The Supreme Court has issued a writ of preliminary injunction stopping the Court of Tax Appeals from requiring boxing champ Emmanuel “Manny” Pacquiao and his wife Jinkee to deposit P3.2-billion cash bond or P4.9-billion surety bond as a condition to suspend the garnishment order against his assets. Pacquiao, an incumbent congressman who is running for a Senate seat, was issued the taxman’s garnishment order due to his alleged failure to pay taxes that have ballooned to over P3 billion for the period 2008 and 2009.
In an en banc resolution released on Wednesday, the SC remanded the case to the CTA’s First Division which was also ordered to conduct a preliminary hearing to determine whether the dispensation or reduction of the required cash deposit or bond is proper to restrain the collection of deficiency taxes assessed against the couple.
“If required, the Court of Tax Appeals, First Division, shall proceed to compute the amount of the bond in accordance with the guidelines aforestated…It should also take into account the amounts already paid by the petitioners,” the tribunal ruled.
“After posting of the required bond, or if the Court of Tax Appeals, First Division, determines that no bond is necessary, it shall proceed to hear and resolve the petition for review pending before it,” it said.
In their petition, the Pacquiao couple asked the SC to set aside the April 22, 2014 and the July 11, 2014 resolutions which required them to post cash bond as a prerequisite for the lifting of the garnishment of their properties.
The spouses even accused the BIR of resorting to fishing expedition to pin him down on a P3-billion tax evasion.
They said the BIR violated their right to due process when it proceeded with the tax collection process despite its failure to serve them a Final Decision on Disputed Assessment (FDDA).
An FDDA is needed to give the taxpayer the opportunity to question the final decision of the BIR.
According to them, the CTA acted with grave abuse of discretion when it required them to post a bond despite the BIR’s violation.
SC spokesman Theodore Te stressed that the high court ruled that the CTA “has ample authority to issue injunctive writs to restrain the collection of taxes and to even dispense with the deposit of the amount claimed or the filing of the required bond, whenever the method employed by the Commissioner of Internal Revenue (CIR) in the collection of taxes jeopardizes the interest of the taxpayer for being in violation of the law.”
However, Te explained that the magistrates found no basis to determine whether the imposition of the cash bond is appropriate since the CTA has not made even a preliminary determination of whether the CIR had violated the law in its effort to collect taxes from the Pacquiaos.
“Absent any such determination, the Court cannot make any factual finding and settle the issue of whether the petitioners should comply with the security requirement; this would be a finding of fact that would require reception of evidence and the CTA would be in a better position to make this finding,” it ruled.
The BIR, through Solicitor General Florin Hilbay, argued that Section 11 of Republic Act No. 1125 clearly requires the posting of a bond in order to suspend the payment the levy, distraint and sale of any property to satisfy the taxpayer’s tax liabilities.
According to the chief state lawyer, the requirement to post bond to suspend tax collection is to ensure that the taxpayer would not become insolvent during pendency of the proceedings.
Last August 2014, the SC issued a temporary restraining order that indefinitely enjoined the CTA from enforcing its resolution ordering Pacquiao and his wife to post over P3.2 billion cash bond or P4 billion surety bond as a condition for the lifting of a garnishment order issued by the BIR for their failure to pay their deficiency taxes.