Lim vs CA 190 SCRA 616

Facts:
Spouses Lim were engaged in the dealership of various household appliances.
The NBI conducted a raid on Oct. 5, 1959 on their Business Address: No. 336 Nueva Street, Manila and 111-12th Street, Quezon City.Seized from the Lim couple were business and accounting records which served as bases for an investigation undertaken by the BIR. On Sept. 30, 1964, Senior Revenue Examiner Raphael S. Daet submitted a memorandum that the income tax returns filed by the spouses Lim for 1958 and 1959 were false or fraudulent. The assessment should be: P835, 127. Acting Commissioner Benjamin M. Tabios informed the couple that there deficiency income taxes are P922, 913.04.
On April 10, 1965, spouses requested an re-investigation.BIR expressed willingness on the following conditions:

1. 1.)  written waiver of the defense of prescription under the statute of limitations;
   
2. 2.)  depositing 1⁄2 of the assessment and securing the other 1⁄2 with a surety bond.
   

Spouses Lim refused to comply with the conditions and reiterated his request. BIR rendered a final decision holding that there was no cause for reversal of the assessment against the Lim couple. The final notice and demand for payment was served through their daughter in law on July 3, 1968 for the amount of P1,237,190.55 including interest, surcharges and penalty for late payment. BIR referred the matter to the Manila’s Fiscal’s Office for investigation and prosecution.RTC Manila found petitioners guilty

Issues:

1. WON the offenses prescribe after 5 years (Lim) or 10 years (government’s position)
   
2. WON the prescriptive period commenced to runfrom 1965 date of 1stassessment or discovery(accdg to Lim spouses) or
   from final notice on 1968(government)
   
3. WON the RTC had jurisdiction over the tax collection case
   
4. WON the death of Emilio S. Lim, Sr. extinguished his civil liabilities
   

Ruling:

1. 5 years – but the government instituted the case within the prescriptive period
   
2. Commenced from the date of the final notice.In criminal cases, statutes of limitations are acts of grace, a surrendering by the sovereign of its right to prosecute. They receive strict construction in favor of the Government and limitations in such cases will not be presumed in the absence of clear legislation.
   
3. No, because the criminal case was instituted on June 23, 1970 and PD 69 which mandates RTC to order payment of the taxes took effect only on Jan. 1, 1973. It has no retroactive application.The law applicable was SECTION 316 which does not sanction such imposition.
   
4. Yes. The liability of Emilio S. Lim, Sr. is extinguished by his death in accordancewith SECTION 89 of the RPC; but the fine imposed in the 4 criminal cases is affirmed in the case of petitioner Antonia Sun Lim in accordance with NIRC SECTION 73.