Case Digest (G.R. No. 224764)
Facts:
The case involves the Bureau of Internal Revenue (BIR) and its officials—Assistant Commissioner Alfredo V. Misajon, Group Supervisor Rolando M. Balbido, and Examiner Reynante DP. Martirez—who are the petitioners, against Lepanto Ceramics, Inc. (LCI), the respondent. On December 23, 2011, LCI filed a petition for corporate rehabilitation under Republic Act No. 10142, known as the Financial Rehabilitation and Insolvency Act (FRIA) of 2010, in the Regional Trial Court (RTC) of Calamba City, Branch 34. LCI claimed it was in a state of insolvency due to financial difficulties stemming from the Asian financial crisis, with total liabilities of approximately P4.2 billion against total assets of about P1.1 billion. LCI acknowledged tax liabilities amounting to at least P6.3 million.
On January 13, 2012, the RTC issued a Commencement Order declaring LCI under corporate rehabilitation, which included a suspension of all actions for the enforcement of claims against LCI, including ta...
Case Digest (G.R. No. 224764)
Facts:
Background of the Case:
- Respondent Lepanto Ceramics, Inc. (LCI), a corporation organized under Philippine laws, filed a petition for corporate rehabilitation on December 23, 2011, under Republic Act No. (RA) 10142, also known as the "Financial Rehabilitation and Insolvency Act (FRIA) of 2010."
- LCI cited financial difficulties stemming from the Asian financial crisis, leading to insolvency, with liabilities amounting to P4,213,682,715.00 exceeding its assets worth P1,112,723,941.00.
- LCI admitted tax liabilities to the national government amounting to at least P6,355,368.00.
Rehabilitation Court's Commencement Order:
- On January 13, 2012, the Rehabilitation Court issued a Commencement Order, which:
- Declared LCI under corporate rehabilitation.
- Suspended all actions or proceedings for the enforcement of claims against LCI.
- Prohibited LCI from paying its outstanding liabilities, except as provided under RA 10142.
- Directed the Bureau of Internal Revenue (BIR) to file its claims or opposition to the petition.
- The Commencement Order was published and personally served on LCI's creditors, including the BIR.
BIR's Actions Despite the Commencement Order:
- Despite the Commencement Order, BIR officials (Misajon, Balbido, and Martirez) sent LCI:
- A notice of informal conference dated May 27, 2013, regarding deficiency internal tax liabilities for the Fiscal Year ending June 30, 2010.
- A Formal Letter of Demand dated May 9, 2014, requiring LCI to pay deficiency taxes amounting to P567,519,348.39.
- LCI's court-appointed receiver reminded the BIR of the ongoing rehabilitation proceedings, but the BIR persisted.
LCI's Petition for Indirect Contempt:
- LCI filed a petition for indirect contempt against the BIR officials on August 13, 2014, alleging that their actions defied the Commencement Order.
- The BIR officials argued that:
- The RTC Br. 35 had no jurisdiction to cite them in contempt.
- The petition was moot due to the termination of the rehabilitation proceedings.
- Their actions were meant to toll the prescriptive period for tax collection and did not amount to a legal action or recourse against LCI.
Issue:
- (Unlock)
Ruling:
- (Unlock)
Ratio:
- Purpose of Corporate Rehabilitation: Corporate rehabilitation aims to restore a financially distressed corporation to solvency, ensuring that creditors can recover more through the corporation's continued operation than through immediate liquidation.
- Suspension of Claims Under RA 10142: Section 16 of RA 10142 mandates the suspension of all actions or proceedings for the enforcement of claims against a corporation under rehabilitation. This includes tax claims by the government.
- Indirect Contempt for Defying Court Orders: Any attempt to enforce claims outside the rehabilitation proceedings constitutes indirect contempt of court. The BIR officials' actions were deemed a willful disregard of the Commencement Order, warranting a finding of indirect contempt.
- Proper Procedure for Creditors: Creditors, including the BIR, must submit their claims to the rehabilitation court and participate in the proceedings rather than pursuing independent actions.
Conclusion:
The Supreme Court upheld the RTC Br. 35's decision, finding that the BIR officials' actions were in clear defiance of the Commencement Order and constituted indirect contempt. The petition was denied, and the fines imposed on the BIR officials were affirmed.