Lim vs CA

G.R. Nos. L-48134-37 October 18, 1990

190 SCRA 616

FACTS: 

The spouses Lim were the subject of 4 criminal complaints for filing of
fraudulent income tax returns and for refusing to pay deficiency taxes.
Petitioners spouses were engaged ni the dealership of various household
appliances.  They filed their income tax returns fro the years 1958 and 1959.
On October 5, 1959 a raid was conducted in their business offices and therein
was seized business and accounting records which served as bases for an
investigation undertaken by the Bureau of Internal Revenue.  On September
30, 1964 the Revenue Examinar made a recommendation, based on the
records, that the spouses be assessed P835,127.  On April 7, 11965 the
petitioner spouses were informed that their deficiency taxes amounted to
P922,913 inclusive of interest and gave them until May 7, 1965.  Emilio Lim
requested for a reinvestigation which was granted by the BIR on the condition
that Lim first execute a waiver of defense of prescription under the Statute of
Limitations and that one half of the delinquency tax be deposited and the
other half be secured by a surety bond.  Lim refused to comply and reiterated
his request for another reinvestigation.  The BIR subsequent to that never
entertained any reinvestigation made by Sps. Lim and on October 10, 1967
the BIR rendered a final decision that there was no cause for reversal of the
first assessment made to the Sps. Lim, by this time the deficiency income
taxes has ballooned to P1,237,190.55 inclusive of interest, surcharges, and
compromise penalty for late payment.  The final notice and demand for
payment was served on petitioners through their daughter in law on July 3,
1968. Since no payment was still made, on September 1,  1969 the matter
was referred to the Fiscal's office and the criminal charges herein was filed
against them.

The spouses Lim raised the defense of prescription in the Criminal case
contending that since the law provides for a period of 5 years, the instant case
has now been filed beyond the 5-year period.  Although the SolGen agreed on
the contention of the Sps. Lim, the parties were in disagreement as to the
reckoning period wherein the running of the prescriptive period should
commence.
ISSUE: WON, the criminal case should be dismissed on the ground of
prescription.

Held: No. The governing penal provision in the tax code for the violations
committed by the Sps. Lim herein - filing of fraudulent income tax returns and
for refusing to pay deficiency taxes - are governed by Sectioon 73 in
conjunction with Section 354 of the NIRC.  

As regards, the two criminal cases involving the refusal to pay the deficiency
income taxes due the five year-period of limitation should be reckoned from
July 3, 1968, as opposed to April 7 1965 when the original assessment was
issued to the Lims, when the final notice and demand was served on
petitioners daughter in law. This is so because in as much as the final notice
and demand for payment of the deficiency taxes was served only in July 3,
1068 it was only then that the cause of action on the payt of the BIR accrued,
as prior to that no violation has yet been committed by the taxpayer. 

On the matter of the criminal cases for filing of false returns, the court in
denying the contention of the Sps. Lim stressed that in as much as Section
354 states that 'prsecription shall begin to run from the day of the commission
of the violation of the law, and if the same be not known at the time, from the
discovery thereof AND the institution of judicial proceedings for its
investigation and punishment the commencement of the prescriptive perid
shall begin to run only on September 1, 1969 when the case was indorsed to
the Fiscal's office for preliminary investigation.  Moreover, although the
information filed by the BIR made no allegation that the offenses were not
known at the time off the commission as to bring them within the exception to
the statute of limitation, such ommission does not make the information
necessarily defective since prescription is a matter of defense  and the
information filed does not need to anticipate and meet it.