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    CTA Case 9502 CIR Vs PSI CTA en Banc BIR Motion For Reconsideration

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    REPUBLIC OF THE PHILIPPINES | | | CoNMESIONER OF INTERNAL oamcpuaehe ie COURT OF TAX APPEAI Quezon City DIvINALAW were: = EN BANC Jut 07 wi Y i REVEN| Petitioner, | -versus- CTA EB No. 2202 (CTA Case No. 9502) THE PROFESSIONAL SERVICES, INC., Respondent. annenaX MOTION FOR RECONSIDERATION (Re: Decision promulgated 9 June 2021) Petitioner, COMMISSIONER OF INTERNAL REVENUE, by undersigned counselsy unto this Honorable Court, respectfully moves for the reconsideration.of the Decision promulgated 9 June 2021, which he received on 16 Jung 2021, the dispositive portion of which reads: | SWHEREFORE, premises considered, the instant Petition “for--Review is DENIED for lack of merit. Accordingly,’for being void, the subject assessments issued against respondent TPSI for taxable year 2007 for deficiency ingome tax and VAT are CANCELLED and SET ASIDE.” i GROUND OF THE MOTION FOR RECONSIDERATION | THE HONORABLE COURT ERRED IN RULING THAT THE SUBJECT ASSESSMENTS ARE ALREADY BARRED BY PRESCRIPTION. [18-18] [OTA Cae 8882 CIR mepstera En Bane BIR Motion for Reconsldraton of Page 1 of 17] ARGUMENTS/DISCUSSIONS ‘A motion for reconsideration is not pro forma just! because it reiterated the arguments earlier passed upon and rejected by the) court. A movant may raise the same arguments, precisely to convince the|court that its ruling was erroneous’. In the case of Marikina Valley Development v. Fiojor, the Honorable Supreme Court ruled: xxx xxx because the doctrine relating to’ pro forma mofjons for reconsideration impacts upon the reality jand substance of the statutory right of appeal, that doctrine should be applied reasonably, rather than literally. ‘The right to appeal, where it exists, is an important and valuable tight. Public policy would be better served by according the appellate! court an effective opportunity to review the decision of the trial court on the merits, rather than aborting the right to appeal by a literal application of the procedural rules relating to pro forma motions for reconsideration. | ' prescriptive period to assess TPSI’s tax liabilities arising from the ‘sale of the subject property finds no application in this case. | | In fhe Decision, the Honorable Court ruled that the a (10)-year Petitioner respectfully begs to differ. ‘The running of the: 3-year prescriptive period to, assess as provided under Section 203 of the NIRC of 1997 finds no application in the instant case. Rather, Section 222(A) should apply which states that in case of false or fraudulent return with the intent to evade tax or failure to file a return, the tax may be assessed, or a proceeding in court for the collection of such tax maybe filed without assessment, at any time within ten (10) years after the disdovery' lof the falsity, fraud or omission. ‘The subject property is an ordinary asset. Its misclassification into a capital asset is an act that constitutes fraud with intent to evade payment of tax/or at the-very least resulted in the filing of a false retum.| Such act resulted tb an underdeclaration of sales for income and VAT) as shown eee ' Undpclared Income on Sale of Property 1,000,0001000.00 ee * Security Bank and Trust Company, Inc, vs. Rodolfo M. Cuenca, G.R. No. 138544, October, 2000; Department of Agrarian Reform, ec, vs Vicente K. Uy, G.R. No, 169277, February 9, 2007/ MCC Intl Sls Comraton Ssangyong Corton, GA No, 17063, Otobe 7, 207 7G.R.No. 116801, December 8, 1995. 2 CIR ve PSICTA En Bane BIR Moto jeconsideration.gof Page 2 of 17 Divided by: Reported Income per Returns 2,538,580.813.00 Percentage of Underdeciaration 39.39% | Based on the foregoing, the deliberate misclassification of income constitutes a prima facie evidence of fraud or falsity in the returns filed. It is hoteworthy to point out the dissenting opinion of the Honorable Justice Mp. Belen Ringpis Liban in the case entitled ‘Commissioner of Internal Revenue vs. Robert Christopher M. Carmona, doing busihess under the name SAGA CASTING AND PRODUCTION’, thus: “xx, The non-declaration of several items in respondent/s tax returns arose from the Reconciliation of Listing for (a System (RELIEF), Tax Reconciliation System (TRS) and Third-Party Matching - Bureau of Customs (TPM-BOC) Data Program. Commissioner of Internal Revenue v. Philippine Daily Inquirer, Inc. expounds on this as follows: | “Reconciliation of Listing for Enforcement | (RELIEF) System is an information technology tool used by the BIR to improve tax administration. The system was created ~ X ox x to. support third party information. program and voluntary | assessment program of the Bureau through. the cross-referencing of third’ party information from the taxpayers’ Summary Lists of Sales and Purchases prescribed to be submitted on a quarterly basis pursuant to Revenue Regulations Nos. 7-95, as amended by RR 13- 97, RR.7-99 and RR 9-2002. In addition — [RELIEF] can detect tax leaks by matching the data available under the Bureau’s Integrated Tax System (ITS) with data gathered from third party sources (i.e. ° CTA EB No.|I324 (CTA Case No. 8484), 20 December 2017 | 3 ‘STA En Bane BIR Mati jeconsideration.gcf Page 3 of 17 Schedules of Sales and Domestic Purchases, and Schedule of | Importations submitted by VAT taxpayers pursuant to RR No. 7-95, | as amended by RR Nos. 13-97, 7-99 | and 8-2002). | Through the consolidation and cross-referencing of third party. | information, discrepancy reports on | | sales and purchases can be | generated to uncover under declared income and over claimed purchases (goods and services). Timely recognition and accurate reporting of unregistered taxpayers and non- filers can be made possible.” Using the aforementioned, petitioner came up with its Details of Discrepancies, one of its annexes attached tol the PAN, which shows that the correct sales of respondent did not appear in his income and VAT retums resulting in a substantial under-declaration of sales in his income and VAT ret\ims. The Details of Discrepancies is reproduced below Similar to what happened in the Asalus case, in this case, the Court in Division opined that petitioner failed to substantiate with blear and convincing evidence its claim that respondent filed a falge return, noting in the Assailed Resolution that petitioner’s evidence to prove the falsity in the returns was scant. Hence, its ruling that the assessment was subject to the three (3)| year ordinsity prescriptive period. In Asalus, however, the Supreme Court took a different | view jand expounded on how the presumption of the falsity of | returns is applied, thus: “Under Section 248(B) of the NIRC, there is a | prima facie evidence of a false retum if there is a substantial underdeclaration of taxable sales, receipt or income. The failure to report sales, receipts or income in an amount exceeding 30%: what is declared in the returns constitutes substantial underdeclaration. A prima facie evidence is one which that will establish a fact or sustain a judgment unless contradictory evidence is produced. 4 ‘STA En Bane BIR Mata jeconsideration.gcf Page 4 of 17 Coui | declal filed to satis# | Presi In other words, when there is a showing that a taxpayer has substantidlly underdeclared its sales, receipt or income, there is a presumption that it has filed a false return. As such, the CIR need not immediately present evidence to support the falsity of the return, unless the taxpayer fails to overcome the presumption against it. Applied in this case, the audit investigation revealed that there were undeclared VATable salés more than 30% of that declared in Asalus’ VAT returns. Moreover, Asalus’ Ione witness testified that not all membership fees, particularly. those pertaining to medical practitioners and hospitals, were reported in Asalus’ VAT retums. The testimony of its witness, in trying to justify why not all of its sales were included in the gross receipts reflected in the VAT ‘eturns, supported the presumption that the. return filed was indeed false precisely because not all the sales of Asalus were included in the VAT returns. Hence, the. CIR need not present: further evidence as the presumption of falsity of the returns was not overcome. Asalus was bound to refute the presumption of the falsity of the return and to prove that it had ‘filed accurate returns. Its failure to overcome the same warranted the application of the ten (10)-year prescriptive period for assessment under Section'222 of the NIRC. To require the CIR to present “additional evidence in spite of the presumption provided in Section 248(B) of the NIRC would render the said provision inutile.” Again, T'éall your attention to the 400.72% discrepancy in in Asalus, is prima facie evidence of a substantial ‘under- tion pointing to a falsity in the income and VAT returns yy respondent. At this juncture, the burden of evidence shifts ‘spondent to rebut the findings of petitioner. Unless ctorily contradicted and overcome by other evidence inted by respondent, the assessment is presumed correct coal 's return which, given the discourse of the Suy | and made in good faith. XXX XXX Xxx 5 '81;CTA En Bane BIR Mation for Reconsideration.paf] [Page § of 17 | | ; In her dissenting opinion in the aforesaid case, the Honorable Justice Catherine [. Manahan likewise ruled: “Under Section 248 (B) of the 1997 NIRC, the substantial under declaration of sales constitutes a prima facie evidence of filing a false or fraudulent return and I quote thus: Section 248. Civil Penalties. (B) Incase of willful neglect to file the return’ within the period prescribed by this Code or by rules and regulations, or in case of a false or fraudulent, return is willfully made, the penalty to be imposed | shall be 50% of the tax or of the deficiency tax, in | case any payment has been made on the basis of such return before the discovery’ of the falsity or | fraud: Provided, That’ a substantial | underdeclaration of taxable sales, receipts or income, or a substantial overstatement of deductions, as determined by the Commissioner pursuant to the rules and regulations to be promulgated by the Secretary of Finance, shall constitute prima facie of a false or fraudulent return. XXX XXX Xxx (italics ours) The Supreme Court, in the recent case of CIR vs. Asalus Corporation, had the occasion to rule on the prima facie conellision onthe’ substantial under declaration of sales which would justify the application of the ten year prescriptive period, thus: In other ‘words, when there is a showing that a taxpayer has substantially underdeclared its sales, receipt or income, there is a presumption that it has filed a false retum. As such, the CIR need not immediately present evidence to support the falsity of the return, unless the taxpayer fails to ‘overcome the presumption against it. Applied in this case, the audit investigation revealed that there were undeclared VATable sales more than 30% of that declared in Asalus’ VAT returns. Moreover, Asalus’ lone witness testified that not all membership fees, particularly. those pertaining to medical practitioners and hospitals, were reported in Asalus’ VAT retums. The 6 consigeration.pdl] [Page 6 of 17] 2 cin ai (OTA En Bane BIR Mati testimony of its witness, in trying to justify why not all of its sales were included in the gross receipts reflected in the VAT returns, supported the presumption that the return filed was indeed false precisely because not all the sales of Asalus | -were included in the VAT returns. j Singe the correct sales of respondent did not appear in its) VAT and income tax returns, there can only be one inevitable conclusion’; that there was|a substantial under-declaration of sales/income by 39.39%). As such, there is alprima facie evidence of a false return. Contrary to the Second Division’s decision, petitioner does not have to demonstrate the falsity of the return, unless respondent fails to overcome the presumption against it. In the instant case, respondent miserably failed to overcome the presumption against it. |Thus, the ten-year period applies. Further, the Honorable Supreme Court in the case of Aznar|vs. CTA’, A the. oopasion to define fake or fraudulent return in this wise: “That there is a difference between “false return” and “fraudulent return” cannot be denied. While the first merely implies deviation from the truth, whether intentional or not, the second implies intentional] or deceitful entry with intent to evade the taxes due.” (Emphasis ours) To| reiterate, a false return implies deviation from the truth, whether intentional or not. Although the Aznar case distinguishes what constitute |“false returns” referring to mistake, carelessness or ignorance, from that 9f “fraudulent returns” referring to intent to evade taxes) the same case does fiod of 10 yeats. Indeed, in the same case of Aznar, the Supreme Court rule in favor of the CIR for an extension of 10 years to assess the taxpayer, thus) ‘The ordinary period of prescription of 5 years (now B ears) within which to assess tax liabilities under Seg. 31-of the National Intemal Revenue Code should te plicable to normal circumstances, but whenever the government is placed at a disadvantage so as to prevent its lawful agents from proper assessment of tax liabilities due to false returns, fraudulent return intended to evade payment of tax or failure to file jeturns the period of 10 years provided for in Sectio 32 (a) NIRC, from the time of the discovery of * RLNo. L-2)569, 23 August 1974 | | 1 CIR ve PSICTA En Banc BIR Motion for Reconsideration.oof [Page 7 of 17 feces) it I fei, fraud or omission even seems to be inadequate id should be the one enforced. | There being undoubtedly false tax retums in this case, | ve affirm the conclusion of the respondent CTA that | ‘ection 332 (a) (now Sec. 222) of the NIRC should apply | nd that the period of 10 years within which to assess | etitioner’s tax liability had not expired at the time sai | ssessment was made.” (Emphases ours) It is, therefore clear from the statutory provision in Section 222 of the NIRC] of 1997 in the three different case of (1) false return, (2) fraudulent|return with intent to evade tax, (3) failure to file'a retutn, the tax may be assessed, or a proceeding in court for the collection of such tax may begin without assessment, at any time within 10 years after the discovery of the (I) falsity, (2) fraud, (3) omission. ‘The discrepancy of 39.39% in petitioner’s return manifests an evident substantial under declaration which eloquently|demonstrate the falsity or fraudulence of the VAT returhs with an intent to evade the payment of tax. Petitioner, could therefore, rightfully invoke Section 222 because her right to assess has not yet prescribed. On|a final note, the decision of the Honorable Supreme Court in the case of Commissioner of Internal Revenue vs. Bank of Philippine Islands? can be well use as a guide, to wit: if “Tax assessments by tax examiners are presumed correct and made in good faith. The taxpayer has the duty to prove’ otherwise, In the absence of proof of any irregularities \in’ the performance of “duties, | an assessment. duly made _by a Bureau _of Internal Revenue examiner and approved _by his superior | officers will not be disturbed. All presumptions are in favor of the correctness of tax _ assessments.” (Emphasis ours) { To|reiterate, the aforementioned amount of misclassification of sales is considered as sales subject to Value-Added Tax (VAT) at 12%, hence, assessed pursuant to Sections 106 and 108 of the NIRC of/ 1997, as implemented by Revenue Regulations No. 16-2005. Also, the resulting income on, the sale is subject to the regular corporate income tax and not capital gains tax. Since there was a deliberate misclassification of asset resulting to a misdeclaration of sales, the subject sale should be subjected to Income Tax and VAT. Hence, there was neither a timely nor proper settlement | of tax liabilities nor payment of taxes due in full. Thus, Coa eager eee ®GR No. 184062, April 17, 2007 8 IR vs PRIGTA En Bane BIR Ma jeconsideration.gaf Page & of 17 respondent is clearly liable for deficiency Income Tax and VAT pertaining to the salelof the land classified as capital asset but which should have been classified as ordinary asset. It bears to emphasize once again that during the audit of ! spondent for taxable year 2007, the subject real property was classified ag a capital asset. THis fact is undisputed. In fact, in the petition for review, it enumeratell as one of the grounds for the allowance of the petition that site gravely erred in affirming the Disputed Assessment by not holding that the Subject Property is a Capital Asset, the sale of which is subject to CGT, not VAT nor regular income tax on ret gain.” Thus ;, petitioner treated the same as capital asset when it ¢: up with the assessment when the first LOA was issued. As stated 'in the petition for review, aslearly as June 2004, the subject property became vacant and was not anymdre used in respondent’s hospital business. Thus, in) the 2005 ‘Audited Financial Statements (AFS), respondent already classified it as a capital asset, for according to respondent, the same was no longer used in its hospital business but was merely held as investment property. However, it was| later| found that the subject property did not. remain | idle and undgveloptd as alleged by respondent. Qn the'contrary, the same] was used in tiade or business within 2. years prior to its sale being leased and rented out as parking lot. No matter how minimal the income earned in the lease of the property, the same was still used for business. The act of leasing the progerty is within the definition of “used in trade or business’. | Hehce, there can only. be.one conclusion - there was a/{deliberate misclassifigation of sales pertainiing to a sale of land classified as a capital asset which should have been classified as an ordinary .asset pursuant to Section 39 of the National Internal Revenue Code of 1997 (NIRC of 1997), as regulated by Revenue Regulations No. 7-2003, hence, assessed pursuant to Section 2. of the NIRC of 1997. Section 2 (¢) of RR.7-2003 provides: “Provided however, that properties classified as ordinary assels fot being used in business by a taxpayer engaged in business other than real estate business as defined in Section 2(g)| hereof are automatically converted into capital asset upon | shoWing of proof that the same have not been used in| the | busihess for more than two (2) years prior to the consummation of tHe taxable transactions involving said properties. ‘The aforementioned amount of misclassification of sales is considered as sales subject to Value-Added Tax (VAT) at 12%, hence, assessed pursuant to Sections 106 and 108 of the NIRC of/ 1997, as 9 ‘STA En Bane BIR Mati jeconsideration.gof Page 8 of 17 implemented by Revenue Regulations No. 16-2005. Since there was a deliberate misclassification of asset resulting to a misdeclaration of sales, the subject sale should be subjected to Income Tax and VAT. Hence, there was neither a timely nor proper settlement of tax liabilities nor payment of taxes duelin full. Thus, the issuance of the second LOA was valid singe this did not cover fhe Income Tax and VAT issues on the sale of the real property classified by petitioner as capital asset which should have been classified as ordinary afset. Petitioner therefore, had a valid authority to issue the second LOA pursuant to Section 235 of the National Internal Revenue Code (NIRC) of 1997 which provides: “SEC. 235. Preservation of Books and Accounts dnd er Accounting Records. — All the books of accounts, including the subsidiary books and other accounting records of forporations, partnerships, of persons, shall be preserved by|them for a period beginning from the last entry in edch book until the last day prescribed by Section 203 within which the Commissioner» is authorized to make assessment, The said books and records shall be subject examination and inspection by intemal revenue offic Provided, That for income tax purposes, such examination and inspection shall be made only once in a taxable y« exdept in the following cases: | (a) Fraud, itregularity or mistakes, as determined by the Commissioner; (b) The taxpayer requests reinvestigation; (©) Verification of compliance with withholding tax laws and regulations; (d) Verification of capital gains tax liabilities; and (e)In the exercise of the Commissioner’s power under Section 5(B) to obtain information from other persons in which case, another or separate examination and inspection may be made. Examination and inspection of books of accounts and other accounting re cords shall be done in the taxpayer’s office or place of business or in the office of the Bureau of Internal Revenue. All corporations, partnerships or persons that retire from business shall, within ten (10) days from the date of is0 S502 CIR vs PBI [Page 19 of 17] retirement or within such period of time as may be allowed by the Commissioner in special cases submit their books of accounts, including the subsidiary books and other accounting records to the Commissioner or any of his deputies for examination, after which they shall be returned. Corporations and partnerships contemplating dissolution must notify . the Commissioner and shall not be dissolved until cleared of any tax liability. Anly provision of existing general or special law’ to’ the contrary notwithstanding, the books of accounts and other pertinent records of tax-exempt organizations or grantees of tax! incentives shall be subject to examination by the Bureau of Internal Revenue for purposes of ascertaining compliance with the conditions under which they have been granted tax exdmptions or tax incentives, and their tax liability, if any.”, All presumptions are in, favor of the correctness of tax assessments. The} good] faith of tax assessors and: the validity of their ‘aétions are presumed.| They will be presumed.to have taken into consideration all the facts to which their attention was called (CIR vs. Construction Resources of Asia, Inc. 145 SCRA 671). It is incumbent upon the taxpayer to| prove the contrary (Mindanao Bus Company'vs. CIR, 1 SCRA 538; CIR vs. Tuazon, Ine.} 173 ft 397) and failure to do so shall vest legality on 'petitioner’s actions and assessments. Failure to present proof of error in the assessment will justify judicial affirmation of said assessment (Delta Motors Co. vs. Commissioner, CTA Case No. $782, 21 May 1986; Commissioner of Internal Revenue vs. Court of Appa etal., GR. Nos. 104151 and 105563, 10 March 1995). | In View-of the foregoing, respondent is liable to pay the assessed defibiency taxes) The examiner's assessment should be given full weight and credit, in the absence of proof submitted by respondent to the contrary. This is in Tine ith the High Court's ruling in several cases wherein the Court said| that tax assessments by tax examiners are prima facie presumed correct ad made in good faith. The taxpayer has the duty|to prove otherwise] In the absence of proof of any irregularities in the performance of duties, an assessment duly made by a Bureau of Internal Revenue examiner and approved by his superior officers will not be disturbed. All presumptions are in favor of the correc of tax assessments. The case of Commissioner of Intemal Revenue vs. ff [Page 11 of 17] Construction Resources of Asia, Inc.°, where the Honorable Coutt cited 51 Am Jur. p} . 620-621, states the principle in detail, thus: espouse: +All presumptions are in favor of the correctness of tax! Assessments. The good faith of tax assessors and the alidity of their actions are presumed. They. will be’ resumed to have taken into consideration all the facts to which their attention was called. No presumption can be indulged that all of the public officials of the State in| .¢ various counties who have to do with the assessment, f property for taxation will knowingly. violate the! iuties imposed upon them by law.” In smother case decided by the Supreme Court, the Honorable Court “We agree with the contention of the petitioner that, as a genéral rule, tax assessments by tax examiners are presumed correct and made in, good faith. All presumptions are in favor of the lcorrectness of a tax assessment. It is to be. presumed, however, that such assessment was based on sufficient evidence. Upon the introduction of the assessment) in evidence, a prima facie case of liability on the part of the taxpayer is made. If a taxpayer files a petition for review in the |CTA and. assails the -assessment, the prima facie presumption is that the assessment made by the BIR is corifect, and that in preparing the same, the BIR personnel ce performed their duties. This rule for tax initiated suity is’ premised’on ‘several factors other than the normal evidentiary rule imposing proof obligation on the petitioner taxpayer: the presumption of administrative regularity; |the likelihood that the taxpayer will have access to the relevant information; and the desirability of bolstering’ the record- keeling requirements of the NIRC.” ” (Emphasis supplied) Unfortunately, respondent failed to overcome the presumption of correctness of the respondent’s assessment. *G.R.No —— 1986, 145 SCRA 671. | 7 Commissioner of Internal Revenise vs. Hantex Trading Co,, Inc., G.R. No, 136975, March 3], 2005 citing United States ‘Rindskopf, 105 USS. 418 (1881) and United States v. Rexach, 482 F.2d 10 (1973). The certiorari was denied by the United States Supreme Court on November 19, 1973. jane BIR Motion tor af [Page 12 of 17] In the Decision, the Honorable Court likewise granted respondent’s Omnibus Motion to Set Aside Warrant of Distraint and/or Leyy and to Restrain Implementation Thereof. | Petitioner respectfully submits that the Omnibus Motion is unmeritoripus. | With regard the alleged grave prejudice that will be caused by the implementation of the WDL, petitioner respectfully that respondent’s claim has no basis. | xr Section 5, Rule 58 of the 1997 Revised Rules of Court, a Writ ihary Injunction may be issued only if it appears from the facts affidavits or by the verified application that great or irreparable Id result to the applicant before the Writ of Preliminary Injunction In addition, Section 4(a) of Rule 58 of the Rules of Court is clear with regard to the procedure to be followed in the issuance of writs of pteliminary injunction, i.e., a preliminary injunetion or temporary restraining order may be granted] only when the application in the action or proceeding is verified, and|shows/facts entitling the applicant to the relief demanded | To justify the injunctive relief prayed for, the respondent must be able to establish that. (1) he has a clear and unmistakable right to be protected, (2) the invasign of the right sought to be protected is material and substantial, and/(3) there is an urgent and paramount necessity for the writ to prevent serious dafhage. The burden of proof rests with respondent to establish that it has a legal right that should be protected by a writ of preliminary injunction. The issuance of the writ is therefore not proper when the complainant's right is doubtful of disputed.'° Further, there must be a showing that the invasion of the Fight is| material and substantial and that there is an urgent and paramount necessity for the writ'to prevent a serious damage." Respondent has not presented any sufficient and convincing evidence to support [ts entitlement to the relief sought. Respondent failed to|discharge its burden pf proof. One, respondent failed to show the existence of its clear and| unmistakable right which it seeks to protect. Respondent failed to present concrete evidence to justify its allegations. | Corp. vs. Francisco G. Rojas, Sr., 459 SCRA 14 (2005). | Universal a vs. Ta Fa Industries, Inc, supra note 11. * China "© Republic of ¥ Romeo 8. Gi 1 Philippines, tal. vs. Hon. Ramon S. Caguioa, etal, 536 SCRA 193 2007), stilo vs. Hon, Ricardo S. Real, Sr, 353 SCRA 1 (2001). oR af [Page 13 of 17] In the case of Marcela Gonzales Almeida v. Court of Appeals", the Honorable| Supreme Court held that the failure of the applicant or movant to establish the first requisite results in the denial of the motion for issuance of a suspensi m order. When the legal right upon which the motion for the issuance of a suspension order is based is not clear, the motion must fail. In explaining|the importance of satisfying the second requisite, the Honorable Supreme Court ruled: “KxXX It must be stressed that injunction is not designed to protect contingent or future.rights, and, as such, the possibility of irreparable damage without proof of actual existing right is no ground for an injunction. A clear and: positive right especially calling for judicial protection must be established. Injunction is not a remedy to protect or enforce contingent, abstract, or future rights; it will not issue to protect a right not in esse and which may never arise, or to restrain an- action which did not give rise to a cause.of action. There must be an existence of an actual right. Hence, where the plaintiff's right or title is doubtful or disputed, injunction is not proper. An injunctive remedy may only be resorted to when there'is a pressing necessity to: avoid’ injurious consequences which cannot be remedied under any standard compensation. The possibility of irreparable. damage without proof of an actual , existing right would not justify injunctive relief in his favor, xx Xx"5 (Emphasis ours) ‘As fuled’in the case of Republic of the Philippines vs.| Salvador “Injunction is a preservative remedy aimed at protecting substantive rights and interests, The writ of preliminary injunction is issued by the court to prevent threatened or continuous irremediable injury to some of the parties before their claims can be thoroughly studied and adjudicated. Its sole objective is to preserve the status quo until the merits of|the | GR, No. 159124, 17 Jnumry 2005 © Ibid. “GRNo. " May 6, 1997 14 sap C IR Motion for Reconsider Page 14 ot 17] t two and Thei burden is “one clea case can be heard fully. The writ is issued upon satisfaction of requisites, namely, the existence of a right to:be protected Ithe facts against which the injunction is to be directed are violative of said right. The question now is whether or not respondent Big a Construction, plaintiff below, possessed a right entitled tection by the courts, for the possibility of, irreparable ge without proof of violation of an actually-existing right 'o ground for injunction.” (Emphases and ‘underscoring lied) | | lefore, the issuance of an injunction is exceptional in nature. The n the movant to'show a “clear legal right,” Which was defined as ly founded in or granted by law.” Herein respondent has not proved such clear right, Moi jeopardize petitioner collection interests. On over, respondent failed to prove that the collection of taxes will its interest. There is no serious damage to ‘respondent should push through with the collection. of taxes. In other words, of the assessed taxes will not jeopardize respondent or its fhe contrary, to unduly delay the collection of taxes would surely be prejudbial to the govemment’s interest, The case of Republic of the Philippine vs. Caguioa," is instructive, to wit: Recalling this Court’s _ pronouncements in Olalia v. Hizon that: x x ¥ [T]here is no power the exercise of which is more delicate, which requires greater caution, deliberation and sound discretion, or more dangerous in a doubtful case, than the issuance of an injunction. It is the strong arm of equity that should never be extended unless to cases of great injury, where courts of law cannot afford an adequate or commensurate remedy in damages. an injunction is a limitation upon the freedom of action of the defendant and | Every court should remember that | should not be granted lightly or | 84, October 15, 2017 2 ciR ve 15 En Banc BIR, Motion for Reconsiderallon.pot [Page 15 of 17] the om: precipitately. It should be granted only | when the court is fully satisfied that the | law permits it and the emergency | demands it, | it cannot be overemphasized that any injunction that restrains the collection of taxes, which is the inevitable result of the suspension of the implementation of the assailed Section,6 of R.A. No. 9334, is a limitation upon the right of the government to its lifeline and wherewithal. The power to tax emanates froth necessity; without taxes, government cannot fulfill its | mandate of promoting the general welfare “and well-being of the people. That the enforcement of tax_laws_and_the collection. of taxes are _of paramount importance for. the sustenance _of government has been

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