Enbanc: Republic of The Philippines Court of Tax Appeals Quezon

REPUBLIC OF THE PHILIPPINES
COURT OF TAX APPEALS

QUEZON CITY
ENBANC
COMMISSIONER OF INTERNAL CTA EB NO. 1210

REVENUE, (CTA Case NO. 8382)
Petitioner,
-versus-
OFFICEMETRO PHILIPPINES,
INC. (formerly REGUS CENTRES,
INC.),
Respondent.
x------------------------------------------x CTA EB NO. 1213
OFFICEMETRO PHILIPPINES,
(CTA Case NO. 8382)
INC. (formerly REGUS CENTRES,
INC.)
Present:
Petitioner,
Del Rosario, P.J.,
Castaneda, Jr.,
-versus-
Bautista,
Uy,
Casanova,
COMMISSIONER OF INTERNAL
Fabon-Victorino,
REVENUE,
Mindaro-Grulla, and
Respondent.
Ringpis-Liban, JJ.
Promulgated:
NOV Z~ 2016 ~ -
X---------------------------------------------------------------------------------------------X
RESOLUTION
RESOLUTION
C.T.A. EB NOS. 1210 & 1213
Page 2 of5
For resolution of this Court is Officemetro Philippines, Inc.'s

(Officemetro) Motion for Partial Reconsideration filed on August 2, 2016,
sans Commissioner of Internal Revenue's (CIR) Comment.
In the instant motion, Officemetro prays for the Court En Bane to

reconsider the Resolution dated July 1, 2016 and to recognize the dissolution
order of Branch 66 of the Regional Trial Court (RTC) of Makati City and
the Securities and Exchange Commission.
The instant motion stemmed from Officemetro's

Comment/Opposition to the Motion for Reconsideration of the CIR. 1
Officemetro prayed that the CIR's motion be denied for being moot and
academic, on the ground that there is already an order of dissolution by the
RTC. In the Court En Bane Resolution2 dated July 1, 2016, We pronounced
that Officemetro' s liquidation process has not yet attained finality because
its liabilities, including its liabilities to the government, are yet to be settled
pursuant to a Liquidation Order under Section 112 of the Financial
Rehabilitation and Insolvency Act of 2010. Said pronouncement is the crux
of the instant motion.
Verily, the Court En Bane recognizes the Order3 dated August 5, 2013
of the RTC. However, the Court En Bane emphasizes that although
Officemetro is declared insolvent and dissolved as contained in the said
Order, it does not necessarily translate to the extinguishment of its liability
to pay the subject taxes. In fact, the Order4 dated May 28, 2015 and the
subsequent Orders 5 of the RTC show that Officemetro' s liquidation process
is still in the approval stage of the Proposed Liquidation Plan. Thus,
payment of the subject taxes is yet to be made by Officemetro and therefore,
it could not have mooted the previously resolved motion for reconsideration6
ofthe CIR.
To remove Officemetro's cloud of confusion as to whether the said

Order of Dissolution extinguished its obligation to pay the subject taxes,
Article 1231 of the Civil Code provides:
"Art. 1231. Obligations are extinguished:
( 1) By payment or performance;
(2) By the loss of the thing due;
1
Court En Bane Docket, pp. 180-182.
2
3
Annex "A" of the Motion for Partial Reconsideration, Court En Bane Docket, p. 212.
4
Id., Annex "B", p. 213.
5
Id., Annexes "C", "D" and "E", pp. 214-216.
6
RESOLUTION
C.T.A. EB NOS. 1210 & 1213
Page 3 of5
(3) By the condonation or remission of the debt;
(4) By the confusion or merger of the rights of

creditor and debtor;
( 5) By compensation;
(6) By novation."
Based on Article 1231 of the Civil Code, dissolution is not one of the
modes to extinguish an obligation. To finally effect its extinguishment,
liquidation becomes a necessary process after a corporation's dissolution. In
this regard, the Court En Bane reiterates the concept of liquidation as
explained by the Supreme Court in the case of Anthony S. Yu, eta/. v. Joseph
S. Yukayguan, et a/., 7 viz:
"xxx Liquidation is a necessary consequence of the

dissolution of a corporation. It is specifically governed by
Section 122 of the Corporation Code, which reads:
SEC. 122. Corporate liquidation. Every

corporation whose charter expires by its own limitation
or is annulled by forfeiture or otherwise, or whose
corporate existence for other purposes is terminated in
any other manner, shall nevertheless be continued as a
body corporate for three (3) years after the time when it
would have been so dissolved, for the purpose of
prosecuting and defending suits by or against it and
enabling it to settle and close its affairs, to dispose of and
convey its property and to distribute its assets, but not for
the purpose of continuing the business for which it was
established.
At any time during said three (3) years, said

corporation is authorized and empowered to convey all of
its property to trustees for the benefit of stockholders,
members, creditors, and other persons in interest. From
and after any such conveyance by the corporation of its
property in trust for the benefit of its stockholders,
members, creditors and others in interest, all interest
which the corporation had in the property terminates, the
legal interest vests in the trustees, and the beneficial
interest in the stockholders, members, creditors or other
persons in interest.
7
G.R. No. 177549, June 18,2009,589 SCRA 588.
RESOLUTION
~.T.A. EB NOS. 1210 & 1213
Page 4 of5
Upon winding up of the corporate affairs, any asset

distributable to any creditor or stockholder or member
who is unknown or cannot be found shall be escheated to
the city or municipality where such assets are located.
Except by decrease of capital stock and as

otherwise allowed by this Code, no corporation shall
distribute any of its assets or property except upon lawful
dissolution and after payment of all its debts and
liabilities.
Following the voluntary or involuntary dissolution of a

corporation, liquidation is the process of settling the affairs
of said corporation, which consists of adjusting the debts
and claims, that is, of collecting all that is due the
corporation, the settlement and adjustment of claims
against it and the payment of its just debts. More
particularly, it entails the following:
Winding up the affairs of the corporation means the

collection of all assets, the payment of all its creditors, and the
distribution of the remaining assets, if any among the
stockholders thereof in accordance with their contracts, or if
there be no special contract, on the basis of their respective
interests. The manner of liquidation or winding up may be
provided for in the corporate by-laws and this would prevail
unless it is inconsistent with law.
It may be undertaken by the corporation itself, through its

Board of Directors; or by trustees to whom all corporate assets
are conveyed for liquidation; or by a receiver appointed by the
SEC upon its decree dissolving the corporation."8 (Emphasis
supplied)
To conclude, there is no question as to the dissolved status of

Officemetro based on the Order dated August 5, 2013 of the RTC. However,
the Court En Bane reiterates that unless the process of Officemetro's
liquidation is completed and the subject taxes have been paid in accordance
with an approved liquidation plan, Officemetro's obligation still subsists.
WHEREFORE, the instant Motion for Partial Reconsideration 1s

DENIED, for lack of merit.
SO ORDERED.
8
Id., citing China Banking Corp. v. M Michelin & Cie, 58 Phi1261, 266 (1933) and Campos, THE CORPORATION
CODE: COMMENTS, NOTES AND SELECTED CASES (Vol. 2, 1990 ed.), pp. 415,415-416.
RESOLl!TION
C.T.A. EB NOS. 1210 & 1213
PageS ofS
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dUANITO C. CASTANEDA, JR.
Associate Justice
WE CONCUR:
~G. DEL
Presiding Justice
LOVELL~
'
BAUTISTA E~.UY
Associate Justice As;~~stice
p (On Leave)
CAESAR. A. CASANOVA ESPERANZA R. FABON·VICTORINO
Associate Justice Associate Justice
~N,M~~G~ ~- ~ -1: --
CIELITO N. MINDARO·GRULLA MA. BELEN M. RINGPIS·LIBAN
Associate Justice Associate Justice

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REPUBLIC OF THE PHILIPPINES

COURT OF TAX APPEALS

COMMISSIONER OF INTERNAL CTA EB NO. 1210

For resolution of this Court is Officemetro Philippines, Inc.'s

In the instant motion, Officemetro prays for the Court En Bane to

The instant motion stemmed from Officemetro's

To remove Officemetro's cloud of confusion as to whether the said

"Art. 1231. Obligations are extinguished:

(2) By the loss of the thing due;

(3) By the condonation or remission of the debt;

(4) By the confusion or merger of the rights of

"xxx Liquidation is a necessary consequence of the

SEC. 122. Corporate liquidation. Every

At any time during said three (3) years, said

Upon winding up of the corporate affairs, any asset

Except by decrease of capital stock and as

Following the voluntary or involuntary dissolution of a

Winding up the affairs of the corporation means the

It may be undertaken by the corporation itself, through its

To conclude, there is no question as to the dissolved status of

WHEREFORE, the instant Motion for Partial Reconsideration 1s

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