April 21, 1989
172 SCRA 653
FACTS
Sampaguita Pictures incurred obligations for percentage, withholding, and amusement taxes in the amount of P10,268.41.
To settle said amount, Sampaguita Pictures tendered and delivered to the Office of Municipal Treasurer of Bocaue, Bulacan, a total of 16 back pay negotiable certificates of indebtedness in the sum of P16,763.60.
The BIR did not accept the certificates as valid payment and demanded that the payment of tax liabilities be made in cash. Sampaguita Pictures did not respond to the demands of BIR.
As a result, OSG filed the present case, arguing that the payment was void since Sampaguita Pictures was not the original holder of the certificates and that under the law, only original holders of back pay certificates are allowed to use the same in payment of their own taxes.
RULING
The Court ruled in favor of Sampaguita Pictures.
Sampaguita Pictures, as assignee of the certificates of indebtedness, had succeeded to the original rights of the holders thereof and was therefore authorized to demand payment by the Republic of the indebtedness thereby represented.
Given the present circumstances, Sampaguita Pictures was indeed entitled to judgment upon its counterclaim for the payment by the Republic of its indebtedness by virtue of the back pay certificates in question, with the ultimate result that the claim and counterclaim of the Government and Sampaguita Pictures respectively will offset each other.
