CIR vs CA, Atlas

Facts:
1. Atlas Consolidated Mining and Development Corporation is a domestic corporation which owns
and operates a mining concession at Toledo City, Cebu, the products o which are e!ported to
"apan and other oreign countries.
#. $n April %, 1%&', the Commissioner o (nternal )evenue acting on the basis o the report o the
e!aminers o the *ureau o (nternal )evenue +*(),, caused the service o an assessment notice
and demand or payment o the amount o -1#,.%1,'/'.01 representing deiciency ad valorem
percentage and i!ed ta!es, including increments, or the ta!able year 1%/0 against ACMDC.
.. 1i2ewise, on the basis. o the *() e!aminer3s report in another investigation separately
conducted, the Commissioner had another assessment notice, with a demand or payment o the
amount o -1.,0.1,455.&' representing the 1%/5 deiciency ad valorem and business ta!es with
-0,'''.'' compromise penalty, served on ACMDC on 6eptember #., 1%&'.
4. ACMDC alleged that it did not reali7e any proit rom the leasing out o its said personal
properties, since its income thererom covered only the costs o operation such as salaries and
uel.
(ssue:
8$9 the assessment made was correct
:eld:
;es. The allegation o ACMDC that it did not reali7e any proit rom the leasing out o its said
personal properties, since its income thererom covered only the costs o operation such as
salaries and uel, is not supported by any documentary or substantial evidence. 8e are not,
thereore, convinced by such disavowal.
Assessments are prima acie presumed correct and made in good aith. Contrary to the theory o
ACMDC, it is the ta!payer and not the *ureau o (nternal )evenue who has the duty o proving
otherwise. (t is an elementary rule that in the absence o proo o any irregularities in the
perormance o oicial duties, an assessment will not be disturbed. All presumptions are in avor
o ta! assessments. 41 <erily, ailure to present proo o error in assessments will =ustiy =udicial
airmance o said assessment. 4#
Finally, we deem it opportune to emphasi7e the ot>repeated rule that ta! statutes are to receive a
reasonable construction with a view to carrying out their purposes and intent. 4. They should not
be construed as to permit the ta!payer to easily evade the payment o the ta!. 44 $n this note,
and under the conluence o the weighty. considerations and authorities earlier discussed, the
challenged assessment against ACMDC or contractor3s ta! must be upheld.
Tambunting vs CIR
Facts:
1. -etitioner protested the assessment. 9o response so it iled a -etition or )eview with the
Court o Ta! Appeals +CTA, pursuant to 6ection ##& o the 9ational (nternal )evenue Code,?4@
raising the ollowing arguments:
A. -awnshops are not sub=ect to <alue Added Ta! pursuant to 6ection 1'& o
the 9ational (nternal )evenue Code.?0@
*. -etitioner properly withheld and remitted to the respondent the correct
amount o e!panded withholding ta! or ta!able year 1%%%.?5@
C. -etitioner has already paid the assessed amount o -14,.%&..& ?sic@,
representing deiciency withholding ta! on compensation, thus, assessment on withholding on
compensation must be cancelled.?/@
D. -etitionerAs pawn tic2ets are not sub=ect to documentary stamp ta! pursuant
to e!isting laws and =urisprudence.?&@ +emphasis and underscoring in the original,
(ssue:
8$9 the petitioner is liable or the delinBuency interest based on the assessment despite the
deerment on the collection o <AT
on non>ban2 intermediaries
Held:
Coming now to the issue at hand 6ince petitioner is a non>ban2 inancial intermediary, it is
sub=ect to 1'C <AT or the ta! years 1%%5 to #''#D however, with the levy, assessment and
collection o <AT rom non>ban2 inancial intermediaries being speciically deerred by law, then
petitioner is not liable or <AT during these ta! years. *ut with the ull implementation o the <AT
system on non>ban2 inancial intermediaries starting "anuary 1, #''., petitioner is liable or 1'C
<AT or said ta! year. And beginning #''4 up to the present, by virtue o ).A. 9o. %#.&, petitioner
is no longer liable or <AT but it is sub=ect to percentage ta! on gross receipts rom 'C to 0C, as
the case may be. +emphasis and underscoring supplied,
Angeles vs Angeles
Facts:
1. AEC was granted a legislative ranchise under )epublic Act 9o. +)A, 4'/%?#@ to construct,
maintain and operate an electric light, heat, and power system or the purpose o generating and
distributing electric light, heat and power or sale in Angeles City, -ampanga. -ursuant to 6ection
.>A thereo,?.@ AECAs payment o ranchise ta! or gross earnings rom electric current sold was in
lieu o all ta!es, ees and assessments.
#. $n "anuary ##, #''4, the City Treasurer issued a 9otice o Assessment?/@ to AEC or payment
o business ta!, license ee and other charges or the period 1%%. to #''4 in the total amount o
-%4,&51,1%4.1'.
.. 8ithin the period prescribed by law, AEC protested the assessment.
4. $n February 1/, #''4, the City Treasurer denied the protest or lac2 o merit and reBuested
AEC to settle its ta! liabilities.
0 Aggrieved, AEC appealed the denial o its protest to the )TC o Angeles City via a -etition or
Declaratory )elie .
5. $n April 0, #''4, the City Treasurer levied on the real properties o AEC.?11@ A 9otice o
Auction 6ale?1#@ was published and posted announcing that a public auction o the levied
properties o AEC would be held on May /, #''4.
/. This prompted AEC to ile with the )TC, where the petition or declaratory relie was pending,
an Frgent Motion or (ssuance o Temporary )estraining $rder andGor 8rit o -reliminary
(n=unction?1.@ to en=oin Angeles City and its City Treasurer rom levying, annotating the levy,
sei7ing, coniscating, garnishing, selling and disposing at public auction the properties o AEC.
&. Ater due notice and hearing, the )TC issued a Temporary )estraining $rder +T)$,?15@ on
May 4, #''4, ollowed by an $rder?1/@ dated May #4, #''4 granting the issuance of a Writ of
reliminar! In"unction, conditioned upon the iling o a bond in the amount o -1',''','''.''.
etitioner#s Arguments
-etitionerAs main argument is that the collection o ta!es cannot be en=oined by the )TC, citing
<alley Trading Co., (nc. v. Court o First (nstance o (sabela, *ranch ((,?#.@ wherein the lower
courtAs denial o a motion or the issuance o a writ o preliminary in=unction to en=oin the collection
o a local ta! was upheld. -etitioner urther reasons that since the levy and auction o the
properties o a delinBuent ta!payer are proper and lawul acts speciically allowed by the 1HC,
these cannot be the sub=ect o an in=unctive writ. -etitioner li2ewise insists that AEC must irst
pay the ta! beore it can protest the assessment. Finally, petitioner contends that the ta!
e!emption claimed by AEC has no legal basis because )A 4'/% has been e!pressly repealed by
the 1HC.
rivate res$ondent#s Arguments
-rivate respondent AEC on the other hand asserts that there was no grave abuse o
discretion on the part o the )TC in issuing the writ o preliminary in=unction because it was
issued ater due notice and hearing, and was necessary to prevent the petition rom becoming
moot. (n addition, AEC claims that the issuance o the writ o in=unction was proper since the ta!
assessment issued by the City Treasurer is not yet inal, having been seasonably appealed
pursuant to 6ection 1%0?#4@ o the 1HC. AEC li2ewise points out that ollowing the case o
-anto=a v. David,?#0@ proceedings to invalidate a warrant o distraint and levy to restrain the
collection o ta!es do not violate the prohibition against in=unction to restrain the collection o
ta!es because the proceedings are directed at the right o the City Treasurer to collect the ta! by
distraint or levy. As to its ta! liability, AEC maintains that it is e!empt rom paying local business
ta!. (n any case, AEC counters that the issue o whether it is liable to pay the assessed local
business ta! is a actual issue that should be determined by the )TC and not by the 6upreme
Court via a petition or certiorari under )ule 50 o the )ules o Court.
(ssue:
8$9 the writ o preliminary in=unction granted by )TC was proper
:eld:
;es.
A $rinci$le dee$l! embedded in our "uris$rudence is that ta%es being the lifeblood of the
government should be collected $rom$tl!,&'() *ithout unnecessar! hindrance&'+) or
dela!.&',) In line *ith this $rinci$le, the -ational Internal Revenue Code of 1..+ /-IRC0
e%$ressl! $rovides that no court shall have the authorit! to grant an in"unction to restrain
the collection of an! national internal revenue ta%, fee or charge im$osed b! the code.&'.)
An e%ce$tion to this rule obtains onl! *hen in the o$inion of the Court of Ta% A$$eals
/CTA0 the collection thereof ma! "eo$ardi1e the interest of the government and2or the
ta%$a!er.&34)
The situation, ho*ever, is different in the case of the collection of local ta%es as there is no
e%$ress $rovision in the 56C $rohibiting courts from issuing an in"unction to restrain
local governments from collecting ta%es.
In light of the foregoing, $etitioner#s reliance on the above7cited case to su$$ort its vie*
that the collection of ta%es cannot be en"oined is mis$laced. The lo*er court#s denial of
the motion for the issuance of a *rit of $reliminar! in"unction to en"oin the collection of
the local ta% *as u$held in that case, not because courts are $rohibited from granting
such in"unction, but because the circumstances re8uired for the issuance of *rit of
in"unction *ere not $resent
-evertheless, it must be em$hasi1ed that although there is no e%$ress $rohibition in the
56C, in"unctions en"oining the collection of local ta%es are fro*ned u$on. Courts
therefore should e%ercise e%treme caution in issuing such in"unctions.
The Court is ully aware o the 6upreme Court pronouncement that in=unction is not proper to
restrain the collection o ta!es. The issue here as o the moment is the restraining o the
respondent rom pursuing its auction sale o the petitionerAs properties. The right o ownership
and possession o the petitioner over the properties sub=ect o the auction sale is at sta2e.
-9 vs Cru1
Facts:
1. Aggregate Mining E!ponents +AMEI, laid>o about seventy percent +/'C, o its employees
because it was e!periencing business reverses.
#. The retained employees constituting thirty percent +.'C, o the wor2 orce however, were not
paid their wages. This non>payment o salaries went on until "uly 1%&# when AMEI completely
ceased operations and instead entered into an operating agreement with T.M. 6an Andres
Development Corporation whereby the latter would be leasing the eBuipment and machineries o
AMEI.
.. The unpaid employees sought redress rom the 1abor Arbiter 1 who rendered a decision
inding their claim valid and meritorious.
4. AMEI and its -resident, Tirso )evilla did not appeal rom this decision. *ut -9*, in its capacity
as mortgagee>creditor o AMEI interposed an appeal with the respondent Commission.
0. At the outset, petitioner -9* did not Buestion the validity o the wor2ers3 claim or unpaid
wages with respect to the mortgaged properties o AMEI, provided that the same be limited to
the unpaid wages, and to the e!clusion o termination pay. (n the instant petition however, -9
starts off *ith the 8uestion of *hether or not the *or:ers; lien ta:e $recedence over an!
other claim considering that this Court has ruled other*ise in Re$ublic vs. eralta.
(ssue:
8$9 the wor2ers3 lien ta2e precedence over any other claim including ta!
:eld:
;es. Article 11' o the 1abor Code provides that:
Art. 11'. 8or2er preerence in case o ban2ruptcy. (n the event o ban2cruptcy or liBuidation o an
employer3s business > his wor2ers shall en=oy irst preerence as regards their unpaid wages and
other monetary claims, any provision o law to the contrary notwithstanding. 6uch unpaid wages
and monetary claims, shall be paid in ull beore claims o the government and other creditors
may be paid. 5
Reliance b! the $etitioners on Re$ublic vs. eralta is *ithout basis. The said case
involved a 8uestion of *or:ers; $reference as against the ta% claims of the <tate. In the
said case the Court held that the <tate must $revail in that instance since =it has been
fre8uentl! said that ta%es are the ver! lifeblood of government. The effective collection of
ta%es is a tas: of highest im$ortance for the sovereign. It is critical indeed for its o*n
survival .= 14
-evertheless, under Article 114 of the 5abor Code as amended, the un$aid *ages and
other monetar! claims of *or:ers should be $aid in full before the claims of the
6overnment and other creditors. Thus not even ta% claims could have $reference over the
*or:ers; claim.