540 Phil. 142
CHICO-NAZARIO, J.:
Rural Bank of Bokod (Benguet), Inc. – Report on its examination as of June 16, 1986, its placement under receivership
Finding to be true the statements of the Special Assistant to the Governor and Head, Supervision and Examination Sector (SES) Department III, in her memorandum dated 28 November 1986 submitting a report on the general examination of the Rural Bank of Bokod (Benguet), Inc. as of 16 June 1986, that the financial condition of the rural bank is one of insolvency and its continuance in business would involve further losses to its depositors and creditors, x x xA memorandum and report, dated 28 August 1990, were submitted by the Director of the SES Department III concluding that the RBBI remained in insolvent financial condition and it can no longer safely resume business with the depositors, creditors, and the general public. On 7 September 1990, the Monetary Board, after determining and confirming the said memorandum and report, ordered the liquidation of the bank and designated the Director of the SES Department III as liquidator.[7]
x x x x
[T]he Board decided as follows:a. To forbid the bank to do business in the Philippines and place its assets and affairs under receivership in accordance with Section 29 of R.A. No. 265, as amended.
b. To designate the Special Assistant to the Governor and Head, SES Department III, as Receiver of the bank;
c. To refer the cases of irregularities/frauds to the Office of Special Investigation for further investigation and possible filing of appropriate charges against the following present/former officers and employees of the bank:
x x x x
d. To include the names of the above-mentioned present and former officers and employees of the bank in the list of persons barred from employment in any financial institution under the supervision of the Central Bank without prior clearance from the Central Bank.[6]
Submitted for resolution is petitioner's motion for reconsideration of the order of this court dated January 17, 2003 holding in abeyance the motion for approval of the project of distribution pending their compliance with a tax clearance from the Bureau of Internal Revenue.Hence, PDIC filed the present Petition for Review on Certiorari, under Rule 45 of the revised Rules of Court, raising pure questions of law. It made a lone assignment of error, alleging that –
Petitioner in their motion state that Section 52-C of Republic Act 8424 does not cover closed banking institutions like the Rural Bank of Bokod as the law that covers liquidation of closed banks is Section 30 of Republic Act No. 7653 otherwise known as the new Central Bank Law.
Commenting on the motion for reconsideration the Bureau of Internal Revenue states that the only logic why the Bureau is requesting for a tax clearance is to determine how much taxes, if there be any, is due the government.
The court believes and so holds that petitioner should still secure the necessary tax clearance in order for it to be cleared of all its tax liabilities as regardless of what law covers the liquidation of closed banks, still these banks are subject to payment of taxes mandated by law. Also in its motion for approval of the project of distribution, paragraph 2, item 2.2 states that there are unremitted withholding taxes in the amount of P8,767.32.
This shows that indeed there are still taxes to be paid. In order therefore that all taxes due the government should be paid, petitioner should secure a tax clearance from the Bureau of Internal Revenue.
Wherefore, based on the foregoing premises, the motion for reconsideration filed by petitioner is hereby DENIED for lack of merit.[13]
THE COURT A QUO ERRED IN APPLYING THE PROVISION OF SECTION 52-C OF REPUBLIC ACT NO. 8424 DIRECTING THE SUBMISSION OF TAX CLEARANCE FOR CORPORATIONS CONTEMPLATING DISSOLUTION ON A BANK ORDERED CLOSED AND PLACED UNDER RECEIVERSHIP AND, THEREAFTER, UNDER LIQUIDATION, BY THE MONETARY BOARD PURSUANT TO SECTION 30 OF REPUBLIC ACT NO. 7653.[14]PDIC argues that the closure of banks under Section 30 of the New Central Bank Act is summary in nature and procurement of tax clearance as required under Section 52(C) of the Tax Code of 1997 is not a condition precedent thereto; that under Section 30, in relation to Section 31, of the New Central Bank Act, asset distribution of a closed bank requires only the approval of the liquidation court; and that the BIR is not without recourse since, subject to the applicable provisions of the Tax Code of 1997, it may therefore assess the closed RBBI for tax liabilities, if any.
Guided by the foregoing distinctions, this Court, in perusing the assailed RTC Orders, dated 17 January 2003 and 13 May 2003, reaches the conclusion that these are merely interlocutory in nature and are not the proper subjects of an appeal by certiorari under Rule 45 of the revised Rules of Court.
- In appeal by certiorari, the petition is based on questions of law which the appellant desires the appellate court to resolve. In certiorari as an original action, the petition raises the issue as to whether the lower court acted without or in excess of jurisdiction or with grave abuse of discretion.
- Certiorari, as a mode of appeal, involves the review of the judgment, award or final order on the merits. The original action for certiorari may be directed against an interlocutory order of the court prior to appeal from the judgment or where there is no appeal or any other plain, speedy or adequate remedy.
- Appeal by certiorari must be made within the reglementary period for appeal. An original action for certiorari may be filed not later than sixty (60) days from notice of the judgment, order or resolution sought to be assailed.
- Appeal by certiorari stays the judgment, award or order appealed from. An original action for certiorari, unless a writ of preliminary injunction or a temporary restraining order shall have been issued, does not stay the challenged proceeding.
- In appeal by certiorari, the petitioner and respondent are the original parties to the action, and the lower court or quasi-judicial agency is not to be impleaded. In certiorari as an original action, the parties are the aggrieved party against the lower court or quasi-judicial agency and the prevailing parties, who thereby respectively become the petitioner and respondents.
- In certiorari for purposes of appeal, the prior filing of a motion for reconsideration is not required (Sec. 1, Rule 45); while in certiorari as an original action, a motion for reconsideration is a condition precedent (Villa-Rey Transit vs. Bello, L-18957, April 23, 1963), subject to certain exceptions.
- In appeal by certiorari, the appellate court is in the exercise of its appellate jurisdiction and power of review, while in certiorari as an original action, the higher court exercises original jurisdiction under its power of control and supervision over the proccedings of lower courts.
SEC. 52. Corporation Returns. –To implement the foregoing provision, the BIR still relies on the regulations it jointly issued with the Securities and Exchange Commission (SEC) in 1985, when the Tax Code of 1977 was still in effect and a similar provision could be found in Section 46(C) thereof. The full text of the regulations is reproduced below –
x x x x
(C) Return of Corporation Contemplating Dissolution or Reorganization. – Every corporation shall, within thirty days (30) after the adoption by the corporation of a resolution or plan for its dissolution, or for the liquidation of the whole or any part of its capital stock, including a corporation which has been notified of possible involuntary dissolution by the Securities and Exchange Commission, or for its reorganization, render a correct return to the Commissioner, verified under oath, setting forth the terms of such resolution or plan and such other information as the Secretary of Finance, upon recommendation of the Commissioner, shall, by rules and regulations, prescribe.
The dissolving or reorganizing corporation shall, prior to the issuance by the Securities and Exchange Commission of the Certificate of Dissolution or Reorganization, as may be defined by rules and regulations prescribed by the Secretary of Finance, upon recommendation of the Commissioner, secure a certificate of tax clearance from the Bureau of Internal Revenue which certificate shall be submitted to the Securities and Exchange Commission.
SUBJECT: Regulations to Implement the Provisions of Executive Order No. 1026, Amending Section 46(c) of the National Internal Revenue Code of 1977, as amended, Requiring Dissolving Corporations to File Information Returns and Secure Tax Clearance from the Commissioner of Internal Revenue, and Providing Adequate Penalties for Violations Thereof.The afore-quoted Tax Code provision and regulations refer to a voluntary dissolution and/or liquidation of a corporation through its adoption of a resolution or plan to that effect, or an involuntary dissolution of a corporation by order of the SEC. They make no reference at all to a situation similar to the one at bar in which a banking corporation is ordered closed and placed under receivership by the BSP and its assets judicially liquidated. Now, the determining question is, whether Section 52(C) of the Tax Code of 1997 and BIR-SEC Regulations No. 1 could be made to apply to the present case.
TO: All Internal Revenue Officers and Others Concerned.
Pursuant to the provisions of Section 277, in relation to Section 4 of the National Revenue Code of 1977, as amended, the following regulations are hereby promulgated.
Section 1. Scope. – These regulations shall govern the procedure for the issuance of tax clearance certificates to dissolving corporations. This shall include corporations intending to dissolve or liquidate the whole or any part of its capital stocks, as well as, corporations which have been notified of possible involuntary dissolution by the Securities and Exchange Commission.
Section 2. Requirements in case of dissolution. – a) Every Corporation shall, within thirty (30) days after
- the adoption by the corporation of a resolution or plan for the dissolution of the corporation, or for the liquidation of the whole or any part of its capital stock, or
- the receipt of an order of suspension by the Securities and Exchange Commission in case of involuntary dissolution,
file their income tax returns covering the income earned by them from the beginning of the taxable year up to date of such dissolution.
In addition thereto, they shall submit within the same period and verified under oath, the following documents:b) The Securities and Exchange Commission whenever it issues an order of involuntary dissolution or suspension of the primary franchise or certificate of registration of a corporation, shall at the same time furnish the Commissioner of Internal Revenue a copy of such order.
- a copy of the articles of incorporation and by-laws;
- a copy of the resolution authorizing dissolution; and
- balance sheet as of the date of dissolution and a profit and loss statement covering the period from the beginning of the taxable year to the date of dissolution.
Section 3. Tax clearance certificate. – a) Within thirty (30) days from receipt of the documents mentioned in the preceding Section, the Commissioner of Internal Revenue, or his duly authorized representative, shall issue the corresponding tax clearance certificate (BIR Form No. 17.61) for the corporation which will be dissolved.
b) The Securities and Exchange Commission shall issue the final order of dissolution only after a certificate of tax clearance has been submitted by the dissolving corporation: Provided, that in case of involuntary dissolution, the Securities and Exchange Commission may nevertheless proceed with the dissolution if thirty (30) days after receipt of the suspension order no tax clearance has yet been issued.
Section 4. Penalty. – Failure to render the return and secure the certificate of tax clearance as above-mentioned shall subject the officer(s) of the corporation required by law to file the return under Section 46(a) of the National Internal Revenue Code of 1977, as amended, to a fine of not less than P5,000.00 or imprisonment of not less than two (2) years, and shall make them liable for all outstanding or unpaid tax liabilities of the dissolving corporation.
Section 5. Effectivity. – These regulations shall apply to all corporate dissolution taking place on or after May 14, 1985.
Section 6. Repealing Clause. – All revenue regulations, orders and circulars which are inconsistent herewith are hereby modified accordingly.
Sec. 121. Involuntary dissolution. – A corporation may be dissolved by the Securities and Exchange Commission upon filing of a verified complaint and after proper notice and hearing on the grounds provided by existing laws, rules and regulations.The Corporation Code, however, is a general law applying to all types of corporations, while the New Central Bank Act regulates specifically banks and other financial institutions, including the dissolution and liquidation thereof. As between a general and special law, the latter shall prevail – generalia specialibus non derogant.[23]
Sec. 30. Proceedings in Receivership and Liquidation. - Whenever, upon report of the head of the supervising or examining department, the Monetary Board finds that a bank or quasi-bank:Section 30 of the New Central Bank Act lays down the proceedings for receivership and liquidation of a bank. The said provision is silent as regards the securing of a tax clearance from the BIR. The omission, nonetheless, cannot compel this Court to apply by analogy the tax clearance requirement of the SEC, as stated in Section 52(C) of the Tax Code of 1997 and BIR-SEC Regulations No. 1, since, again, the dissolution of a corporation by the SEC is a totally different proceeding from the receivership and liquidation of a bank by the BSP. This Court cannot simply replace any reference by Section 52(C) of the Tax Code of 1997 and the provisions of the BIR-SEC Regulations No. 1 to the "SEC" with the "BSP." To do so would be to read into the law and the regulations something that is simply not there, and would be tantamount to judicial legislation.
(a) is unable to pay its liabilities as they become due in the ordinary course of business: Provided, That this shall not include inability to pay caused by extraordinary demands induced by financial panic in the banking community;
(b) has insufficient realizable assets, as determined by the Bangko Sentral, to meet its liabilities; or
(c) cannot continue in business without involving probable losses to its depositors or creditors; or
(d) has wilfully violated a cease and desist order under Section 37 that has become final, involving acts or transactions which amount to fraud or a dissipation of the assets of the institution; in which cases, the Monetary Board may summarily and without need for prior hearing forbid the institution from doing business in the Philippines and designate the Philippine Deposit Insurance Corporation as receiver of the banking institution.
For a quasi-bank, any person of recognized competence in banking or finance may be designated as receiver.
The receiver shall immediately gather and take charge of all the assets and liabilities of the institution, administer the same for the benefit of its creditors, and exercise the general powers of a receiver under the Revised Rules of Court but shall not, with the exception of administrative expenditures, pay or commit any act that will involve the transfer or disposition of any asset of the institution: Provided, That the receiver may deposit or place the funds of the institution in non-speculative investments. The receiver shall determine as soon as possible, but not later than ninety (90) days from take over, whether the institution may be rehabilitated or otherwise placed in such a condition that it may be permitted to resume business with safety to its depositors and creditors and the general public: Provided, That any determination for the resumption of business of the institution shall be subject to prior approval of the Monetary Board.
If the receiver determines that the institution cannot be rehabilitated or permitted to resume business in accordance with the next preceding paragraph, the Monetary Board shall notify in writing the board of directors of its findings and direct the receiver to proceed with the liquidation of the institution. The receiver shall:
(1) file ex parte with the proper regional trial court, and without requirement of prior notice or any other action, a petition for assistance in the liquidation of the institution pursuant to a liquidation plan adopted by the Philippine Deposit Insurance Corporation for general application to all closed banks. In case of quasi-banks, the liquidation plan shall be adopted by the Monetary Board. Upon acquiring jurisdiction, the court shall, upon motion by the receiver after due notice, adjudicate disputed claims against the institution, assist the enforcement of individual liabilities of the stockholders, directors and officers, and decide on other issues as may be material to implement the liquidation plan adopted. The receiver shall pay the cost of the proceedings from the assets of the institution.
(2) convert the assets of the institution to money, dispose of the same to creditors and other parties, for the purpose of paying the debts of such institution in accordance with the rules on concurrence and preference of credit under the Civil Code of the Philippines and he may, in the name of the institution, and with the assistance of counsel as he may retain, institute such actions as may be necessary to collect and recover accounts and assets of, or defend any action against, the institution. The assets of an institution under receivership or liquidation shall be deemed in custodia legis in the hands of the receiver and shall, from the moment the institution was placed under such receivership or liquidation, be exempt from any order of garnishment, levy, attachment, or execution.
The actions of the Monetary Board taken under this section or under Section 29 of this Act shall be final and executory, and may not be restrained or set aside by the court except on petition for certiorari on the ground that the action taken was in excess of jurisdiction or with such grave abuse of discretion as to amount to lack or excess of jurisdiction. The petition for certiorari may only be filed by the stockholders of record representing the majority of the capital stock within ten (10) days from receipt by the board of directors of the institution of the order directing receivership, liquidation or conservatorship.
The designation of a conservator under Section 29 of this Act or the appointment of a receiver under this section shall be vested exclusively with the Monetary Board. Furthermore, the designation of a conservator is not a precondition to the designation of a receiver.
SEC. 52. Corporation Returns. –Section 54 of the Tax Code of 1997 imposes a general duty on all receivers, trustees in bankruptcy, and assignees, who operate and preserve the assets of a corporation, regardless of the circumstances or the law by which they came to hold their positions, to file the necessary returns on behalf of the corporation under their care.
x x x x
(C) Return of Corporation Contemplating Dissolution or Reorganization. – Every corporation shall, within thirty days (30) after the adoption by the corporation of a resolution or plan for its dissolution, or for the liquidation of the whole or any part of its capital stock, including a corporation which has been notified of possible involuntary dissolution by the Securities and Exchange Commission, or for its reorganization, render a correct return to the Commissioner, verified under oath, setting forth the terms of such resolution or plan and such other information as the Secretary of Finance, upon recommendation of the Commissioner, shall, by rules and regulations, prescribe.
x x x x
SEC. 54. Returns of receivers, Trustees in Bankruptcy or Assignees. – In cases wherein receivers, trustees in bankruptcy or assignees are operating the property or business of a corporation, subject to the tax imposed by this Title, such receivers, trustees or assignees shall make returns of net income as and for such corporation, in the same manner and form as such an organization is hereinbefore required to make returns, and any tax due on the income as returned by receivers, trustees or assignees shall be assessed and collected in the same manner as if assessed directly against the organizations of whose businesses or properties they have custody or control.
[A] liquidation proceeding resembles the proceeding for the settlement of estate of deceased persons under Rules 73 to 91 of the Rules of Court. The two have a common purpose: the determination of all the assets and the payment of all the debts and liabilities of the insolvent corporation or the estate. The Liquidator and the administrator or executor are both charged with the assets for the benefit of the claimants. In both instances, the liability of the corporation and the estate is not disputed. The court's concern is with the declaration of creditors and their rights and the determination of their order of paymentIrrefragably, liquidation proceedings cannot be summary in nature. It requires the holding of hearings and presentation of evidence of the parties concerned, i.e., creditors who must prove and substantiate their claims, and the liquidator disputing the same. It also allows for multiple appeals, so that each creditor may appeal a final order rendered against its claim. Hence, liquidation proceedings may very well be highly-contested and drawn-out, because, at the end of it all, all claims against the corporation undergoing litigation must be settled definitively and its assets properly disposed off.
x x x x
A liquidation proceeding is a single proceeding which consists of a number of cases properly classified as "claims." It is basically a two-phased proceeding. The first phase is concerned with the approval and disapproval of claims. Upon the approval of the petition seeking the assistance of the proper court in the liquidation of a closed entity, all money claims against the bank are required to be filed with the liquidation court. This phase may end with the declaration by the liquidation court that the claim is not proper or without basis. On the other hand, it may also end with the liquidation court allowing the claim. In the latter case, the claim shall be classified whether it is ordinary or preferred, and thereafter included Liquidator. In either case, the order allowing or disallowing a particular claim is final order, and may be appealed by the party aggrieved thereby.
The second phase involves the approval by the Court of the distribution plan prepared by the duly appointed liquidator. The distribution plan specifies in detail the total amount available for distribution to creditors whose claim were earlier allowed. The Order finally disposes of the issue of how much property is available for disposal. Moreover, it ushers in the final phase of the liquidation proceeding - payment of all allowed claims in accordance with the order of legal priority and the approved distribution plan.
x x x x
A liquidation proceeding is commenced by the filing of a single petition by the Solicitor General with a court of competent jurisdiction entitled, "Petition for Assistance in the Liquidation of e.g., Pacific Banking Corporation." All claims against the insolvent are required to be filed with the liquidation court. Although the claims are litigated in the same proceeding, the treatment is individual. Each claim is heard separately. And the Order issued relative to a particular claim applies only to said claim, leaving the other claims unaffected, as each claim is considered separate and distinct from the others. x x x [Emphases supplied.]
SECTION 1. Filing of petition with Supreme Court. – A party desiring to appeal by certiorari from a judgment or final order or resolution of the Court of Appeals, the Sandiganbayan, the Regional Trial Court or other courts whenever authorized by law, may file with the Supreme Court a verified petition for review on certiorari. The petition shall raise only questions of law which must be distinctly set forth.[16] Section, Rule 65 of the revised Rules of Court provides –
SECTION 1. Petition for certiorari. – When any tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal, nor any plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered annulling or modifying the proceedings of such tribunal, board or officer, and granting such incidental reliefs as law and justice may require.[17] 347 Phil. 122, 136-137 (1997).