People vs. Consebido

For violations of the 1997 NIRC where the date of commission is known or readily ascertainable by the authorities, the prescriptive period begins to run from the date of the commission of the violation, not from the later date of its formal discovery. The institution of proceedings for preliminary investigation by filing a complaint with the Department of Justice interrupts the running of the prescriptive period.

The respondent, Ulysses Palconit Consebido, was a VAT-registered contractor doing business as Seven Digit Construction and Supplies. He received payments from the Provincial Government of Palawan for infrastructure projects funded by Malampaya Funds. The Bureau of Internal Revenue (BIR) filed a complaint-affidavit against him on January 30, 2014, for willful failure to file his quarterly VAT return for the 3rd quarter of 2008, which was due on October 25, 2008. The alleged deficiency VAT amounted to PHP 4,184,566.10. An Information was subsequently filed before the Court of Tax Appeals (CTA) on March 18, 2019.

• Nature of the Charge: Consebido was charged with willful failure to file a quarterly VAT return for the 3rd quarter of 2008, in violation of Section 255 in relation to Section 114 of the 1997 NIRC.
• Key Dates: The return was due on October 25, 2008. The BIR's complaint-affidavit was filed on January 30, 2014. The Information was filed in court on March 18, 2019.
• BIR's Position: The BIR alleged Consebido, a VAT-registered contractor, received taxable payments from the government but failed to file the required return. The BIR attached Consebido's Monthly VAT Declarations for other months, indicating it expected regular filings.
• CTA's Factual Finding: The CTA divisions found that the offense was "discovered" on January 30, 2014, the date the complaint-affidavit was filed. The CTA En Banc applied Lim, Sr., holding the prescriptive period began on that date and expired before the Information was filed.
• Supreme Court's Factual Re-assessment: The Court found the Discovery Rule inapplicable. Given that Consebido was VAT-registered, the government was required to withhold VAT from its payments to him, and the BIR's electronic system could readily generate a list of required but unfiled returns, the BIR had "reasonable means to ascertain" the failure to file on the due date itself. Thus, the date of commission (October 25, 2008) was the proper reckoning point.

• Prescriptive Period Commencement: Petitioner argued that under Section 281 of the 1997 NIRC and Section 2 of Act No. 3326, prescription for an offense not known at the time of its commission begins to run from the date of its discovery (January 30, 2014).
• Interruption of Prescription: Petitioner maintained that the filing of the complaint with the DOJ for preliminary investigation interrupted the prescriptive period, thus the action had not prescribed.
• Favorable Interpretation: Petitioner contended that even if its legal arguments were debatable, they should be favored over the termination of proceedings on technical grounds.

• Precedent on Prescription: Respondent countered, citing Lim, Sr. v. Court of Appeals, that the prescriptive period under the identical wording of the old NIRC cannot commence and be interrupted at the same time by the same act (institution of proceedings). He argued the CTA correctly held the action had prescribed.
• Literal Interpretation: Respondent's position, as reflected in the lower courts' rulings, was that the five-year period ran from the date of discovery (January 30, 2014) and expired before the Information was filed on March 18, 2019.

• Prescriptive Period Commencement: Whether the five-year prescriptive period for the alleged failure to file a VAT return began to run on the date the return was due (October 25, 2008) or on the later date the BIR filed its complaint (January 30, 2014).
• Tolling of Prescription: Whether the filing of a complaint with the Department of Justice for preliminary investigation interrupts the prescriptive period for tax offenses under the 1997 NIRC.

• Prescriptive Period Commencement: The prescriptive period began to run on October 25, 2008, the deadline for filing the return. The Discovery Rule does not apply where the authorities have reasonable means to ascertain the omission at the time of its commission. Since the BIR could have readily discovered the unfiled return from its own systems and the government's withholding obligations, the offense was "known" from its commission date. Consequently, the five-year period expired on October 25, 2013, long before the complaint was filed on January 30, 2014.
• Tolling of Prescription: The filing of the criminal complaint before the DOJ tolls the running of the prescriptive period for offenses under the 1997 NIRC. The Court clarified its prior ruling in Lim, Sr., harmonizing the second and third paragraphs of Section 281 to avoid the absurd result of prescription being both started and interrupted by the same act. This tolling rule applies to all offenses, including those covered by the Rules on Summary Procedure/Expedited Procedures, abandoning prior jurisprudence to the contrary. This new interpretation is applied prospectively.

• Discovery Rule in Tax Offenses — Under Section 281 of the 1997 NIRC, if the violation is not known at the time of its commission, prescription begins to run from its discovery. However, this rule is not absolute. It does not apply where the information necessary to detect the violation is readily available to the authorities or where there are reasonable means for its immediate discovery. In such cases, prescription runs from the date of commission.
• Tolling of Prescriptive Period by Preliminary Investigation — The institution of proceedings for preliminary investigation, specifically the filing of a complaint with the prosecution office (DOJ), interrupts the prescriptive period for offenses punishable under special laws like the 1997 NIRC. This principle ensures the State is not prejudiced by delays in the investigative process not under its control.

• "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." — Articulates the rationale for strictly construing prescriptive periods in favor of the accused.
• "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." — Justifies the new rule that filing a complaint with the DOJ tolls prescription for all offenses.
• "A literal reading of Section 281 of the 1997 NIRC would be unfavorable to the accused and is unnecessary... prescription would both begin and be interrupted by the institution of proceedings." — Explains the rejection of a literal interpretation that would nullify the prescriptive period.

• Lim, Sr. v. Court of Appeals, 268 Phil. 680 (1990) — Applied and clarified. The Supreme Court adopted its interpretation that the prescriptive period under the old NIRC runs from discovery until the filing of the Information but re-examined and modified its practical application to avoid absurdity.
• Panaguiton, Jr. v. Department of Justice, 592 Phil. 286 (2008) — Followed. Its holding that the filing of a complaint with the DOJ for preliminary investigation tolls the prescriptive period under Act No. 3326 was applied by analogy to Section 281 of the 1997 NIRC.
• People v. Duque, 287 Phil. 669 (1992) — Adopted. Its interpretation that the phrase "institution of judicial proceedings" in the law should be read as a terminal point ("until") to harmonize the provisions on commencement and interruption of prescription was used to resolve the conundrum in Section 281.
• Republic v. Desierto, 933 Phil. 373 (2023) — Partially abandoned. Its ruling that the tolling rule from Panaguiton does not apply to cases covered by the Rules on Summary Procedure was overturned prospectively.

• Section 281, National Internal Revenue Code of 1997 — The central provision. It provides a five-year prescriptive period for violations of the NIRC. The Court interpreted its second paragraph (commencement of prescription for unknown offenses) and third paragraph (interruption of prescription) to mean that prescription begins to run from discovery and is interrupted by the institution of proceedings (filing of a complaint).
• Section 114, National Internal Revenue Code of 1997 (as amended by R.A. 9337) — The substantive provision allegedly violated. It mandates VAT-registered persons to file quarterly returns and requires government agencies to withhold VAT on payments to contractors.
• Section 2, Act No. 3326 (An Act to Establish Periods of Prescription...) — Cited by analogy. Its identical wording to Section 281 of the NIRC and the interpretive history from cases like Panaguiton guided the Court's clarification.
• Article 91, Revised Penal Code — Referenced in the Chief Justice's concurring opinion to trace the history of rules on the tolling of prescriptive periods.

• Chief Justice Alexander G. Gesmundo (with a separate concurring opinion)
• Associate Justice Alfredo Benjamin S. Caguioa (ponente)
• Associate Justice Marvic M.V.F. Leonen (Senior Associate Justice)
• Associate Justice Henri Jean Paul B. Inting
• Associate Justice Ramon Paul L. Hernando
• Associate Justice Amy C. Lazaro-Javier
• Associate Justice Rodil V. Zalameda
• Associate Justice Mario V. Lopez
• Associate Justice Jhosep Y. Lopez
• Associate Justice Antonio T. Kho, Jr.
• Associate Justice Maria Filomena D. Singh (on leave but left a concurring vote)
• Associate Justice Jose Midas P. Marquez
• Associate Justice Japar B. Dimaampao (with a concurring and dissenting opinion)
• Associate Justice Carlito B. Caguioa
• Associate Justice Samuel H. Gaerlan
• Associate Justice Ricardo R. Rosario
• Associate Justice Gener D. Garcia
• Associate Justice Henri Jean Paul B. Inting
• Associate Justice Ramon Paul L. Hernando
• Associate Justice Rodil V. Zalameda
• Associate Justice Mario V. Lopez
• Associate Justice Jhosep Y. Lopez
• Associate Justice Antonio T. Kho, Jr.
• Associate Justice Maria Filomena D. Singh
• Associate Justice Jose Midas P. Marquez
• Associate Justice Japar B. Dimaampao
• Associate Justice Carlito B. Caguioa
• Associate Justice Samuel H. Gaerlan
• Associate Justice Ricardo R. Rosario
• Associate Justice Gener D. Garcia

• Associate Justice Japar B. Dimaampao — Issued a concurring and dissenting opinion. While agreeing with the outcome (dismissal on prescription), the dissent likely disagreed with the majority's doctrinal clarification regarding the tolling of the prescriptive period or its application to the facts, though the specific points of dissent are not detailed in the main decision text.