232 Tan Tiong Bio vs.
CIR  TC rules in favor of BIR, and Tan Tiong
EMERGENCY RECIT:
 Central Syndicate, a domestic
corporation, appealed the assessment
by the Collector of Internal Revenue
against it of deficiency sales taxes
before the CTA. During the pendency of
this appeal, the Central Syndicate was
dissolved due to the expiration of its
corporate existence. Pursuant to a
motion filed by the Collector, the CTA
dismissed the case based on the lack of
personality of the defunct corporation to
institute the appeal. Its directors and
officers, herein petitioners, appealed the
dismissal to SC.
 The SC held that the CTA should have
allowed the substitution of the
petitioners in place of Central Syndicate.
The SC remanded the case to the CTA
where it was tried on the merits. The
CTA held petitioners solidarily liable for
deficiency sales taxes. The petitioners
appealed to the SC, arguing that they
cannot be held liable for the deficiency
assessment against the defunct
corporation.
 The SC denied the appeal.
DOCTRINE: Although the 3 year period has
already expired, an unpaid creditor may still
sue the trustee id there is one, or if the
circumstances so warrant, the court may
allow him to follow the corporate assets in th
hands of stockholders who received the
same as liquidating dividends.
FACTS:
 Tan Tiong Bio et. al. are incorporators
and directors of the Central Syndicate.
The company realized a net profit of
close to P300K, and sale of goods was
the only transaction undertaken by it.
 BIR sues the Tan Tiong et. al. for
deficiency sales taxes and surcharges
on surplus goods purchased by the
corporation from the Foreign Liquidation
Commission.
 Corporation was dissolved, and Tan
Tiong and company substituted
themselves as parties, thereby
becoming successors-in-interests in the
corporate assets after liquidation.
et. al. appeals, claiming that they cannot
be held liable for tax liability there being
no law authorizing the government to
proceed against stockholders of a
defunct corporation as transferees of the
corporate assets upon liquidation.
 If they were liable, it is only to the extent
of the benefits derived by them, and that
the action is barred by prescription due
to the 3-year limit in the corporation law.
ISSUE:
WON the sales tax can be enforced against
the corporation’s successors-in-interest,
even if corporation has been dissolved by
expiration of corporate existence. (YES)
HELD:
The creditor of a dissolved
corporation may follow its assets, as in the
nature of a trust fund, once they pass into
the hands of the stockholders. The
dissolution of a corporation does not
extinguish the debts due or owing to it.
An indebtedness of a corporation to
the government for income and excess profit
taxes is not extinguished by the dissolution
of the corporation. The hands of
government cannot, of course, collect taxes
from a defunct corporation, it loses thereby
none of its rights to assess taxes which had
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. Thus, petitioners can be held
personally liable for the corporation's taxes,
being successors-in-interest of the defunct
corporation.