CALFURN MFG. PHILIPPINES INCORPORATED, ASIA RATTAN MFG. COMPANY, AWECA EXIM TRADING CORPORATION, AIM-EX ASIA INT`L TRADING CORPORATION, AWECA CARGO SERVICES, INC., and AWECA AGRO-FOREST INDUSTRIES CORPORATION v. JULIETA QUINSAAT in her capacity as City Treasurer of Angeles City, Pampanga

REPUBLIC OF THE PHILIPPINES Court of Tax Appeals QUEZON CITY Special Third Division CALFURN MFG. PHILIPPINES CTA AC NO. 253 INCORPORATED, ASIA RATTAN MFG. COMPANY, M e m b e rs: AWECA EXIM TRADING CORPORATION, AIM-EX ASIA RINGPIS-LIBAN, Chairperson, INT'L TRADING MODESTO-SAN PEDRO, and CORPORATION, AWECA FERRER, FLORES, JJ. CARGO SERVICES, INC., and AWECA AGRO-FOREST INDUSTRIES CORPORATION, Petitioners, -versus- JULIETA QUINSAAT, in her capacity as City Treasurer of Promulgated : Angeles City, Pampanga, Respondent. JAN 2 5 ?�12% X -------------------- ---------------------------------- ------------ ~---------- --------~-~-~~-!-~�---------- X DECISION MODESTO-SAN PEDRO, J.: The Case This Petiti on for Review ("Petition" ),1 filed by petitioners, CALFURN MFG. PHILIPPINES INCORPORATED, ASIA RAN MFG. COMPANY, AWECA EXIM TRADING CORPORATION, AIM-EX ASIA INT'L TRADING CORPORATION, AWECA CARGO SERVICES, INC., and AWECA AGRO-FOREST INDUSTRIES CORPORATION, on 24 May 202 1, through registered ma il, against respondent, JULIETA QUINSAAT, in her capacity as City Treasurer of Angeles City, Pampanga, pu rsuant to Section 7 {a) (3) ofR epublic Act No. 1125, as amended by Section (7) of R epublic Act No. 9282 ("RA 1125'~ , seeks the appeal of the Reso lutions, dated 27 Janu ary 202 12 and 11 M arch 202 1,3 both issued by Regional Trial Court - Branch 42, C ity of San Fernand o,'-"' Records. pp. 14- 107. Ann ex " A '', Pet ition . id.. pp. 3 1-36 A nnex " 8". Pet ition , id.. pp. 37 -4 1.

llF.CJSIO~ Png~ ~of 13 rtbPaeeaxhmearsebpniald(inte"garLtaeiB,doTinnf"ion)rfedlpiaanetngitdoitnpioertnetoiaetlrCiosonapmerrreomspoeeenrxrcgteiyoamilnptgCat.xa4fesrsoemN(o"l.Roc0Pa6Tl0",t)a)axnedws ph(iri.laeey.,s that judgment local business the corporate The Parties5 mtPhuaelnuunRfgaePbcpeututulibortlie,iocAannenodrgsfeealxtrehpeseodrCutPilothyyfi,lcfiouPpnrpansmiitntipeutusaretnegwdmaia.cthdoTerhppoeorifrirnanctmaiiotpianvaislne existing under the laws of office at Manga Road, operation consists in the materials. SthheeOisffRiimceespploeofantddheeednCtiniitsyheoTrfrcelaeagpsuaalrceiatryg, eAa,snFgCieliiltpeyisnTCor,eitaaysnuHdraewlrli,othAf AnpgonesglteeallseoCsfiCftiyict,yeP.aadmdpreasnsgaa.t The Faets6 p22e00t00it88i.o7 nWPTeeirhttsieh.t8iRsouencheharsbOfCrildoeedurr,atatPhSeettnaiytiiosOsnur defoderraCwCoaorspmloimkraeetwenicRseeemhiseasnbutielOidtraodtnieoranloloncnl1a67imDDseeccaeegmmaibbneesrtr CtdOouor3ruda1rettri.D,o1A0nedbcpaeoteemurditboaed1r6oy2ef0Dau2rne3tcliaelptm3ue1rrb,seDutrahene2cte0Rtm0oe9bha.e9narbTO2ilh0ritde1ae8trRi,obenudhtaaPttbheldiiaslni2twa3wtaiMasosnsauaybPps2lpae0rnqo1uv9iee,nndoittlfityathlherleyoxutRehgneahhddaeabdna ALthBcetTO("ifnFfTiRlchiegIeAhnot,f'oo't)hfnLeth2aA3ewspDsoreoefscv2seio0smr1io0bon.efs1rA1,o_2nf0gt1he9le,eFspeCintiiattyinocrneieaqrlusResseethninat gbLifeloitttraeatrisowtnoaiavrneesdrpoIonfnRsdoPelnvTtenaanncddy See Prayer. Petition. id.. pp. 24-25. See The Par1ies. Petition. id. p. 15. SS2iPSsee0eeeae0eti8tnAASi:oonntnsnanneet-eeeiresxmsxsMue""henAe/a\mtv"f..oeo,ororfPaafORlesnAtueodintlrueincocvmelnuaax.,rnimrhit"edeinEF...d.ta"ppc.pt..thPus32a.er62tptP8i.otteh.isoteeiHntysi.,oofisnwidol.ee..idvtdhepi.r.tsh.5peCw3pi:or.huSePIrte6tehe-tew1itrA8iioln.tlnhnceeofoxPmre"mtC8itoe"ionrnpot ofn"rAovaantfsenufenRilxheeedh"rFaoob"nn.ili6Ptiate.ottiriotin8onDo,neicd8e.mDpbe.ec6re7m2. 0b0e8r 10 ptASoeentesniteeiAnoxdnnen.r.reeCsqx..u.o"epP8stete"stdiottiosofunArce.nhsindpce.oo,xnupdr�ps�eF.en"4to.2tPf�o4ae6wcti:ttaiioPoivnnee.t,ittiihdoe.n.ireprR.s6Pd7Ti.dannodt 11 indicate in their submissions what triggered them LBT. Tl1us. this Court will no longer inquire why

DECISIO~ CTA i\C ~n. 253 In January 2020, petitioners received a Letter from respondent, dated 3 January 2020, to which a Legal Opinion of Atty. Ralph Vincent S. Macalino, City Legal Officer of Angeles City, was attached. In said Legal Opinion, the City Legal Officer opined that there is no explicit pronouncement on the waiver ofLBT and RPT with respect to the Local Government Unit ("LGU") of Angeles City, Pampanga. Accordingly, respondent requested that a more specific pronouncement be provided by petitioners in order that the LGU of Angeles City can grant a waiver of LBT and RPTY On 16 January 2020, the Cou11-appointed Rehabilitation Receiver, Atty. Leopoldo E. San Buenaventura, wrote to respondent explaining that Section 19 ofthe FRIA Law mandates the exemption of petitioners from local taxes and fees. 13 The Receiver likewise discussed the matter with the LGU of the City of Angeles through informal explanations and negotiations concerning the applicable provisions of the FRJA Law but to no avail. Respondent maintained that an Order from the Rehabilitation CoUI1 ("Rehab CoUI1") must be secured pat1icularly exempting petitioners from the imposition of local taxes within the City of Angeles and that this would serve as legal basis for the request for exemption by petitioners from the aforementioned local taxes. On 22 September 2020, petitioners received a copy of the Motion for Exemption (for Local Taxes and Fees) from the Receiver which was filed with the Rehab CoUI1 (i.e .. Regional Trial Court- Branch 42, City of San Fernando, Pampanga, in relation to Commercial Case No. 060). 1 ~ In response, the City Legal Officer of Angeles City filed his formal entry of appearance and filed a Comment/Opposition (to Petitioner's Motion for Exemption), which was later on amended when the City Legal Officer filed an Amended Comment/Opposition (to Petitioner's Motion for Exemption). 15 On 28 January 2021, petitioners received a Manifestation, dated 25 January 2021, filed by the Receiver. In said Manifestation, the Receiver pointed out that two (2) Orders of Payment addressed to petitioners, both dated 17 January 2021, were received by the latter, requiring them to pay the amounts of Php 1,794,4 72.46 and Php272, 162.80. Petitioners did not indicate what type oflocal taxes were sought to be collected in such Orders of Payment nor did they indicate the taxable years on which such local taxes pertained to. However, in petitioners' Memorandum, they claimed that they paid local taxes under protest for the taxable year 2009 to 2019 in the total amount of Php7,490,252.83 and for the taxable year 2020 to 2022 in the total amount of Php6,625,574.21. 16 This CoUI1, therefore, has no option but to presume that J.' " Annex .. D... Pel ilion. id. pp. 47�48. 1 -~ Anne:-.: "E��. Petition. id.. pp. ..J-9-54. 1.. Annex "F". Petition. id. pp. 55-69. " Anne' ��G ... Petition. id.. pp. 70-78. 16 !d.. pp. 282-283.

llECISIO\ Page-lt1flJ the local taxes demanded in the two (2) Orders of Payment are contained in the payments made by petitioners under protest for the taxable years 2009 to 2022. Accordingly, this Court shall deem such local taxes as pertaining to taxable years 2009 to 2022. oRrtpahtEaheafneasexesrxdtsscepneieaotsombsiisnploneieapfsonendiOdnitlnnecediednorednedRasnfetrpe2eaaanpse(t9ratiofesrf.Rooiol1Jlnrnure9eMvaeo.thdenLqi1oaod8uluobtonaOecioian,orsalrnygitnldteteatCaThd2rhtteifa0oeeeboox2mndPynroe1temitsp2,thtPRlei9eaeeptltiennradieoJtcdntthain/toiooOantFnnhihnuoapesaeadaienpssrwd,rsseoyet)barashirieslio2aevrrtentevie0eniRocaaor2tnedledhno!iicyedi,vfseelmw(goiibotndvrnohecioeslaeityruschlnrenfhePrutiddsaolena,epdxutpttdoieiweghpltnsnihahraaoisoatieeRnRcnevtdehlhdeeeereeptdth'cfhhsvlaetweyereebbroiarsyietrMn.olictivioMPtotocseah,ematrt1oeitii7moitedootinCsaniofwfoiniollfPnlohiuireflctnifsraohlroagttensr;e,rl the The Rehab Court then denied the Motion for Reconsideration through by assailed Resolution, dated II March 2021, a copy of which was received petitioners through electronic mail on 23 March 2021. Thus, the present Petition was filed before this Court on 24 May 2021 through registered mail, after the filing of of Time to File Petition for Review on 22 April 202!. a Motion for Extension 20 Rev Respondent filed a Comment/Opposition (to Petitioner's Petition for due iew) with Manifestati on on !6 August 2022.21 As such, the Court gave in a Resolution, dated !4 September 2022. 22 course to the Petition On 18 November 2022, petitioner filed their Memorandum.23 On the Memorandum on 24 November 2022 through other hand, respondent filed her registered mail. 24 Thus, in a Resolution, dated 13 January 2023, the instant case was submitted for Decision. 25 Hence, this Decision.}' 17 Annex ��H'', Petition. id, pp. 79-90. 18 Annex �T. Petition. id, pp. 91-95. 19 Annex "J", Petition. id, pp. 96-107. 211 !d.. pp. 8-! 3. OJ /d.. pp, cJ6-c44. ~2 ld, pp.145-147. 2�' !d., pp. 263-308. " !d., pp. J I0-322. ~- ld, p. 324.

DECISIO' CTA AC No_ 2)3 Pnge 5 of 13 The lssue26 TDbyAEXNthEYisSBINCaAsGoeNudrDPtoEnFisTEtIhWETeSIHM.OENeTmEHoRErSaR'ndROaERfQilNeUdOEbTSyTTboHFtOEh RpRarEWtiHeAAs,IBVthEeCRiOssUOuRFe TtoITEbSRe RLreEOsoDClvAIeNLd Arguments of the Parties Petitioner's Arguments27 Petitioner avers the following in its Memorandum: a) PtcSnaoeaextrtceiipttosioinoor"annaul,tni1owgti9nolhvitocuhehnrefnedtamvehpereepgrnroioFtsivnRaeagnaIlArdrloieefbherytax.h"bpetirhleRietsaestLhliyaoGbnUpilrisfotraovhtmiiadovenisinmPgflpoajornusritoinhsrgeddiicawsntmaidoiivnscesoraollvlbeeoycrftittthnhhegee b) ruwtswUhetniihehplldllaioecibnpsrhbisrldeeaueiivtpcasaelpnetturrifrceodfoecsenevoscdoa,mptlfiirfvenortoehosccfemleeutuehaSdndcertitiloaniinRllyegglrees,Otlhchifattaretihndbenedcedigllriacn.ttiobaaaSmytxvtiaieesooisrdnrno.seafaSTPlatsltlhhlgaoaeeyoncnlvgraOoeeooiarrmrvfnsddeosmetirnhsranemegmanfaositesitrnenspatarstenhm.ltrditsioahntpfephaprtetchoilooiehLcrniapGPbboieUoltrteiafisottilnitoaaohrnwinees, c) tSrCheeoahctmatbtimhoileneitnda2cet1iebomtonoefrptnwhrtoeiclOleFebrRddeIieAnsrugcspschrfeooasvlrsliafdusebllseloytnhergeaffhtaesa"cb[ttuhiilv]einetraleetfeissodsra."listfuhtebedstdabnuytritaahtlieolinckoeuolrifth,ottohhdee d) cnaIcInnoaacvtnCti.ehnoo2reon8emtacdtlmpahsuebeoerynrsSocuutfeelhpoBmerictueeasmrSln,cettelaaaiyuOniCmcrooOldsuufrerIddfrtno.ienrtrreg.uAdrlelnTeltfdaahixclicsiteRlehsanea,iisvtcmyettstanhortueaiofexaffB,leslseuothtrawiaenena/d.lutgihvgoec.ohvuLftceseotoIrponnframtpmtelhorlseerfnnoaaidttls,iCuostReunwireaeahsnvu,mecentenidhacureoeseerr,f distress to rehabilitate. The affected creditors, however, are not without remedy. They may file their claims before the Rehab Court.,... ~(, See lssue/s. Respondent's Memorandum. hi., p. 312: See Lone Issue, Memorandum, id., p. 275. !d" pp. 275-289. 27 " G.R. No. 224764.24 April2017.

llf.CISIO~ CTA Al' \Jo ::!:'13 Page 6 t)r I :I e) Petitioners have been exerting their best efforts to attain the desired objectives of the Rehabilitation Plan. The process, though slowed down by the pandemic, surely are being attained with the valuable cooperation of petitioners' suppliers. f) The reason for the Stay Order is to enable the Management Committee or the Rehabilitation Receiver to effectively exercise its/his power free from any judicial or extra-judicial interference that might unduly hinder or prevent the "rescue" of the debtor company. To allow such other action to continue would only add to the burden of the Management Committee or Rehabilitation receiver, whose time, effort and resources would be washed in defending claims against the corporation instead of being directed towards its restructuring and rehabilitation. g) While taxes are the lifeblood of the government, the collection of the same should be made in accordance with law as any arbitrariness will negate the very reason for government itself. It is therefore necessary to reconcile the apparently conflicting interests of the authorities and the taxpayers so that the real purpose of taxation, which is the promotion of the common good, may be achieved. h) Section19 ofthe FRJA must not be literally applied. Upon approval of the Rehabilitation Plan, it might take six or seven months or a year before compliance with the Rehabilitation Plan starts. As such, there is no tax or fee, both national and local, which may be subject to waiver or exemption. It follows that no benefit was actually accorded by such prOVISIOn. Respondent's Counter-Arguments29 Respondent counter-argues that petitioners are liable to pay local taxes to the LGU of Angeles City. Section 19 ofthe FRJA clearly provides that the waiver of local taxes are only until the approval of the Rehabilitation Plan or dismissal of the Petition, whichever is earlier. The issuance of a Commencement Order was merely to signify the start of such waiver of local taxes and fees. It is not made to mean that such waiver shall remain in full force and effect while the Commencement Order (i.e., Stay Order) is in effect. The waiver of taxes immediately ends upon the approval ofthe Rehabilitation Plan or dismissal of the Petition, whichever comes earlier. Section 21 of the FRJA does not apply to taxes and fees. It only applies to ordinary creditors of the distressed corporation. The wisdom and understanding of petitioners in seeking for the waiver of taxes are contrary to law. Upon approval of the Rehabilitation Plan, a distressed corporation shall commence the operation of its business in order to make profits and pay its debtors. Consequently, since,_... 29 See Respondents' Memorandum, id., pp. 312-315.

DECISIO\" the distressed corporation is already making profits, it shall pay taxes. Thus, the Assailed Resolutions were properly issued by the Rehab Court. The Ruling of the Court The Court has jurisdiction over the present Petition. Jurisdiction by this Court over the instant case is conferred by Section 7 (a) (3) of RA 1125, to wit: "SEC. 7. Jurisdictiou. -The Court of Tax Appeals shall exercise exclusive appellate jurisdiction to review by appeal. as herein provided - XXX XXX XXX (3) Decisions, orders or resolutions of the Regional Trial Courts in local tax cases originallv decided or resolved bv them in the exercise of their original or appellate jurisdiction:" (Emphasis and underscoring. Ours.) As clearly provided, above, this Court has exclusive appellate jurisdiction over decisions by the Regional Trial Courts exercised in their original or appellate jurisdiction involving local tax cases. In the present case, petitioner is appealing two (2) Assailed Resolutions by Regional Trial Court - Branch 42, City of San Fernando, Pampanga, in relation to Commercial Case No. 060, where said Regional Trial Cow1 denied petitioners' request for waiver from local taxes and fees. As such, these Assailed Resolutions are decisions by a Regional Trial Court exercised in their original jurisdiction involving local tax cases. This Court has undoubted jurisdiction over the instant case. Now, the question that should be determined is whether petitioners timely filed their judicial appeal. Under Section 3, Rule 8 of the Revised Rules of tlte Court of Tax Appeals, "[a] pa11y adversely affected by a decision ... of the Commissioner of Internal Revenue ... may appeal to the Cow1 by petition for review filed within thirty days after receipt of a copy of such decision." In the case at bar, petitioner unquestionably received the Assailed Resolution, dated electronic II March 2021, on 23 March 2021 through mail. 3� Following this, petitioner had thirty (30) days from receipt, or until22 April2021, within which to file a judicial appeal before this Court.,t.. -~r1 Annex .. B... Petition. ill.. pp. 37-<-l 1.

DECIStO' CTA AC ~o- :!:'iJ On 22 April 202 I, petitioner timely filed a Motion for Extension of Time to File Petition for Review extending the filing of the Petition for thirty (30) days, or up until 22 May 2021.3 t The request for extension was granted by this Court in a Resolution, dated 17 June 2021.32 ccCsoaeoulremvrntim.cdeaPurounfdritspayulyeaQsanudct aiotnoruagnAnsttedaidmnnedifnr(mo"ismMotrtiEatothCinevsQefi"inCr)stiwthrcedausaalyraseruoasNsfpopep.nlha2dyc2ese-did2caa0unl2nd1od,psetherhnaMelilntoirgmdeisoefuifefmotdhreeEfsinerleihvnleaegnnvcaa(ne7ndd)t This Court was physically opened on 17 May 202!.33 Hence, the deadline to file the instant Petition was moved to 24 May 2021. As petitioner filed the instant Petition on 24 May 2021, through registered mail, this Court properly assumed jurisdiction over the present case. The FRIA clearly provides that the waiver of taxes granted to a distressed corporation is only until the approval of a Rehabilitation Plan or dismissal of the Petition, whichever comes first. The present Petition for Corporate Rehabilitation was filed on 6 December At first glance, it would appear that the FRIA is 2008 3~ JAinucalytpps2lh0iacIlal0b.lgeHotvooewtrheneveairnll,stSpaenecttitctiioaosnnes1s4ifni6lceeodtfhatehfteeefrfFeiRct tIiAhvaitscyltedaaakrtleeynopfersfofaveicdidt.leaswAtlhwl aatfsu"ro(ttn]hhe1i8rs proceedings in insolvency, suspension of payments and rehabilitation cases then pending, except to the extent that in opinion would not be feasible or would work injustice, in of the co~.<rt their application set forth in prior laws and regulations shall which event the procedures provisions apply to the present case. apply." Thus, the FRIA 's There are two provisions of the FRIA which are applicable to the case before us. The first is Section 19, which provides as follows: ..SEC. 19. Waiver o(Taxes and Fees Due to the National Government and to Local Governmem Units (LGUs). - Upon issuance of the they Commencement Order by the court. and until the approval of )I !d. pp. 8-1 J. '' !d. pp. 108-110. �~ Administrative Circular No. 33-:20.:21. -'-' Petitioners have also claimed that they filed their Petition for Corporate Rehabilitation on 8 December 2008: see Memorandum. Records. p. 268. However. whether the Petition 8 December 2008 is a non-issue for Our current purposes. so this Court will comment was filed on 6 or no further on it.

DECISIO\' CTA AC No. 2:'i3 wtiRhmaeepihrveoaeosbdifit.,liioitdnanutifeoounfrtotahPleltlrhaatenanxcnoeeasrtoiadofninstdahmlefiesgoesobsavj,leeicorntnficvmltuehesdeniontpfgoertrepithetioanobnaLil,ltiGiwteaUsht,iisocinnhst.hee"avrleelsrtbsiesaencadornlcsiehidra,ergrtehedes wRaneadhivacebhdiTal,irhtugaipsetiosponrndouivsPesilsuationaonnotchreleadoyinssfamtdthiiooeswnsCaanllotmoghofemvtrheeuenmlcepmeetmhteiantetintoatnollOrftoratodrxeerLres,GhaafnUebdesislui,stnhapttaieillnolaanpbl.tpeirecosov, nainlstioedrfeertshetdes aiaCnlploptmthraeoxmvepAaesrlnociccsvoeoifcsmrotidhoeniennnsitgRidlteyeOsrhe,reladdfbeafiwrrsloiat"moaiinvtnieodfInup.7roTPtihnlDhaeteneracrnoaeAnctmi,eob1noe6awfrltDehh2ieefc0coh0oer8mbt,hjbeIiStsceotrgiv2tephe0noes0einr9oot,fIutsrBshseeu,hwaaiawnbmicihvlpeiieoctrahstaioitpoifiposnen"att.hhoresef daintetvbeotmolvrp'eJtsuterroeqismuppirartoauinvbdiilendengecaaenfos,dsriernttehshteuatorebnfii,fltiistchaiactesrinevtsdehiatponouwdrrsnp;eoqatsuhneiadstta.obt"hnlTeethhdoueibssjo:tertOichbteniurvt,teihotsoenopoofrnforeevahhnidaaeibnniddsl,ioetb'latvtthioeoernynst with a fresh start by relieving them of the weight of their outstanding debts and pennitting them to reorganize their affairs. '"35 nrbbeoueotisrnignlgiaemansFnsiiwtzdea(1dotvhirioteaonrpb,m,ai1dldoi1etarsybect,iooofafnfoiarrtn)geehinaivansebspnioaaelligsvtgsaoeo,t,niidontdnegdebebpctbtolrt-anoeencsqrceuauhriisntemiy,dnsugoclrtivoonsangerrv,iteeotsrirutensosogiror-megnua,eptnhaaienoznsfadftiinnineoascwnanlulceodibariunloqsgfiwu,naeetbshlsuiles--t entity, or other s imila r arrangements creditors.36 Thus , such waiver of taxes, as may be approved by the court or a form of d ebt forgiveness, during the period specified is justified. However, before the Commencement Order was issued on I 7 December 2008 and for the period following 16 December 2009, taxes could be assessed against petitioner, these not covered by the period of waiver. The next question is thus: when can such taxes be collected? This brings us to the second provision of FRIA, Section 21, which provides as follows:y �'' China Banking Corp. v. St. Francis Square Realty Corp .. G.R. Nos. 232600-04, 27 July 2022. _1(, !d.

DECISI(}_, CT.A AC No_ 2:'3 Page IOofiJ dll"iiSukftrEeealCdtiih.oobn2yo1do.tfhtEthehafeftcixorthetuiehrvatid,bteyitblhiatteoanrtdCiowoDnimllupmrrbaoeectniseocuenecdmcioneegsfnssCtfufooOlmrlryamdsereerlnhocsanhebgmaillaelistnabtttheeeOdre.re"fdfieesrca.tisv-uebsfUtoarnnltteihasesl tPchaleanne.oxnpFlryoelsblsoewtemirnmagdsethoaeffttdehirecttsahcteehsdeduourfalSetieoocnftipooanfytm2h1ee,nrcteoholalfbeccilltiaitoiamntisoonifnaptnrhoyecseRueecdhhinatbgaisxlieotsartdipouener ep2iennxa0dyt1tehem9ndeed.OsHnecrdtdehcreeueardn,.nu3t7pilnleeTot3owhi1tfeiorpbDeneaeyeicsrcmoenalemlolnelbetcisgenteerdidnsi2cit0tafhh,2teia3oitnR,ndtechethiheetaaidnbtr,egitlthhihttaeehabteLiriloeGirhnteaaUhtPbia'olisbalniinctl.ailptatAaeiiotmrsiinooinhtdpasrcstoteaocbnrueemdreestdsn',sinhai2nnga3scyslhusbMuadevcaeehdeyn here. For clarity, there are three periods relevant to the collection of taxes All The first would be prior to the issuance of the Commencement Order. taxes, national or local, that pertain to taxable periods prior to the date of issuance of the Commencement Order may be assessed but not immediately collected, considering that these are considered claims against the distressed corporation. These would involve taxes covering the period before 17 December 2008 and would be in the nature of claims against the petitioner in light of the rehabilitation proceedings. Applying Sections 19 these claims are subject to the Stay Order and must have been and 21 ofFRIA, presented before ndibptnhoaiesdett1tivrrmreeeoesacnhfstdtaetiechbldaoeiptlneicaRttdoraeettrmihpboopaoenfbtrf.taoi3chlt8rioieetoIuafsntrtcinth.ohoefneOtodRrptPuhrelileeanhesrncawe.olbnuiiTftsslepioeitod,aansytdttimrhuoienernesinsnt,Rhctgoetethtlhchlseeeeecrciahevrtseiieesnndhre,guasaltbsehnpimeldaoisertefatnnytptocioatlomanyfdimampsiyrureseocncchcbtteolenyetuaedlcxcdwiineetiessgntdshsomatartfuinbholsdeyert bTamfehtaeeednrsee3te1dcrilmraDeiicmentcalseyt,emhdtoob, wespruee2bvti0jeteir2co,3tnc,teaowrnthdaheulernreirnatuhdgleeytshrbeoeehndcapuobrrlilleaeisttcicaotrteniidopnotdifoiprnrree.ochctaleybeidaliigtnaagitnisosantptphpreeoapcreetteoidtiihonangveser. ptaRChrreoieoshmcdaeimesbeediTeplmiinnhrtoeagcedvtsei.imo,sdw_neee.acdnPiotvlnfaeodOndr robbdwnyyeor1eul6axlowdpnDreeibnsc1ese7fmputrrDhbotaheevtrecirse2apim0one0ncbr9ieeoo.rdofAfS2ll0beth0ceteatt8iwxooeenabsenjne1pdc9etrtitothvhaefeeinsthiianoespgsfpuFrtraoeRonhvItcaAhaebli.silAoioptfaegftraiittioohhnndee, " Annex "B" of Annex "F". p. 67. ' 3 Bureau of Internal Revenue. eta!. v. Lepanto Ceramics. Inc .. G.R. No. 2.24764,24 April2017.

OECISIO' CTA :\C 1'\o 2."3 Png~llnfl3 Plan Finally, there is the period following the approval ofthe Rehabilitation on 16 December 2009. All taxes from this point onward are neither claims nor subject to waiver. They can and could be assessed and collected against petitioner. Of course, during the duration of rehabilitation proceedings, any such collection effort must be coursed through the Rehabilitation Receiver. Following the rehabilitation proceedings, however, they can be collected directly against the petitioner. Following the above guidelines, this Court shall now determine whether the LGU can collect the assessed taxes against petitioners. The Court notes that neither party indicated the taxable periods of the taxes which are sought by petitioner to be waived. It was only indicated that two (2) Orders of Payment addressed to petitioners, both dated 17 January 2021, were received by the latter, requiring them to pay the amounts of Php I, 794,472.46 and Php272, 162.80. Petitioners did not indicate what type of local taxes were sought to be collected in such Orders of Payment nor did they indicate the taxable years to which such local taxes pertained. It is only in petitioners' Memorandum that they claimed that they paid local taxes under protest for the taxable year 2009 to 20 19 in the total amount of Php7,490,252.83 and for the taxable year 2020 to 2022 in the total amount of Php6,625,574.21.39 This Court, therefore, has no recourse but to presume that the local taxes demanded in the two (2) Orders of Payment are contained in the payments made by petitioners under protest for the taxable years 2009 to 2022. Thus, this Court shall deem that the subject local taxes which petitioners request to be waived pertain to taxable years 2009 to 2022. Given this, local taxes that accrued during the taxable year 2009 against petitioners are deemed partially waived in accordance with Sectionl9 ofthe FRJA. This is because these taxes fell due between the dates the Commencement Order was issued on 17 December 2008 and the date the Rehabilitation Plan was approved on 16 December 2009. However, the waiver shall be made pro-rata since taxable year 2009 ends on 31 December 2009 which means that there is a remaining fifteen (I 5) days in 2009 that taxes are no longer deemed waived. On the other hand, local taxes for taxable years 20 I 0 to 2022 can be assessed and collected directly fi�om petitioners. These taxes cannot be tdaexeems eudntwilatihveedapspinrocevaSleoctfioanR1eh9aobfiltihtaetiFonRIPAlanexoprredsisslmy ilsismalitsofththeewPaeivtietiroon,f whichever comes first. Fut1her, the assessment of these taxes can be directly made against petitioners. It is no longer necessary to ventilate the assessment of these taxes before the Rehabilitation Receiver considering that rehabilitation proceedings have already been terminated as of 31 December 2023.p :;'J !d. pp. 282-283.

DECISIO.'\" CT:\ /\C No. 2.'\3 Pag<.: l~ofl3 Taxes are the lifeblood of the government and so should be collected without unnecessary hindrance.~0 Their collection is of primordial importance. The waiver of national and local taxes provided for under Section 19 of the FRIA is akin to a tax exemption. Well-settled is the rule that a tax exemption is strictly construed against the taxpayer because an exemption restricts the collection of taxes necessary for the existence of the governmentY Thus, the waiver of taxes in Section 19 of the FRIA can only be claimed within the specific parameters provided therein, specifically only from the date of issuance of the Commencement Order until the approval of the Rehabilitation Plan or dismissal of the Petition, whichever comes first. WHEREFORE, in light of the toregoing considerations, the instant Petition is PARTIALLY GRANTED only insofar as taxes for the period of 17 December 2008 to 16 December 2009 are concerned, which taxes are deemed waived by express provision of Section 19 of Republic Act No. 10472. The Assailed Resolutions, dated 27 January 2021 atrd 11 March 2021, are accordingly hereby so MODIFIED. SO ORDERED. MARIA R Justice I CONCUR: Gl:v. ~ __, '--� MA. BELEN M. RINGPIS-LIBAN Associate Justice CO~RJ'\t'O-N +G. ''FER�RE~:L7RES Associate Justice ~ 11 Commissioner of Internal Revenue v. Yumex Philippines Corporation. G.R. No. 222476.5 May 2021. 41 Commissioner of Internal Revenue v. St. Luke's Medical Center. Inc .. G.R. Nos. 195909 and 195960, 26 September 2012.

Ht:CJSIO~ CT ,\ AC No_ 253 Page IJ or 13 ATTESTATION attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. 1&. ~ ~\......._ MA. BELEN M. RINGPIS-LIBAN Associate Justice Chairperson CERTIFICATION Pursuant to Section 13 of Article Vllf of the Constitution and the Division Chairperson's Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. Presiding Justice