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All Jurisprudence based

0 tracked cards Commercial and Taxation Laws

DeltaX Industries, Inc., a VAT-registered taxpayer, is assessed PHP 14,350,000 by the BIR for deficiency in value-added tax for calendar year 2024. The BIR issues a collection order pending judgment on the assessment. DeltaX files for a temporary restraining order to prevent tax collection while the dispute is reviewed. The trial court denies the TRO. DeltaX pays the PHP 14,350,000 under protest and later files a separate action for refund and for a declaration that the assessment is invalid. (a) Identify the controlling doctrine governing whether an injunction may restrain tax collection. (b) Distinguish this doctrine from the ordinary rule on injunctions. (c) Apply the doctrine to DeltaX’s facts: should the injunction have been granted? what is the proper remedy, and what outcome can DeltaX expect in the refund action?

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Injunction Not Available to Restrain Tax Collection; the proper remedy is to pay the tax under protest and sue for a refund (and for a declaration of invalidity); ordinary injunctions apply the usual Rule on Preliminary Injunctions, but they do not override the tax-collection rule. The governing doctrine is the Tax Suspension Rule, which allows stays of collection if the taxpayer posts a bond and there is an imminent threat to the taxpayer’s business; the remedy is a stay of collection during review. Injunction Not Available to Restrain Tax Collection; the taxpayer may still seek administrative refund remedies with the BIR, but injunctive relief cannot suspend collection. The proper remedy is to file a declaratory relief action to declare the assessment invalid and to restrain collection; no protest payment is required.

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