Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 192300 November 24, 2014
NATIONAL POWER CORPORATION, Petitioner,
vs.
MUNICIPAL GOVERNMENT OF NAVOTAS,
SANGGUNIANG BAYAN OF NAVOTAS AND MANUEL T. ENRIQUEZ, in his capacity as
Municipal Treasurer of Navotas, Respondents.
FACTS : Petitioner National
Power Corporation (NPC) is a government owned and controlled corporation. 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. On the respective dates of November 16, 1988 and June 29, 1992,
petitioner entered into a Build-Operate-and-Transfer Project Agreements (BOTs)
with Mirant Navotas I Corporation and Mirant Navotas II Corporation. petitioner
has the obligation to pay for all taxes, except business taxes, relative to the
implementation of the agreements. For the 1st quarter of 2003, petitioner paid
respondent Municipality, real property taxes in the amounts of P3,382,715.88
and P4,973,869.83 for the MNC-I and MNC-II power stations, respectively. After
the said quarter, petitioner stopped paying the real property taxes, claiming
exemption from payment thereon pursuant to Section 234(c) of the Local
Government Code (LGC) of 1991. On May 25, 2005, MNC-II received four notices
from respondent Municipal Treasurer informing MNC-I and MNC-II of their real
property tax delinquencies for the 2nd, 3rd, and 4th quarters of calendar year
2003 and for the calendar years 2004 and 2005. On November 21, 2005, a Warrant
of Levy was received from respondent Municipal Treasurer. On December 16, 2005,
petitioner filed before the Regional Trial Court (RTC) of Malabon City, a
Petition for Declaratory Relief, Annulment of Notice of Delinquency, Warrant of
Levy, and Notice of Sale with prayer for the issuance of a Writ of Preliminary
Injunction and Temporary Restraining Order (TRO). Petitioner’s application for
the issuance of a TRO was denied by the RTC. Respondents proceeded withthe
scheduled public auction. Considering that there were no bidders for the
purchase of the subject properties, the same were forfeited in favor of
respondent Municipality. Petitioner filed an amended petition before the RTC
seeking to declare as null and void the public auction. The RTC denied the
petition on May 23, 2007. a Petition for Review with application for Temporary
Restraining Order and/or Order of Suspension of Collection and Writ of
Preliminary Injunctionwas seasonably filed with this Court though registered
mail on July 27, 2007 and received on August 2, 2007. In a Decision promulgated
on July 18, 2008, the Second Division dismissed the Petition and sustained the
RTC’s Decision dated May 23, 2007. Petitioner’s Motion for Reconsideration
filed on August 6, 2008 was likewise denied in a Resolution dated January 9,
2009. petitioner filed a petition before the CTA En Banc. In a Decision dated
March 1, 2010, the CTA En Banc affirmed the CTA Second Division’s
ISSUE : 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
HELD: Indeed, 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. We,
therefore, disagree with the conclusion of the CTA En Banc that real property
taxes have always been treated by our laws separately from local taxes. Based
on the foregoing, the general meaning of "local taxes" should be
adopted in relation to Paragraph (a)(3) of Section 7 of R.A. 9282, which
necessarily includes real property taxes. Second, as correctly pointed out by
petitioner, when the legality or validity of the assessment is in question, and
not its reasonableness or correctness, appeals to the LBAA, and subsequently to
the CBAA, pursuant to Sections 22614 and 22915 of the LGC, are not necessary.
Stated differently, in the
event that the taxpayer questions the authority and power of the assessor to
impose the assessment, and of the treasurer to collect the real property tax,
resort to judicial action may prosper. 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., 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. Accordingly, if the only issue is
the legality or validity of the assessment – a question of law – direct recourse
to the RTC is warranted. 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 CT A En Banc erred in dismissing the petition for
review en bane, 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
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