2025 / Apr
G.R. No. 258563 PEOPLE OF THE PHILIPPINES, PETITIONER, VS. ULYSSES PALCONIT CONSEBIDO,* RESPONDENT. April 02, 2025
EN BANC
[ G.R. No. 258563, April 02, 2025 ]
PEOPLE OF THE PHILIPPINES, PETITIONER, VS. ULYSSES PALCONIT CONSEBIDO,*RESPONDENT.
D E C I S I O N
INTING, J.:
Before the Court is a Petition for Review onCertiorari[1]filed by the People of the Philippines (petitioner), through the Office of the Solicitor General, assailing the Decision[2]dated January 6, 2021, and the Resolution[3]dated January 5, 2022, of the Court of Tax Appeals (CTA)En Bancin CTA EB CRIM NO. 069. The CTAEn Bancaffirmed the Resolutions dated April 2, 2019,[4]and May 7, 2019,[5]of the CTA Second Division (2nd Division) in CTA CRIM CASE NO. 0-701 which dismissed the Information for Willful Failure to File a Quarterly Value-Added Tax (VAT) Return, in violation of Section 255,[6]in relation to Section 114,[7]of the National Internal Revenue Code (1997 NIRC) against Ulysses Palconit Consebido (Consebido).
The Antecedents
In a Joint Complaint-Affidavit[8]dated January 30, 2014, Bureau of Internal Revenue (BIR) Officers Gina D. Floreza and Vivencio M. Gapasin charged Consebido with Willful Failure to File a Quarterly VAT Return. On even date, the BIR Officers referred the Complaint-Affidavit to the Department of Justice (DOJ).[9]
On March 18, 2019, an Information[10]against Consebido was filed before the CTA, stating:
The Ruling of the CTA 2ndDivision
The CTA 2ndDivision dismissed the case on the ground of prescription in its Resolution[13]dated April 2, 2019; thus:
Petitioner filed a motion for reconsideration which the CTA 2ndDivision denied in the Resolution dated May 7, 2019.[16]Thereafter, petitioner filed a Petition for Review[17]before CTAEn Banc.
The Ruling of the CTA En Banc
In its Decision[18]dated January 6, 2021, the CTA En Banc denied the Petition and affirmed the ruling of the CTA 2ndDivision. The CTAEn Bancopined that pursuant to the Court's ruling inLim, Sr. v. Court of Appeals,[19]the date of discovery and the institution of judicial proceedings for investigation and punishment up to the filing of the Information in court should not exceed the five-year prescriptive period under Article 354 of Commonwealth Act No. 466 or the "National Internal Revenue Code of 1939" (1939 NIRC). The CTAEn Bancobserved that Article 354 of the 1939 NIRC and Article 281 of the 1997 NIRC are identically worded. Accordingly, the CTAEn Bancruled that the Information in the present case should have been filed not later than January 30, 2019, or five years from the date of discovery on January 30, 2014. The filing of the Information on March 18, 2019, was clearly beyond the period.[20]
Petitioner prayed for the CTAEn Bancto reconsider its Decision but to no avail.[21]
Hence, it filed the present Petition before the Court.
Petitioners Arguments
Petitioner contends that: (1) under Section 281 of the 1997 NIRC, the prescriptive period would only run from the discovery of the commission of the violationandthe institution of judicial proceedings for its investigation and commission; (2) being a special act, the governing law on prescription for violations of the 1997 NIRC is Section 2 of Act 3326;[22](3) the Court has already settled that under Section 2 of Act 3326, prescription shall begin from the date of the commission of the offense or if unknown, then it shall be counted on the date of discovery. It further contends that the filing of the complaint with the DOJ for preliminary investigation interrupted the prescriptive period, and thus, its action has not yet prescribed because the filing of the complaint with the DOJ interrupted the prescriptive period; and (4) even assuming otherwise, its legal arguments should be favored over the termination of the proceedings on purely technical grounds.[23]
Respondent's Arguments
Citing the case ofLim, Sr., Consebido maintains that the prescriptive period cannot commence and be interrupted at the same time by the institution of judicial proceedings; hence, the CTAEn Banccorrectly held that petitioner's action had prescribed.[24]
The Issue
The issue is whether the CTAEn Bancerred in affirming the dismissal of the Information on the ground of prescription.
The Ruling of the Court
The Court denies the Petition.
At the outset, it must be stressed that the prescriptive period for violations of the 1997 NIRC is governed by Section 281 thereof, which provides:
The Court takes this opportunity to re-examine its ruling inLim, Sr.and to clarify the prescriptive period under Section 281 of the 1997 NIRC, specifically with respect to violations that are unknown at the time of its commission.
There are two components in determining when the prescriptive period shall begin to run under Section 281:first, the discovery of the commission of the violation; andsecond, the institution of judicial proceedings for its investigation and punishment. As observed inLim, Sr., this makes the prosecution of offenses under the 1997 NIRC practically imprescriptible as the prescriptive period will only begin to run upon the institution of judicial proceedings. But the next paragraph of Section 281 states that "prescription shall be intern1pted when proceedings are instituted against the guilty persons[.]" IfLim, Sr.is to be followed, prescription would both be started and interrupted by the institution of proceedings against the accused.
This is not the first time that the Court encountered this conundrum.
Petitioner duly pointed out that Section 2 of Act No. 3326 is similarly worded to the second and third paragraphs of Section 281 of the 1997 NIRC. Section 2 provides:
InPeople v. Duque,[30]the Court held that the phrase "'institution of judicial proceedings for its investigation and punishment' may be either disregarded as surplusage or should be deemed preceded by the word 'until.'"[31]A literal reading of Section 2 of Act No. 3326 would be unfavorable to the accused and is unnecessary. The Court opined that "the prescription period would both begin and be interrupted by the same occurrences the net effect would be that the prescription period would not have effectively begun, having been rendered academic by the simultaneous interruption of that same period."[32]The Court affirmed this interpretation inPresidential Commission on Good Government v. The Ombudsman[33]and added that this interpretation is consistent with the second paragraph of Section 2 of Act No. 3326.[34]
Notably,Lim, Sr.applied Section 354 of the 1939 NIRC. Associate Justice Japar B. Dimaampao (Associate Justice Dimaampao) astutely noted that the 1939 NIRC was passed when justices of the peace conducted preliminary investigations. This is no longer the case now, as observed inPanaguition. Thus, in consideration of the foregoing, the Court clarifies that under Section 281 of the 1997 NIRC, prescription for criminal offenses where the commission of the violation is not known shall begin to run from its discovery. The adoption of the interpretation inDuqueis apt in order to harmonize the second and third paragraphs of Section 281 of the 1997 NIRC. The institution of proceedings, specifically the commencement of preliminary investigation, shall interrupt the prescriptive period for the offense. This clarification is necessary as a literal interpretation of the law should be rejected if it would lead to absurd results.[35]Prescription would not run under a literal reading of Section 281 of the 1997 NIRC, as it would both begin and be interrupted by the institution of proceedings. The Court must give effect to the clear intent of the Legislature to set a prescriptive period for violations of the 1997 NIRC. Chief Justice Alexander G. Gesmundo (Chief Justice Gesmundo) judiciously expressed that the prevailing interpretation renders nugatory or lifeless the prescriptive period set by the Legislature itself.
As explained inPanaguiton, Jr.and reiterated inDesierto, the injured party, i.e., the government, should not be penalized for the delays in the investigation even if the complaint is timely filed. If there is undue delay in the preliminary investigation, what should be invoked by the accused is the violation of their right to speedy disposition of cases under Article III, Section 16 of the Constitution and not the prescription of the offense.
The most favorable interpretation to the accused should be adopted with respect to laws on prescription of crimes.[36]As pointed out by Chief Justice Gesmundo during the deliberation, the prescriptive period of a penal provision is an amnesty granted by the State in favor of the defendant. It is a surrender by the State of its right to prosecute and, as such, a liberal construction in favor of the defendant is proper.
The Court stresses that the date of discovery of the commission of the violation is not necessarily synonymous to the date of the filing of the complaint. Discovery is "the act, process, or an instance of gaining knowledge of or ascertaining the existence of something previously unknown or unrecognized."[37]Simply put, the date of discovery is when it becomes known that a violation of the 1997 NIRC was committed. The filing of the complaint is not the reckoning point for the discovery unless it so happens that the complaint was filed on the very same day that the violation was discovered.
As aptly suggested by Associate Justice Dimaampao, the wording of Section 281 of the 1997 NIRC should be brought to the attention of the Legislature. Thus, a copy of this Decision must be given to the Senate of the Philippines and the House of Representatives for their appropriate action.
To be sure, Section 281 of the 1997 NIRC incorporates the Discovery Rule or the Blameless Ignorance Doctrine which computes prescription from the date of discovery in view of the propensity of tax evaders to come up with devious methods to thwart the BIR's investigation and conceal the commission of the offense. Taken together with the presumption that tax returns have been prepared and filed by the taxpayer "in good faith, in observance of the ordinary course of business, and in compliance with the applicable rules and regulations,"[38]the BIR could not have discovered that a taxpayer had filed a fraudulent return at the time of its filing.
It must be stressed, however, that the Discovery Rule does not apply to all offenses punishable under the 1997 NIRC. In cases where the information, data, or records, from which the crime is based could be plainly discovered or were readily available to the public, or when there are reasonable means to be aware of the commission of the offense, the prescriptive period should be reckoned from the date of commission of the offense.[39]
Here, the Court finds that the Discovery Rule is not applicable to the present case considering that the BIR had reasonable means to ascertain that Consebido failed to file his quarterly VAT return for the 3rdquarter of the taxable year 2008 given the circumstances, as will be discussed below.
The complaint against Consebido stemmed from the payments he received from the Provincial Government of Palawan in relation to the construction of infrastructure projects using the Malampaya Funds.[40]
A careful review of the records reveals that Consebido, who was doing business under the name Seven Digit Construction and Supplies,[41]is VAT registered.[42]
Section 114 of the 1997 NIRC, as amended by Republic Act No. 9337,[43]the applicable law at that time, partly provides that "[e]very person liable to pay the value-added tax imposed under this Title shall file a quarterly return of the amount of his gross sales or receipts within twenty-five (25) days following the close of each taxable quarter prescribed for each taxpayer:Provided, however, That VAT-registered persons shall pay the value-added tax on a monthly basis."[44]
In addition, the Joint Complaint-Affidavit against Consebido states that he was required to file a monthly VAT return and a consolidated quarterly VAT return pursuant to Section 114 of the 1997 NIRC, as amended by Republic Act No. 9337.[45]Copies of Consebido's Monthly VAT Declaration, or BIR Form No. 2550M, for January, May, and June 2008, were attached to the Joint Complaint-Affidavit.[46]
More, Section 114(c)[47]of the 1997 NIRC, as amended by Republic Act No. 9337, requires the government, or any of its political subdivisions, to withhold VAT before making payment on account of each purchase of goods and services which are subject to VAT. The same provision requires the VAT withheld to be remitted within 10 days following the end of the month the withholding was made. That being so, it cannot be said that it was difficult for the BIR to discover that Consebido received payments that may be subject to VAT because the Provincial Government of Palawan was required to report it by law.
Evidently, the BIR expected Consebido to regularly file his monthly and quarterly VAT returns. Coupled with the fact that it is mandatory for government contractors, such as Consebido, to file their income and business tax returns and other required information electronically using the BIR's Electronic Filing and Payment System since April 1, 2005,[48]the BIR could readily generate from its system the list of tax returns which Consebido is required to file but failed to do so. Simply put, Consebido's failure to file his Quarterly VAT return for the 3rdquarter of the taxable year 2008 on the deadline fixed by law, i.e., October 25, 2008, could have easily been discovered by the BIR.
Verily, the Discovery Rule is not applicable in the case. The prescriptive period should not be counted from the date of discovery of the alleged violation, which the parties all agreed to be January 30, 2014,[49]but on October 25, 2008, the date when Consebido purportedly failed to file his return.
Considering the foregoing, even if the commencement of preliminary investigation interrupted the running of the prescriptive period, the complaint should have been filed with the DOJ within five years from October 25, 2008, or not later than October 25, 2013. Thus, the offense had already prescribed as early as when the Joint Complaint-Affidavit dated January 30, 2014, was filed.
In fine, the CTAEn Bancdid not err in affirming the dismissal of the Complaint.
As discussed above, the filing of the criminal complaint before the DOJ shall toll the running of the prescriptive period for offenses under the 1997 NIRC, as amended, whether its commission was immediately known or unknown at the time of the violation.
Still, the Court deems it necessary to revisit the prevailing jurisprudence on the tolling of offenses covered by the 1991 Revised Rules on Summary Procedure as well as the 2022 Rules on Expedited Procedures in the First Level Courts.
In the recent case ofRepublic v. Desierto,[50]the Court held that the rule inPanaguiton, Jr., i.e., prescription is tolled by the institution of proceedings for preliminary investigation, only applies to special laws that are not covered by the Revised Rules on Summary Procedure.[51]For acts covered by special laws where the Revised Rules on Summary Procedure applies, prescription shall only be interrupted by the filing of the Information and not the commencement of preliminary investigation.[52]This is based on Section 11 of the 1991 Revised Rules on Summary Procedure which states that "[t]he filing of criminal cases falling within the scope of this Rule shall be either by complaint or by information: Provided, however, that in Metropolitan Manila and in Chartered Cities, such cases shall be commenced only by information, except when the offense cannot be prosecutedde oficio."
The ruling inDesiertocan be traced back toZaldivia v. Reyes, Jr.,[53]which involved a municipal ordinance. The Court held:
The 1991 Revised Rules on Summary Procedure was supplanted by the 2022 Rules on Expedited Procedures in the First Level Courts.[59]Rule II, Subsection B, Section 1 thereof states that "[t]he filing of criminal cases governed by the Rule on Summary Procedure shall either be by complaint or by information."[60]
The DOJ likewise issued Circular No. 028, entitled the "2024 DOJ-NPS Rules on Summary Investigation and Expedited Preliminary Investigation," which applies when the penalty prescribed by the law is imprisonment of one day to six years, fine regardless of the amount, or both.[61]A summary investigation shall be conducted if the prescribed penalty is imprisonment of one day to one year, fine regardless of the amount, or both.[62]The investigating prosecutor must immediately resolve a case subject of summary investigation upon receipt of its records.
With this dilemma, the Court takes this opportunity to pronounce that the filing of the complaint before the prosecution office and the conduct of the summary investigation should toll the running of the prescriptive period. While it is ideal that all cases are resolved promptly, the reality is that this is not done at all times, whether for valid reasons or not. The offended party, which is primarily the State, should not be prejudiced by any delay in the conduct of the preliminary investigation even for cases covered by summary procedure. The Court reiterates its reasoning inPeople v. Olarte[63]that "it is unjust to deprive the injured party of the right to obtain vindication on account of delays that are not under his control. All that the victim of the offense may do on his part to initiate the prosecution is to file the requisite complaint.[64]"
In addition, Chief Justice Gesmundo extensively discussed the history of the pertinent laws and rules on the filing of complaint or information for criminal cases and the conduct of preliminary investigation in his Reflections.[65]Based on an examination of these laws and rules, he aptly surmised:
Accordingly, the Court resolves that, henceforth, the filing of the criminal complaint before the DOJ, even if it involves offenses that may be covered by the 2022 Rules on Expedited Procedures in the First Level Courts,[69]shall toll the running of the prescriptive period. The ruling inDesiertoand the subsequent case ofCorpus, Jr. v. People of the Philippines,[70]insofar as the tolling of the prescriptive period for crimes covered by the 2022 Rules on Expedited Procedures in the First Level Courts is concerned, is deemed abandoned.
WHEREFORE, the Petition for Review onCertiorariisDENIED. The Decision dated January 6, 2021, and the Resolution dated January 5, 2022, of the Court of Tax AppealsEn Bancin CTA EB CRIM No. 069 areAFFIRMED.
Let copies of this Decision be furnished to the Senate of the Philippines and the House of Representatives for their information and appropriate action.
SO ORDERED.
Leonen, SAJ., Caguioa, Hernando, Lazaro-Javier, Zalameda, M. Lopez, Gaerlan, Rosario, J. Lopez, Marquez, andKho, Jr., JJ., concur.
Gesmundo, C.J., see separate concurring opinion.
Dimaampao, J., see concurring and dissenting opinion.
Singh,**J., on leave but left a concurring vote.
*Referred to as "Ulysses Palconet Consebido" in some parts of therollo.
**On leave but left a concurring vote.
[1]Rollo, pp. 19-42.
[2]Id.at 55-64. Penned by Associate Justice Ma. Belen M. Ringpis-Liban and concurred in by Presiding Justice Roman G. Del Rosario and Associate Justices Juanito C. Castañeda, Jr., Erlinda P. Uy, Catherine T. Manahan, Jean Marie A. Bacorro-Villena, and Maria Rowena Modesto-San Pedro of the CTAEn Banc, Court of Tax Appeals, Quezon City.
[3]Id.at 66-69. Penned by Associate Justice Ma. Belen M. Ringpis-Liban and concurred in by Presiding Justice Roman G. Del Rosario and Associate Justices Juanito C. Castañeda, Jr., Erlinda P. Uy, Catherine T. Manahan, Jean Marie A. Bacorro-Villena, Maria Rowena Modesto-San Pedro, Marian Ivy F. Reyes-Fajardo, and Lanee S. Cui-David of the CTAEn Banc, Court of Tax Appeals, Quezon City.
[4]Id.at 99-102. Penned by Associate Justices Juanito C. Castañeda, Jr. and Cielito N. Mindaro-Grulla of the Second Division, Court of Tax Appeals, Quezon City.
[5]Id.at 115-117. Penned by Associate Justices Juanito C. Castañeda, Jr. and Cielito N. Mindaro-Grulla of the Second Division, Court of Tax Appeals, Quezon City.
[6]SECTION 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 such correct and accurate information, or withhold or remit taxes withheld, or refund excess taxes withheld on compensation, at the time or times required by law or rules and regulations shall, in addition to other penalties provided by law, upon conviction thereof, be punished by
a fine of not less than Ten thousand pesos ([PHP]10,000) and suffer imprisonment of not less than one (1) year but not more than ten (10) years.
Any person who attempts to make it appear for any reason that he or another has in fact filed a return or statement, or ach1ally files a return or statement and subsequently withdraws the same return or statement after securing the official receiving seal or stamp of receipt of an internal revenue office wherein the same was actually filed shall, upon conviction therefor, be punished by a fine of not less than Ten thousand pesos ([PHP]10,000) but not more than Twenty thousand pesos ([PHP]20,000) and suffer imprisonment of not less than one (1) year but not more than three (3) years.
[7]SECTION 114.Return and Payment of Value-added Tax.—
(A)In General.— Every person liable to pay the value-added tax imposed under this Title shall file a quarterly return of the amount of his gross sales or receipts within twenty-five (25) days following the close of each taxable quarter prescribed for each taxpayer:Provided, however, That VAT-registered persons shall pay the value-added tax on a monthly basis.
Any person, whose registration has been cancelled in accordance with Section 236, shall file a return and pay the tax due thereon within twenty-five (25) days from the date of cancellation of registration:Provided, That only one consolidated return shall be filed by the taxpayer for his principal place of business or head office and all branches.
(B)Where to File the Return and Pay the Tax.— Except as the Commissioner otherwise permits, the return shall be filed with and the tax paid to an authorized agent bank, Revenue Collection Officer or duly authorized city or municipal Treasurer in the Philippines located within the revenue district where the taxpayer is registered or required to register.
(C)Withholding of Creditable Value-added Tax.— The Government or any of its political subdivisions, instrumentalities or agencies, including government-owned or -controlled corporations (GOCCs) shall, before making payment on account of each purchase of goods from sellers and services rendered by contractors which are subject to the value-added tax imposed in Sections 106 and 108 of this Code, deduct and withhold the value-added tax due at the rate of three percent (3%) of the gross payment for the purchase of goods and six percent (6%) on gross receipts for services rendered by contractors on every sale or installment payment which shall be creditable against the value-added tax liability of the seller or contractor:Provided, however, That in the case of government public works contractors, the withholding rate shall be eight and one-half percent (8.5%):Provided, further, That the payment for lease or use of properties or property rights to nonresident owners shall be subject to ten percent (10%) withholding tax at the time of payment. For this purpose, the payor or person in control of the payment shall be considered as the withholding agent.
The value-added tax withheld under this Section shall be remitted within ten (10) days following the end of the month the withholding was made.
[8]CTA Second Division records, pp. 172-183.
[9]Rollo, p. 100.
[10]CTA Second. Division records, pp. 8-10. Filed by Assistant State Prosecutor Christine T. Perolino and approved by Senior Deputy State Prosecutor Richard Anthony D. Fadullon.
[11]Id.at 8-9.
[12]Rollo, p. 23.
[13]Id.at 99-102.
[14]Id.at 102.
[15]Id.at 100-102.
[16]Id.at 115-117.
[17]Id.at 82-96.
[18]Id.at 55-64.
[19]268 Phil. 680 (1990).
[20]Rollo, pp. 60-62.
[21]Id.at 66-69.
[22]An Act to Establish Periods of Prescription for Violations Penalized by Special Acts and Municipal Ordinances and to Provide When Prescription Shall Begin to Run (1926).
[23]Rollo, pp. 30-40.
[24]Id.at 150-154.
[25]Commonwealth Act No. 466 (1939).
[26]Lim, Sr. v. Court of Appeals, 268 Phil. 680, 688-689 (1990).
[27]SeePanaguiton, Jr. v. Department of Justice, 592 Phil. 286, 295 (2008).
[28]Id.
[29]Id.at 297,citingPeople v. Olarte, 19 Phil. 494, 500 (1967).
[30]287 Phil. 669 (1992).
[31]Id.at 681.
[32]Id.at 679-680.
[33]746 Phil. 995 (2014).
[34]Id.at 1005.
[35]SeeBoard of Commissioners of the Bureau of Immigration and the Jail Warden v. Wenle, 937 Phil. 148, 221-222 (2023).SeeMicrosoft Corp. v. Manansala, 772 Phil. 14, 22 (2015);See alsoThe Philippine American Life and General Insurance Co. v. The Secretary of Finance, 747 Phil. 811, 824 (2014);See furtherCivil Service Commission v. Court of Appeals, 696 Phil. 230, 248-249 (2012); andSecretary of Justice v. Koruga, 604 Phil. 405, 416 (2009).
[36]Republic v. Desierto, 933 Phil. 373, 408 (2023).See alsoPresidential Commission on Good Government v. The Ombudsman, 746 Phil. 995, 1003-1004 (2014).
[37]Baylosis, Sr. v. People, 556 Phil. 684, 690 (2007).
[38]McDonald's Philippines Realty Corp. v. Commissioner of Internal Revenue, 945 Phil. 365, 394 (2023),citingCollector of Internal Revenue v. Central Azucarera De Tarlac, G.R. Nos. L-11760 & 11761, July 31, 1958, and RULES OF COURT, Rule 131, secs. 3(q) and 3(ff).
[39]SeeDel Rosario v. People, 834 Phil. 419, 433 (2018).
[40]Rollo, p. 24.
[41]CTA Second Divisionrollo, p. 185.
[42]Pleaseseethe Official Receipt issued by respondent to the Provincial Government of Palawan,id.at 289-291.
[43]Approved on May 25, 2005.
[44]Section 114 of the 1997 NIRC was further amended by Republic Act No. 11976, titled, "Ease of Paying Taxes Act," approved on January 5, 2024:
SEC. 114.Return and Payment of Value-Added Tax. —
(A)In General.— Every person liable to pay the value-added tax imposed under this Title shall file, either electronically or manually, a quarterly return of the amount of his gross sales within twenty-five (25) days following the close of each taxable quarter prescribed for each taxpayer:Provided, however, That VAT-registered persons shall pay, either electronically or manually, the value-added tax on a monthly basis:Provided, finally, That beginning January 1, 2023, the filing and payment required under this Subsection shall be done within twenty-five (25) days following the close of each taxable quarter.
[45]CTA Second Division records, p. 179.
[46]Id.at 335-337.
[47]SEC. 114.Return and Payment of Value-added Tax.—
. . . .
(C)Withholding of Value-Added Tax. — The Government or any of its political subdivisions, instrumentalities or agencies, including government-owned or -controlled corporations (GOCCs) shall, before making payment on account of each purchase of goods and services which are subject to the value-added tax imposed in Sections 106 and 108 of this Code, deduct and withhold a final valueadded tax at the rate of five percent (5%) of the gross payment thereof:Provided, That the payment for lease or use of properties or property rights to nonresident owners shall be subject to ten percent (10%) withholding tax at the time of payment. For purposes of this Section, the payor or person in control of the payment shall be considered as the withholding agent.
The value-added tax withheld under this Section shall be remitted within ten (10) days following the end of the month the withholding was made.
[48]SeeRules and Regulations Implementing Executive Order No. 398, s. 2005, Revenue Regulations No. 03-05, Section 4.1.
[49]See rollo, pp. 107-108 and 152-154, respectively.
[50]933 Phil. 373 (2023).
[51]Approved on October 15, 1991.
[52]Republic v. Desierto, 933 Phil. 373, 419-421 (2023).
[53]286 Phil 375 (1992).
[54]Id.at 382.
[55]687 Phil. 95, 104 (2012).
[56]719 Phil. 1 (2013).
[57]863 Phil. 134 (2019).
[58]Id.at 143.
[59]A.M. No. 08-8-7-SC, March 1, 2022.
[60]Underlining in the original.
[61]Rule I, Section 2.
[62]Rule IV, Section 6.
[63]125 Phil. 895 (1967).
[64]Id.at 902.
[65]Pages 8-12 of Chief Justice Gesmundo's Reflections.
[66]ARTICLE 91. Computation of Prescription of Offenses. — The period of prescription shall commence to run from the day on which the crime is discovered by the offended party, the authorities, or their agents, and shall be interrupted by the filing of the complaint or information, and shall commence to run again when such proceedings terminate without the accused being convicted or acquitted, or are unjustifiably stopped for any reason not imputable to him.
The term of prescription shall not run when the offender is absent from the Philippine Archipelago.
[67]Page 13 of Chief Justice Gesmundo's Reflections.
[68]Republic v. Desierto, 933 Phil. 373, 408 (2023).
[69]Rule I, Section 1(B) of the 2022 Rules on Expedited Procedures in the First Level Courts states:
The following criminal cases shall be governed by the Rule on Summary Procedure:
(1) Violations of traffic laws, rules and regulations;
(2) Violations of the rental law;
(3) Violations of municipal or city ordinances;
(4)Violations ofBatas Pambansa Blg.22 (the Bouncing Checks Law); and
(5) All other criminal cases where the penalty prescribed by law for the offense charged is imprisonment notexceeding one (1) year, or a fine not exceeding Fifty Thousand Pesos ([PHP] 50,000.00), or both,regardlessof other imposable penalties, accessory or otherwise, or of the civil liability arising therefrom. In offenses involving damage to property through criminal negligence under Article 365 of the Revised Penal Code, this Rule shall govern where the imposable finedoes not exceed One Hundred Fifty Thousand Pesos ((PHP] 150,000.00).
If the prescribed penalty consists of imprisonment and/or a fine, the prescribed imprisonment shall be the basis for determining the applicable procedure.
All other cases not included herein shall be governed the regular rules of procedure.
[70]946 Phil. 88 (2023).
GESMUNDO,C.J.:
I concur with the esteemedponenteand write this concurring opinion to expound on my reasons for such concurrence. In particular, I wish to elaborate on my views on the (1) proper interpretation of Section 281 of the National Internal Revenue Code (1997 NIRC), and (2) rule on the tolling of the prescriptive period for offenses under the 1991 Revised Rules on Summary Procedure or the 2022 Rules on Expedited Procedures in the First Level Courts.
The facts of this case, as culled from theponencia, are as follows.
This is a Petition for Review onCertiorarifiled by the People of the Philippines, through the Office of the Solicitor General, assailing the Court of Tax Appeals (CTA)En Banc's January 6, 2021 Decision and January 5, 2022 Resolution affirming the April 2, 2019 and May 7, 2019 Resolutions of the CTA Second Division, which dismissed the Information for Willful Failure to File a Quarterly Value-Added Tax (VAT) Return in violation of Section 255, in relation to Section 114 of the 1997 NIRC against Ulysses Palconit Consebido (Consebido).[1]
The Information against Consebido, doing business under the name and style of SEVEN DIGIT CONSTRUCTION AND SUPPLIES, charged him with failing to file his quarterly VAT return for the 3rdquarter of taxable year 2008, resulting in a basic quarterly VAT deficiency of PHP 4,184,566.10 for the 3rdquarter of taxable year 2008.[2]
The CTA Second Division, in its April 2, 2019 Resolution dismissed the case on the ground of prescription, having been filed beyond the five-year prescriptive period in Section 281 of the 1997 NIRC. It denied the motion for reconsideration filed by the People in its May 7, 2019 Resolution. On review, the CTAEn Banc, in its January 6, 2021 Decision, denied the petition and affirmed the ruling of the CTA Second Division. The People filed a motion for reconsideration, which the CTAEn Banclikewise denied in its January 5, 2022 Resolution.[3]
Theponenciadenied the petition. It held that the prescriptive period for violations of the 1997 NIRC not known at the time of its commission begin to run from its discovery. It observed that Section 281 of the 1997 NIRC, which governs prescription for violation of said law, is identical to Section 354 of the 1939 NIRC. It noted that the Court previously held inLim, Sr. v. Court of Appeals[4]that said provision speaks of both discovery of the fraud and the institution of judicial proceedings for the five-year period to run. Thus, it stated that, based onLim, Sr., "the prescriptive period for violations of the 1939 NIRC where the date of its commission is unknown, shall begin to run from the discovery of its commission until an Information is filed with the court. Stated otherwise, the Information must be filed within five years from· the discovery of the commission of the violation. This implies that the preliminary investigation does not toll the running of the prescriptive period."[5]
Theponenciare-examined the ruling inLim, Sr.and clarified that under Section 281 of the 1997 NIRC, the prescription of criminal offenses where the commission of the violation is not known shall begin to run from its discovery. It explained that this ruling is to harmonize the second and third paragraphs of Section 281 of the 1997 NIRC. Thus, the institution of proceedings, specifically the commencement of preliminary investigation, shall interrupt the prescriptive period for offenses. It further explained that this clarification is necessary as a literal interpretation of the law should be rejected if it would lead to absurd results. Otherwise, prescription would not run pursuant to a literal reading of Section 281 of the 1997 NIRC, as it would both begin and be interrupted by the institution of proceedings. Theponenciaurged that the Court must give effect to the clear intent of the Legislature to set a prescriptive period for violations of the 1997 NIRC.[6]
Theponenciafurther provided that, as suggested by Associate Justice Japar B. Dimaampao, the wording of Section 281 of the 1997 NIRC should be brought to the attention of the Legislature. Thus, it stated that a copy of the Decision shall be given to the Senate of the Philippines and the House of Representatives for their appropriate action.[7]
Theponencia, nevertheless, found that the Discovery Rule does not apply to the instant case since the Bureau of Internal Revenue (BIR) had reasonable means to ascertain that Consebido failed to file his quarterly VAT return for the 3rdquarter of the taxable year of 2008. This is because the Provincial Government of Palawan, as the payor of Consebido, was required by law to report the payments made. Also, due to the Electronic Filing and Payment System in place since April 1, 2005, the BIR could have easily discovered that Consebido failed to file the same. Thus, the Discovery Rule does not apply. Rather, the prescriptive period should run from October 25, 2008, the date when Consebido purportedly failed to file his return. Thus, the complaint should have been filed with the Department of Justice (DOJ) on October 25, 2013. However, it was filed on January 30, 2014. Thus, the CTAEn Bancdid not err in affirming the dismissal of the complaint.[8]
Theponenciathen clarified that the rule on the tolling of the prescriptive period for offense. It stated that "the filing of the criminal complaint before the DOJ shall toll the running of the prescriptive period for offenses under the 1997 NIRC, as amended, whether its commission was immediately known or unknown at the time of the violation."[9]It then revisited prevailing jurisprudence on the tolling of offenses covered by the 1991 Revised Rules on Summary Procedure as well as the 2022 Rules on Expedited Procedures in the First Level Courts. It observed that Rule III, Subsection B, Section 1 thereof states that "[t]he filing of criminal cases governed by the Rule on Summary Procedure shall either be by complaint or by information."[10]Further, it noted that the DOJ issued Circular No. 028, titled the "2024 DOJ-National Prosecution Service (NPS) Rules on Summary Investigation and Expedited Preliminary Investigation," which applies when the penalty prescribed by the law is imprisonment of one day to six years, fine regardless of the amount, or both. In view of the foregoing, it pronounced that the filing of the complaint before the prosecution office and the conduct of the summary investigation should toll the running of the prescriptive period. Nonetheless, it stated that this ruling shall apply prospectively.[11]
I concur in theponenciathat the CTAEn Bancdid not err in affirming the dismissal of the complaint. I also concur that the interpretation of Section 281 of the 1997 NIRC must be re-examined. Further, I agree with theponencia's interpretation that the prescription for criminal offenses under the 1997 NIRC where the commission of the violation is not known shall begin to run from its discovery. I also concur that the prescription of any criminal offense, whether or not covered by the 1991 Revised Rules on Summary Procedure or the 2022 Rules on Expedited Procedures, shall be interrupted by the filing of the criminal complaint with the DOJ.
Allow me to expound on my position that the prevailing interpretation of Section 281 of the 1997 NIRC must be re-examined, as well as the rule on the tolling of the prescription of offenses covered by the Revised Rules on Summary Procedure or 2022 Rules on Expedited Procedures in the First Level Courts.
The provision pivotal in the instant case is Section 281 of the 1997 NIRC, which reads as follows:
The source of confusion in Section 281 is the Discovery Rule, which provides that when the day of the commission of the violation of the law is not known, the prescriptive period of five years shall run from the discovery of the violation of the lawandthe institution of judicial proceedings for its investigation and punishment.
As theponenciapoints out, this has been previously interpreted by the Court to mean that "tax cases ... are practically imprescriptible for as long as the period from the discoveryandinstitution of judicial proceedings for its investigation and punishment,up tothe filing of the information in court does not exceed five (5) years."[12]
To my mind, such an interpretation leads to an absurd situation because it renders tax cases practically imprescriptible. Under such an interpretation,the running of the prescriptive period requires the concurrence of two events: (1) the discovery of the commission of a violation, and (2) the institution of judicial proceedings for its investigation and punishment. However, in the same breath, Section 281 states that the running of the prescriptive period shall be interrupted when proceedings are instituted against the guilty persons. Thus,the same event—the institution of judicial proceedings—gives rise to the running and the tolling of the prescriptive period. This leads to a situation where the prescriptive period does not run at all. Plainly, this is an absurd situation. The net effect of such an interpretation is to render the prescriptive period practically non-existent.
To this end, the Court has previously declared that the courts are not to give words a meaning which would lead to absurd or unreasonable consequences:
Rather, I am of the mind that Section 281 should be interpreted to mean that, in instances the day of the commission of the violation of the 1997 NIRC is not known,the five-year prescriptive period shall run from the discovery of the commission of the violation of the law. This view echoes the ruling of the Court inPeople v. Duque[14]andPresidential Commission on Good Government [PCGG] v. Carpio Morales,[15]both cited by theponencia.[16]
InDuque, Napoleon Duque (Duque) was charged with and convicted of illegal recruitment under Section 38, in relation to Section 39 of Presidential Decree No. 442, as amended, known as The Labor Code of the Philippines. On appeal, Duque only raised the defense that the criminal offense for which he was convicted had already prescribed.
For this purpose, Section 2 of Act No. 3326, as amended, titled "An Act to Establish Periods of Prescription for Violations Penalized by Special Acts and Municipal Ordinances and to Provide When Prescription Shall Begin to Run" is relevant. Section 2 of Act No. 3326 reads as follows:
The Court affirmed this interpretation inPCGG, which involved an affidavit-complaint filed by PCGG against Resorts Hotel Corporation (RHC) and the directors of the Development Bank of the Philippines before the Office of the Ombudsman for violation of Sections 3(e) and 3(g) of Republic Act No. 3019 or the Anti-Graft and Corrupt Practices Act. The Ombudsman dismissed the complaint on the ground of prescription. Before the Court, PCGG argued that the offense had not yet prescribed since the prescriptive period only commenced to run on January 6, 2003 when it filed its affidavit-complaint with the Office of the Ombudsman, and not on January 4, 1993 when the crimes were discovered. PCGCC cited Section 2 of Act No. 3326 as basis for this argument. In rejecting said argument, the Court cited the ruling inDuque. The Court held that the prescriptive period ran from the date of discovery on January 4, 1993, when the Presidential Ad Hoc Fact-Finding Committee reported to the president its findings and conclusions anent the RHC loans. Thus, the dismissal of PCGG's complaint is proper on the ground of prescription since PCGG filed its affidavit-complaint on January 6, 2003, a little over 10 years from the date of discovery of the crimes.
DuqueandPCGGboth centered on an interpretation of Section 2 of Act No. 3326, which is similarly worded as Section 281 of the 1997 NIRC. To my mind, the interpretation inDuqueandPCGGis proper. Accordingly, in instances the day of the commission of the violation of the 1997 NIRC is not known,the five-year prescriptive period shall run from the discovery of the commission of the violation of the law.
This interpretationgives life to the spirit of the law. It respects the fact that the Legislature clearly intended for prescription to run against the State in the prosecution of offenses defined and punishable under the 1997 NIRC but which were not known on the day of its commission.
This interpretation is alsoconsistent with the principle that statutes of limitation in criminal suits are to be liberally construed in favor of the defendant. The rationale behind this principle is elucidated in the 1924 case ofPeople v. Moran,[17]where the Court quoted with approval the discussion of Wharton on Criminal Pleading & Practice, 9th ed., 1889, sec. 316, page 215:
Since Section 281 provides for the prescriptive period for the prosecution of violations of penal provisions, it must be liberally construed in favor of the defendant.The prescriptive period of a penal provision is an amnesty granted by the State in favor of the defendant.It is a surrender by the State of its right to prosecute and, as such,a liberal construction in favor of the defendant is proper.
I am aware of the view advanced by the esteemed Justice Dimaampao that the "Congress deliberately chose to retain the reckoning point of prescriptive periods for tax offenses under the NIRC from both the discoveryandthe institution of judicial proceedings as it is understood in its modern meaning, i.e., the filing of an Information before the courts" since the provision has remained unchanged from its first iteration.[20]
While it is true that the formulation has remain unchanged, I am of the mind thatretaining the prevailing interpretation effectively renders nugatory or lifeless the prescriptive period set by Congress itself. This is because the same event, the institution of judicial proceeding, gives rise to the. running and the tolling of the prescriptive period. In short, it appears that the prescriptive period does not begin to run at all.Section 281 of the 1997 NICR is rendered lifeless by such interpretation.Such a result is a disservice to the Legislature and defeats the entirety of the second paragraph of Section 281 of the 1997 NIRC.
Indeed, if the Court maintains the literal reading of the Discovery Rule under Section 281, the prescription of violations of the 1997 NIRC will never occur. Certainly, Congress did not intend a provision of the law to be ineffective and futile. The law does not require the impossible (lex non cognit ad impossibilia).[21]
Accordingly, I am of the view that the prescription of criminal offenses under the 1997 NIRC where the commission of the violation is not known shall begin to run from its discovery.
I now turn my attention to theponencia's discussion on the tolling of offenses covered by the 1991 Revised Rules on Summary Procedure or the 2022 Rules on Expedited Procedures in the First Level Courts.
On this score, Section 11 of the 1991 Revised Rules on Summary Procedure, as well as Rule III, Subsection B, Section 1 of the 2022 Rules on Expedited Procedures in the First Level Courts, is relevant.
Section 11 of the 1991 Revised Rules on Summary Procedure provides
that:
Nonetheless, Article 91 of the Revised Penal Code is equally relevant to this discussion:
It is important to note that, at the time the Revised Penal Code was approved, or on December 8, 1930 (effective on January 1, 1932), "the function of conducting the preliminary investigation of criminal offenses was vested in the justices of the peace."[22]
At this juncture, it is proper to discuss the historical development of the conduct of preliminary investigation.
The 1940 Rules of Court expressly defined preliminary investigation in Rule 108, Section 1 as that inquiry or examination made in connection with a complaint or information imputing the commission of an offense cognizable by the Court of First Instance, viz.:
In 1972, Presidential Decree No. 77[25]amended Section 1 of Republic Act No. 5180, viz.:
Meanwhile, Batas Pambansa Bilang No. 129, enacted in 1981, authorized judges of Metropolitan Trial Courts (MeTCs; except those in the National Capital Region), Municipal Trial Courts (MTCs), and Municipal Circuit Trial Courts (MCTCs) to conduct preliminary investigation of crimes alleged to have been committed within their respective territorial jurisdictions cognizable by the Regional Trial Court (RTC) in accordance with the procedure laid down in Presidential Decree No. 911.
The 1985 Rules on Criminal Procedure, in turn, provides that preliminary investigation may be conducted by the (1) provincial or city fiscals and their assistants, (2) judges of the MTCs and MCTCs, (3) national and regional state prosecutors, and (4) such other officers as may be authorized by law.[27]This was maintained in the 2000 Revised Rules on Criminal Procedure. In 2005, the Court removed the authority of judges of MTCs and MCTCs to conduct preliminary investigation.[28]
Nonetheless, in 2010, Republic Act No. 10071, otherwise known as the "Prosecution Service Act of 2010," was enacted. It created the NPS, "which shall be primarily responsible for the preliminary investigation and prosecution of all cases involving violations of penal laws under the supervision of the Secretary of Justice, subject to the provisions of Sections 4, 5 and 7 hereof."[29]
Cognizant of Republic Act No. 10071, the Court, on May 28, 2024, promulgated a Resolution in A.M. No. 24-02-09-SC recognizing the authority of the DOJ to promulgate its own rules on the conduct of preliminary investigations and inquest proceedings. It repealed the pertinent provisions of Rule 112 of the 2000 Revised Rules on Criminal Procedure, as amended, inconsistent with the rules of the DOJ.
It is respectfully submitted that this historical examination of the pertinent legislative enactments and Court issuances reveal that the use of the phrase "complaint or information" in Article 91 of the Revised Penal Code, Section 11 of the 1991 Revised Rules on Summary Procedure, and Rule III, Subsection B, Section 1 of 2022 Rules on Expedited Procedures in the First Level Courts, for purposes of the tolling of the prescriptive period of offenses, refers to the filing thereof for the conduct of preliminary investigation.
This is made even more evident when viewed from the fact that Article 91 of the Revised Penal Code was enacted in a factual milieu where "the function of conducting the preliminary investigation of criminal offenses was vested in the justices of the peace."[30]It must be recalled that it was only in 1952 that Section 1687 of the Administrative Code was amended by Republic Act No. 732 to provide for the authority of the provincial fiscal to conduct investigation in criminal matters. Clearly, at the time of the enactment of Article 91 of the Revised Penal Code, the filing of the complaint or information principally contemplated a filing for purposes of the conduct of a preliminary investigation.
Concomitantly, the use of the phrase "complaint or information" in Article 91 of the Revised Penal Code, Section 11 of the 1991 Revised Rules on Summary Procedure, and Rule III, Subsection B, Section 1 of the 2022 Rules on Expedited Procedures in the First Level Courts, for purposes of the tolling of the prescriptive period of offenses, must henceforth be construed to refer to the filing of the complaint or information before the prosecution office. It is the filing of such complaint or information before the prosecution office that institutes the criminal proceedings against the accused and tolls the· prescriptive period of the offense.
Such a view is consistent with DOJ Department Circular No. 15, dated July 16, 2024, titled the "2024 DOJ-NPS Rules on Preliminary Investigations and Inquest Proceedings" and DOJ Department Circular No. 028, dated November 13, 2024, titled "2024 DOJ-NPS Rules on Summary Investigation and Expedited Preliminary Investigation."
DOJ Department Circular No. 15 requires the conduct of apreliminary investigationproceeding for crimes or offenses where the penalty prescribed by law isat least six years and one day without regard to fine.
On the other hand, DOJ Department Circular No. 028 provides that it governs the conduct ofinvestigationof crimes or offenses in the NPS of the DOJwhere the penalty prescribed by law is one day to six years, fine regardless of the amount, or both.[31]Section 6 thereof provides thatsummary investigationis required for crimes or offenses where the penalty prescribed isone day to one year, fine regardless of the amount or both. Further, Section 8 thereof provides that anexpedited preliminary investigationis required where the penalty prescribed isone year and one day to six years, without regard to fine, or both imprisonment and fine, if exclusively falling within the jurisdiction of first level courts such as MeTCs, MTCs, and MCTCs,provided that, if the cases are by law cognizable by the RTCs, they shall be subjected to regular preliminary investigation or inquest proceedings.
I am aware of views expressed that such construction may lead to delay in the filing of the Information with the courts. To my mind, such concern is more apparent than real. After all, courts may hold the prosecutors accountable by the process and periods provided for under DOJ Department Circular Nos. 15 and 28.
In fine, I concur with theponenciathat (1) the prescription of criminal offenses under the 1997 NIRC where the commission of the violation is not known shall begin to run from its discovery, and (2) the prescriptive period of an offense is tolled by the filing of the complaint with the prosecutor for purposes of Article 91 of the Revised Penal Code, Section 11 of the 1991 Revised Rules on Summary Procedure, and Rule III, Subsection B, Section 1 of the 2022 Rules on Expedited Procedures in the First Level Courts.
ACCORDINGLY, I vote toDENYthe Petition.
[1]Ponencia, pp. 1-2.
[2]Id.at 3.
[3]Id.at 3-4.
[4]268 Phil. 680 (1990) [Per C.J. Fernan, Third Division].
[5]Ponencia, pp. 5-7, 7.
[6]Id.at 9-10.
[7]Id.at 10.
[8]Id.at 10-12.
[9]Id.at 12-13.
[10]Id.at 14.
[11]Id.at 14-15.
[12]Lim, Sr. v. Court of Appeals, 268 Phil. 680, 689 (1990) [Per C.J. Fernan, Third Division].
[13]Brent School, Inc. v. Zamora, 260 Phil. 747, 762-763 (1990) [Per J. Narvasa,En Banc]. (Citations omitted)
[14]287 Phil. 669 (1992) [Per J. Feliciano, Third Division].
[15]46 Phil. 995 (2014) [Per J. Velasco, Jr., Third Division].
[16]Ponencia, p. 8.
[17]44 Phil. 387 (1923) [Per C.J. Araullo, First Division].
[18]Inmates of the New Bilibid Prison v. De Lima, 854 Phil. 675, 706-707 (2019) [Per J. Peralta,En Banc].
[19]Titled "Statutory Offenses and Penalties."
[20]J. Dimaampao, Concurring and Dissenting Opinion, pp. 4-5.
[21]SeePiccio v. House of Representatives Electoral Tribunal, 912 Phil. 189, 223 (2021) [Per J. Caguioa,En Banc].
[22]Panaguiton, Jr. v. Department of Justice, 592 Phil. 286, 295 (2008) [Per J. Tinga, Second Division]. (Citation omitted)
[23]An Act To Further Amend Sections Sixteen Hundred and Seventy-Four and Sixteen Hundred and Eighty-Seven of The Revised Administrative Code (1952).
[24]Dated September 8, 1967.
[25]Dated December 6, 1972.
[26]Dated March 23, 1976.
[27]1985 RULES ON CRIMINAL PROCEDURE (1985), Rule 112, sec. 2.
[28]SeeSC Administrative Matter No. 05-8-26-SC, August 30, 2005, sec. 2.
[29]REPUBLIC ACT NO. 10071, sec 3:
[31]2024 DOJ-NPS Rules on Summary Investigation and Expedited Preliminary Investigation, Rule 1, sec. 2.
CONCURRING AND DISSENTING OPINION
DIMAAMPAO,J.:
Theponenciaoverturns the doctrine laid down inLim, Sr. v. Court of Appeals[1](Lim), which declared that Section 354 (now Section 281) of the National Internal Revenue Code (NIRC) of 1939 reckons the running of the prescription of violations of the Tax Code from both the discovery of the fraudandthe institution of judicial proceedings. Theponenciaposits that this provision should be interpreted as reckoning the running of the prescriptive period solely on the discovery of the violation[2]and the filing of a complaint before the Department of Justice tolls the prescriptive period.[3]It bases this interpretation from the Court's pronouncements inPanaguiton, Jr. v. Department of Justice[4](Panaguiton) andPeople v. Duque[5](Duque). InPanaguiton, the Court determined that the "proceedings" referred to in Section 2 of Act No. 3326[6]—a provision sharing the wording of Section 281—must be read as including proceedings conducted by the executive branch, i.e., preliminary investigation. InDuque, the Court held that the phrase "institution of judicial proceedings for its investigation and punishment" should either be disregarded or deemed preceded by the word "until." Otherwise, the prescriptive period can never commence given that it would begin and be interrupted by the same occurrences.
While I agree it is high time for the Court to take a second look at the doctrine inLim, I do not share the proposition of the majority to completely abandon the same. Rather, I believe the Court should take this opportunity to clarify the doctrine in obeisance to legislative intent.
In order to elucidate my position, an extensive review of the history of the tax provision is in order.
The provision first appears in its present form under Section 354 of Commonwealth Act No. 466, otherwise known as the NIRC of 1939:
InLim, the Court affirmed the assertion of the Solicitor General that Section 354 of the NIRC of 1939 requires the concurrence of both the discovery of the violation and the institution of judicial proceedings before the five-year prescriptive period may begin to run:
Thereafter, the provision was again carried over in Republic Act No. 8424, or the NIRC of 1997, although it was again renumbered:
Based on this fact alone, there is ample reason to reject the majority's stance in applying analogously the jurisprudence reinterpreting the provisions of Act No. 3326 to Section 281 of the NIRC of 1997.
Act No. 3326, unlike the NIRC, has not been subject to amendment except in 1929 by Act No. 3585 and in 1930 by Act No. 3763. Since then, no legislative act has been passed, either affirming, modifying, or repealing Act No. 3326.
This should be contradistinguished from the NIRC which has gone through several amendments as a whole, while Section 281 remained unchanged. From this, it may be reasonably inferred that the legislators simply did not see it fit to alter the same notwithstanding the ostensible evolution in the "judicial proceedings" for criminal cases from the time that investigations began from filing a complaint with the justices of the peace.
It bears stressing that when the NIRC of 1997 was passed,Limalready espoused the doctrine that Section 281 (them Section 354) required the concurrence of both discovery and institution of judicial proceedings for the prescriptive period to begin. Moreover, the doctrine inDuquereinterpreting Act No. 3326 was likewise existent. Still, Section 281 was not amended to "correct" the contemporary interpretation of the Court.
It is a basic principle in statutory construction that in the enactment of statutes, it is presumed that the Legislature "understood the language it used. and to have acted with full idea of what it wanted to accomplish"[9]and that the law was passed "with deliberation [and] with full knowledge of all existing ones on the subject."[10]Guided by the foregoing, it must be assumed that Congress deliberately chose to retain the reckoning point of prescriptive periods for tax offenses under the NIRC from both the discoveryandthe institution of judicial proceedings as it is understood in its modern meaning, i.e., the filing of an Information before the courts. Unless the resulting effect offends the fundamental law of the land, the Court is in no position to override the prerogative of Congress.
Interestingly, this is not the first time that applying the exact wording of the provisions of the NIRC has resulted in an absurd situation. InCommissioner of Internal Revenue v. Carrier Air Conditioning Philippines, Inc.(Carrier Air),[11]the Court likewise examined the issues surrounding Section 229 on the lack of a period provided for the Commissioner of Internal Revenue to act on administrative claims for refund of erroneously or illegally collected taxes before judicial claims for refund may be filed. The wording of the law led to ludicrous situations wherein taxpayers may file an administrative claim two days before the two-year period lapses and then file their judicial claim a day after. Still, the Court held that "the silence or insufficiency in the law on the reasonable period for the Commissioner's action is one that can be addressed not by judicial pronouncement, but by appropriate legislation."[12]
As intimated by now retired Senior Associate Justice Estela M. Perlas-Bernabe in her Concurring Opinion inCarrier Air:
Corollary thereto, there is a need to correct the conclusions of the Court of Tax AppealsEn Bancin its resolution of the case at bench. It appears that in "applyingLim" the tax court misunderstood the import of the doctrine espoused therein. In holding that the criminal violations of respondent have prescribed, the Court of Tax AppealsEn Bancratiocinated that:[13]
This misapprehension appears to have been borne by the following ambiguous statement inLim:
Upon the creation of the National Prosecution Service in 1978[15]and reorganization of the judiciary in 1980,[16]the task of investigating criminal charges for the purposes of prosecution became the sole province of the executive branch. The shift in the criminal investigation process without the concurrent shift in the wording of the law led to the ambiguous statement inLimthat the prescriptive period began upon discovery and filing of a complaint with the fiscal, and ran until the filing of the Information in court.
Nonetheless, as above-discussed, the Legislature chose to retain the phrase "institution of judicial proceedings" notwithstanding that the criminal investigation process no longer began with the courts. Thus, the provision itself should be understood to mean that the prescriptive period begins both from the discovery and the filing of the Information in court, without consideration of the period in between, i.e., the preliminary investigation of the prosecution. Moreover, the filing of the Information will likewise interrupt the period "and shall begin to run again if the proceedings are dismissed for reasons not constituting jeopardy." To reiterate, while this may seem absurd or irrational, and appears to heavily favor the government, it goes into the wisdom of the law. As the Court held inLim, "[i]n criminal cases, statutes of limitations are acts of grace, a surrendering by the sovereign of its right to prosecute. They receive a strict construction in favor of the Government and limitations in such cases will not be presumed m the absence of clear legislation."
Still, the accused-taxpayers are not left without remedy. If the preliminary investigation spans several years, the accused-taxpayer may still raise the defense of a violation of their right to the speedy disposition of cases. This defense is wholly separate from the defense of prescription. Moreover, they may likewise argue that the offense charged is not covered by the· Discovery Rule.
On that point, I wholly concur with theponenciainsofar as it held that the Discovery Rule does not apply to the criminal charge in this case as the Bureau of Internal Revenue had reasonable means to ascertain respondent's failure to file his tax return for 2008. Thus, regardless of my disagreement with theponencia's proposal to abandonLim, I still concur in the result of dismissing the Information against respondent on the ground of prescription.
In view though of the problems that arise from the present wording of Section 281 of the NIRC, and in observance of the principle of separation of powers, I wholeheartedly support theponenciain directing that a copy of the Decision be furnished to both the Lower and Upper Houses of Congress for remedial legislation.
In summary, I vote toDENYthe petition, but I maintain that the doctrine laid down inLimshould be upheld, subject to the clarification above discussed.
[1]268 Phil. 680-692 (1990) [Per C.J. Fernan, Third Division].
[2]Ponencia, pp. 9-10.
[3]Id.at 14-15.
[4]592 Phil. 286-298 (2008) [Per J. Tinga, Second Division].
[5]287 Phil. 669-683 (1992) [Per J. Feliciano, Third Division].
[6]Act No. 3326 (1926), An Act to Establish Periods of Prescription for Violations Penalized by Special Acts and Municipal Ordinances and to Provide When Prescription Shall Begin to Run.
[7]Lim, Sr. v. Court of Appeals,supranote 1.
[8]Panaguiton, Jr. v. Department of Justice,supranote 3 citing the Concurring Opinion of Justice Tinga inSecurities and Exchange Commission v. Interport Resources Corp., 588 Phil. 651-731 (2008) [Per J. Chico-Nazario,En Banc].
[9]CBK Power Company Ltd. v. Commissioner of Internal Revenue, 750 Phil. 748-766 (2015) [Per J. PerlasBernabe, First Division] citingP. J. Kiener Co., Ltd. v. David, 92 Phil. 945-947 (1953) [Per J. Tuason,En Banc].
[10]Calleja v. Executive Secretary, G.R. Nos. 252578 et al., December 7, 2021 [Per J. Carandang,En Banc] citingMecano v. Commission on Audit, 290-A Phil. 272, 283 (1992) [Per J. Campos, Jr.,En Banc].
[11]G.R. No. 226592, July 27, 2021 [Per J. Leonen,En Banc].
[12]Id.
[13]People v. Consebido, C.T.A. EB Crim. Case No. 069 (C.T.A. Crim. Case No. 0-701), January 6, 2021.
[14]Emphasis supplied.
[15]Presidential Decree No. 1275 (1978), Reorganizing the Prosecution Staff of the Department of Justice and the Offices of the Provincial and City Fiscals, Regionalizing the Prosecution Service, and Creating the National Prosecution Service.
[16]Batas Pambansa Blg. 129, (1981), The Judiciary Reorganization Act of 1980.
In a Joint Complaint-Affidavit[8]dated January 30, 2014, Bureau of Internal Revenue (BIR) Officers Gina D. Floreza and Vivencio M. Gapasin charged Consebido with Willful Failure to File a Quarterly VAT Return. On even date, the BIR Officers referred the Complaint-Affidavit to the Department of Justice (DOJ).[9]
On March 18, 2019, an Information[10]against Consebido was filed before the CTA, stating:
That on or about October 25, 2008, in Roxas, Palawan[,] and within the jurisdiction of this Honorable Court, the above-named accused, an individual and a Filipino citizen residing in the Philippines, doing business under the name and style SEVEN DIGIT CONSTRUCTION AND SUPPLIES, and at that time required by law, rules and regulations to file his quarterly Value Added Tax (VAT) return did, then and there, willfully, unlawfully and feloniously fail to file his quarterly VAT return for the 3rdquarter of taxable year 2008, which resulted in basic deficiency quarterly VAT of [PHP] 4,184,566.10 for the 3rdquarter of taxable year 2008, exclusive of surcharge and interest, to the damage and prejudice of the Government of the Republic of the Philippines.The case was docketed as Criminal Case No. 0-701 before the CTA.[12]
CONTRARY TO LAw.[11]
The CTA 2ndDivision dismissed the case on the ground of prescription in its Resolution[13]dated April 2, 2019; thus:
WHEREFORE, CTA Criminal Case No. O-701 is hereby DISMISSED on the ground of prescription.The CTA 2ndDivision held that the Information was filed beyond the five-year prescriptive period in Section 281 of the 1997 NIRC. According to the CTA 2ndDivision, prescription began to run on the day of the discovery, which is January 30, 2014, together with the proceedings for the preliminary investigation. It noted that the period lapsed on January 30, 2019; the Information was filed only on March 18, 2019.[15]
SO ORDERED.[14]
Petitioner filed a motion for reconsideration which the CTA 2ndDivision denied in the Resolution dated May 7, 2019.[16]Thereafter, petitioner filed a Petition for Review[17]before CTAEn Banc.
In its Decision[18]dated January 6, 2021, the CTA En Banc denied the Petition and affirmed the ruling of the CTA 2ndDivision. The CTAEn Bancopined that pursuant to the Court's ruling inLim, Sr. v. Court of Appeals,[19]the date of discovery and the institution of judicial proceedings for investigation and punishment up to the filing of the Information in court should not exceed the five-year prescriptive period under Article 354 of Commonwealth Act No. 466 or the "National Internal Revenue Code of 1939" (1939 NIRC). The CTAEn Bancobserved that Article 354 of the 1939 NIRC and Article 281 of the 1997 NIRC are identically worded. Accordingly, the CTAEn Bancruled that the Information in the present case should have been filed not later than January 30, 2019, or five years from the date of discovery on January 30, 2014. The filing of the Information on March 18, 2019, was clearly beyond the period.[20]
Petitioner prayed for the CTAEn Bancto reconsider its Decision but to no avail.[21]
Hence, it filed the present Petition before the Court.
Petitioner contends that: (1) under Section 281 of the 1997 NIRC, the prescriptive period would only run from the discovery of the commission of the violationandthe institution of judicial proceedings for its investigation and commission; (2) being a special act, the governing law on prescription for violations of the 1997 NIRC is Section 2 of Act 3326;[22](3) the Court has already settled that under Section 2 of Act 3326, prescription shall begin from the date of the commission of the offense or if unknown, then it shall be counted on the date of discovery. It further contends that the filing of the complaint with the DOJ for preliminary investigation interrupted the prescriptive period, and thus, its action has not yet prescribed because the filing of the complaint with the DOJ interrupted the prescriptive period; and (4) even assuming otherwise, its legal arguments should be favored over the termination of the proceedings on purely technical grounds.[23]
Citing the case ofLim, Sr., Consebido maintains that the prescriptive period cannot commence and be interrupted at the same time by the institution of judicial proceedings; hence, the CTAEn Banccorrectly held that petitioner's action had prescribed.[24]
The issue is whether the CTAEn Bancerred in affirming the dismissal of the Information on the ground of prescription.
The Court denies the Petition.
The prescriptive period for violations of the NIRC that are not known at the time of its commission shall begin to run from its discovery |
At the outset, it must be stressed that the prescriptive period for violations of the 1997 NIRC is governed by Section 281 thereof, which provides:
SECTION 281.Prescription for Violations of any Provision of this Code. — All violations of any provision of this Code shall prescribe after five (5) years.As observed by the CTAEn Banc, Section 281 of the 1997 NIRC is identical to Section 354 of the 1939 NIRC[25]that reads:
Prescription 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 prescription 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.
SECTION 354.Prescription for Violations of Any Provisions of this Code. — All violations of any provisions of this Code shall prescribe after five years.The proper understanding of Section 354 was discussed by the Court inLim, Sr.:
Prescription 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 prescription 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.
The Solicitor General stresses that Section 354 speaks not only of discovery of the fraud but also institution of judicial proceedings. Note the conjunctive word "and" between the phrases "the discovery thereof" and the institution of judicial proceedings for its investigation and proceedings. In other words, in addition to the fact of discovery, there must be a judicial proceeding for the investigation and punishment of the tax offense before the five-year limiting period begins to run. It was on September 1, 1969 that the offenses subject of Criminal Cases Nos. 1790 and 1791 were indorsed to the Fiscal's Office for preliminary investigation. Inasmuch as a preliminary investigation is a proceeding for investigation and punishment of a crime, it was only on September 1, 1969 that the prescriptive period commenced.Based onLim, Sr., the prescriptive period for violations of the 1939 NIRC where the date of its commission is unknown, shall begin to run from the discovery of its commission until an Information is filed with the court. Stated otherwise, the Information must be filed within five years from the discovery of the commission of the violation. This implies that the preliminary investigation does not toll the running of the prescriptive period.
But according to the Lim spouses, that argument had precisely been raised considered and found without merit in the case ofPeople vs. Ching Lakwhich had perfunctorily dismissed the Government's position in this wise:"Anent the theory that in the present case the period of prescription should commence from the time the case was referred to the Fiscal's Office,suffice it to state that the theory is not supported by any provision of law, and we need not elucidate thereon."The Court is inclined to adopt the view of the Solicitor General. For while that particular point might have been raised in the Ching Lak case, the Court, at that time, did not give a definitive ruling which would have settled the question once and for all.As Section 354 stands in the statute book (and to this day it has remained unchanged) it would indeed seem that tax cases, such as the present ones, are practically imprescriptible for as long as the period from the discovery and institution of judicial proceedings for its investigation and punishment, up to the filing of the information in court does not exceed five (5) years.[26](Emphasis supplied; and citation omitted)
The Court takes this opportunity to re-examine its ruling inLim, Sr.and to clarify the prescriptive period under Section 281 of the 1997 NIRC, specifically with respect to violations that are unknown at the time of its commission.
There are two components in determining when the prescriptive period shall begin to run under Section 281:first, the discovery of the commission of the violation; andsecond, the institution of judicial proceedings for its investigation and punishment. As observed inLim, Sr., this makes the prosecution of offenses under the 1997 NIRC practically imprescriptible as the prescriptive period will only begin to run upon the institution of judicial proceedings. But the next paragraph of Section 281 states that "prescription shall be intern1pted when proceedings are instituted against the guilty persons[.]" IfLim, Sr.is to be followed, prescription would both be started and interrupted by the institution of proceedings against the accused.
This is not the first time that the Court encountered this conundrum.
Petitioner duly pointed out that Section 2 of Act No. 3326 is similarly worded to the second and third paragraphs of Section 281 of the 1997 NIRC. Section 2 provides:
SECTION 2. Prescription 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.When Act No. 3326 was passed on December 4, 1926, it was the justice of the peace that conducted the preliminary investigation of criminal offenses. Accordingly, the filing of the complaint with the justice of the peace also signified the institution of criminal proceedings against the accused. The prevailing rule then was that the filing of the complaint with the justice of the peace tolled the prescription of the offense.[27]The Court thus clarified inPanaguiton, Jr. v. Department of Justice[28]that the term "proceedings" in Section 2 of Act No. 3326 should now be understood to include those before the executive branch of government. Hence, preliminary investigation tolls prescription, the reason being that "to rule otherwise would deprive the injured party the right to obtain vindication on account of delays that are not under his control."[29]
The prescription shall be interrupted when proceedings are instituted against the guilty person and shall begin to run again if the proceedings are dismissed for reasons not constituting jeopardy.
InPeople v. Duque,[30]the Court held that the phrase "'institution of judicial proceedings for its investigation and punishment' may be either disregarded as surplusage or should be deemed preceded by the word 'until.'"[31]A literal reading of Section 2 of Act No. 3326 would be unfavorable to the accused and is unnecessary. The Court opined that "the prescription period would both begin and be interrupted by the same occurrences the net effect would be that the prescription period would not have effectively begun, having been rendered academic by the simultaneous interruption of that same period."[32]The Court affirmed this interpretation inPresidential Commission on Good Government v. The Ombudsman[33]and added that this interpretation is consistent with the second paragraph of Section 2 of Act No. 3326.[34]
Notably,Lim, Sr.applied Section 354 of the 1939 NIRC. Associate Justice Japar B. Dimaampao (Associate Justice Dimaampao) astutely noted that the 1939 NIRC was passed when justices of the peace conducted preliminary investigations. This is no longer the case now, as observed inPanaguition. Thus, in consideration of the foregoing, the Court clarifies that under Section 281 of the 1997 NIRC, prescription for criminal offenses where the commission of the violation is not known shall begin to run from its discovery. The adoption of the interpretation inDuqueis apt in order to harmonize the second and third paragraphs of Section 281 of the 1997 NIRC. The institution of proceedings, specifically the commencement of preliminary investigation, shall interrupt the prescriptive period for the offense. This clarification is necessary as a literal interpretation of the law should be rejected if it would lead to absurd results.[35]Prescription would not run under a literal reading of Section 281 of the 1997 NIRC, as it would both begin and be interrupted by the institution of proceedings. The Court must give effect to the clear intent of the Legislature to set a prescriptive period for violations of the 1997 NIRC. Chief Justice Alexander G. Gesmundo (Chief Justice Gesmundo) judiciously expressed that the prevailing interpretation renders nugatory or lifeless the prescriptive period set by the Legislature itself.
As explained inPanaguiton, Jr.and reiterated inDesierto, the injured party, i.e., the government, should not be penalized for the delays in the investigation even if the complaint is timely filed. If there is undue delay in the preliminary investigation, what should be invoked by the accused is the violation of their right to speedy disposition of cases under Article III, Section 16 of the Constitution and not the prescription of the offense.
The most favorable interpretation to the accused should be adopted with respect to laws on prescription of crimes.[36]As pointed out by Chief Justice Gesmundo during the deliberation, the prescriptive period of a penal provision is an amnesty granted by the State in favor of the defendant. It is a surrender by the State of its right to prosecute and, as such, a liberal construction in favor of the defendant is proper.
The Court stresses that the date of discovery of the commission of the violation is not necessarily synonymous to the date of the filing of the complaint. Discovery is "the act, process, or an instance of gaining knowledge of or ascertaining the existence of something previously unknown or unrecognized."[37]Simply put, the date of discovery is when it becomes known that a violation of the 1997 NIRC was committed. The filing of the complaint is not the reckoning point for the discovery unless it so happens that the complaint was filed on the very same day that the violation was discovered.
As aptly suggested by Associate Justice Dimaampao, the wording of Section 281 of the 1997 NIRC should be brought to the attention of the Legislature. Thus, a copy of this Decision must be given to the Senate of the Philippines and the House of Representatives for their appropriate action.
The alleged offense of respondent has prescribed |
To be sure, Section 281 of the 1997 NIRC incorporates the Discovery Rule or the Blameless Ignorance Doctrine which computes prescription from the date of discovery in view of the propensity of tax evaders to come up with devious methods to thwart the BIR's investigation and conceal the commission of the offense. Taken together with the presumption that tax returns have been prepared and filed by the taxpayer "in good faith, in observance of the ordinary course of business, and in compliance with the applicable rules and regulations,"[38]the BIR could not have discovered that a taxpayer had filed a fraudulent return at the time of its filing.
It must be stressed, however, that the Discovery Rule does not apply to all offenses punishable under the 1997 NIRC. In cases where the information, data, or records, from which the crime is based could be plainly discovered or were readily available to the public, or when there are reasonable means to be aware of the commission of the offense, the prescriptive period should be reckoned from the date of commission of the offense.[39]
Here, the Court finds that the Discovery Rule is not applicable to the present case considering that the BIR had reasonable means to ascertain that Consebido failed to file his quarterly VAT return for the 3rdquarter of the taxable year 2008 given the circumstances, as will be discussed below.
The complaint against Consebido stemmed from the payments he received from the Provincial Government of Palawan in relation to the construction of infrastructure projects using the Malampaya Funds.[40]
A careful review of the records reveals that Consebido, who was doing business under the name Seven Digit Construction and Supplies,[41]is VAT registered.[42]
Section 114 of the 1997 NIRC, as amended by Republic Act No. 9337,[43]the applicable law at that time, partly provides that "[e]very person liable to pay the value-added tax imposed under this Title shall file a quarterly return of the amount of his gross sales or receipts within twenty-five (25) days following the close of each taxable quarter prescribed for each taxpayer:Provided, however, That VAT-registered persons shall pay the value-added tax on a monthly basis."[44]
In addition, the Joint Complaint-Affidavit against Consebido states that he was required to file a monthly VAT return and a consolidated quarterly VAT return pursuant to Section 114 of the 1997 NIRC, as amended by Republic Act No. 9337.[45]Copies of Consebido's Monthly VAT Declaration, or BIR Form No. 2550M, for January, May, and June 2008, were attached to the Joint Complaint-Affidavit.[46]
More, Section 114(c)[47]of the 1997 NIRC, as amended by Republic Act No. 9337, requires the government, or any of its political subdivisions, to withhold VAT before making payment on account of each purchase of goods and services which are subject to VAT. The same provision requires the VAT withheld to be remitted within 10 days following the end of the month the withholding was made. That being so, it cannot be said that it was difficult for the BIR to discover that Consebido received payments that may be subject to VAT because the Provincial Government of Palawan was required to report it by law.
Evidently, the BIR expected Consebido to regularly file his monthly and quarterly VAT returns. Coupled with the fact that it is mandatory for government contractors, such as Consebido, to file their income and business tax returns and other required information electronically using the BIR's Electronic Filing and Payment System since April 1, 2005,[48]the BIR could readily generate from its system the list of tax returns which Consebido is required to file but failed to do so. Simply put, Consebido's failure to file his Quarterly VAT return for the 3rdquarter of the taxable year 2008 on the deadline fixed by law, i.e., October 25, 2008, could have easily been discovered by the BIR.
Verily, the Discovery Rule is not applicable in the case. The prescriptive period should not be counted from the date of discovery of the alleged violation, which the parties all agreed to be January 30, 2014,[49]but on October 25, 2008, the date when Consebido purportedly failed to file his return.
Considering the foregoing, even if the commencement of preliminary investigation interrupted the running of the prescriptive period, the complaint should have been filed with the DOJ within five years from October 25, 2008, or not later than October 25, 2013. Thus, the offense had already prescribed as early as when the Joint Complaint-Affidavit dated January 30, 2014, was filed.
In fine, the CTAEn Bancdid not err in affirming the dismissal of the Complaint.
The rule on the tolling of the prescriptive period for offenses |
As discussed above, the filing of the criminal complaint before the DOJ shall toll the running of the prescriptive period for offenses under the 1997 NIRC, as amended, whether its commission was immediately known or unknown at the time of the violation.
Still, the Court deems it necessary to revisit the prevailing jurisprudence on the tolling of offenses covered by the 1991 Revised Rules on Summary Procedure as well as the 2022 Rules on Expedited Procedures in the First Level Courts.
In the recent case ofRepublic v. Desierto,[50]the Court held that the rule inPanaguiton, Jr., i.e., prescription is tolled by the institution of proceedings for preliminary investigation, only applies to special laws that are not covered by the Revised Rules on Summary Procedure.[51]For acts covered by special laws where the Revised Rules on Summary Procedure applies, prescription shall only be interrupted by the filing of the Information and not the commencement of preliminary investigation.[52]This is based on Section 11 of the 1991 Revised Rules on Summary Procedure which states that "[t]he filing of criminal cases falling within the scope of this Rule shall be either by complaint or by information: Provided, however, that in Metropolitan Manila and in Chartered Cities, such cases shall be commenced only by information, except when the offense cannot be prosecutedde oficio."
The ruling inDesiertocan be traced back toZaldivia v. Reyes, Jr.,[53]which involved a municipal ordinance. The Court held:
Under Section 9 of the Rule on Summary Procedure, "the complaint or information shall be filed directly in court without need of a prior preliminary examination or preliminary investigation." Both parties agree that this provision does not prevent the prosecutor from conducting a preliminary investigation if he wants to. However, the case shall be deemed commenced only when it is filed in court, whether or not the prosecution decides to conduct a preliminary investigation. This means that the running of the prescriptive period shall be halted on the date the case is actually filed in court and not on any date before that.[54]Subsequently, the Court pronounced inPeople v. Pangilinan[55]that the ruling inZaldiviadoes not apply to special laws. The Court later clarified inJadewell Parking Systems Corp. v. Lidua, Sr.[56]that "the doctrine ofPangilinanpertains to violations of special laws butnotto ordinances." InPeople v. Lee,[57]the Court explained that "Jadewellpresents a different factual milieu as the issue involved therein was the prescriptive period for violation of a city ordinance, unlike here as well as in [Pangilinan] and [the]other above-mentioned related cases, where the issue refers to prescription of actions pertaining to violation of a special law." Thus, the Court said thatJadewelldid not abandon the doctrine inPangilinan.[58]
The 1991 Revised Rules on Summary Procedure was supplanted by the 2022 Rules on Expedited Procedures in the First Level Courts.[59]Rule II, Subsection B, Section 1 thereof states that "[t]he filing of criminal cases governed by the Rule on Summary Procedure shall either be by complaint or by information."[60]
The DOJ likewise issued Circular No. 028, entitled the "2024 DOJ-NPS Rules on Summary Investigation and Expedited Preliminary Investigation," which applies when the penalty prescribed by the law is imprisonment of one day to six years, fine regardless of the amount, or both.[61]A summary investigation shall be conducted if the prescribed penalty is imprisonment of one day to one year, fine regardless of the amount, or both.[62]The investigating prosecutor must immediately resolve a case subject of summary investigation upon receipt of its records.
With this dilemma, the Court takes this opportunity to pronounce that the filing of the complaint before the prosecution office and the conduct of the summary investigation should toll the running of the prescriptive period. While it is ideal that all cases are resolved promptly, the reality is that this is not done at all times, whether for valid reasons or not. The offended party, which is primarily the State, should not be prejudiced by any delay in the conduct of the preliminary investigation even for cases covered by summary procedure. The Court reiterates its reasoning inPeople v. Olarte[63]that "it is unjust to deprive the injured party of the right to obtain vindication on account of delays that are not under his control. All that the victim of the offense may do on his part to initiate the prosecution is to file the requisite complaint.[64]"
In addition, Chief Justice Gesmundo extensively discussed the history of the pertinent laws and rules on the filing of complaint or information for criminal cases and the conduct of preliminary investigation in his Reflections.[65]Based on an examination of these laws and rules, he aptly surmised:
[T]he use of the phrase "complaint or information" in Article 91[66]of the Revised Penal Code, Section 11 of the 1991 Revised Rules on Summary Procedure, and Rule II, Subsection B, Section 1 of [the] 2022 Rules on Expedited Procedures in the First Level Courts, for purposes of the tolling of the prescriptive period of offenses, must henceforth, be construed to refer to the filing of the complaint or information before the prosecution office."[67]But in line with the time-honored principle that the interpretation that is most favorable to the accused should be adopted with respect to laws on prescription of crimes,[68]this new rule shall apply prospectively.
Accordingly, the Court resolves that, henceforth, the filing of the criminal complaint before the DOJ, even if it involves offenses that may be covered by the 2022 Rules on Expedited Procedures in the First Level Courts,[69]shall toll the running of the prescriptive period. The ruling inDesiertoand the subsequent case ofCorpus, Jr. v. People of the Philippines,[70]insofar as the tolling of the prescriptive period for crimes covered by the 2022 Rules on Expedited Procedures in the First Level Courts is concerned, is deemed abandoned.
WHEREFORE, the Petition for Review onCertiorariisDENIED. The Decision dated January 6, 2021, and the Resolution dated January 5, 2022, of the Court of Tax AppealsEn Bancin CTA EB CRIM No. 069 areAFFIRMED.
Let copies of this Decision be furnished to the Senate of the Philippines and the House of Representatives for their information and appropriate action.
SO ORDERED.
Leonen, SAJ., Caguioa, Hernando, Lazaro-Javier, Zalameda, M. Lopez, Gaerlan, Rosario, J. Lopez, Marquez, andKho, Jr., JJ., concur.
Gesmundo, C.J., see separate concurring opinion.
Dimaampao, J., see concurring and dissenting opinion.
Singh,**J., on leave but left a concurring vote.
*Referred to as "Ulysses Palconet Consebido" in some parts of therollo.
**On leave but left a concurring vote.
[1]Rollo, pp. 19-42.
[2]Id.at 55-64. Penned by Associate Justice Ma. Belen M. Ringpis-Liban and concurred in by Presiding Justice Roman G. Del Rosario and Associate Justices Juanito C. Castañeda, Jr., Erlinda P. Uy, Catherine T. Manahan, Jean Marie A. Bacorro-Villena, and Maria Rowena Modesto-San Pedro of the CTAEn Banc, Court of Tax Appeals, Quezon City.
[3]Id.at 66-69. Penned by Associate Justice Ma. Belen M. Ringpis-Liban and concurred in by Presiding Justice Roman G. Del Rosario and Associate Justices Juanito C. Castañeda, Jr., Erlinda P. Uy, Catherine T. Manahan, Jean Marie A. Bacorro-Villena, Maria Rowena Modesto-San Pedro, Marian Ivy F. Reyes-Fajardo, and Lanee S. Cui-David of the CTAEn Banc, Court of Tax Appeals, Quezon City.
[4]Id.at 99-102. Penned by Associate Justices Juanito C. Castañeda, Jr. and Cielito N. Mindaro-Grulla of the Second Division, Court of Tax Appeals, Quezon City.
[5]Id.at 115-117. Penned by Associate Justices Juanito C. Castañeda, Jr. and Cielito N. Mindaro-Grulla of the Second Division, Court of Tax Appeals, Quezon City.
[6]SECTION 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 such correct and accurate information, or withhold or remit taxes withheld, or refund excess taxes withheld on compensation, at the time or times required by law or rules and regulations shall, in addition to other penalties provided by law, upon conviction thereof, be punished by
a fine of not less than Ten thousand pesos ([PHP]10,000) and suffer imprisonment of not less than one (1) year but not more than ten (10) years.
Any person who attempts to make it appear for any reason that he or another has in fact filed a return or statement, or ach1ally files a return or statement and subsequently withdraws the same return or statement after securing the official receiving seal or stamp of receipt of an internal revenue office wherein the same was actually filed shall, upon conviction therefor, be punished by a fine of not less than Ten thousand pesos ([PHP]10,000) but not more than Twenty thousand pesos ([PHP]20,000) and suffer imprisonment of not less than one (1) year but not more than three (3) years.
[7]SECTION 114.Return and Payment of Value-added Tax.—
(A)In General.— Every person liable to pay the value-added tax imposed under this Title shall file a quarterly return of the amount of his gross sales or receipts within twenty-five (25) days following the close of each taxable quarter prescribed for each taxpayer:Provided, however, That VAT-registered persons shall pay the value-added tax on a monthly basis.
Any person, whose registration has been cancelled in accordance with Section 236, shall file a return and pay the tax due thereon within twenty-five (25) days from the date of cancellation of registration:Provided, That only one consolidated return shall be filed by the taxpayer for his principal place of business or head office and all branches.
(B)Where to File the Return and Pay the Tax.— Except as the Commissioner otherwise permits, the return shall be filed with and the tax paid to an authorized agent bank, Revenue Collection Officer or duly authorized city or municipal Treasurer in the Philippines located within the revenue district where the taxpayer is registered or required to register.
(C)Withholding of Creditable Value-added Tax.— The Government or any of its political subdivisions, instrumentalities or agencies, including government-owned or -controlled corporations (GOCCs) shall, before making payment on account of each purchase of goods from sellers and services rendered by contractors which are subject to the value-added tax imposed in Sections 106 and 108 of this Code, deduct and withhold the value-added tax due at the rate of three percent (3%) of the gross payment for the purchase of goods and six percent (6%) on gross receipts for services rendered by contractors on every sale or installment payment which shall be creditable against the value-added tax liability of the seller or contractor:Provided, however, That in the case of government public works contractors, the withholding rate shall be eight and one-half percent (8.5%):Provided, further, That the payment for lease or use of properties or property rights to nonresident owners shall be subject to ten percent (10%) withholding tax at the time of payment. For this purpose, the payor or person in control of the payment shall be considered as the withholding agent.
The value-added tax withheld under this Section shall be remitted within ten (10) days following the end of the month the withholding was made.
[8]CTA Second Division records, pp. 172-183.
[9]Rollo, p. 100.
[10]CTA Second. Division records, pp. 8-10. Filed by Assistant State Prosecutor Christine T. Perolino and approved by Senior Deputy State Prosecutor Richard Anthony D. Fadullon.
[11]Id.at 8-9.
[12]Rollo, p. 23.
[13]Id.at 99-102.
[14]Id.at 102.
[15]Id.at 100-102.
[16]Id.at 115-117.
[17]Id.at 82-96.
[18]Id.at 55-64.
[19]268 Phil. 680 (1990).
[20]Rollo, pp. 60-62.
[21]Id.at 66-69.
[22]An Act to Establish Periods of Prescription for Violations Penalized by Special Acts and Municipal Ordinances and to Provide When Prescription Shall Begin to Run (1926).
[23]Rollo, pp. 30-40.
[24]Id.at 150-154.
[25]Commonwealth Act No. 466 (1939).
[26]Lim, Sr. v. Court of Appeals, 268 Phil. 680, 688-689 (1990).
[27]SeePanaguiton, Jr. v. Department of Justice, 592 Phil. 286, 295 (2008).
[28]Id.
[29]Id.at 297,citingPeople v. Olarte, 19 Phil. 494, 500 (1967).
[30]287 Phil. 669 (1992).
[31]Id.at 681.
[32]Id.at 679-680.
[33]746 Phil. 995 (2014).
[34]Id.at 1005.
[35]SeeBoard of Commissioners of the Bureau of Immigration and the Jail Warden v. Wenle, 937 Phil. 148, 221-222 (2023).SeeMicrosoft Corp. v. Manansala, 772 Phil. 14, 22 (2015);See alsoThe Philippine American Life and General Insurance Co. v. The Secretary of Finance, 747 Phil. 811, 824 (2014);See furtherCivil Service Commission v. Court of Appeals, 696 Phil. 230, 248-249 (2012); andSecretary of Justice v. Koruga, 604 Phil. 405, 416 (2009).
[36]Republic v. Desierto, 933 Phil. 373, 408 (2023).See alsoPresidential Commission on Good Government v. The Ombudsman, 746 Phil. 995, 1003-1004 (2014).
[37]Baylosis, Sr. v. People, 556 Phil. 684, 690 (2007).
[38]McDonald's Philippines Realty Corp. v. Commissioner of Internal Revenue, 945 Phil. 365, 394 (2023),citingCollector of Internal Revenue v. Central Azucarera De Tarlac, G.R. Nos. L-11760 & 11761, July 31, 1958, and RULES OF COURT, Rule 131, secs. 3(q) and 3(ff).
[39]SeeDel Rosario v. People, 834 Phil. 419, 433 (2018).
[40]Rollo, p. 24.
[41]CTA Second Divisionrollo, p. 185.
[42]Pleaseseethe Official Receipt issued by respondent to the Provincial Government of Palawan,id.at 289-291.
[43]Approved on May 25, 2005.
[44]Section 114 of the 1997 NIRC was further amended by Republic Act No. 11976, titled, "Ease of Paying Taxes Act," approved on January 5, 2024:
SEC. 114.Return and Payment of Value-Added Tax. —
(A)In General.— Every person liable to pay the value-added tax imposed under this Title shall file, either electronically or manually, a quarterly return of the amount of his gross sales within twenty-five (25) days following the close of each taxable quarter prescribed for each taxpayer:Provided, however, That VAT-registered persons shall pay, either electronically or manually, the value-added tax on a monthly basis:Provided, finally, That beginning January 1, 2023, the filing and payment required under this Subsection shall be done within twenty-five (25) days following the close of each taxable quarter.
[45]CTA Second Division records, p. 179.
[46]Id.at 335-337.
[47]SEC. 114.Return and Payment of Value-added Tax.—
. . . .
(C)Withholding of Value-Added Tax. — The Government or any of its political subdivisions, instrumentalities or agencies, including government-owned or -controlled corporations (GOCCs) shall, before making payment on account of each purchase of goods and services which are subject to the value-added tax imposed in Sections 106 and 108 of this Code, deduct and withhold a final valueadded tax at the rate of five percent (5%) of the gross payment thereof:Provided, That the payment for lease or use of properties or property rights to nonresident owners shall be subject to ten percent (10%) withholding tax at the time of payment. For purposes of this Section, the payor or person in control of the payment shall be considered as the withholding agent.
The value-added tax withheld under this Section shall be remitted within ten (10) days following the end of the month the withholding was made.
[48]SeeRules and Regulations Implementing Executive Order No. 398, s. 2005, Revenue Regulations No. 03-05, Section 4.1.
[49]See rollo, pp. 107-108 and 152-154, respectively.
[50]933 Phil. 373 (2023).
[51]Approved on October 15, 1991.
[52]Republic v. Desierto, 933 Phil. 373, 419-421 (2023).
[53]286 Phil 375 (1992).
[54]Id.at 382.
[55]687 Phil. 95, 104 (2012).
[56]719 Phil. 1 (2013).
[57]863 Phil. 134 (2019).
[58]Id.at 143.
[59]A.M. No. 08-8-7-SC, March 1, 2022.
[60]Underlining in the original.
[61]Rule I, Section 2.
[62]Rule IV, Section 6.
[63]125 Phil. 895 (1967).
[64]Id.at 902.
[65]Pages 8-12 of Chief Justice Gesmundo's Reflections.
[66]ARTICLE 91. Computation of Prescription of Offenses. — The period of prescription shall commence to run from the day on which the crime is discovered by the offended party, the authorities, or their agents, and shall be interrupted by the filing of the complaint or information, and shall commence to run again when such proceedings terminate without the accused being convicted or acquitted, or are unjustifiably stopped for any reason not imputable to him.
The term of prescription shall not run when the offender is absent from the Philippine Archipelago.
[67]Page 13 of Chief Justice Gesmundo's Reflections.
[68]Republic v. Desierto, 933 Phil. 373, 408 (2023).
[69]Rule I, Section 1(B) of the 2022 Rules on Expedited Procedures in the First Level Courts states:
The following criminal cases shall be governed by the Rule on Summary Procedure:
(1) Violations of traffic laws, rules and regulations;
(2) Violations of the rental law;
(3) Violations of municipal or city ordinances;
(4)Violations ofBatas Pambansa Blg.22 (the Bouncing Checks Law); and
(5) All other criminal cases where the penalty prescribed by law for the offense charged is imprisonment notexceeding one (1) year, or a fine not exceeding Fifty Thousand Pesos ([PHP] 50,000.00), or both,regardlessof other imposable penalties, accessory or otherwise, or of the civil liability arising therefrom. In offenses involving damage to property through criminal negligence under Article 365 of the Revised Penal Code, this Rule shall govern where the imposable finedoes not exceed One Hundred Fifty Thousand Pesos ((PHP] 150,000.00).
If the prescribed penalty consists of imprisonment and/or a fine, the prescribed imprisonment shall be the basis for determining the applicable procedure.
All other cases not included herein shall be governed the regular rules of procedure.
[70]946 Phil. 88 (2023).
CONCURRING OPINION
GESMUNDO,C.J.:
I concur with the esteemedponenteand write this concurring opinion to expound on my reasons for such concurrence. In particular, I wish to elaborate on my views on the (1) proper interpretation of Section 281 of the National Internal Revenue Code (1997 NIRC), and (2) rule on the tolling of the prescriptive period for offenses under the 1991 Revised Rules on Summary Procedure or the 2022 Rules on Expedited Procedures in the First Level Courts.
The facts of this case, as culled from theponencia, are as follows.
This is a Petition for Review onCertiorarifiled by the People of the Philippines, through the Office of the Solicitor General, assailing the Court of Tax Appeals (CTA)En Banc's January 6, 2021 Decision and January 5, 2022 Resolution affirming the April 2, 2019 and May 7, 2019 Resolutions of the CTA Second Division, which dismissed the Information for Willful Failure to File a Quarterly Value-Added Tax (VAT) Return in violation of Section 255, in relation to Section 114 of the 1997 NIRC against Ulysses Palconit Consebido (Consebido).[1]
The Information against Consebido, doing business under the name and style of SEVEN DIGIT CONSTRUCTION AND SUPPLIES, charged him with failing to file his quarterly VAT return for the 3rdquarter of taxable year 2008, resulting in a basic quarterly VAT deficiency of PHP 4,184,566.10 for the 3rdquarter of taxable year 2008.[2]
The CTA Second Division, in its April 2, 2019 Resolution dismissed the case on the ground of prescription, having been filed beyond the five-year prescriptive period in Section 281 of the 1997 NIRC. It denied the motion for reconsideration filed by the People in its May 7, 2019 Resolution. On review, the CTAEn Banc, in its January 6, 2021 Decision, denied the petition and affirmed the ruling of the CTA Second Division. The People filed a motion for reconsideration, which the CTAEn Banclikewise denied in its January 5, 2022 Resolution.[3]
Theponenciadenied the petition. It held that the prescriptive period for violations of the 1997 NIRC not known at the time of its commission begin to run from its discovery. It observed that Section 281 of the 1997 NIRC, which governs prescription for violation of said law, is identical to Section 354 of the 1939 NIRC. It noted that the Court previously held inLim, Sr. v. Court of Appeals[4]that said provision speaks of both discovery of the fraud and the institution of judicial proceedings for the five-year period to run. Thus, it stated that, based onLim, Sr., "the prescriptive period for violations of the 1939 NIRC where the date of its commission is unknown, shall begin to run from the discovery of its commission until an Information is filed with the court. Stated otherwise, the Information must be filed within five years from· the discovery of the commission of the violation. This implies that the preliminary investigation does not toll the running of the prescriptive period."[5]
Theponenciare-examined the ruling inLim, Sr.and clarified that under Section 281 of the 1997 NIRC, the prescription of criminal offenses where the commission of the violation is not known shall begin to run from its discovery. It explained that this ruling is to harmonize the second and third paragraphs of Section 281 of the 1997 NIRC. Thus, the institution of proceedings, specifically the commencement of preliminary investigation, shall interrupt the prescriptive period for offenses. It further explained that this clarification is necessary as a literal interpretation of the law should be rejected if it would lead to absurd results. Otherwise, prescription would not run pursuant to a literal reading of Section 281 of the 1997 NIRC, as it would both begin and be interrupted by the institution of proceedings. Theponenciaurged that the Court must give effect to the clear intent of the Legislature to set a prescriptive period for violations of the 1997 NIRC.[6]
Theponenciafurther provided that, as suggested by Associate Justice Japar B. Dimaampao, the wording of Section 281 of the 1997 NIRC should be brought to the attention of the Legislature. Thus, it stated that a copy of the Decision shall be given to the Senate of the Philippines and the House of Representatives for their appropriate action.[7]
Theponencia, nevertheless, found that the Discovery Rule does not apply to the instant case since the Bureau of Internal Revenue (BIR) had reasonable means to ascertain that Consebido failed to file his quarterly VAT return for the 3rdquarter of the taxable year of 2008. This is because the Provincial Government of Palawan, as the payor of Consebido, was required by law to report the payments made. Also, due to the Electronic Filing and Payment System in place since April 1, 2005, the BIR could have easily discovered that Consebido failed to file the same. Thus, the Discovery Rule does not apply. Rather, the prescriptive period should run from October 25, 2008, the date when Consebido purportedly failed to file his return. Thus, the complaint should have been filed with the Department of Justice (DOJ) on October 25, 2013. However, it was filed on January 30, 2014. Thus, the CTAEn Bancdid not err in affirming the dismissal of the complaint.[8]
Theponenciathen clarified that the rule on the tolling of the prescriptive period for offense. It stated that "the filing of the criminal complaint before the DOJ shall toll the running of the prescriptive period for offenses under the 1997 NIRC, as amended, whether its commission was immediately known or unknown at the time of the violation."[9]It then revisited prevailing jurisprudence on the tolling of offenses covered by the 1991 Revised Rules on Summary Procedure as well as the 2022 Rules on Expedited Procedures in the First Level Courts. It observed that Rule III, Subsection B, Section 1 thereof states that "[t]he filing of criminal cases governed by the Rule on Summary Procedure shall either be by complaint or by information."[10]Further, it noted that the DOJ issued Circular No. 028, titled the "2024 DOJ-National Prosecution Service (NPS) Rules on Summary Investigation and Expedited Preliminary Investigation," which applies when the penalty prescribed by the law is imprisonment of one day to six years, fine regardless of the amount, or both. In view of the foregoing, it pronounced that the filing of the complaint before the prosecution office and the conduct of the summary investigation should toll the running of the prescriptive period. Nonetheless, it stated that this ruling shall apply prospectively.[11]
I concur in theponenciathat the CTAEn Bancdid not err in affirming the dismissal of the complaint. I also concur that the interpretation of Section 281 of the 1997 NIRC must be re-examined. Further, I agree with theponencia's interpretation that the prescription for criminal offenses under the 1997 NIRC where the commission of the violation is not known shall begin to run from its discovery. I also concur that the prescription of any criminal offense, whether or not covered by the 1991 Revised Rules on Summary Procedure or the 2022 Rules on Expedited Procedures, shall be interrupted by the filing of the criminal complaint with the DOJ.
Allow me to expound on my position that the prevailing interpretation of Section 281 of the 1997 NIRC must be re-examined, as well as the rule on the tolling of the prescription of offenses covered by the Revised Rules on Summary Procedure or 2022 Rules on Expedited Procedures in the First Level Courts.
The prescription of criminal offenses under the 1997 NIRC where the commission of the violation is not known shall begin to run from its discovery. |
The provision pivotal in the instant case is Section 281 of the 1997 NIRC, which reads as follows:
Section 281.Prescription for Violations of any Provision of this Code. – All violations of any provision of this Code shall prescribe after five (5) years.To be clear, Section 281 provides that any violation of any provision of the 1997 NIRC shall prescribe after five years. This period runs from the day of the commission of the violation of the law. If the day of the commission is not known, it shall run from the discovery thereof and the institution of judicial proceedings for its investigation and punishment. This is known as the Discovery Rule. Meanwhile, the running of the prescriptive period 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.
Prescription 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 prescription shall beinterrupted when proceedings are instituted against the guilty personsand 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. (Emphasis supplied)
The source of confusion in Section 281 is the Discovery Rule, which provides that when the day of the commission of the violation of the law is not known, the prescriptive period of five years shall run from the discovery of the violation of the lawandthe institution of judicial proceedings for its investigation and punishment.
As theponenciapoints out, this has been previously interpreted by the Court to mean that "tax cases ... are practically imprescriptible for as long as the period from the discoveryandinstitution of judicial proceedings for its investigation and punishment,up tothe filing of the information in court does not exceed five (5) years."[12]
To my mind, such an interpretation leads to an absurd situation because it renders tax cases practically imprescriptible. Under such an interpretation,the running of the prescriptive period requires the concurrence of two events: (1) the discovery of the commission of a violation, and (2) the institution of judicial proceedings for its investigation and punishment. However, in the same breath, Section 281 states that the running of the prescriptive period shall be interrupted when proceedings are instituted against the guilty persons. Thus,the same event—the institution of judicial proceedings—gives rise to the running and the tolling of the prescriptive period. This leads to a situation where the prescriptive period does not run at all. Plainly, this is an absurd situation. The net effect of such an interpretation is to render the prescriptive period practically non-existent.
To this end, the Court has previously declared that the courts are not to give words a meaning which would lead to absurd or unreasonable consequences:
It is a salutary principle in statutory construction that there exists a valid presumption that undesirable consequences were never intended by a legislative measure, and that a construction of which the statute is fairly susceptible is favored, which will avoid all objectionable, mischievous, undefensible, wrongful, evil and injurious consequences.It is respectfully submitted that the prevailing interpretation of requiring the concurrence of two events—(1) the discovery of the commission of a violation, and (2) the institution of judicial proceedings for its investigation and punishment—for the five-year prescriptive period to run in instances where the Discovery Rule appliesrenders nugatory the very provision on prescription of violations of the 1997 NIRCas it makes tax cases practically imprescriptible. This could not have been the intention of the Legislature in providing for a prescriptive period to begin with.
Nothing is better settled than that courts are not to give words a meaning which would lead to absurd or unreasonable consequences.That is a principle that goes back toIn re Allendecided on October 27, 1903, where it was held thata literal interpretation is to be rejected if it would be unjust or lead to absurd results. That is a strong argument against its adoption. The words of Justice Laurel are particularly apt. Thus: "The fact that the construction placed upon the statute by the appellants would lead to an absurdity is another argument for rejecting it."
... We have, here, then a case where the true intent of the law is clear that calls for the application of the cardinal rule of statutory construction that such intent of spirit must prevail over the letter thereof, for whatever is within the spirit of a statute is within the statute, since adherence to the letter would result in absurdity, injustice and contradictions and would defeat the plain and vital purpose of the statute.[13]
Rather, I am of the mind that Section 281 should be interpreted to mean that, in instances the day of the commission of the violation of the 1997 NIRC is not known,the five-year prescriptive period shall run from the discovery of the commission of the violation of the law. This view echoes the ruling of the Court inPeople v. Duque[14]andPresidential Commission on Good Government [PCGG] v. Carpio Morales,[15]both cited by theponencia.[16]
InDuque, Napoleon Duque (Duque) was charged with and convicted of illegal recruitment under Section 38, in relation to Section 39 of Presidential Decree No. 442, as amended, known as The Labor Code of the Philippines. On appeal, Duque only raised the defense that the criminal offense for which he was convicted had already prescribed.
For this purpose, Section 2 of Act No. 3326, as amended, titled "An Act to Establish Periods of Prescription for Violations Penalized by Special Acts and Municipal Ordinances and to Provide When Prescription Shall Begin to Run" is relevant. Section 2 of Act No. 3326 reads as follows:
Section 2. Prescription shall begin to run from the day of the commission of the violation of the law, andif the same be not known at the time, from the discovery thereof and institution of judicial proceedings for its investigation and punishment.(Emphasis supplied)Interpreting the same inDuque, the Court declared that the phrase "institution of judicial proceedings for its investigation and punishment" may be either disregarded as surplusage or should be deemed preceded by the word 'until,'" viz.:
In our view, the phrase "institution of judicial proceedings for its investigation and punishment" may be either disregarded as surplusage or should be deemed preceded by the word "until." Thus, Section 2 may be read as:Accordingly, the Court held that the prescriptive period began to run from the time the complainants and the Philippine Overseas Employment Administration discovered the recruitment activities of Duque. Thus, the offense of illegal recruitment had yet to prescribe when the complaint was filed with the Provincial Prosecutor's Office in April 1990 and when the Information was filed in court in May 1990."Prescription 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;"
or as:
"Prescription 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 anduntilinstitution of judicial proceedings for its investigation and punishment."
The Court affirmed this interpretation inPCGG, which involved an affidavit-complaint filed by PCGG against Resorts Hotel Corporation (RHC) and the directors of the Development Bank of the Philippines before the Office of the Ombudsman for violation of Sections 3(e) and 3(g) of Republic Act No. 3019 or the Anti-Graft and Corrupt Practices Act. The Ombudsman dismissed the complaint on the ground of prescription. Before the Court, PCGG argued that the offense had not yet prescribed since the prescriptive period only commenced to run on January 6, 2003 when it filed its affidavit-complaint with the Office of the Ombudsman, and not on January 4, 1993 when the crimes were discovered. PCGCC cited Section 2 of Act No. 3326 as basis for this argument. In rejecting said argument, the Court cited the ruling inDuque. The Court held that the prescriptive period ran from the date of discovery on January 4, 1993, when the Presidential Ad Hoc Fact-Finding Committee reported to the president its findings and conclusions anent the RHC loans. Thus, the dismissal of PCGG's complaint is proper on the ground of prescription since PCGG filed its affidavit-complaint on January 6, 2003, a little over 10 years from the date of discovery of the crimes.
DuqueandPCGGboth centered on an interpretation of Section 2 of Act No. 3326, which is similarly worded as Section 281 of the 1997 NIRC. To my mind, the interpretation inDuqueandPCGGis proper. Accordingly, in instances the day of the commission of the violation of the 1997 NIRC is not known,the five-year prescriptive period shall run from the discovery of the commission of the violation of the law.
This interpretationgives life to the spirit of the law. It respects the fact that the Legislature clearly intended for prescription to run against the State in the prosecution of offenses defined and punishable under the 1997 NIRC but which were not known on the day of its commission.
This interpretation is alsoconsistent with the principle that statutes of limitation in criminal suits are to be liberally construed in favor of the defendant. The rationale behind this principle is elucidated in the 1924 case ofPeople v. Moran,[17]where the Court quoted with approval the discussion of Wharton on Criminal Pleading & Practice, 9th ed., 1889, sec. 316, page 215:
We should at first observe that a mistake is sometimes made in applying to statute of limitation in criminal suits the construction that has been given to statutes of limitation in civil suits. The two classes of statutes, however, are essentially different. In civil suits the statute is interposed by the legislature as an impartial arbiter between two contending parties. In the construction of the statute, therefore, the is no intendment to be made in favor of either party. Neither grants the right to the other; there is therefore no granter against whom the ordinary presumptions of construction are to be made.But it is otherwise when a statute of limitation is granted by the State. Here the State is the grantor, surrendering by act of grace its rights to prosecute, and declaring the offense to be no longer the subject of prosecution. The statute is not a statute of process, to be scantily and grudgingly applied, but an amnesty, declaring that after a certain time oblivion shall be cast over the offense; that the offender shall be at liberty to return to his country, and resume his immunities as a citizen; and that from henceforth he may cease to preserve the proofs of his innocence, for the proofs of his guilt are blotted out. Hence it is that statutes of limitation are to be liberally construed in favor of the defendant, not only because such liberality of construction belongs to all acts of amnesty and grace, but because the very existence of the statute is a recognition and notification by the Legislature of the fact that time, while it gradually wears out proofs of innocence, has assigned to it fixed and positive periods in which it destroys proofs of guilt.Independently of these views, it must be remembered that delay in instituting prosecutions is not only productive of expense to the State, but of peril to public justice in the attenuation and distortion, even by mere natural lapse of memory, of testimony. It is the policy of the law that prosecutions should be prompt, and that statutes enforcing such promptitude should be vigorously maintained. They are not merely acts of grace, but checks imposed by the State upon itself, to exact vigilant activity from its subaltern, and to secure for criminal trials the best evidence that can be obtained. (Emphasis supplied)The Court has defined a penal provision or statute as follows:
A penal provision or statute has been consistently defined by jurisprudence as follows:Without a doubt, the 1997 NIRC contains penal prov1s10ns. The provisions under the 1997 NIRC's Title X,[19]Chapter II, titled "Crimes, Other Offenses and Forfeitures," clearly defines crimes and prescribes penalties for their violation. To this end, Section 281 of the 1997 NIRC provides for the prescriptive period of the offenses defined and punishable under the 1997 NIRC.A penal provision defines a crime or provides a punishment for one.
Penal laws and laws which, while not penal in nature, have provisions defining offenses and prescribing penalties for their violation.
Properly speaking, a statute is penal when it imposes punishment for an offense committed against the state which, under the Constitution, the Executive has the power to pardon. In common use, however, this sense has been enlarged to include within the term "penal statutes" all statutes which command or prohibit certain acts, and establish penalties for their violation, and even those which, without expressly prohibiting certain acts, impose a penalty upon their commission.
Penal laws are those acts of the Legislature which prohibit certain acts and establish penalties for their violations; or those that define crimes, treat of their nature, and provide for their punishment.[18](Citations omitted)
Since Section 281 provides for the prescriptive period for the prosecution of violations of penal provisions, it must be liberally construed in favor of the defendant.The prescriptive period of a penal provision is an amnesty granted by the State in favor of the defendant.It is a surrender by the State of its right to prosecute and, as such,a liberal construction in favor of the defendant is proper.
I am aware of the view advanced by the esteemed Justice Dimaampao that the "Congress deliberately chose to retain the reckoning point of prescriptive periods for tax offenses under the NIRC from both the discoveryandthe institution of judicial proceedings as it is understood in its modern meaning, i.e., the filing of an Information before the courts" since the provision has remained unchanged from its first iteration.[20]
While it is true that the formulation has remain unchanged, I am of the mind thatretaining the prevailing interpretation effectively renders nugatory or lifeless the prescriptive period set by Congress itself. This is because the same event, the institution of judicial proceeding, gives rise to the. running and the tolling of the prescriptive period. In short, it appears that the prescriptive period does not begin to run at all.Section 281 of the 1997 NICR is rendered lifeless by such interpretation.Such a result is a disservice to the Legislature and defeats the entirety of the second paragraph of Section 281 of the 1997 NIRC.
Indeed, if the Court maintains the literal reading of the Discovery Rule under Section 281, the prescription of violations of the 1997 NIRC will never occur. Certainly, Congress did not intend a provision of the law to be ineffective and futile. The law does not require the impossible (lex non cognit ad impossibilia).[21]
Accordingly, I am of the view that the prescription of criminal offenses under the 1997 NIRC where the commission of the violation is not known shall begin to run from its discovery.
The prescriptive period of any criminal offense is tolled by the filing of the complaint with the prosecutor. |
I now turn my attention to theponencia's discussion on the tolling of offenses covered by the 1991 Revised Rules on Summary Procedure or the 2022 Rules on Expedited Procedures in the First Level Courts.
On this score, Section 11 of the 1991 Revised Rules on Summary Procedure, as well as Rule III, Subsection B, Section 1 of the 2022 Rules on Expedited Procedures in the First Level Courts, is relevant.
Section 11 of the 1991 Revised Rules on Summary Procedure provides
that:
Rule III, Subsection B, Section 1 of the 2022 Rules on Expedited Procedures in the First Level Courts, on the other hand, reads as follows:III.
Criminal Cases
Section 11.How commenced. –The filing of criminal cases falling within the scope of this Rule shall be either by complaint or by information:Provided, however, that in Metropolitan Manila and in Chartered Cities, such cases shall be commenced only by information, except when the offense cannot be prosecutedde oficio.
The complaint or information shall be accompanied by the affidavits of the compliant and of his witnesses in such number of copies as there are accused plus two (2) copies for the court's files. If this requirement is not complied with within five (5) days from date of filing, the [case] may be dismissed. (Emphasis supplied)
The foregoing are procedural rules promulgated by the Supreme Court in the exercise of its rule-making power granted by Article VIII, Section 5(5) of the 1987 Constitution.B. CRIMINAL CASES
Section 1.How commenced; filing and service. –The filing of criminal cases governed by the Rule on Summary Procedure shall either be by complaint or by information.
The complaint or information shall be accompanied by the judicial affidavits of the complainant and of his or her witnesses, in such number of copies as there are accused, plusone (1) copy for the court.
The complaint or information and other submissions of the parties may be filed with the court and served on the adverse party/ies, and judgments, resolutions, orders, and other court processes may be served to the parties, electronically with their consent, in accordance with the prevailing Rules and other Court issuances.(Emphasis supplied)
Nonetheless, Article 91 of the Revised Penal Code is equally relevant to this discussion:
Article 91.Computation of prescription of offenses. – The period of prescription shall commence to run from the day on which the crime is discovered by the offended party, the authorities, or their agents, andshall be interrupted by the filing of the complaint or information, and shall commence to run again when such proceedings terminate without the accused being convicted or acquitted, or are unjustifiably stopped for any reason not imputable to him.On this score, it is notable that Article 91 mandates that the period of prescription is interrupted by the filing of the complaintorinformation.
The term of prescription shall not run when the offender is absent from the Philippine Archipelago. (Emphasis supplied)
It is important to note that, at the time the Revised Penal Code was approved, or on December 8, 1930 (effective on January 1, 1932), "the function of conducting the preliminary investigation of criminal offenses was vested in the justices of the peace."[22]
At this juncture, it is proper to discuss the historical development of the conduct of preliminary investigation.
The 1940 Rules of Court expressly defined preliminary investigation in Rule 108, Section 1 as that inquiry or examination made in connection with a complaint or information imputing the commission of an offense cognizable by the Court of First Instance, viz.:
Section 1.Preliminary Investigation. –Preliminary investigation is a previous inquiry or examination made before the arrest of the defendant by the judge or officer authorized to conduct the same, with whom a complaint or information has been filed imputing the commission of an offense cognizable by the Court of First Instance, for the purpose of determining whether there is a reasonable ground to believe that an offense has been committed and the defendant is probably guilty thereof, so as to issue a warrant of arrest and to hold him for trial. (Emphasis supplied)Section 2 of the same rule provides that every justice of the peace, municipal judge, or city fiscal has jurisdiction to conduct preliminary investigation of all offenses alleged to have been committed within their municipality or city, cognizable by the Court of First Instance, viz.:
Section 2.Officers Authorized to Conduct Preliminary Investigation. –Every justice of the peace, municipal judge or city fiscal shall have jurisdiction to conduct preliminary investigation of all offenses alleged to have been committed within his municipality or city, cognizable by the Court of First Instance.Further, Section 4 of the same rule mandated judges of the Court of First Instance to conduct a preliminary investigation when a complaint or information is filed directly with it:
The justice of the peace of the provincial capital or of the municipality in which the provincial jail is located, when directed by an order of the Court of First Instance, shall have jurisdiction to conduct such preliminary investigation of any offense committed anywhere within his province at the expense of the municipality wherein the same was committed. (Emphasis supplied)
Section 4.Investigation by the Judge of the Court of First Instance. –Upon complaint or information filed directly with the Court of First Instance, the judge thereof shall conduct a preliminary investigationin the manner provided in the following sections, and should he find a reasonable ground to believe that the defendant has committed the offense charged, he shall issue a warrant for his arrest and try the case on the merits. (Emphasis supplied)In 1952, Republic Act No. 732[23]was enacted. It amended Section 1687 of the Administrative Code to provide for the authority of the provincial fiscal to conduct investigation in criminal matters:
Section 2. Section sixteen hundred and eighty-seven of the Administrative Code is hereby amended to read as follows:In 1967, Republic Act No. 5180,[24]otherwise titled "An Act Prescribing a Uniform System of Preliminary Investigation by Provincial and City Fiscals and their Assistants, and by State Attorneys or their Assistants," was enacted. It provided for the statutory right to preliminary investigation. Section 1 thereof provides that ". . . no information for an offense cognizable by the Court of First Instance shall be filed by the provincial or city fiscal or any of his assistants, or by a state attorney or his assistants, without first giving the accused a chance to be heard in a preliminary investigation conducted by him by issuing a corresponding subpoena."Section 1687.Authority of Fiscal to conduct investigation in criminal matter. –A provincial fiscal shall have authority to conduct investigation into the matter of any crime or misdemeanor and have the necessary information or complaint prepared or made again.st persons charged with the commission of the same. If the offense charged falls within the original jurisdiction of the Court of First Instance, the defendant shall not be entitled as a matter of right to preliminary investigation in any case where the provincial fiscal himself, after due investigation of the facts made in the presence of the accused if the latter so requested, shall have presented an information against:him in proper form and certified under oath by the said provincial fiscal that he conducted a proper preliminary investigation. To this end, he may, with due notice to the accused, summon reputed witnesses and require them to appear before him and testify and be cross-examined under oath by the accused upon the latter's request. The attendance or evidence of absent or recalcitrant witnesses who may be summoned or whose testimony may be required by the provincial fiscal under the authority herein conferred shall be enforced by proper process upon application to be made by the provincial fiscal to any Judge of First Instance of the Judicial District. But no witness summoned to testify under this section shall be compelled to give testimony to incriminate himself.
The Provincial Fiscal shall also cause to be investigated the cause of sudden deaths which have not been satisfactorily explained and when there is suspicion that the cause arose from the unlawful acts or omissions of other persons, or from foul play. For that purpose, he may cause autopsies to be made and shall be entitled to demand and receive for purposes of such investigations or autopsies, the aid of the medico-legal section of the National Bureau of Investigation or of the District Health Officer and the different presidents of the sanitary divisions of the province. (Emphasis supplied)
In 1972, Presidential Decree No. 77[25]amended Section 1 of Republic Act No. 5180, viz.:
1. Section 1 of Republic Act No. 5180 is hereby amended to read as follows:In 1976, Presidential Decree No. 911[26]further amended Section 1 of Republic Act No. 5180, as amended by Presidential Decree No. 77. The amendments introduced focused on the procedure of preliminary investigation itself.Section 1. Notwithstanding any provision of law to the contrary and except when an investigation has been conducted by a judge of first instance, city or municipal judge or other officer in accordance with law and the Rules of Court of the Philippines, no information for an offense cognizable by the Court of First Instance shall be filed by the provincial or city fiscal or any of his assistants, or by the Chief State Prosecutor or his assistants, without first conducting a preliminary investigation[.]
Meanwhile, Batas Pambansa Bilang No. 129, enacted in 1981, authorized judges of Metropolitan Trial Courts (MeTCs; except those in the National Capital Region), Municipal Trial Courts (MTCs), and Municipal Circuit Trial Courts (MCTCs) to conduct preliminary investigation of crimes alleged to have been committed within their respective territorial jurisdictions cognizable by the Regional Trial Court (RTC) in accordance with the procedure laid down in Presidential Decree No. 911.
The 1985 Rules on Criminal Procedure, in turn, provides that preliminary investigation may be conducted by the (1) provincial or city fiscals and their assistants, (2) judges of the MTCs and MCTCs, (3) national and regional state prosecutors, and (4) such other officers as may be authorized by law.[27]This was maintained in the 2000 Revised Rules on Criminal Procedure. In 2005, the Court removed the authority of judges of MTCs and MCTCs to conduct preliminary investigation.[28]
Nonetheless, in 2010, Republic Act No. 10071, otherwise known as the "Prosecution Service Act of 2010," was enacted. It created the NPS, "which shall be primarily responsible for the preliminary investigation and prosecution of all cases involving violations of penal laws under the supervision of the Secretary of Justice, subject to the provisions of Sections 4, 5 and 7 hereof."[29]
Cognizant of Republic Act No. 10071, the Court, on May 28, 2024, promulgated a Resolution in A.M. No. 24-02-09-SC recognizing the authority of the DOJ to promulgate its own rules on the conduct of preliminary investigations and inquest proceedings. It repealed the pertinent provisions of Rule 112 of the 2000 Revised Rules on Criminal Procedure, as amended, inconsistent with the rules of the DOJ.
It is respectfully submitted that this historical examination of the pertinent legislative enactments and Court issuances reveal that the use of the phrase "complaint or information" in Article 91 of the Revised Penal Code, Section 11 of the 1991 Revised Rules on Summary Procedure, and Rule III, Subsection B, Section 1 of 2022 Rules on Expedited Procedures in the First Level Courts, for purposes of the tolling of the prescriptive period of offenses, refers to the filing thereof for the conduct of preliminary investigation.
This is made even more evident when viewed from the fact that Article 91 of the Revised Penal Code was enacted in a factual milieu where "the function of conducting the preliminary investigation of criminal offenses was vested in the justices of the peace."[30]It must be recalled that it was only in 1952 that Section 1687 of the Administrative Code was amended by Republic Act No. 732 to provide for the authority of the provincial fiscal to conduct investigation in criminal matters. Clearly, at the time of the enactment of Article 91 of the Revised Penal Code, the filing of the complaint or information principally contemplated a filing for purposes of the conduct of a preliminary investigation.
Concomitantly, the use of the phrase "complaint or information" in Article 91 of the Revised Penal Code, Section 11 of the 1991 Revised Rules on Summary Procedure, and Rule III, Subsection B, Section 1 of the 2022 Rules on Expedited Procedures in the First Level Courts, for purposes of the tolling of the prescriptive period of offenses, must henceforth be construed to refer to the filing of the complaint or information before the prosecution office. It is the filing of such complaint or information before the prosecution office that institutes the criminal proceedings against the accused and tolls the· prescriptive period of the offense.
Such a view is consistent with DOJ Department Circular No. 15, dated July 16, 2024, titled the "2024 DOJ-NPS Rules on Preliminary Investigations and Inquest Proceedings" and DOJ Department Circular No. 028, dated November 13, 2024, titled "2024 DOJ-NPS Rules on Summary Investigation and Expedited Preliminary Investigation."
DOJ Department Circular No. 15 requires the conduct of apreliminary investigationproceeding for crimes or offenses where the penalty prescribed by law isat least six years and one day without regard to fine.
On the other hand, DOJ Department Circular No. 028 provides that it governs the conduct ofinvestigationof crimes or offenses in the NPS of the DOJwhere the penalty prescribed by law is one day to six years, fine regardless of the amount, or both.[31]Section 6 thereof provides thatsummary investigationis required for crimes or offenses where the penalty prescribed isone day to one year, fine regardless of the amount or both. Further, Section 8 thereof provides that anexpedited preliminary investigationis required where the penalty prescribed isone year and one day to six years, without regard to fine, or both imprisonment and fine, if exclusively falling within the jurisdiction of first level courts such as MeTCs, MTCs, and MCTCs,provided that, if the cases are by law cognizable by the RTCs, they shall be subjected to regular preliminary investigation or inquest proceedings.
I am aware of views expressed that such construction may lead to delay in the filing of the Information with the courts. To my mind, such concern is more apparent than real. After all, courts may hold the prosecutors accountable by the process and periods provided for under DOJ Department Circular Nos. 15 and 28.
In fine, I concur with theponenciathat (1) the prescription of criminal offenses under the 1997 NIRC where the commission of the violation is not known shall begin to run from its discovery, and (2) the prescriptive period of an offense is tolled by the filing of the complaint with the prosecutor for purposes of Article 91 of the Revised Penal Code, Section 11 of the 1991 Revised Rules on Summary Procedure, and Rule III, Subsection B, Section 1 of the 2022 Rules on Expedited Procedures in the First Level Courts.
ACCORDINGLY, I vote toDENYthe Petition.
[1]Ponencia, pp. 1-2.
[2]Id.at 3.
[3]Id.at 3-4.
[4]268 Phil. 680 (1990) [Per C.J. Fernan, Third Division].
[5]Ponencia, pp. 5-7, 7.
[6]Id.at 9-10.
[7]Id.at 10.
[8]Id.at 10-12.
[9]Id.at 12-13.
[10]Id.at 14.
[11]Id.at 14-15.
[12]Lim, Sr. v. Court of Appeals, 268 Phil. 680, 689 (1990) [Per C.J. Fernan, Third Division].
[13]Brent School, Inc. v. Zamora, 260 Phil. 747, 762-763 (1990) [Per J. Narvasa,En Banc]. (Citations omitted)
[14]287 Phil. 669 (1992) [Per J. Feliciano, Third Division].
[15]46 Phil. 995 (2014) [Per J. Velasco, Jr., Third Division].
[16]Ponencia, p. 8.
[17]44 Phil. 387 (1923) [Per C.J. Araullo, First Division].
[18]Inmates of the New Bilibid Prison v. De Lima, 854 Phil. 675, 706-707 (2019) [Per J. Peralta,En Banc].
[19]Titled "Statutory Offenses and Penalties."
[20]J. Dimaampao, Concurring and Dissenting Opinion, pp. 4-5.
[21]SeePiccio v. House of Representatives Electoral Tribunal, 912 Phil. 189, 223 (2021) [Per J. Caguioa,En Banc].
[22]Panaguiton, Jr. v. Department of Justice, 592 Phil. 286, 295 (2008) [Per J. Tinga, Second Division]. (Citation omitted)
[23]An Act To Further Amend Sections Sixteen Hundred and Seventy-Four and Sixteen Hundred and Eighty-Seven of The Revised Administrative Code (1952).
[24]Dated September 8, 1967.
[25]Dated December 6, 1972.
[26]Dated March 23, 1976.
[27]1985 RULES ON CRIMINAL PROCEDURE (1985), Rule 112, sec. 2.
[28]SeeSC Administrative Matter No. 05-8-26-SC, August 30, 2005, sec. 2.
[29]REPUBLIC ACT NO. 10071, sec 3:
Sec. 3.Creation of the National Prosecution Service. – There is hereby created and established a National Prosecution Service to be composed of the prosecution staff in the Office of the Secretary of Justice and such number of regional prosecution offices, offices of the provincial prosecutor and offices of the city prosecutor as are hereinafter provided, which shall be primarily responsible for the preliminary investigation and prosecution of all cases involving violations of penal laws under the supervision of the Secretary of Justice, subject to the provisions of Sections 4, 5 and 7 hereof.[30]Panaguiton, Jr. v. Department of Justice, 592 Phil. 286, 295 (2008) [Per J. Tinga, Second Division]. (Citation omitted)
[31]2024 DOJ-NPS Rules on Summary Investigation and Expedited Preliminary Investigation, Rule 1, sec. 2.
DIMAAMPAO,J.:
Theponenciaoverturns the doctrine laid down inLim, Sr. v. Court of Appeals[1](Lim), which declared that Section 354 (now Section 281) of the National Internal Revenue Code (NIRC) of 1939 reckons the running of the prescription of violations of the Tax Code from both the discovery of the fraudandthe institution of judicial proceedings. Theponenciaposits that this provision should be interpreted as reckoning the running of the prescriptive period solely on the discovery of the violation[2]and the filing of a complaint before the Department of Justice tolls the prescriptive period.[3]It bases this interpretation from the Court's pronouncements inPanaguiton, Jr. v. Department of Justice[4](Panaguiton) andPeople v. Duque[5](Duque). InPanaguiton, the Court determined that the "proceedings" referred to in Section 2 of Act No. 3326[6]—a provision sharing the wording of Section 281—must be read as including proceedings conducted by the executive branch, i.e., preliminary investigation. InDuque, the Court held that the phrase "institution of judicial proceedings for its investigation and punishment" should either be disregarded or deemed preceded by the word "until." Otherwise, the prescriptive period can never commence given that it would begin and be interrupted by the same occurrences.
While I agree it is high time for the Court to take a second look at the doctrine inLim, I do not share the proposition of the majority to completely abandon the same. Rather, I believe the Court should take this opportunity to clarify the doctrine in obeisance to legislative intent.
In order to elucidate my position, an extensive review of the history of the tax provision is in order.
The provision first appears in its present form under Section 354 of Commonwealth Act No. 466, otherwise known as the NIRC of 1939:
SECTION 354. Prescription for Violations of Any Provisions of this Code. — All violations of any provisions of this Code shall prescribe after five years.In Presidential Decree No. 1158, or the NIRC of 1977, the provision was renumbered but remained unchanged:
Prescription 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 prescription 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.
SECTION 340. Prescription for violations of any provision of this Code. — All violations of any provision of this Code shall prescribe after five years.It was around this time that the Court promulgatedLim, albeit the applicable law in that case was the NIRC of 1939 given that the purported violations occurred in 1958 and 1959.
Prescription 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 prescription 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.
InLim, the Court affirmed the assertion of the Solicitor General that Section 354 of the NIRC of 1939 requires the concurrence of both the discovery of the violation and the institution of judicial proceedings before the five-year prescriptive period may begin to run:
Not only that. The Solicitor General stresses that Section 354 speaks not only of discovery of the fraud but also institution of judicial proceedings. Note the conjunctive word "and" between the phrases "the discovery thereof" and "the institution of judicial proceedings for its investigation and proceedings." In other words, in addition to the fact of discovery, there must be a judicial proceeding for the investigation and punishment of the tax offense before the five-year limiting period begins to run. It was on September 1, 1969 that the offenses subject of Criminal Cases Nos. 1790 and 1791 were indorsed to the Fiscal's Office for preliminary investigation. Inasmuch as a preliminary investigation is a proceeding for investigation and punishment of a crime, it was only on September 1, 1969 that the prescriptive period commenced.Notably, this specific interpretation of the provision does not appear to have been reiterated by the Court in subsequent case law up to the present date.
. . . .
The Court is inclined to adopt the view of the Solicitor General. For while that particular point might have been raised in theChing Lakcase, the Court, at that time, did not give a definitive ruling which would have settled the question once and for all. As Section 354 stands in the statute book (and to this day it has remained unchanged) it would indeed seem that tax cases, such as the present ones, are practically imprescriptible for as long as the period from the discoveryandinstitution of judicial proceedings for its investigation and punishment,up tothe filing of the information in court does not exceed five (5) years.
. . . .
Unless amended by the Legislature, Section 354 stays in the Tax Code as it was written during the days of the Commonwealth. And as it is, must be applied regardless of its apparent one-sidedness in favor of the Government. In criminal cases, statutes of limitations are acts of grace, a surrendering by the sovereign of its right to prosecute. They receive a strict construction in favor of the Government and limitations in such cases will not be presumed in the absence of clear legislation.[7]
Thereafter, the provision was again carried over in Republic Act No. 8424, or the NIRC of 1997, although it was again renumbered:
SECTION 281. Prescription for Violations of any Provision of this Code. — All violations of any provision of this Code shall prescribe after Five (5) years.All in all, it is self-evident that the provision itself remained unchanged from its first iteration, even with the change in the processes involving the institution of criminal proceedings, specifically that the "investigation of the charge for purposes of prosecution [became] the exclusive function of the executive branch."[8]
Prescription 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 prescription 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.
Based on this fact alone, there is ample reason to reject the majority's stance in applying analogously the jurisprudence reinterpreting the provisions of Act No. 3326 to Section 281 of the NIRC of 1997.
Act No. 3326, unlike the NIRC, has not been subject to amendment except in 1929 by Act No. 3585 and in 1930 by Act No. 3763. Since then, no legislative act has been passed, either affirming, modifying, or repealing Act No. 3326.
This should be contradistinguished from the NIRC which has gone through several amendments as a whole, while Section 281 remained unchanged. From this, it may be reasonably inferred that the legislators simply did not see it fit to alter the same notwithstanding the ostensible evolution in the "judicial proceedings" for criminal cases from the time that investigations began from filing a complaint with the justices of the peace.
It bears stressing that when the NIRC of 1997 was passed,Limalready espoused the doctrine that Section 281 (them Section 354) required the concurrence of both discovery and institution of judicial proceedings for the prescriptive period to begin. Moreover, the doctrine inDuquereinterpreting Act No. 3326 was likewise existent. Still, Section 281 was not amended to "correct" the contemporary interpretation of the Court.
It is a basic principle in statutory construction that in the enactment of statutes, it is presumed that the Legislature "understood the language it used. and to have acted with full idea of what it wanted to accomplish"[9]and that the law was passed "with deliberation [and] with full knowledge of all existing ones on the subject."[10]Guided by the foregoing, it must be assumed that Congress deliberately chose to retain the reckoning point of prescriptive periods for tax offenses under the NIRC from both the discoveryandthe institution of judicial proceedings as it is understood in its modern meaning, i.e., the filing of an Information before the courts. Unless the resulting effect offends the fundamental law of the land, the Court is in no position to override the prerogative of Congress.
Interestingly, this is not the first time that applying the exact wording of the provisions of the NIRC has resulted in an absurd situation. InCommissioner of Internal Revenue v. Carrier Air Conditioning Philippines, Inc.(Carrier Air),[11]the Court likewise examined the issues surrounding Section 229 on the lack of a period provided for the Commissioner of Internal Revenue to act on administrative claims for refund of erroneously or illegally collected taxes before judicial claims for refund may be filed. The wording of the law led to ludicrous situations wherein taxpayers may file an administrative claim two days before the two-year period lapses and then file their judicial claim a day after. Still, the Court held that "the silence or insufficiency in the law on the reasonable period for the Commissioner's action is one that can be addressed not by judicial pronouncement, but by appropriate legislation."[12]
As intimated by now retired Senior Associate Justice Estela M. Perlas-Bernabe in her Concurring Opinion inCarrier Air:
Whether or not the CIR should be given a mandatory period of review of administrative claims as a condition precedent to the filing of a judicial claim goes into the wisdom of the law. It is well-settled that the Court cannot supplant its own wisdom with that of Congress as this goes beyond the purview of its power of judicial review. As the Court has held, "[t]he courts may or may not agree with the legislature upon the wisdom or necessity of the law. Their disagreement, however, furnishes no basis for pronouncing a statute illegal. If the particular statute is within the constitutional power of the legislature to enact, whether the courts agree or not in the wisdom of its enactment, is a matter of no concern."Undeniably, striking down portions of Section 281 or inserting words or phrases therein to arrive at a more logical and reasonable application of the prescriptive period, as inDuque, would be tantamount to judicial legislation. To reiterate, the Legislature consistently maintained the wording of the provision by positive acts. This deliberateness cannot be ignored or set aside by the Court.
In this regard, the proper recourse against the curtailment of the CIR's power to first rule on administrative claim, as herein stated, is to seek the amendment of Section 229."'[I]f the law is too narrow in scope, it is for the Legislature rather than the courts to expand it.'It is only when all other means of determining the legislative intention fail that a court may look into the effect of the law; otherwise, the interpretation becomes judicial legislation."(Emphasis supplied)
Corollary thereto, there is a need to correct the conclusions of the Court of Tax AppealsEn Bancin its resolution of the case at bench. It appears that in "applyingLim" the tax court misunderstood the import of the doctrine espoused therein. In holding that the criminal violations of respondent have prescribed, the Court of Tax AppealsEn Bancratiocinated that:[13]
The commencement of the prescriptive period as provided in the above-cited provision (previously Section 354 of the NIRC of 1939) was interpreted by no less than the Supreme Court inLim v. CAin the following manner, to wit:The foregoing application of theLimdoctrine effective reckons the prescriptive period from the discovery of the violation and institution of executive proceedings, i.e., preliminary investigation, and sets the end of the five-year period to the filing of the Information before the courts. However, this is essentially the doctrine inDuquewhere the word "until" is read into the provision before the words "institution of judicial proceedings". Worse, this application effectively curtails the third paragraph of the provision which states that "prescription shall beinterrupted when proceedings are institutedagainst the guilty persons and shall begin to run again if the proceedings are dismissed for reasons not constituting jeopardy."[14]
. . . .
Evident from the foregoing, both the date of discovery and the institution of judicial proceedings for investigation and punishment are significant events in the prosecution of any infraction of the Tax Code. It was observed that as long as the period from the discovery and institution of judicial proceedings for its investigation and punishment up to the filing of the Information in court does not exceed five (5) years, the government's right to file a criminal action does not prescribe.Conversely, if the period from the institution of judicial proceedings for its investigation up to the filing of the information in court exceeds five (5) years, then the government's right to file an action has prescribed.
As found by the Court in Division, the Joint Complaint-Affidavit of the investigating revenue officers was filed with the DOJ for preliminary investigation on January 30, 2014.Thus, the point in time which constitutes "discovery" together with the institution of judicial proceedings for preliminary investigation, show that prescription began to run on January 30, 2014.Applying the law andLim v. CA, the 5-year prescriptive period from January 30, 2014 lapsed on January 30, 2019. In fine, when the Information was filed before the Court in Division on March 18, 2019, the 5-year prescriptive period had already lapsed. Hence, the Court in Division correctly ruled that the Information dated March 18, 2019 against Respondent could no longer be entertained as it was filed beyond the 5-year prescriptive period. (Emphasis supplied)
This misapprehension appears to have been borne by the following ambiguous statement inLim:
. . . As Section 354 stands in the statute book (and to this day it has remained unchanged) it would indeed seem that tax cases, such as the present ones, are practically imprescriptible for as long as the period from the discovery and institution of judicial proceedings for its investigation and punishment,up to the filing of the information in court does not exceed five (5) years. (Emphasis supplied)However, the foregoing statement should be understood from the context of the reality of when the NIRC of 1939 was in effect. As earlier intimated, at that time, the judicial proceedings for the investigation and punishment of offenses began from the filing of the complaint with the justice of the peace. Thus, if the provision were to be taken on its face, similar to Act No. 3326, the discovery of the offense coupled with the filing of a complaint with the justice of the peace operated to begin and interrupt the prescriptive period.
Upon the creation of the National Prosecution Service in 1978[15]and reorganization of the judiciary in 1980,[16]the task of investigating criminal charges for the purposes of prosecution became the sole province of the executive branch. The shift in the criminal investigation process without the concurrent shift in the wording of the law led to the ambiguous statement inLimthat the prescriptive period began upon discovery and filing of a complaint with the fiscal, and ran until the filing of the Information in court.
Nonetheless, as above-discussed, the Legislature chose to retain the phrase "institution of judicial proceedings" notwithstanding that the criminal investigation process no longer began with the courts. Thus, the provision itself should be understood to mean that the prescriptive period begins both from the discovery and the filing of the Information in court, without consideration of the period in between, i.e., the preliminary investigation of the prosecution. Moreover, the filing of the Information will likewise interrupt the period "and shall begin to run again if the proceedings are dismissed for reasons not constituting jeopardy." To reiterate, while this may seem absurd or irrational, and appears to heavily favor the government, it goes into the wisdom of the law. As the Court held inLim, "[i]n criminal cases, statutes of limitations are acts of grace, a surrendering by the sovereign of its right to prosecute. They receive a strict construction in favor of the Government and limitations in such cases will not be presumed m the absence of clear legislation."
Still, the accused-taxpayers are not left without remedy. If the preliminary investigation spans several years, the accused-taxpayer may still raise the defense of a violation of their right to the speedy disposition of cases. This defense is wholly separate from the defense of prescription. Moreover, they may likewise argue that the offense charged is not covered by the· Discovery Rule.
On that point, I wholly concur with theponenciainsofar as it held that the Discovery Rule does not apply to the criminal charge in this case as the Bureau of Internal Revenue had reasonable means to ascertain respondent's failure to file his tax return for 2008. Thus, regardless of my disagreement with theponencia's proposal to abandonLim, I still concur in the result of dismissing the Information against respondent on the ground of prescription.
In view though of the problems that arise from the present wording of Section 281 of the NIRC, and in observance of the principle of separation of powers, I wholeheartedly support theponenciain directing that a copy of the Decision be furnished to both the Lower and Upper Houses of Congress for remedial legislation.
In summary, I vote toDENYthe petition, but I maintain that the doctrine laid down inLimshould be upheld, subject to the clarification above discussed.
[1]268 Phil. 680-692 (1990) [Per C.J. Fernan, Third Division].
[2]Ponencia, pp. 9-10.
[3]Id.at 14-15.
[4]592 Phil. 286-298 (2008) [Per J. Tinga, Second Division].
[5]287 Phil. 669-683 (1992) [Per J. Feliciano, Third Division].
[6]Act No. 3326 (1926), An Act to Establish Periods of Prescription for Violations Penalized by Special Acts and Municipal Ordinances and to Provide When Prescription Shall Begin to Run.
[7]Lim, Sr. v. Court of Appeals,supranote 1.
[8]Panaguiton, Jr. v. Department of Justice,supranote 3 citing the Concurring Opinion of Justice Tinga inSecurities and Exchange Commission v. Interport Resources Corp., 588 Phil. 651-731 (2008) [Per J. Chico-Nazario,En Banc].
[9]CBK Power Company Ltd. v. Commissioner of Internal Revenue, 750 Phil. 748-766 (2015) [Per J. PerlasBernabe, First Division] citingP. J. Kiener Co., Ltd. v. David, 92 Phil. 945-947 (1953) [Per J. Tuason,En Banc].
[10]Calleja v. Executive Secretary, G.R. Nos. 252578 et al., December 7, 2021 [Per J. Carandang,En Banc] citingMecano v. Commission on Audit, 290-A Phil. 272, 283 (1992) [Per J. Campos, Jr.,En Banc].
[11]G.R. No. 226592, July 27, 2021 [Per J. Leonen,En Banc].
[12]Id.
[13]People v. Consebido, C.T.A. EB Crim. Case No. 069 (C.T.A. Crim. Case No. 0-701), January 6, 2021.
[14]Emphasis supplied.
[15]Presidential Decree No. 1275 (1978), Reorganizing the Prosecution Staff of the Department of Justice and the Offices of the Provincial and City Fiscals, Regionalizing the Prosecution Service, and Creating the National Prosecution Service.
[16]Batas Pambansa Blg. 129, (1981), The Judiciary Reorganization Act of 1980.