TAX1.11 Hongkong & Shanghai Banking Corp. v.

Commissioner

FACTS: HSBC is the owner of 2,000 railroad ties it had acquired from the firm of Pujalte & Co. and that prior to the
assignment of the railroad ties to HSBC it owed to the BIR forest charges. Pujalte executed a bond of P2000 to secure the
payment of the forest charges and was allowed to remove the timber from the public forests. Later, the Collector instituted
collection proceedings against Pujalte and went after the property of the latter including that which were already in the
possession of HSBC, who at the time it acquired the property had no notice of the lien nor of the delinquent tax due from
Pujalte.

ISSUE: Whether or not the CIR can still enforce the lien?

RULING: No, the lien does not follow the property subject to the tax into the hands of a third party when at the time of
transfer, no demand for payment had been made and when the purchaser then had no notice of the existence of the lien. A lien
in its modern-acceptation is understood to denote a legal claim or charge on property, either real or personal, as
security for the payment of some debt or obligation.

TAX2.11 Republic v. Peralta

FACTS: In the voluntary insolvency proceedings commenced by Quality Tobacco Corporation, there were 4 creditors who
filed claims: 2 for labor related claim 2 for tax.
In its questioned Order, the trial court held that the labor claims for separation pay of their respective members
embodied in final awards of the National Labor Relations Commission were to be preferred over the claims of the Bureau of
Customs and the Bureau of Internal Revenue.

ISSUE: Whether the claims of the Unions should be preferred over the claims of the BIR.

RULING: The claim of the government predicated on a tax lien is superior to the claim of a private litigant predicated on a
judgment. The tax claim must be given preference over any other claim of any other creditor, in respect of any and all properties
of the insolvent. There is no merit in the contention of the National Labor Relations Commission that taxes are absolutely
preferred claims only with respect to movable or immovable properties on which they are due.

TAX3.11 Commissioner v. NLRC and Maritime Co. of the Phil

Facts: The CIR then issued warrants of distraint of personal property and levy of real property of Maritime. A “receipt of
goods, articles and things” was executed as proof of constructive distraint of property but the same was not signed by any
representative of private respondent. It appeared that 4 out of 6 of the barges were also levied upon by a deputy sheriff of
Manila and sold at public auction to satisfy a judgment for unpaid wages and other benefits of employees of private respondent.

Issue: Who has a preferential lien over the barges, the Government or the company’s employees?

Held: the government has preferential lien over the barge. the preferential lien of employees for unpaid wages under the Labor
Code applies only to bankruptcy cases where the employer is under liquidation due to bankruptcy.
The court upheld the validity of distraint of the barges against the levy on execution and the claim of the Government
predicated on a tax lien is superior to the claim of a private litigant predicated on a judgment. The tax lien attaches not only
from the service of the warrant of distraint of personal property but from the time thetax became due and payable.

TAX4.11 CIR v. Pineda

Digest in the book

TAX5.11 CIR v. NLRC

FACTS: same with 3.11

ISSUE: Who has a preferential lien over the barges, the Government or the company’s employees?

RULING: see book

TAX6.11 Reliance Procoma, Inc. v. Phil-Asia Tobacco Corp.

FACTS: the SC issued a restraining order from enforcing the writ of execution and orders of garnishment. However,
respondent Judge Arciaga issued an order to refrain to refrain, pending the termination of the legal proceedings in this case
before the CA, from effecting the transfer to anyone of the funds of the Phil-Asia which are in the possession and control of
the PVTA.
Movant's, however, submit that the questioned order of respondent Judge `is a wanton disregard and/or disobedience to the
restraining order', because such a subsequent order which deprive the PVTA from complying with its valid and just obligation.
According to them, by issuing the order, the respondent Judge in effect enforces the writ of execution complained of.

ISSUE: Whether the assailed order of respondent Judge constitutes a disobedience of or resistance to, the restraining order
issued by the SC to respondents, prohibiting and restraining them "from enforcing the writ of execution and orders of
garnishment."

RULING: Yes. "The term "garnishment" has been defined as a warning to a person in whose hands the effects of another are
attached, not to pay the money or deliver the property or allow withdrawal of deposits of the defendant in his hands to him,
but to appear and answer the plaintiff's suit.
Therefore, when respondent Judge, issued the challenged order, in effect, resuscitates and put in force the order of
garnishment the enforcement of which had been restrained by this Court, thereby maintaining and giving force to the
garnishment, at least as to the attachment of the funds, in plain violation or disobedience of the restraining order.

TAX8.11 BPI v. Commissioner

FACTS: BIR issued a FAN against the BPI. BPI filed a protest. The BIR did not reply on the protest but 4 days before the
expiration of the period to collect – or 3 years after issuance of FAN, the CIR issued a warrant of distraint/levy against BPI
for the satisfaction of the assessed tax. The warrant was served to BPI on October 23, 1992 (four days after period has
prescribed). After 5yrs and 11 months, the CIR finally sent a letter to BPI advising the latter that its protest is denied.

ISSUE: Whether or not the government’s right to collect the assessed tax has prescribed.

RULING: Under Section 223(c) of the Tax Code of 1977, as amended, it is not essential that the Warrant of Distraint and/or
Levy be fully executed so that it can suspend the running of the statute of limitations on the collection of the tax. It is enough
that the proceedings have validly began or commenced and that their execution has not been suspended by reason of the
voluntary desistance of the respondent BIR Commissioner. Existing jurisprudence establishes that distraint and levy
proceedings are validly begun or commenced by the issuance of the Warrant and service thereof on the taxpayer.

TAX9.11 Marcos II v. CA and CIR

FACTS: Bongbong Marcos sought for the reversal of the ruling of the CA granting CIR's petition to levy the properties of the
late Pres. Marcos to cover the payment of his tax delinquencies during the period of his exile in the US. Marcos contends that
the properties could not be levied to cover the tax dues because they are still pending probate with the court, and settlement of
tax deficiencies could not be had, unless there is an order by the probate court or until the probate proceedings are terminated.

ISSUE: Whether the BIR is authorized to collect estate tax deficiencies by the summary remedy of levy upon and sale of real
properties of the decedent without first securing the authority of the court sitting in probate court over the supposed will of the
decedent

RULING: Yes. The BIR is authorized to collect estate tax deficiency through the summary remedy of levying upon and sale
of real properties of a decedent, without the cognition and authority of the court sitting in probate over the supposed will of
the deceased, because the collection of estate tax is executive in character. As such, the estate tax is exempted from the
application of the statute of non-claims, and this is justified by the necessity of government funding, immortalized in the maxim
that taxes are the lifeblood of the government.