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    L8 - CIR-V-Maritime-Shipping-238-SCRA-42

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    Mae Ellen Aven
    The CIR demanded payment of unpaid taxes from a private company totaling over 17 million pesos. When the company failed to pay, the CIR issued warrants to distrain barges owned by the company. However, 4 of the barges were also levied upon by a deputy sheriff to satisfy an unpaid wages judgment against the company. The issue was whether the government or employees had preferential lien over the barges. The court ruled the government has preferential tax lien under the Civil Code. While employees have preferential lien for unpaid wages under the Labor Code, this only applies in bankruptcy cases, which this was not. As the tax lien attached when taxes became due and the distraint preceded the execution, the government's claim was superior.

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    L8 - CIR-V-Maritime-Shipping-238-SCRA-42

    Uploaded by

    Mae Ellen Aven
    50 views2 pages
    The CIR demanded payment of unpaid taxes from a private company totaling over 17 million pesos. When the company failed to pay, the CIR issued warrants to distrain barges owned by the company. However, 4 of the barges were also levied upon by a deputy sheriff to satisfy an unpaid wages judgment against the company. The issue was whether the government or employees had preferential lien over the barges. The court ruled the government has preferential tax lien under the Civil Code. While employees have preferential lien for unpaid wages under the Labor Code, this only applies in bankruptcy cases, which this was not. As the tax lien attached when taxes became due and the distraint preceded the execution, the government's claim was superior.

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    The CIR demanded payment of unpaid taxes from a private company totaling over 17 million pesos. When the company failed to pay, the CIR issued warrants to distrain barges owned by the company. However, 4 of the barges were also levied upon by a deputy sheriff to satisfy an unpaid wages judgment against the company. The issue was whether the government or employees had preferential lien over the barges. The court ruled the government has preferential tax lien under the Civil Code. While employees have preferential lien for unpaid wages under the Labor Code, this only applies in bankruptcy cases, which this was not. As the tax lien attached when taxes became due and the distraint preceded the execution, the government's claim was superior.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    50 views2 pages

    L8 - CIR-V-Maritime-Shipping-238-SCRA-42

    Uploaded by

    Mae Ellen Aven
    The CIR demanded payment of unpaid taxes from a private company totaling over 17 million pesos. When the company failed to pay, the CIR issued warrants to distrain barges owned by the company. However, 4 of the barges were also levied upon by a deputy sheriff to satisfy an unpaid wages judgment against the company. The issue was whether the government or employees had preferential lien over the barges. The court ruled the government has preferential tax lien under the Civil Code. While employees have preferential lien for unpaid wages under the Labor Code, this only applies in bankruptcy cases, which this was not. As the tax lien attached when taxes became due and the distraint preceded the execution, the government's claim was superior.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 2

    1. CIR V NLRC GR No.

    74965, November 3, 1994

    TOPIC: TAXES AS DISTINGUISHED FROM OTHER


    IMPOSITIONS/EXACTIONS/LEVIES (L)

    FACTS: On January 12, 1984, the CIR demanded payment from private respondent
    Maritime Company of the Philippines of deficiency common carrier’s tax, fixed tax,
    6% commercial broker’s tax, documentary stamp tax, income tax and withholding
    tax totaling P17,284,882.45. The assessment became final and executory, and with
    private respondent’s failure to pay the tax liabilities, the CIR issued warrants of
    distraint of personal property and levy of real property which were duly served on
    January 23, 1985. On April 16, 1985, a “receipt of goods, articles and things” was
    executed covering, among others, 6 barges as proof of constructive distraint of
    property but the same was not signed by any representative of private respondent
    because of the refusal of the persons actually in possession of the barges.

    It appeared that 4 of the barges constructively distrained were also levied upon by a
    deputy sheriff of Manila on July 20, 1985 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?

    RULING: The court held that it is the government which has preferential lien over
    the barges under Articles 2241 and 2247 of the Civil Code. Accordingly, the
    preferential lien of employees for unpaid wages under Article 110 of the Labor Code
    applies only to bankruptcy cases where the employer is under liquidation due to
    bankruptcy.

    The NIRC provides for the collection of delinquent taxes by any of the following
    remedies: a) distraint of personal property or levy of real property of the delinquent
    taxpayer; b) civil or criminal action.

    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 the tax
    became due and payable. Besides, the distraint on the subject properties of Maritime
    Company of the Philippines as well as the notice of their seizure were made by
    petitioner, through the CIR, a long before the writ of execution was issued by
    RTC-Manila, Branch 31. There is no question then that at the time the writ of
    execution was issued, the two (2) barges, MCP-1 and MCP-4, were no longer
    properties of the Maritime Company of the Philippines. The power of the court in
    execution of judgment extends only to properties unquestionably belonging to the
    judgment debtor. Execution sales affect the rights of the judgment debtor only, and
    the purchaser in auction sale requires only such rights as the judgment debtor had
    tat the time of the sale. It is also well settled that the sheriff is not authorized to
    attach or levy on property not belonging to the judgment debtor.

    DOCTRINE:
    In the event of bankruptcy or liquidation of an employer's business, his workers shall
    enjoy first preference as regards wages due them for services rendered during the
    period prior to the bankruptcy or liquidation, any provision of law to the contrary
    notwithstanding. Unpaid wages shall be paid in full before other creditors may
    establish any claims to a share in the assets of the employer.

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