G.R. No. 192300, November 24, 2014
NATIONAL POWER CORPORATION, Petitioner, v. MUNICIPAL GOVERNMENT OF NAVOTAS, SANGGUNIANG BAYAN OF NAVOTAS AND MANUEL T. ENRIQUEZ, IN HIS CAPACITY AS MUNICIPAL TREASURER OF NAVOTAS, Respondents.
D E C I S I O N
Petitioner National Power Corporation (NPC) is a government-owned and controlled corporation organized and existing under and by virtue of Republic Act (RA) No. 6395, as amended, with principal office address at NPC Office Building Complex, corner Quezon Avenue and BIR Road, East Triangle, Diliman, Quezon City.Respondent Municipal Government of Navotas, is a local government unit, hosting petitioner’s Navotas Power Stations I and II located in the Municipality of Navotas. It may be served with summons and court processes through the Municipal Mayor, at the Municipal Hall Building, Navotas, Metro Manila.
In a letter dated July 26, 2005, petitioner reiterated to the Municipal Assessor of Navotas their position that the subject properties are exempt from real property tax.
First and Second Notices, addressed to Hopewell Energy (Phils.) Corp. P59,505,580.10 First and Second Notices, addressed to Hopewell Tileman Phil. Corp. 88,792,759.05 Total P148,298,339.15
WHEREFORE, finding no reversible error in the assailed Decision promulgated on July 18, 2008 and the Resolution dated January 9, 2009, the instant Petition for Review is hereby DISMISSED for lack of merit.Unfazed, petitioner filed a Motion for Reconsideration but the same was denied in a Resolution dated May 6, 2010.
WHEREFORE, it is respectfully prayed that the Decision dated March 1, 2010 and Resolution dated May 6, 2010 of the Court of Tax Appeals En Banc be REVERSED and SET ASIDE; a new one be rendered declaring:chanroblesvirtuallawlibraryThus, petitioner assigns the following errors for this Court’s resolution:
1) that the Court of Tax Appeals has jurisdiction over the subject matter of the case; 2) petitioner as exempt from paying real property taxes over the properties subject of the present case; and 3) the assailed Notices of Delinquency, Warrant of Levy and Notice of Sale and the Auction Sale and Forfeiture as null and void.
Petitioner prays for such other reliefs just and equitable under the premises.5
THE COURT OT TAX APPEALS EN BANC ERRED IN SUSTAINING THE DECISION OF THE COURT OF TAX APPEALS SECOND DIVISION WHICH HELD THAT:chanroblesvirtuallawlibraryIn essence, the issue is whether or not the CTA Second Division has jurisdiction to review the decision of the RTC which concerns a petition for declaratory relief involving real property taxes.
1) IT HAS NO JURISDICTION OVER THE INSTANT PETITION. 2) APPEALS TO THE LBAA AND CBAA ARE REQUIRED BEFORE THE PETITION DATED DECEMBER 12, 2005 (AS AMENDED ON JANUARY 5, 2006) FOR DECLARATORY RELIEF FILED BY PETITIONER BEFORE THE REGIONAL TRIAL COURT MAY BE GIVEN DUE COURSE.6
Sec. 7. Jurisdiction. – The CTA shall exercise:chanroblesvirtuallawlibrarySuch authority is echoed in Section 3, Rule 4 of the Revised Rules of the CTA, which enumerates the jurisdiction of the CTA, sitting as a Division, to wit:
(a) Exclusive appellate jurisdiction to review by appeal, as herein provided:
x x x8
- Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue;
- Inaction by the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue, where the National Internal Revenue Code provides a specific period of action, in which case the inaction shall be deemed a denial;
- Decisions, orders or resolutions of the Regional Trial Courts in local tax cases originally decided or resolved by them in the exercise of their original or appellate jurisdiction;
- Decisions of the Commissioner of Customs in cases involving liability for customs duties, fees, or other monetary charges, seizure, detention or release of property affected, fines, forfeitures or other penalties in relation thereto, or other matters arising under the Customs Laws or other laws administered by the Bureau of Customs;
- Decisions of the Central Board of Assessment Appeals in the exercise of its appellate jurisdiction over cases involving the assessment and taxation of real property originally decided by the provincial or city board assessment appeals;
- Decisions of the Secretary of Finance on customs cases elevated to him automatically for review from decisions of the Commissioner of Customs which are adverse to the Government under Section 2315 of the Tariff and Customs Code;
- Decisions of the Secretary of Trade and Industry, in the case of nonagricultural product, commodity or article, and the Secretary of Agriculture in the case of agricultural product, commodity or article, involving dumping and countervailing duties under Section 301 and 302, respectively, of the Tariff and Customs Code, and safeguard measures under Republic Act No. 8800, where either party may appeal the decision to impose or not to impose said duties;
Section 3. Cases Within the Jurisdiction of the Court In Division. – The Court Division shall exercise:chanroblesvirtuallawlibraryIndeed, the CTA, sitting as Division, has jurisdiction to review by appeal the decisions, rulings and resolutions of the RTC over local tax cases, which includes real property taxes. This is evident from a perusal of the Local Government Code (LGC) which includes the matter of Real Property Taxation under one of its main chapters. Indubitably, the power to impose real property tax is in line with the power vested in the local governments to create their own revenue sources, within the limitations set forth by law. As such, the collection of real property taxes is conferred with the local treasurer rather than the Bureau of Internal Revenue.
(a) Exclusive original or appellate jurisdiction to review by appeal the following:chanroblesvirtuallawlibrary
x x x x
(3) Decisions, resolutions or orders of the Regional Trial Courts in local tax cases decided or resolved by them in the exercise of their original jurisdiction;
x x x9
Where words are used which have both, a restricted and a general meaning, the general must prevail over the restricted unless the nature of the subject matter of the context clearly indicates that the limited sense is intended.13Here, the context in which the word “local taxes” is employed does not clearly indicate that the limited or restricted view was intended by the legislature. In addition, the specification of real property tax assessment under Paragraph (a)(5) of Section 7 of R.A. 9282, in relation to the decisions of the CBAA, is only proper given that the CBAA has no jurisdiction, either original or appellate, over cases involving local taxes other than real property taxes.
Respondents argue that this case is premature because petitioners neither appealed the questioned assessments on their properties to the Board of Assessment Appeal, pursuant to Sec. 226, nor paid the taxes under protest, per Sec. 252.Accordingly, if the only issue is the legality or validity of the assessment – a question of law – direct recourse to the RTC is warranted.
We do not agree. Although as a rule, administrative remedies must first be exhausted before resort to judicial action can prosper, there is a well-settled exception in cases where the controversy does not involve questions of fact but only of law. In the present case, the parties, even during the proceedings in the lower court on 11 April 1994, already agreed "that the issues in the petition are legal", and thus, no evidence was presented in said court.
In laying down the powers of the Local Board of Assessment Appeals, R.A. 7160 provides in Sec. 229 (b) that "(t)he proceedings of the Board shall be conducted solely for the purpose of ascertaining the facts . . . ." It follows that appeals to this Board may be fruitful only where questions of fact are involved. Again, the protest contemplated under Sec. 252 of R.A. 7160 is needed where there is a question as to the reasonableness of the amount assessed. Hence, if a taxpayer disputes the reasonableness of an increase in a real estate tax assessment, he is required to "first pay the tax" under protest. Otherwise, the city or municipal treasurer will not act on his protest. In the case at bench, however, the petitioners are questioning the very authority and power of the assessor, acting solely and independently, to impose the assessment and of the treasurer to collect the tax. These are not questions merely of amounts of the increase in the tax but attacks on the very validity of any increase.17
Section 234. Exemptions from Real Property Tax. - The following are exempted from payment of the real property tax:chanroblesvirtuallawlibraryAs can be gleaned from the foregoing, the issue is clearly legal given that it involves an interpretation of the contract between the parties vis-à-vis the applicable laws, i.e., which entity actually, directly and exclusively uses the subject machineries and equipment. The answer to such question would then determine whether petitioner is indeed exempt from payment of real property taxes. Since the issue is a question of law, the jurisdiction was correctly lodged with the RTC.
(a) Real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial use thereof has been granted, for consideration or otherwise, to a taxable person; (b) Charitable institutions, churches, parsonages or convents appurtenant thereto, mosques, non-profit or religious cemeteries and all lands, buildings, and improvements actually, directly, and exclusively used for religious, charitable or educational purposes; (c) All machineries and equipment that are actually, directly and exclusively used by local water districts and government owned or controlled corporations engaged in the supply and distribution of water and/or generation and transmission of electric power; (d) All real property owned by duly registered cooperatives as provided for under R.A. No. 6938; and (e) Machinery and equipment used for pollution control and environmental protection.
Except as provided herein, any exemption from payment of real property tax previously granted to, or presently enjoyed by, all persons, whether natural or juridical, including all government-owned or controlled corporations are hereby withdrawn upon the effectivity of this Code.
There is no dispute that Section 234 of the Local Government Code exempts petitioner from payment of real property tax due on its machineries located at MNC-1 and MNC-2 power stations.20The foregoing was not disputed by respondents.
If the legality of the real property tax assessment is at issue, the well pronounced ruling and ratiocination made by the Supreme Court in the case of Ty vs. Trampe is applicable. There, the Supreme Court notes:We find the reasoning of the CTA En Banc quite illogical. For one, it held that unlike Ty, the resolution of the question of law submitted by petitioner requires proof of facts;22 hence, resort to the LBAA is necessary. However, instead of sustaining the requirement of payment under protest under Section 25223 of the LGC, the CTA En Banc found the payment of protest no longer necessary given the availing circumstances of the case. If indeed the Court a quo finds the present case to fall under the jurisdiction of the LBAA, and then the CBAA on appeal, the dispensation with the requirement of payment under protest would be devoid of merit and contrary to law and jurisprudence.Again, the protest contemplated under Sec. 252 of R.A. 7160 is needed where there is a question as to the reasonableness of the amount assessed. Hence, if a taxpayer disputes the reasonableness of an increase in a real estate tax assessment, he is required to "first pay the tax" under protest. Otherwise, the city or municipal treasurer will not act on his protest. In the case at bench however, the petitioners are questioning the very authority and power of the assessor, acting solely and independently, to impose the assessment and of the treasurer to collect the tax. These are not questions merely of amounts of the increase in the tax but attacks on the very validity of any increase.In a similar way, as there has been an apparent admission by petitioner that it is not questioning the excessiveness or reasonableness of the real property tax assessment, but the legality thereof; there is no need for petitioner to pay the real property tax assessment before initiating a protest.
At this point, although we agree with petitioner on it stance that payment under protest is not necessary, we still maintain the view that exhausting the available remedies of lodging an appeal before the LBAA and CBAA before availing judicial intervention is still mandatory.21
Section 2. Cases Within the Jurisdiction of the Court En Banc. – The Court En Banc shall exercise exclusive appellate jurisdiction to review by appeal the following:chanroblesvirtuallawlibraryThus, the CTA En Banc erred in dismissing the petition for review en banc, and affirming the CTA Second Division’s position that the RTC has no jurisdiction over the instant case for failure of petitioner to exhaust administrative remedies which resulted in the finality of the assessment.
(a) Decisions or resolutions on motions for reconsideration or new trial of the Court in Divisions in the exercise of its exclusive appellate jurisdiction over:x x x x
(2) Local tax cases decided by the Regional Trial Courts in the exercise of their original jurisdiction;
x x x24
* Designated Acting Member in lieu of Associate Justice Bienvenido L. Reyes, per Special Order No. 1878 dated November 21, 2014.
1 Penned by Presiding Justice Ernesto D. Acosta, with Associate Justices Juanito C. Castañeda, Jr., Lovell R. Bautista, Erlinda P. Uy, Caesar A. Casanova, Esperanza R. Fabon-Victorino, Cielito N. Mindaro-Grulla, and Amelia R. Cotangco-Manalastas, concurring; Olga Palanca-Enriquez, dissenting; rollo, pp. 50-75.
2Id. at 76-79.
3Id. at 51-56.
4Id. at 74. (Emphasis in the original)
5Id. at 43-44.
6Id. at 23.
7 AN ACT EXPANDING THE JURISDICTION OF THE COURT OF TAX APPEALS (CTA), ELEVATING ITS RANK TO THE LEVEL OF A COLLEGIATE COURT WITH SPECIAL JURISDICTION AND ENLARGING ITS MEMBERSHIP, AMENDING FOR THE PURPOSE CERTAIN SECTIONS OF REPUBLIC ACT NO. 1125, AS AMENDED, OTHERWISE KNOWN AS THE LAW CREATING THE COURT OF TAX APPEALS, AND FOR OTHER PURPOSES.
10Gutierrez v. The House of Representatives Committee on Justice, G.R. No. 193459, February 15, 2011, 643 SCRA 198, 244.
12 89 Phil. 246 (1951).
13Marcos v. Chief of Staff, supra, at 248.
14Section 226. Local Board of Assessment Appeals. - Any owner or person having legal interest in the property who is not satisfied with the action of the provincial, city or municipal assessor in the assessment of his property may, within sixty (60) days from the date of receipt of the written notice of assessment, appeal to the Board of Assessment Appeals of the provincial or city by filing a petition under oath in the form prescribed for the purpose, together with copies of the tax declarations and such affidavits or documents submitted in support of the appeal.
15Section 229. Action by the Local Board of Assessment Appeals. -
(a) The Board shall decide the appeal within one hundred twenty (120) days from the date of receipt of such appeal. The Board, after hearing, shall render its decision based on substantial evidence or such relevant evidence on record as a reasonable mind might accept as adequate to support the conclusion.
(b) In the exercise of its appellate jurisdiction, the Board shall have the power to summon witnesses, administer oaths, conduct ocular inspection, take depositions, and issue subpoena and subpoena duces tecum. The proceedings of the Board shall be conducted solely for the purpose of ascertaining the facts without necessarily adhering to technical rules applicable in judicial proceedings.
(c) The secretary of the Board shall furnish the owner of the property or the person having legal interest therein and the provincial or city assessor with a copy of the decision of the Board. In case the provincial or city assessor concurs in the revision or the assessment, it shall be his duty to notify the owner of the property or the person having legal interest therein of such fact using the form prescribed for the purpose. The owner of the property or the person having legal interest therein or the assessor who is not satisfied with the decision of the Board, may, within thirty (30) days after receipt of the decision of said Board, appeal to the Central Board of Assessment Appeals, as herein provided. The decision of the Central Board shall be final and executory.
16 321 Phil. 81 (1995).
17Ty v. Trampe, supra, at 101-102. (Emphasis supplied)
18Olivares v. Marquez, 482 Phil. 183, 191 (2004).
20 Records, p. 41.
21Id. at 73-74. (Emphasis ours)
22Id. at 75.
23Section 252. Payment Under Protest. -
(a) No protest shall be entertained unless the taxpayer first pays the tax. There shall be annotated on the tax receipts the words "paid under protest". The protest in writing must be filed within thirty (30) days from payment of the tax to the provincial, city treasurer or municipal treasurer, in the case of a municipality within Metropolitan Manila Area, who shall decide the protest within sixty (60) days from receipt.
(b) The tax or a portion thereof paid under protest, shall be held in trust by the treasurer concerned.
(c) In the event that the protest is finally decided in favor of the taxpayer, the amount or portion of the tax protested shall be refunded to the protestant, or applied as tax credit against his existing or future tax liability.
(d) In the event that the protest is denied or upon the lapse of the sixty day period prescribed in subparagraph (a), the taxpayer may avail of the remedies as provided for in Chapter 3, Title II, Book II of this Code.