16: EMILIO S. LIM, SR. V.

CA
October 18, 1990; C.J. Fernan; G.R. L-48134-37
Prescriptive Period to File Criminal Case Under NIRC SECTION 281: 5 years from
failure to pay tax after notice and demand.
FACTS: Spouses Lim were engaged in the dealership of various household
appliances.
The NBI conducted a raid on Oct. 5, 1959 on their:
1) Business Address: No. 336 Nueva Street, Manila; and
2) 111 12th Street, Quezon City.
Seized from the Lim couple were business and accounting records which served
as bases for an investigation undertaken by the BIR.
On Sept. 30, 1964, Senior Revenue Examiner Raphael S. Daet submitted a
memorandum that the income tax returns filed by the spouses Lim for 1958
and 1959 were false or fraudulent.
Assessment should be: P835, 127.
Acting Commissioner Benjamin M. Tabios informed the couple that there
deficiency income taxes are P922, 913.04.
On April 10, 1965, spouses requested an re-investigation.
BIR expressed willingness on the following conditions:
1) written waiver of the defense of prescription under the statute of
limitations;
2) depositing of the assessment and securing the other with a surety
bond.
Spouses Lim refused to comply with the conditions and reiterated his request.
BIR rendered a final decision holding that there was no cause for reversal of the
assessment against the Lim couple.
The final notice and demand for payment was served through their daughter in
law on July 3, 1968 for the amount of P1,237,190.55 including interest,
surcharges and penalty for late payment.
BIR referred the matter to the Manilas Fiscals Office for investigation and
prosecution.
4 criminal informations were filed against petitioners.
violation of NIRC SECTION 45
violation of NIRC SECTION 51
RTC Manila found petitioners guilty.

CA affirmed RTC. 23 days later Antonio Lim, Sr. died.

ISSUE/S:
1) WON the offenses prescribe after 5 years (Lim) or 10 years (governments
position)?
2) WON the prescriptive period commenced to run from 1965 date of 1 st
assessment or discovery (accdg to Lim spouses) or from final notice on
1968 (government)?
3) WON the RTC had jurisdiction over the tax collection case?
4) WON the death of Emilio S. Lim, Sr. extinguished his civil liabilities?
HELD:
1) 5 years but the government instituted the case within the prescriptive
period.
SECTION 73. PENALTY FOR FAILURE TO FILE RETURN OR TO PAY TAX.
Anyone liable to pay the tax, to make a return or to supply information
required under this code, who refuses or neglects to pay such tax, to make
such return or to supply such information at the time or times herein
specified in each year, shall be punished by a fine of not more than P2,000
or by imprisonment for not more than 6 months, or both.
Any individual or any officer of any corporation, or general co-partnership,
required by law to make, render, sign or verify any return or to supply any
information, who makes any false or fraudulent return or statement with
intent to defeat or evade the assessment required by this Code to be made,
shall be punished by a fine not exceeding P4,000 or by imprisonment for not
exceeding 1 year, or both.
SECTION 354. PRESCRIPTION FOR VIOLATIONS OF ANY PROVISIONS
OF THIS CODE. All violations of any provision of this Code shall prescribe
after 5 years.
Prescription shall run from the day of the commission of the violation of the
law, and if the same not be known at the time, from the discovery thereof
AND the institution of judicial proceeding for its investigation and
punishment.
The presumption shall be interrupted when proceedings are instituted
against the guilty persons and shall begin to run again if the proceedings
are dismissed for reasons not constituting jeopardy.

The term of prescription shall not run when the offender is absent from the
Philippines.
2) Commenced from the date of the final notice.
In criminal cases, statutes of limitations are acts of grace, a surrendering by
the sovereign of its right to prosecute.
They receive strict construction in favor of the Government and limitations
in such cases will not be presumed in the absence of clear legislation.
3) No, because the criminal case was instituted on June 23, 1970 and PD 69
which mandates RTC to order payment of the taxes took effect only on Jan.
1, 1973. It has no retroactive application.
The law applicable was SECTION 316 which does not sanction such
imposition.