Republic of the Philippines

Mindanao State University

COLLEGE of LAW
Marawi City 9700

CASE DIGEST

In Partial Fulfillment
Of the Course Requirement in
LAW 410: Taxation Law Review
First Semester, A.Y. 2023-2024

Presented to
Atty. Sorayah M. Sharief-Tabao, CPA

By
Muhammad A. Ibrahim

December 2023
PEOPLE v. MENDEZ, G.R. No. 208310-11

MENDEZ v. PEOPLE, G.R. No. 208662, March 28, 2023

M. LOPEZ, J.:

FACTS: Mendez Body and Face Salon Spa, and Mendez Body
and Face Skin Clinic, owned by Joel Mendez, with principal
office at Quezon City, and with several branches in Quezon
City, Makati City, San Fernando, Pampanga, and Dagupan
City, failed 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.

Two (2) informations were filed against Joel C. Mendez which

the CTA Division found Joel guilty beyond reasonable doubt
under Sec. 255 of the NIRC and for failure to file an income
tax return (ITR) for the taxable year 2002 and for failure to
supply correct and accurate information in the ITR for the
taxable year 2003.

The Office of the Solicitor General (OSG) posits that Joel is

barred by estoppel in raising the defense of lack of jurisdiction
for the first time on appeal. Moreover, the issuance of
subpoena duces tecum is not a prerequisite under the law.

Joel Mendez insists that the tax court had no jurisdiction over
the criminal cases because the amounts stated in the
Amended Informations are mere estimates. Lastly, the
prosecution failed to prove his guilt beyond reasonable doubt
as he did not wilfully evade to file his ITR, supply correct and
accurate information in his ITR, and pay his tax obligations.

Hence, this Petition for Review assailing the CTA En Banc

Division’s Decision.
ISSUEs:

(1) Whether the CTA has jurisdiction over the criminal cases
against the accused Joel?

(2) Whether the prosecution proved Joel’s guilt for violating

Section 255 of the Tax Code beyond reasonable doubt?

(3) Whether Joel is liable for deficiency income tax for

taxable years 2002 and 2003?

HELD:

Whether the CTA has jurisdiction over the criminal

cases against the accused Joel?

Yes.

The Supreme Court held that Estoppel does not apply as

Joel timely raised the issue of jurisdiction in his MR of the
CTA Division’s Decision. No extraordinary long period of time
had yet elapsed for laches to attach. Further, the tax court
had no jurisdiction to hear and decide criminal cases for tax
law violations as it is vested within the cognizance of the
regular courts. As to amount in the two Informations, it
sufficiently vest jurisdiction to the CTA as Joel’s argument is
an estimate, it is as if no specified amount claimed.

Whether the prosecution proved Joel’s guilt for

violating Section 255 of the Tax Code beyond reasonable
doubt?

Yes.

Section 255 of the Tax Code provides that any person

who wilfully fails to pay such tax, make such return or supply
correct and accurate information shall be punished by a fine
of not less than P10,000 and suffer imprisonment of not less
than 1 year.
 Here, Joel was are of his obligation to file ITR, and he
consciously and voluntarily refused to comply with his duty to
make the return as he is a doctor by profession and a
businessman who is ought to know and understand the
matters concerning his practice and business.

Hence, Joel deliberately failed to file his Annual ITR and

he is found guilty beyond reasonable doubt.

Whether Joel is liable for deficiency income tax for

taxable years 2002 and 2003?

Yes.

Joel is an individual required by law to file a return and

declare all his income derived from all sources in the taxable
year 2003. Further, Joel’s failure to inquire and ensure that
the ITR filed reported all income earned from other branches
constitutes wilful blindness. Joel also knew that he had two
clinics all registered with the BIR in 2003.

Hence, Joel shall be punished with 1 year imprisonment

as minimum to 2 years as the maximum with corresponding
fine of P10,000.00 affirming CTA Division’s penalty imposition.

What are the guidelines for the prosecution of criminal tax

law violations and the corresponding civil liability for
unpaid taxes?

(1) When a criminal action for violation of the tax laws is

filed, a prior assessment is not required. Neither a
final assessment is a precondition to collection of
delinquent taxes in the criminal tax case. The criminal
action is deemed a collection case. Therefore, the
government must prove two things: one, the guilt of
the accused by proof beyond reasonable doubt, and
two, the accused’s civil liability for taxes by competent
evidence.

(2) If before the institution of the criminal action, the

government filed (1) a civil suit for collection, or (2) an
 answer to the taxpayer’s petition for review before the
CTA, the civil action or the resolution of the taxpayer’s
petition for review shall be suspended before judgment
on the merits until on the merits is rendered in the
civil action, it may be consolidated with the criminal
action. In such a case, the judgment in the criminal
action shall include a finding of the accused’s civil
liability for unpaid taxes relative to the criminal case.

Note: The Court En Banc clarified that an assessment for deficiency taxes
is not a prerequisite for the collection of civil liabilities in criminal tax cases.