located at 31-G, A. Races
Avenue, Quezon City. She stated that she entered into a six-year
contract of lease with Dr. Mendez with a monthly rental of P25,000.00.
Ms. Gregorio said that it was on August 15, 2001 that Dr. Mendez
actually occupied subject property and started to gradually introduce
major improvements. It was not until in the latter part of the year 2002
that the renovation was completed. Ms. Gregorio corroborated the
accused's testimony that the operation of the health clinic and art
gallery was suspended due to lack of building permit.
THE ISSUE
WHETHER OR NOT ACCUSED DR. JOEL C. MENDEZ IS LIABLE FOR
VIOLATION OF SECTION 255 OF THE 1997 NATIONAL INTERNAL
REVENUE CODE, AS AMENDED, FOR FAILURE TO FILE INCOME TAX
RETURN AND FOR FAILURE TO SUPPLY CORRECT AND ACCURATE
INFORMATION.
THE RULING OF THE COURT
After analyzing carefully all the evidence on record both testimonial and
documentary, the court finds it strange the fact that as alleged in the AMENDED
INFORMATION in the Criminal Case No. 0-013, the accused failed to file his Income
Tax Return for the year 2002 to the damage and prejudice of the government in the
ESTIMATED AMOUNT of P1 ,522,152.14 exclusive of penalties, surcharges and
interest, also in the AMENDED INFORMATION in Criminal Case No. 0 -015, the
accused failed to supply correct and accurate information in his Income Tax Return for
the taxable year 2003 to the damage and prejudice of the government in the
-1/iZ...
31 7
'DISSENTING OPINION
Criminal. Case Nos. 0 -013 & 0 -015
Page 24 of 32
ESTIMATED AMOUNT of P2, 107,023.65 exclusive of penalties, surcharges and
interest.
From the above, it is very evident and glaring in both cases that the AMOUNTS
of the taxes being claimed as alleged in the INFORMATIONS are both ESTIMATED
AMOUNT and NOT EXACT NOR CERTAIN which the Court cannot ACCEPT or
ENTERTAIN. It must be noted that in case the amount of tax deficiency is alleged in
the Information, the same must be accurate and the truth, for the amount being
claimed plays an important role. The amount claimed determines which Court has
jurisdiction over the case. Accordingly, the amount must not be based on ESTIMATES
NOR PRESUMPTIONS for it will give undue power to the complainants to select
the court they feel will be in their favor. This fact holds true in the advent of the law
creating the Court of Tax Appeals, Republic Act No. 1125 as amended by Republic Act
No. 9282 otherwise known as the "The Expanded Jurisdiction of the Court of Tax
Appeals". Sec. 7(b)(1) of the said law specifically provides as follows:
"Sec. 7. JURISDICTION- The CTA shall exercise:
a) XXX
b) Jurisdiction over cases involving Criminal Offenses as herein provided:
1) Exclusive Original jurisdiction over all criminal offenses arising from
violations of the NIRC or Tariff and Customs Code and other laws
administered by the Bureau of Internal Revenue and the Bureau of
Customs: Provided, however, That offenses or felonies mentioned in this
paragraph where the principal amount of taxes and fees, exclusive of
charges and penalties claimed is less than One Million Pesos
(P1 ,000,000.00) or where there is no specified amount claimed shall be
tried by the regular courts and the jurisdiction of the CTA shall be
appellate. Any provision of law or the Rules of Court on the contrary
notwithstanding, the criminal action and the corresponding civil action for
the recovery of the civil liability for taxes and penalties shall at all times be
simultaneously instituted with and jointly determined in the same
proceedings by the CTA, the filing of the criminal action being deemed to
necessarily carry with it the filing of the civil action, and no right to r e s e r v ~
318
b iSSENTING OPINION
Criminal. Case Nos. 0-013 & 0 -015
Page 25 of 32
the filing of such civil action separately from the criminal action will be
recognized."
From the above, it is crystal clear that before a taxpayer can be prosecuted for
criminal offenses arising from violations of the NIRC or Tariff and Customs Code and
other laws administered by the Bureau of Internal Revenue and the Bureau of Customs,
the principal amount of taxes being claimed as alleged in the Information should only
either be definite or no specified amount at all at the time of the filing of the case in
Court . This is so because it determines the jurisdiction of the Court. In case the claim
is One Million Pesos (P 1 ,000,000.00) or more, the CTA has exclusive original
jurisdiction over the case. On the other hand, if the claim is less than One Million Pesos
(P 1 ,000,000.00) , or where no specified amount is claimed, the cases shall be tried
before the Regular Courts and the jurisdiction of the CTA shall be appellate.
Considering that the amounts alleged in both Informations are ESTIMATED
AMOUNTS and are not definite nor lack of certainty that will determine as to which
Court will have jurisdiction over the cases, the Court has no recourse but to dismiss both
cases for lack of jurisdiction.
Even assuming that the Court has jurisdiction over the cases, the accused is still
entitled to acquittal for the Court finds that the prosecution evidence failed to prove the
guilt of the accused beyond reasonable doubt.
Placing the conflicting testimonies of the witnesses for the prosecution and the
defense side by side and after examining their relative merits, the Court is inclined to
give more credence to the version of the accused. Certain circumstances had given this
Court reasons to doubt the truthfulness of the accusation;_@-
319
DISSENTING OPINION
Criminal. Case Nos. 0-013 & 0 -015
Page 26 of 32
For one, the Court finds as odd the fact that not even one of the twenty (20)
prosecution witnesses was able to identify the accused Dr. Joel Mendez in OPEN
COURT. It is a well-settled rule that the identification of the offender is very essential
and his identity must be determined with certainty in OPEN COURT specially so if
accused was not apprehended and coupled with non-stipulation of facts as to the
identity of the accused at the Pre-trial as in the instant cases.
For another, the Court would like to emphasize that when an amount of tax
deficiency is being claimed and alleged in the Information, it does not only determine the
jurisdiction of the Court , it becomes one of the elements of the crime that must be
proven beyond reasonable doubt by the prosecution. So the prosecution is under
obligation to supply the correct and accurate information as to the amount of the tax
deficiency being claimed and alleged in the INFORMATION.
But in the instant cases, this has not been observed. Instead an ESTIMATED
AMOUNTS have been alleged in the Informations and not with certainty. In Grim. Case.
No. 0 -013 an ESTIMATED AMOUNT of P 1,522,152.14 tax due to the government has
been alleged in the Information while in Grim. Case No. 0 -015, an ESTIMATED
AMOUNT of P2,107,023.65 tax due to the government has been alleged in the
Information. How can the prosecution now reconcile these ESTIMATED AMOUNTS TO
THE TRUE OR CORRECT AMOUNTS which are missing in the INFORMATIONS if
ever there were, being one of the elements of the crime that has not been proven by the
prosecution beyond reasonable doubt.
Lastly, the evidence for the prosecution marked as Exhibits "JJJJJJ-4, JJJJJJ-5
and JJJJJJ-6" referring to the Computation of Deficiency Tax for Taxable Years 2002
and 2003, respectively, which became the BASIS or LED to the filing of these c a s e ~
320
DISSENTING OPINION
Criminal. Case Nos. 0-013 & 0 -015
Page 27 of 32
against the accused Dr. Joel Mendez, cannot be relied upon by the Court for the
following reasons:
a) In both Informations, the amounts alleged therein, although ESTIMATED
AMOUNTS were BLOATED or SWELLED as observed by the Court , compared
to the ESTIMATED AMOUNTS of Tax Deficiency reflected on the Computation
for Tax Deficiency formally offered by the prosecution marked as Exhibits
"JJJJJJ-4, JJJJJJ-5 and JJJJJJ-6."
In Criminal Case No. 0-013, the ESTIMATED AMOUNT alleged in the
Information is P1 ,522,152.14 while as reflected in the Computation of Deficiency
Tax for the taxable year 2002 is only P1 ,409,357.79. The same is true in Crim.
Case No. 0-015, the ESTIMATED AMOUNT alleged in the Information is
P2, 107,023.65 but in the evidence identified and submitted by the prosecution,
the ESTIMATED AMOUNT is only P 1,759,654.44. Questions from the Court:
Who caused the BLOATING or SWELLING OF THE AMOUNT in the two
INFORMATIONS? Why those two amounts were BLOATED in the TWO
INFORMATIONS? Remember. the AMOUNTS alleged in the Informations play
an important role in the instant cases. First. it determines the JURISDICTION OF
THE COURT and second. it becomes an element of the crime. Considering that
these questions are still unanswered, to the mind of the Court , the accused is
entitled to an acquittal.
b) In the same evidence by the prosecution, it was stated therein that
accused Dr. Mendez spent for ADVERTISEMENT in the year 2002 and 2003 the
total amount of P 3,791 ,201 .94. The breakdown is as f o l l o w s ~
321
DISSENTING OPINION
Criminal. Case Nos. 0 -013 & 0 -015
Page 28 of 32
Philippine Star for the year 2002
Philippine Daily Inquirer for the year 2002
Philippine Star for the year 2003
Philippine Daily Inquirer for the year 2003
p 1,385,108.78
'
p 1,702,871.41
p
703,221 .75
p 1, 128, 258.48
But when prosecution witnesses, Miss Perlita de Lara, an accounting
supervisor of Philippine Star, testified in Court, she admitted during cross-
examination that it was an AGENCY who placed the advertisement in Philippine
Star and not Dr. Joel Mendez. (TSN p.19, January 29, 2007) So it is very clear
that the total amount of P 2,088,330.53 paid for advertisement in Philippine Star
in the years 2002 and 2003 was not paid for by the accused Dr. Mendez. The
same is true with respect to the advertisement paid for the years 2002 and 2003
with the Philippine Daily Inquirer. Prosecution witness Jose Villareal , Vice
President for Finance of the Philippine Daily Inquirer, testified in Court during
cross-examination "that based on the transactions that they had experienced, the
ad agency pays and the payment come from the client, in this, case Dr. Mendez."
From the testimony of this witness, the Court cannot rely on the truthfulness of
what he stated for being HEARSAY. He is an incompetent witness who has no
personal knowledge as to whether the accused was really the one who paid for
the advertisement, in fact he stated that it was the ad agency who made the
payment. It is crystal clear that the above-mentioned witnesses cannot prove
beyond reasonable doubt that the accused was the one who paid for the
advertisement.61A-
322
'
DISSENTING OPINION
Criminal. Case Nos. 0 -013 & 0 -015
Page 29 of 32
c) Again, in the same evidence for the prosecution, it was stated therein that
a HONDA CRV was purchased by Accused Dr. Joel Mendez as evidenced by
Sales Invoice No. 030252 dated April 30, 2002, marked as Exhibit "PP", in the
amount of P 909,950.00 while in the year 2003, another Honda CRV was again
purchased by accused Dr. Mendez in the amount of P 1,035,500.00 as
evidenced by Sales Invoice No. 24775 dated October 24, 2003, marked as
Exhibit "LLL".
According to the prosecution, the purposes for presenting these evidences are:
first , to prove that Accused had earned income in 2002 for being able to purchase these
two (2) vehicles and second, to prove that the accused has been engaged in the
practice of his profession and has been operating his business during the taxable years
2002 and 2003.
Although the above evidences may be relevant for two or more purposes, it is still
necessary for the prosecution to satisfy the requirements of the particular purposes for
which it is being offered. Otherwise, it will be rejected even if it fulfills the requirements of
the other purposes. Like in the instant cases, these evidences are inadmissible for the
purpose for which they are being offered. The said documents were not properly identified
by a competent witness and their due execution and authenticity were not properly
established. The competent witness who can prove the amount stated in the sales
invoices for the prosecution could have been a representative from a CAR DEALER who
knew personally the business transaction that transpired before the prosecution can
presume that those are earned income for the year 2002 by the accused, and not Miss
Menchie de Leon-Aiea, who is a record officer of the Land Transportation Office who just
attested to the fact that the sales invoices of the two Honda CRV of the accused D r ~
323
DISSENTING OPINION
Criminal. Case Nos. 0-013 & 0 -015
Page 30 of 32
Mendez are the faithful reproduction of the original documents on file with the L TO. What
the witness was able to prove is only the existence of the said documents or that the said
documents have been submitted to the L TO. So the amount of P 909,950.00 as the
purchase price of Honda CRV for the year 2002 and the amount of P1 ,035,500.00 also as
the purchase price of Honda CRV for the year 2003 cannot be the basis for the
prosecution to presume that they came from the earned income of Dr. Mendez for the
years 2002 and 2003 from the practice of his profession, wherein the Court has rejected
these evidence.
So if the Court will now recompute the Deficiency Tax for taxable year 2002 of
the accused Dr. Mendez based from the prosecution's evidence and without touching
yet on the OTHER expenses for R E ~ T A L S and FOREIGN TRAVELS of the Accused, it
will show that from the ORIGINAL GROSS INCOME of P 5,037,353.43, the amount left
now is P 1,039,423.24 after deducting P 3,087,980.19 for advertisement which was not
paid by the accused and P 909,950.00 the purchase price of the Honda CRV in the
Sales Invoice which was declared by the Court to be inadmissible evidence.
The same is true in Criminal Case No. 0-015, if the Court will recompute the
Deficiency Tax for the taxable year 2003 of the accused Dr. Mendez based from the
prosecution's evidence and without touching yet on the other expenses for RENTALS,
FOREIGN TRAVELS and CAPITAL INVESTMENTS of the accused, it will show that
from the ORIGINAL GROSS INCOME of P 5,667, 189.05, the amount left now is P
2,800,208.82 after deducting P 1,831,480.23 for an ADVERTISEMENT which was not
paid by the accused and P 1,035,500.00- the purchase price of the Honda CRV in the
sales invoice which was declared by the Court to be an inadmissible evidence. How can
-c..
324
DISSENTING OPINION
Criminal. Case Nos. 0 -013 & 0 -015
Page 31 of 32
the Court now rely on this evidence, which is full of uncertainties, being presented by the
prosecution?
It is a well-settled rule in our jurisdiction that the prosecution should rely on the
strength of their evidence. In the instant cases, the prosecution failed to prove the guilt
of the accused beyond reasonable doubt, in fact , the defense's version is even more
believable than the prosecution's.
The circumstances above raise grave and serious doubts about the truthfulness
and credibility of the prosecution witnesses' story. On the other hand, the defense's
version stands strong that the accused Dr. Joel Mendez's businesses were not yet
operational in the year 2002 since all of the businesses were registered at the BIR in the
years 2003 and 2004, except one, Mendez Body and Face Salon . & Spa. Although
Mendez Body and Face Salon & Spa was registered on May 6, 2002, still the
prosecution failed to prove that it was in operation for the year 2002. Not even a single
receipt from customers in the year 2002 was presented as prosecution evidence, also
even if no single receipt was presented as prosecution evidence, at least one of the
customers was presented as a witness for the year 2002, nor any of the employees of
the accused in the year 2002 was presented as prosecution witness that can convince
the Court that the businesses of accused Dr. Mendez were in operation during 2002. So
it follows that the allegations of the prosecution that the accused Dr. Joel Mendez
willfully, unlawfully and feloniously failed to file his income tax return with the BIR for the
taxable year 2002 in Criminal Case No. 0 -013 and also failed to supply correct and
accurate information in his income tax return for the taxable year 2003 filed in the
Revenue District Office of the BIR were not proven by the prosecution b e y o n ~
325
\ .
DISSENTING OPINION
Criminal. Case Nos. 0 -013 & 0-015
Page 32 of 32
reasonable doubt. It follows too, that no civil liability can be imputed against the accused
Dr. Joel Mendez.
WHEREFORE, in view of the foregoing, the Undersigned finds that the
prosecution has failed to establish the guilt of the accused Dr. Joel Mendez beyond
reasonable doubt in Criminal Cases No. 0-013 and 0-015 and, accordingly, votes to
ACQUIT him of the crimes for which he has been charged herein. With cost de office,
no civil liability is attached.
~
CAESAR A. CASANOVA
Associate Justice
32ti