CASE DIGEST: BIR vs. Lepanto (G.R. No. 224764; April 24, 2017)

CASE DIGEST: BUREAU OF INTERNAL REVENUE, ASSISTANT COMMISSIONER ALFREDO V. MISAJON, GROUP SUPERVISOR ROLANDO M. BALBIDO, and EXAMINER REYNANTE DP. MARTIREZ, Petitioners, vs. LEPANTO CERAMICS, INC., Respondent. (G.R. No. 224764; April 24, 2017)

Lepanto Ceramics, Inc. (LCI) filed a petition for corporate rehabilitation under RA 10142 with the RTC in Calamba City. Aside from financial difficulties, the petition for rehab also alleged LCI's tax liability at 6.3 million pesos. The Rehabilitation (Rehab Court) issued a Commencement Order (Order).

The Order declared LCI under rehab and suspended all actions or proceedings, in court or otherwise, for the enforcement of claims against LCI. It also directed the BIR to file and serve on LCI its comment or opposition to the petition, or its claims against LCI.

Despite this, petitioners, acting as Assistant Commissioner, Group Supervisor, and Examiner, sent LCI a notice of informal conference, informing the latter of its tax liabilities for the fiscal year ending June 30, 2010. Despite receiving LCI's letter-reply regarding the pendency of a rehab proceeding, the BIR sent LCI a Formal Letter of Demand.

A petition for indirect contempt of court was filed by LCI against petitioners for defying the Order. In their defense, petitioners insist that the issue has already become moot and academic because, in the meantime, LCI had already been declared rehabilitated. Also, petitioners argue that their acts do not amount to a defiance of the Commencement Order as it was done merely to toll the prescriptive period in collecting deficiency taxes, that their acts of sending a Notice of Informal Conference and Formal Letter of Demand do not amount to a "legal action or other recourse" against LCI outside of the rehabilitation proceedings and that the indirect contempt proceedings interferes with the exercise of their functions to collect taxes due to the government.

ISSUE: Are petitioners guilty of indirect contempt for issuing a notice of informal conference despite the fact that they simple wanted to toll the prescriptive period and considering the lifeblood doctrine?

Yes, they are guilty of indirect contempt.

According to RA 10142, upon the issuance of a commencement order, the distressed corporation shall be temporarily immune from the enforcement of all claims against it, including all claims of the government, whether national or local, including taxes, tariffs and customs duties.

To clarify, however, creditors of the distressed corporation are not without remedy as they may still submit their claims to the rehabilitation court for proper consideration so that they may participate in the proceedings, keeping in mind the general policy of the law.

Petitioners' act of issuing a notice of informal conference and later a formal letter of demand, all despite the written reminder by LCI regarding the pendency of the rehab proceeding, is in clear defiance of the Commencement Order.

As aptly put by the RTC Br. 35, they could have easily tolled the running of such prescriptive period, and at the same time, perform their functions as officers of the BIR, without defying the Commencement Order and without violating the laudable purpose of RA 10142 by simply ventilating their claim before the Rehabilitation Court.