Specific Tax on Coal Removed from Its Coal Mines

April 4, 1960 BIR RULING NO. 170-60 The Acting Regional Director Regional District No. 8 Iloilo City S i r : This is in connection with your letter dated January 21, 1960 relative to the internal revenue tax case of the Sinukuan Coal Mining Co., Inc. involving the amount of P4,546.00 representing specific tax on coal removed from its coal mines located in Semirata, Caluya, Antique, requesting the opinion of this Office as to whether or not the assessment can be validly enforced against the officers of said corporation which was dissolved already. cdll In reply thereto, there is quoted hereunder authorities on the matters: "In general under the modern rule, debt due to and from a corporation are not extinguished by its dissolution. Thus, it has been stated in reference to the effect of dissolution upon taxes due from a corporation that the hands of the government are not paralyzed by its dissolution; that while the government cannot of course, collect taxes from a defunct corporation, it loses thereby none of its right to assess taxes which have been due from the corporation and to collect them from persons, who by reason of transactions with the corporation hold property against which the tax can be enforced and that the legal death of the corporation no more prevents such action than would the physical death of an individual prevent the government from assessing taxes against him and collecting them from his administrator, who holds the property which the decedent had formerly possessed." (Wonder Bakeries Co., vs. U.S. 1934 Ct. Cl. 6n F. Supp. 228.) "The dissolution of a corporation cannot deprived its creditors or stockholders of their right in its property; and if the common law affords them no adequate remedy, they may obtain relief in equity. (Foyer vs. Columbian Insurance Co. (1868) 99 Mass. 267; 96 Am. Dec. 747.) "A creditor of a dissolved corporation may follow assets thereof as in the nature of a trust fund, into the hands of stockholders. (McWilliams vs. Excelsior Coal Co. (1924 298 Fed. 384 C.C.A.) Moreover, our Supreme Court in a decision promulgated on October 23, 1956 in the case of "Tan Tiong Bio, et al. and/or Central Syndicate' vs. Bureau of Internal Revenue", G.R. NO. L-8800 held that the officers and directors of a defunct corporation can be held liable for unpaid deficiency assessments on the defunct corporation as successors-in-interest to the corporate property. Inasmuch as the corporation was able to extract 18,184 tons of coal which was sold for P340,000.00 it is possible that at the time of its dissolution the corporation had assets which were distributed to the officers and stockholders of the corporation. In view thereof, you are therefore instructed to proceed with the collection of the aforesaid amount against the officers of the defunct corporation. aisadc Very truly yours, MELECIO R. DOMINGO Commissioner of Internal Revenue