Case Digest (G.R. No. 13188)
Facts:
The Hongkong & Shanghai Banking Corporation v. James J. Rafferty, G.R. No. 13188. November 15, 1918, the Supreme Court, Malcolm, J., writing for the Court (Torres, Johnson, Carson, and Araullo, JJ., concurring; Street, J., dissenting in part).During 1912–1915 Pujalte & Co., a mercantile partnership engaged in lumbering in Mindanao, removed and milled 6,087.54 cubic meters of timber. Forest charges assessed against that timber totaled P8,328.93. The Collector of Internal Revenue permitted removal of the timber upon bonds aggregating P2,000, allowing shipment without prior cash payment of forest charges. From the timber, railroad ties were manufactured at Pujalte & Co.’s Manila mills for the Manila Railroad Company; 6,305 ties were produced but later rejected by the railroad.
In February 1915 Pujalte & Co. owed the Hongkong & Shanghai Banking Corporation a large debt and, being unable to pay in specie, assigned among other assets a large quantity of the railroad ties to the bank; the bank subsequently sold most but in May 1916 still possessed about 2,000 ties. The internal-revenue charges on the forest products had not been paid. On May 2, 1916 the Collector initiated delinquency proceedings and issued a distress warrant; on May 15, 1916 the Collector made a distress levy upon the 6,305 ties and seized the approximately 2,000 ties in the bank’s possession. The bank had no prior notice of any tax claim.
The bank paid the charge under protest and sued to recover the payment. At trial Judge James A. Ostrand held that a tax lien existed on the 2,000 ties but only for P316.43 (the tax attributable to the timber used to manufacture the ties); the trial court ordered the C...(Subscriber-Only)
Issues:
- Does an internal-revenue tax lien on personal property follow the property into the hands of a third party purchaser for value who had no notice and when no demand had been made?
- If the lien follows, does it make the transferred property liable only for the tax attributable to that property or for all unpaid internal-revenue taxes of the vendor?
- From what date is interest allowable on a judgment recovering an illegal tax paid under protest: the date of the illegal exaction (June 3, 1916), the date of suit (February 1, 1917), or not at all in view of Administrative Code section 1579?
- May costs be awarded against the Government of the Ph...(Subscriber-Only)
Ruling:
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Ratio:
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Doctrine:
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