TRIDHARMA MARKETING CORPORATION VS.

COURT OF TAX APPEALS

G.R. No. 215950; June 20, 2016

FACTS:
BIR assessed Tridharma Marketing Corporation with various tax deficiencies amounting
to more than 4.640 billion pesos. Protest was filed. Tridharma Marketing Corporation
paid 5.8 million pesos for its assessment on WTC, DST and EWT and reiterated its
interest to compromise alleged IT and VAT deficiencies. FDDA was issued at 4.473
billion pesos.

Tridharma Marketing Corporation appealed the CIR's decision to the CTA 2D and
moved for the suspension of tax collection against it. However, the CTA 2D required
Tridharma Marketing Corporation to post bond equivalent to 150% of the assessment
within 15 days from notice. Hence, Tridharma Marketing Corporation was ordered to
post 6.701 billion pesos as bond. Tridharma Marketing Corporation petitioned for
certiorari.

ISSUES:
[1] Did the CTA abuse its discretion in requiring bond that Tridharma Marketing
Corporation is legally and physically incapable of procuring?
[2] Was the bond requirement properly issued considering Tridharma Marketing
Corporation 's allegation of illegal collection?

HELD:
[1] Yes, the CTA abused its discretion. Although the Tax Code empowers the CTA to
suspend tax collection by requiring either the (1) deposit of the tax claimed or (2) surety
bond for not more than double the amount, Tridharma Marketing Corporation was able
to show that it is not capable of producing the amount of 6.701 billion pesos as its net
worth is only almost 1 billion pesos. Plus, it is legally impossible to procure the bond
from bonding companies that are limited in their risk assumptions.

What the CTA should have done is to conduct a preliminary hearing on Tridharma
Marketing Corporation 's ability to deposit or procure bond. While there is legal
justification for the bond requirement, the power to tax is not the power to destroy. For
the bond to equal the deficiency assessment would practically deny to the petitioner the
meaningful opportunity to contest the validity of the assessments, and would likely even
impoverish it as to force it out of business.

[2] The bond requirement was not properly issued. Section 11 of R.A. 1125, as amended,
indicates that the requirement of the bond as a condition precedent to suspension of the
collection applies only in cases where the processes by which the collection sought to be
made by means thereof are carried out in consonance with the law, not when the
processes are in plain violation of the law that they have to be suspended for
jeopardizing the interests of the taxpayer.

The Court is not in the position to rule on the correctness of the deficiency assessment,
which is a matter still pending in the CTA. The determination of whether the methods,
employed by the CIR in its assessment, jeopardized the interests of a taxpayer for being
patently in violation of the law is a question of fact that calls for the reception of
evidence.