Bureau of Internal Revenue vs. TICO Insurance Company, Inc., Glowide Enterprises, Inc., and Pacific Mills, Inc.

A tax lien under Section 219 of the Tax Code is not valid against a prior judgment creditor until notice of such lien is filed with the Register of Deeds. Consequently, the rights of a purchaser at an execution sale, which retroact to the date of the annotation of the levy on attachment, prevail over a tax lien annotated after such levy but before the sale.

Respondent TICO Insurance Company, Inc. (TICO) was placed under liquidation by the Insurance Commission. Prior to liquidation, its clients, Glowide and PMI, obtained a final and executory judgment against TICO for unpaid fire insurance proceeds. To satisfy this judgment, they caused a writ of preliminary attachment and, later, a writ of execution to be annotated on TICO's condominium units (CCT Nos. 39452 and 39453) in December 2000 and June 2002, respectively. The units were sold at a public auction to Glowide and PMI in 2004, and after the redemption period lapsed, a final deed of sale was issued in their favor in 2005. Separately, the BIR assessed TICO for deficiency taxes for 1996-1997. Despite TICO's protest, the tax liability remained, prompting the BIR to issue a warrant of distraint/levy and a notice of tax lien, which it annotated on the same condominium titles in February 2005. TICO then filed an interpleader action to determine which claimant had a superior right to the units.

• Nature of the Action: TICO filed an interpleader suit to determine whether Glowide and PMI or the BIR had a superior right to two condominium units it owned.
• Glowide and PMI's Claim: Based on a final judgment for unpaid insurance proceeds. They caused a levy on attachment to be annotated on the titles on December 22, 2000, and a levy on execution on June 13, 2002. The units were sold to them at a public auction in April 2004, and after the redemption period expired, they received a final deed of sale in April 2005.
• The BIR's Claim: Based on deficiency tax assessments against TICO for 1996-1997. The BIR issued a warrant of distraint/levy and a notice of tax lien, which it annotated on the titles on February 15, 2005.
• RTC Makati Ruling: Found the BIR's tax claim preferred under Articles 2241 and 2242 of the Civil Code.
• CA Ruling: Reversed the RTC, holding that Glowide and PMI's rights, which retroacted to the 2000 levy, were superior to the BIR's lien annotated in 2005. It also found the interpleader improper as it collaterally attacked a final judgment.
• Supreme Court Proceedings: The BIR appealed, but its petition was denied primarily on procedural grounds (late filing of motion for reconsideration) and, alternatively, on the merits.

• Procedural Lapse: The BIR argued that the CA had already admitted its late motion for reconsideration "in the interest of justice," and the Supreme Court should resolve the merits in the interest of substantial justice.
• Propriety of Interpleader: The BIR contended the interpleader was proper to determine which creditor had a better right to TICO's only remaining assets, distinct from the prior case that only established TICO's liability to Glowide and PMI.
• Superiority of Tax Lien: The BIR maintained its tax lien retroacted to the date of assessment (January 31, 2000), which was earlier than Glowide and PMI's levy (December 22, 2000). It also argued the execution proceedings were void for lack of notice to TICO's liquidator and that its claim was an absolute preferred credit under Articles 2241, 2242, and 2246-2249 of the Civil Code.

• Finality of CA Decision: Glowide and PMI asserted that the BIR's failure to timely file its motion for reconsideration rendered the CA decision final and executory.
• Improper Interpleader: They argued the interpleader was a belated, improper collateral attack on the final and executory judgment in their favor from the RTC QC.
• Superior Right via Execution Sale: They maintained their rights over the units vested upon the execution sale and retroacted to the date of the levy's annotation in 2000, prior to the BIR's registered lien in 2005. The auction sale itself conveyed title to them.

• Procedural Bar: Whether the BIR's failure to timely file a motion for reconsideration of the CA Decision bars the instant petition.
• Propriety of Interpleader: Whether TICO's complaint for interpleader is proper or constitutes an impermissible collateral attack on a final judgment.
• Preference of Credits: Whether the BIR's tax lien or Glowide and PMI's rights acquired through execution sale have priority over the subject condominium units.

• Procedural Bar: The petition is barred. The BIR's motion for reconsideration was filed one day late, rendering the CA decision final and executory. The negligence of counsel's staff is not an exceptional circumstance warranting liberal application of procedural rules.
• Propriety of Interpleader: The interpleader is improper. A stakeholder cannot file an interpleader after a claimant has already obtained a final and executory judgment against it, as this would constitute a collateral attack on that judgment. TICO, having been defeated by Glowide and PMI, belatedly used interpleader to relitigate the issue, causing conflicting rulings between co-equal courts (RTC Makati and RTC QC).
• Preference of Credits: Glowide and PMI's rights are superior. The execution sale in their favor retroacted to the date of the annotation of the levy on attachment (December 22, 2000). Under Section 219 of the Tax Code, a tax lien is not valid against a judgment creditor until notice is filed with the Register of Deeds. The BIR's lien was annotated on February 15, 2005, long after Glowide and PMI's rights had attached. Furthermore, TICO's general tax liability is only an ordinary preferred credit under Article 2244 of the Civil Code, while Glowide and PMI's credit, annotated via judicial order, is a special preferred credit under Article 2242(7), which takes precedence with respect to the specific property.

• Doctrine of Finality of Judgments — A decision that has become final and executory is immutable and unalterable, and may no longer be modified in any respect. This doctrine is subject to narrow exceptions, such as the correction of clerical errors or the presence of void judgments.
• Interpleader as a Remedy — Interpleader is proper only when the stakeholder has not yet been subjected to independent liability on the same subject matter. It cannot be used to circumvent or collaterally attack a final and executory judgment already rendered against the stakeholder in favor of one of the claimants.
• Retroactive Effect of Levy and Execution Sale — The rights of a purchaser at an execution sale retroact to the date of the annotation of the levy on attachment or execution. This prior registration creates a preference that prevails over subsequent liens or encumbrances.
• Nature of Tax Lien under the Tax Code — A tax lien under Section 219 of the National Internal Revenue Code attaches to all property of the taxpayer from the time of assessment but is not valid against any mortgagee, purchaser, or judgment creditor until notice thereof is filed with the Register of Deeds.
• Preference of Credits (Special vs. Ordinary) — Credits annotated in the Registry of Property by virtue of a judicial order (Art. 2242(7), Civil Code) are special preferred credits with respect to the specific immovable property. General tax claims of the national government (Art. 2244(9), Civil Code) are ordinary preferred credits and are inferior to special preferred credits concerning the specific property to which the lien has attached.

• "A stakeholder should use reasonable diligence to hale the contending claimants to court. He need not await actual institution of independent suits against him before filing a bill of interpleader... But where he acts with reasonable diligence in view of the environmental circumstances, the remedy is not barred."
• "Once a decision attains finality, it becomes the law of the case irrespective of whether the decision is erroneous or not, and no court — not even the Supreme Court — has the power to revise, review, change or alter the same."
• "The proviso in Section 219 of the Tax Code precludes any effect of the tax lien against any judgment creditor prior to the annotation of the tax lien on the title of the property concerned."
• "Duties, taxes, and fees due the Government enjoy priority only when they are with reference to a specific movable property, under Article 2241(1) of the Civil Code, or immovable property, under Article 2242(1) of the same Code. However, with reference to the other real and personal property of the debtor... the taxes and assessments due the National Government... will come only in ninth place in the order of preference."

• Wack Wack Golf & Country Club, Inc. v. Won, 162 Phil. 233 (1976) — Cited as controlling precedent that an interpleader suit filed after a final judgment has been rendered against the stakeholder in favor of one claimant is barred, as it would be a collateral attack on that judgment.
• Metropolitan Bank and Trust Company v. S.F. Naguiat Enterprises, Inc., 756 Phil. 229 (2015) — Cited for the classification and hierarchy of credits under the concurrence and preference system of the Civil Code, distinguishing special preferred credits (liens) from ordinary preferred credits.
• In Re: Petition for Assistance in the Liquidation of the Rural Bank of Bokod (Benguet), Inc., 540 Phil. 142 (2006) — Cited to explain that general tax claims of the government, other than those specifically mentioned in Articles 2241(1) and 2242(1), are ordinary preferred credits under Article 2244(9).

• Section 219, National Internal Revenue Code (Tax Code) — Provides that a tax lien attaches from the time of assessment but shall not be valid against any mortgagee, purchaser, or judgment creditor until notice is filed with the Register of Deeds. Applied to hold that the BIR's lien was unenforceable against Glowide and PMI, a prior judgment creditor, until its annotation in 2005.
• Article 2242(7), Civil Code — Lists as a preferred credit with respect to specific immovable property: "Credits annotated in the Registry of Property, in virtue of a judicial order, by attachments or executions, upon the property affected, and only as to later credits." Applied to classify Glowide and PMI's credit as a special preferred credit.
• Article 2244(9), Civil Code — Lists as a preferred credit with reference to other property of the debtor: "Taxes and assessments due the national government, other than those mentioned in Articles 2241, No. 1, and 2242, No. 1." Applied to classify the BIR's general tax claim as an ordinary preferred credit, inferior to the special preferred credit.
• Section 1, Rule 52, Rules of Court — Prescribes a non-extendible 15-day period for filing a motion for reconsideration of a judgment or final resolution. Applied to dismiss the BIR's petition for its failure to timely file its motion for reconsideration.

• Associate Justice Perlas-Bernabe (Chairperson)
• Associate Justice J. Lopez
• Associate Justice Dimaampao
• Associate Justice Marquez