lim sr vs ca

616 SUPREMECOURTREPORTSANNOTATED

Lim, Sr. vs. Court of Appeals

G.R.Nos.4813437.October18,1990.*

EMILIOE.LIM,SR.andANTONIASUNLIM,petitioners,vs. COURT OF APPEALS and PEOPLE OF THEPHILIPPINES,respondents.

Taxation; Income Tax; Prescription; The 5year prescriptiveperiod provided for under Sec. 354 of the Tax Code should bereckoned from the date the final notice and demand was served onthe taxpayer.—Relative to Criminal Cases Nos. 1788 and 1789which involved petitioners' refusal to pay the deficiency incometaxesdue,againbothpartiesareinaccordthatbytheirnature,theviolationsaschargedcouldonlybecommittedafterserviceofnoticeand demand for payment of the deficiency taxes upon thetaxpayers. Petitioners maintain that the fiveyear period oflimitationunderSection354shouldbereckonedfromApril7,1965,the date of the original assessment while the Government insiststhatitshouldbecountedfrom

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*THIRDDIVISION.

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July 3, 1968 when the final notice and demand was served onpetitioners' daughterinlaw.Wehold for theGovernment.Section51 (b) of the Tax Code provides: "(b) Assessment and payment of

deficiency tax.—After the return is filed, the Commissioner ofInternalRevenueshallexamineitandassessthecorrectamountofthe tax.The tax or deficiency in tax so discovered shall be paidupon notice and demand from the Commissioner of lnternalRevenue." (Italics supplied) Inasmuch as the final notice anddemand for payment of the deficiency taxes was served onpetitionersonJuly3,1968,itwasonlythenthatthecauseofactiononthepartoftheBIRaccrued.Thisissobecausepriortothereceiptoftheletterassessment,noviolationhasyetbeencommittedbythetaxpayers.Theoffensewascommittedonlyafterreceiptwascoupledwith the wilful refusal to pay the taxes due within the allotedperiod. The two criminal informations, having been filed on June23,1970,arewellwithin the fiveyearprescriptiveperiodandarenottimebarred.

Same; Same; Same; Fraudulent Returns; In addition to the factof discovery, there must be a judicial proceeding for theinvestigation and punishment of the tax offense before the fiveyearlimiting period begins to run.—Onbehalf of theGovernment, theSolicitorGeneralcountersthatthecrimeof filingfalsereturnscanbeconsidered"discovered"onlyafterthemannerofcommission,andthenatureandextentofthefraudhavebeendefinitelyascertained.Itwas only onOctober 10, 1967when theBIR rendered its finaldecision holding that therewas no ground for the reversal of theassessment and therefore required the petitioners to payP1,237,190.55 in deficiency taxes that the tax infractions werediscovered.Notonlythat.TheSolicitorGeneralstressesthatSection354speaksnotonlyofdiscoveryofthefraudbutalsoinstitutionofjudicial proceedings.Note the conjunctiveword "and" between thephrases "the discovery thereof' and "the institution of judicialproceedings for its investigation and proceedings." In otherwords,in addition to the fact of discovery, there must be a judicialproceedingfortheinvestigationandpunishmentofthetaxoffensebefore the fiveyear limiting period begins to run. It was onSeptember1,1969that theoffensessubjectofCriminalCasesNos.1790and1791were indorsed to theFiscal'sOffice forpreliminaryinvestigation. Inasmuch as a preliminary investigation is aproceedingforinvestigationandpunishmentofacrime,itwasonlyonSeptember1,1969thattheprescriptiveperiodcommenced.xxxTheCourtisinclinedtoadopttheviewoftheSolicitorGeneral.ForwhilethatparticularpointmighthavebeenraisedintheChingLakcase,theCourt,atthattime,didnotgiveadefinitiverulingwhichwould have settled the question once and for all. As Section 354standsinthestatutebook(andtothis

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dayithasremainedunchanged)itwouldindeedseemthatthetaxcases,suchasthepresentones,arepracticallyimprescriptibleforaslong as the period from the discovery and institution of judicialproceedingsforitsinvestigationandpunishment,up tothefilingoftheinformationincourtdoesnotexceedfive(5)years.

Same; Same; Presidential Decree 69; PD 69 provides thatjudgment in the criminal case shall not only impose the penalty butshall order payment of the taxes subject of the criminal case. Thisdecree, however, cannot be applied to criminal cases filed prior tothe effectivity thereof i.e. January 1, 1973.—Thepetition,however,is impressed with merit insofar as it assails the inclusion in thejudgmentofthepaymentofdeficiencytaxesinCriminalCasesNos.17881789. The trial court had absolutely no jurisdiction insentencing the Lim couple to indemnify the Government for thetaxesunpaid.ThelowercourterredinapplyingPresidentialDecreeNo. 69, particularly Section 316 thereof, which provides that"judgmentinthecriminalcaseshallnotonlyimposethepenaltybutshall order payment of the taxes subject of the criminal case",becausethatdecreetookeffectonly011January1,1973whereasthecriminalcasessubjectofthisappealwereinstitutedonJune23,1970.Saveintwospecificinstances,PresidentialDecreeNo.69hasnoretroactiveapplication.

PETITIONforcertioraritoreviewthedecisionoftheCourtofAppeals.

ThefactsarestatedintheopinionoftheCourt.Santiago, Fornier, Tinga & Associatesforpetitioners.

FERNAN,C.J.:

The instant petition for review on certiorari seeks thereversaloftheCourtofAppealsdecisiondatedSeptember1,1977whichaffirmedin totothejudgmentsofthethenCourtofFirstInstanceofManila,BranchVIinfour(4)CriminalcasesinstitutedbytheBureauofInternalRevenueagainstpetitioners.

1

ThefactsasfoundbythetrialcourtandaffirmedbytheAppellateCourtaresubstantiallyasfollows:

Petitioner spousesEmilioE.Lim,Sr. andAntoniaSunLim, with business address at No. 336 Nueva Street,

Manila,were

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1Rollo,p.118.

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VOL.190,OCTOBER18,1990 619


engagedinthedealershipofvarioushouseholdappliances.Theyfiledincometaxreturnsfortheyears1958and1959.

On October 5, 1959, a raid was conducted at theirbusiness address by theNationalBureau of InvestigationbyvirtueofasearchwarrantissuedbyJudgeWenceslaoL.Cornejo of the City Court of Manila. A similar raid wasmade on petitioners' premises at 111 12th Street,QuezonCity. Seized from the Lim couple were business andaccounting records which served as bases for aninvestigation undertaken by the Bureau of InternalRevenue(BIR).

On October 14,1960, the Chief of the InvestigationDivision of the BIR informed petitioners that revenueexaminers had been authorized to examine their books ofaccount.

On September 30, 1964 Senior Revenue ExaminerRaphael S. Daet submitted a memorandum with thefindingsthattheincometaxreturnsfiledbypetitionersforthe years 1958 and 1959 were false or fraudulent. Daetrecommended thatanassessmentofP835,127.00bemadeagainstthepetitioners.

Accordingly,onApril7,1965,thenActingCommissionerof theBIR,BenjaminM.Tabios informedpetitioners thatthere was due from them the amount of P922,913.04 asdeficiency income taxes for 1958 and 1959, giving themuntilMay7,1965topaytheamount.

On April 10, 1965, petitioner Emilio E. Lim, Sr.requested for a reinvestigation. The BIR expressedwillingness to grant such request but on condition thatwithintendaysfromnotice,Limwouldaccomplishawaiverofdefenseofprescriptionunder theStatuteofLimitationsand that one half of the deficiency income tax would bedeposited with the BIR and the other half secured by asuretybond. Ifwithin the tendayperiod theBIRdidnot

hear frompetitioners, then itwouldbepresumed that therequestforreinvestigationhadbeenabandoned.

PetitionerEmilioE.Lim,Sr.refusedtocomplywiththeabove conditions and reiterated his request for anotherinvestigation.

On January 31, 1967, theBIRCommissioner informedpetitioners that their deficiency income tax liabilities for1958and1959hadbeenassessedatP934,000.54includinginterest and compromise penalty for late payment.PetitionersweregivenuntilMarch7,1967tosubmittheirobjectionswiththeadmonitionthatiftheyfailedtodoso,itwouldbeassumedthatthey

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were agreeable to the assessment and a formal demandwouldissue.

OnMarch15,1967,petitionerswrotetheBIRtoprotestthe latest assessment and repeated their request for areinvestigation,

OnOctober10,1967, theBIRrendereda finaldecisionholding that there was no cause for reversal of theassessment against the Lim couple. Petitioners wererequiredtopaydeficiencyincometaxesfor1958and1959amounting to P1,237,190.55 inclusive of interest,surchargesandcompromisepenalty for latepayment.Thefinal notice and demand for payment was served onpetitionersthroughtheirdaughterinlawonJuly3,1968.

Still, no paymentwas forthcoming from the delinquenttaxpayers. Accordingly on September 1, 1969, the matterwas referred by the BIR to theManila Fiscal's Office forinvestigation and prosecution. On June 23, 1970, four (4)separate criminal informations were filed againstpetitioners in the thenCourt of First Instance ofManila,BranchVIforviolationofSections45and51inrelationtoSection 73 of theNational Internal RevenueCode.

2 Trial

ensued.OnAugust19,1975,thetrialcourtrenderedtwo(2)joint decisions finding petitioners guilty as charged. Thedispositiveportionsread:InCriminalCasesNos.1789and1788:

'WHEREFORE, in view of the foregoing considerations, theCourt

findstheaccusedEmilioE.Lim,Sr.andAntoniaSunLimguiltyofaviolationofSection51penalizedunderSection73oftheNationalInternalRevenueCodeandeach isherebysentenced ineachcasetopayafineofP2,000.00andtopaythegovernmentpursuanttoPresidential Decree No. 69 the amounts of P580,588.75 andP656,601.80 as deficiency income taxes for the years 1958 and1959,respectively,andthecostsoftheproceedings."

3

InCriminalCasesNos.1790and1791:

"WHEREFORE, inviewof the foregoing considerations, theCourtfindstheaccusedEmilioE.Lim,Sr.andAntoniaSunLimguiltyofa

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2CommonwealthActNo.466.

3Rollo,p.228.

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violation of Section 45 in relation to Section 332 of the NationalInternalRevenueCodeasamended,penalizedunderSection73ofthesameCodeandherebysentenceseachtopayafineofP4,000,00ineachcaseandthecostsoftheproceedings."

4

PetitionersappealedtheforegoingdecisionstotheCourtofAppeals.

5 In its judgment dated September 1, 1977, the

CourtofAppealsaffirmedin toto the twindecisionsof thelowercourt.Twentythreedays (23) lateroronSeptember24,1977,petitionerEmilioE.Lim,Sr.died.

On September 26, 1977, petitioners moved for areconsiderationofthedecisiondatedSeptember1,1977.OnApril 4, 1978, the Court of Appeals promulgated aresolutionasfollows:

"WHEREFORE,pursuant toArticle89of theRevisedPenalCode,bythedeathofappellantEmilioE.Lim,Sr.hiscriminalliabilityistotally extinguished; but his counsel is hereby required to informtheCourtas towhoare theheirs of thedeceased followingwhichthe caption shouldbemodified soas to reflect the civil aspect andsubstitution of the heirs, as defendants. In all other respects, thedecisionofthisCourtpromulgatedSeptember1,1977,stands."

6

Hencethepresentpetitionforreviewbycertiorari.In their Brief, petitioners contend that the Appellate

Court erred in holding that the offenses charged inCriminal CaseNos. 1790 and 1791 prescribed in ten (10)years,insteadoffive(5)years;thattheprescriptiveperiodinCriminalCasesNos.1788and1789 commenced to runonlyfromJuly3,1968,thedateofthefinalassessment;thatSection 316 of the Tax Code as amended by PresidentialDecreeNo.69wasapplicabletothecaseatbar;andthatthecivilobligationofpetitionerEmilioE.Lim,Sr.arisingfromthecrimeschargedwasnotextinguishedbyhisdeath.

7

Preliminarily, itmust bemade clear thatwhatwe aredealing

________________

4Rollo,p.233.5CAG.R.Nos.1881418817CR.6Rollo,p.163.7 Brief of the Petitioners, pp. 12, in relation to the Motion for

Correction,Rollo,p.346.

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Lim, Sr. vs, Court of Appeals

herearecriminal prosecutions forfilingfraudulentincometax returns and for refusing to pay deficiency taxes. ThegoverningpenalprovisionoftheNationalInternalRevenueCode

8 is Section 73 in conjunction with Section 354. The

disputecentersontheinterpretationofSection354becauseinanefforttoexculpatethemselves,petitionershaveraisedthe defense of prescription. On the fiveyear prescriptiveperiod,bothpartiesareinagreement.Theydifferhoweverin themanner of computation, specifically as towhen theperiodshouldcommence.Thus:

"Section73.Penaltyforfailuretofilereturnortopaytax.—Anyoneliable to pay the tax, to make a return or to supply informationrequiredunderthisCode,whorefusesorneglectstopaysuchtax,tomake such return or to supply such information at the time ortimeshereinspecificedineachyear,shallbepunishedbyafineofnotmorethantwothousandpesosorbyimprisonmentfornotmorethansixmonths,orboth.

"Any individual or any officer of any corporation, or generalcopartnershipxxx,requiredbylawtomake,render,signorverifyany return or to supply any information,whomakes any false orfraudulent return or statementwith intent to defeat or evade theassessmentrequiredbythisCodetobemade,shallbepunishedbyafineofnotexceedingfourthousandpesosorbyimprisonmentfornotexceedingoneyear,orboth."

"Section354.Prescription for violations of any provisions of thisCode.—All violations of any provision of this Code shall prescribeafterfiveyears.

"Prescription shall begin to run from the day of the commissionof the violation of the law, and if the same be not known at the time,from the discovery thereof and the institution of judicialproceedings for its investigation and punishment.

'The prescription shall be interrupted when proceedings areinstitutedagainsttheguiltypersonsandshallbegintorunagainiftheproceedingsaredismissedforreasonsnotconstitutingjeopardy.

"The term of prescription shall not run when the offender isabsentfromthePhilippines."(Italicssupplied)

Indubitably, petitioners had filed false and fraudulentincome tax returns for the years 1958 and 1959 bynondisclosure

________________

8CommonwealthActNo.466.

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ofsalesintheaggregateamountofP2,197,742.92,therebydeprivingtheGovernmentintheamountofP1,237,190.55,representing deficiency income taxes inclusive of interest,surcharges and compromise penalty for late payment.Considering that this occurred in the late 1950's, thedefraudationwasonamassivescale.

Relative to Criminal Cases Nos. 1788 and 1789 whichinvolved petitioners' refusal to pay the deficiency incometaxes due, again both parties are in accord that by theirnature, theviolationsas charged couldonlybe committedafter service of notice and demand for payment of thedeficiency taxes upon the taxpayers. Petitionersmaintain

that the fiveyear period of limitation under Section 354should be reckoned from April 7, 1965, the date of theoriginal assessment while the Government insists that itshouldbecountedfromJuly3,1968whenthefinalnoticeanddemandwasserved011petitioners'daughterinlaw.

Wehold for theGovernment. Section 51 (b) of theTaxCodeprovides;

"(b)Assessmentandpaymentofdeficiencytax.—Afterthereturnisfiled, the Commissioner of Internal Revenue shall examine it andassessthecorrectamountofthetax.The tax or deficiency in tax sodiscovered shall be paid upon notice and demand from theCommissioner of lnternal Revenue."(Italicssupplied)

InasmuchasthefinalnoticeanddemandforpaymentofthedeficiencytaxeswasservedonpetitionersonJuly3,1968,itwasonlythenthatthecauseofactiononthepartoftheBIRaccrued. This is so because prior to the receipt of theletterassessment, no violation has yet been committed bythetaxpayers.Theoffensewascommittedonlyafterreceiptwas coupled with the wilful refusal to pay the taxes duewithin the alloted period. The two criminal informations,havingbeenfiledonJune23,1970,arewellwithinthefiveyearprescriptiveperiodandarenottimebarred.

With regard to Criminal Cases Nos. 1790 and 1791which dealt with petitioners' filing of fraudulentconsolidated income tax returns with intent to evade theassessmentdecreedbylaw,petitionerscontendthatthesaidcrimeshavelikewisepre

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624 SUPREMECOURTREPORTSANNOTATED.


scribed. They advance the view that the fiveyear periodshouldbecountedfromthedateof discoveryoftheallegedfraud which, at the latest, should have been October 15,1964, the date stated by the Appellate Court in itsresolutionofApril4,1978asthedatethefraudulentnatureofthereturnswasunearthed.

9

On behalf of the Government, the Solicitor Generalcounters that the crime of filing false returns can beconsidered "discovered" only after the manner ofcommission, and the nature and extent of the fraud have

beendefinitelyascertained.ItwasonlyonOctober10,1967whentheBIRrendereditsfinaldecisionholdingthattherewas no ground for the reversal of the assessment andtherefore required the petitioners to payP1,237,190.55 indeficiencytaxesthatthetaxinfractionswerediscovered.

Notonlythat.TheSolicitorGeneralstressesthatSection354 speaks not only of discovery of the fraud but alsoinstitution of judicial proceedings. Note the conjunctiveword"and"betweenthephrases"thediscoverythereof'and"the institutionof judicialproceedings for its investigationandproceedings."Inotherwords, inadditiontothefactofdiscovery, there must be a judicial proceeding for theinvestigationandpunishmentofthetaxoffensebeforethefiveyearlimitingperiodbeginstorun.ItwasonSeptember1,1969thattheoffensessubjectofCriminalCasesNos.1790and1791wereindorsedtotheFiscal'sOfficeforpreliminaryinvestigation.Inasmuchasapreliminaryinvestigationisaproceeding for investigationandpunishmentofacrime, itwasonlyonSeptember1,1969thattheprescriptiveperiodcommenced.

But according to the Lim spouses, that argument hadpreciselybeenraised,consideredandfoundwithoutmeritinthecaseofPeople vs. Ching Lak

10whichhadperfunctorily

dismissedtheGovernment'spositioninthiswise:

"AnentthetheorythatinthepresentcasetheperiodofprescriptionshouldcommencefromthetimethecasewasreferredtotheFiscal'sOffice, suffice it to state that the theory is not supported by anyprovision of law and we need not elucidate thereon." (Italicssupplied).

________________

9BriefforthePetitioners,pp.22and133.10No.L10609,May23,1958.

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The Court is inclined to adopt the view of the SolicitorGeneral. Forwhile that particular pointmight have beenraised in theChingLakcase, theCourt,at that time,didnot give a definitive rulingwhichwould have settled the

question once and for all. As Section 354 stands in thestatutebook(andtothisdayithasremainedunchanged)itwouldindeedseemthattaxcases,suchasthepresentones,arepracticallyimprescriptibleforaslongastheperiodfromthediscoveryand institutionof judicialproceedingsfor itsinvestigation and punishment, up to the filing of theinformationincourtdoesnotexceedfive(5)years.

In the case of People vs. Tierra,11 the same argument

cameupbeforetheCourtbutitsconclusionsontheissueofprescription did not bring us any closer to a categoricalruling.Itopined:

"Evidencewasadduced to show,and the trial court so found, thatthe falsity of the returns filed by the appellant and his failure topreservehisbooksofaccountsforatleastfiveyearsfromthedateofthelastentryineachbookwerealldiscoveredonlyonDecember16,1950.SincetheinformationswerefiledonDecember12,1955,thetrial courtcorrectlyruled that theactionswereallwithin the fiveyearperiodoflimitation.

"Appellantargues,however,thatsincetheinformationsmakenoallegation that the offenses were not known at the time of thecommissionas tobring themwithin theexceptionto thestatuteoflimitations,thentheinformationswerenecessarilydefectiveforthatreason,andthisfataldefectcannotbecuredbytheintroductionofevidence. Prescription is a matter of defense and the informationdoes not need to anticipate and meet it. The defendant could, atmost, object to the introduction of evidence to defeat his claim ofprescription;buthedidnot.Anyway, the law says that prescriptionbegins to run from x x x 'the institution of judicial proceedings forits xx x punishment.'

12(Italicssupplied).

UnlessamendedbytheLegislature,Section354staysintheTax Code as it was written during the days of theCommonwealth.Andasitis,mustbeappliedregardlessofits apparent onesidedness in favor of theGovernment. Incriminalcases,

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11Nos.Ll717780,December28,1964,12SCRA667,671.12SeeaboveSection354cited.

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statutesof limitationsareactsofgrace,asurrenderingbythesovereignofitsrighttoprosecute.TheyreceiveastrictconstructioninfavoroftheGovernmentandlimitationsinsuch cases will not be presumed in the absence of clearlegislation.

13

Thepetition,however,isimpressedwithmeritinsofarasit assails the inclusion in the judgment of thepayment ofdeficiency taxes in Criminal Cases Nos. 17881789. ThetrialcourthadabsolutelynojurisdictioninsentencingtheLim couple to indemnify the Government for the taxesunpaid. The lower court erred in applying PresidentialDecree No. 69, particularly Section 316 thereof, whichprovidesthat"judgmentinthecriminalcaseshallnotonlyimpose the penalty but shall order payment of the taxessubjectofthecriminalcase",becausethatdecreetookeffectonlyonJanuary1,1973whereasthecriminalcasessubjectofthisappealwereinstitutedonJune23,1970.Saveinthetwo specific instances, Presidential Decree No. 69 has noretroactiveapplication.

InthecaseofPeople vs, Tierra,14wereiteratedtheruling

inPeople vs. Arnault,15thatthereisnolegalsanctionforthe

imposition of payment of the civil indemnity to theGovernmentinacriminalproceedingforviolationofincometaxlaws.Thus:

"x x x While Section 73 of the National Internal Revenue Codeprovides for the imposition of the penalty for refusal or neglect topay income tax or to make a return thereof, by imprisonment orfine, or both, it fails to provide for the collection of said tax incriminal proceedings. As well contended by counsel for appellant,ChaptersIandIIofTitleIXoftheNationalInternalRevenueCodeprovidesonlyforcivilremediesforthecollectionoftheincometax,and under Section 316, the civil remedy is either by distraint ofgoods,chattels,etc.,orbyjudicialaction.Itisacommonlyacceptedprinciple of law that the method prescribed by statute for thecollection of taxes is generally exclusive, and unless a contraryintentbegatheredfromthestatute,itshouldbefollowedstrictly.(3Cooley,LawonTaxation,Section1326,pp.621623)."

________________

13Peoplevs.Ross,156N.E.303,304citedinBlack'sLawDictionary,

FourthEdition,p.1077;Mertens,TheLawonFederalTaxationvol.10,

p.144.14Supra.

1.

2.

3.

1592Phil.252(1952).

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Under the citedTierra andArnault cases, it is clear thatcriminalconvictionforaviolationofanypenalprovisioninthe Tax Code does not amount at the same time to adecision for thepaymentof theunpaid taxes inasmuchasthereisnospecificprovisionintheTaxCodetothateffect.

16

ConsideringthatunderSection316oftheTaxCodepriorto itsamendmentthetrialcouldnotorderthepaymentofthe unpaid taxes as part of the sentence, the question ofwhetherornot thesuperveningdeathofpetitionerEmilioE. Lim, Sr. has extinguished his tax liability need notconcernus.However,withregardtothepecuniarypenaltyof fine imposed on the deceased Lim, this is necessarilyextinguishedbyhisdeathinaccordancewithSection89oftheRevisedPenalCode.

Inresume,wethereforerule:

Criminal Cases Nos. 17881789 and 17901791,havingbeeninstitutedbytheGovernmentonJune23, 1970, are not timebarred pursuant to Section354oftheNationalInternalRevenueCode;ThethenCourtofFirstInstanceofManila,Branch6isdevoidofjurisdictiontodirectthecollectionandpaymentoftheunpaiddeficiencytaxesinCriminalCase Nos. 17881789 because prior to theamendment introduced by Presidential DecreeNo.69, such imposition was not sanctioned underSection316;The fine imposed in the four (4) aforementionedcriminal cases is hereby affirmed in the case ofpetitionerAntoniaSunLiminaccordancewiththeprovisionofSection73oftheTaxCode.Thefineisdeemed extinguished in the case of the deceasedpetitionerEmilioE.Lim,Sr.pursuanttoSection89oftheRevisedPenalCode.

WHEREFORE, conformably with the abovestated ruling,thedecisionoftheCourtofAppealsunderreviewisdeemedMODIFIED,Nocosts.

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16SeealsoPeoplevs.Patanao,No.L22356,July21,1967,20SCRA

712.

628



SOORDERED.

BidinandCortés, JJ.,concur.Gutierrez, Jr., J.,Pleseseeconcurringopinion.Feliciano, J.,Onleave.

GUTIERREZ,JR., J.,Concurring Opinion

Iconcurintheresults.I feel that certain issues need further clarification. I,

therefore, reserve my definitive vote on these issues. Forinstance,tosaythatnoviolationoftheIncomeTaxLawhasbeencommitteduntilafterreceiptoftheletterassessmentoverlooksthefactthattheassessmentisonlyevidenceofapriorviolation.Itisnottherefusaltocomplywiththelatterthatcreatestheviolation.Itisthefailuretopaytaxesintheyears that theyweredue.Again, tomakediscoveryof thefraud and institution of judicial proceedings conjunctiveseems to me illogical because the judicial proceedingsalwayscomeafterdiscovery.Thedateofdiscoverybecomesmeaningless under our decision. Perhaps, the law needsamendmenttomakeitclearer.

Decision modified.

Note.—The Court of Appeals is now vested withexclusive appellate jurisdiction over the Court of TaxAppeals and other quasijudicial agencies,instrumentalities, boards or commissions. (DevelopmentBank of the Philippines vs. Court of Appeals, 180 SCRA609.)

——o0o——

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