Title
Supreme Court
Philippine Deposit Insurance Corporation vs. Bureau of Internal Revenue
Case
G.R. No. 172892
Decision Date
Jun 13, 2013
PDIC contested BIR's tax clearance requirement for RBTI's liquidation, arguing it was inapplicable under the New Central Bank Act. Supreme Court ruled in favor of PDIC, exempting banks under liquidation from Section 52(C) of the Tax Code of 1997.

Case Summary (G.R. No. 172892)

Background and Procedural History

The Monetary Board of the BSP issued Resolution No. 1056 in 1994, ordering the closure of RBTI and placing it under receivership with PDIC as receiver. After determining that the bank was insolvent, the Board directed PDIC through Resolution No. 675 in 1997 to liquidate the bank. Pursuant to Section 30 of the New Central Bank Act, PDIC filed a petition with the RTC of La Trinidad, Benguet to assist in the liquidation.

The RTC, thereafter, approved the petition and commenced liquidation proceedings. The BIR intervened as a creditor, requesting suspension of the proceedings until PDIC secured a tax clearance pursuant to Section 52(C) of the 1997 Tax Code, which mandates a corporation undergoing dissolution or liquidation to secure a tax clearance prior to SEC approval.

Legal Issue

Whether Section 52(C) of the 1997 Tax Code, requiring a tax clearance from the BIR, applies to banks placed under liquidation by the BSP through PDIC under Section 30 of the New Central Bank Act, thereby necessitating PDIC to secure a tax clearance prior to approval of the liquidation plan by the RTC.

Position of the Parties

PDIC's Argument:
PDIC contended that Section 52(C) of the Tax Code does not apply to closed banks placed under liquidation by the Monetary Board of the BSP because such banks do not fall within the definition of "corporations contemplating liquidation" under that provision. The closure and liquidation of banks are special proceedings governed exclusively by the New Central Bank Act, not by the Securities and Exchange Commission (SEC). Therefore, requiring a BIR tax clearance prior to liquidation approval is improper.

BIR's Argument:
The BIR maintained that Section 52(C) applies to rural banks under liquidation. They argued that the supervisory authority of the BSP over banks does not exclude the applicability of the tax clearance requirement. The tax clearance ensures proper collection and determination of income taxes due, serving a valid governmental interest.

Supreme Court’s Findings and Ruling

The Court ruled in favor of PDIC, holding that Section 52(C) of the 1997 Tax Code does not apply to banks under liquidation pursuant to Section 30 of the New Central Bank Act. The Court cited its earlier decision in In Re: Petition for Assistance in the Liquidation of the Rural Bank of Bokod, where it was held that a tax clearance from the BIR is not a prerequisite for the approval of the liquidation plan.

The Court gave three key reasons:

  1. Scope of the Applicable Law:
    Section 52(C) regulates the relationship between the BIR and the SEC with respect to corporations under the SEC’s supervision contemplating dissolution or reorganization. Banks, however, are governed by a special regime under Section 30 of the New Central Bank Act, where the BSP and PDIC have exclusive authority over their receivership and liquidation. The liquidation process for banks is therefore distinct and not subject to the tax clearance requirements aimed at corporations dissolved by the SEC.

  2. Tax Return Filing Suffices:
    While the BIR’s interest in determining tax liabilities is legitimate, this is adequately served by the filing of the final tax return as required by Section 54 of the Tax Code. The Court emphasized that requiring a tax clearance certificate before approving liquidation creates an untenable "chicken-and-egg" dilemma: the BIR cannot issue clearance without full payment, but payments depend on approval of distribution under liquidation, which in turn requires clearance.

  3. Judicial Restraint and Legislative Role:
    The Court stated that it is not its role to fill gaps or legislatively impose requirements on the interrelations between the BIR, BSP, and PDIC. Any amendment to reconcile their roles must come from Congress or the executive via appropriate regulations.

Preference of Creditors and Implications on Tax Clearance Requirement

The Court further examined the order of preference in claims against the dissolved bank’s assets, relying on Articles 2241, 2242, and 2244 of the Civil Code. It clarified that government taxes not related to specific properties are generally subordinated behind other creditor claims. Ordering full tax payment first through securing a tax clearance improperly elevates tax claims above their lawful priority in insolvency, violating the mandatory rules governing liquidation.

Court Orders

...continue reading

Analyze Cases Smarter, Faster
Jur is a legal research platform serving the Philippines with case digests and jurisprudence resources. AI digests are study aids only—use responsibly.

About Privacy Terms