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BIR v. LEPANTO CERAMICS

FACTS:

Respondent Lepanto Ceramics, Inc. (LCI) filed a petition for corporate rehabilitation under the Financial Rehabilitation and Insolvency Act (FRIA) of 2010. LCI alleged financial difficulties and insolvency, with tax liabilities amounting to at least P6,355,368.00. The Rehabilitation Court issued a Commencement Order declaring LCI under corporate rehabilitation and suspending actions for the enforcement of claims against LCI. Despite this, BIR officials Misajon, Balbido, and Martirez sent LCI a notice of informal conference and a formal letter of demand for deficiency taxes. LCI filed a petition for indirect contempt against the BIR officials, asserting that their actions violated the Commencement Order. The RTC Br. 35 found Misajon, et al. guilty of indirect contempt and ordered them to pay a fine. Misajon, et al. moved for reconsideration, but it was denied. Hence, this petition.

ISSUES:

  1. Whether or not the Regional Trial Court (RTC) Branch 35 has jurisdiction over the petition for indirect contempt.

  2. Whether or not the termination of the rehabilitation proceedings rendered moot the petition for indirect contempt.

  3. Whether or not the act of petitioners in sending a notice of informal conference and a Formal Letter of Demand to the respondent amounts to a defiance of the Commencement Order.

RULING:

  1. The RTC Branch 35 has jurisdiction over the petition for indirect contempt because it is docketed, heard, and decided separately from the principal action.

  2. The termination of the rehabilitation proceedings and the lifting of the Commencement Order did not render moot the petition for indirect contempt because the acts complained of were already consummated.

  3. The act of petitioners in sending a notice of informal conference and a Formal Letter of Demand to the respondent amounts to a defiance of the Commencement Order as they were done for the purpose of pursuing and enforcing a claim for deficiency taxes in clear defiance of the said order.

PRINCIPLES:

  • The RTC has jurisdiction over a petition for indirect contempt when it is docketed, heard, and decided separately from the principal action.

  • The termination of the rehabilitation proceedings and the lifting of the Commencement Order do not render moot a petition for indirect contempt if the acts complained of were already consummated.

  • The act of sending a notice of informal conference and a Formal Letter of Demand can amount to a defiance of a court order if it is done for the purpose of pursuing and enforcing a claim in clear defiance of said order.