Olivares-vs-marquez.docx

OLIVARES VS MARQUEZ Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the Order dated July 24, 2002 of the Regional Trial Court (Branch 257) of Paraaque City (RTC for brevity), dismissing Civil Case No. 98-0313 on the following grounds: 1. Questions involving tax assessment is within the jurisdiction of the Bureau of Internal Revenue (BIR). 2. It is improper for this Court to prohibit or annul a tax assessment issued by the City Assessors Office since it is legally inherent in the functions of their office. Any complaint or protest thereto should be coursed through the BIR. 3. It appears on record that the City Treasurers Office had already responded to the letter-protest of plaintiff. Hence, the prayer in the complaint asking that the City Treasurer be ordered to act on it is now moot. 4. It is also of judicial notice that at present there is no longer any publication regarding plaintiffs tax delinquency. Hence, the prayer that this kind of publication be ordered stopped is now, likewise, moot.[1] Civil Case No. 98-0313 is a petition for certiorari, prohibition and mandamus filed by petitioners with the RTC on August 18, 1998, questioning the assessment and levy made by the Office of the City Treasurer of Paraaque City on petitioners properties. Petitioners alleged that on July 1, 1998, they received a final notice from the Office of the City Treasurer on their real estate tax delinquencies. They protested said notice in a letter dated July 7, 1998, and sought reinvestigation on the grounds that: (1) some of the taxes being collected have already prescribed and may no longer be collected as provided in Section 194 of the Local Government Code of 1991; (2) some properties have been doubly taxed/assessed; (3) some properties being taxed are no longer existent; (4) some properties are exempt from taxation as they are being used exclusively for educational purposes; and (5) some errors are made in the assessment and collection of taxes due on petitioners properties. They wrote another letter on July 24, 1998, but respondents failed to act thereon. Thus, petitioners sought, among others, the annulment of the assessments and respondents be ordered to act on their protest immediately.[2] Respondents filed a motion to dismiss Civil Case No. 98-0313 on the grounds that: (1) the trial court has no jurisdiction over tax assessment matters; (2) petitioners failed to comply with the requirements of a tax protest; and (3) the petition states no cause of action.[3] Petitioners opposed the motion, arguing that the trial court has jurisdiction over the case as the issue raised pertains to the authority of respondents to assess and collect the real estate taxes. Petitioners cite the case of Ty vs. Trampe,[4] wherein the Court upheld the jurisdiction of the Regional Trial Court (Branch 163) of Pasig to entertain the petition for prohibition as it questions the power of the assessor to impose and collect any tax, and not merely the reasonableness thereof. Ruling in favor of respondents motion to dismiss, the trial court issued the herein assailed order dismissing Civil Case No. 98-0313. The trial court denied petitioners motion for reconsideration.[5] Hence, petitioners filed the herein petition for review raising the following questions of law to be resolved by the Court: FIRST QUESTION OF LAW WHETHER OR NOT THE COURT A QUO HAS JURISDICTION TO TRY THE CASE INVOLVING MATTERS QUESTIONING THE VERY AUTHORITY AND POWER OF THE ASSESSOR TO IMPOSE ASSESSMENT AND OF THE CITY TREASURER TO COLLECT THE TAX. SECOND QUESTION OF LAW WHETHER OR NOT THE COURT A QUO BLATANTLY ERRED [IN] NOT DECLARING THE CONFISCATORY AND OPPRESSIVE NATURE OF THE ASSESSMENTS AS ILLEGAL, VOID AB INITIO, UNCONSTITUTIONAL AND CONSTITUTING DEPRIVATION OF PROPERTY WITHOUT DUE PROCESS OF LAW.[6] The Court rules against petitioners. The petition has no merit. The extraordinary remedies of certiorari, prohibition and mandamus may be resorted to only when there is no other plain, available, speedy and adequate remedy in the course of law.[7] Where administrative remedies are available, petitions for the issuance of these peremptory writs do not lie[8] in order to give the administrative body the opportunity to decide the matter by itself correctly and to prevent unnecessary and premature resort to courts.[9] Republic Act (R.A.) No. 7160, or the Local Government Code of 1991, clearly sets forth the administrative remedies available to a taxpayer or real property owner who is not satisfied with the assessment or reasonableness of the real property tax sought to be collected.[10] Section 252 of R.A. No. 7160 provides:

SEC. 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 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 credits 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 Two, Book II[11] of this Code. (Emphasis supplied) Chapter 3, Title Two, Book II of the Local Government Code, entitled Assessment Appeals, refers to the appellate procedure before the Local Board of Assessment Appeals (LBAA), as provided in Section 226, et seq. of the Code, and the Central Board of Assessment Appeals (CBAA), as provided in Section 230 thereof. Thus, should the taxpayer/real property owner question the excessiveness or reasonableness of the assessment, Section 252 directs that the taxpayer should first pay the tax due before his protest can be entertained. There shall be annotated on the tax receipts the words paid under protest. It is only after the taxpayer has paid the tax due that he may file a protest in writing within thirty days from payment of the tax to the Provincial, City or Municipal Treasurer, who shall decide the protest within sixty days from receipt. In no case is the local treasurer obliged to entertain the protest unless the tax due has been paid. If the local treasurer denies the protest or fails to act upon it within the 60-day period provided for in Section 252, the taxpayer/real property owner may then appeal or directly file a verified petition with the LBAA within sixty days from denial of the protest or receipt of the notice of assessment, as provided in Section 226 of R.A. No. 7160, to wit: SEC. 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 province 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. And, if the taxpayer is not satisfied with the decision of the LBAA, he may elevate the same to the CBAA, which exercises exclusive jurisdiction to hear and decide all appeals from the decisions, orders and resolutions of the Local Boards involving contested assessments of real properties, claims for tax refund and/or tax credits or overpayments of taxes.[12] An appeal may be taken to the CBAA by filing a notice of appeal within thirty days from receipt thereof.[13] From the CBAA, the dispute may then be taken to the Court of Appeals by filing a verified petition for review under Rule 43 of the Rules of Court. The Court is not convinced with petitioners argument that their recourse of filing a petition before the trial court is proper as they are questioning the very authority of respondents to assess and collect the real estate taxes due on their properties, and not merely the correctness of said amount. The well-established rule is that the allegations in the complaint and the character of the relief sought determine the nature of an action.[14] A perusal of the petition before the RTC plainly shows that what is actually being assailed is the correctness of the assessments made by the local assessor of Paraaque on petitioners properties. The allegations in the said petition purportedly questioning the assessors authority to assess and collect the taxes were obviously made in order to justify the filing of the petition with the RTC. In fact, there is nothing in the said petition that supports their claim regarding the assessors alleged lack of authority. What petitioners raise are the following: (1) some of the taxes being collected have already prescribed and may no longer be collected as provided in Section 194 of the Local Government Code of 1991; (2) some properties have been doubly taxed/assessed; (3) some properties being taxed are no longer existent; (4) some properties are exempt from taxation as they are being used exclusively for educational purposes; and (5) some errors are made in the assessment and collection of taxes due on petitioners properties,[15] and that respondents committed grave abuse of discretion in making the improper, excessive and unlawful the collection of taxes against the petitioner[s].[16] Moreover, these arguments essentially involve questions of fact. Hence, the petition should have been brought, at the very first instance, to the LBAA. Under the doctrine of primacy of administrative remedies, an error in the assessment must be administratively pursued to the exclusion of ordinary courts whose decisions would be void for lack of jurisdiction. But an appeal shall not suspend the collection of the tax assessed without prejudice to a later adjustment pending the outcome of the appeal.[17]

Even assuming that the assessors authority is indeed an issue, it must be pointed out that in order for the court a quo to resolve the petition, the issues of the correctness of the tax assessment and collection must also necessarily be dealt with. In Ty vs. Trampe,[18] cited by petitioners, the Court held that jurisdiction over the case was properly vested with the trial court because what was being questioned is the very authority and power of the assessor, acting solely and independently, to impose the assessment and of the treasurer to collect the tax, and not merely of amounts of the increase in the tax. The petitioners therein were questioning the increased real estate taxes imposed by and being collected in Pasig City effective from the year 1994, premised on the legal question of whether or not P.D. No. 921 was repealed by R.A. No. 7160. P.D. No. 921, particularly Section 9 thereof, requires that the schedule of values of real properties in the Metropolitan Manila area shall be prepared jointly by the city assessors in the districts created therein; while Sec. 212 of R.A. No. 7160 states that the schedule shall be prepared by the provincial, city or municipal assessors of the municipalities within the Metropolitan Manila Area for the different classes of real property situated in their respective local government units for enactment by ordinance of the sanggunian concerned. In the present case, the authority of the assessor is not being questioned. Despite petitioners protestations, the petition filed before the court a quo primarily involves the correctness of the assessments, which are questions of fact, that are not allowed in a petition for certiorari, prohibition and mandamus. The court a quo is therefore precluded from entertaining the petition, and it appropriately dismissed the petition. WHEREFORE, the petition is DENIED for lack of merit. SO ORDERED.

Camp John Hay vs CBAA A claim for tax exemption, whether full or partial, does not deal with the authority of local assessor to assess real property tax. Such claim questions the correctness of the assessment and compliance with the Q applicable provisions of Republic Act (RA) No. 7160 or the Local Government Code (LGC) of 1991, particularly as to requirement of payment under protest, is mandatory. Before the Court is a Petition for Review on Certiorari seeking tore verse and set aside the 27 July 2005 Decision1of the Court of Tax Appeals(CTA) En Banc in C.T.A. E.B. No. 48 which affirmed the Resolutions dated 23 May 2003 and 8 September 2004 issued by the Central Board of Assessment Appeals (CBAA) in CBAA Case No. L-37 remanding the case to the Local Board of Assessment Appeals (LBAA) of Baguio City for further proceedings. The facts The factual antecedents of the case as found by the CTA En Banc areas follows: In a letter dated 21 March 2002, respondent City Assessor of Baguio City notified petitioner Camp John Hay Development Corporation about the issuance against it of thirty-six (36) Owner’s Copy of Assessment of Real Property (ARP), with ARP Nos. 01-07040-008887 to 01-07040-008922covering various buildings of petitioner and two (2) parcels of land owned by the Bases Conversion Development Authority (BCDA) in the John Hay Special Economic Zone (JHSEZ), Baguio City, which were leased out to petitioner. In response, petitioner questioned the assessments in a letter dated 3April 2002 for lack of legal basis due to the City Assessor’s failure to identify the specific properties and its corresponding assessed values. The City Assessor replied in a letter dated 11 April 2002 that the subject ARPs (with an additional ARP on another building bringing the total number of ARPs to thirty-seven [37]) against the buildings of petitioner located within the JHSEZ were issued on the basis of the approved building permits obtained from the City Engineer’s Office of Baguio City and pursuant to Sections 201 to 206 of RA No. 7160 or the LGC of 1991. Consequently, on 23 May 2002, petitioner filed with the Board of Tax Assessment Appeals (BTAA) of Baguio City an appeal under Section 2262 of the LGC of 1991 challenging the validity and propriety of the issuances of the City Assessor. The appeal was docketed as Tax Appeal Case No. 2002-003. Petitioner claimed that there was no legal basis for the issuance of the assessments because it was allegedly exempted from paying taxes, national and local, including real property taxes, pursuant to RA No. 7227, otherwise known as the Bases Conversion and Development Act of 1992.3 The Ruling of the BTAA

In a Resolution dated 12 July 2002,4 the BTAA cited Section 7,5 Rule V of the Rules of Procedure Before the LBAA, and enjoined petitioner to first comply therewith, particularly as to the payment under protest of the subject real property taxes before the hearing of its appeal. Subsequently, the BTAA dismissed petitioner’s Motion for Reconsideration in the 20 September 2002 Resolution6 for lack of merit. Aggrieved, petitioner elevated the case before the CBAA through a Memorandum on Appeal docketed as CBAA Case No. L-37. The Ruling of the CBAA The CBAA denied petitioner’s appeal in a Resolution dated 23 May 2003,7 set aside the BTAA’s order of deferment of hearing, and remanded the case to the LBAA of Baguio City for further proceedings subject to a full and up-to-date payment of the realty taxes on subject properties as assessed by the respondent City Assessor of Baguio City, either in cash or in bond. Citing various cases it previously decided,8 the CBAA explained that the deferment of hearings by the LBAA was merely in compliance with the mandate of the law. The governing provision in this case is Section 231, not Section 226, of RA No. 7160 which provides that "appeal on assessments of real property made under the provisions of this Code shall, in no case, suspend the collection of the corresponding realty taxes on the property involved as assessed by the provincial or city assessor, without prejudice to subsequent adjustment depending upon the final outcome of the appeal." In addition, as to the issue raised pertaining to the propriety of the subject assessments issued against petitioner, allegedly claimed to be a tax-exemptentity, the CBAA expressed that it has yet to acquire jurisdiction over it since the same has not been resolved by the LBAA. On 8 September 2004, the CBAA denied petitioner’s Motion for Reconsideration for lack of merit.9 Undaunted by the pronouncements in the abovementioned Resolutions, petitioner appealed to the CTA En Banc by filing a Petition for Review under Section 11 of RA No. 1125, as amended by Section 9 of RA No. 9282, on 24 November 2004, docketed as C.T.A. EB No. 48, and raised the following issues for its consideration: (1) whether or not respondent City Assessor of the City of Baguio has legal basis to issue against petitioner the subject assessments with serial nos. 01-07040-008887 to 01-07040-008922for real property taxation of the buildings of the petitioner, a tax-exemptentity, or land owned by the BCDA under lease to the petitioner; and (2)whether or not the CBAA, in its Resolutions dated 23 May 2003 and 8September 2004, has legal basis to order the remand of the case to the LBAA of Baguio City for further proceedings subject to a full and up-to- date payment, in cash or bond, of the realty taxes on the subject properties as assessed by the City Assessor of the City of Baguio.10 The Ruling of the CTA En Banc In the assailed Decision dated 27 July 2005,11 the CTA En Banc found that petitioner has indeed failed to comply with Section 252 of RA No. 7160or the LGC of 1991. Hence, it dismissed the petition and affirmed the subject Resolutions of the CBAA which remanded the case to the LBAA for further proceedings subject to compliance with said Section, in relation to Section 7, Rule V of the Rules of Procedure before the LBAA. Moreover, adopting the CBAA’s position, the court a quo ruled that it could not resolve the issue on whether petitioner is liable to pay real property tax or whether it is indeed a tax-exempt entity considering that the LBAA has not decided the case on the merits. To do otherwise would not only be procedurally wrong but legally wrong. It therefore concluded that before a protest may be entertained, the tax should have been paid first without prejudice to subsequent adjustment depending upon the final outcome of the appeal and that the tax or portion thereof paid under protest, shall be held in trust by the treasurer concerned. Consequently, this Petition for Review wherein petitioner on the ground of lack of legal basis seeks to set aside the 27 July 2005 Decision, and to nullify the assessments of real property tax issued against it by respondent City Assessor of Baguio City.12 The Issue The Issue before the Court is whether or not respondent CTA En Banc erred in dismissing for lack of merit the petition in C.T.A. EB No. 48, and accordingly affirmed the order of the CBAA to remand the case to the LBAA of Baguio City for further proceedings subject to a full and up-to-date payment of realty taxes, either in cash or in bond, on the subject properties assessed by the City Assessor of Baguio City. In support of the present petition, petitioner posits the following grounds: (a) Section 225 (should be Section 252) of RA No. 7160 or the LGC of 1991 does not apply when the person assessed is a tax-exemptentity; and (b) Under the doctrine of operative fact, petitioner is not liable for the payment of the real property taxes subject of this petition.13 Our Ruling

The Court finds the petition unmeritorious and therefore rules against petitioner. Section 252 of RA No. 7160, also known as the LGC of 199114, categorically provides: SEC. 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 beheld 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 tax payer may avail of the remedies as provided for in Chapter 3, Title Two, Book II of this Code. (Emphasis and underlining supplied) Relevant thereto, the remedies referred to under Chapter 3, Title Two, Book II of RA No. 7160 or the LGC of 1991 are those provided for under Sections 226 to 231. Significant provisions pertaining to the procedural and substantive aspects of appeal before the LBAA and CBAA, including its effect on the payment of real property taxes, follow: SEC. 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 province 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. SEC. 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 powers 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 here in provided. The decision of the Central Board shall be final and executory. SEC. 231. Effect of Appeal on the Payment of Real Property Tax. – Appeal on assessments of real property made under the provisions of this Code shall, in no case, suspend the collection of the corresponding realty taxes on the property involved as assessed by the provincial or city assessor, without prejudice to subsequent adjustment depending upon the final outcome of the appeal. (Emphasis supplied) The above-quoted provisions of RA No. 7160 or the LGC of 1991,clearly sets forth the administrative remedies available to a taxpayer or real property owner who does not agree with the assessment of the real property tax sought to be collected. The language of the law is clear. No interpretation is needed. The elementary rule in statutory construction is that if a statute is clear, plain and free from ambiguity, it must be given its literal meaning and applied without attempted interpretation. Verba legis non est recedendum. From the words of a statute there should be no departure.15 To begin with, Section 252 emphatically directs that the taxpayer/real property owner questioning the assessment should first pay the tax due before his protest can be entertained. As a matter of fact, the words "paid under protest" shall be annotated on the tax receipts. Consequently, only after such payment has been made by the taxpayer may he file a protest in writing (within thirty (30) days from said payment of tax) to the provincial, city, or municipal treasurer, who shall decide the protest within sixty (60)days from its receipt. In no case is the local treasurer obliged to entertain the protest unless the tax due has been paid.

Secondly, within the period prescribed by law, any owner or person having legal interest in the property not satisfied with the action of the provincial, city, or municipal assessor in the assessment of his property may file an appeal with the LBAA of the province or city concerned, as provided in Section 226 of RA No. 7160 or the LGC of 1991. Thereafter, within thirty (30) days from receipt, he may elevate, by filing a notice of appeal, the adverse decision of the LBAA with the CBAA, which exercises exclusive jurisdiction to hear and decide all appeals from the decisions, orders, and resolutions of the Local Boards involving contested assessments of real properties, claims for tax refund and/or tax credits, or overpayments of taxes.16 Significantly, in Dr. Olivares v. Mayor Marquez,17 this Court had the occasion to extensively discuss the subject provisions of RA No. 7160 or the LGC of 1991, in relation to the impropriety of the direct recourse before the courts on issue of the correctness of assessment of real estate taxes. The pertinent articulations follow: x x x A perusal of the petition before the RTC plainly shows that what is actually being assailed is the correctness of the assessments made by the local assessor of Parañaque on petitioners’ properties. The allegations in the said petition purportedly questioning the assessor’s authority to assess and collect the taxes were obviously made in order to justify the filing of the petition with the RTC. In fact, there is nothing in the said petition that supports their claim regarding the assessor’s alleged lack of authority. What petitioners raise are the following: (1) some of the taxes being collected have already prescribed and may no longer be collected as provided in Section 194 of the Local Government Code of 1991; (2) some properties have been doubly taxed/assessed; (3) some properties being taxed are no longer existent; (4)some properties are exempt from taxation as they are being used exclusively for educational purposes; and (5) some errors are made in the assessment and collection of taxes due on petitioners’ properties, and that respondents committed grave abuse of discretion in making the "improper, excessive and unlawful the collection of taxes against the petitioners." Moreover, these arguments essentially involve questions of fact. Hence, the petition should have been brought, at the very first instance, to the LBAA. Under the doctrine of primacy of administrative remedies, an error in the assessment must be administratively pursued to the exclusion of ordinary courts whose decisions would be void for lack of jurisdiction. But an appeal shall not suspend the collection of the tax assessed without prejudice to a later adjustment pending the outcome of the appeal. Even assuming that the assessor’s authority is indeed an issue, it must be pointed out that in order for the court a quo to resolve the petition, the issues of the correctness of the tax assessment and collection must also necessarily be dealt with. xxxx In the present case, the authority of the assessor is not being questioned. Despite petitioners’ protestations, the petition filed before the court a quo primarily involves the correctness of the assessments, which are questions of fact, that are not allowed in a petition for certiorari, prohibition and mandamus. The court a quo is therefore precluded from entertaining the petition, and it appropriately dismissed the petition.18 (Emphasis and underlining supplied) By analogy, the rationale of the mandatory compliance with the requirement of "payment under protest" similarly provided under Section 64of the Real Property Tax Code (RPTC)19 was earlier emphasized in Meralcov. Barlis,20wherein the Court held: We find the petitioner’s arguments to be without merit. The trial court has no jurisdiction to entertain a Petition for Prohibition absent petitioner’s payment under protest, of the tax assessed as required by Sec.64 of the RPTC. Payment of the tax assessed under protest, is a condition sine qua non before the trial court could assume jurisdiction over the petition and failure to do so, the RTC has no jurisdiction to entertain it. The restriction upon the power of courts to impeach tax assessment without a prior payment, under protest, of the taxes assessed is consistent with the doctrine that taxes are the lifeblood of the nation and as such their collection cannot be curtailed by injunction or any like action; otherwise, the state or, in this case, the local government unit, shall be crippled in dispensing the needed services to the people, and its machinery gravely disabled. xxxx There is no merit in petitioner’s argument that the trial court could take cognizance of the petition as it only questions the validity of the issuance of the warrants of garnishment on its bank deposits and not the tax assessment. Petitioner MERALCO in filing the Petition for Prohibition before the RTC was in truth assailing the validity of the tax assessment and collection. To resolve the petition, it would not only be the question of validity of the warrants of garnishments that would have to be tackled, but in addition the issues of tax assessment and collection would necessarily have to be dealt with too. As the warrants of garnishment were issued to collect back taxes from petitioner, the petition for prohibition

would be for no other reason than to forestall the collection of back taxes on the basis of tax assessment arguments. This, petitioner cannot do without first resorting to the proper administrative remedies, or as previously discussed, by paying under protest the tax assessed, to allow the court to assume jurisdiction over the petition. xxxx It cannot be gainsaid that petitioner should have addressed its arguments to respondent at the first opportunity - upon receipt of the3 September 1986 notices of assessment signed by Municipal Treasurer Norberto A. San Mateo. Thereafter, it should have availed of the proper administrative remedies in protesting an erroneous tax assessment, i.e., to question the correctness of the assessments before the Local Board of Assessment Appeals (LBAA), and later, invoke the appellate jurisdiction of the Central Board of Assessment Appeals(CBAA). Under the doctrine of primacy of administrative remedies, an error in the assessment must be administratively pursued to the exclusion of ordinary courts whose decisions would be void for lack of jurisdiction. But an appeal shall not suspend the collection of the tax assessed without prejudice to a later adjustment pending the outcome of the appeal. The failure to appeal within the statutory period shall render the assessment final and unappealable. Petitioner having failed to exhaust the administrative remedies available to it, the assessment attained finality and collection would be in order. (Emphasis and underscoring supplied) From the foregoing jurisprudential pronouncements, it is clear that the requirement of "payment under protest" is a condition sine qua non before a protest or an appeal questioning the correctness of an assessment of real property tax may be entertained. Moreover, a claim for exemption from payment of real property taxes does not actually question the assessor’s authority to assess and collect such taxes, but pertains to the reasonableness or correctness of the assessment by the local assessor, a question of fact which should be resolved, at the very first instance, by the LBAA. This may be inferred from Section 206 of RA No. 7160 or the LGC of 1991which states that: SEC. 206. Proof of Exemption of Real Property from Taxation. – Every person by or for whom real property is declared, who shall claim tax exemption for such property under this Title shall file with the provincial, city or municipal assessor within thirty (30) days from the date of the declaration of real property sufficient documentary evidence in support of such claim including corporate charters, title of ownership, articles of incorporation, bylaws, contracts, affidavits, certifications and mortgage deeds, and similar documents. If the required evidence is not submitted within the period herein prescribed, the property shall be listed as taxable in the assessment roll. However, if the property shall be proven to be tax exempt, the same shall be dropped from the assessment roll. (Emphasis supplied) In other words, by providing that real property not declared and proved as tax-exempt shall be included in the assessment roll, the above-quoted provision implies that the local assessor has the authority to assess the property for realty taxes, and any subsequent claim for exemption shall be allowed only when sufficient proof has been adduced supporting the claim.21 Therefore, if the property being taxed has not been dropped from the assessment roll, taxes must be paid under protest if the exemption from taxation is insisted upon. In the case at bench, records reveal that when petitioner received the letter dated 21 March 2002 issued by respondent City Assessor, including copies of ARPs (with ARP Nos. 01-07040-008887 to 01-07040-008922) attached thereto, it filed its protest through a letter dated 3 April 2002seeking clarification as to the legal basis of said assessments, without payment of the assessed real property taxes. Afterwards, respondent City Assessor replied thereto in a letter dated 11 April 2002 which explained the legal basis of the subject assessments and even included an additional ARP against another real property of petitioner. Subsequently, petitioner then filed before the BTAA its appeal questioning the validity and propriety of the subject ARPs. Clearly from the foregoing factual backdrop, petitioner considered the11 April 2002 letter as the "action" referred to in Section 226 which speaks of the local assessor’s act of denying the protest filed pursuant to Section252. However, applying the above-cited jurisprudence in the present case, it is evident that petitioner’s failure to comply with the mandatory requirement of payment under protest in accordance with Section 252 of the LGC of 1991 was fatal to its appeal. Notwithstanding such failure to comply therewith, the BTAA elected not to immediately dismiss the case but instead took cognizance of petitioner’s appeal subject to the condition that payment of the real property tax should first be made before proceeding with the hearing of its appeal, as provided for under Section 7, Rule V of the Rules of Procedure Before the LBAA. Hence, the BTAA simply recognized the importance of the requirement of "payment under protest" before an appeal may be entertained, pursuant to Section 252, and in relation with Section231 of the same Code as to non-suspension of collection of the realty tax pending appeal.

Notably, in its feeble attempt to justify non-compliance with the provision of Section 252, petitioner contends that the requirement of paying the tax under protest is not applicable when the person being assessed is a tax-exempt entity, and thus could not be deemed a "taxpayer" within the meaning of the law. In support thereto, petitioner alleges that it is exempted from paying taxes, including real property taxes, since it is entitled to the tax incentives and exemptions under the provisions of RA No. 7227 and Presidential Proclamation No. 420, Series of 1994,22 as stated in and confirmed by the lease agreement it entered into with the BCDA.23 This Court is not persuaded. First, Section 206 of RA No. 7160 or the LGC of 1991, as quoted earlier, categorically provides that every person by or for whom real property is declared, who shall claim exemption from payment of real property taxes imposed against said property, shall file with the provincial, city or municipal assessor sufficient documentary evidence in support of such claim. Clearly, the burden of proving exemption from local taxation is upon whom the subject real property is declared; thus, said person shall be considered by law as the taxpayer thereof. Failure to do so, said property shall be listed as taxable in the assessment roll. In the present case, records show that respondent City Assessor of Baguio City notified petitioner, in the letters dated 21 March 200224 and 11April 2002,25 about the subject ARPs covering various buildings owned by petitioner and parcels of land (leased out to petitioner) all located within the JHSEZ, Baguio City. The subject letters expressed that the assessments were based on the approved building permits obtained from the City Engineer’s Office of Baguio City and pursuant to Sections 201 to 206 of RA No. 7160 or the LGC of 1991 which pertains to whom the subject real properties were declared. Noticeably, these factual allegations were neither contested nor denied by petitioner. As a matter of fact, it expressly admitted ownership of the various buildings subject of the assessment and thereafter focused on the argument of its exemption under RA No. 7227. But petitioner did not present any documentary evidence to establish that the subject properties being tax exempt have already been dropped from the assessment roll, in accordance with Section 206. Consequently, the City Assessor acted in accordance with her mandate and in the regular performance of her official function when the subject ARPs were issued against petitioner herein, being the owner of the buildings, and therefore considered as the person with the obligation to shoulder tax liability thereof, if any, as contemplated by law. It is an accepted principle in taxation that taxes are paid by the person obliged to declare the same for taxation purposes. As discussed above, the duty to declare the true value of real property for taxation purposes is imposed upon the owner, or administrator, or their duly authorized representatives. They are thus considered the taxpayers. Hence, when these persons fail or refuse to make a declaration of the true value of their real property within the prescribed period, the provincial or city assessor shall declare the property in the name of the defaulting owner and assess the property for taxation. In this wise, the taxpayer assumes the character of a defaulting owner, or defaulting administrator, or defaulting authorized representative, liable to pay back taxes. For that reason, since petitioner herein is the declared owner of the subject buildings being assessed for real property tax, it is therefore presumed to be the person with the obligation to shoulder the burden of paying the subject tax in the present case; and accordingly, in questioning the reasonableness or correctness of the assessment of real property tax, petitioner is mandated by law to comply with the requirement of payment under protest of the tax assessed, particularly Section 252 of RA No. 7160 or the LGC of 1991. Time and again, the Supreme Court has stated that taxation is the rule and exemption is the exception. The law does not look with favor on tax exemptions and the entity that would seek to be thus privileged must justify it by words too plain to be mistaken and too categorical to be misinterpreted.26 Thus applying the rule of strict construction of laws granting tax exemptions, and the rule that doubts should be resolved in favor of provincial corporations, this Court holds that petitioner is considered a taxable entity in this case. Second, considering that petitioner is deemed a taxpayer within the meaning of law, the issue on whether or not it is entitled to exemption from paying taxes, national and local, including real property taxes, is a matter which would be better resolved, at the very instance, before the LBAA, for the following grounds: (a) petitioner’s reliance on its entitlement for exemption under the provisions of RA No. 7227 and Presidential Proclamation No. 420, was allegedly confirmed by Section 18,27 Article XVI of the Lease Agreement dated 19 October 1996 it entered with the BCDA. However, it appears from the records that said Lease Agreement has yet to be presented nor formally offered before any administrative or judicial body for scrutiny; (b) the subject provision of the Lease Agreement declared a condition that in order to be allegedly exempted from the payment of taxes, petitioner should have first paid and remitted 5% of the gross income earned by it within ninety (90) days from the close of the calendar year through the JPDC. Unfortunately, petitioner has neither established nor presented any evidence to show that it has indeed paid and remitted 5% of said gross income tax; (c) the right to appeal is a privilege of statutory origin, meaning a right granted only by the law, and not a constitutional right, natural or inherent. Therefore, it follows that petitioner may avail of such opportunity only upon strict compliance with the procedures and rules prescribed by the law itself, i.e. RA No. 7160 or the LGC of 1991; and (d) at any rate, petitioner’s position of exemption is weakened by its own admission and

recognition of this Court’s previous ruling that the tax incentives granted in RA No. 7227 are exclusive only to the Subic Special Economic and Free Port Zone; and thus, the extension of the same to the JHSEZ (as provided in the second sentence of Section 3 of Presidential Proclamation No. 420)28 finds no support therein and therefore declared null and void and of no legal force and effect.29 Hence, petitioner needs more than mere arguments and/or allegations contained in its pleadings to establish and prove its exemption, making prior proceedings before the LBAA a necessity. With the above-enumerated reasons, it is obvious that in order for a complete determination of petitioner’s alleged exemption from payment of real property tax under RA No. 7160 or the LGC of 1991, there are factual issues needed to be confirmed. Hence, being a question of fact, petitioner cannot do without first resorting to the proper administrative remedies, or as previously discussed, by paying under protest the tax assessed in compliance with Section 252 thereof. Accordingly, the CBAA and the CTA En Banc correctly ruled that real property taxes should first be paid before any protest thereon may be considered. It is without a doubt that such requirement of "payment under protest" is a condition sine qua non before an appeal may be entertained. Thus, remanding the case to the LBAA for further proceedings subject to a full and up-to-date payment, either in cash or surety, of realty tax on the subject properties was proper. To reiterate, the restriction upon the power of courts to impeach tax assessment without a prior payment, under protest, of the taxes assessed is consistent with the doctrine that taxes are the lifeblood of the nation and as such their collection cannot be curtailed by injunction or any like action; otherwise, the state or, in this case, the local government unit, shall be crippled in dispensing the needed services to the people, and its machinery gravely disabled.30 The right of local government units to collect taxes due must always be upheld to avoid severe erosion. This consideration is consistent with the State policy to guarantee the autonomy of local governments and the objective of RA No. 7160 or the LGC of 1991 that they enjoy genuine and meaningful local autonomy to empower them to achieve their fullest development as self-reliant communities and make them effective partners in the attainment of national goals.31 All told, We go back to what was at the outset stated, that is, that a claim for tax exemption, whether full or partial, does not question the authority of local assessor to assess real property tax, but merely raises a question of the reasonableness or correctness of such assessment, which requires compliance with Section 252 of the LGC of 1991. Such argument which may involve a question of fact should be resolved at the first instance by the LBAA. The CTA En Bane was correct in dismissing the petition in C.T.A. EB No. 48, and affirming the CBAA's position that it cannot delve on the issue of petitioner's alleged non-taxability on the ground of exemption since the LBAA has not decided the case on the merits. This is in compliance with the procedural steps prescribed in the law. WHEREFORE, the petition is DENIED for lack of merit. The Decision of the Court of Tax Appeals En Bane in C.T.A. EB No. 48 is AFFIRMED. The case is remanded to the Local Board of Assessment Appeals of Baguio City for further proceedings. No costs. SO ORDERED.

NAPOCOR VS NAVOTAS Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking to reverse and set aside the Decision1 dated March 1, 2010 and Resolution2 dated May 6, 2010 of the Court of Tax Appeals (CTA) En Banc in E.B. No. 461. The facts, as found by the CTA En Banc, are as follows: 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, comer Quezon A venue 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. Respondent Sangguniang Bayan of Navotas is a legislative body being sued for the purpose of enjoining it from performing any and all acts geared toward [the] collection of the assailed taxes and/or sale of petitioner’s properties during the pendency of the instant petition. It may be served with summons and other court processes through the Vice Mayor, as the presiding officer, at the Municipal Hall Building, Navotas, Metro Manila. Respondent Manuel T. Enriquez is being sued in his official capacity as the Municipal Treasurer of Navotas and may be served with summons and other court processes at the Municipal Hall Building, Navotas, Metro Manila.

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 (MNC-I), formerly known as Hopewell Energy Philippines Corporation, and Mirant Navotas II Corporation (MNC-II), formerly known as Hopewell Tileman (Philippines) Corporation. The BOTs are for the construction, operation and eventual transfer to petitioner of MNC-I’s 200-MW and MNC-II’s 100-MW gas turbine power stations. During the period of the agreement, the operation of the power stations shall be under the actual and direct control and supervision of petitioner. Consequently, 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 ₱3,382,715.88 and ₱4,973,869.83 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. In a letter dated March 30, 2004, petitioner informed the Municipal Assessor of Navotas (Municipal Assessor) of their position on the exemption from real property tax of the subject properties, pertaining to machineries and equipment which are in the name of Hopewell Tileman (Phils.) Corporation. Pursuant to the BOTs, MNC-I and MNC-II eventually transferred to petitioner all their rights, title and interests in and to the fixtures, fittings, plant and equipment, and improvements comprising the power stations on March 24, 2003 and August 1, 2005, respectively. 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. Details are as follows: First and Second Notices, addressed ₱59,505,580.10 to Hopewell Energy (Phils.) Corp. First and Second Notices, addressed 88,792,759.05 to Hopewell Tileman Phil. Corp. Total

₱148,298,339.15

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. On November 21, 2005, a Warrant of Levy was received from respondent Municipal Treasurer. MNC-II also received two Notices of Sale of Delinquent Real Property, scheduling the public auction of the subject properties on December 21, 2005. 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 and the forfeiture of the subject properties in favor of respondent Municipality on the ground that these actions are patently illegal because the subject properties are exempt from real property tax. The RTC denied the petition on May 23, 2007. It ruled that although Section 234 of the LGC exempts petitioner from payment of real property tax due on the subject properties located at MNC-I and MNC-II, failure of petitioner to exhaust administrative remedies resulted in the finality of the assessment; thus, the eventual collection was in order. The RTC explained that petitioner should have appealed the assessments to the Local Board of Assessment Appeals (LBAA), pursuant to Section 226 of the LGC, within 60 days from the date of receipt of the written notice of assessment. If not satisfied with the decision of the LBAA, petitioner should appeal to the Central Board of Assessment Appeals (CBAA), pursuant to Section 229 of the samecode. The RTC further went on in saying that before initiating any protest to the assessment, the tax due must first be paid. After an extension of 30 days was granted, 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. The Petition was raffled to the Second Division of this Court. Respondents filed their Comment/Opposition through registered mail on October 15, 2007 and which was received by this Court on October 30, 2007.

In a Resolution dated December 17, 2007, the Second Division treated petitioner’s application for TRO and/or Order of Suspension of Collection and Writ of Preliminary Injunction as a "Motion to Suspend the Collection of Taxes," considering that the ownership of the auctioned properties was not yet consolidated inthe name of respondents; thus, the collection of payment of the alleged deficiency taxes was not yet consummated. The application was granted on equitable considerations, to preserve the status quoduring the pendency of the appeal, and in order not to render ineffectual and nugatory the judgment that will be rendered. Respondents were enjoined from consolidating the ownership of the subject properties, from confiscating them, from taking possession thereof and from doing any and all acts relative thereto during the pendency of petitioner’s appeal, until further ordered. In a Resolution dated March 6, 2008, the case was considered submitted for Decision after petitioner manifested to adopt its Petition for Review as its Memorandum and after respondents failed to file their Memorandum. 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, 2009.3 Resultantly, petitioner filed a petition before the CTA En Banc. In a Decision dated March 1, 2010, the CTA En Bancaffirmed the CTA Second Division’s decision and held as follows: 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. SO ORDERED.4 Unfazed, petitioner filed a Motion for Reconsideration but the same was denied in a Resolution dated May 6, 2010. Accordingly, petitioner lodged the present petition praying as follows: 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 Bancbe REVERSED and SET ASIDE; a new one be rendered declaring: 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 suchother reliefs just and equitable under the premises.5 Thus, petitioner assigns the following errors for this Court’s resolution: THE COURT OT TAX APPEALS EN BANC ERRED IN SUSTAINING THE DECISION OF THE COURT OF TAX APPEALS SECOND DIVISION WHICH HELD THAT: 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 In 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. We rule in the affirmative. First, Section 7 of Republic Act (R.A.) No. 92827 explicitly enumerates the scope of the CTA’s jurisdiction over decisions, orders or resolutions of the RTC in local tax cases, to wit: Sec. 7. Jurisdiction. – The CTA shall exercise: (a) Exclusive appellate jurisdiction to review by appeal, as herein provided: 1. 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; 2. 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;

3. 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; 4. 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; 5. 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; 6. 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; 7. 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; x x x8 Such 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: Section 3. Cases Within the Jurisdiction of the Court In Division.– The Court Division shall exercise: (a) Exclusive original or appellate jurisdiction to review by appeal the following: xxxx (3) Decisions, resolutions or orders of the Regional Trial Courts in local tax cases decided or resolved by themin the exercise of their original jurisdiction; x x x9 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. 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. We, therefore, disagree withthe conclusion of the CTA En Bancthat real property taxes have always been treated by our laws separately from local taxes. The fact that a separate chapter is devoted to the treatment of real property taxes, and a distinct appeal procedure is provided therefor does not justify an inference that Section 7(a)(3) of R.A. 9282 pertains only to local taxes other than real property taxes. Rather, the term "local taxes" in the aforementioned provision should be considered in its general and comprehensive sense, which embraces real property tax assessments, in line with the precept Generalia verba sunt generaliter inteligencia—what is generally spoken shall be generally understood.10 Between the restricted sense and the general meaning of a word, the general must prevail unless it was clearly intended that the restricted sense was to be used.11 In the words of the Court in Marcos v. Chief of Staff:12 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.13 Here, the context in which the word"local taxes" is employed does not clearly indicate that the limited orrestricted 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. 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. This is in consonance with the ruling in Ty v. Trampe.16 Here, a petition for prohibition with prayer for a restraining order and/or writ of preliminary injunction was filed to declare null and void the new tax assessments and enjoin the collection ofreal estate taxes based on said assessments. Despite the alleged non-exhaustion of administrative remedies and non-payment of the real property tax, the Court gave due course to the case on the ground that the controversy did not involve questions of fact but only of law. Thus: Respondents argue that this case ispremature 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. 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 Accordingly, if the only issue isthe legality or validity of the assessment – a question of law – directrecourse to the RTC is warranted. In the case at bar, the claim of petitioner essentially questions the very authority and power of the Municipal Assessor to impose the assessment and of the Municipal Treasurer to collect the real property tax with respect to the machineries and equipment located in the Navotas I and II power plants. Certainly, it does not pertain to the correctness of the amounts assessed but attacks the validity of the assessment of the taxes itself. The well-established rule is that the allegations in the complaint and the character of the relief sought determine the nature of an action.18 Here, it is not disputed that the machineries and equipment are being used for power generation. The primordial issue, however, is whether these machineries and equipment are actually, directly and exclusively used by petitioner within the purview of Section 23419 of the LGC, which exempts it from payment of real property taxes, to wit: Section 234. Exemptions from Real Property Tax.- The following are exempted from payment of the real property tax: (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 usedfor 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. As 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.

On this score, it is worthy to note that in its Decision dated March 23, 2007, the RTC already declared that petitioner is exempt from payment of real property taxes on its machineries located at MNC-I & MNC-II, the pertinent portion of which reads: 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.20 The foregoing was not disputed by respondents. Despite this, the RTC still dismissed the petition on the ground of lack of jurisdiction for failure of petitioner to appeal the assailed assessment to the LBAA and the CBAA. More, we find it obscure that the CTA En Banc, while finding that the issue obtaining in the present case pertains to a question of fact, held that Ty is applicable to the present case with respect to the requirement for payment under protest, to wit: 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. Trampeis applicable. There, the Supreme Court notes: 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 realproperty 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 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 quofinds 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. It is for the foregoing reasons that we deem the reversal of the ruling of the CTA En Bancin order. At the risk of repetition, what is being questioned in the present case is the authority of the Municipal Assessor to impose the assessment and of the Municipal Treasurer to collect the real property taxes. Accordingly, resort to the LBAA and the CBAA is no longer necessary for the same reason that what is being questioned is the legality or validity of the tax assessment, not the reasonableness or correctness of the assessment. Certainly, it would be unjust to require the realty owner to first pay the tax, the validity of which he precisely questions, before he can lodge a complaint to the court. In fine, if a taxpayer is not satisfied with the decision of the CBAA or the RTC, as the case may be, the taxpayer may file, within thirty (30) days from receipt of the assailed decision,a petition for review with the CTA pursuant to Section 7(a) of R.A. 9282. In cases where the question involves the amount of the tax or the correctness thereof, the appeal will be pursuant to Section 7(a)(5) of R.A. 9282. Whenthe appeal comes from a judicial remedy which questions the authority of the local government to impose the tax, Section 7(a)(3) of R.A. 9282 applies. Thereafter, such decision, ruling or resolution may be further reviewed by the CT A En Banc pursuant to Section 2, Rule 4 of the Revised Rules of the CT A, to wit: 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: (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: xxxx (2) Local tax cases decided by the Regional Trial Courts in the exercise of their original jurisdiction;

x x x24 Thus, 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. Anent the matter on the validity of the Notices of Delinquency issued by the Municipal Treasurer, as well as the Warrant of Levy, the same involves questions of fact. Thus, the remand of this case to the RTC is warranted for the proper verification and determination of the factual basis and merits of this case, and in order that the ends of substantial justice and fair play may be served. WHEREFORE, the Court GRANTS the petition and SETS ASIDE the Decision dated March 1, 2010 and Resolution dated May 6, 2010 of the Court of Tax Appeals En Banc in E.B. No. 461. Moreover, this case is REMANDED to the Regional Trial Court for determination of petitioner's claims for annulment of Notice of Delinquency, Warrant of Levy, and Notice of Sale. SO ORDERED.

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

Manila Electric Company vs. Barlis For the Courts Resolution is petitioner Manila Electric Companys (MERALCO) Motion for Leave to File Motion for Reconsideration, filed on June 2, 2002 and the attached Motion for Reconsideration of the ________________ * On official leave. ** On leave. Resolution of this Court dated April 15, 2002, denying its second motion for reconsideration and ordering that entry of judgment be made in due course,[1] as well as its motion for reconsideration dated March 19, 2002.

To preface, the above-entitled petition was an off-shoot of the following antecedents:

From 1968 to 1972, petitioner MERALCO, a duly-organized corporation in the Philippines engaged in the distribution of electricity, erected four (4) power generating plants in Sucat, Muntinlupa, namely, the Gardner I, Gardner II, Snyder I and Snyder II stations. To equip the power plants, various machineries and equipment were purchased both locally and abroad. When the Real Property Tax Code took effect on June 1, 1974, MERALCO filed its tax declarations covering the Sucat power plants, including the buildings thereon as well as the machineries and equipment.[2] In 1976, the Provincial Assessor found that the market value of the machineries amounted to P41,660,220.00, and its assessed value at P33,328,380.00. Later, in 1978, the Municipal Assessor assessed the value of the machineries and equipment at P36,974,610.00. From 1975 to 1978, MERALCO paid the real property taxes on the said properties on the basis of their assessed value as stated in its tax declarations.

On December 29, 1978, MERALCO sold all the power-generating plants including the landsite to the National Power Corporation (NAPOCOR), a corporation fully owned and controlled by the Philippine government. In 1985, the Municipal Assessor of Muntinlupa, while reviewing records pertaining to assessment and collection of real property taxes, discovered, among others, that MERALCO, for the period beginning January 1, 1976 to December 29, 1978, misdeclared and/or failed to declare for taxation purposes a number of real properties consisting of several equipment and machineries found in the said power plants. A review of the Deed of Sale which MERALCO executed in favor of NAPOCOR when it sold the power plants to the latter convinced the municipal government of Muntinlupa that the true value of the machineries and equipment was misdeclared/undeclared. The Municipal Assessor of Muntinlupa, on his own, then determined and assessed the value[3] of the subject properties for taxation purposes from 1977 to 1978 under Tax Declarations Nos. T-009-05486 to T-05506, viz: TAX DECL.

ASSESSED VALUE

B-009-05495

P 68,208,610.00 (1977-1978)

B-009-0496

P 62,524,550.00 (1978)

B-009-05486

P102,088,300.00 (1978)

B-009-05490

P 79,881,420.00 (1977-1978)

B-009-05491

P 74,555,990.00 (1978)

B-009-05494

P 73,892,660.00 (1976-1978)

B-009-05501

P 86,874,490.00 (1976-1978)

B-009-05502

P 81,082,860.00 (1977-1978)

B-009-05503

P 75,291,220.00 (1978)[4]

The matter of collection of the tax due and the enforcement of the remedies provided for in Presidential Decree No. 464 was then referred to the Municipal Treasurer, conformably to Section 57 thereof. [5]

Thereafter, on September 3, 1986, the Municipal Treasurer of Muntinlupa issued three notices to MERALCO, requesting it to pay the full amount of the claimed deficiency in the real property taxes covering the machinery and equipment found in the said power plants.[6] He warned the taxpayer that its properties could be sold at public auction unless the tax due was paid. Still, MERALCO did not pay the assessed tax, nor take steps to question the tax assessed as contained in the said notices.The Municipality of Muntinlupa then sought the assistance of the Bureau of Local Government Finance-Department of Finance (BLGF-DOF) for the collection of the tax due from MERALCO.

On August 14, 1989, the BLGF-DOF issued a Letter-Indorsement[7] declaring that the properties of MERALCO were not used in a new and preferred industry, hence, taxable from 1976 up to but not beyond December 31, 1978, the year the properties were acquired by NAPOCOR. The municipal treasurer was directed, in the same letter, to inform the BLGF-DPF of any recent action taken by MERALCO on the collection letter dated September 3, 1986. On the basis thereof, the Municipal Treasurer of Muntinlupa, in a Letter[8] dated October 31, 1989, reminded MERALCO of its deficiency tax liability, demanded the immediate payment of the amount of P36,432,001.97 as unpaid real property taxes inclusive of penalties and accrued interest, and reiterated its warning that its properties may be sold at public auction if it failed to pay the taxes due. Subsequently, the Municipality of Muntinlupa, through its Municipal Treasurer, sent MERALCO another Letter[9] dated November 20, 1989, reiterating its previous demands for tax payment. Attached to the latter was the computation of the taxes due. Still, no payment was made.

Accordingly, after issuing the requisite certification of non-payment of real property taxes and complying with the additional requirement of public posting of the notices of delinquency, the Municipal Treasurer issued, on October 4, 1990, Warrants of Garnishment[10] ordering the attachment of MERALCOs bank deposits with the Philippine Commercial and Industrial Bank (PCIB), Metropolitan Bank and Trust Company (METROBANK) and the Bank of the Philippine Islands (BPI) to the extent of its unpaid real property taxes.

On October 10, 1990, MERALCO filed before the Regional Trial Court (RTC) of Makati a Petition for Prohibition with Prayer for Writ of Preliminary Mandatory Injunction and/or Temporary Restraining Order (TRO) praying, among others, that a TRO be issued to enjoin the Municipal Treasurer of Muntinlupa from enforcing the warrants of garnishment. The petitioner therein alleged, inter alia, that it had paid the real property taxes on its properties from 1975 to 1978 in full, based on the assessed value thereof, as well as the taxes on the machineries and equipment, based on their appraisal value as

determined by the Provincial Assessor. According to the petitioner, the collection letters of the municipal assessor for real property taxes amounting to P36,432,001.97 was made arbitrarily and without legal authority, for the following reasons: (a) in times of rising cost, especially of imported machinery and equipment such as those installed at the Sucat Power Plants, the prices of articles several years after their acquisition would be very much higher; (b) the respondent could not levy additional real estate taxes without a prior re-appraisal of the property and an amendment of the tax declaration; and, (c) assuming arguendo that there was such a re-appraisal made, and a new tax declaration issued, such re-appraisal should operate prospectively and not retroactively as was done in this case.[11] According to the petitioner, the respondent had no authority to distrain its personal property not found in the real property subject of the delinquent real estate taxes, the authority of respondent being limited to those found in the real property subject of the delinquent real estate taxes.[12] The petitioner further averred that real estate tax is a tax on real property; as such, any tax delinquency on property should follow the present owner, in this case, the National Power Corporation.

The petitioner further claimed that the alleged delinquent real estate taxes claimed by respondent as shown in the annex to the Notice of Garnishment,[13] were arrived at by taxing the same property twice, and, in one case, even three times; by evaluating the property based on the selling price of the machineries and equipment rather than the actual acquisition cost; by taxing, as undeclared machineries, items that were already declared by the petitioner in 1974; and, by including the value of the land and other tax-exempt property in the computation of the alleged deficiency tax. Even assuming that it was liable for the real property tax delinquency, the petitioner asserted that the collection of the said amount had already prescribed.

The petitioner later filed an Amended Petition alleging as follows:

12. To further pursue his unjustified aims, respondent issued three Warrants of Garnishment against petitioners bank deposits with the Philippine Commercial International Bank, Metropolitan Bank and Trust Company, and Bank of the Philippine Islands which required the said Banks to turn over to petitioner all the garnished amount, copies of which are attached hereto as Annexes E, F, and G.[14]

The trial court issued a TRO which, after the hearing on the injunctive aspect of the case, was modified to the effect that the warrants of garnishment against the bank accounts would be in full force and effect, provided that the Municipal Treasurer would not, in the meantime, collect, receive or withdraw the frozen bank deposits. MERALCO was also allowed therein to withdraw from the frozen deposits, provided that it would not leave a balance less than the tax claim of the Municipality of Muntinlupa.

For its part, the Municipal Treasurer filed a Motion to Dismiss[15] on the following grounds: (a) lack of jurisdiction, since under Sec. 64 of the Real

Property Tax Code, courts are prohibited from entertaining any suit assailing the validity of a tax assessed thereunder until the taxpayer shall have paid, under protest, the tax assessed against him; and (b) lack of cause of action, by reason of MERALCOs failure to question the notice of assessment issued to it by the Municipality of Muntinlupa before the Local Board of Assessment Appeals. MERALCO opposed the motion, contending that it was the NAPOCOR that was liable for the taxes being collected by the Municipal Treasurer, and that the right to collect such taxes had already prescribed under Section 25 of P.D. No. 464.

In its June 17, 1991 Order, the trial court denied the said motion, ratiocinating that since MERALCO was not the present owner or possessor of the properties in question, it was not the taxpayer contemplated under Section 64 of the Tax Code:

After careful examination of the grounds and arguments of the motion to dismiss and the opposition thereto, the Court is of the view that the petitioner in this case, the Manila Electric Company, is not the taxpayer contemplated under Section 64 of the Tax Code. For as rightly argued by the petitioner, the tax due on the property constitutes a lien thereto

which lien shall be enforceable against the property whether in the possession of the delinquent or any subsequent owner or possessor. In the case at bar, it is undisputed that the present owner or the possessor of the property in question is not the petitioner Manila Electric Company but the National Power Corporation.[16]

The trial court no longer delved into and resolved the issue of whether the petitioners action was premature.

On a Petition for Certiorari filed before the Supreme Court, later endorsed to the Court of Appeals,[17] the Municipal Treasurer of Muntinlupa assailed the June 17, 1991 Order of the RTC alleging that MERALCO was the taxpayer liable for the tax due and the penalties thereon; that despite receipt by it of the 1985 notice of assessment from the Municipal Assessor, it failed to appeal therefrom and, as such, the assessment had become final and enforceable; and, that MERALCO was proscribed from filing its petition assailing the assessment. In its answer to the petition, MERALCO denied having received a notice of assessment from the Municipal Treasurer, but admitted to having received collection letters.

On August 11, 1993, the Court of Appeals, in its Decision, granted the petition and declared the assailed order void and without life in law, having been issued without jurisdiction, on a petition that further does not state a sufficient cause of action, filed by a party who had not exhausted available administrative remedies.[18] The CA ruled that MERALCO was the taxpayer liable for the taxes due, and that it was barred under Section 64 of P.D. No. 464 from assailing the 1986 assessment of the Municipal Assessor for its failure to appeal therefrom. MERALCO moved for a reconsideration of the Decision, which the CA denied for lack of merit in a Resolution[19] dated February 28, 1994.

On further recourse to this Court via a petition for review on certiorari under Rule 45, the petitioner alleged, inter alia, that the Court of Appeals erred in applying Section 64 of the Real Property Tax Code for the following reasons: (a) the petitioner was not the taxpayer for the purpose of an assessment under the Real Property Tax Code; and, (b) no assessment was made by the respondent, and only collection letters were sent to it; hence, Section 30 of the said Code had no application.The petitioner also alleged that its petition stated a sufficient cause of action for prohibition against the petitioner. Thus:

Respondent Alon committed a grave mistake in going after MERALCO. He should have first asked the registered owner to explain the difference between the original assessment and the purchase price of the plant. Then he should have asked for a revision of the assessment and thereafter serve the notice of assessment on the new owner.

Respondent cannot use MERALCO as a scapegoat for his errors.

Moreover, as the PETITION FOR PROHIBITION states, the Municipal Treasurer made an erroneous conclusion as to the application of the valuation of the properties.

The Real Property Tax Code provides that real property shall be appraised at its current and fair market value. (Sec. 2, Pres. Decree No. 469).

As a rule, the market value is that highest price estimated in terms of money which the property will buy if exposed for sale in the open market x x x (Sec. 3 [n], ibid). But in appraising machineries, the following provision applies:

The current market value of machinery shall be determined on the basis of the original cost in the case of newly acquired machinery not yet depreciated and is appraised within the year of its purchase. In the case of all others, the current market value shall be determined by dividing the remaining economic life of the machinery by its economic life and multiplied by the replacement or reproduction cost (new) of said machinery.

If the machinery is imported, replacement or reproduction cost shall be the original acquisition cost which would normally include such costs as flight and insurance charges, brokerage, arrastre and handling, customs duties and taxes plus cost of inland transportation and handling, and significant installation charges at the present side. (Sec. 28, ibid).

The land, building and machinery and equipment constituting the three power plants were sold to NAPOCOR in 1979. Instead of confronting to the above formula, respondent Alon merely assumed that the 1979 purchase price of the land and machinery would be the same value for the years 1976 to 1978. On the fact alone, he has erred in the appraisal of the machineries. His action is glaringly iniquitous in the light of the economic reality that immovables constantly appreciate in value. Likewise, he did not take into consideration the fact that the foreign currency exchange rate on the imported equipment at the time of the sale was very much higher than the exchange rate at the time of original purchase. It is of judicial notice that when the peso depreciated in value, the cost of cars rapidly escalated. Thus, a second-hand car fetched a price double that of its original cost. The same is true in the instant case. The replacement cost of the machineries and equipment herein was more than their original cost, which replacement cost was made the basis of the purchase price between NAPOCOR and MERALCO. The tax declaration, meanwhile, reflected the actual cost and value of the machineries at the time they were originally purchased by MERALCO.

Furthermore, the Real Property Tax Code itself provides for the prospective application of assessment and reassessments, thus

Sec. 24. Date of effectivity of assessment or reassessments All assessments or reassessments made after the first day of January or any year shall take effect on the first day of January of the succeeding year x x x.

Taxes, moreover, levied on real estate for general revenue purposes are not enforceable as a personal liability of the owner, but a charge upon the real estate assessed, to be enforced and collected by a sale of property liable for the taxes so levied and assessed (Philadelphia Mortgage & Trust Co. v. City of Omaha, 63 Neb. 280, 88 NW 523; Grant v. Bartholomew, 57 Neb 673, 78 NW 314; Carman v. Harris, 85 NW 848; State of Montana Ex. Rel. Tillman v. District Court, 103 ALR 376). This principle is currently embodied in our own Real Property Tax Code, to wit:

The real property tax for any year shall attach and become due and payable on the first day of January and from the same date said tax and all penalties subsequently accruing thereto shall constitute a lien upon the property subject to such tax. Said lien shall be x x x enforceable against the property whether in the possession of the delinquent or any subsequent owner or possessor, and shall be removable only by the payment of the delinquent taxes and penalties. (Sec. 56, op. Cit., underscoring supplied). If indeed there is any tax due on the realty involved herein, Respondent Alon should therefore go against the real property involved herein, i.e., the Sucat Power Plant, and the personal property attached thereto, which have become immobilized by attachment. Even assuming arguendo that MERALCO is the taxpayer, Respondent Alon has no right or the authority to attach personal property that is not located in the said realty, most especially the funds of MERALCO presently deposited with local banks.

Regrettably, the respondent Court of Appeals did not even give petitioner MERALCO an opportunity to be heard on the foregoing. Instead, it ordered the dismissal of the PETITION FOR PROHIBITION.[20]

In his Comment on the Petition, the respondent alleged that the petitioner was furnished with a notice of assessment on November 19, 1985, and appended a receipt stressing the signature of one Basilio Afuang.[21]

The Court promulgated its Decision[22] on May 18, 2001, denying due course to the petition and affirming the decision of the appellate court. The dispositive portion of the decision reads:

WHEREFORE, the 11 August 1993 Decision of the Court of Appeals declaring as void the 17 June 1992 Order of the Regional Trial Court is hereby AFFIRMED. The appellate courts 28 February 1994 Resolution denying petitioners motion for reconsideration of its subject Decision is likewise AFFIRMED.

SO ORDERED.[23]

The Court held that the appellate court correctly ruled that the Regional Trial Court of Makati, Branch 66, had no jurisdiction to entertain the petition for prohibition filed by the petitioner because the latter failed to first pay under protest the deficiency taxes assessed against it, as required under Section 64[24] of P.D. No. 464.[25] The Court stated that the Notices sent by the respondent to the petitioner dated September 3, 1986 and October 31, 1989 were in the nature of tax assessments;hence, the petitioner should have paid under protest the deficiency tax assessed against it. The Court also ruled that contrary to the petitioners contention, the RTC could not take cognizance of its petition for prohibition, as it was, in truth, assailing the validity of the tax assessment and collection. The Court ratiocinated that to fully resolve the petition for prohibition, the trial court would not only have to rule on the validity of the warrants of garnishment, but also on the issues relating to the assessment and collection of the deficiency taxes. It further declared that the filing of the petition for prohibition would be for no other reason than to forestall the collection of deficiency taxes on the basis of the tax assessment arguments. It emphasized that the petitioner could not file a petition for certiorari and prohibition without first resorting to the proper administrative remedies, and by paying under protest the tax assessed, to allow the court to assume jurisdiction over the petition.[26]

The Court also ruled that the garnishment of the petitioners bank deposits was proper and regular, since the respondent was not limited to the remedy of selling the delinquent real property. It agreed with the contention of the respondent that it could, likewise, avail of the remedies of distraint and levy of the petitioners personal property and the collection of the real property tax through ordinary court action. Hence, the respondents availment of the remedy of distraint and levy on the petitioners bank deposits was in accord with case law. The Court declared that there was nothing illegal about exercising this option, since bank deposits are not among those properties exempt from execution under the Revised Rules of Court or under the Real Property Tax Code.[27]

The petitioner received a copy of this Courts Decision on June 18, 2001 and filed, on July 3, 2001, a motion for reconsideration thereon. The petitioner argued that the notices issued by the Municipal Treasurer of Muntinlupa were not notices of assessment envisaged in Section 3 of P.D. No. 464.[28] The petitioner pointed out that the said notices did not contain the assessors findings regarding the kind of real estate, area, unit value, market value, actual use and assessment level; and, in the case of the machinery attached to the land, the description of the machinery, date of operation, original cost, depreciation, market value and assessment level. Hence, the said notices could not be used as bases for filing an appeal to the Local Board of Assessment Appeals under Section 30[29] of the Real Property Tax Code, which clearly adverts to a written notice of assessment. Thus, the petitioner contended, it could not be required to avail of the prescribed administrative remedies in protesting an erroneous tax assessment under the said Code.[30]

On February 1, 2002, the Court issued a Resolution denying with finality the petitioners motion for reconsideration.[31] The Court, however, reversed its ruling that the notices sent by the respondent to the petitioner were notices of assessment. It categorically stated that the notices were, in fact, notices of collection.

Additionally, the Court declared that a question of fact had been raised before it, since the petitioner denied having received any notice of assessment from the Municipal Assessor and collection letters from the respondent:

As there has been no apparent admission by petitioner that it had received the 1985 tax assessment notices allegedly sent by respondent Municipal Treasurer, and because we have found that the records are bereft of evidence showing

actual receipt by petitioner of the real property tax declaration allegedly sent by the Municipal Assessor, We are thus compelled to declare that a question of fact has been raised before this Court: On the one hand, said respondent claims that, aside from the September 3, 1986 and October 31, 1989 notices, he had transmitted to petitioner tax assessment notices in the form of real property tax declarations in November of 1985. On the other hand, petitioner denies having received any tax assessment notice from said respondent prior to receipt of the notices of collection.

Whether or not a tax assessment had been made and sent to the petitioner prior to the collection of back taxes by respondent Municipal Treasurer is of vital importance in determining the applicability of Section 64 of the Real Property Tax Code inasmuch as payment under protest is required only when there has in fact been a tax assessment, the validity of which is being questioned. Concomitantly, the doctrine of exhaustion of administrative remedies finds no application where no tax assessment has been made.[32]

The foregoing notwithstanding, the Court ruled against a remand of the case to the trial court, ratiocinating as follows:

The Petition for Review on Certiorari of petitioner before us raises the same grounds which petitioner relies upon in its Petition for Prohibition before the trial court that the respondent Municipal Treasurer arbitrarily and despotically issued the writ of garnishment against petitioners funds, to wit: 1) The petitioner is not the taxpayer contemplated by the Real Property Tax Code for purposes of an assessment; 2) There was no assessment made prior to the collection of back taxes thereby rendering irregular the collection of taxes by the respondent; and 3) Respondent cannot garnish petitioners funds for the satisfaction of delinquent taxes. His remedy is merely to levy upon the real property subject of the tax pursuant to the legal principle that unpaid real property taxes constitute a lien upon the real property subject to back taxes.

By the parties own doing, all the issues that bear upon the propriety of the issuance of the warrants of garnishment against petitioners bank deposits for the collection of back taxes have been raised before this Court in its Petition for Review on Certiorari and properly resolved in favor of respondent Municipal Treasurer. In resolving all those issues presented before us by petitioner, we have, in effect, resolved petitioners amended petition for prohibition filed before the trial court. In other words, we have already decided that said respondent did not act arbitrarily and despotically in garnishing petitioners funds.

Hence, should the trial court find that there has indeed been a prior assessment, petitioners petition for prohibition would be dismissed for failure to pay under protest and to exhaust administrative remedies. However, a finding by the trial court that there was no tax assessment made prior to the collection of taxes would render inapplicable the requirement of paying under protest and exhausting administrative remedies by first appealing to the LBAA before the trial court takes cognizance of petitioners petition for prohibition. Unfortunately therefore, even if the trial court can assume jurisdiction over the said petition for prohibition, there is nothing substantial left for it to do.[33]

The petitioner received, on March 4, 2002, a copy of this Courts Resolution dated February 1, 2002. Entry of judgment was made of record on March 6, 2002.[34] On March 19, 2002, the petitioner filed a Motion for Reconsideration of the Resolution Promulgated on February 1, 2002 or Motion to Admit the Second Motion for Reconsideration Herein Incorporated of the Decision, in view of the Courts pronouncements in its February 1, 2002 Resolution that the petitioner was not furnished with any notice of assessment; that the notices sent by the respondent to the petitioner were merely collection letters and not notices of assessment; and, that questions of fact were raised before the Court. The petitioner insisted that conformably with its new findings, the Court should have reversed the Decision of the Court of Appeals dated August 11, 1993 and its Resolution dated February 28, 1994, and remanded the case to the trial court for further proceedings. The petitioner argued that the Courts new findings were inconsistent with its denial of its motion for reconsideration. The petitioner prayed that:

WHEREFORE, petitioner respectfully prays that the Decision promulgated on May 18, 2001 and the Resolution promulgated on February 1, 2002 be reconsidered and set aside and a new one issue reversing the Decision of the Honorable Court of Appeals dated August 11, 1993 and its Resolution dated February 28, 1994 and remanding this case to the trial court for further proceedings.[35]

Instead of resolving the petitioners March 19, 2002 motion for reconsideration on its merits, the Court, in a Resolution[36] dated April 15, 2002, merely noted without action the said motion, directed that Entry of Judgment be made in due course and stated that no further pleadings shall be entertained in relation to the case. The Court treated the March 19, 2002 motion for reconsideration of the petitioner as a prohibited pleading.

Undaunted, the petitioner filed, on June 2, 2002, a motion for leave to file a motion for reconsideration of the April 15, 2002 Resolution, appending thereto its motion for reconsideration. It contended that after the Court held in its February 1, 2002 Resolution that the September 3, 1986 and October 31, 1989 notices sent by the respondent to the petitioner were notices of collection, thus, justifying its conclusion that Section 614 of P.D. No. 464 was not applicable, the Court should have ordered the case remanded to the trial court for further proceedings. The petitioner argued that since the Court made findings in its February 1, 2002 Resolution contrary to those findings in its May 18, 2001 Decision, it should be allowed to seek a reconsideration of the said resolution.[37]

In the meantime, in view of the entry of judgment made in the case, the Equitable PCI Bank, one of the petitioners depository banks, was requested by the respondent, on June 20, 2002, to release to the latter the garnished funds of the petitioner in the amount of P36,432,001.97, pursuant to the October 4, 1990 Warrant of Garnishment served on the bank on October 8, 1990.[38] The petitioner, however, in a Letter dated June 24, 2002,[39] requested the same bank to defer the release of the garnished funds, and forthwith filed before the Court on June 28, 2002 an Urgent Motion For The Recall Of The Entry Of Judgment,[40] in view of the pendency of its motion for reconsideration before the Court. Hence, on July 2, 2002, Equitable PCI Bank filed a Motion For Clarification,[41] praying that it be given appropriate guidance relative to the respondents implementation of the warrant of garnishment, vis--vis the petitioners motion for reconsideration pending before the Court.

On October 1, 2003, the Court resolved to refer the pending incidents to the Court En Banc for resolution.

The Issues

The petitioner presented two issues in its motions dated March 19, 2002 and June 2, 2002, viz: (a) whether the entry of judgment made of record by the Clerk of Court of this Court on March 6, 2002 should be recalled and the petitioner granted leave to file its motion for reconsideration; and, (b) whether the Courts May 18, 2001 Decision should be set aside and the case remanded to the trial court for further proceedings, in view of the factual findings contained in the Courts February 1, 2002 Resolution.

On the first issue, the petitioner asserts that the entry of judgment made of record by this Court on March 6, 2002 was premature. It argues that it had the right to file a motion for the reconsideration of the February 1, 2002 Resolution of this Court, considering that while the material findings in the instant case were reversed, the petitioners motion for reconsideration was altogether denied. The petitioner avers that it should not be prevented from moving for a rectification of this Courts inconsistent stance, and submits that the Courts Resolution of February 1, 2002 denying with finality its July 3, 2001 motion for reconsideration was premature, hence, inefficacious.

The Ruling of the Court

The contention of the petitioner is meritorious.

Section 1, Rule 52 of the Rules of Court, provides that a motion for reconsideration of a decision may be filed within fifteen days from notice thereof. Under Section 10, Rule 51, if no appeal or motion for new trial or reconsideration is filed within the time provided in the Rules, the judgment shall forthwith be entered by the clerk in the book of entries of judgments. Section 2, Rule 52 further provides that no second motion for reconsideration of a judgment or final resolution by the same party shall be entertained.

Indeed, in Ortigas and Company Limited Partnership vs. Velasco,[42] we held that a second motion for reconsideration of a decision or a final order is prohibited, except for extraordinarily persuasive reasons and only upon express leave first obtained.We explained, thus:

The propriety or acceptability of such a second motion for reconsideration is not contingent upon the averment of new grounds to assail the judgment, i.e., grounds other than those theretofore presented and rejected. Otherwise, attainment of finality of a judgment might be staved off indefinitely, depending on the partys ingeniousness or cleverness in conceiving and formulating additional flaws or newly discovered errors therein, or thinking up some injury or prejudice to the rights of the movant for reconsideration. Piece-meal impugnation of a judgment by successive motions for reconsideration is anathema, being precluded by the salutary axiom that a party seeking the setting aside of a judgment, act or proceeding must set out in his motion all the grounds therefor, and those not so included are deemed waived and cease to be available for subsequent motions.

For all litigation must come to an end at some point, in accordance with established rules of procedure and jurisprudence. As a matter of practice and policy, courts must dispose of every case as promptly as possible; and in fulfillment of their role in the administration of justice, they should brook no delay in the termination of cases by stratagems or maneuverings of parties or their lawyers...[43]

The foregoing rule has no application in this case. It bears stressing that this Court, in its May 18, 2001 Decision, affirmed the ruling of the Court of Appeals that the petitioner had no cause of action against the respondent. Thus, the appellate courts finding, that the petitioner received a notice of assessment from the respondent notwithstanding which it failed to appeal in due course from the same, was upheld; hence, the petitioner was barred from filing a petition for prohibition in the trial court under Section 64 of P.D. No. 464. This Court also ruled that the respondents Letters dated September 3, 1986 and October 31, 1989 received by the petitioner were notices of assessment and not mere collection letters. The Court concluded that the bank deposits of the petitioner may, thus, be garnished by the respondent under P.D. No. 464.

However, in its February 1, 2002 Resolution, the Court reversed its findings and ruled that the petitioner was not served with any notice of assessment as required by law, and that the respondents Letters of September 6, 1985 and October 31, 1983 were collection letters, receipt of which was denied by the petitioner. The Court, thus, held that there was a need to remand the case to the lower court in order to resolve the factual issue of whether or not the respondent, indeed, served a notice of assessment on the petitioner. The Court, however, also ruled that there was no longer a need to remand the case to the trial court.

In light of the supervening findings of this Court in its February 1, 2002 Resolution which are inconsistent with its ruling in its May 18, 2001 Decision, and the disposition of the petition on its merits, the Court now rules that the petitioner had the right to file a motion for reconsideration thereon. Consequently, the entry of judgment made of record on March 6, 2002 was premature and inefficacious, and should be recalled.

Anent the second issue, this Court, upon a meticulous review of the records of the case, finds that the Court of Appeals erred in granting the respondents petition for a writ of certiorari.

In People vs. Court of Appeals, et al.,[44] this Court ruled that the public respondent acts without jurisdiction if it does not have the legal power to determine the case; there is excess of jurisdiction where the respondent, being clothed with the power to determine the case, oversteps its authority as determined by law. There is grave abuse of discretion where the public respondent acts in a capricious, whimsical, arbitrary or despotic manner in the exercise of its judgment as to be said to be equivalent to lack of jurisdiction.[45] Mere abuse of discretion is not enough.

In a petition for certiorari, the jurisdiction of the court is narrow in scope. It is limited to resolving only errors of jurisdiction. Errors of judgment of the trial court are to be resolved by the appellate court in the appeal by writ of error, or via a petition for review on certiorari in this Court under Rule 45 of the Rules of Court. Certiorari will issue only to correct errors of jurisdiction. It is not a remedy to correct errors of judgment.[46] An error of judgment is one in which the court may commit in the exercise of its jurisdiction, and which error is reversible only by an appeal. Error of jurisdiction is one where the act complained of was issued by the court without or in excess of jurisdiction, and which error is correctible only by the extraordinary writ of certiorari.[47] As long as the court acts within its jurisdiction, any alleged errors committed in the exercise of its discretion will amount to nothing more than mere errors of judgment, correctible by an appeal or a petition for review under Rule 45 of the Rules of Court.[48]

This Court finds and so rules that the RTC committed grave abuse of discretion amounting to excess or lack of jurisdiction in declaring that the petitioner is not the taxpayer liable for the taxes due claimed by the private respondent. Indeed, in its May 18, 2001 Decision,[49] this Court ruled:

The fact that NAPOCOR is the present owner of the Sucat power plant machineries and equipment does not constitute a legal barrier to the collection of delinquent taxes from the previous owner, MERALCO, who has defaulted in its payment. In Testate Estate of Concordia T. Lim vs. City of Manila, the Court held that the unpaid tax attaches to the property and is chargeable against the person who had actual or beneficial use and possession of it regardless of whether or not he is the owner. In that case, the Court declared that to impose the real property tax on the subsequent owner which was neither the owner nor the beneficial user of the property during the designated periods would not only be contrary to law but also unjust.[50]

However, the Court holds that the RTC did not commit any grave abuse of discretion when it denied the respondents motion to dismiss on the claim that for the petitioners failure to appeal from the 1986 notice of assessment of the Municipal Assessor, the assessment had become final and enforceable under Section 64 of P.D. No. 464.

Section 22 of P.D. No. 464 states that, upon discovery of real property, the provincial, city or municipal assessor shall make an appraisal and assessment of such real property in accordance with Section 5 of the law, irrespective of any previous assessment or taxpayers valuation thereon. The provincial, city or municipal assessor is tasked to determine the assessed value of the property, meaning the value placed on taxable property for ad valorem tax purposes. The assessed value multiplied by the tax rate will produce the amount of tax due. It is synonymous to taxable value.

An assessment fixes and determines the tax liability of a taxpayer.[51] It is a notice to the effect that the amount therein stated is due as tax and a demand for payment thereof.[52] The assessor is mandated under Section 27 of the law to give written notice within thirty days of such assessment, to the person in whose name the property is declared.[53] The notice should indicate the kind of property being assessed, its actual use and market value, the assessment level and the assessed value. The notice may be delivered either personally to such person or to the occupant in possession, if any, or by mail, to the last known address of the person to be served, or through the assistance of the barrio captain. The issuance of a notice of assessment by the local assessor shall be his last action on a particular assessment.[54] For purposes of giving effect to such assessment, it is deemed made when the notice is released, mailed or sent to the taxpayer.[55] As soon as the notice is duly served, an obligation arises on the part of the taxpayer to pay the amount assessed and demanded.[56]

If the taxpayer is not satisfied with the action of the local assessor in the assessment of his property, he has the right, under Section 30 of P.D. No. 464, to appeal to the Local Board of Assessment Appeals by filing a verified petition within sixty (60) days from service of said notice of assessment. If the taxpayer fails to appeal in due course, the right of the local government to collect the taxes due becomes absolute upon the expiration of such period, with respect to the taxpayers property.[57]The action to collect the taxes due is akin to an action to enforce a judgment.[58] It bears stressing, however, that Section 30 of P.D. No. 464 pertains to the assessment and valuation of the property for purposes of real estate taxation. Such provision does not apply where what is questioned is the imposition of the tax assessed and who should shoulder the burden of the tax.[59]

Conformably to Section 57 of P.D. No. 464, it is the local treasurer who is tasked with collecting taxes due from the taxpayer. The said provision reads: SEC. 57. Collection of tax to be the responsibility of treasurers. The collection of the real property tax and all penalties accruing thereto, and the enforcement of the remedies provided for in this Code or any applicable laws, shall be the responsibility of the treasurer of the province, city or municipality where the property is situated.

The duty of the local treasurer to collect the taxes commences from the time the taxpayer fails or refuses to pay the taxes due, following the latters failure to question the assessment in the Local Board of Assessment Appeals and/or to the Central Board of Assessment Appeals. This, in turn, renders the assessment of the local assessor final, executory and demandable, thus, precluding the taxpayer from disputing the correctness of the assessment or from invoking any defense that would reopen the question of its liability on the merits.[60]

In this case, the petitioner denied receiving copies of Tax Declarations Nos. B-009-5501 to B-009-5494 prepared by the respondent Municipal Assessor in 1985. In the face of the petitioners denial, the respondent was burdened to prove the service of the tax declarations on the petitioner.[61] While the respondent alleged in his Comment on the Petition at bar that the Municipal Assessor furnished the petitioner with copies of the said tax declarations on November 29, 1985, the only proof proferred by the respondent to prove such claim was the receipt signed by a certain Basilio Afuang dated November 29, 1985.[62] The records failed to show the connection of Basilio Afuang to the petitioner, or that he was authorized by the petitioner to receive the owners copy of the said tax declaration from the Office of the Municipal Assessor. We note that the respondent even failed to append a copy of the said receipt in its motion to dismiss in the trial court. Conformably, this Court, in its May 18, 2001 Decision,[63] declared as follows: The records, however, are bereft of any evidence showing actual receipt by petitioner of the real property tax declaration sent by the Municipal Assessor. However, the respondent in a Petition for Certiorari (G.R. No. 100763) filed with this Court which later referred the same to the Court of Appeals for resolution, narrated that the municipal assessor assessed and declared the afore-listed properties for taxation purposes as of 28 November 1985. Significantly, in the same petition, respondent referred to former Municipal Treasurer Norberto A. San Mateos notices to MERALCO, all dated 3 September 1986, as notices of assessment and not notices of collection as it claims in this present petition. Respondent cannot maintain diverse positions.[64]

The question that now comes to fore is, whether the respondents Letters to the petitioner dated September 3, 1986 and October 31, 1989, respectively, are mere collection letters as contended by the petitioner and as held by this Court in its February 1, 2002 Resolution; or, as claimed by the respondent and as ruled by this Court in its May 18, 2001 Decision, are notices of assessment envisaged in Section 27 of P.D. No. 464.

The September 3, 1986 notice/letter[65] of the respondent to the petitioner reads:

G/Gng. MANILA ELECTRIC CO. Ortigas Avenue, Pasig Metro Manila

Mahal na G./Gng.

Ipinababatid po namin sa inyo na ayon sa talaan ng aming tanggapan, ang buwis sa mga ari-arian na nakatala sa inyong pangalan ay hindi pa nakakabayad tulad ng nasasaad sa ibaba:

Tax. Decl. No.

Location

Assessment

Year

Tax Due

Penalty

Total

B-009-05501

Sucat

P86,874,490

1976

...

-

2,171,862.25

-05502

- do -

81,082,860

1977

-

2,027,071.50

-05503

- do -

75,291,220

1978

-

1,882,280.50

-05504

- do -

80,978,500.

1979

-

2,024,462.50

1980

-

2,024,462.50

1981

2,024,462.50

TOTAL - - - - - P ___________CONT. BELOW__________ Inaasahan po namin na di ninyo ipagwawalang bahala ang patalastas na ito at ang pagbabayad ng nabanggit na buwis sa lalong madaling panahon. Ipinaaala-ala po lamang ang sino mang magpabaya o magkautang ng buwis ng maluwat ay isusubasta (Auction Sale) ng Pamahalaan ang inyong ari-arian ng naaayon sa batas.

Subalit kung kayo po naman ay bayad na, ipakita po lamang ang katibayan sa pagbabayad (Official Receipt) at ipagwalang bahala ang patalastas na ito.

Lubos na gumagalang, (Sgd.) NORBERTO A. SAN MATEO Ingat-Yaman Pambayan [66]

The October 31, 1989 notice/letter of the respondent to the petitioner, on the other hand, reads: Gng. MANILA ELECTRIC COMPANY Sucat

Mahal na G./Gng.

Ipinababatid po namin sa inyo na ayon sa talaan ng aming tanggapan, ang buwis sa mga ari-arian na nakatala sa inyong pangalan ay hindi nakabayad tulad ng nasasaad sa ibaba:

TAX DECL NO.

LOCA-TION

05495-Mach.

Sucat

05496-Mach.

- do -

ASSESSED

YEAR

TAX DUE

PENALTY

TOTAL

68,208,610.00

1977-78

3,410,430.50

818,503.32

4,228,933

62,524,550.00

1978

1,563,113.75

375,147.30

1,938,261

VALUE

05486-Mach.

- do -

102,088,300.00

1978

2,552,200.50

612,529.80

1,164,737

05490-Mach.

- do -

78,881,420.00

1977-78

1,997,035.50

479,288.52

2,476,324

05491-Mach.

- do -

74,555,990.00

1978

1,863,899.75

447,335.94

2,311,235

05494-Mach.

- do -

73,892,660.00

1976-78

5,541,949.50

1,330,067.88

6,872,017

GRAND

TOTAL

20,991.509

Inaasahan po namin na di ninyo ipagwawalang bahala ang patalastas ng ito at ang pagbabayad sa buwis ng sa lalong madaling panahon. Ipinaala-ala po lamang na sino ang magpabaya sa buwis ng maluwat ay isusubasta (AUCTION SALE) ng pamahalaan ang inyong ari-arian ayon sa batas.

Subalit kung kayo ay bayad na, ipakita po lamang ang katibayan sa pagbabayad (OFFICIAL RECEIPT) at ipagwalang bahala ag patalastas na ito.

Lubos na gumagalang, (Sgd.) EDUARDO A. ALON Asst. Municipal Treasurer Officer-in-Charge[67]

The Court, in its February 1, 2002 Resolution,[68] upheld the petitioners contention and ruled that the aforequoted letters/notices are not the notices of assessment envisaged in Section 27 of P.D. No. 464. Thus: It is apparent why the foregoing cannot qualify as a notice of tax assessment. A notice of assessment as provided for in the Real Property Tax Code should effectively inform the taxpayer of the value of a specific property, or proportion thereof subject to tax, including the discovery, listing, classification, and appraisal of properties. The September 3, 1986 and October 31, 1989 notices do not contain the essential information that a notice of assessment must specify, namely, the value of a specific property or proportion thereof which is being taxed, nor does it state the discovery, listing, classification and appraisal of the property subject to taxation. In fact, the tenor of the notices bespeaks an intention to collect unpaid taxes, thus the reminder to the taxpayer that the failure to pay the taxes shall authorize the government to auction off the properties subject to taxes or, in the words of the notice, Ipinaala-ala po lamang, ang sino mang magpabaya o magkautang ng buwis ng maluwat ay isusubasta (Auction Sale) ng pamahalaan ang inyong ari-arian ng naaayon sa batas.

The petitioner is also correct in pointing out that the last paragraph of the said notices that inform the taxpayer that in case payment has already been made, the notices may be disregarded is an indication that it is in fact a notice of collection.

Furthermore, even the Bureau of Local Government Finance (BLGF), upon whose recommendation former Municipal Treasurer Alon relied in the collection of back taxes against petitioner, deemed the September 3, 1986 notice as a collection letter. Hence;

The Bureau should be informed of any recent action taken by MERALCO on the collection letter dated September 3, 1986 of that Office and whether NAPOCOR was also advised thereof and its reaction thereon, if any, for our record and reference.[69]

Such ruling is, in effect, a reversal of the May 18, 2001 Decision of the Court, where it was ruled that the said letters/notices were, in fact, notices of assessment:

Be that as it may, petitioner was correct when it pointed out that the Municipal Treasurer, contrary to that required by law, issued the notices of assessment. However, the trial court is without authority to address the alleged irregularity in the issuance of the notices of assessment without prior tax payment, under protest, by petitioner. Section 64 of the RPTC, prohibits courts from declaring any tax invalid by reason of irregularities or informalities in the proceedings of the officers charged with the assessment or collection of taxes except upon the condition that the taxpayer pays the just amount of the tax, as determined by the court in the pending proceeding. As petitioner failed to make a protest payment of the tax assessed, any argument regarding the procedure observed in the preparation of the notice of assessment and collection is futile as the trial court in such a scenario cannot assume jurisdiction over the matter.

It cannot be gainsaid that petitioner should have addressed its arguments to respondent at the first opportunity upon receipt of the 3 September 1986 notices of assessment signed by Municipal Treasurer Norberto A. San Mateo. Thereafter, it should have availed of the proper administrative remedies in protesting an erroneous tax assessment, i.e., to question the correctness of the assessments before the Local Board of Assessment Appeals (LBAA), and later, invoke the appellate jurisdiction of the Central Board of Assessment Appeals (CBAA). Under the doctrine of primacy of administrative remedies, an error in the assessment must be administratively pursued to the exclusion of ordinary courts whose decisions would be void for lack of jurisdiction. But an appeal shall not suspend the collection of the tax assessed without prejudice to a later adjustment pending the outcome of the appeal. The failure to appeal within the statutory period shall render the assessment final and unappealable[70]

We note that the petitioner, in its Answer to the Petition of the respondent in the Court of Appeals, admitted to receiving copies of the said letters/notices.[71]

Upon a careful review of the records of this case and the applicable jurisprudence, we find that it is the contention of the petitioner and the ruling of this Court in its February 1, 2002 Resolution which is correct. Indeed, even the respondent admitted in his comment on the petition that:

Indeed, respondent did not issue any notice of assessment because statutorily, he is not the proper officer obliged to do so. Under Chapter VIII, Sections 90 and 90-A of the Real Property Tax Code, the functions related to the appraisal and assessment for tax purposes of real properties situated within a municipality pertains to the Municipal Deputy Assessor and for the municipalities within Metropolitan Manila, the same is lodged, pursuant to P.D. No. 921, on the Municipal Assessor.[72]

Consequently then, Sections 30 and 64 of P.D. No. 464 had no application in the case before the trial court. The petitioners action for prohibition was not premature. Hence, the Court of Appeals erred in rendering judgment granting the petition for certiorari of the respondent.

Moreover, the petitioner, in its petition for prohibition before the court a quo, denied liability for the taxes claimed by the respondent, asserting that if at all, it is the NAPOCOR, as the present owner of the machineries/equipment, that should be held liable for such taxes. The petitioner had further alleged that the assessment and collection of the said taxes had already prescribed. Conformably to the ruling of this Court in Testate Estate of Lim vs. City of Manila,[73] Section 30 of P.D. No. 464 will not apply.

The Court further rules that there is a need to remand the case for further proceedings, in order for the trial court to resolve the factual issue of whether or not the Municipal Assessor served copies of Tax Declarations Nos. B-009-05499 to B-009-05502 on the petitioner, and, if in the affirmative, when the petitioner received the same; and to resolve the other issues raised by the parties in their pleadings. It bears stressing that the Court is not a trier of facts.

IN VIEW OF THE FOREGOING, the May 18, 2001 Decision of this Court dismissing the petition is SET ASIDE. The petition at bar is GIVEN DUE COURSE and GRANTED. The assailed decision of the Court of Appeals is REVERSED and SET ASIDE. The case is REMANDED to the trial court for further proceedings. The trial court is DIRECTED to terminate the proceedings within six (6) months from notice hereof.

No costs.

SO ORDERED.

AALA VS UY Parties must comply with the doctrines on hierarchy of courts and exhaustion of administrative remedies. Otherwise, they run the risk of bringing premature cases before this Court, which may result to protracted litigation and overclogging of dockets. This resolves the original action for Certiorari, Prohibition, and Mandamus1 filed by petitioners Crisanto M. Aala, Robert N. Balat, Datu Belardo M. Bungad, Cesar B. Cuntapay, Laura S. Domingo, Gloria M. Gazmen-Tan, and Jocelyn P.Saludares-Cadayona.2 They question the validity of City Ordinance No. 558, s-2012 of the City of Tagum, Davao del Norte, which the Sangguniang Panlungsod of Tagum City enacted on March 19, 2012. 3 On July 12, 2011, the Sangguniang Panlungsod of Tagum City's Committee on Finance conducted a public hearing for the approval of a proposed ordinance. The proposed ordinance sought to adopt a new schedule of market values and assessment levels of real properties in Tagum City 4. On November 3, 2011, the Sangguniang Panlungsod of Tagum City passed City Ordinance No. 516, s-2011, entitled An Ordinance Approving the New Schedule of Market Values, its Classification, and Assessment Level of Real Properties in the City of Tagum. 5 The ordinance was approved by Mayor Rey T. Uy (Mayor Uy) on November 11,2011 and was immediately forwarded to the Sangguniang Panlalawigan of Davao del Norte for review.6 On February 7, 2012, the Sangguniang Panlalawigan of Davao del Norte's Committee on Ways and Means/Games and Amusement issued a report dated February 1, 2012 declaring City Ordinance No. 516, s-2011 valid. 7 It also directed the Sangguniang Panlungsod of Tagum City to revise the ordinance based on the recommendations of the Provincial Assessor's Office.8 Consequently, the Sangguniang Panlalawigan of Davao del Norte returned City Ordinance No. 516, s-2011 to the Sangguniang Panlungsod of Tagum City for modification.9 As a result of the amendments introduced to City Ordinance No. 516, s-2011, on March 19, 2012, the Sangguniang Panlungsod of Tagum City passed City Ordinance No. 558, s-2012. 10 The new ordinance was approved by Mayor Uy on April 10, 2012. On the same day, it was transmitted for review to the Sangguniang Panlalawigan of Davao del Norte. The Sangguniang Panlalawigan of Davao del Norte received the proposed ordinance on April 12, 2012. 11 On April 30, 2012, Engineer Crisanto M. Aala (Aala) and Colonel Jorge P. Ferido (Ferido ), both residents of Tagum City, filed before the Sangguniang Panlalawigan of Davao del Norte an Opposition/Objection to City Ordinance No. 558, s-2012. 12 The opposition was docketed as Case No. DOCS-12-000362 and was referred to the Committee on Ways and Means/Games and Amusement. 13 The Committee conducted a hearing to tackle the matters raised in the Opposition.14 Present at the hearing were oppositors Aala and Ferido, their counsel, Alfredo H. Silawan, City Assessor of Tagum City, and Atty. Rolando Tumanda, City Legal Officer of Tagum City. 15 In their Opposition/Objection, 16 Aala and Ferido asserted that City Ordinance No. 558, s-2012 violated Sections 130(a), 17 198(a) and (b), 18 199(b), 19 and 20120 of the Local Government Code of 1991. 21 They alleged that Sections III C 1, 2, and 3 as well as Sections III G 1(b) and 4(g)22 of the proposed ordinance divided Tagum City into different zones, classified real properties per zone, and fixed its market values depending on where they were situated23 without taking into account the "distinct and fundamental differences . . . and elements of value"24 of each property. Aala and Ferido asserted that the proposed ordinance classified and valued those properties located in a predominantly commercial area as commercial, regardless of the purpose to which they were devoted. 25 According to them, this was erroneous because real property should be classified, valued, and assessed not according to its location

but on the basis of actual use.26 Moreover, they pointed out that the proposed ordinance imposed exorbitant real estate taxes, which the residents of Tagum City could not afford to pay.27 After the hearing, the Sangguniang Panlalawigan of Davao del Norte's Committee on Ways and Means/Games and Amusement issued Committee Report No. 5 dated May 4, 2012, which returned City Ordinance No. 558, s-2012 to the Sangguniang Panlungsod of Tagum City. 28 The Sangguniang Panlalawigan of Davao del Norte also directed the Sangguniang Panlungsod ofTagum City to give attention and due course to the oppositors' concerns.29 On May 22, 2012, the Sangguniang Panlungsod ofTagum City issued Resolution No. 808, s-2012 dated May 14, 2012, requesting the Sangguniang Panlalawigan of Davao del Norte to reconsider its position on City Ordinance No. 558, s-2012.30 On June 18, 2012, the Sangguniang Panlalawigan of Davao del Norte issued Resolution No. 42831 declaring as invalid Sections III C 1, 2, and 3, Sections III D (1) and (2), and Sections G l(b) and 4(g) of City Ordinance No. 558, s-2012. 32 However, on July 9, 2012, the Sangguniang Panlungsod of Tagum City passed Resolution No. 874, s-2012 declaring City Ordinance No. 558, s-2012 as valid.33 The Sangguniang Panlungsod of Tagum City cited as its basis Section 56(d)34 of the Local. Government Code of 1991 and Department of Interior and Local Government Opinion No. 151 dated November 25, 2010.35 It argued that the Sangguniang Panlalawigan of Davao del Norte failed to take action on City Ordinance No. 558, s-2012 within 30 days from its receipt on April 12, 2012.36 Hence, under Section 56(d) of the Local Government Code of 1991, City Ordinance No. 558, s-2012 enjoys the presumption of validity.37 On July 13, 2012, City Ordinance No. 558, s-2012 was published in the July 13-19, 2012 issue of Trends and Time,38 a newspaper of general circulation in Tagum City. 39 Alarmed by the impending implementation of City Ordinance No. 558, s-2012, petitioners filed before this Court an original action for Certiorari, Prohibition, and Mandamus on August 13, 2012.40 The Petition included a prayer for the issuance of a temporary restraining order and a writ of preliminary injunction.41 In their Petition, petitioners seek to nullify the ordinance on the ground that respondents enacted it with grave abuse of discretion.42 Petitioners invoke this Court's original jurisdiction under Article VIII, Section 5(1) of the Constitution 43in view of the need to immediately resolve the issues they have raised. 44 Petitioners allege that there is an urgent need to restrain the implementation of City Ordinance No. 558, s-2012.45Otherwise, the City Government of Tagum would proceed with "the collection of exorbitant real property taxes to the great damage and prejudice of . . . petitioners and the thousands of taxpayers inhabiting Tagum City[.]"46 On October 16, 2012, respondent Geterito T. Gementiza (Gementiza) filed a Motion47 praying that he be dropped as a respondent in the case. According to respondent Gementiza, he had opposed the passage of City Ordinance No. 558, s-2012 during the deliberations of the Sangguniang Panlungsod of Tagum City.48 In the Resolution49 dated October 23, 2012, this Court required the parties to file a comment on respondent Gementiza's Motion. On October 31, 2012, respondents filed a Comment50 on the Petition. In the Resolution51 dated December 4, 2012, this Court noted the Comment and required petitioners to file a reply to the Comment. Meanwhile, on February 20, 2013, respondents filed a Manifestation52 stating that the implementation of City Ordinance No. 558, s-2012 had been deferred due to the wide extent of damage caused by Typhoon Pablo in Tagum City.53 On February 25, 2013, petitioners and respondents filed their respective Comments54 on respondent Gementiza's Motion. Petitioners argued that the passage of the questioned ordinance was a collegial act of the Sangguniang Panlungsod of Tagum City, of which respondent Gementiza was a member. Hence, respondent Gementiza should still be impleaded in the case regardless of whether or not he opposed the passage of the ordinance.55 On March 6, 2013, petitioners filed a Reply56 to the Comment dated October 18, 2012.1âwphi1 In the Resolution57 dated March 19, 2013, this Court gave due course to the Petition, treated respondents' Comment as an answer, and required the parties to submit their memoranda. On July 10, 2013, petitioners filed their Memorandum58 dated June 20, 2013. On September 6, 2013, respondents filed their Memorandum59 dated August 2, 2013. Petitioners allege that Tagum City is predominantly agricultural. 60 Although it boasts of expansive highways "lined with tall palm trees" and a state-of-the-art city hall, Tagum City still has an outstanding debt of ₱450 million.61 The income level of its 240,000 inhabitants remains constant, and due to unreasonable business taxes, most businesses have either scaled down or closed. 62

Set against this factual backdrop, petitioners assail the validity of City Ordinance No. 558, s-2012.1âwphi1 They claim that the ordinance imposes exorbitant real estate taxes because of the Sangguniang Panlungsod's erroneous classification and valuation of real properties. 63 Petitioners are concerned residents of Tagum City who would be directly affected by the implementation of the questioned ordinance.64 Well-aware of the doctrines on the hierarchy of courts and exhaustion of administrative remedies, they beg this Court's indulgence to allow immediate and direct resort to it. 65 According to petitioners, this case is exempt from the application of the doctrine on hierarchy of courts. They anchor their claim on the ground that the redress they desire cannot be obtained in the appropriate courts. 66 Furthermore, petitioners assert that the issue they have raised is purely legal and that the case involves paramount public interest, which warrants the relaxation of the rule on exhaustion of administrative remedies. 67 Petitioners believe that compliance with Section 187 of the Local Government Code of 1991 would harm the taxpayers of Tagum City. 68 They argue that the cited provision hardly constitutes an efficacious remedy that can provide the redress they urgently seek. 69 According to petitioners, there is nothing that would prevent the City Government of Tagum from collecting exorbitant real property taxes since the Secretary of Justice does not have the power to suspend the implementation of the questioned ordinance.70 Moreover, the 60-day period given to the Secretary of Justice within which to render a decision would merely constitute delay and give the City Government of Tagum enough time to assess and collect exorbitant real property taxes.71 Petitioners also believe that upon receipt of an assessment, they would be precluded from questioning the excessiveness of the real property tax imposed by way of protest. 72 Under the Local Government Code of 1991, the amount of real property tax assessed must first be paid before a protest may be entertained. 73 However, petitioners contend that the taxpayers of Tagum City would not be able to comply with this rule due to lack of money. 74Petitioners justify immediate resort to this Court due to this impasse. 75 In their Comment, 76 respondents attack the propriety of the remedy of which petitioners have availed themselves. Respondents point out that the extraordinary remedy of certiorari is only directed against judicial and quasi-judicial acts. 77 According to respondents, the Sangguniang Panlungsod of Tagum City exercised a legislative function in enacting the questioned ordinance and is, thus, beyond the scope of a petition for certiorari. 78 Moreover, there is a plain, speedy, and adequate remedy available to petitioners under the law. 79 Citing Section 187 of the Local Government Code of 1991, respondents argue that petitioners should have exhausted administrative remedies by filing an appeal before the Secretary of Justice.80 Respondents further argue that in directly filing their Petition before this Court, petitioners violated the doctrine on hierarchy of courts.81 They stress that the Supreme Court, Court of Appeals, and the Regional Trial Courts have concurrent jurisdiction to issue writs of certiorari, prohibition, and mandamus. 82 Respondents also allege that the Petition raises factual issues, which warrants the dismissal of the Petition. 83 Going into the substantive aspect of the case, petitioners contend that the ordinance created only two (2) categories of real properties. Petitioners point out that Sections III C and D, which pertain to the classification of commercial and industrial lands, list all the streets and barrios in Tagum City. 84 Because of this, petitioners argue that the ordinance effectively categorized all lands in Tagum City either into commercial or industrial lands, regardless of the purpose to which they were devoted and the extent of their development. 85 Petitioners further contend that since all lands in Tagum City had been classified as commercial or industrial, all buildings and improvements would likewise be classified as commercial or industrial. Otherwise, an absurd situation would arise where the building and the land on which it stands would have a different classification. 86 In other words, petitioners claim that the ordinance created a blanket classification of real properties without regard to the principle of actual use. To the mind of petitioners, this blanket classification "does not conform to the reality that Tagum City is not that far advanced and commercially developed like Ayala Avenue [in] Makati City where [almost all] of the properties fronting the entire breadth of Ayala Avenue are . . . used for commercial purposes."87 In classifying real properties based on location, petitioners argue that the ordinance contravenes Section 217 of the Local Government Code of 1991, which provides that "[ r] eal property shall be classified, valued and assessed on the basis of its actual use regardless of where located, whoever owns it, and whoever uses it."88 Petitioners highlight the necessity in properly classifying real properties based on actual use because the classification of real property determines the assessment level that would be applied in computing the real property tax due. 89 Petitioners add that because all real properties in Tagum City were classified into commercial or industrial properties, their valuation would then correspond to that of commercial or industrial properties as the case may be.90In effect, the ordinance provided a uniform market value for all real properties without regard to the principle of actual use.91 According to petitioners, this is erroneous. They further add that the schedule of fair market values was arbitrarily prepared by those who do not know the basic principles of property valuation. 92

By way of example, petitioners point out that the market values of residential lands, which were reclassified under the ordinance as commercial, increased from ₱600.00 per square meter to ₱5,000.00 per square meter, or by 833% in a span of only three (3) years.93 According to petitioners, this violates Section 191 of the Local Government Code of 1991.94 Petitioners allege that the ordinance equated the market values of unused and undeveloped lands to that of fully developed lands. 95 Hence, the ordinance discriminates against poor land owners who do not have the means to pay the increased amount of real property taxes.96 Petitioners claim that what the Sangguniang Panlungsod had actually determined were the zonal values of real properties in Tagum City and not the market values.97 Petitioners contend that respondents committed grave abuse of discretion in fixing the new schedule of market values by usurping or arrogating unto itself the City Assessor's authority to fix the schedule of market values.98Being "personally acquainted with the nature, condition, and value of the said real properties" in a given locality, the City Assessor is in the best position to fix the schedule of market values.99 However, petitioners believe that the schedule of market values was prepared by the Sangguniang Panlungsod of Tagum City, and not by the City Assessor. 100 They also believe that the City Assessor abdicated his duty and unlawfully neglected to perform what was mandated under Section 212 of the Local Government Code of 1991. 101 Petitioners conclude that what the Sangguniang Panlungsod of Tagum City had undertaken was a general revision of real property assessments and property classification under Section 212 of the Local Government Code of 1991. 102 They argue that "the general revision of [real property] assessments and property classification cannot be made simultaneously with the ordinance adopting [a new] schedule of fair market values."103 Petitioners raise the sole substantive issue of whether respondents committed grave abuse of discretion in preparing, enacting, and approving City Ordinance No. 558, s-2012, which imposes exorbitant real property taxes in violation of the equal protection clause, due process clause, and the rule on uniformity in taxation. 104 On the other hand, respondents argue that petitioners misconstrued the ordinance. 105 They claim that a careful reading of the provisions would reveal that there were four (4) categories by which real properties were to be classified, valued, and assessed, namely: agricultural, residential, commercial, and industrial. 106 Although the ordinance lists specific roads and areas in Tagum City classified as commercial and industrial, this does not mean that all properties located in commercial and industrial areas would automatically be classified as such. 107 Respondents stress that the principle of actual use still plays an important role in the classification and assessment of real properties. 108 For the proper computation of the real property tax due, real properties located in commercial and industrial areas will be assessed depending on how they are used. 109 To illustrate, if a parcel of land located along a commercial area is used partly for commercial purposes and partly for agricultural purposes, then the fair market value of the portion used for commercial purposes will correspond to that of commercial lands, while the fair market value of the portion used for agricultural purposes will correspond to that of agricultural lands. 110 Respondents reiterate their claim that the Sangguniang Panlalawigan of Davao del Norte acted beyond the 30-day reglementary period under Section 56(d) of the Local Government Code of 1991. 111 Citing Department of Interior and Local Government's Opinion No. 151 dated November 25, 2010, respondents argue that the phrase "take action" means that the Sangguniang Panlalawigan, within 30 days from receipt of the ordinance or resolution, "should have issued their legislative action in the form of a [r]esolution containing their disapproval in whole or in part [of] any ordinance or resolution submitted to them for review[.]" 112 Since the Sangguniang Panlalawigan of Davao del Norte received the questioned ordinance on April 12, 2012, it had until May 12, 2012 to take action. 113However, the Sangguniang Panlalawigan of Davao del Norte only issued Resolution No. 428 on June 18, 2012. 114 For this Court's resolution are the following issues: Procedural First, whether this case falls under the exceptions to the doctrine on hierarchy of courts; Second, whether this case falls under the exceptions to the rule on exhaustion of administrative remedies; Third, whether petitioners correctly availed themselves of the extraordinary remedies of certiorari, prohibition, and mandamus; and Lastly, whether respondent Gementiza should be dropped as a respondent in the case. Substantive First, whether respondents committed grave abuse of discretion amounting to lack or excess of jurisdiction in preparing, enacting, and approving City Ordinance No. 558, s-2012;

Second, whether City Ordinance No. 558, s-2012 classifies all real properties in Tagum City into commercial or industrial properties only; Third, whether the schedule market values conform to the principle that real properties shall be valued on the basis of actual use; Fourth, whether City Ordinance No. 558, s-2012 imposes exorbitant real property taxes; and Lastly, whether City Ordinance No. 558, s-2012 is unconstitutional for violation of the equal protection clause, due process clause, and the rule on uniformity in taxation. We deny the Petition for serious procedural errors. I The doctrine on hierarchy of courts is a practical judicial policy designed to restrain parties from directly resorting to this Court when relief may be obtained before the lower courts. 115 The logic behind this policy is grounded on the need to prevent "inordinate demands upon the Court's time and attention which are better devoted to those matters within its exclusive jurisdiction," as well as to prevent the congestion of the Court's dockets. 116 Hence, for this Court to be able to "satisfactorily perform the functions assigned to it by the fundamental charter[,]" it must remain as a "court of last resort." 117 This can be achieved by relieving the Court of the "task of dealing with causes in the first instance." 118 As expressly provided in the Constitution, this Court has original jurisdiction "over petitions for certiorari, prohibition, mandamus, quo warranto, and habeas corpus."119 However, this Court has emphasized in People v. Cuaresma120that the power to issue writs of certiorari, prohibition, and mandamus does not exclusively pertain to this Court. 121 Rather, it is shared with the Court of Appeals and the Regional Trial Courts. 122 Nevertheless, "this concurrence of jurisdiction" does not give parties unfettered discretion as to the choice of forum. The doctrine on hierarchy of courts is determinative of the appropriate venue where petitions for extraordinary writs should be filed. 123 Parties cannot randomly select the court or forum to which their actions will be directed. There is another reason why this Court enjoins strict adherence to the doctrine on hierarchy of courts. As explained in Diocese of Bacolod v. Commission on Elections, 124 "[t]he doctrine that requires respect for the hierarchy of courts was created by this court to ensure that every level of the judiciary performs its designated roles in an effective and efficient manner." 125 Thus: Trial courts do not only determine the facts from the evaluation of the evidence presented before them. They are likewise competent to determine issues of law which may include the validity of an ordinance, statute, or even an executive issuance in relation to the Constitution. To effectively perform these functions, they are territorially organized into regions and then into branches. Their writs generally reach within those territorial boundaries. Necessarily, they mostly perform the all-important task of inferring the facts from the evidence as these are physically presented before them. In many instances, the facts occur within their territorial jurisdiction, which properly present the 'actual case' that makes ripe a determination of the constitutionality of such action. The consequences, of course, would be national in scope. There are, however, some cases where resort to courts at their level would not be practical considering their decisions could still be appealed before the higher courts, such as the Court of Appeals. The Court of Appeals is primarily designed as an appellate court that reviews the determination of facts and law made by the trial courts. It is collegiate in nature. This nature ensures more standpoints in the review of the actions of the trial court. But the Court of Appeals also has original jurisdiction over most special civil actions. Unlike the trial courts, its writs can have a nationwide scope. It is competent to determine facts and, ideally, should act on constitutional issues that may not necessarily be novel unless there are factual questions to determine. This court, on the other hand, leads the judiciary by breaking new ground or further reiterating - in the light of new circumstances or in the light of some confusions of bench or bar - existing precedents. Rather than a court of first instance or as a repetition of the actions of the Court of Appeals, this court promulgates these doctrinal devices in order that it truly performs that role. 126 (Citation omitted) Consequently, this Court will not entertain direct resort to it when relief can be obtained in the lower courts. 127 This holds especially true when questions of fact are raised. 128 Unlike this Court, trial courts and the Court of Appeals are better equipped to resolve questions of fact. 129 They are in the best position to deal with causes in the first instance. However, the doctrine on hierarchy of courts is not an inflexible rule. 130 In Spouses Chua v. Ang, 131 this Court held that "[a] strict application of this rule may be excused when the reason behind the rule is not present in a case[.]" 132This Court has recognized that a direct invocation of its original jurisdiction may be warranted in exceptional cases as when there are compelling reasons clearly set forth in the petition, 133 or when what is raised is a pure question of law. 134

In a fairly recent case, we summarized other well-defined exceptions to the doctrine on hierarchy of courts. Immediate resort to this Court may be allowed when any of the following grounds are present: (1) when genuine issues of constitutionality are raised that must be addressed immediately; (2) when the case involves transcendental importance; (3) when the case is novel; (4) when the constitutional issues raised are better decided by this Court; (5) when time is of the essence; (6) when the subject of review involves acts of a constitutional organ; (7) when there is no other plain, speedy, adequate remedy in the ordinary course of law; (8) when the petition includes questions that may affect public welfare, public policy, or demanded by the broader interest of justice; (9) when the order complained of was a patent nullity; and (10) when the appeal was considered as an inappropriate remedy. 135 None of the exceptions to the doctrine on hierarchy of courts are present in this case. Significantly, although petitioners raise questions of law, other interrelated factual issues have emerged from the parties' arguments, which this Court deems indispensable for the proper disposition of this case. In Republic v. Sandiganbayan, 136 this Court explained that a question of fact exists: when the doubt or difference arises as to the truth or falsehood of facts or when the query invites calibration of the whole evidence considering mainly the credibility of the witnesses, the existence and relevancy of specific surrounding circumstances as well as their relation to each other and to the whole, and the probability of the situation. 137 (Citations omitted) The resolution of the first substantive issue of whether respondents committed grave abuse of discretion in preparing, enacting, and approving City Ordinance No. 558, s-2012 requires the presentation of evidence on the procedure undertaken by the City Government of Tagum. The second substantive issue, which involves the alleged blanket classification of real properties, is likewise factual in nature. There is still a dispute on whether the questioned ordinance truly limited the classification of real properties into two (2) categories. This Court cannot resolve this issue without further evidence from the parties, particularly from the Sangguniang Panlungsod of Tagum City. The third and fourth issues, which are essential for the proper disposition of this case, are questions of fact. To determine whether the schedule of fair market values conforms to the principle of actual use requires evidence from the person or persons who prepared it. These individuals must show the process and method they employed in arriving at the schedule of market values. It is worth mentioning that several of petitioners' assertions, on which their arguments are based, are purely speculative. For instance, petitioners claim that the Sangguniang Panlungsod of Tagum City usurped the City Assessor's authority in fixing the schedule of fair market values. 138 Yet, they offer no evidence to support their allegation. They merely rely on a comparison between the new schedule of market values and the schedule of market va1ues in a previous ordinance. 139 With regard to the fourth issue, petitioners invite this Court to compare the new schedule of fair market values with the old schedule of fair market values and determine whether the increase was exorbitant. In the absence of any evidence, this Court does not have the technical expertise to make such determination. We cannot simply rely on bare numbers. In order to resolve these factual issues, we will be tasked to receive evidence from both parties. However, the initial reception and appreciation of evidence are functions that this Court cannot perform. These functions are best left to the trial courts. This Court is not a trier of facts. 140 The factual issues in this case should have been raised and ventilated in the proper forum. II Parties are generally precluded from immediately seeking the intervention of courts when "the law provides for remedies against the action of an administrative board, body, or officer."141 The practical purpose behind the principle of exhaustion of administrative remedies is to provide an orderly procedure by giving the administrative agency an "opportunity to decide the matter by itself correctly [and] to prevent unnecessary and premature resort to the courts."142 Under Section 187 of the Local Government Code of 1991, aggrieved taxpayers who question the validity or legality of a tax ordinance are required to file an appeal before the Secretary of Justice before they seek intervention from the regular courts. Section 187 of the Local Government Code of 1991 provides: SECTION 187. Procedure for Approval and Effectivity of Tax Ordinances and Revenue Measures; Mandatory Public Hearings. - The procedure for approval of local tax ordinances and revenue measures shall be in accordance with the provisions of this Code: Provided, That public hearings shall be conducted for the purpose prior to the enactment thereof: Provided, further, That any question on the constitutionality or legality of tax ordinances or revenue measures may be raised on appeal within thirty (30) days from the effectivity thereof to the Secretary of Justice who shall render a

decision within sixty (60) days from the date of receipt of the appeal: Provided, however, That such appeal shall not have the effect of suspending the effectivity of the ordinance and the accrual and payment of the tax, fee, or charge levied therein: Provided, finally, That within thirty (30) days after receipt of the decision or the lapse of the sixty-day period without the Secretary of Justice acting upon the appeal, the aggrieved party may file appropriate proceedings with a court of competent jurisdiction. In Reyes v. Court of Appeals, 143 this Court declared the mandatory nature of Section 187 of the Local Government Code of 1991 : [T]he law requires that the dissatisfied taxpayer who questions the validity or legality of a tax ordinance must file his appeal to the Secretary of Justice, within 30 days from effectivity thereof. In case the Secretary decides the appeal, a period also of 30 days is allowed for an aggrieved party to go to court. But if the Secretary does not act thereon, after the lapse of 60 days, a party could already proceed to seek relief in court. These three separate periods are clearly given for compliance as a prerequisite before seeking redress in a competent court. Such statutory periods are set to prevent delays as well as enhance the orderly and speedy discharge of judicial functions. For this reason the courts construe these provisions of statutes as mandatory. 144 (Emphasis supplied, citations omitted) The same principle was reiterated in Jardine Davies Insurance Brokers, Inc. v. Aliposa. 145 In Jardine, the then Sangguniang Bayan of Makati enacted Municipal Ordinance No. 92-072, otherwise known as the Makati Revenue Code, which provided for the schedule of "real estate, business, and franchise taxes . . . at rates higher than those in the Metro Manila Revenue Code." Under this ordinance, Jardine Davies Insurance Brokers, Inc. (Jardine) was assessed taxes, fees, and charges. Jardine believed that the ordinance was void. It filed before the Regional Trial Court a case seeking a refund for alleged overpayment of taxes. The trial court dismissed the complaint. Aggrieved, Jardine filed before this Court a Petition for review raising pure questions of law. Ruling on the Petition, this Court observed that Jardine essentially questioned the validity of the tax ordinance without filing an appeal before the Secretary of Justice, in violation of Section 187 of the Local Government Code of 1991: In this case, petitioner, relying on the resolution of the Secretary of Justice in The Philippine Racing Club, Inc. v. Municipality of Makati case, posited in its complaint that the ordinance which was the basis of respondent Makati for the collection of taxes from petitioner was null and void. However, the Court agrees with the contention of respondents that petitioner was proscribed from filing its complaint with the RTC of Makati for the reason that petitioner failed to appeal to the Secretary of Justice within 30 days from the effectivity date of the ordinance as mandated by Section 187 of the Local Government Code[.] 146 The doctrine of exhaustion of administrative remedies, like the doctrine on hierarchy of courts, is not an iron-clad rule. It admits of several well-defined exceptions. Province of Zamboanga del Norte v. Court of Appeals147has held that the principle of exhaustion of administrative remedies may be dispensed in the following instances: (1) [W]hen there is a violation of due process; (2) when the issue involved is purely a legal question; (3) when the administrative action is patently illegal and amounts to lack or excess of jurisdiction; (4) when there is estoppel on the part of the administrative agency concerned; (5) when there is irreparable injury; (6) when the respondent is a department secretary whose acts, as an alter ego of the President, bears the implied and assumed approval of the latter; (7) when to require exhaustion of administrative remedies would be unreasonable; (8) when it would amount to a nullification of a claim; (9) when the subject matter is a private land in land case proceedings; (10) when the rule does not provide a plain, speedy and adequate remedy; (11) when there are circumstances indicating the urgency of judicial intervention; and unreasonable delay would greatly prejudice the complainant; (12) when no administrative review is provided by law; (13) where the rule of qualified political agency applies; and (14) when the issue of non-exhaustion of administrative remedies has been rendered moot. 148 Thus, in Alta Vista Golf and Country Club v. City of Cebu, 149 this Court excluded the case from the strict application of the principle on exhaustion of administrative remedies, particularly for non-compliance with Section 187 of the Local Government Code of 1991, on the ground that the issue raised in the Petition was purely legal. 150 In this case, however, the issues involved are not purely legal. There are factual issues that need to be addressed for the proper disposition of the case. In other words, this case is still not ripe for adjudication. To question the validity of the ordinance, petitioners should have first filed an appeal before the Secretary of Justice. However, petitioners justify direct resort to this Court on the ground that they are entangled in a "catch- 22 situation." 151 They believe that filing an appeal before the Secretary of Justice would merely delay the process and give the City Government of Tagum ample time to collect real property taxes. 152 The questioned ordinance was published in July 2012. 153 Had petitioners immediately filed an appeal, the Secretary of Justice would have had enough time to render a decision. Section 187 of the Local Government Code of 1991 gives the Secretary of Justice 60 days to act on the appeal. Within 30 days from receipt of an unfavorable decision or upon

inaction by the Secretary of Justice within the time prescribed, aggrieved taxpayers may opt to lodge the appropriate proceeding before the regular courts. 154 The "catch-22 situation" petitioners allude to does not exist. Under Section 166 of the Local Government Code of 1991, local taxes "shall accrue on the first (1st) day of January of each year."155 When the questioned ordinance was published in July 2012, the City Government of Tagum could not have immediately issued real property tax assessments. Hence, petitioners had ample time within which to question the validity of the tax ordinance. In cases where the validity or legality of a tax ordinance is questioned, the rule that real property taxes must first be paid before a protest is lodged does not apply. Taxpayers must first receive an assessment before this rule is triggered. 156 In Jardine, this Court ruled that prior payment under protest is not required >> when the taxpayer is questioning the very authority of the assessor to impose taxes: 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. 157 (Emphasis and citation omitted) Given the serious procedural errors committed by petitioners, we find no genuine reason to dwell on and resolve the other issues presented in this case. The factual issues raised by petitioners could have been properly addressed by the lower courts had they adhered to the doctrines of hierarchy of courts and exhaustion of administrative remedies. These rules were established for a reason. While petitioners' enthusiasm in their advocacy may be admirable, their overzealousness has further delayed their cause. WHEREFORE, the Petition for Certiorari, Prohibition, and Mandamus is DISMISSED. SO ORDERED. Facts:

On July 12, 2011, the Sangguniang Panlungsod of Tagum City's Committee on Finance conducted a public hearing for the approval of a proposed ordinance. The proposed ordinance sought to adopt a new schedule of market values and assessment levels of real properties in Tagum City. It then passed City Ordinance No. 516, s-2011, entitled An Ordinance Approving the New Schedule of Market Values, its Classification, and Assessment Level of Real Properties in the City of Tagum. The ordinance was approved by Mayor Rey T. Uy (Mayor Uy) on November 11, 2011 and was immediately forwarded to the Sangguniang Panlalawigan of Davao del Norte for review.

On February 7, 2012, the Sangguniang Panlalawigan of Davao del Norte's Committee on Ways and Means/Games and Amusement issued a report dated February 1, 2012 declaring City Ordinance No. 516, s-2011 valid. It also directed the respondents to revise the ordinance based on the recommendations of the Provincial Assessor's Office. Consequently, petitioners returned it to the respondents for modification. As a result of the amendments introduced to City Ordinance No. 516, s-2011, on March 19, 2012, the respondents passed City Ordinance No. 558, s-2012 and was approved by Mayor Uy on April 10, 2012. It was then transmitted for review to the Sangguniang Panlalawigan of Davao del Norte. The petitioners received the proposed ordinance on April 12, 2012. On April 30, 2012, Engineer Crisanto M. Aala (Aala) and Colonel Jorge P. Ferido (Ferido), both residents of Tagum City, filed before the Sangguniang Panlalawigan of Davao del Norte an Opposition/Objection to City Ordinance No. 558, s-2012. It was referred to the Committee on Ways and Means/Games and Amusement. The Committee conducted a hearing to tackle the matters raised in the Opposition.

In their Opposition/Objection, Aala and Ferido asserted that City Ordinance No. 558, s-2012 violated Sections 130(a), 198(a) and (b), 199(b), and 201 of the Local Government Code of 1991. They alleged that Sections III C 1, 2, and 3 as well as Sections III G 1(b) and 4(g) of the proposed ordinance divided Tagum City into different zones, classified real properties per zone, and fixed its market values depending on where they were situated without taking into account the "distinct and fundamental differences ... and elements of value" of each property.

Aala and Ferido asserted that the proposed ordinance classified and valued those properties located in a predominantly commercial area as commercial, regardless of the purpose to which they were devoted. According to

them, this was erroneous because real property should be classified, valued, and assessed not according to its location but on the basis of actual use. Moreover, they pointed out that the proposed ordinance imposed exorbitant real estate taxes, which the residents of Tagum City could not afford to pay.

After the hearing, the Sangguniang Panlalawigan of Davao del Norte's Committee on Ways and Means/Games and Amusement issued Committee Report No.5 dated May 4, 2012, which returned City Ordinance No. 558, s-2012 to the respondents. The petitioners also directed the Sangguniang Panlungsod of Tagum City to give attention and due course to the oppositors' concerns.

On May 22, 2012, the Sangguniang Panlungsod of Tagum City issued Resolution No. 808, s-2012 dated May 14, 2012, requesting the Sangguniang Panlalawigan of Davao del Norte to reconsider its position on City Ordinance No. 558, s-2012.

The Sangguniang Panlalawigan of Davao del Norte issued Resolution No. 428 declaring as invalid Sections III C 1, 2, and 3, Sections III D (1) and (2), and Sections G 1(b) and 4(g) of City Ordinance No. 558, s-2012.

However, on July 9, 2012, the Sangguniang Panlungsod of Tagum City passed Resolution No. 874, s-2012 declaring City Ordinance No. 558, s-2012 as valid. It argued that te Sangguniang Panlalawigan of Davao del Norte failed to take action on City Ordinance No. 558, s-2012 within 30 days from its receipt on April 12, 2012. Hence, under Section 56(d) of the Local Government Code of 1991, City Ordinance No. 558, s-2012 enjoys the presumption of validity.

On July 13, 2012, City Ordinance No. 558, s-2012 was published in the July 13-19, 2012 issue of Trends and Time, a newspaper of general circulation in Tagum City.

Alarmed by the impending implementation of City Ordinance No. 558, s-2012, petitioners filed before this Court an original action for Certiorari, Prohibition, and Mandamus on August 13, 2012. The Petition included a prayer for the issuance of a temporary restraining order and a writ of preliminary injunction.

In their Petition, petitioners seek to nullify the ordinance on the ground that respondents enacted it with grave abuse of discretion. Petitioners invoke this Court's original jurisdiction under Article VIII, Section 5(1) of the Constitution in view of the need to immediately resolve the issues they have raised.

Issue:

Whether or not the petitioners comply with the doctrine on hierarchy of courts and exhaustion of administrative remedy?

Held:

No. The Supreme Court denies the Petition for serious procedural errors. The doctrine on hierarchy of courts is a practical judicial policy designed to restrain parties from directly resorting to this Court when relief may be obtained before the lower courts. The logic behind this policy is grounded on the need to prevent "inordinate demands upon the Court's time and attention which are better devoted to those matters within its exclusive jurisdiction," as well as to prevent the congestion of the Court's dockets. Hence, for this Court to be able to "satisfactorily perform the functions

assigned to it by the fundamental charter," it must remain as a "court of last resort." This can be achieved by relieving the Court of the "task of dealing with causes in the first instance."

As expressly provided in the Constitution, this Court has original jurisdiction "over petitions for certiorari, prohibition, mandamus, quo warranto, and habeas corpus."However, this Court has emphasized that the power to issue writs of certiorari, prohibition, and mandamus does not exclusively pertain to this Court. Rather, it is shared with the Court of Appeals and the Regional Trial Courts. Nevertheless, "this concurrence of jurisdiction" does not give parties unfettered discretion as to the choice of forum. The doctrine on hierarchy of courts is determinative of the appropriate venue where petitions for extraordinary writs should be filed. Parties cannot randomly select the court or forum to which their actions will be directed.

There is another reason why this Court enjoins strict adherence to the doctrine on hierarchy of courts. The doctrine that requires respect for the hierarchy of courts was created by this court to ensure that every level of the judiciary performs its designated roles in an effective and efficient manner."

Consequently, this Court will not entertain direct resort to it when relief can be obtained in the lower courts. This holds especially true when questions of fact are raised. Unlike this Court, trial courts and the Court of Appeals are better equipped to resolve questions of fact. They are in the best position to deal with causes in the first instance. Given the serious procedural errors committed by petitioners, we find no genuine reason to dwell on and resolve the other issues presented in this case. The factual issues raised by petitioners could have been properly addressed by the lower courts had they adhered to the doctrines of hierarchy of courts and exhaustion of administrative remedies. These rules were established for a reason. While petitioners' enthusiasm in their advocacy may be admirable, their overzealousness has further delayed their cause.

DIGITAL TELECOM VS CANTOS "It is of the utmost importance x x x that the modes adopted to enforce the taxes levied should be interfered with as little as possible. Any delay in the proceedings of the officers, upon whom the duty is devolved of collecting the taxes, may derange the operations of government, and thereby cause serious detriment to the public."1 This Petition for Review on Certiorari2 assails the July 24, 2007 Decision3 of the Court of Appeals (CA) in CA-G.R. CR No. 29009 which affirmed the July 7, 2003 Decision4 of the Regional Trial Court (RTC), Branch XI, Balayan, Batangas in Civil Case No. 4051 dismissing petitioner Digital Telecommunications, Philippines, Inc.’s (petitioner) Petition for Indirect Contempt/Prohibition against respondent Jessie E. Cantos (respondent) as Provincial Treasurer of Batangas. Also assailed is the October 11, 2007 CA Resolution5 denying petitioner’s Motion for Reconsideration. Factual Antecedents By virtue of Republic Act (RA) No. 7678,6 petitioner was granted a legislative franchise to install, operate and maintain telecommunications systems throughout the Philippines on February 17, 1994. Upon seeking the renewal of its Mayor’s Permit to operate and provide telecommunications service in Balayan, Batangas, petitioner was informed by then Mayor Benjamin E. Martinez, Jr. that its business operation would be restrained should it fail to pay the assessed real property taxes on or before October 5, 1998. And as petitioner failed to pay, the Chief of the Permit and License Division of Balayan, Batangas, Mr. Francisco P. Martinez, issued on October 6, 1998 a Cease and Desist Order enjoining petitioner from further operating its business. Petitioner thus promptly filed a case for Annulment of the Cease and Desist Order before the RTC of Balayan, Batangas against the Mayor and the Chief of the Permit and License Division. The case was docketed as Civil Case No. 3514 and raffled to Branch IX of said court. In a Decision7 dated July 15, 1999, Branch IX ruled in favor of petitioner and declared that the issuance of the Cease and Desist Order was without legal basis. It held that the enjoinment of petitioner’s business operation is not one of the remedies available to enforce collection of real property taxes under existing laws. The RTC also ruled that petitioner is only liable to pay real property taxes on properties not used in connection with the operation of its franchise. In arriving at such conclusion, the RTC relied on Section 5 of RA 7678, which provides that: Sec. 5. Tax Provisions. - The grantee shall be liable to pay the same taxes on its real estate, buildings, and personal property exclusive of this franchise as other persons or corporations are now or hereafter may be required by law to

pay. In addition thereto, the grantee shall pay to the Bureau of Internal Revenue each year, within thirty (30) days after the audit and approval of the accounts, a franchise tax as may be prescribed by law of all gross receipts of the telephone or other telecommunications businesses transacted under this franchise by the grantee; provided, that the grantee shall continue to be liable for income taxes payable under Title II of the National Internal Revenue Code pursuant to Section 2 of Executive Order No. 72 unless the latter enactment is amended or repealed, in which case the amendment or repeal shall be applicable thereto. The grantee shall file the return with and pay the tax due thereon to the Commissioner of Internal Revenue or his duly authorized representative in accordance with the National Internal Revenue Code and the return shall be subject to audit by the Bureau of Internal Revenue. (Boldfacing and underscoring supplied) and construed the phrase "exclusive of this franchise" in the first sentence as limiting petitioner’s exemption from paying real property tax only to properties used in furtherance of its legislative franchise to provide telecommunications services. The dispositive portion of Branch IX’s Decision reads: WHEREFORE, the Cease and Desist Order dated October 6, 1998 is hereby declared null and void for lack of legal basis. The Court further declares that real properties of plaintiff [Digital] Telecommunications Philippines, Inc. (DIGITEL) which are used in the operation of its franchise are exempt from the payment of real property taxes, but those not used in connection thereto are subject to aforesaid taxes. SO ORDERED.8 The then Mayor attempted to set aside the above Decision by filing a Petition for Certiorari before the CA. But his efforts were in vain as the CA outrightly dismissed the Petition.9 The dismissal became final and executory as shown in an Entry of Judgment dated February 2, 2000.10 In June 2002, respondent, in his capacity as Provincial Treasurer of the Province of Batangas, issued seven Warrants of Levy11 certifying that several real properties of petitioner situated in the Municipalities of Ibaan, San Juan, Sto. Tomas, Cuenca, Nasugbu, Balayan, and Lemery, all in the Province of Batangas, are delinquent in the payment of real property taxes. Hence, the properties would be advertised and sold at public auction within 30 days from petitioner’s receipt of the warrants. On July 1, 2002, petitioner wrote respondent to request the lifting of the Warrants of Levy and to refrain from proceeding with the public sale of its property located in Balayan, Batangas.12 It invoked the final Decision in Civil Case No. 3514 decreeing petitioner’s exemption from the payment of real property tax which it claimed to be binding upon respondent. But since the warrants remained unlifted, petitioner filed with the RTC a Petition for Indirect Contempt and Prohibition with prayer for the issuance of a Writ of Preliminary Injunction and/or Temporary Restraining Order (TRO)13 on July 5, 2002. The case was docketed as Civil Case No. 4051. Proceedings before the Regional Trial Court For his defense, respondent averred that he cannot be held liable for contempt or for having disobeyed the Decision in Civil Case No. 3514 since the same relates to an action in personam and, therefore, binds only the parties impleaded therein and their successors in interest.14 He also asserted that petitioner’s claim for tax exemption could not be collaterally presented and resolved in a contempt proceeding and that petitioner should have resorted instead to the remedies provided under the Local Government Code (LGC) in order to prevent the public sale of its delinquent properties. On July 25, 2002, the RTC granted15 petitioner’s prayer for TRO. Respondent, however, manifested that when said TRO was served upon him, he had already effected the public auction of petitioner’s real properties.16 Thus, petitioner filed a Very Urgent Manifestation and Motion17 to recall and nullify the auction sale and to order respondent and his counsel to explain why they should not be held in contempt for their blatant defiance of the TRO. It also thereafter asserted that respondent is bound by the final Decision rendered in Civil Case No. 3514 under the principle of res judicata.18 It maintained that respondent has a shared interest with the defendants in Civil Case No. 3514 in that they are all interested in the levy, imposition and collection of real property tax and that the Province of Batangas, including respondent, is estopped from denying privity because of the Province’s active participation in both proceedings by virtue of the representation of the same counsel. Petitioner likewise contended that the declaration in Civil Case No. 3514 that it is exempt from real property tax for properties used in the operation of its franchise is considered in rem and binds the property itself. On August 14, 2002, the RTC issued an Order19 denying petitioner’s prayer for the issuance of a Writ of Preliminary Injunction. It held that the issuance of the writ prayed for had already become moot and academic since the public auction sale sought to be enjoined was already consummated. It further noted that the writ as a provisional remedy is

unavailing to petitioner’s case as it should have availed of the remedy provided under Section 260 of the LGC in order to stop the scheduled auction sale, that is, to pay the delinquent tax and interest due thereon under protest. Petitioner filed a Joint Motion for Reconsideration and Motion to Declare Null and Void the Sale Conducted on July 25, 200220 which was, however, denied in an Order21 dated September 3, 2002. When petitioner elevated the denial to the CA via a Petition for Certiorari,22 the same was dismissed in a Resolution23 dated November 18, 2002. Meanwhile, acting on petitioner’s Motion for Judgment on the Pleadings,24 the RTC rendered its Decision25 dated July 7, 2003 dismissing petitioner’s Petition for Indirect Contempt and Prohibition against respondent (Civil Case No. 4051). The RTC ruled that since respondent was not a party in Civil Case No. 3514, he had no duty to render obedience to the Decision therein. Furthermore, there being no identity of causes of action between Civil Case No. 3514 and Civil Case No. 4051, the former being an action in personam, the Decision in said case binds only the parties impleaded therein and their successors in interest, which do not include the respondent. The said court refused to rule on petitioner’s claim for exemption from payment of realty taxes ratiocinating that any case pertaining thereto should be filed directly with the local government unit concerned. The dispositive portion of the Decision reads: WHEREFORE, in view of the foregoing, the instant petition is dismissed, with costs against the petitioner. IT IS SO ORDERED.26 As petitioner’s Motion for Reconsideration27 was denied by the RTC in a Resolution28 dated September 17, 2004, it appealed to the CA.29 Proceedings before the Court of Appeals In a Decision30 dated July 24, 2007, the CA found no merit in the appeal. First, it noted that the dismissal of the case for indirect contempt by the RTC amounted to an acquittal from which an appeal is not allowed. In any case, respondent’s act of issuing the warrants of levy did not constitute indirect contempt in Civil Case No. 3514 since the final Decision issued in said case was not directed against him but to the Mayor and the Chief of the Permit and License Division of Balayan, Batangas. The CA also concurred with the trial court’s ruling that petitioner’s claim for tax exemption could not be presented and resolved in an indirect contempt case and opined that the correct remedy is for petitioner to file an independent action for annulment of sale against the Province of Batangas and there invoke its exemption from real property taxes. The dispositive portion of the Decision reads: WHEREFORE, premises considered, the assailed Decision dated July 7, 2003 and the Resolution dated September 17, 2004, rendered by the Regional Trial Court, Branch XI, Balayan, Batangas in Civil Case No. 4051 are AFFIRMED. SO ORDERED.31 Petitioner’s Motion for Reconsideration32 was denied by the CA in a Resolution33 dated October 11, 2007. Issues Petitioner, thence, filed this Petition on the following grounds: (a) The Honorable Court of Appeals erred in ruling that Civil Case No. 4051 is simply a case for indirect contempt so much [so] that its dismissal by the lower court would amount to acquittal from which an appeal would not lie; (b) The Honorable Court of Appeals erred in ruling that respondent, not being a party to Civil Case No. 3514, cannot be held in contempt for refusing to abide by the decision there[in]; (c) The Honorable Court of Appeals erred in ruling that the claim of Digitel for real property tax exemption cannot be presented and resolved in the indirect contempt case; and (d) The Honorable Court of Appeals erred in ruling that the "proper remedy is for Digitel to file an independent action for annulment of sale against the Province of Batangas, invoking its exemption from payment of real property taxes.34 Petitioner takes exception to the CA’s ruling that an appeal will not lie since the RTC Decision essentially amounts to respondent’s acquittal. It posits that the CA can still take cognizance of the appeal since the same is also a Petition for Prohibition. It is well within the authority of the said court to rule on the claim for tax exemption like in the case of The City Government of Quezon City v. Bayan Telecommunications, Inc.35 wherein the claim for realty tax exemption of another telecommunications company, Bayantel, was resolved through a Petition for Prohibition. Petitioner likewise insists that respondent cannot defy the final ruling in Civil Case No. 3514 and also the pronouncement of this Court in Digital Telecommunications Philippines, Inc. v. Province of Pangasinan36 that petitioner is exempted from paying real

property tax. Also, in consonance with said rulings, the sale by public auction of petitioner’s properties is void ab initio, the same having been made under a mistaken premise that petitioner’s properties are not exempt from realty taxes. Thus, an independent action to annul the sale of the properties, contrary to the CA’s intimation, is not the proper remedy. Petitioner therefore prays for the nullification and setting aside of the auction sale conducted by respondent against its real properties. Our Ruling The Petition has no merit. Respondent is not guilty of indirect contempt. At the outset, the Court shall address the issue on double jeopardy as discussed by petitioner in its Memorandum. In his Comment, respondent reiterated the CA’s ruling that the RTC Decision amounts to an acquittal, hence, an appeal does not lie. Arguing against it, petitioner contends that the rule on double jeopardy will not bar it from pursuing its appeal because this is not a criminal case and respondent is not tried as an accused. The Court is not persuaded. Indeed, contempt is not a criminal offense.37 However, a charge for contempt of court partakes of the nature of a criminal action.38 Rules that govern criminal prosecutions strictly apply to a prosecution for contempt.39 In fact, Section 11 of Rule 7140 of the Rules of Court provides that the appeal in indirect contempt proceedings may be taken as in criminal cases. This Court has held that an alleged contemner should be accorded the same rights as that of an accused.41 Thus, the dismissal of the indirect contempt charge against respondent amounts to an acquittal, which effectively bars a second prosecution.42 Be that as it may, respondent is not guilty of indirect contempt. "Contempt of court is defined as a disobedience to the court by acting in opposition to its authority, justice, and dignity. It signifies not only a willful disregard or disobedience of the court’s order, but such conduct which tends to bring the authority of the court and the administration of law into disrepute or, in some manner, to impede the due administration of justice. It is a defiance of the authority, justice, or dignity of the court which tends to bring the authority and administration of the law into disrespect or to interfere with or prejudice party-litigants or their witnesses during litigation."43 In this case, the acts of respondent in issuing the Warrants of Levy and in effecting the public auction sale of petitioner’s real properties, were neither intended to undermine the authority of the court nor resulted to disobedience to the lawful orders of Branch IX. He merely performed a ministerial function which he is bound to perform under Sections 176 and 177 of RA 7160,44 viz: Section 176. Levy on Real Property. - After the expiration of the time required to pay the delinquent tax, fee, or charge, real property may be levied on before, simultaneously, or after the distraint of personal property belonging to the delinquent taxpayer. To this end, the provincial, city or municipal treasurer, as the case may be, shall prepare a duly authenticated certificate showing the name of the taxpayer and the amount of the tax, fee, or charge, and penalty due from him. Said certificate shall operate with the force of a legal execution throughout the Philippines. Levy shall be effected by writing upon said certificate the description of the property upon which levy is made. At the same time, written notice of the levy shall be mailed to or served upon the assessor and the Register of Deeds of the province or city where the property is located who shall annotate the levy on the tax declaration and certificate of title of the property, respectively, and the delinquent taxpayer or, if he be absent from the Philippines, to his agent or the manager of the business in respect to which the liability arose, or if there be none, to the occupant of the property in question. In case the levy on real property is not issued before or simultaneously with the warrant of distraint on personal property, and the personal property of the taxpayer is not sufficient to satisfy his delinquency, the provincial, city or municipal treasurer, as the case may be, shall within thirty (30) days after execution of the distraint, proceed with the levy on the taxpayer's real property. . A report on any levy shall, within ten (10) days after receipt of the warrant, be submitted by the levying officer to the sanggunian concerned. Section 177. Penalty for Failure to Issue and Execute Warrant. - Without prejudice to criminal prosecution under the Revised Penal Code and other applicable laws, any local treasurer who fails to issue or execute the warrant of distraint or levy after the expiration of the time prescribed, or who is found guilty of abusing the exercise thereof by competent authority shall be automatically dismissed from the service after due notice and hearing. Noteworthy at this point is that there is nothing in the records which would show that petitioner availed of the tax exemption or submitted the requirements to establish that it is exempted from paying real property taxes. Section 206 of RA 7160 outlines the requirements for real property tax exemption, viz.: Sec. 206. Proof of Exemption of Real Property from Taxation. - Every person by or for whom real property is declared, who shall claim tax exemption for such property under this Title shall file with the provincial, city or municipal assessor

within thirty (30) days from the date of the declaration of real property sufficient documentary evidence in support of such claim including corporate charters, title of ownership, articles of incorporation, by-laws, contracts, affidavits, certifications and mortgage deeds, and similar documents. If the required evidence is not submitted within the period herein prescribed, the property shall be listed as taxable in the assessment roll. However, if the property shall be proven to be tax exempt, the same shall be dropped from the assessment roll. Neither did petitioner avail of the remedy of paying the assessed real property tax under protest as prescribed in Section 25245 of RA 7160. Suffice it to say that the availment of these remedies could have prevented respondent’s issuance of the Warrants of Levy and the conduct of the subsequent public auction sale of petitioner’s properties. Due to petitioner’s non-availment of these remedies, respondent therefore remained duty bound to perform such acts, otherwise, he may be subjected to the penalties prescribed for non-performance of his ministerial duties as provincial treasurer. Respondent is not bound by the Decision in Civil Case No. 3514. Petitioner avers that respondent blatantly defied a final and binding Decision rendered in Civil Case No. 3514 declaring it exempt from paying taxes on its real properties. It argues that there is a shared identity of interest between the defendants in Civil Case No. 3514 and respondent. Therefore, respondent is barred by the Decision in the said case under the principle of res judicata. The contention is specious. "Res judicata means ‘a matter adjudged; a thing judicially acted upon or decided; a thing or matter settled by judgment.’"46 For res judicata to apply there must among others be, between the first and the second actions, identity of the parties, identity of subject matter, and identity of causes of action.47 Here, there is no identity of parties between Civil Case No. 3514 and the instant case. "Identity of parties exists ‘where the parties in both actions are the same, or there is privity between them, or they are successors-in-interest by title subsequent to the commencement of the action, litigating for the same thing and under the same title and in the same capacity.’"48 In Civil Case No. 3514, the action was directed against Benjamin E. Martinez, Jr. and Francisco P. Martinez in their capacities as Mayor and Chief of the Permit and License Division of the Municipality of Balayan, Batangas, respectively. On the other hand, respondent, in the instant case, is being sued in his capacity as Provincial Treasurer of the Province of Batangas. While the defendants in both cases similarly sought to enforce the tax obligation of petitioner, they were sued under different capacities. Moreover, there is no identity in the causes of action between the two cases. In Civil Case No. 3514, the propriety of the municipal officials’ closure/stoppage of petitioner’s business operation in Balayan, Batangas was the one in question while what is involved in this case is respondent’s act of issuing Warrants of Levy and proceeding with the auction sale of the real properties of petitioner. Clearly, the principle of res judicata does not apply. The RTC and the CA are therefore correct in ruling that respondent, not being a party thereto, is not bound by the Decision rendered in Civil Case No. 3514. Petitioner’s reliance on the rulings in Civil Case No. 3514 and Digital Telecommunications Philippines, Inc. v. Province of Pangasinan is misplaced. In support of its prayer to annul the auction sale of its real properties, petitioner heavily relies on the Decision rendered in Civil Case No. 3514 declaring that it is exempt from paying real property tax. In addition, it invokes Digital Telecommunications Philippines, Inc. v. Province of Pangasinan49 wherein it was ruled that petitioner’s real properties located within the territorial jurisdiction of Pangasinan that are actually, directly and exclusively used in its franchise are exempt from realty tax. As in Civil Case No. 3514, this Court’s Third Division in Digital Telecommunications Philippines, Inc. v. Province of Pangasinan50 has interpreted the phrase "exclusive of this franchise" in the first sentence of Section 5 of RA 7678 as limiting petitioner’s exemption from realty tax to real properties used in the pursuit of its legislative franchise.1âwphi1 It was then held that RA 7678 exempted petitioner’s properties that are actually, directly, and exclusively used in the conduct and operation of its franchise from real property tax. But this ruling has already been abandoned. In the later case of Digital Telecommunications Philippines, Inc. v. City Government of Batangas,51 the Court en banc speaking thru Senior Associate Justice Antonio T. Carpio pronounced: Nowhere in the language of the first sentence of Section 5 of RA 7678 does it expressly or even impliedly provide that petitioner’s real properties that are actually, directly and exclusively used in its telecommunications business are exempt from payment of realty tax. On the contrary the first sentence of Section 5 specifically states that the petitioner, as the franchisee shall pay the ‘same taxes on its real estate, buildings, and personal property exclusive of this franchise as other persons or corporations are now or hereafter may be required by law to pay.’

The heading of Section 5 is ‘Tax Provisions,’ not Tax Exemptions. To reiterate, the phrase ‘exemption from real estate tax’ or other words conveying exemption from realty tax do not appear in the first sentence of Section 5. The phrase ‘exclusive of this franchise’ in the first sentence of Section 5 merely qualifies the phrase personal property to exclude petitioner’s legislative franchise, which is an intangible personal property. Petitioner’s franchise is subject to tax in the second sentence of Section 5 which imposes the ‘franchise tax.’ Thus, there is no grant of tax exemption in the first sentence of Section 5. The interpretation of the phrase exclusive of this franchise in the Bayantel and Digitel cases goes against the basic principle in construing tax exemptions. In PLDT v. City of Davao the Court held that ‘tax exemptions should be granted only by clear and unequivocal provision of law on the basis of language too plain to be mistaken. They cannot be extended by mere implication or inference.’ Tax exemptions must be clear and unequivocal. A taxpayer claiming a tax exemption must point to a specific provision of law conferring on the taxpayer in clear and plain terms, exemption from a common burden. Any doubt whether a tax exemption exists is resolved against the taxpayer.52 As things now stand, petitioner s real properties, whether used in the furtherance of its franchise or not, are subject to real property tax. Hence, its reliance on the rulings in Civil Case No. 3514 and Digital Telecommunications Philippines Inc. v. Province of Pangasinan53 becomes unavailing. WHEREFORE, the Petition is DENIED. The assailed Decision dated July 24, 2007 and the Resolution dated October 11, 2007 of the Court of Appeals in CA-GR. CR No. 29009 are AFFIRMED. SO ORDERED. city of lapu lapu vs peza The Philippine Economic Zone Authority is exempt from payment of real property taxes. These are consolidated1 petitions for review on certiorari the City of Lapu-Lapu and the Province of Bataan separately filed against the Philippine Economic Zone Authority (PEZA). In G.R. No. 184203, the City of Lapu-Lapu (the City) assails the Court of Appeals’ decision2 dated January 11, 2008 and resolution3 dated August 6, 2008, dismissing the City’s appeal for being the wrong mode of appeal. The City appealed the Regional Trial Court, Branch 111, Pasay City’s decision finding the PEZA exempt from payment of real property taxes. In G.R. No. 187583, the Province of Bataan (the Province) assails the Court of Appeals’ decision4 dated August 27, 2008 and resolution5 dated April 16, 2009, granting the PEZA’s petition for certiorari. The Court of Appeals ruled that the Regional Trial Court, Branch 115, Pasay City gravely abused its discretion in finding the PEZA liable for real property taxes to the Province of Bataan. Facts common to the consolidated petitions In the exercise of his legislative powers,6 President Ferdinand E. Marcos issued Presidential Decree No. 66 in 1972, declaring as government policy the establishment of export processing zones in strategic locations in the Philippines. Presidential Decree No. 66 aimed “to encourage and promote foreign commerce as a means of making the Philippines a center of international trade, of strengthening our export trade and foreign exchange position, of hastening industrialization, of reducing domestic unemployment, and of accelerating the development of the country.”7chanRoblesvirtualLawlibrary To carry out this policy, the Export Processing Zone Authority (EPZA) was created to operate, administer, and manage the export processing zones established in the Port of Mariveles, Bataan8 and such other export processing zones that may be created by virtue of the decree.9chanRoblesvirtualLawlibrary The decree declared the EPZA non-profit in character10 with all its revenues devoted to its development, improvement, and maintenance.11 To maintain this non-profit character, the EPZA was declared exempt from all taxes that may be due to the Republic of the Philippines, its provinces, cities, municipalities, and other government agencies and instrumentalities.12 Specifically, Section 21 of Presidential Decree No. 66 declared the EPZA exempt from payment of real property taxes:chanroblesvirtuallawlibrary Section 21. Non-profit Character of the Authority; Exemption from Taxes. The Authority shall be non-profit and shall devote and use all its returns from its capital investment, as well as excess revenues from its operations, for the development, improvement and maintenance and other related expenditures of the Authority to pay its indebtedness

and obligations and in furtherance and effective implementation of the policy enunciated in Section 1 of this Decree. In consonance therewith, the Authority is hereby declared exempt:ChanRoblesVirtualawlibrary .... (b) From all income taxes, franchise taxes, realty taxes and all other kinds of taxes and licenses to be paid to the National Government, its provinces, cities, municipalities and other government agencies and instrumentalities[.] In 1979, President Marcos issued Proclamation No. 1811, establishing the Mactan Export Processing Zone. Certain parcels of land of the public domain located in the City of Lapu-Lapu in Mactan, Cebu were reserved to serve as site of the Mactan Export Processing Zone. In 1995, the PEZA was created by virtue of Republic Act No. 7916 or “the Special Economic Zone Act of 1995”13 to operate, administer, manage, and develop economic zones in the country.14 The PEZA was granted the power to register, regulate, and supervise the enterprises located in the economic zones.15 By virtue of the law, the export processing zone in Mariveles, Bataan became the Bataan Economic Zone16 and the Mactan Export Processing Zone the Mactan Economic Zone.17chanRoblesvirtualLawlibrary As for the EPZA, the law required it to “evolve into the PEZA in accordance with the guidelines and regulations set forth in an executive order issued for [the] purpose.”18chanRoblesvirtualLawlibrary On October 30, 1995, President Fidel V. Ramos issued Executive Order No. 282, directing the PEZA to assume and exercise all of the EPZA’s powers, functions, and responsibilities “as provided in Presidential Decree No. 66, as amended, insofar as they are not inconsistent with the powers, functions, and responsibilities of the PEZA, as mandated under [the Special Economic Zone Act of 1995].”19 All of EPZA’s properties, equipment, and assets, among others, were ordered transferred to the PEZA.20chanRoblesvirtualLawlibrary Facts of G.R. No. 184203 In the letter21 dated March 25, 1998, the City of Lapu-Lapu, through the Office of the Treasurer, demanded from the PEZA ?32,912,350.08 in real property taxes for the period from 1992 to 1998 on the PEZA’s properties located in the Mactan Economic Zone. The City reiterated its demand in the letter22 dated May 21, 1998. It cited Sections 193 and 234 of the Local Government Code of 1991 that withdrew the real property tax exemptions previously granted to or presently enjoyed by all persons. The City pointed out that no provision in the Special Economic Zone Act of 1995 specifically exempted the PEZA from payment of real property taxes, unlike Section 21 of Presidential Decree No. 66 that explicitly provided for EPZA’s exemption. Since no legal provision explicitly exempted the PEZA from payment of real property taxes, the City argued that it can tax the PEZA. The City made subsequent demands23 on the PEZA. In its last reminder24 dated May 13, 2002, the City assessed the PEZA ?86,843,503.48 as real property taxes for the period from 1992 to 2002. On September 11, 2002, the PEZA filed a petition for declaratory relief25 with the Regional Trial Court of Pasay City, praying that the trial court declare it exempt from payment of real property taxes. The case was raffled to Branch 111. The City answered26 the petition, maintaining that the PEZA is liable for real property taxes. To support its argument, the City cited a legal opinion dated September 6, 1999 issued by the Department of Justice,27 which stated that the PEZA is not exempt from payment of real property taxes. The Department of Justice based its opinion on Sections 193 and 234 of the Local Government Code that withdrew the tax exemptions, including real property tax exemptions, previously granted to all persons. A reply28 was filed by the PEZA to which the City filed a rejoinder.29chanRoblesvirtualLawlibrary Pursuant to Rule 63, Section 3 of Rules of Court,30 the Office of the Solicitor General filed a comment31on the PEZA’s petition for declaratory relief. It agreed that the PEZA is exempt from payment of real property taxes, citing Sections 24 and 51 of the Special Economic Zone Act of 1995. The trial court agreed with the Solicitor General. Section 24 of the Special Economic Zone Act of 1995 provides:chanroblesvirtuallawlibrary

SEC. 24. Exemption from National and Local Taxes. – Except for real property taxes on land owned by developers, no taxes, local and national, shall be imposed on business establishments operating within the ECOZONE. In lieu thereof, five percent (5%) of the gross income earned by all business enterprises within the ECOZONE shall be paid and remitted as follows: a. Three percent (3%) to the National Government; b. Two percent (2%) which shall be directly remitted by the business establishments to the treasurer’s office of the municipality or city where the enterprise is located. Section 51 of the law, on the other hand, provides:chanroblesvirtuallawlibrary SEC. 51. Ipso-Facto Clause. – All privileges, benefits, advantages or exemptions granted to special economic zones under Republic Act No. 7227, shall ipso-facto be accorded to special economic zones already created or to be created under this Act. The free port status shall not be vested upon new special economic zones. Based on Section 51, the trial court held that all privileges, benefits, advantages, or exemptions granted to special economic zones created under the Bases Conversion and Development Act of 1992 apply to special economic zones created under the Special Economic Zone Act of 1995. Since these benefits include exemption from payment of national or local taxes, these benefits apply to special economic zones owned by the PEZA. According to the trial court, the PEZA remained tax-exempt regardless of Section 24 of the Special Economic Zone Act of 1995. It ruled that Section 24, which taxes real property owned by developers of economic zones, only applies to private developers of economic zones, not to public developers like the PEZA. The PEZA, therefore, is not liable for real property taxes on the land it owns. Characterizing the PEZA as an agency of the National Government, the trial court ruled that the City had no authority to tax the PEZA under Sections 133(o) and 234(a) of the Local Government Code of 1991. In the resolution32 dated June 14, 2006, the trial court granted the PEZA’s petition for declaratory relief and declared it exempt from payment of real property taxes. The City filed a motion for reconsideration,33 which the trial court denied in its resolution34 dated September 26, 2006. The City then appealed35 to the Court of Appeals. The Court of Appeals noted the following issues the City raised in its appellant’s brief: (1) whether the trial court had jurisdiction over the PEZA’s petition for declaratory relief; (2) whether the PEZA is a government agency performing governmental functions; and (3) whether the PEZA is exempt from payment of real property taxes. The issues presented by the City, according to the Court of Appeals, are pure questions of law which should have been raised in a petition for review on certiorari directly filed before this court. Since the City availed itself of the wrong mode of appeal, the Court of Appeals dismissed the City’s appeal in the decision36 dated January 11, 2008. The City filed a motion for extension of time to file a motion for reconsideration,37 which the Court of Appeals denied in the resolution38 dated April 11, 2008. Despite the denial of its motion for extension, the City filed a motion for reconsideration.39 In the resolution40 dated August 6, 2008, the Court of Appeals denied that motion. In its petition for review on certiorari with this court,41 the City argues that the Court of Appeals “hid under the skirts of technical rules”42 in resolving its appeal. The City maintains that its appeal involved mixed questions of fact and law. According to the City, whether the PEZA performed governmental functions “cannot completely be addressed by law but [by] the factual and actual activities [the PEZA is] carrying out.”43chanRoblesvirtualLawlibrary Even assuming that the petition involves pure questions of law, the City contends that the subject matter of the case “is of extreme importance with [far-reaching] consequence that [its magnitude] would surely shape and determine the course of our nation’s future.”44 The Court of Appeals, the City argues, should have resolved the case on the merits. The City insists that the trial court had no jurisdiction to hear the PEZA’s petition for declaratory relief. According to the City, the case involves real property located in the City of Lapu-Lapu. The petition for declaratory relief should have

been filed before the Regional Trial Court of the City of Lapu-Lapu.45chanRoblesvirtualLawlibrary Moreover, the Province of Bataan, the City of Baguio, and the Province of Cavite allegedly demanded real property taxes from the PEZA. The City argues that the PEZA should have likewise impleaded these local government units as respondents in its petition for declaratory relief. For its failure to do so, the PEZA violated Rule 63, Section 2 of the Rules of Court, and the trial court should have dismissed the petition.46chanRoblesvirtualLawlibrary This court ordered the PEZA to comment on the City’s petition for review on certiorari.47chanRoblesvirtualLawlibrary At the outset of its comment, the PEZA argues that the Court of Appeals’ decision dated January 11, 2008 had become final and executory. After the Court of Appeals had denied the City’s appeal, the City filed a motion for extension of time to file a motion for reconsideration. Arguing that the time to file a motion for reconsideration is not extendible, the PEZA filed its motion for reconsideration out of time. The City has no more right to appeal to this court.48chanRoblesvirtualLawlibrary The PEZA maintains that the City availed itself of the wrong mode of appeal before the Court of Appeals. Since the City raised pure questions of law in its appeal, the PEZA argues that the proper remedy is a petition for review on certiorari with this court, not an ordinary appeal before the appellate court. The Court of Appeals, therefore, correctly dismissed outright the City’s appeal under Rule 50, Section 2 of the Rules of Court.49chanRoblesvirtualLawlibrary On the merits, the PEZA argues that it is an agency and instrumentality of the National Government. It is therefore exempt from payment of real property taxes under Sections 133(o) and 234(a) of the Local Government Code.50 It adds that the tax privileges under Sections 24 and 51 of the Special Economic Zone Act of 1995 applied to it.51chanRoblesvirtualLawlibrary Considering that the site of the Mactan Economic Zone is a reserved land under Proclamation No. 1811, the PEZA claims that the properties sought to be taxed are lands of public dominion exempt from real property taxes.52chanRoblesvirtualLawlibrary As to the jurisdiction issue, the PEZA counters that the Regional Trial Court of Pasay had jurisdiction to hear its petition for declaratory relief under Rule 63, Section 1 of the Rules of Court.53 It also argued that it need not implead the Province of Bataan, the City of Baguio, and the Province of Cavite as respondents considering that their demands came after the PEZA had already filed the petition in court.54chanRoblesvirtualLawlibrary Facts of G.R. No. 187583 After the City of Lapu-Lapu had demanded payment of real property taxes from the PEZA, the Province of Bataan followed suit. In its letter55 dated May 29, 2003, the Province, through the Office of the Provincial Treasurer, informed the PEZA that it would be sending a real property tax billing to the PEZA. Arguing that the PEZA is a developer of economic zones, the Province claimed that the PEZA is liable for real property taxes under Section 24 of the Special Economic Zone Act of 1995. In its reply letter56 dated June 18, 2003, the PEZA requested the Province to suspend the service of the real property tax billing. It cited its petition for declaratory relief against the City of Lapu-Lapu pending before the Regional Trial Court, Branch 111, Pasay City as basis. The Province argued that serving a real property tax billing on the PEZA “would not in any way affect [its] petition for declaratory relief before [the Regional Trial Court] of Pasay City.”57 Thus, in its letter58 dated June 27, 2003, the Province notified the PEZA of its real property tax liabilities for June 1, 1995 to December 31, 2002 totalling ?110,549,032.55. After having been served a tax billing, the PEZA again requested the Province to suspend collecting its alleged real property tax liabilities until the Regional Trial Court of Pasay City resolves its petition for declaratory relief.59chanRoblesvirtualLawlibrary The Province ignored the PEZA’s request. On January 20, 2004, the Province served on the PEZA a statement of unpaid real property tax for the period from June 1995 to December 2004.60chanRoblesvirtualLawlibrary The PEZA again requested the Province to suspend collecting its alleged real property taxes.61 The Province denied the request in its letter62 dated January 29, 2004, then served on the PEZA a warrant of levy63 covering the PEZA’s real properties located in Mariveles, Bataan.

The PEZA’s subsequent requests64 for suspension of collection were all denied by the Province.65 The Province then served on the PEZA a notice of delinquency in the payment of real property taxes66 and a notice of sale of real property for unpaid real property tax.67 The Province finally sent the PEZA a notice of public auction of the latter’s properties in Mariveles, Bataan.68chanRoblesvirtualLawlibrary On June 14, 2004, the PEZA filed a petition for injunction69 with prayer for issuance of a temporary restraining order and/or writ of preliminary injunction before the Regional Trial Court of Pasay City, arguing that it is exempt from payment of real property taxes. It added that the notice of sale issued by the Province was void because it was not published in a newspaper of general circulation as required by Section 260 of the Local Government Code.70chanRoblesvirtualLawlibrary The case was raffled to Branch 115. In its order71 dated June 18, 2004, the trial court issued a temporary restraining order against the Province. After the PEZA had filed a P100,000.00 bond,72 the trial court issued a writ of preliminary injunction,73 enjoining the Province from selling the PEZA’s real properties at public auction. On March 3, 2006, the PEZA and Province both manifested that each would file a memorandum after which the case would be deemed submitted for decision. The parties then filed their respective memoranda.74chanRoblesvirtualLawlibrary In the order75 dated January 31, 2007, the trial court denied the PEZA’s petition for injunction. The trial court ruled that the PEZA is not exempt from payment of real property taxes. According to the trial court, Sections 193 and 234 of the Local Government Code had withdrawn the real property tax exemptions previously granted to all persons, whether natural or juridical.76 As to the tax exemptions under Section 51 of the Special Economic Zone Act of 1995, the trial court ruled that the provision only applies to businesses operating within the economic zones, not to the PEZA.77chanRoblesvirtualLawlibrary The PEZA filed before the Court of Appeals a petition for certiorari78 with prayer for issuance of a temporary restraining order. The Court of Appeals issued a temporary restraining order, enjoining the Province and its Provincial Treasurer from selling PEZA's properties at public auction scheduled on October 17, 2007.79 It also ordered the Province to comment on the PEZA’s petition. In its comment,80 the Province alleged that it received a copy of the temporary restraining order only on October 18, 2007 when it had already sold the PEZA’s properties at public auction. Arguing that the act sought to be enjoined was already fait accompli, the Province prayed for the dismissal of the petition for certiorari. The PEZA then filed a supplemental petition for certiorari, prohibition, and mandamus81 against the Province, arguing that the Provincial Treasurer of Bataan acted with grave abuse of discretion in issuing the notice of delinquency and notice of sale. It maintained that it is exempt from payment of real property taxes because it is a government instrumentality. It added that its lands are property of public dominion which cannot be sold at public auction. The PEZA also filed a motion82 for issuance of an order affirming the temporary restraining order and a writ of preliminary injunction to enjoin the Province from consolidating title over the PEZA’s properties. In its resolution83 dated January 16, 2008, the Court of Appeals admitted the supplemental petition for certiorari, prohibition, and mandamus. It required the Province to comment on the supplemental petition and to file a memorandum on the PEZA’s prayer for issuance of temporary restraining order. The Province commented84 on the PEZA’s supplemental petition, to which the PEZA replied.85chanRoblesvirtualLawlibrary The Province then filed a motion86 for leave to admit attached rejoinder with motion to dismiss. In the rejoinder with motion to dismiss,87 the Province argued for the first time that the Court of Appeals had no jurisdiction over the subject matter of the action. According to the Province, the PEZA erred in filing a petition for certiorari. Arguing that the PEZA sought to reverse a Regional Trial Court decision in a local tax case, the Province claimed that the court with appellate jurisdiction over the action is the Court of Tax Appeals. The PEZA then prayed that the Court of Appeals dismiss the petition for certiorari for lack of jurisdiction over the subject matter of the action.

The Court of Appeals held that the issue before it was whether the trial court judge gravely abused his discretion in dismissing the PEZA’s petition for prohibition. This issue, according to the Court of Appeals, is properly addressed in a petition for certiorari over which it has jurisdiction to resolve. It, therefore, maintained jurisdiction to resolve the PEZA’s petition for certiorari.88chanRoblesvirtualLawlibrary Although it admitted that appeal, not certiorari, was the PEZA’s proper remedy to reverse the trial court’s decision,89 the Court of Appeals proceeded to decide the petition for certiorari in “the broader interest of justice.”90chanRoblesvirtualLawlibrary The Court of Appeals ruled that the trial court judge gravely abused his discretion in dismissing the PEZA’s petition for prohibition. It held that Section 21 of Presidential Decree No. 66 and Section 51 of the Special Economic Zone Act of 1995 granted the PEZA exemption from payment of real property taxes.91 Based on the criteria set in Manila International Airport Authority v. Court of Appeals,92 the Court of Appeals found that the PEZA is an instrumentality of the national government. No taxes, therefore, could be levied on it by local government units.93chanRoblesvirtualLawlibrary In the decision94 dated August 27, 2008, the Court of Appeals granted the PEZA’s petition for certiorari. It set aside the trial court’s decision and nullified all the Province’s proceedings with respect to the collection of real property taxes from the PEZA. The Province filed a motion for reconsideration,95 which the Court of Appeals denied in the resolution96dated April 16, 2009 for lack of merit. In its petition for review on certiorari with this court,97 the Province of Bataan insists that the Court of Appeals had no jurisdiction to take cognizance of the PEZA’s petition for certiorari. The Province maintains that the Court of Tax Appeals had jurisdiction to hear the PEZA’s petition since it involved a local tax case decided by a Regional Trial Court.98chanRoblesvirtualLawlibrary The Province reiterates that the PEZA is not exempt from payment of real property taxes. The Province points out that the EPZA, the PEZA’s predecessor, had to be categorically exempted from payment of real property taxes. The EPZA, therefore, was not inherently exempt from payment of real property taxes and so is the PEZA. Since Congress omitted from the Special Economic Zone Act of 1995 a provision specifically exempting the PEZA from payment of real property taxes, the Province argues that the PEZA is a taxable entity. It cited the rule in statutory construction that provisions omitted in revised statutes are deemed repealed.99chanRoblesvirtualLawlibrary With respect to Sections 24 and 51 of the Special Economic Zone Act of 1995 granting tax exemptions and benefits, the Province argues that these provisions only apply to business establishments operating within special economic zones,100 not to the PEZA. This court ordered the PEZA to comment on the Province’s petition for review on certiorari.101chanRoblesvirtualLawlibrary In its comment,102 the PEZA argues that the Court of Appeals had jurisdiction to hear its petition for certiorari since the issue was whether the trial court committed grave abuse of discretion in denying its petition for injunction. The PEZA maintains that it is exempt from payment of real property taxes under Section 21 of Presidential Decree No. 66 and Section 51 of the Special Economic Zone Act of 1995. The Province filed its reply,103 reiterating its arguments in its petition for review on certiorari. On the PEZA’s motion,104 this court consolidated the petitions filed by the City of Lapu-Lapu and the Province of Bataan.105chanRoblesvirtualLawlibrary The issues for our resolution are the following: I. Whether the Court of Appeals erred in dismissing the City of Lapu-Lapu’s appeal for raising pure questions of law; II. Whether the Regional Trial Court, Branch 111, Pasay City had jurisdiction to hear, try, and decide the City of Lapu-Lapu’s petition for declaratory relief; III. Whether the petition for injunction filed before the Regional Trial Court, Branch 115, Pasay City, is a local tax case appealable to the Court of Tax Appeals; and

IV. Whether the PEZA is exempt from payment of real property taxes. We deny the consolidated petitions. I.

The Court of Appeals did not err in dismissing the City of Lapu-Lapu’s appeal for raising pure questions of law Under the Rules of Court, there are three modes of appeal from Regional Trial Court decisions. The first mode is through an ordinary appeal before the Court of Appeals where the decision assailed was rendered in the exercise of the Regional Trial Court’s original jurisdiction. Ordinary appeals are governed by Rule 41, Sections 3 to 13 of the Rules of Court. In ordinary appeals, questions of fact or mixed questions of fact and law may be raised.106chanRoblesvirtualLawlibrary The second mode is through a petition for review before the Court of Appeals where the decision assailed was rendered by the Regional Trial Court in the exercise of its appellate jurisdiction. Rule 42 of the Rules of Court governs petitions for review before the Court of Appeals. In petitions for review under Rule 42, questions of fact, of law, or mixed questions of fact and law may be raised.107chanRoblesvirtualLawlibrary The third mode is through an appeal by certiorari before this court under Rule 45 where only questions of law shall be raised.108chanRoblesvirtualLawlibrary A question of fact exists when there is doubt as to the truth or falsity of the alleged facts.109 On the other hand, there is a question of law if the appeal raises doubt as to the applicable law on a certain set of facts.110chanRoblesvirtualLawlibrary Under Rule 50, Section 2, an improper appeal before the Court of Appeals is dismissed outright and shall not be referred to the proper court:chanroblesvirtuallawlibrary SEC. 2. Dismissal of improper appeal to the Court of Appeals. – An appeal under Rule 41 taken from the Regional Trial Court to the Court of Appeals raising only questions of law shall be dismissed, issues purely of law not being reviewable by said court. Similarly, an appeal by notice of appeal instead of by petition for review from the appellate judgment of a Regional Trial Court shall be dismissed. An appeal erroneously taken to the Court of Appeals shall not be transferred to the appropriate court but shall be dismissed outright. Rule 50, Section 2 repealed Rule 50, Section 3 of the 1964 Rules of Court, which provided that improper appeals to the Court of Appeals shall not be dismissed but shall be certified to the proper court for resolution:chanroblesvirtuallawlibrary Sec. 3. Where appealed case erroneously, brought. — Where the appealed case has been erroneously brought to the Court of Appeals, it shall not dismiss the appeal, but shall certify the case to the proper court, with a specific and clear statement of the grounds therefor. With respect to appeals by certiorari directly filed before this court but which raise questions of fact, paragraph 4(b) of Circular No. 2-90 dated March 9, 1990 states that this court “retains the option, in the exercise of its sound discretion and considering the attendant circumstances, either itself to take cognizance of and decide such issues or to refer them to the Court of Appeals for determination.” In Indoyon, Jr. v. Court of Appeals,111 we said that this court “cannot tolerate ignorance of the law on appeals.”112 It is not this court’s task to determine for litigants their proper remedies under the Rules.113chanRoblesvirtualLawlibrary We agree that the City availed itself of the wrong mode of appeal before the Court of Appeals. The City raised pure questions of law in its appeal. The issue of whether the Regional Trial Court of Pasay had jurisdiction over the PEZA’s petition for declaratory relief is a question of law, jurisdiction being a matter of law.114 The issue of whether the PEZA is a government instrumentality exempt from payment of real property taxes is likewise a question of law since this

question is resolved by examining the provisions of the PEZA’s charter as well as other laws relating to the PEZA.115chanRoblesvirtualLawlibrary The Court of Appeals, therefore, did not err in dismissing the City’s appeal pursuant to Rule 50, Section 2 of the Rules of Court. Nevertheless, considering the important questions involved in this case, we take cognizance of the City’s petition for review on certiorari in the interest of justice. In Municipality of Pateros v. The Honorable Court of Appeals,116 the Municipality of Pateros filed an appeal under Rule 42 before the Court of Appeals, which the Court of Appeals denied outright for raising pure questions of law. This court agreed that the Municipality of Pateros “committed a procedural infraction”117 and should have directly filed a petition for review on certiorari before this court. Nevertheless, “in the interest of justice and in order to write finis to [the] controversy,”118 this court “opt[ed] to relax the rules”119 and proceeded to decide the case. This court said:chanroblesvirtuallawlibrary While it is true that rules of procedure are intended to promote rather than frustrate the ends of justice, and while the swift unclogging of the dockets of the courts is a laudable objective, it nevertheless must not be met at the expense of substantial justice. The Court has allowed some meritorious cases to proceed despite inherent procedural defects and lapses. This is in keeping with the principle that rules of procedure are mere tools designed to facilitate the attainment of justice, and that strict and rigid application of rules which should result in technicalities that tend to frustrate rather than promote substantial justice must always be avoided. It is a far better and more prudent cause of action for the court to excuse a technical lapse and afford the parties a review of the case to attain the ends of justice, rather than dispose of the case on technicality and cause grave injustice to the parties, giving a false impression of speedy disposal of cases while actually resulting in more delay, if not a miscarriage of justice.120 Similar to Municipality of Pateros, we opt to relax the rules in this case. The PEZA operates or otherwise administers special economic zones all over the country. Resolving the substantive issue of whether the PEZA is taxable for real property taxes will clarify the taxing powers of all local government units where special economic zones are operated. This case, therefore, should be decided on the merits. II. The Regional Trial Court of Pasay had no jurisdiction to hear, try, and decide the PEZA’s petition for declaratory relief against the City of Lapu-Lapu Rule 63 of the Rules of Court governs actions for declaratory relief. Section 1 of Rule 63 provides:chanroblesvirtuallawlibrary SECTION 1. Who may file petition. – Any person interested under a deed, will, contract or other written instrument, or whose rights are affected by a statute, executive order or regulation, ordinance, or any other governmental regulation may, before breach or violation, thereof, bring an action in the appropriate Regional Trial Court to determine any question of construction or validity arising, and for a declaration of his rights or duties, thereunder. An action for reformation of an instrument, to quiet title to real property or remove clouds therefrom, or to consolidate ownership under Article 1607 of the Civil Code, may be brought under this Rule. The court with jurisdiction over petitions for declaratory relief is the Regional Trial Court, the subject matter of litigation in an action for declaratory relief being incapable of pecuniary estimation.121 Section 19 of the Judiciary Reorganization Act of 1980 provides:chanroblesvirtuallawlibrary SEC. 19. Jurisdiction in Civil Cases. – Regional Trial Courts shall exercise exclusive original jurisdiction: (1) In all civil actions in which the subject of litigation is incapable of pecuniary estimation[.] Consistent with the law, the Rules state that a petition for declaratory relief is filed “in the appropriate Regional Trial Court.”122

A special civil action for declaratory relief is filed for a judicial determination of any question of construction or validity arising from, and for a declaration of rights and duties, under any of the following subject matters: a deed, will, contract or other written instrument, statute, executive order or regulation, ordinance, or any other governmental regulation.123 However, a declaratory judgment may issue only if there has been “no breach of the documents in question.”124 If the contract or statute subject matter of the action has already been breached, the appropriate ordinary civil action must be filed.125 If adequate relief is available through another form of action or proceeding, the other action must be preferred over an action for declaratory relief.126chanRoblesvirtualLawlibrary In Ollada v. Central Bank of the Philippines,127 the Central Bank issued CB-IED Form No. 5 requiring certified public accountants to submit an accreditation under oath before they were allowed to certify financial statements submitted to the bank. Among those financial statements the Central Bank disallowed were those certified by accountant Felipe B. Ollada. 128chanRoblesvirtualLawlibrary Claiming that the requirement “restrained the legitimate pursuit of one’s trade,”129 Ollada filed a petition for declaratory relief against the Central Bank. This court ordered the dismissal of Ollada’s petition “without prejudice to [his] seeking relief in another appropriate action.”130 According to this court, Ollada’s right had already been violated when the Central Bank refused to accept the financial statements he prepared. Since there was already a breach, a petition for declaratory relief was not proper. Ollada must pursue the “appropriate ordinary civil action or proceeding.”131 This court explained:chanroblesvirtuallawlibrary Petitioner commenced this action as, and clearly intended it to be one for Declaratory Relief under the provisions of Rule 66 of the Rules of Court. On the question of when a special civil action of this nature would prosper, we have already held that the complaint for declaratory relief will not prosper if filed after a contract, statute or right has been breached or violated. In the present case such is precisely the situation arising from the facts alleged in the petition for declaratory relief. As vigorously claimed by petitioner himself, respondent had already invaded or violated his right and caused him injury — all these giving him a complete cause of action enforceable in an appropriate ordinary civil action or proceeding. The dismissal of the action was, therefore, proper in the light of our ruling in De Borja vs. Villadolid, 47 O.G. (5) p. 2315, and Samson vs. Andal, G.R. No. L-3439, July 31, 1951, where we held that an action for declaratory relief should be filed before there has been a breach of a contract, statutes or right, and that it is sufficient to bar such action, that there had been a breach — which would constitute actionable violation. The rule is that an action for Declaratory Relief is proper only if adequate relief is not available through the means of other existing forms of action or proceeding (1 C.J.S. 1027-1028). 132 It is also required that the parties to the action for declaratory relief be those whose rights or interests are affected by the contract or statute in question.133 “There must be an actual justiciable controversy or the ‘ripening seeds’ of one”134 between the parties. The issue between the parties “must be ripe for judicial determination.”135 An action for declaratory relief based on theoretical or hypothetical questions cannot be filed for our courts are not advisory courts.136chanRoblesvirtualLawlibrary In Republic v. Roque,137 this court dismissed respondents’ petition for declaratory relief for lack of justiciable controversy. According to this court, “[the respondents’] fear of prospective prosecution [under the Human Security Act] was solely based on remarks of certain government officials which were addressed to the general public.”138chanRoblesvirtualLawlibrary In Velarde v. Social Justice Society,139 this court refused to resolve the issue of “whether or not [a religious leader’s endorsement] of a candidate for elective office or in urging or requiring the members of his flock to vote for a specific candidate is violative [of the separation clause].”140 According to the court, there was no justiciable controversy and ordered the dismissal of the Social Justice Society’s petition for declaratory relief. This court explained:chanroblesvirtuallawlibrary Indeed, SJS merely speculated or anticipated without factual moorings that, as religious leaders, the petitioner and his co-respondents below had endorsed or threatened to endorse a candidate or candidates for elective offices; and that such actual or threatened endorsement "will enable [them] to elect men to public office who [would] in turn be forever beholden to their leaders, enabling them to control the government"[;] and "pos[ing] a clear and present danger of serious erosion of the people’s faith in the electoral process[;] and reinforc[ing] their belief that religious leaders determine the ultimate result of elections," which would then be violative of the separation clause. Such premise is highly speculative and merely theoretical, to say the least. Clearly, it does not suffice to constitute a justiciable controversy. The Petition does not even allege any indication or manifest intent on the part of any of the

respondents below to champion an electoral candidate, or to urge their so-called flock to vote for, or not to vote for, a particular candidate. It is a time-honored rule that sheer speculation does not give rise to an actionable right. Obviously, there is no factual allegation that SJS’ rights are being subjected to any threatened, imminent and inevitable violation that should be prevented by the declaratory relief sought. The judicial power and duty of the courts to settle actual controversies involving rights that are legally demandable and enforceable cannot be exercised when there is no actual or threatened violation of a legal right. All that the 5-page SJS Petition prayed for was "that the question raised in paragraph 9 hereof be resolved." In other words, it merely sought an opinion of the trial court on whether the speculated acts of religious leaders endorsing elective candidates for political offices violated the constitutional principle on the separation of church and state. SJS did not ask for a declaration of its rights and duties; neither did it pray for the stoppage of any threatened violation of its declared rights. Courts, however, are proscribed from rendering an advisory opinion.141 In sum, a petition for declaratory relief must satisfy six requisites:chanroblesvirtuallawlibrary [F]irst, the subject matter of the controversy must be a deed, will, contract or other written instrument, statute, executive order or regulation, or ordinance; second, the terms of said documents and the validity thereof are doubtful and require judicial construction; third, there must have been no breach of the documents in question; fourth, there must be an actual justiciable controversy or the "ripening seeds" of one between persons whose interests are adverse; fifth, the issue must be ripe for judicial determination; and sixth, adequate relief is not available through other means or other forms of action or proceeding.142 (Emphases omitted) We rule that the PEZA erred in availing itself of a petition for declaratory relief against the City. The City had already issued demand letters and real property tax assessment against the PEZA, in violation of the PEZA’s alleged tax-exempt status under its charter. The Special Economic Zone Act of 1995, the subject matter of PEZA’s petition for declaratory relief, had already been breached. The trial court, therefore, had no jurisdiction over the petition for declaratory relief. There are several aspects of jurisdiction.143 Jurisdiction over the subject matter is “the power to hear and determine cases of the general class to which the proceedings in question belong.”144 It is conferred by law, which may either be the Constitution or a statute.145 Jurisdiction over the subject matter means “the nature of the cause of action and the relief sought.”146 Thus, the cause of action and character of the relief sought as alleged in the complaint are examined to determine whether a court had jurisdiction over the subject matter.147 Any decision rendered by a court without jurisdiction over the subject matter of the action is void.148chanRoblesvirtualLawlibrary Another aspect of jurisdiction is jurisdiction over the person. It is “the power of [a] court to render a personal judgment or to subject the parties in a particular action to the judgment and other rulings rendered in the action.”149 A court automatically acquires jurisdiction over the person of the plaintiff upon the filing of the initiatory pleading.150 With respect to the defendant, voluntary appearance in court or a valid service of summons vests the court with jurisdiction over the defendant’s person.151 Jurisdiction over the person of the defendant is indispensable in actions in personam or those actions based on a party’s personal liability.152 The proceedings in an action in personam are void if the court had no jurisdiction over the person of the defendant.153chanRoblesvirtualLawlibrary Jurisdiction over the res or the thing under litigation is acquired either “by the seizure of the property under legal process, whereby it is brought into actual custody of the law; or as a result of the institution of legal proceedings, in which the power of the court is recognized and made effective.”154 Jurisdiction over the res is necessary in actions in rem or those actions “directed against the thing or property or status of a person and seek judgments with respect thereto as against the whole world.”155 The proceedings in an action in rem are void if the court had no jurisdiction over the thing under litigation.156chanRoblesvirtualLawlibrary In the present case, the Regional Trial Court had no jurisdiction over the subject matter of the action, specifically, over the remedy sought. As this court explained in Malana v. Tappa:157chanRoblesvirtualLawlibrary . . . an action for declaratory relief presupposes that there has been no actual breach of the instruments involved or of rights arising thereunder. Since the purpose of an action for declaratory relief is to secure an authoritative statement of the rights and obligations of the parties under a statute, deed, or contract for their guidance in the enforcement thereof, or compliance therewith, and not to settle issues arising from an alleged breach thereof, it may be entertained only before the breach or violation of the statute, deed, or contract to which it refers. A petition for declaratory relief gives a practical remedy for ending controversies that have not reached the state where another relief is immediately available; and supplies the need for a form of action that will set controversies at rest before they lead to a repudiation of

obligations, an invasion of rights, and a commission of wrongs. Where the law or contract has already been contravened prior to the filing of an action for declaratory relief, the courts can no longer assume jurisdiction over the action. In other words, a court has no more jurisdiction over an action for declaratory relief if its subject has already been infringed or transgressed before the institution of the action.158(Emphasis supplied) The trial court should have dismissed the PEZA’s petition for declaratory relief for lack of jurisdiction. Once an assessment has already been issued by the assessor, the proper remedy of a taxpayer depends on whether the assessment was erroneous or illegal. An erroneous assessment “presupposes that the taxpayer is subject to the tax but is disputing the correctness of the amount assessed.”159 With an erroneous assessment, the taxpayer claims that the local assessor erred in determining any of the items for computing the real property tax, i.e., the value of the real property or the portion thereof subject to tax and the proper assessment levels. In case of an erroneous assessment, the taxpayer must exhaust the administrative remedies provided under the Local Government Code before resorting to judicial action. The taxpayer must first pay the real property tax under protest. Section 252 of the Local Government Code provides:chanroblesvirtuallawlibrary SECTION 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. Should the taxpayer find the action on the protest unsatisfactory, the taxpayer may appeal with the Local Board of Assessment Appeals within 60 days from receipt of the decision on the protest:chanroblesvirtuallawlibrary SECTION 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. Payment under protest and appeal to the Local Board of Assessment Appeals are “successive administrative remedies to a taxpayer who questions the correctness of an assessment.”160 The Local Board Assessment Appeals shall not entertain an appeal “without the action of the local assessor”161 on the protest. If the taxpayer is still unsatisfied after appealing with the Local Board of Assessment Appeals, the taxpayer may appeal with the Central Board of Assessment Appeals within 30 days from receipt of the Local Board’s decision:chanroblesvirtuallawlibrary SECTION 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. (Emphasis supplied) On the other hand, an assessment is illegal if it was made without authority under the law.162 In case of an illegal assessment, the taxpayer may directly resort to judicial action without paying under protest the assessed tax and filing an appeal with the Local and Central Board of Assessment Appeals. In Ty v. Trampe,163 the Municipal Assessor of Pasig sent Alejandro B. Ty a notice of assessment with respect to Ty’s real properties in Pasig. Without resorting to the administrative remedies under the Local Government Code, Ty filed before the Regional Trial Court a petition, praying that the trial court nullify the notice of assessment. In assessing the real property taxes due, the Municipal Assessor used a schedule of market values solely prepared by him. This, Ty argued, was void for being contrary to the Local Government Code requiring that the schedule of market values be jointly prepared by the provincial, city, and municipal assessors of the municipalities within the Metropolitan Manila Area. This court ruled that the assessment was illegal for having been issued without authority of the Municipal Assessor. Reconciling provisions of the Real Property Tax Code and the Local Government Code, this court held that the schedule of market values must be jointly prepared by the provincial, city, and municipal assessors of the municipalities within the Metropolitan Manila Area. As to the issue of exhaustion of administrative remedies, this court held that Ty did not err in directly resorting to judicial action. According to this court, payment under protest is required only “where there is a question as to the reasonableness of the amount assessed.”164 As to appeals before the Local and Central Board of Assessment Appeals, they are “fruitful only where questions of fact are involved.”165chanRoblesvirtualLawlibrary Ty raised the issue of the legality of the notice of assessment, an issue that did not go into the reasonableness of the amount assessed. Neither did the issue involve a question of fact. Ty raised a question of law and, therefore, need not resort to the administrative remedies provided under the Local Government Code. In the present case, the PEZA did not avail itself of any of the remedies against a notice of assessment. A petition for declaratory relief is not the proper remedy once a notice of assessment was already issued. Instead of a petition for declaratory relief, the PEZA should have directly resorted to a judicial action. The PEZA should have filed a complaint for injunction, the “appropriate ordinary civil action”166 to enjoin the City from enforcing its demand and collecting the assessed taxes from the PEZA. After all, a declaratory judgment as to the PEZA’s tax-exempt status is useless unless the City is enjoined from enforcing its demand. Injunction “is a judicial writ, process or proceeding whereby a party is ordered to do or refrain from doing a certain act.”167 “It may be the main action or merely a provisional remedy for and as incident in the main action.”168 The essential requisites of a writ of injunction are: “(1) there must be a right in esse or the existence of a right to be protected; and (2) the act against which the injunction is directed to constitute a violation of such right.”169chanRoblesvirtualLawlibrary We note, however, that the City confused the concepts of jurisdiction and venue in contending that the Regional Trial Court of Pasay had no jurisdiction because the real properties involved in this case are located in the City of Lapu-Lapu. On the one hand, jurisdiction is “the power to hear and determine cases of the general class to which the proceedings in question belong.”170 Jurisdiction is a matter of substantive law.171 Thus, an action may be filed only with the court or tribunal where the Constitution or a statute says it can be brought.172 Objections to jurisdiction cannot be waived and may be brought at any stage of the proceedings, even on appeal.173 When a case is filed with a court which has no jurisdiction over the action, the court shall motu proprio dismiss the case.174chanRoblesvirtualLawlibrary On the other hand, venue is “the place of trial or geographical location in which an action or proceeding should be brought.”175 In civil cases, venue is a matter of procedural law.176 A party’s objections to venue must be brought at the earliest opportunity either in a motion to dismiss or in the answer; otherwise the objection shall be deemed waived.177 When the venue of a civil action is improperly laid, the court cannot motu proprio dismiss the

case.178chanRoblesvirtualLawlibrary The venue of an action depends on whether the action is a real or personal action. Should the action affect title to or possession of real property, or interest therein, it is a real action. The action should be filed in the proper court which has jurisdiction over the area wherein the real property involved, or a portion thereof, is situated.179 If the action is a personal action, the action shall be filed with the proper court where the plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the principal defendants resides, or in the case of a non-resident defendant where he may be found, at the election of the plaintiff.180chanRoblesvirtualLawlibrary The City was objecting to the venue of the action, not to the jurisdiction of the Regional Trial Court of Pasay. In essence, the City was contending that the PEZA’s petition is a real action as it affects title to or possession of real property, and, therefore, the PEZA should have filed the petition with the Regional Trial Court of Lapu-Lapu City where the real properties are located. However, whatever objections the City has against the venue of the PEZA’s action for declaratory relief are already deemed waived. Objections to venue must be raised at the earliest possible opportunity.181 The City did not file a motion to dismiss the petition on the ground that the venue was improperly laid. Neither did the City raise this objection in its answer. In any event, the law sought to be judicially interpreted in this case had already been breached. The Regional Trial Court of Pasay, therefore, had no jurisdiction over the PEZA’s petition for declaratory relief against the City. III.

The Court of Appeals had no jurisdiction over the PEZA’s petition for certiorari against the Province of Bataan Appeal is the remedy “to obtain a reversal or modification of a judgment on the merits.”182 A judgment on the merits is one which “determines the rights and liabilities of the parties based on the disclosed facts, irrespective of the formal, technical or dilatory objections.”183 It is not even necessary that the case proceeded to trial.184 So long as the “judgment is general”185 and “the parties had a full legal opportunity to be heard on their respective claims and contentions,” 186 the judgment is on the merits. On the other hand, certiorari is a special civil action filed to annul or modify a proceeding of a tribunal, board, or officer exercising judicial or quasi-judicial functions.187 Certiorari, which in Latin means “to be more fully informed,”188 was originally a remedy in the common law. This court discussed the history of the remedy of certiorari in Spouses Delos Santos v. Metropolitan Bank and Trust Company:189chanRoblesvirtualLawlibrary In the common law, from which the remedy of certiorari evolved, the writ of certiorari was issued out of Chancery, or the King’s Bench, commanding agents or officers of the inferior courts to return the record of a cause pending before them, so as to give the party more sure and speedy justice, for the writ would enable the superior court to determine from an inspection of the record whether the inferior court’s judgment was rendered without authority. The errors were of such a nature that, if allowed to stand, they would result in a substantial injury to the petitioner to whom no other remedy was available. If the inferior court acted without authority, the record was then revised and corrected in matters of law. The writ of certiorari was limited to cases in which the inferior court was said to be exceeding its jurisdiction or was not proceeding according to essential requirements of law and would lie only to review judicial or quasi-judicial acts.190 In our jurisdiction, the term “certiorari” is used in two ways. An appeal before this court raising pure questions of law is commenced by filing a petition for review on certiorari under Rule 45 of the Rules of Court. An appeal by certiorari, which continues the proceedings commenced before the lower courts,191is filed to reverse or modify judgments or final orders.192 Under the Rules, an appeal by certiorari must be filed within 15 days from notice of the judgment or final order, or of the denial of the appellant’s motion for new trial or reconsideration.193chanRoblesvirtualLawlibrary A petition for certiorari under Rule 65, on the other hand, is an independent and original action filed to set aside proceedings conducted without or in excess of jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction.194 Under the Rules, a petition for certiorari may only be filed if there is no appeal or any plain, speedy, or adequate remedy in the ordinary course of law.195 The petition must be filed within 60 days from notice of the judgment, order, or resolution.196chanRoblesvirtualLawlibrary

Because of the longer period to file a petition for certiorari, some litigants attempt to file petitions for certiorari as substitutes for lost appeals by certiorari. However, Rule 65 is clear that a petition for certiorari will not prosper if appeal is available. Appeal is the proper remedy even if the error, or one of the errors, raised is grave abuse of discretion on the part of the court rendering judgment.197 If appeal is available, a petition for certiorari cannot be filed. In this case, the trial court’s decision dated January 31, 2007 is a judgment on the merits. Based on the facts disclosed by the parties, the trial court declared the PEZA liable to the Province of Bataan for real property taxes. The PEZA’s proper remedy against the trial court’s decision, therefore, is appeal. Since the PEZA filed a petition for certiorari against the trial court’s decision, it availed itself of the wrong remedy. As the Province of Bataan contended, the trial court’s decision dated January 31, 2007 “is only an error of judgment appealable to the higher level court and may not be corrected by filing a petition for certiorari.”198 That the trial court judge allegedly committed grave abuse of discretion does not make the petition for certiorari the correct remedy. The PEZA should have raised this ground in an appeal filed within 15 days from notice of the assailed resolution. This court, “in the liberal spirit pervading the Rules of Court and in the interest of substantial justice,”199has treated petitions for certiorari as an appeal: “(1) if the petition for certiorari was filed within the reglementary period within which to file a petition for review on certiorari; (2) when errors of judgment are averred; and (3) when there is sufficient reason to justify the relaxation of the rules.”200 Considering that “the nature of an action is determined by the allegations of the complaint or the petition and the character of the relief sought,”201 a petition which “actually avers errors of judgment rather than errors than that of jurisdiction”202 may be considered a petition for review. However, suspending the application of the Rules has its disadvantages. Relaxing procedural rules may reduce the “effective enforcement of substantive rights,”203 leading to “arbitrariness, caprice, despotism, or whimsicality in the settlement of disputes.”204 Therefore, for this court to suspend the application of the Rules, the accomplishment of substantial justice must outweigh the importance of predictability of court procedures. The PEZA’s petition for certiorari may be treated as an appeal. First, the petition for certiorari was filed within the 15-day reglementary period for filing an appeal. The PEZA filed its petition for certiorari before the Court of Appeals on October 15, 2007,205 which was 12 days from October 3, 2007206 when the PEZA had notice of the trial court’s order denying the motion for reconsideration. Second, the petition for certiorari raised errors of judgment. The PEZA argued that the trial court erred in ruling that it is not exempt from payment of real property taxes given Section 21 of Presidential Decree No. 66 and Sections 11 and 51 of the Special Economic Zone Act of 1995.207chanRoblesvirtualLawlibrary Third, there is sufficient reason to relax the rules given the importance of the substantive issue presented in this case. However, the PEZA’s petition for certiorari was filed before the wrong court. The PEZA should have filed its petition before the Court of Tax Appeals. The Court of Tax Appeals has the exclusive appellate jurisdiction over local tax cases decided by Regional Trial Courts. Section 7, paragraph (a)(3) of Republic Act No. 1125, as amended by Republic Act No. 9282, provides:chanroblesvirtuallawlibrary Sec. 7. Jurisdiction. – The [Court of Tax Appeals] shall exercise: a. Exclusive appellate jurisdiction to review by appeal, as herein provided: .... 3. 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[.] The local tax cases referred to in Section 7, paragraph (a)(3) of Republic Act No. 1125, as amended, include cases involving real property taxes. Real property taxation is governed by Book II of the Local Government Code on “Local Taxation and Fiscal Matters.” Real property taxes are collected by the Local Treasurer,208 not by the Bureau of Internal Revenue in charge of collecting national internal revenue taxes, fees, and charges.209chanRoblesvirtualLawlibrary Section 7, paragraph (a)(5) of Republic Act No. 1125, as amended by Republic Act No. 9282, separately provides for

the exclusive appellate jurisdiction of the Court of Tax Appeals over decisions of the Central Board of Assessment Appeals involving the assessment or collection of real property taxes:chanroblesvirtuallawlibrary Sec. 7. Jurisdiction. – The [Court of Tax Appeals] shall exercise: a. Exclusive appellate jurisdiction to review by appeal, as herein provided: .... 5. 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 of assessment appeals[.] This separate provision, nevertheless, does not bar the Court of Tax Appeals from taking cognizance of trial court decisions involving the collection of real property tax cases. Sections 256210 and 266211 of the Local Government Code expressly allow local government units to file “in any court of competent jurisdiction” civil actions to collect basic real property taxes. Should the trial court rule against them, local government units cannot be barred from appealing before the Court of Tax Appeals – the “highly specialized body specifically created for the purpose of reviewing tax cases.”212chanRoblesvirtualLawlibrary We have also ruled that the Court of Tax Appeals, not the Court of Appeals, has the exclusive original jurisdiction over petitions for certiorari assailing interlocutory orders issued by Regional Trial Courts in a local tax case. We explained in The City of Manila v. Hon. Grecia-Cuerdo213 that while the Court of Tax Appeals has no express grant of power to issue writs of certiorari under Republic Act No. 1125,214 as amended, the tax court’s judicial power as defined in the Constitution215 includes the power to determine “whether or not there has been grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the [Regional Trial Court] in issuing an interlocutory order of jurisdiction in cases falling within the exclusive appellate jurisdiction of the tax court.”216 We further elaborated:chanroblesvirtuallawlibrary Indeed, in order for any appellate court to effectively exercise its appellate jurisdiction, it must have the authority to issue, among others, a writ of certiorari. In transferring exclusive jurisdiction over appealed tax cases to the CTA, it can reasonably be assumed that the law intended to transfer also such power as is deemed necessary, if not indispensable, in aid of such appellate jurisdiction. There is no perceivable reason why the transfer should only be considered as partial, not total. .... If this Court were to sustain petitioners' contention that jurisdiction over their certiorari petition lies with the CA, this Court would be confirming the exercise by two judicial bodies, the CA and the CTA, of jurisdiction over basically the same subject matter – precisely the split-jurisdiction situation which is anathema to the orderly administration of justice. The Court cannot accept that such was the legislative motive, especially considering that the law expressly confers on the CTA, the tribunal with the specialized competence over tax and tariff matters, the role of judicial review over local tax cases without mention of any other court that may exercise such power. Thus, the Court agrees with the ruling of the CA that since appellate jurisdiction over private respondents' complaint for tax refund is vested in the CTA, it follows that a petition for certiorari seeking nullification of an interlocutory order issued in the said case should, likewise, be filed with the same court. To rule otherwise would lead to an absurd situation where one court decides an appeal in the main case while another court rules on an incident in the very same case. Stated differently, it would be somewhat incongruent with the pronounced judicial abhorrence to split jurisdiction to conclude that the intention of the law is to divide the authority over a local tax case filed with the RTC by giving to the CA or this Court jurisdiction to issue a writ of certiorari against interlocutory orders of the RTC but giving to the CTA the jurisdiction over the appeal from the decision of the trial court in the same case. It is more in consonance with logic and legal soundness to conclude that the grant of appellate jurisdiction to the CTA over tax cases filed in and decided by the RTC carries with it the power to issue a writ of certiorari when necessary in aid of such appellate jurisdiction. The supervisory power or jurisdiction of the CTA to issue a writ of certiorari in aid of its appellate jurisdiction should co-exist with, and be a complement to, its appellate jurisdiction to review, by appeal, the final orders and decisions of the RTC, in order to have complete supervision over the acts of the latter.217 (Citations omitted) In this case, the petition for injunction filed before the Regional Trial Court of Pasay was a local tax case originally decided by the trial court in its original jurisdiction. Since the PEZA assailed a judgment, not an interlocutory order, of the Regional Trial Court, the PEZA’s proper remedy was an appeal to the Court of Tax Appeals.

Considering that the appellate jurisdiction of the Court of Tax Appeals is to the exclusion of all other courts, the Court of Appeals had no jurisdiction to take cognizance of the PEZA’s petition. The Court of Appeals acted without jurisdiction in rendering the decision in CA-G.R. SP No. 100984. Its decision in CA-G.R. SP No. 100984 is void.218chanRoblesvirtualLawlibrary The filing of appeal in the wrong court does not toll the period to appeal. Consequently, the decision of the Regional Trial Court, Branch 115, Pasay City, became final and executory after the lapse of the 15th day from the PEZA’s receipt of the trial court’s decision.219 The denial of the petition for injunction became final and executory. IV.

The remedy of a taxpayer depends on the stage in which the local government unit is enforcing its authority to impose real property taxes The proper remedy of a taxpayer depends on the stage in which the local government unit is enforcing its authority to collect real property taxes. For the guidance of the members of the bench and the bar, we reiterate the taxpayer’s remedies against the erroneous or illegal assessment of real property taxes. Exhaustion of administrative remedies under the Local Government Code is necessary in cases of erroneous assessments where the correctness of the amount assessed is assailed. The taxpayer must first pay the tax then file a protest with the Local Treasurer within 30 days from date of payment of tax.220 If protest is denied or upon the lapse of the 60-day period to decide the protest, the taxpayer may appeal to the Local Board of Assessment Appeals within 60 days from the denial of the protest or the lapse of the 60-day period to decide the protest.221 The Local Board of Assessment Appeals has 120 days to decide the appeal.222chanRoblesvirtualLawlibrary If the taxpayer is unsatisfied with the Local Board’s decision, the taxpayer may appeal before the Central Board of Assessment Appeals within 30 days from receipt of the Local Board’s decision.223chanRoblesvirtualLawlibrary The decision of the Central Board of Assessment Appeals is appealable before the Court of Tax Appeals En Banc.224 The appeal before the Court of Tax Appeals shall be filed following the procedure under Rule 43 of the Rules of Court.225chanRoblesvirtualLawlibrary The Court of Tax Appeals’ decision may then be appealed before this court through a petition for review on certiorari under Rule 45 of the Rules of Court raising pure questions of law.226chanRoblesvirtualLawlibrary In case of an illegal assessment where the assessment was issued without authority, exhaustion of administrative remedies is not necessary and the taxpayer may directly resort to judicial action.227 The taxpayer shall file a complaint for injunction before the Regional Trial Court228 to enjoin the local government unit from collecting real property taxes. The party unsatisfied with the decision of the Regional Trial Court shall file an appeal, not a petition for certiorari, before the Court of Tax Appeals, the complaint being a local tax case decided by the Regional Trial Court.229 The appeal shall be filed within fifteen (15) days from notice of the trial court’s decision. The Court of Tax Appeals’ decision may then be appealed before this court through a petition for review on certiorari under Rule 45 of the Rules of Court raising pure questions of law.230chanRoblesvirtualLawlibrary In case the local government unit has issued a notice of delinquency, the taxpayer may file a complaint for injunction to enjoin the impending sale of the real property at public auction. In case the local government unit has already sold the property at public auction, the taxpayer must first deposit with the court the amount for which the real property was sold, together with interest of 2% per month from the date of sale to the time of the institution of action. The taxpayer may then file a complaint to assail the validity of the public auction.231 The decisions of the Regional Trial Court in these cases shall be appealable before the Court of Tax Appeals,232 and the latter’s decisions appealable before this court through a petition for review on certiorari under Rule 45 of the Rules of Court.233chanRoblesvirtualLawlibrary V.

The PEZA is exempt from payment of real property taxes The jurisdictional errors in this case render these consolidated petitions moot. We do not review void decisions rendered without jurisdiction. However, the PEZA alleged that several local government units, including the City of Baguio and the Province of Cavite, have issued their respective real property tax assessments against the PEZA. Other local government units will likely follow suit, and either the PEZA or the local government units taxing the PEZA may file their respective actions against each other. In the interest of judicial economy234 and avoidance of conflicting decisions involving the same issues,235we resolve the substantive issue of whether the PEZA is exempt from payment of real property taxes. Real property taxes are annual taxes levied on real property such as lands, buildings, machinery, and other improvements not otherwise specifically exempted under the Local Government Code.236 Real property taxes are ad valorem, with the amount charged based on a fixed proportion of the value of the property.237 Under the law, provinces, cities, and municipalities within the Metropolitan Manila Area have the power to levy real property taxes within their respective territories.238chanRoblesvirtualLawlibrary The general rule is that real properties are subject to real property taxes. This is true especially since the Local Government Code has withdrawn exemptions from real property taxes of all persons, whether natural or juridical:chanroblesvirtuallawlibrary SEC. 234. Exemptions from Real Property Tax. – The following are exempted from payment of real property tax: (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, nonprofit 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 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 taxes previously granted to, or presently enjoyed by, all persons, whether natural or juridical, including government-owned or -controlled corporations are hereby withdrawn upon the effectivity of this Code. (Emphasis supplied) The person liable for real property taxes is the “taxable person who had actual or beneficial use and possession [of the real property for the taxable period,] whether or not [the person owned the property for the period he or she is being taxed].”239chanRoblesvirtualLawlibrary The exceptions to the rule are provided in the Local Government Code. Under Section 133(o), local government units have no power to levy taxes of any kind on the national government, its agencies and instrumentalities and local government units:chanroblesvirtuallawlibrary SEC. 133. Common Limitations on the Taxing Powers of Local Government Units. – Unless otherwise provided herein, the exercise of taxing powers of provinces, cities, municipalities, and barangays shall not extend to the levy of the following: .... (o) Taxes, fees or charges of any kind on the National Government, its agencies and instrumentalities and local government units.

Specifically on real property taxes, Section 234 enumerates the persons and real property exempt from real property taxes:chanroblesvirtuallawlibrary SEC. 234. Exemptions from Real Property Tax. – The following are exempted from payment of real property tax: (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, nonprofit 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 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. (Emphasis supplied) For persons granted tax exemptions or incentives before the effectivity of the Local Government Code, Section 193 withdrew these tax exemption privileges. These persons consist of both natural and juridical persons, including government-owned or controlled corporations:chanroblesvirtuallawlibrary SEC. 193. Withdrawal of Tax Exemption Privileges. – Unless otherwise provided in this code, tax exemptions or incentives granted to or presently enjoyed by all persons, whether natural or juridical, including government-owned or controlled corporations, except local water districts, cooperatives duly registered under R.A. 6938, non stock and non profit hospitals and educational institutions, are hereby withdrawn upon effectivity of this Code. As discussed, Section 234 withdrew all tax privileges with respect to real property taxes. Nevertheless, local government units may grant tax exemptions under such terms and conditions as they may deem necessary:chanroblesvirtuallawlibrary SEC. 192. Authority to Grant Tax Exemption Privileges. – Local government units may, through ordinances duly approved, grant tax exemptions, incentives or reliefs under such terms and conditions as they may deem necessary. In Mactan Cebu International Airport Authority v. Hon. Marcos,240 this court classified the exemptions from real property taxes into ownership, character, and usage exemptions. Ownership exemptions are exemptions based on the ownership of the real property. The exemptions of real property owned by the Republic of the Philippines, provinces, cities, municipalities, barangays, and registered cooperatives fall under this classification.241chanRoblesvirtualLawlibrary Character exemptions are exemptions based on the character of the real property. Thus, no real property taxes may be levied on charitable institutions, houses and temples of prayer like churches, parsonages, or convents appurtenant thereto, mosques, and non profit or religious cemeteries.242chanRoblesvirtualLawlibrary Usage exemptions are exemptions based on the use of the real property. Thus, no real property taxes may be levied on real property such as: (1) lands and buildings actually, directly, and exclusively used for religious, charitable or educational purpose; (2) machineries and equipment actually, directly and exclusively used by local water districts or by government-owned or controlled corporations engaged in the supply and distribution of water and/or generation and transmission of electric power; and (3) machinery and equipment used for pollution control and environmental protection.243chanRoblesvirtualLawlibrary Persons may likewise be exempt from payment of real properties if their charters, which were enacted or reenacted

after the effectivity of the Local Government Code, exempt them payment of real property taxes.244chanRoblesvirtualLawlibrary V. (A) The PEZA is an instrumentality of the national government An instrumentality is “any agency of the National Government, not integrated within the department framework, vested with special functions or jurisdiction by law, endowed with some if not all corporate powers, administering special funds, and enjoying operational autonomy, usually through a charter.”245chanRoblesvirtualLawlibrary Examples of instrumentalities of the national government are the Manila International Airport Authority,246 the Philippine Fisheries Development Authority,247 the Government Service Insurance System,248 and the Philippine Reclamation Authority.249 These entities are not integrated within the department framework but are nevertheless vested with special functions to carry out a declared policy of the national government. Similarly, the PEZA is an instrumentality of the national government. It is not integrated within the department framework but is an agency attached to the Department of Trade and Industry.250 Book IV, Chapter 7, Section 38(3)(a) of the Administrative Code of 1987 defines “attachment”:chanroblesvirtuallawlibrary SEC. 38. Definition of Administrative Relationship. – Unless otherwise expressly stated in the Code or in other laws defining the special relationships of particular agencies, administrative relationships shall be categorized and defined as follows: .... (3) Attachment.–(a) This refers to the lateral relationship between the department or its equivalent and the attached agency or corporation for purposes of policy and program coordination. The coordination may be accomplished by having the department represented in the governing board of the attached agency or corporation, either as chairman or as a member, with or without voting rights, if this is permitted by the charter; having the attached corporation or agency comply with a system of periodic reporting which shall reflect the progress of the programs and projects; and having the department or its equivalent provide general policies through its representative in the board, which shall serve as the framework for the internal policies of the attached corporation or agency[.] Attachment, which enjoys “a larger measure of independence”251 compared with other administrative relationships such as supervision and control, is further explained in Beja, Sr. v. Court of Appeals:252chanRoblesvirtualLawlibrary An attached agency has a larger measure of independence from the Department to which it is attached than one which is under departmental supervision and control or administrative supervision. This is borne out by the “lateral relationship” between the Department and the attached agency. The attachment is merely for “policy and program coordination.” With respect to administrative matters, the independence of an attached agency from Departmental control and supervision is further reinforced by the fact that even an agency under a Department’s administrative supervision is free from Departmental interference with respect to appointments and other personnel actions “in accordance with the decentralization of personnel functions” under the Administrative Code of 1987. Moreover, the Administrative Code explicitly provides that Chapter 8 of Book IV on supervision and control shall not apply to chartered institutions attached to a Department.253 With the PEZA as an attached agency to the Department of Trade and Industry, the 13-person PEZA Board is chaired by the Department Secretary.254 Among the powers and functions of the PEZA is its ability to coordinate with the Department of Trade and Industry for policy and program formulation and implementation.255 In strategizing and prioritizing the development of special economic zones, the PEZA coordinates with the Department of Trade and Industry.256chanRoblesvirtualLawlibrary The PEZA also administers its own funds and operates autonomously, with the PEZA Board formulating and approving the PEZA’s annual budget.257 Appointments and other personnel actions in the PEZA are also free from departmental interference, with the PEZA Board having the exclusive and final authority to promote, transfer, assign and reassign officers of the PEZA.258chanRoblesvirtualLawlibrary As an instrumentality of the national government, the PEZA is vested with special functions or jurisdiction by law. Congress created the PEZA to operate, administer, manage and develop special economic zones in the Philippines.259 Special economic zones are areas with highly developed or which have the potential to be developed

into agro-industrial, industrial tourist/recreational, commercial, banking, investment and financial centers.260 By operating, administering, managing, and developing special economic zones which attract investments and promote use of domestic labor, the PEZA carries out the following policy of the Government:chanroblesvirtuallawlibrary SECTION 2. Declaration of Policy. — It is the declared policy of the government to translate into practical realities the following State policies and mandates in the 1987 Constitution, namely: (a) “The State recognizes the indispensable role of the private sector, encourages private enterprise, and provides incentives to needed investments.” (Sec. 20, Art. II) (b) “The State shall promote the preferential use of Filipino labor, domestic materials and locally produced goods, and adopt measures that help make them competitive.” (Sec. 12, Art. XII) In pursuance of these policies, the government shall actively encourage, promote, induce and accelerate a sound and balanced industrial, economic and social development of the country in order to provide jobs to the people especially those in the rural areas, increase their productivity and their individual and family income, and thereby improve the level and quality of their living condition through the establishment, among others, of special economic zones in suitable and strategic locations in the country and through measures that shall effectively attract legitimate and productive foreign investments.261 Being an instrumentality of the national government, the PEZA cannot be taxed by local government units. Although a body corporate vested with some corporate powers,262 the PEZA is not a government-owned or controlled corporation taxable for real property taxes. Section 2(13) of the Introductory Provisions of the Administrative Code of 1987 defines the term “government-owned or controlled corporation”:chanroblesvirtuallawlibrary SEC. 2. General Terms Defined. – Unless the specific words of the text, or the context as a whole, or a particular statute, shall require a different meaning: .... (13) Government-owned or controlled corporation refers to any agency organized as a stock or non-stock corporation, vested with functions relating to public needs whether governmental or proprietary in nature, and owned by the Government directly or through its instrumentalities either wholly, or, where applicable as in the case of stock corporations, to the extent of at least fifty-one (51) per cent of its capital stock: Provided, That government-owned or controlled corporations may be further categorized by the Department of the Budget, the Civil Service Commission, and the Commission on Audit for purposes of the exercise and discharge of their respective powers, functions and responsibilities with respect to such corporations. Government entities are created by law, specifically, by the Constitution or by statute. In the case of government-owned or controlled corporations, they are incorporated by virtue of special charters263 to participate in the market for special reasons which may be related to dysfunctions or inefficiencies of the market structure. This is to adjust reality as against the concept of full competition where all market players are price takers. Thus, under the Constitution, government-owned or controlled corporations are created in the interest of the common good and should satisfy the test of economic viability.264 Article XII, Section 16 of the Constitution provides:chanroblesvirtuallawlibrary Section 16. The Congress shall not, except by general law, provide for the formation, organization, or regulation of private corporations. Government-owned or controlled corporations may be created or established by special charters in the interest of the common good and subject to the test of economic viability. Economic viability is “the capacity to function efficiently in business.”265 To be economically viable, the entity “should not go into activities which the private sector can do better.”266chanRoblesvirtualLawlibrary To be considered a government-owned or controlled corporation, the entity must have been organized as a stock or non-stock corporation.267chanRoblesvirtualLawlibrary Government instrumentalities, on the other hand, are also created by law but partake of sovereign functions. When a government entity performs sovereign functions, it need not meet the test of economic viability. In Manila International Airport Authority v. Court of Appeals,268 this court explained:chanroblesvirtuallawlibrary

In contrast, government instrumentalities vested with corporate powers and performing governmental or public functions need not meet the test of economic viability. These instrumentalities perform essential public services for the common good, services that every modern State must provide its citizens. These instrumentalities need not be economically viable since the government may even subsidize their entire operations. These instrumentalities are not the "government-owned or controlled corporations" referred to in Section 16, Article XII of the 1987 Constitution. Thus, the Constitution imposes no limitation when the legislature creates government instrumentalities vested with corporate powers but performing essential governmental or public functions. Congress has plenary authority to create government instrumentalities vested with corporate powers provided these instrumentalities perform essential government functions or public services. However, when the legislature creates through special charters corporations that perform economic or commercial activities, such entities — known as "government-owned or controlled corporations" — must meet the test of economic viability because they compete in the market place. .... Commissioner Blas F. Ople, proponent of the test of economic viability, explained to the Constitutional Commission the purpose of this test, as follows:chanroblesvirtuallawlibrary MR. OPLE: Madam President, the reason for this concern is really that when the government creates a corporation, there is a sense in which this corporation becomes exempt from the test of economic performance. We know what happened in the past. If a government corporation loses, then it makes its claim upon the taxpayers' money through new equity infusions from the government and what is always invoked is the common good. That is the reason why this year, out of a budget of P115 billion for the entire government, about P28 billion of this will go into equity infusions to support a few government financial institutions. And this is all taxpayers' money which could have been relocated to agrarian reform, to social services like health and education, to augment the salaries of grossly underpaid public employees. And yet this is all going down the drain. Therefore, when we insert the phrase "ECONOMIC VIABILITY" together with the "common good," this becomes a restraint on future enthusiasts for state capitalism to excuse themselves from the responsibility of meeting the market test so that they become viable. And so, Madam President, I reiterate, for the committee's consideration and I am glad that I am joined in this proposal by Commissioner Foz, the insertion of the standard of "ECONOMIC VIABILITY OR THE ECONOMIC TEST," together with the common good. .... Clearly, the test of economic viability does not apply to government entities vested with corporate powers and performing essential public services. The State is obligated to render essential public services regardless of the economic viability of providing such service. The non-economic viability of rendering such essential public service does not excuse the State from withholding such essential services from the public.269 (Emphases and citations omitted) The law created the PEZA’s charter. Under the Special Economic Zone Act of 1995, the PEZA was established primarily to perform the governmental function of operating, administering, managing, and developing special economic zones to attract investments and provide opportunities for preferential use of Filipino labor. Under its charter, the PEZA was created a body corporate endowed with some corporate powers. However, it was not organized as a stock270 or non-stock271 corporation. Nothing in the PEZA’s charter provides that the PEZA’s capital is divided into shares.272 The PEZA also has no members who shall share in the PEZA’s profits. The PEZA does not compete with other economic zone authorities in the country. The government may even subsidize the PEZA’s operations. Under Section 47 of the Special Economic Zone Act of 1995, “any sum necessary to augment [the PEZA’s] capital outlay shall be included in the General Appropriations Act to be treated as an equity of the national government.”273chanRoblesvirtualLawlibrary The PEZA, therefore, need not be economically viable. It is not a government-owned or controlled corporation liable for real property taxes. V. (B) The PEZA assumed the non-profit character, including the tax exempt status, of the EPZA

The PEZA’s predecessor, the EPZA, was declared non-profit in character with all its revenues devoted for its development, improvement, and maintenance. Consistent with this non-profit character, the EPZA was explicitly declared exempt from real property taxes under its charter. Section 21 of Presidential Decree No. 66 provides:chanroblesvirtuallawlibrary Section 21. Non-profit Character of the Authority; Exemption from Taxes. The Authority shall be non-profit and shall devote and use all its returns from its capital investment, as well as excess revenues from its operations, for the development, improvement and maintenance and other related expenditures of the Authority to pay its indebtedness and obligations and in furtherance and effective implementation of the policy enunciated in Section 1 of this Decree. In consonance therewith, the Authority is hereby declared exempt:ChanRoblesVirtualawlibrary .... (b) From all income taxes, franchise taxes, realty taxes and all other kinds of taxes and licenses to be paid to the National Government, its provinces, cities, municipalities and other government agencies and instrumentalities[.] The Special Economic Zone Act of 1995, on the other hand, does not specifically exempt the PEZA from payment of real property taxes. Nevertheless, we rule that the PEZA is exempt from real property taxes by virtue of its charter. A provision in the Special Economic Zone Act of 1995 explicitly exempting the PEZA is unnecessary. The PEZA assumed the real property exemption of the EPZA under Presidential Decree No. 66. Section 11 of the Special Economic Zone Act of 1995 mandated the EPZA “to evolve into the PEZA in accordance with the guidelines and regulations set forth in an executive order issued for this purpose.” President Ramos then issued Executive Order No. 282 in 1995, ordering the PEZA to assume the EPZA’s powers, functions, and responsibilities under Presidential Decree No. 66 not inconsistent with the Special Economic Zone Act of 1995:chanroblesvirtuallawlibrary SECTION 1. Assumption of EPZA’s Powers and Functions by PEZA. All the powers, functions and responsibilities of EPZA as provided under its Charter, Presidential Decree No. 66, as amended, insofar as they are not inconsistent with the powers, functions and responsibilities of the PEZA, as mandated under Republic Act No. 7916, shall hereafter be assumed and exercised by the PEZA. Henceforth, the EPZA shall be referred to as the PEZA. The following sections of the Special Economic Zone Act of 1995 provide for the PEZA’s powers, functions, and responsibilities:chanroblesvirtuallawlibrary SEC. 5. Establishment of ECOZONES. – To ensure the viability and geographical dispersal of ECOZONES through a system of prioritization, the following areas are initially identified as ECOZONES, subject to the criteria specified in Section 6: .... The metes and bounds of each ECOZONE are to be delineated and more particularly described in a proclamation to be issued by the President of the Philippines, upon the recommendation of the Philippine Economic Zone Authority (PEZA), which shall be established under this Act, in coordination with the municipal and / or city council, National Land Use Coordinating Committee and / or the Regional Land Use Committee. SEC. 6. Criteria for the Establishment of Other ECOZONES. – In addition to the ECOZONES identified in Section 5 of this Act, other areas may be established as ECOZONES in a proclamation to be issued by the President of the Philippines subject to the evaluation and recommendation of the PEZA, based on a detailed feasibility and engineering study which must conform to the following criteria: (a) The proposed area must be identified as a regional growth center in the Medium-Term Philippine Development Plan or by the Regional Development Council; (b) The existence of required infrastructure in the proposed ECOZONE, such as roads, railways, telephones, ports, airports, etc., and the suitability and capacity of the proposed site to absorb such improvements; (c) The availability of water source and electric power supply for use of the ECOZONE; (d) The extent of vacant lands available for industrial and commercial development and future expansion of the

ECOZONE as well as of lands adjacent to the ECOZONE available for development of residential areas for the ECOZONE workers; (e) The availability of skilled, semi-skilled and non-skilled trainable labor force in and around the ECOZONE; (f) The area must have a significant incremental advantage over the existing economic zones and its potential profitability can be established; (g) The area must be strategically located; and (h) The area must be situated where controls can easily be established to curtail smuggling activities. Other areas which do not meet the foregoing criteria may be established as ECOZONES: Provided, That the said area shall be developed only through local government and/or private sector initiative under any of the schemes allowed in Republic Act No. 6957 (the build-operate-transfer law), and without any financial exposure on the part of the national government: Provided, further, That the area can be easily secured to curtail smuggling activities: Provided, finally, That after five (5) years the area must have attained a substantial degree of development, the indicators of which shall be formulated by the PEZA. SEC. 7. ECOZONE to be a Decentralized Agro-Industrial, Industrial, Commercial / Trading, Tourist, Investment and Financial Community. - Within the framework of the Constitution, the interest of national sovereignty and territorial integrity of the Republic, ECOZONE shall be developed, as much as possible, into a decentralized, self-reliant and self-sustaining industrial, commercial/trading, agro-industrial, tourist, banking, financial and investment center with minimum government intervention. Each ECOZONE shall be provided with transportation, telecommunications, and other facilities needed to generate linkage with industries and employment opportunities for its own inhabitants and those of nearby towns and cities. The ECOZONE shall administer itself on economic, financial, industrial, tourism development and such other matters within the exclusive competence of the national government. The ECOZONE may establish mutually beneficial economic relations with other entities within the country, or, subject to the administrative guidance of the Department of Foreign Affairs and/or the Department of Trade and Industry, with foreign entities or enterprises. Foreign citizens and companies owned by non-Filipinos in whatever proportion may set up enterprises in the ECOZONE, either by themselves or in joint venture with Filipinos in any sector of industry, international trade and commerce within the ECOZONE. Their assets, profits and other legitimate interests shall be protected: Provided, That the ECOZONE through the PEZA may require a minimum investment for any ECOZONE enterprises in freely convertible currencies: Provided, further, That the new investment shall fall under the priorities, thrusts and limits provided for in the Act. SEC. 8. ECOZONE to be Operated and Managed as Separate Customs Territory. – The ECOZONE shall be managed and operated by the PEZA as separate customs territory. The PEZA is hereby vested with the authority to issue certificate of origin for products manufactured or processed in each ECOZONE in accordance with the prevailing rules or origin, and the pertinent regulations of the Department of Trade and Industry and/or the Department of Finance. SEC. 9. Defense and Security. – The defense of the ECOZONE and the security of its perimeter fence shall be the responsibility of the national government in coordination with the PEZA. Military forces sent by the national government for the purpose of defense shall not interfere in the internal affairs of any of the ECOZONE and expenditure for these military forces shall be borne by the national government. The PEZA may provide and establish the ECOZONES’ internal security and firefighting forces. SEC. 10. Immigration. – Any investor within the ECOZONE whose initial investment shall not be less than One Hundred Fifty Thousand Dollars ($150,000.00), his/her spouse and dependent children under twenty-one (21) years of age shall be granted permanent resident status within the ECOZONE. They shall have freedom of ingress and egress to and from the ECOZONE without any need of special authorization from the Bureau of Immigration. The PEZA shall issue working visas renewable every two (2) years to foreign executives and other aliens, processing highly-technical skills which no Filipino within the ECOZONE possesses, as certified by the Department of Labor and Employment. The names of aliens granted permanent resident status and working visas by the PEZA shall be reported

to the Bureau of Immigration within thirty (30) days after issuance thereof. SEC. 13. General Powers and Functions of the Authority. – The PEZA shall have the following powers and functions: (a) To operate, administer, manage and develop the ECOZONE according to the principles and provisions set forth in this Act; (b) To register, regulate and supervise the enterprises in the ECOZONE in an efficient and decentralized manner; (c) To coordinate with local government units and exercise general supervision over the development, plans, activities and operations of the ECOZONES, industrial estates, export processing zones, free trade zones, and the like; (d) In coordination with local government units concerned and appropriate agencies, to construct, acquire, own, lease, operate and maintain on its own or through contract, franchise, license, bulk purchase from the private sector and build-operate-transfer scheme or joint venture, adequate facilities and infrastructure, such as light and power systems, water supply and distribution systems, telecommunication and transportation, buildings, structures, warehouses, roads, bridges, ports and other facilities for the operation and development of the ECOZONE; (e) To create, operate and/or contract to operate such agencies and functional units or offices of the authority as it may deem necessary; (f) To adopt, alter and use a corporate seal; make contracts, lease, own or otherwise dispose of personal or real property; sue and be sued; and otherwise carry out its duties and functions as provided for in this Act; (g) To coordinate the formulation and preparation of the development plans of the different entities mentioned above; (h) To coordinate with the National Economic Development Authority (NEDA), the Department of Trade and Industry (DTI), the Department of Science and Technology (DOST), and the local government units and appropriate government agencies for policy and program formulation and implementation; and (i) To monitor and evaluate the development and requirements of entities in subsection (a) and recommend to the local government units or other appropriate authorities the location, incentives, basic services, utilities and infrastructure required or to be made available for said entities. SEC. 17. Investigation and Inquiries. – Upon a written formal complaint made under oath, which on its face provides reasonable basis to believe that some anomaly or irregularity might have been committed, the PEZA or the administrator of the ECOZONE concerned, shall have the power to inquire into the conduct of firms or employees of the ECOZONE and to conduct investigations, and for that purpose may subpoena witnesses, administer oaths, and compel the production of books, papers, and other evidences: Provided, That to arrive at the truth, the investigator(s) may grant immunity from prosecution to any person whose testimony or whose possessions of documents or other evidence is necessary or convenient to determine the truth in any investigation conducted by him or under the authority of the PEZA or the administrator of the ECOZONE concerned. SEC. 21. Development Strategy of the ECOZONE. - The strategy and priority of development of each ECOZONE established pursuant to this Act shall be formulated by the PEZA, in coordination with the Department of Trade and Industry and the National Economic and Development Authority; Provided, That such development strategy is consistent with the priorities of the national government as outlined in the medium-term Philippine development plan. It shall be the policy of the government and the PEZA to encourage and provide Incentives and facilitate private sector participation in the construction and operation of public utilities and infrastructure in the ECOZONE, using any of the schemes allowed in Republic Act No. 6957 (the build-operate-transfer law). SEC. 22. Survey of Resources. The PEZA shall, in coordination with appropriate authorities and neighboring cities and municipalities, immediately conduct a survey of the physical, natural assets and potentialities of the ECOZONE areas under its jurisdiction. SEC. 26. Domestic Sales. – Goods manufactured by an ECOZONE enterprise shall be made available for immediate retail sales in the domestic market, subject to payment of corresponding taxes on the raw materials and other regulations that may be adopted by the Board of the PEZA.

However, in order to protect the domestic industry, there shall be a negative list of Industries that will be drawn up by the PEZA. Enterprises engaged in the industries included in the negative list shall not be allowed to sell their products locally. Said negative list shall be regularly updated by the PEZA. The PEZA, in coordination with the Department of Trade and Industry and the Bureau of Customs, shall jointly issue the necessary implementing rules and guidelines for the effective Implementation of this section. SEC. 29. Eminent Domain. – The areas comprising an ECOZONE may be expanded or reduced when necessary. For this purpose, the government shall have the power to acquire, either by purchase, negotiation or condemnation proceedings, any private lands within or adjacent to the ECOZONE for: a. Consolidation of lands for zone development purposes; b. Acquisition of right of way to the ECOZONE; and c. The protection of watershed areas and natural assets valuable to the prosperity of the ECOZONE. If in the establishment of a publicly-owned ECOZONE, any person or group of persons who has been occupying a parcel of land within the Zone has to be evicted, the PEZA shall provide the person or group of persons concerned with proper disturbance compensation: Provided, however, That in the case of displaced agrarian reform beneficiaries, they shall be entitled to the benefits under the Comprehensive Agrarian Reform Law, including but not limited to Section 36 of Republic Act No. 3844, in addition to a homelot in the relocation site and preferential employment in the project being undertaken. SEC. 32. Shipping and Shipping Register. – Private shipping and related business including private container terminals may operate freely in the ECOZONE, subject only to such minimum reasonable regulations of local application which the PEZA may prescribe. The PEZA shall, in coordination with the Department of Transportation and Communications, maintain a shipping register for each ECOZONE as a business register of convenience for ocean-going vessels and issue related certification. Ships of all sizes, descriptions and nationalities shall enjoy access to the ports of the ECOZONE, subject only to such reasonable requirement as may be prescribed by the PEZA In coordination with the appropriate agencies of the national government. SEC. 33. Protection of Environment. - The PEZA, in coordination with the appropriate agencies, shall take concrete and appropriate steps and enact the proper measure for the protection of the local environment. SEC. 34. Termination of Business. - Investors In the ECOZONE who desire to terminate business or operations shall comply with such requirements and procedures which the PEZA shall set, particularly those relating to the clearing of debts. The assets of the closed enterprise can be transferred and the funds con be remitted out of the ECOZONE subject to the rules, guidelines and procedures prescribed jointly by the Bangko Sentral ng Pilipinas, the Department of Finance and the PEZA. SEC. 35. Registration of Business Enterprises. - Business enterprises within a designated ECOZONE shall register with the PEZA to avail of all incentives and benefits provided for in this Act. SEC. 36. One Stop Shop Center. - The PEZA shall establish a one stop shop center for the purpose of facilitating the registration of new enterprises in the ECOZONE. Thus, all appropriate government agencies that are Involved In registering, licensing or issuing permits to investors shall assign their representatives to the ECOZONE to attend to Investor’s requirements. SEC. 39. Master Employment Contracts. - The PEZA, in coordination with the Department of Tabor and Employment, shall prescribe a master employment contract for all ECOZONE enterprise staff members and workers, the terms of which provide salaries and benefits not less than those provided under this Act, the Philippine Labor Code, as amended, and other relevant issuances of the national government. SEC. 41. Migrant Worker. - The PEZA, in coordination with the Department of Labor and Employment, shall promulgate appropriate measures and programs leading to the expansion of the services of the ECOZONE to help the local governments of nearby areas meet the needs of the migrant workers.

SEC. 42. Incentive Scheme. - An additional deduction equivalent to one- half (1/2) of the value of training expenses incurred in developing skilled or unskilled labor or for managerial or other management development programs incurred by enterprises in the ECOZONE can be deducted from the national government's share of three percent (3%) as provided In Section 24. The PEZA, the Department of Labor and Employment, and the Department of Finance shall jointly make a review of the incentive scheme provided In this section every two (2) years or when circumstances so warrant. SEC. 43. Relationship with the Regional Development Council. - The PEZA shall determine the development goals for the ECOZONE within the framework of national development plans, policies and goals, and the administrator shall, upon approval by the PEZA Board, submit the ECOZONE plans, programs and projects to the regional development council for inclusion in and as inputs to the overall regional development plan. SEC. 44. Relationship with the Local Government Units. - Except as herein provided, the local government units comprising the ECOZONE shall retain their basic autonomy and identity. The cities shall be governed by their respective charters and the municipalities shall operate and function In accordance with Republic Act No. 7160, otherwise known as the Local Government Code of 1991. SEC. 45. Relationship of PEZA to Privately-Owned Industrial Estates. – Privately-owned industrial estates shall retain their autonomy and independence and shall be monitored by the PEZA for the implementation of incentives. SEC. 46. Transfer of Resources. - The relevant functions of the Board of Investments over industrial estates and agri-export processing estates shall be transferred to the PEZA. The resources of government-owned Industrial estates and similar bodies except the Bases Conversion Development Authority and those areas identified under Republic Act No. 7227, are hereby transferred to the PEZA as the holding agency. They are hereby detached from their mother agencies and attached to the PEZA for policy, program and operational supervision. The Boards of the affected government-owned industrial estates shall be phased out and only the management level and an appropriate number of personnel shall be retained. Government personnel whose services are not retained by the PEZA or any government office within the ECOZONE shall be entitled to separation pay and such retirement and other benefits they are entitled to under the laws then in force at the time of their separation: Provided, That in no case shall the separation pay be less than one and one-fourth (1 1/4) month of every year of service. The non-profit character of the EPZA under Presidential Decree No. 66 is not inconsistent with any of the powers, functions, and responsibilities of the PEZA. The EPZA’s non-profit character, including the EPZA’s exemption from real property taxes, must be deemed assumed by the PEZA. In addition, the Local Government Code exempting instrumentalities of the national government from real property taxes was already in force274 when the PEZA’s charter was enacted in 1995. It would have been redundant to provide for the PEZA’s exemption in its charter considering that the PEZA is already exempt by virtue of Section 133(o) of the Local Government Code. As for the EPZA, Commonwealth Act No. 470 or the Assessment Law was in force when the EPZA’s charter was enacted. Unlike the Local Government Code, Commonwealth Act No. 470 does not contain a provision specifically exempting instrumentalities of the national government from payment of real property taxes.275 It was necessary to put an exempting provision in the EPZA’s charter. Contrary to the PEZA’s claim, however, Section 24 of the Special Economic Zone Act of 1995 is not a basis for the PEZA’s exemption. Section 24 of the Special Economic Zone Act of 1995 provides:chanroblesvirtuallawlibrary Sec. 24. Exemption from National and Local Taxes. — Except for real property taxes on land owned by developers, no taxes, local and national, shall be imposed on business establishments operating within the ECOZONE. In lieu thereof, five percent (5%) of the gross income earned by all business enterprises within the ECOZONE shall be paid and remitted as follows:chanroblesvirtuallawlibrary (a) Three percent (3%) to the National Government;

(b) Two percent (2%) which shall be directly remitted by the business establishments to the treasurer's office of the municipality or city where the enterprise is located. (Emphasis supplied) Tax exemptions provided under Section 24 apply only to business establishments operating within economic zones. Considering that the PEZA is not a business establishment but an instrumentality performing governmental functions, Section 24 is inapplicable to the PEZA. Also, contrary to the PEZA’s claim, developers of economic zones, whether public or private developers, are liable for real property taxes on lands they own. Section 24 does not distinguish between a public and private developer. Thus, courts cannot distinguish.276 Unless the public developer is exempt under the Local Government Code or under its charter enacted after the Local Government Code’s effectivity, the public developer must pay real property taxes on their land. At any rate, the PEZA cannot be taxed for real property taxes even if it acts as a developer or operator of special economic zones. The PEZA is an instrumentality of the national government exempt from payment of real property taxes under Section 133(o) of the Local Government Code. As this court said in Manila International Airport Authority, “there must be express language in the law empowering local governments to tax national government instrumentalities. Any doubt whether such power exists is resolved against local governments.”277chanRoblesvirtualLawlibrary V. (C) Real properties under the PEZA’s title are owned by the Republic of the Philippines

Under Section 234(a) of the Local Government Code, real properties owned by the Republic of the Philippines are exempt from real property taxes:chanroblesvirtuallawlibrary SEC. 234. Exemptions from Real Property Tax. – The following are exempted from payment of real property tax: (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[.] Properties owned by the state are either property of public dominion or patrimonial property. Article 420 of the Civil Code of the Philippines enumerates property of public dominion:chanroblesvirtuallawlibrary Art. 420. The following things are property of public dominion: (1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks, shores, roadsteads, and others of similar character; (2) Those which belong to the State, without belonging for public use, and are intended for some public service or for the development of the national wealth. Properties of public dominion are outside the commerce of man. These properties are exempt from “levy, encumbrance or disposition through public or private sale.”278 As this court explained in Manila International Airport Authority:chanroblesvirtuallawlibrary Properties of public dominion, being for public use, are not subject to levy, encumbrance or disposition through public or private sale. Any encumbrance, levy on execution or auction sale of any property of public dominion is void for being contrary to public policy. Essential public services will stop if properties of public dominion are subject to encumbrances, foreclosures and auction sale[.]279 On the other hand, all other properties of the state that are not intended for public use or are not intended for some public service or for the development of the national wealth are patrimonial properties. Article 421 of the Civil Code of the Philippines provides:chanroblesvirtuallawlibrary Art. 421. All other property of the State, which is not of the character stated in the preceding article, is patrimonial property.

Patrimonial properties are also properties of the state, but the state may dispose of its patrimonial property similar to private persons disposing of their property. Patrimonial properties are within the commerce of man and are susceptible to prescription, unless otherwise provided.280chanRoblesvirtualLawlibrary In this case, the properties sought to be taxed are located in publicly owned economic zones. These economic zones are property of public dominion. The City seeks to tax properties located within the Mactan Economic Zone,281 the site of which was reserved by President Marcos under Proclamation No. 1811, Series of 1979. Reserved lands are lands of the public domain set aside for settlement or public use, and for specific public purposes by virtue of a presidential proclamation.282 Reserved lands are inalienable and outside the commerce of man,283 and remain property of the Republic until withdrawn from public use either by law or presidential proclamation.284 Since no law or presidential proclamation has been issued withdrawing the site of the Mactan Economic Zone from public use, the property remains reserved land. As for the Bataan Economic Zone, the law consistently characterized the property as a port. Under Republic Act No. 5490, Congress declared Mariveles, Bataan “a principal port of entry”285 to serve as site of a foreign trade zone where foreign and domestic merchandise may be brought in without being subject to customs and internal revenue laws and regulations of the Philippines.286 Section 4 of Republic Act No. 5490 provided that the foreign trade zone in Mariveles, Bataan “shall at all times remain to be owned by the Government”:chanroblesvirtuallawlibrary SEC. 4. Powers and Duties. – The Foreign Trade Zone Authority shall have the following powers and duties: To fix and delimit the site of the Zone which at all times remain to be owned by the Government, and which shall have a contiguous and adequate area with well defined and policed boundaries, with adequate enclosures to segregate the Zone from the customs territory for protection of revenues, together with suitable provisions for ingress and egress of persons, conveyance, vessels and merchandise sufficient for the purpose of this Act[.] (Emphasis supplied) The port in Mariveles, Bataan then became the Bataan Economic Zone under the Special Economic Zone Act of 1995.287 Republic Act No. 9728 then converted the Bataan Economic Zone into the Freeport Area of Bataan.288chanRoblesvirtualLawlibrary A port of entry, where imported goods are unloaded then introduced in the market for public consumption, is considered property for public use. Thus, Article 420 of the Civil Code classifies a port as property of public dominion. The Freeport Area of Bataan, where the government allows tax and duty-free importation of goods,289 is considered property of public dominion. The Freeport Area of Bataan is owned by the state and cannot be taxed under Section 234(a) of the Local Government Code. Properties of public dominion, even if titled in the name of an instrumentality as in this case, remain owned by the Republic of the Philippines. If property registered in the name of an instrumentality is conveyed to another person, the property is considered conveyed on behalf of the Republic of the Philippines. Book I, Chapter 12, Section 48 of the Administrative Code of 1987 provides:chanroblesvirtuallawlibrary SEC. 48. Official Authorized to Convey Real Property. – Whenever real property of the government is authorized by law to be conveyed, the deed of conveyance shall be executed in behalf of the government by the following: .... (2) For property belonging to the Republic of the Philippines, but titled in the name of any political subdivision or of any corporate agency or instrumentality, by the executive head of the agency or instrumentality. (Emphasis supplied) In Manila International Airport Authority, this court explained:chanroblesvirtuallawlibrary [The exemption under Section 234(a) of the Local Government Code] should be read in relation with Section 133(o) of the same Code, which prohibits local governments from imposing “[t]axes, fess or charges of any kind on the National Government, its agencies and instrumentalities x x x.” The real properties owned by the Republic are titled either in the name of the Republic itself or in the name of agencies or instrumentalities of the National Government. The Administrative Code allows real property owned by the Republic to be titled in the name of agencies or instrumentalities of the national government. Such real properties remained owned by the Republic of the Philippines and continue to be exempt from real estate tax. The Republic may grant the beneficial use of its real property to an agency or instrumentality of the national government. This happens when title of the real property is transferred to an agency or instrumentality even as the

Republic remains the owner of the real property. Such arrangement does not result in the loss of the tax exemption/ Section 234(a) of the Local Government Code states that real property owned by the Republic loses its tax exemption only if the “beneficial use thereof has been granted, for consideration or otherwise, to a taxable person.” . . .290 (Emphasis in the original; italics supplied) Even the PEZA’s lands and buildings whose beneficial use have been granted to other persons may not be taxed with real property taxes. The PEZA may only lease its lands and buildings to PEZA-registered economic zone enterprises and entities.291 These PEZA-registered enterprises and entities, which operate within economic zones, are not subject to real property taxes. Under Section 24 of the Special Economic Zone Act of 1995, no taxes, whether local or national, shall be imposed on all business establishments operating within the economic zones:chanroblesvirtuallawlibrary SEC. 24. Exemption from National and Local Taxes. – Except for real property on land owned by developers, no taxes, local and national, shall be imposed on business establishments operating within the ECOZONE. In lieu thereof, five percent (5%) of the gross income earned by all business enterprises within the ECOZONE shall be paid and remitted as follows: a. Three percent (3%) to the National Government; b. Two percent (2%) which shall be directly remitted by the business establishments to the treasurer’s office of the municipality or city where the enterprise is located.292 (Emphasis supplied) In lieu of revenues from real property taxes, the City of Lapu-Lapu collects two-fifths of 5% final tax on gross income paid by all business establishments operating within the Mactan Economic Zone:chanroblesvirtuallawlibrary SEC. 24. Exemption from National and Local Taxes. – Except for real property on land owned by developers, no taxes, local and national, shall be imposed on business establishments operating within the ECOZONE. In lieu thereof, five percent (5%) of the gross income earned by all business enterprises within the ECOZONE shall be paid and remitted as follows: a. Three percent (3%) to the National Government; b. Two percent (2%) which shall be directly remitted by the business establishments to the treasurer’s office of the municipality or city where the enterprise is located.293 (Emphasis supplied) For its part, the Province of Bataan collects a fifth of the 5% final tax on gross income paid by all business establishments operating within the Freeport Area of Bataan:chanroblesvirtuallawlibrary Section 6. Imposition of a Tax Rate of Five Percent (5%) on Gross Income Earned. - No taxes, local and national, shall be imposed on business establishments operating within the FAB. In lieu thereof, said business establishments shall pay a five percent (5%) final tax on their gross income earned in the following percentages: (a) One per centum (1%) to the National Government; (b) One per centum (1%) to the Province of Bataan; (c) One per centum (1%) to the treasurer's office of the Municipality of Mariveles; and (d) Two per centum (2%) to the Authority of the Freeport of Area of Bataan.294 (Emphasis supplied) Petitioners, therefore, are not deprived of revenues from the operations of economic zones within their respective territorial jurisdictions. The national government ensured that local government units comprising economic zones shall retain their basic autonomy and identity.295chanRoblesvirtualLawlibrary All told, the PEZA is an instrumentality of the national government. Furthermore, the lands owned by the PEZA are real properties owned by the Republic of the Philippines. The City of Lapu-Lapu and the Province of Bataan cannot collect real property taxes from the PEZA.chanrobleslaw WHEREFORE, the consolidated petitions are DENIED.

SO ORDERED.cralawlawlibrary

Facts: In 1995, the PEZA was created by virtue of Republic Act No. 7916 or “the Special Economic Zone Act of 1995” to operate, administer, manage, and develop economic zones in the country. The PEZA was granted the power to register, regulate, and supervise the enterprises located in the economic zones. By virtue of the law, the export processing zone in Mariveles, Bataan became the Bataan Economic Zone and the Mactan Export Processing Zone the Mactan Economic Zone. The City contends that due to the enactment of the LGC, specifically withdrawing all tax exemptions and with the PEZA law of 1995 which did not have any provisions on tax exemptions, it maintains that PEZA is liable for real property tax. Issue: Whether or not PEZA should be exempted from real property taxation. Held: Yes. Under Section 234(a) of the Local Government Code, real properties owned by the Republic of the Philippines are exempt from real property taxes. Properties owned by the state are either property of public dominion or patrimonial property as per Art. 420. Citing Manila International Airport Authority: Properties of public dominion, being for public use, are not subject to levy, encumbrance or disposition through public or private sale. Any encumbrance, levy on execution or auction sale of any property of public dominion is void for being contrary to public policy. Essential public services will stop if properties of public dominion are subject to encumbrances, foreclosures and auction sale. In this case, the properties sought to be taxed are located in publicly owned economic zones. These economic zones are property of public dominion – sites which were reserved by President Marcos under Proclamation No. 1811, Series of 1979 (Mactan). Petition Denied. JARDINE VS ALIPOSA Pursuant to Republic Act No. 7160, otherwise known as the Local Government Code of 1991, the then Sangguniang Bayan of Makati enacted Municipal Ordinance No. 92-072, otherwise known as the Makati Revenue Code, which provides, inter alia, for the schedule of real estate, business and franchise taxes in the Municipality of Makati at rates higher than those in the Metro Manila Revenue Code. On May 10, 1993, the Philippine Racing Club, Inc. (PRCI for brevity), a taxpayer of Makati, appealed to the Department of Justice (DOJ for brevity) for the nullification of said ordinance, alleging that it was approved without previous public hearings, in violation of the Local Government Code and Article 276 of its Implementing Rules, and that some of the ordinances provisions were unconstitutional: (2) The in-lieu-of-all-taxes clause of the franchise of the Philippine Racing Club, Inc. exempts it from payment of the real property tax, annual business tax and other new taxes imposed by the ordinance here in question. To withdraw the exemption would impair the obligation of contract in violation of its constitutional right as franchise holder. (3) The imposition of the franchise tax is not within the scope of the taxing powers of the Municipality of Makati (Sections 134, 137 and 142 of Republic Act No. 7160 and Articles 223, 226 and 231 of Rule XXX of the Implementing Rules and Regulations of the Local Government Code of 1991). and (4) The Municipality of Makati already shares 5 of the 25% franchise tax provided for in Section 8 of the franchise of the Philippine Racing Club, Inc. To allow the said municipality to impose another franchise tax and to base the tax on the gross annual receipts, as it does in the ordinance, would certainly be unjust, excessive, oppressive or confiscatory (Section 130 of Republic Act No. 7160 and Article 219 of Rule XXX of the Implementing Rules and Regulations).[1] Although required by the DOJ to comment on the appeal, respondent Makati failed to do so. On July 5, 1993, the DOJ came out with a resolution[2] declaring null and void and without legal effect the said ordinance for having been enacted in contravention of Section 187 of the Local Government Code of 1991 and its implementing rules and regulations.[3] On August 19, 1993, respondent Makati sought a reconsideration of the ruling of the DOJ. Pending resolution of its motion, said respondent filed a petition ad cautelam[4] with the Regional Trial Court (RTC) of Makati, entitled Hon. Jejomar C. Binay and the Municipality of Makati, Petitioners, v. Hon. Franklin M. Drilon, Department of Justice and Philippine Racing Club, Inc., Respondents, and docketed as Case No. 93-2844. The case was raffled to Branch 148 of

the Makati RTC. Respondent Makati alleged, inter alia, that public hearings were conducted before the approval of the ordinance and hence the ordinance was valid. It prayed that after due proceedings judgment be rendered in its favor, thus: WHEREFORE, petitioners respectfully pray that this Honorable Court promulgate judgment: (a) declaring null and void the DOJ Decision dated July 5, 1993; and (b) allowing the full implementation of Makati Municipal Ordinance No. 92-072. Petitioners pray for such further or other reliefs as this Honorable Court may deem just and equitable.[5] In the meantime, respondent Makati continued to implement the ordinance. Petitioner Jardine Davies Insurance Brokers, Inc., a duly-organized corporation with principal place of business at No. 222 Sen. Gil J. Puyat Avenue, Makati, Metro Manila, was assessed and billed by Makati the amount of P63,822.47 for taxes, fees and charges under the ordinance for the second quarter of 1993. It was again billed by respondent Makati the same amount for the third quarter of 1993 and the same amount for the fourth quarter of 1993. Petitioner did not protest the assessment for its quarterly business taxes for the second, third and fourth quarters of 1993 based on said ordinance effective April 1, 1993. Petitioner, in fact, paid the said amounts on April 26, 1993 (for the second quarter), July 12, 1993 (for the third quarter) and October 19, 1993 (for the fourth quarter), respectively, without any protest. Respondent Makati issued the corresponding receipts in favor of petitioner.[6] On January 30, 1994, petitioner wrote the municipal treasurer of Makati requesting that respondent Makati compute its business tax liabilities in accordance with the Metro Manila Revenue Code and not under the ordinance considering that said ordinance was already declared by the DOJ null and void. Petitioner likewise requested that respondent Makati credit the overpayment in the total amount of P27,854.91 for the second to fourth quarters of 1993 against its 1994 liabilities for 1994, or in the alternative, for Makati to refund the said amount to petitioner. In a Letter[7] dated February 4, 1994, respondent Makati, through Maximo L. Paulino Jr., Acting Chief of its Municipal License Division, denied the request of petitioner for tax credit/refund. Respondent Makati insisted that the questioned ordinance code was valid and enforceable pending the final outcome of its petition ad cautelam with the Regional Trial Court of Makati. In the meantime, on October 26, 1993, the RTC rendered judgment in Case No. 93-2844 granting the petition of Makati and declaring the ordinance valid. On November 9, 1993, the DOJ issued a memorandum to the Chief State Counsel directing the latter to refrain from accepting any appeal or to act on pending appeals on the validity/constitutionality of the ordinance until the same shall have been finally resolved by courts of competent jurisdiction. When informed of the denial by respondent Makati of its letter-request, petitioner filed a complaint on March 7, 1994 with the RTC of Makati against respondents Makati and its Acting Municipal Treasurer. The case was raffled to Branch 150 of said court. Petitioner alleged in its complaint that in view of the resolution of the DOJ declaring the Makati Revenue Code null and void and without legal effect, the provisions of the Metro Manila Revenue Code continued to remain in full force and effect; however, petitioner was assessed and billed by respondent Makati for taxes, fees and charges for second, third and fourth quarters for 1993 beginning on April 4, 1993 up to October 14, 1994 at rates fixed in the ordinance despite the nullity thereof. Petitioner prayed that after due proceedings judgment be rendered as follows: 1. Declaring as NULL AND VOID Municipal Ordinance No. 92-072, (Makati Revenue Code) of the Municipality of Makati and ordering Defendants to refund or issue as tax credit in favor of Plaintiff the sum of P27,854.91 plus interest. 2. Assuming without admitting that the Municipal Ordinance No. 92-072 (Makati Revenue Code) is valid, declaring that the rates imposed by said ordinance accrue only on July 1, 1993 and ordering Defendants to refund or issue as tax credit in favor of Plaintiff the sum of P9,284.97.[8] On May 18, 1994, respondents Makati and its Acting Municipal Treasurer filed a motion to dismiss[9] the complaint on the ground of prematurity. They argued that petitioners cause of action was predicated on the appealed resolution of the DOJ, and unless and until nullified by final judgment of a competent court, the ordinance remained in full force and effect. On May 26, 1994, petitioner opposed the motion to dismiss of respondents, contending that its complaint was not predicated solely on the invalidity and unconstitutionality of the ordinance but also on its claim that the ordinance took effect only in July 1, 1993 but Makati applied the ordinance effective April 1, 1993. Petitioner further averred that under Section 166 of the Local Government Code, new taxes, fees or charges or charges provided for in the ordinance shall accrue on the first day of the quarter following the effectivity of the new ordinance. Hence, assuming that the tax ordinance was valid, the same should have been enforced only from the first (1st) day of the quarter following next the

effectivity of the ordinance imposing such new levies or rates as provided for in Section 166 of the Local Government Code. On August 29, 1994, the RTC issued an order granting the motion to dismiss of respondent and ordering the dismissal of the complaint. The trial court ruled that plaintiffs cause of action, if any, had prescribed. Citing Sections 187 and 195 of the Local Government Code of 1991, the trial court ratiocinated that petitioner failed to file an opposition or protest to the written notice of assessment of Makati for taxes, fees and charges at rates provided for in the ordinance within 60 days from the notice of said assessment as required by Section 195 of the Local Government Code. Hence, petitioner was barred from demanding a refund of its payment or that it be credited for said amounts. Petitioner received a copy of said order on October 7, 1994. On October 13, 1994, petitioner filed with the trial court a motion for reconsideration[10] of the order of dismissal, arguing that the trial court erred in applying Section 195 of the Local Government Code of 1991 as its complaint did not involve an assessment for deficiency taxes but one for refund/tax credit. Petitioner further claimed that it was never served with any notice of assessment from respondents and hence there was no need for petitioner to protest. Petitioner argued that what was applicable was Section 196 of the Local Government Code in conjunction with Article 286 of its Implementing Rules and Regulations, both of which simply require the filing of a written claim for refund or tax credit within two years from the date of payment. On December 28, 1994, the trial court issued an order[11] denying the motion for reconsideration of petitioner, a copy of which was served on petitioner on February 13, 1995. The trial court declared that Section 195 of the Local Government Code covers all kinds of assessments and not merely deficiency assessments for taxes, fees or charges. The trial court further ruled that the issue of the validity and constitutionality of the ordinance was still pending resolution by Branch 148 of the RTC in Civil Case No. 93-2844 and until declared null and void, otherwise by final judgment, the ordinance remained valid. Petitioner filed on February 20, 1995 a petition for review on certiorari under Rule 45 of the Rules of Court, contending that: RESPONDENT JUDGE ERRED IN HOLDING THAT THE INSTANT CASE IS NOT A CLAIM FOR REFUND UNDER SECTION 196 OF THE LGC IN RELATION TO ARTICLE 286 OF ITS IMPLEMENTING RULES, BUT A DEFICIENCY ASSESSMENT THAT HAS TO BE PROTESTED UNDER SECTION 195 OF THE SAME CODE. RESPONDENT JUDGE ERRED IN DISMISSING THE CASE ON THE GROUND OF PENDENCY OF ANOTHER ACTION CONTESTING THE LEGALITY OR CONSTITUTIONALITY OF THE MAKATI REVENUE CODE IS STILL BEING DETERMINED IN BRANCH 148 OF THE REGIONAL TRIAL COURT OF MAKATI.[12] Anent the first assignment of errors, petitioner avers that its action in the RTC was one for a refund of its overpayments governed by Article 196 of the Local Government Code implemented by Article 286 of the Implementing Rules and Regulations of the Code and not one involving an assessment for deficiency taxes governed by Section 195 of the said Code. Petitioner contends that it was not mandated to first file a protest with respondents before instituting its action for a refund of its overpayments or for it to be credited for said overpayments. For its part, respondent Makati avers that petitioner was proscribed from filing its complaint with the RTC and for a refund of its alleged overpayment, petitioner having paid without any protest the taxes due to respondent Makati under the ordinance. It is further asserted by respondent Makati that until declared null and void by a competent court, the ordinance was valid and should be enforced. The petition has no merit. The Court agrees with petitioner that as a general precept, a taxpayer may file a complaint assailing the validity of the ordinance and praying for a refund of its perceived overpayments without first filing a protest to the payment of taxes due under the ordinance. This was our ruling in Ty v. Judge Trampe:[13] . . . 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 this case, petitioner, relying on the resolution of the Secretary of Justice in The Philippine Racing Club, Inc. v. Municipality of Makati case, posited in its complaint that the ordinance which was the basis of respondent Makati for the collection of taxes from petitioner was null and void. However, the Court agrees with the contention of respondents that petitioner was proscribed from filing its complaint with the RTC of Makati for the reason that petitioner failed to appeal to the Secretary of Justice within 30 days from the effectivity date of the ordinance as mandated by Section 187 of the Local Government Code which reads:

Sec. 187-Procedure for Approval and Effectivity of Tax Ordinances and Revenue Measures; Mandatory Public Hearings.- The procedure for approval of local tax ordinances and revenue measures shall be in accordance with the provisions of this Code: Provided, That public hearings shall be conducted for the purpose prior to the enactment thereof: Provided further, That any question on the constitutionality or legality of tax ordinances or revenue measures may be raised on appeal within thirty (30) days from the effectivity thereof to the Secretary of Justice who shall render a decision within sixty (60) days from the date of receipt of the appeal: Provided, however, That such appeal shall not have the effect of suspending the effectivity of the ordinance and the accrual and payment of the tax, fee, or charge levied therein: Provided, finally, That within thirty (30) days after receipt of the decision or the lapse of the sixty-day period without the Secretary of Justice acting upon the appeal, the aggrieved party may file appropriate proceedings with a court of competent jurisdiction. In Reyes v. Court of Appeals,[14] we ruled that failure of a taxpayer to interpose the requisite appeal to the Secretary of Justice is fatal to its complaint for a refund: Clearly, the law requires that the dissatisfied taxpayer who questions the validity or legality of a tax ordinance must file his appeal to the Secretary of Justice, within 30 days from effectivity thereof. In case the Secretary decides the appeal, a period also of 30 days is allowed for an aggrieved party to go to court. But if the Secretary does not act thereon, after the lapse of 60 days, a party could already proceed to seek relief in court. These three separate periods are clearly given for compliance as a prerequisite before seeking redress in a competent court. Such statutory periods are set to prevent delays as well as enhance the orderly and speedy discharge of judicial functions. For this reason the courts construe these provisions of statutes as mandatory. A municipal tax ordinance empowers a local government unit to impose taxes. The power to tax is the most effective instrument to raise needed revenues to finance and support the myriad activities of local government units for the delivery of basic services essential to the promotion of the general welfare and enhancement of peace, progress, and prosperity of the people. Consequently, any delay in implementing tax measures would be to the detriment of the public. It is for this reason that protests over tax ordinances are required to be done within certain time frames. In the instant case, it is our view that the failure of petitioners to appeal to the Secretary of Justice within 30 days as required by Sec. 187 of R.A. 7160 is fatal to their cause. Moreover, petitioner even paid without any protest the amounts of taxes assessed by respondents Makati and Acting Treasurer as provided for in the ordinance. Evidently, the complaint of petitioner with the Regional Trial Court was merely an afterthought. In view of our foregoing disquisitions, the Court no longer deems it necessary to resolve other issues posed by petitioner. IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The order of the Regional Trial Court dismissing the complaint of petitioner is AFFIRMED. SO ORDERED.

NPC VS PROVINCE OF QUEZON e resolve in this petition for review on certiorari the question of whether the National Power Corporation (NPC), as a government-owned and controlled corporation, can claim tax exemption under Section 234 of the Local Government Code (LGC) for the taxes due from the Mirant Pagbilao Corporation (Mirant)[1] whose tax liabilities the NPC has contractually assumed.

BACKGROUND FACTS

The NPC is a government-owned and controlled corporation mandated by law to undertake, among others, the production of electricity from nuclear, geothermal, and other sources, and the transmission of electric power on a nationwide basis.[2] To pursue this mandate, the NPC entered into an Energy Conversion Agreement (ECA) with Mirant on November 9, 1991. The ECA provided for a build-operate-transfer (BOT) arrangement between Mirant and the NPC. Mirant will build and finance a coal-fired thermal power plant on the lots owned by the NPC in Pagbilao, Quezon for the purpose of converting fuel into electricity, and thereafter, operate and maintain the power plant for a period of 25 years. The NPC, in turn, will supply the necessary fuel to be converted by Mirant into electric power, take the power generated, and use it to supply the electric power needs of the country. At the end of the 25-year term,

Mirant will transfer the power plant to the NPC without compensation.According to the NPC, the power plant is currently operational and is one of the largest sources of electric power in the country.[3]

Among the obligations undertaken by the NPC under the ECA was the payment of all taxes that the government may impose on Mirant; Article 11.1 of the ECA[4] specifically provides:

11.1 RESPONSIBILITY. [NPC] shall be responsible for the payment of (a) all taxes, import duties, fees, charges and other levies imposed by the National Government of the Republic of the Philippines or any agency or instrumentality thereof to which [Mirant] may at any time be or become subject in or in relation to the performance of their obligations under this Agreement (other than (i) taxes imposed or calculated on the basis of the net income [of Mirant] and (ii) construction permit fees, environmental permit fees and other similar fees and charges), and (b) all real estate taxes and assessments, rates and other charges in respect of the Site, the buildings and improvements thereon and the Power Station. [Emphasis supplied.] In a letter dated March 2, 2000, the Municipality of Pagbilao assessed Mirants real property taxes on the power plant and its machineries in the total amount of P1,538,076,000.00 for the period of 1997 to 2000. The Municipality of Pagbilaofurnished the NPC a copy of the assessment letter.

To protect its interests, the NPC filed a petition before the Local Board of Assessment Appeals (LBAA) entitled In Re: Petition to Declare Exempt from Payment of Property Tax on Machineries and Equipment Used for Generation and Transmission of Power, under Section 234(c) of RA 7160 [LGC], located at Pagbilao, Quezon xxx[5] on April 14, 2000. The NPC objected to the assessment against Mirant on the claim that it (the NPC) is entitled to the tax exemptions provided in Section 234, paragraphs (c) and (e) of the LGC. These provisions state:

Section 234. Exemptions from Real Property Tax. The following are exempted from payment for the real property tax: xxx xxx xxx

(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;

xxx xxx xxx

(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 government-owned or controlled corporations are hereby withdrawn upon the effectivity of the Code.

Assuming that it cannot claim the exemptions stated in these provisions, the NPC alternatively asserted that it is entitled to:

a. the lower assessment level of 10% under Section 218(d) of the LGC for government-owned and controlled corporations engaged in the generation and transmission of electric power, instead of the 80% assessment level for commercial properties as imposed in the assessment letter; and b.

an allowance for depreciation of the subject machineries under Section 225 of the LGC.

The LBAA dismissed the NPCs petition on the Municipality of Pagbilaos motion, through a one-page Order dated November 13, 2000.[6]

The NPC appealed the denial of its petition with the Central Board of Assessment Appeals (CBAA). Although it noted the incompleteness of the LBAA decision for failing to state the factual basis of its ruling, the CBAA nevertheless affirmed, in its decision of August 18, 2003, the denial of the NPCs claim for exemption. The CBAA likewise denied the NPCs subsequent motion for reconsideration, prompting the NPC to institute an appeal before the Court of Tax Appeals (CTA).

Before the CTA, the NPC claimed it was procedurally erroneous for the CBAA to exercise jurisdiction over its appeal because the LBAA issued a sin perjuicio[7] decision, that is, the LBAA pronounced a judgment without any finding of fact. It argued that the CBAA should have remanded the case to the LBAA. On substantive issues, the NPC asserted the same grounds it relied upon to support its claimed tax exemptions.

The CTA en banc resolved to dismiss the NPCs petition on February 21, 2006. From this ruling, the NPC filed the present petition seeking the reversal of the CTA en bancs decision.

THE PETITION

The NPC contends that the CTA en banc erred in ruling that the NPC is estopped from questioning the LBAAs sin perjuicio judgment; the LBAA decision, it posits, cannot serve as an appealable decision that would vest the CBAA with appellate jurisdiction; a sin perjuicio decision, by its nature, is null and void.

The NPC likewise assails the CTA en banc ruling that the NPC was not the proper party to protest the real property tax assessment, as it did not have the requisite legal interest. The NPC claims that it has legal interest because of its beneficial ownership of the power plant and its machineries; what Mirant holds is merely a naked title. Under the terms of the ECA, the NPC also claims that it possesses all the attributes of ownership, namely, the rights to enjoy, to dispose of, and to recover against the holder and possessor of the thing owned. That it will acquire and fully own the power plant after the lapse of 25 years further underscores its legal interest in protesting the assessment.

The NPCs assertion of beneficial ownership of the power plant also supports its claim for tax exemptions under Section 234(c) of the LGC. The NPC alleges that it has the right to control and supervise the entire output and operation of the power plant. This arrangement, to the NPC, proves that it is the entity actually, directly, and exclusively using the subject machineries. Mirants possession of the power plant is irrelevant since all of Mirant activities relating to power generation are undertaken for and in behalf of the NPC. Additionally, all the electricity Mirant generates is utilized by the NPC in supplying the power needs of the country; Mirant therefore operates the power plant for the exclusive and direct benefit of the NPC. Lastly, the NPC posits that the machineries taxed by the local government include anti-pollution devices which should have been excluded from the assessment under Section 234(e) of the LGC.

Assuming that the NPC is liable to pay the assessed real property tax, it asserts that a reassessment is necessary as it is entitled to depreciation allowance on the machineries and to the lower 10% assessment level under Sections 225 and 218(d) of the LGC, respectively. This position is complemented by its prayer to have the case remanded to the LBAA for the proper determination of its tax liabilities.

THE COURTS RULING

This case is not one of first impression. We have previously ruled against the NPCs claimed exemptions under the LGC in the cases of FELS Energy, Inc. v. Province of Batangas[8] and NPC v. CBAA.[9] Based on the principles we

declared in those cases, as well as the defects we found in the NPCs tax assessment protest, we conclude that the petition lacks merit.

The NPC is estopped from questioning the CBAAs jurisdiction

The assailed CTA en banc decision brushed aside the NPCs sin perjuicio arguments by declaring that:

The court finds merit in [NPCs] claim that the Order of the LBAA of the Province of Quezon is a sin perjuicio decision. A perusal thereof shows that the assailed Order does not contain findings of facts in support of the dismissal of the case. It merely stated a finding of merit in the contention of the Municipality of Pagbilao xxx.

However, on appeal before the CBAA, [NPC] assigned several errors, both in fact and in law, pertaining to the LBAAs decision. Thus, petitioner is bound by the appellate jurisdiction of the CBAA under the principle of equitable estoppel. In this regard, [NPC] is in no position to question the appellate jurisdiction of the CBAA as it is the same party which sought its jurisdiction and participated in the proceedings therein.[10] [Emphasis supplied.]

We agree that the NPC can no longer divest the CBAA of the power to decide the appeal after invoking and submitting itself to the boards jurisdiction. We note that even the NPC itself found nothing objectionable in the LBAAs sin perjuicio decision when it filed its appeal before the CBAA; the NPC did not cite this ground as basis for its appeal. What it cited were grounds that went into the merits of its case. In fact, its appeal contained no prayer for the remand of the case to the LBAA.

A basic jurisdictional rule, essentially based on fairness, is that a party cannot invoke a courts jurisdiction to secure affirmative relief and, after failing to obtain the requested relief, repudiate or question that same jurisdiction.[11] Moreover, a remand would be unnecessary, as we find the CBAAs and the CTA en bancs denial of NPCs claims entirely in accord with the law and with jurisprudence.

The entity liable for tax has the right to protest the assessment

Before we resolve the question of the NPC's entitlement to tax exemption, we find it necessary to determine first whether the NPC initiated a valid protest against the assessment. A taxpayer's failure to question the assessment before the LBAA renders the assessment of the local assessor final, executory, and demandable, thus precluding the taxpayer from questioning the correctness of the assessment, or from invoking any defense that would reopen the question of its liability on the merits.[12]

Section 226 of the LGC lists down the two entities vested with the personality to contest an assessment: the owner and the person with legal interest in the property.

A person legally burdened with the obligation to pay for the tax imposed on a property has legal interest in the property and the personality to protest a tax assessment on the property. This is the logical and legal conclusion when Section 226, on the rules governing an assessment protest, is placed side by side with Section 250 on the payment of real property tax; both provisions refer to the same parties who may protest and pay the tax:

SECTION 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 province or city xxx.

SECTION 250. Payment of Real Property Taxes in Instalments. -The owner of the real property or the person having legal interest therein may pay the basic real property tax xxx due thereon without interest in four (4) equal instalments xxx.

The liability for taxes generally rests on the owner of the real property at the time the tax accrues. This is a necessary consequence that proceeds from the fact of ownership.[13] However, personal liability for realty taxes may also expressly rest on the entity with the beneficial use of the real property, such as the tax on property owned by the government but leased to private persons or entities, or when the tax assessment is made on the basis of the actual use of the property.[14] In either case, the unpaid realty tax attaches to the property[15] but is directly chargeable against the taxable person who has actual and beneficial use and possession of the property regardless of whether or not that person is the owner.[16]

In the present case, the NPC, contrary to its claims, is neither the owner nor the possessor/user of the subject machineries.

The ECAs terms regarding the power plants machineries clearly vest their ownership with Mirant. Article 2.12 of the ECA[17] states:

2.12 OWNERSHIP OF POWER STATION. From the Effective Date until the Transfer Date [that is, the day following the last day of the 25-year period], [Mirant] shall, directly or indirectly, own the Power Station and all the fixtures, fittings, machinery and equipment on the Site or used in connection with the Power Station which have been supplied by it or at its cost. [Mirant] shall operate, manage, and maintain the Power Station for the purpose of converting fuel of [NPC] into electricity. [Emphasis supplied.]

The NPC contends that it should nevertheless be regarded as the beneficial owner of the plant, since it will acquire ownership thereof at the end of 25 years. The NPC also asserts, by quoting portions of the ECA, that it has the right to control and supervise the construction and operation of the plant, and that Mirant has retained only naked title to it. These contentions, unfortunately, are not sufficient to vest the NPC the personality to protest the assessment.

In Cario v. Ofilado,[18] we declared that legal interest should be an interest that is actual and material, direct and immediate, not simply contingent or expectant. The concept of the directness and immediacy involved is no different from that required in motions for intervention under Rule 19 of the Rules of Court that allow one who is not a party to the case to participate because of his or her direct and immediate interest, characterized by either gain or loss from the judgment that the court may render.[19] In the present case, the NPCs ownership of the plant will happen only after the lapse of the 25-year period; until such time arrives, the NPC's claim of ownership is merely contingent, i.e., dependent on whether the plant and its machineries exist at that time. Prior to this event, the NPCs real interest is only in the continued operation of the plant for the generation of electricity. This interest has not been shown to be adversely affected by the realty taxes imposed and is an interest that NPC can protect, not by claiming an exemption that is not due to Mirant, but by paying the taxes it (NPC) has assumed for Mirant under the ECA.

To show that Mirant only retains a naked title, the NPC has selectively cited provisions of the ECA to make it appear that it has the sole authority over the power plant and its operations. Contrary to these assertions, however, a complete

reading of the ECA shows that Mirant has more substantial powers in the control and supervision of the power plant's construction and operations.

Under Articles 2.1 and 3.1 of the ECA, Mirant is responsible for the design, construction, equipping, testing, and commissioning of the power plant. Article 5.1 on the operation of the power plant states that Mirant shall be responsible for the power plants management, operation, maintenance, and repair until the Transfer Date. This is reiterated in Article 5.3 where Mirant undertakes to operate the power plant to convert fuel into electricity.

While the NPC asserts that it has the power to authorize the closure of the power plant without any veto on the part of Mirant, the full text of Article 8.5 of the ECA shows that Mirant is possessed with similar powers to terminate the agreement:

8.5 BUYOUT. If the circumstances set out in Article 7.18, Article 9.4, Article 14.4 or Article 28.4 arise or if, not earlier than 20 years after the Completion Date, [the NPC] gives not less than 90 days notice to [Mirant] that it wishes to close the power station, or if [the NPC] has failed to ensure the due payment of any sum due hereunder within three months of its due date then, upon [Mirant] giving to [the NPC] not less than 90 days notice requiring [the NPC] to buy out [Mirant] or, as the case may be, [the NPC] giving not less than 90 days notice requiring [Mirant] to sell out to [NPC], [NPC] shall purchase all [Mirant's] right, title, and interest in and to the Power Station and thereupon all [Mirant's] obligations hereunder shall cease. [Emphasis supplied.]

On liability for taxes, the NPC indeed assumed responsibility for the taxes due on the power plant and its machineries,[20] specifically, all real estate taxes and assessments, rates and other charges in respect of the site, the buildings and improvements thereon and the [power plant]. At first blush, this contractual provision would appear to make the NPC liable and give it standing to protest the assessment. The tax liability we refer to above, however, is the liability arising from law that the local government unit can rightfully and successfully enforce, not the contractual liability that is enforceable between the parties to a contract as discussed below. By law, the tax liability rests on Mirant based on its ownership, use, and possession of the plant and its machineries.

In Testate of Concordia Lim v. City of Manila,[21] we had occasion to rule that: In [Baguio v. Busuego[22]], the assumption by the vendee of the liability for real estate taxes prospectively due was in harmony with the tax policy that the user of the property bears the tax. In [the present case], the interpretation that the [vendee] assumed a liability for overdue real estate taxes for the periods prior to the contract of sale is incongruent with the said policy because there was no immediate transfer of possession of the properties previous to full payment of the repurchase price. xxxx

To impose the real property tax on the estate which was neither the owner nor the beneficial user of the property during the designated periods would not only be contrary to law but also unjust.

For a fuller appreciation of this ruling, the Baguio case referred to a contract of sale wherein the vendee not only assumed liability for the taxes on the property, but also acquired its use and possession, even though title remained with the vendor pending full payment of the purchase price. Under this situation, we found the vendee who had assumed liability for the realty taxes and who had been given use and possession to be liable. Compared with Baguio, the Lim case supposedly involved the same contractual assumption of tax liabilities,[23] but possession and enjoyment of the property remained with other persons. Effectively, Lim held that the contractual assumption of the obligation to pay real property tax, by itself, is not sufficient to make one legally compellable by the government to pay for the taxes due; the person liable must also have use and possession of the property.

Using the Baguio and Lim situations as guides, and after considering the comparable legal situations of the parties assuming liability in these cases, we conclude that the NPCs contractual liability alone cannot be the basis for the

enforcement of tax liabilities against it by the local government unit. In Baguio and Lim, the vendors still retained ownership, and the effectiveness of the tax liabilities assumed by the vendees turned on the possession and use of the property subject to tax. In other words, the contractual assumption of liability was supplemented by an interest that the party assuming liability had on the property taxed; on this basis, the vendee in Baguio was found liable, while the vendee in Lim was not. In the present case, the NPC is neither the owner, nor the possessor or user of the property taxed. No interest on its part thus justifies any tax liability on its part other than its voluntary contractual undertaking. Under this legal situation, only Mirant as the contractual obligor, not the local government unit, can enforce the tax liability that the NPC contractually assumed; the NPC does not have the legal interest that the law and jurisprudence require to give it personality to protest the tax imposed by law on Mirant.

By our above conclusion, we do not thereby pass upon the validity of the contractual stipulation between the NPC and Mirant on the assumption of liability that the NPC undertook. All we declare is that the stipulation is entirely between the NPC and Mirant, and does not bind third persons who are not privy to the contract between these parties. We say this pursuant to the principle of relativity of contracts under Article 1311 of the Civil Code which postulates that contracts take effect only between the parties, their assigns and heirs. Quite obviously, there is no privity between the respondent local government units and the NPC, even though both are public corporations. The tax due will not come from one pocket and go to another pocket of the same governmental entity. An LGU is independent and autonomous in its taxing powers and this is clearly reflected in Section 130 of the LGC which states: SECTION 130. Fundamental Principles. - The following fundamental principles shall govern the exercise of the taxing and other revenue-raising powers of local government units: xxx (d) The revenue collected pursuant to the provisions of this Code shall inure solely to the benefit of, and be subject to disposition by, the local government unit levying the tax, fee, charge or other imposition unless otherwise specifically provided herein; xxx. [Emphasis supplied.]

An exception to the rule on relativity of contracts is provided under the same Article 1311 as follows:

If the contract should contain some stipulation in favor of a third person, he may demand its fulfilment provided he communicated his acceptance to the obligor before its revocation. A mere incidental benefit or interest of a person is not sufficient. The contracting parties must have clearly and deliberately conferred a favor upon a third person. [Emphasis supplied.]

The NPCs assumption of tax liability under Article 11.1 of the ECA does not appear, however, to be in any way for the benefit of the Municipality of Pagbilao and the Province of Quezon. In fact, if the NPC theory of the case were to be followed, the NPCs assumption of tax liability will work against the interests of these LGUs. Besides, based on the objectives of the BOT Law[24] that underlie the parties BOT agreement,[25] the assumption of taxes clause is an incentive for private corporations to take part and invest in Philippine industries. Thus, the principle of relativity of contracts applies with full force in the relationship between Mirant and NPC, on the one hand, and the respondent LGUs, on the other.

To reiterate, only the parties to the ECA agreement can exact and demand the enforcement of the rights and obligations it established only Mirant can demand compliance from the NPC for the payment of the real property tax the NPC assumed to pay. The local government units (the Municipality of Pagbilao and the Province of Quezon), as third parties to the ECA, cannot demand payment from the NPC on the basis of Article 11.1 of the ECA alone. Corollarily, the local government units can neither be compelled to recognize the protest of a tax assessment from the NPC, an entity against whom it cannot enforce the tax liability.

The test of exemption is the nature of the use,

not ownership, of the subject machineries

At any rate, the NPCs claim of tax exemptions is completely without merit. To successfully claim exemption under Section 234(c) of the LGC, the claimant must prove two elements:

a. the machineries and equipment are actually, directly, and exclusively used by local water districts and government-owned or controlled corporations; and b. the local water districts and government-owned and controlled corporations claiming exemption must be engaged in the supply and distribution of water and/or the generation and transmission of electric power.

As applied to the present case, the government-owned or controlled corporation claiming exemption must be the entity actually, directly, and exclusively using the real properties, and the use must be devoted to the generation and transmission of electric power. Neither the NPC nor Mirant satisfies both requirements. Although the plants machineries are devoted to the generation of electric power, by the NPCs own admission and as previously pointed out, Mirant a private corporation uses and operates them. That Mirant operates the machineries solely in compliance with the will of the NPC only underscores the fact that NPC does not actually, directly, and exclusively use them. The machineries must be actually, directly, and exclusively used by the government-owned or controlled corporation for the exemption under Section 234(c) to apply.[26]

Nor will NPC find solace in its claim that it utilizes all the power plants generated electricity in supplying the power needs of its customers. Based on the clear wording of the law, it is the machineries that are exempted from the payment of real property tax, not the water or electricity that these machineries generate and distribute.[27]

Even the NPCs claim of beneficial ownership is unavailing. The test of exemption is the use, not the ownership of the machineries devoted to generation and transmission of electric power.[28] The nature of the NPCs ownership of these machineries only finds materiality in resolving the NPCs claim of legal interest in protesting the tax assessment on Mirant. As we discussed above, this claim is inexistent for tax protest purposes.

Lastly, from the points of view of essential fairness and the integrity of our tax system, we find it essentially wrong to allow the NPC to assume in its BOT contracts the liability of the other contracting party for taxes that the government can impose on that other party, and at the same time allow NPC to turn around and say that no taxes should be collected because the NPC is tax-exempt as a government-owned and controlled corporation. We cannot be a party to this kind of arrangement; for us to allow it without congressional authority is to intrude into the realm of policy and to debase the tax system that the Legislature established. We will then also be grossly unfair to the people of the Province of Quezon and the Municipality of Pagbilao who, by law, stand to benefit from the tax provisions of the LGC.

WHEREFORE, we DENY the National Power Corporations petition for review on certiorari, and AFFIRM the decision of the Court of Tax Appeals en banc dated February 21, 2006. Costs against the petitioner.

SO ORDERED. ACTS: NPC is a GOCC that entered into an Energy Conversion Agreement (ECA) under a build-operate-transfer (BOT) arrangement with Mirant Pagbilao Corp. Under the agreement, Mirant will build and finance a thermal power plant in Quezon, and operate and maintain the same for 25 years, after which, Mirant will transfer the power plant to the Respondent without compensation. NPC also undertook to pay all taxes that the government may impose on Mirant. Quezon then assessed Mirant real property taxes on the power plant and its machineries.

ISSUES: (1) Can Petitioner file the protest against the real property tax assessment? (2) Can Petitioner claim exemption from the RPT given the BOT arrangement with Mirant? (3) Is payment under protest required before an appeal to the LBAA is made?

HELD: (1) NO. The two entities vested with personality to contest an assessment are (a) the owner or (b) the person with legal interest in the property. NPC is neither the owner nor the possessor/user of the subject machineries even if it will acquire ownership of the plant at the end of 25 years. The Court said that legal interest should be an interest that is actual and material, direct and immediate, not simply contingent or expectant. While the Petitioner does indeed assume responsibility for the taxes due on the power plant and its machineries, the tax liability referred to is the liability arising from law that the local government unit can rightfully and successfully enforce, not the contractual liability that is enforceable between the parties to a contract. The local government units can neither be compelled to recognize the protest of a tax assessment from the Petitioner, an entity against whom it cannot enforce the tax liability. (2) NO. To successfully claim exemption under Section 234 (c) of the LGC, the claimant must prove two elements: a) the machineries and equipment are actually, directly, and exclusively used by local water districts and government-owned or controlled corporations; and b) the local water districts and government-owned and controlled corporations claiming exemption must be engaged in the supply and distribution of water and/or the generation and transmission of electric power. Since neither the Petitioner nor Mirant satisfies both requirements, the claim for exemption must fall. (3) YES. If a taxpayer disputes the reasonableness of an increase in a real property tax assessment, he is required to "first pay the tax" under protest. The case of Ty does not apply as it involved a situation where the taxpayer was 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. A claim for tax exemption, whether full or partial, does not question the authority of local assessors to assess real property tax.

SESBRANO VS BOARD OF ASSESSMENT In resolving the validity of retroactive real estate tax assessments, may the Central Board of Assessment Appeals and thereafter the Supreme Court take up and consider issues not raised before the Local Board of Assessment Appeals? For the purpose of assessing back taxes on real estate, what is the meaning of the phrase "declared for the first time?" Specifically, may such back taxes be assessed on a property initially declared as a "residential house of strong materials" after the City Assessor discovered years later that such property was after all a residential building consisting of four storeys with a fifth storey used as roof deck? These are some of the questions raised in this petition to annul and set aside the Resolution[1] dated July 28, 1992 of Respondent Central Board of Assessment Appeals[2] in CBAA Case No. 257. The Facts On April 3, 1980, petitioner purchased from Estrella Benedicto Tan two (2) parcels of land covered by Transfer Certificate of Title No. T-55917 issued by the Register of Deeds of Cebu City[3] and described in the deed of sale as follows:[4] "A parcel of land (Lot 308 of the Cadastral Survey of Cebu), with the improvements thereon, situated in the City of Cebu (formerly Municipality of Cebu), containing an area of Forty Nine (49) square meters, more or less x x x. A parcel of land (Lot 309 of the Cadastral Survey of Cebu), with the improvements thereon, situated in the City of Cebu, containing an area of Forty Eight (48) square meters, more or less x x x." The conveyance included "a residential house of strong materials constructed on the lots above-mentioned"[5] located in Cebu City. Thereafter, petitioner declared the real property constructed on the said lots for purposes of tax assessment as a residential house of strong materials with a floor area of sixty (60) square meters. Effective in the year 1980, the declared property was assessed by Respondent City Assessor of Cebu City under Tax Declaration No. 02-20454 at a market value of P60,000.00 and an assessed value of P36,900.00.[6]

During a tax-mapping operation conducted in February 1989, the field inspectors of the Cebu City Assessor discovered that the real property declared and assessed under Tax Declaration No. 02-20454 was actually a residential building consisting of four (4) storeys with a fifth storey used as a roof deck. The building had a total floor area of 500.20 square meters. The area for each floor was 100.04 square meters. The building was found to have been made of Type II-A materials. On October 17, 1990, these findings were confirmed by the Board of Commissioners in an ocular inspection conducted on the subject property. Based on the findings of the field inspectors, Respondent City Assessor of Cebu City issued Tax Declaration No. GR-06-045-00162 effective in the year 1989, canceling Tax Declaration No. 02-20454 and assessing the building therein at a net market value of P499,860.00 and an assessed value of P374,900.00. The 1981-1984 Schedule of Market Value was applied in the assessment.[7] Petitioner protested the new assessment for being "excessive and unconscionable,"[8] contending that it was increased by more than 1,000% as compared to its previous market value of P60,000.00 or assessed value of P36,900.00 under Tax Declaration No. 02-20454 and "that he bought the building including the lots for only P100,000.00 on April 3, 1980, which amount should be the market value of the building for purposes of determining its assessed value."[9] He questioned the new assessment before the Local Board of Assessment Appeals of Cebu City, which however dismissed petitioner's appeal on January 11, 1990.[10] Hence, petitioner elevated his case to Respondent Central Board of Assessment Appeals. On September 23, 1991, Respondent CBAA rendered a decision,[11] the dispositive portion of which reads as follows:[12] "WHEREFORE, premises considered, the appealed Resolution is hereby modified, viz.: For the purpose of determining the back taxes due on the excess area of subject building for the years 1981 to June 30, 1987, Respondent-Appellee (Respondent City Assessor of Cebu) is hereby directed to issue a new tax declaration effective 1981 based on the following assessments: Type II-A Building (Residential) at P380.00/sq. m. (Minimum Rate)

Undeclared Excess Area

Unit Value Per Sq. M.

Market Value

S1 (95-60)

35 Sq. m.

P 380.00

P13,300.00

S2

95 Sq. m.

380.00

36,100.00

S3

95 Sq. m.

380.00

36,100.00

S4

95 Sq. m.

380.00

36,100.00

S5 Roof deck

95 Sq. m. 30% of

380.00

10,830.00

Total

415 Sq. m

P132,430.00

Assessment Level

x 45%

Assessed Value

P59,593.50

For the purpose of determining the back taxes due on the excess area of subject building for the years July 1, 1987 to 1989, Respondent-Appellee is hereby ordered to issue another tax declaration effective July 1, 1987, to supersede the tax declaration (effective 1981) to be issued above based on the following assessments: Type II-A Building (Residential) at P1,400.00/sq. m. (Minimum Rate)

Undeclared Excess Area

Unit Value Per Sq. M.

S1 (95-4)

35 Sq. m.

P1,400.00

P 49,000.00

S2

95 Sq. m.

1,400.00

133,000.00

Market Value

S3

95 Sq. m.

1,400.00

133,000.00

S4

95 Sq. m.

1,400.00

133,000.00

S5 Roof deck

95 Sq. m. 30% of

1,400.00

Total

415 Sq. m.

39,900.00 P 487,900.00

Less : 30 % Depreciation allowance

146,370.00

Net Market Value

341,530.00

Assessment Level

x 65%

Assessed Value

P221,994.50

Not satisfied, petitioner then filed a motion for reconsideration. During the hearing on said motion, the parties submitted a joint manifestation or compromise agreement which reads:[13] "1. That the revised valuation of the property is P78,330.00 as ASSESSED VALUE, classifying the property as class II-B at P1,110 per sq. m., the building having been completed and occupied in 1950 or forty-two (42) years ago; 2. That Section 23 of Presidential Decree No. 464 APPLIES to this case considering that the appellee has NOT YET SUBMITTED the required CERTIFICATION to the Secretary of Finance to the effect that the GENERAL REVISION OF PROPERTY ASSESSMENTS FOR CEBU CITYHAS BEEN FINISHED. Sec. 23 of P.D. 464 uses the CONJUNCTIVE WORD 'AND' between the phrases: 'ASSESSMENTS SHALL BECOME EFFECTIVE and 'TAXES SHALL ACCRUE AND BE PAYABLE.'" Thereafter, Respondent CBAA issued the assailed Resolution accepting the joint manifestation "for whatever purpose it may be worth to the case," raising "no objection to Manifestation No. 1 for being not contrary to law or public policy" but finding that "Manifestation No. 2 has no bearing on the instant case because Section 25 and not Section 23 of P.D. 464 is the law applicable x x x."[14] The dispositive portion of the now assailed Resolution reads:[15] "WHEREFORE, our Decision on (sic) this case is hereby MODIFIED. For purposes of determining the back taxes due on the excess area of subject building from 1981 to 1989, Respondent-Appellee Assessor of Cebu City is hereby ordered to issue 1. Tax Declaration effective 1981 to June 30, 1987, based on the minimum rate per sq. m. for a Type II-B building, in accordance with the 1978-79 Schedule of Values; 2. Tax Declaration to supersede Tax Declaration No. 1 to be effective from July 1, 1987 to the year 1988, based on the minimum rate per sq. m. for a Type II-B building, in accordance with the 1981-1984 Schedule of Values; and 3. Tax Declaration to supersede Tax Declaration No. 2 to take effect in 1989, based on the revised valuation provided under No. 1 of the Joint Manifestation of the parties hereof." The Issues Disagreeing with the foregoing, petitioner thus filed this "APPEAL BY CERTIORARI" assigning the following errors allegedly committed by Respondent CBAA:[16] "1. Respondent CBAA gravely erred in resolving the matter of back taxes which was never raised in issue in the Local Board of Assessment Appeals of Cebu City or in the appeal by the petitioner before the Central Board of Assessment Appeals (CBAA). 2. Respondent CBAA gravely erred in disregarding the jurisprudence in Reyes vs. Almanzor,[17] 196 SCRA 328 (should be 322). 3. Respondent CBAA gravely erred in mis-interpreting or mis-applying Section 25 of P.D. 464; 4. Respondent CBAA gravely erred in disregarding or failing or refusing to apply Section 23 of P.D. 464." In his Memorandum dated July 23, 1993, petitioner refined the issues as follows:[18] "B-1. Whether or not Respondent Central Board of Assessment Appeals erred in resolving the issue of back taxes from 1981 to 1988 despite the fact that such issue was not raised in the appeal, under its pretext that it is applying Section 25 of Presidential Decree No. 464. B-2. Whether or not Respondent Central Board of Assessment Appeals erred in not strictly applying par. n, Section 3, Presidential Decree No. 464 defining 'market value' as basis for computing the 'assessed value';

B-3. Whether or not Respondent Central Board of Assessment Appeals erred in not strictly applying or refusing to apply Section 23 of Presidential Decree No. 464. Corollary Issues: a. Whether or not respondent CBAA's assessment is discriminatory, unjust, confiscatory and unconstitutional. b. Whether or not P.D. No. 20, as invoked in the doctrinal jurisprudence of Reyes vs. Almanzor, 196 SCRA 328, may be applied to the case at bar in relation with par. n, Sec. 3, P.D. 464 defining 'market value' which was cited in the Reyes vs. Almanzor case (x x x)." The Court's Ruling The petition has no merit. Preliminary Matters At the outset, it should be emphasized that "appeal by certiorari" or a petition for review under Rule 45 of the Rules of Court is not the correct remedy in questioning the decisions and resolutions of the Central Board of Assessment Appeals. Rather, a petition for certiorari under Rule 65 of the Rules of Court on the ground of grave abuse of discretion should be filed.[19] Moreover, the CBAA decision dated September 30, 1991 and the as sailed Resolution dated July 28, 1992 show that petitioner failed to pay under protest the tax assessed against his property. This is a violation of Section 64 of Presidential Decree No. 464[20]which requires that, before a court may entertain any suit assailing the validity of a tax assessment, the taxpayer must first pay under protest the tax assessed against him. The said section provides: "SEC. 64. Restriction upon power of court to impeach tax. No court shall entertain any suit assailing the validity of tax assessed under this Code until the taxpayer shall have paid, under protest, the tax assessed against him nor shall any court declare any tax invalid by reason of irregularities or informalities in the proceedings of the officers charged with the assessment or collection of taxes, or of failure to perform their duties within this time herein specified for their performance unless such irregularities, informalities or failure shall have impaired the substantial rights of the taxpayer; nor shall any court declare any portion of the tax assessed under the provisions of Code invalid except upon condition that the taxpayer shall pay the just amount of the tax, as determined by the court in the pending proceeding." (Underscoring supplied) For the foregoing lapses, if for no other, this case ought to be dismissed. However, there are other cogent reasons showing that the petition has no merit. These will be shown as we tackle the various issues raised by petitioner in his memorandum. Petitioner's First Issue: Propriety of Raising the Issue of Back Taxes Petitioner argues that the issue of back taxes has never been raised before the Local Board of Assessment Appeals or the Central Board of Assessment Appeals. Hence, respondents are barred by due process and fair play from alleging them before Respondent CBAA and now before this Court. As a rule, no issue may be raised on appeal unless it has been brought before the lower tribunal for its consideration.[21] The Court has held in several cases, however, that an appellate court has an inherent authority to review unassigned errors (1) which are closely related to an error properly raised, or (2) upon which the determination of the error properly assigned is dependent, or (3) where the Court finds that consideration of them is necessary in arriving at a just decision of the case. Thus: "x x x. In line with the modern trends of procedure, we are told that, 'while an assignment of error which is required by law or rule of court has been held essential to appellate review, and only those assigned will be considered, there are a number of cases which appear to accord to the appellate court a broad discretionary power to waive the lack of proper assignment of errors and consider errors not assigned. And an unassigned error closely related to the error properly assigned, or upon which the determination of the question raised by the error properly assigned is dependent, will be considered by the appellate court notwithstanding the failure to assign it as error.' (4 C.J.S., 1734; 3 C.J., 1341, footnote 77)."[22] "At any rate, the Court is clothed with ample authority to review matters, even if they are not assigned as errors in their appeal, if it finds that their consideration is necessary in arriving at a just decision of the case x x x[23] Although the foregoing citations specifically referred to "appellate courts," there appears no reason why these should not apply to appellate administrative agencies, where rules of procedure are liberally construed. In the present case, we hold that Respondent CBAA did not err in considering the issue of back taxes, the same being closely related to an error properly raised. Petitioner himself assailed the subject assessment before the Respondent

CBAA for being "excessive and unconscionable." In resolving this issue, Respondent CBAA was duty-bound to review the factual antecedents of the case and to apply thereon the pertinent provisions of law. In the process, Respondent CBAA applied Section 25 of PD 464 which had authorized the imposition of back taxes. In any event, consideration of the question of back taxes is essential to a just decision on the case, as will be shown below. Second Issue: Applicability of Section 24, PD 464 Arguing that he should not be liable for back taxes, petitioner states that Respondent CBAA should have applied Section 24, instead of Section 25, of PD 464. These statutory provisions read: "Section 24. Date of effectivity of Assessment or Reassessment. All assessments or reassessments made after the first day of January of any year shall take effect on the first day of January of the succeeding year: Provided, however, That the reassessment of real property due to its (1) partial or total destruction, or to (2) a major change in its actual use, or to any (3) great and sudden inflation or deflation of real property values, (4) or to the gross illegality of the assessment when made or to any other abnormal cause, shall be made within ninety days from the date any such cause or causes occurred, the same to take effect at the beginning of the quarter next following the reassessment. Section 25. Assessment of Property Subject to Back Taxes. Real property declared for the first time shall have back taxes assessed against it for the period during which it would have been liable if assessed from the first in proper course but in no case for more than ten years prior to the year of initial assessment; Provided, however, that the back taxes shall be computed on the basis of the applicable schedule of values in force during the corresponding period. If said taxes are paid before the expiration of the tax collection period next ensuing, no penalty for delinquency shall be imposed, otherwise the taxes shall be subject to all the penalties to which they would have been liable had they originally become delinquent after assessment of the property in the usual course." Opposing the application of Section 25 of PD 464, petitioner posits that Respondent CBAA "misread or misinterpreted" the same, specifically the phrases therein referring to "property declared for the first time" and "prior to the year of initial assessment."[24]Without expressly stating so, petitioner purports to argue that Section 25 is inapplicable because the property in question has been declared for assessment as early as 1980 (and even before that, by the prior owner), and not "for the first time" in 1989. Petitioner's argument is not novel. In Lopez vs. Crow[25] which involved the interpretation of Section 12[26] of Act 2238, a provision similar to Section 25 of PD 464, the Court rejected a parallel argument that the said provision "refers solely to real estate declared for the first time and does not apply to the area which, upon revision, has been shown to be in excess of that which was formerly declared."[27] The Court held that the area in excess of that declared by the taxpayer was deemed declared for the first time upon its discovery. It ratiocinated thus:[28] "x x x it is neither just that another landowner should be permitted by an involuntary mistake or through other causes, not to say bad faith, to state an area far less than that actually contained in his land and pay to the State a tax far below that which he should really pay. This was one of the objects of the Legislature in ordering the revision, so that all real estate should pay the taxes that legally must accrue to the State. Wherefore, even taking the Spanish text of the phrase in (S)ection 12 of Act No. 2238 that real property declared for the first time shall have taxes assessed against it, etc.,' it should not be understood to apply only to real estate that have (sic) never been declared; as within the meaning of such phrase, the excess areas resulting from the revision must be understood as never having been declared before; because only that area must be deemed as declared which is stated in the declaration sheet, and the area over and above that cannot be considered as ever having been declared." (Underscoring supplied) Section 24 merely lays down the general rule that assessments under PD 464 are to be given prospective application. It cannot be construed in such a manner as to eliminate the imposition of back taxes. If Section 24, instead of Section 25, were made to apply as suggested by petitioner, he would in effect be excused from the payment of back taxes on the undeclared excess area of his property. The Court, clearly, cannot allow a taxpayer to evade his obligation to the government by letting him pay taxes on a property based on its gross undervaluation at P60,000.00, when the same had then a current market value of P449,860.00. Accepting the petitioner's position will necessarily prejudice the public interest, for the government is thereby deprived of back taxes which ought to have been paid in the first place. This will certainly subvert the raison d'etre of the law which is to raise taxes, the lifeblood of the government. This cannot be allowed, for[29] "x x x it is another well-established rule of statutory construction that where great inconvenience will result from a particular construction, or great public interests would be endangered or sacrificed, or great mischief done, such construction is to be avoided, or the court ought to presume that such construction was not intended by the makers of the law, unless required by clear and unequivocal words. (25 R. C. L., pp. 1025-1027)." Furthermore, if Section 24 is the only applicable provision in cases where a taxpayer has eluded the payment of the correct amount of taxes for more than nine (9) years, as in this case, Section 25 of PD 464 which requires the payment

of back taxes will be rendered superfluous and nugatory. Such interpretation could not have been intended by the law. It is a familiar rule in statutory construction that "(t)he legal provision being therefore susceptible of two interpretations, we adopt the one in consonance with the presumed intention of the legislature to give its enactments the most reasonable and beneficial construction, the one that will render them operative and effective and harmonious with other provisions of law."[30] Third Issue: Applicability of Par. N, Section 3, PD 464 Petitioner insists that Respondent CBAA should have computed the assessed value of the property based on its market value as defined in paragraph n, Section 3 of PD 464, to wit: "n) Market Value is defined as "the highest price estimated in terms of money which the property will buy if exposed for sale in the open market allowing a reasonable time to find a purchaser who buys with knowledge of all uses to which it is adapted and for which it is capable of being used." It is also referred to as "the price at which a willing seller would sell and a willing buyer would buy, neither being under abnormal pressure." We cannot sustain petitioner's contention. The cited provision merely defines "market value." It does not in any way direct that the market value as defined therein should be used as basis in determining the value of a property for purposes of real property taxation. On the other hand, Section 5 of PD 464 provides unequivocally that "(a)ll real property, whether taxable or exempt, shall be appraised at the current and fair market value prevailing in the locality where the property is situated."[31] Contrary to petitioner's contention, acquisition cost cannot be and is not the sole basis of the current and fair market value of a property. The current value of like properties and their actual or potential uses, among others, are also considered. Thus, it has been held: "x x x (A)ssessors, in fixing the value of property, have to consider all the circumstances and elements of value, and must exercise a prudent discretion in reaching conclusions. Courts, therefore, will not presume to interfere with the intelligent exercise of the judgment of men specially trained in appraising property. Where, as the Supreme Court of Louisiana says, (when) the judicial mind is left in doubt, it is a sound rule to leave the assessment undisturbed. (Viuda e Hijos de Pedro P. Roxas vs. Rafferty [1918], 37 Phil., 957; New Orleans Cotton Exchange vs. Board of Assessors, supra.)"[32] Other circumstances militate against the acceptance of petitioner's argument. Unscrupulous sellers of real estate often understate the selling price in the deed of sale to minimize their tax liability. Moreover, the value of real property does not remain stagnant; it is unrealistic to expect that the current market value of a property is the same as its cost of acquisition ten years ago. In this light, a general revision of real property assessment is required by law every five (5) years[33] to ensure that real properties are assessed at their current and fair market values. Petitioner also argues that "the number of stories that a building has or its floor area are irrelevant, immaterial or impertinent in the determination of market value as basis for computing the assessed value." This deserves scant consideration. It is a matter of plain common sense that a building with more floors has a higher market value than one with fewer floors, provided that both are of the same materials. Hence, the tax declaration of the building in question should have accurately reflected its actual area and number of floors, these being necessary for the accurate valuation thereof. Petitioner's Fourth Issue: Application of Section 23 of PD 464 Petitioner argues that the CBAA erred in refusing to apply Section 23 of PD 464 which provides: Section 23. Certification of Revised Values to the Secretary of Finance. When the provincial or city assessor shall have finished a general revision of property assessments for any province, municipality or city, he shall so certify to the Secretary of Finance and the assessments shall become effective and taxes shall accrue and be payable thereunder in accordance with the provisions of this Code. Petitioner claims that Respondent City Assessor of Cebu City has not yet completed the general revision of property assessments for years 1981-1984 and has not yet submitted the certification required by Section 23 of PD 464 to the Secretary of Finance; hence, he may not yet be held liable to pay any assessment.[34] This claim lacks merit. As found by Respondent CBAA,[35] the questioned assessment had not been imposed pursuant to a general revision of property assessments that had not yet taken effect. Respondent CBAA held: "(F)or purposes of determining the back taxes due for the years 1981 to June 30, 1987, the excess area of subject building should be assessed on the basis of the Schedule of Base Unit Construction Costs for Buildings applicable for the 1978-1979 General Revision. The tax declaration covering the said assessment became effective in 1981. To determine the back taxes due for the years July 1, 1987 to 1989, the same excess area should be assessed using the

1981-1984 Schedule of Base Unit Construction Costs of Buildings. The 1981-1984 Schedule of Values were approved by the Secretary (Minister) of Finance on May 22, 1984 (Exh. "17") and became finally effective on July 1, 1987 (See Memorandum Circular No. 77 dated March 1, 1987). The tax declaration covering the aforesaid assessment became effective on July 1, 1987."[36] Petitioner, for his part, has failed to prove that this finding constitutes a grave abuse of discretion tantamount to lack or excess of jurisdiction. Sub-Issue: Is CBAA's Assessment Unconstitutional? Equally unmeritorious is petitioner's contention that the imposition of back taxes on his property is unconstitutional for being violative of Section 22,[37] Article III of the 1987 Constitution. When both Public Respondents CBAA and City Assessor imposed back taxes on petitioner's property, they did not violate the rule that laws shall have only prospective applicability. Respondents were only applying PD 464 which had been in effect since 1974. Besides, Section 25 of PD 464 is not penal in character; hence, it may not be considered as an ex post facto law.[38] Sub Issue: Application of Reyes vs. Almanzor Petitioner also claims that the assessed building is covered by PD 20;[39] thus the assessor should have used the "income approach," as enunciated in Reyes vs. Almanzor,[40] in fixing the valuation of the property, instead of the "comparable sales approach." To prove that his property was covered by PD 20, petitioner submitted as annexes to his instant petition several documents consisting of official receipts of lease rentals.[41] The submission of these documents before us cannot establish that his property is covered by PD No. 20. The documents were never presented as documentary exhibits before the City Assessor of Cebu City, Local Board of Assessment Appeal or CBAA. This Court, not being a trier of facts, cannot consider these alleged evidence submitted for the first time in this special civil action. WHEREFORE, premises considered, the petition is DISMISSED and the assailed Resolution is AFFIRMED. Costs against petitioner. SO ORDERED. talento vs escalada The instant petition for certiorari under Rule 65 of the Rules of Court assails the November 5, 2007 Order[1] of the Regional Trial Court of Bataan, Branch 3, in Civil Case No. 8801, granting the petition for the issuance of a writ of preliminary injunction filed by private respondent Petron Corporation (Petron) thereby enjoining petitioner Emerlinda S. Talento, Provincial Treasurer of Bataan, and her representatives from proceeding with the public auction of Petrons machineries and pieces of equipment during the pendency of the latters appeal from the revised assessment of its properties.

The facts of the case are as follows:

On June 18, 2007, Petron received from the Provincial Assessors Office of Bataan a notice of revised assessment over its machineries and pieces of equipment in Lamao, Limay, Bataan. Petron was given a period of 60 days within which to file an appeal with the Local Board of Assessment Appeals (LBAA).[2] Based on said revised assessment, petitioner Provincial Treasurer of Bataan issued a notice informing Petron that as of June 30, 2007, its total liability is P1,731,025,403.06,[3]representing deficiency real property tax due from 1994 up to the first and second quarters of 2007.

On August 17, 2007, Petron filed a petition[4] with the LBAA (docketed as LBAA Case No. 2007-01) contesting the revised assessment on the grounds that the subject assessment pertained to properties that have been previously declared; and that the assessment covered periods of more than 10 years which is not allowed under the Local Government Code (LGC). According to Petron, the possible valid assessment pursuant to Section 222 of the LGC could only be for the years 1997 to 2006.Petron further contended that the fair market value or replacement cost used by petitioner included items which should be properly excluded; that prompt payment of discounts were not considered in determining the fair market value; and that the subject assessment should take effect a year after or on January 1, 2008. In the same petition, Petron sought the approval of a surety bond in the amount of P1,286,057,899.54.[5]

On August 22, 2007, Petron received from petitioner a final notice of delinquent real property tax with a warning that the subject properties would be levied and auctioned should Petron fail to settle the revised assessment due.[6]

Consequently, Petron sent a letter[7] to petitioner stating that in view of the pendency of its appeal[8] with the LBAA, any action by the Treasurers Office on the subject properties would be premature. However, petitioner replied that only Petrons payment under protest shall bar the collection of the realty taxes due,[9] pursuant to Sections 231 and 252 of the LGC.

With the issuance of a Warrant of Levy[10] against its machineries and pieces of equipment, Petron filed on September 24, 2007, an urgent motion to lift the final notice of delinquent real property tax and warrant of levy with the LBAA. It argued that the issuance of the notice and warrant is premature because an appeal has been filed with the LBAA, where it posted a surety bond in the amount of P1,286,057,899.54.[11]

On October 3, 2007, Petron received a notice of sale of its properties scheduled on October 17, 2007.[12] Consequently, on October 8, 2007, Petron withdrew its motion to lift the final notice of delinquent real property tax and warrant of levy with the LBAA.[13] On even date, Petron filed with the Regional Trial Court of Bataan the instant case (docketed as Civil Case No. 8801) for prohibition with prayer for the issuance of a temporary restraining order (TRO) and preliminary injunction.[14]

On October 15, 2007, the trial court issued a TRO for 20 days enjoining petitioner from proceeding with the public auction of Petrons properties.[15] Petitioner thereafter filed an urgent motion for the immediate dissolution of the TRO, followed by a motion to dismiss Petrons petition for prohibition.

On November 5, 2007, the trial court issued the assailed Order granting Petrons petition for issuance of writ of preliminary injunction, subject to Petrons posting of a P444,967,503.52 bond in addition to its previously posted surety bond of P1,286,057,899.54, to complete the total amount equivalent to the revised assessment of P1,731,025,403.06. The trial court held that in scheduling the sale of the properties despite the pendency of Petrons appeal and posting of the surety bond with the LBAA, petitioner deprived Petron of the right to appeal. The dispositive portion thereof, reads:

WHEREFORE, the writ of preliminary injunction prayed for by plaintiff is hereby GRANTED and ISSUED, enjoining defendant Treasurer, her agents, representatives, or anybody acting in her behalf from proceeding with the scheduled public auction of plaintiffs real properties, or any disposition thereof, pending the determination of the merits of the main action, to be effective upon posting by plaintiff to the Court of an injunction bond in the amount of Four Hundred Forty Four Million Nine Hundred Sixty Seven Thousand Five Hundred Three and 52/100 Pesos (P444,967,503.52) and the approval thereof by the Court.

Defendants Urgent Motion for the Immediate Dissolution of the Temporary Restraining Order dated October 23, 2007 is hereby DENIED.

SO ORDERED.[16] From the said Order of the trial court, petitioner went directly to this Court via the instant petition for certiorari under Rule 65 of the Rules of Court.

The question posed in this petition, i.e., whether the collection of taxes may be suspended by reason of the filing of an appeal and posting of a surety bond, is undoubtedly a pure question of law. Section 2(c) of Rule 41 of the Rules of Court provides:

SEC. 2. Modes of Appeal.

(c) Appeal by certiorari. In all cases when only questions of law are raised or involved, the appeal shall be to the Supreme Court by petition for review on certiorari under Rule 45. (Emphasis supplied)

Thus, petitioner resorted to the erroneous remedy when she filed a petition for certiorari under Rule 65, when the proper mode should have been a petition for review on certiorari under Rule 45. Moreover, under Section 2, Rule 45 of the same Rules, the period to file a petition for review is 15 days from notice of the order appealed from. In the instant case, petitioner received the questioned order of the trial court on November 6, 2007, hence, she had only up to November 21, 2007 to file the petition.However, the same was filed only on January 4, 2008, or 43 days late. Consequently, petitioners failure to file an appeal within the reglementary period rendered the order of the trial court final and executory.

The perfection of an appeal in the manner and within the period prescribed by law is mandatory. Failure to conform to the rules regarding appeal will render the judgment final and executory and beyond the power of the Courts review.Jurisprudence mandates that when a decision becomes final and executory, it becomes valid and binding upon the parties and their successors in interest. Such decision or order can no longer be disturbed or reopened no matter how erroneous it may have been.[17]

Petitioners resort to a petition under Rule 65 is obviously a play to make up for the loss of the right to file an appeal via a petition under Rule 45. However, a special civil action under Rule 65 can not cure petitioners failure to timely file a petition for review on certiorari under Rule 45 of the Rules of Court. Rule 65 is an independent action that cannot be availed of as a substitute for the lost remedy of an ordinary appeal, including that under Rule 45, especially if such loss or lapse was occasioned by ones own neglect or error in the choice of remedies.[18]

Moreover, even if we assume that a petition under Rule 65 is the proper remedy, the petition is still dismissible.

We note that no motion for reconsideration of the November 5, 2007 order of the trial court was filed prior to the filing of the instant petition. The settled rule is that a motion for reconsideration is a sine qua non condition for the filing of a petition for certiorari. The purpose is to grant the public respondent an opportunity to correct any actual or perceived error attributed to it by the re-examination of the legal and factual circumstances of the case. Petitioners failure to file a motion for reconsideration deprived the trial court of the opportunity to rectify an error unwittingly committed or to vindicate itself of an act unfairly imputed. Besides, a motion for reconsideration under the present circumstances is the plain, speedy and adequate remedy to the adverse judgment of the trial court.[19]

Petitioner also blatantly disregarded the rule on hierarchy of courts. Although the Supreme Court, Regional Trial Courts, and the Court of Appeals have concurrent jurisdiction to issue writs of certiorari, prohibition, mandamus, quo warranto, habeas corpus and injunction, such concurrence does not give the petitioner unrestricted freedom of choice of court forum. Recourse should have been made first with the Court of Appeals and not directly to this Court.[20]

True, litigation is not a game of technicalities. It is equally true, however, that every case must be presented in accordance with the prescribed procedure to ensure an orderly and speedy administration of justice.[21] The failure therefore of petitioner to comply with the settled procedural rules justifies the dismissal of the present petition.

Finally, we find that the trial court correctly granted respondents petition for issuance of a writ of preliminary injunction. Section 3, Rule 58, of the Rules of Court, provides:

SEC. 3. Grounds for issuance of preliminary injunction. A preliminary injunction may be granted by the court when it is established:

(a) That the applicant is entitled to the relief demanded, and the whole or part of such relief consists in restraining the commission or continuance of the acts complained of, or in the performance of an act or acts, either for a limited period or perpetually;

(b) That the commission, continuance or non-performance of the act or acts complained of during the litigation would probably work injustice to the applicant; or

(c) That a party, court, or agency or a person is doing, threatening, or attempting to do, or is procuring or suffering to be done, some act or acts probably in violation of the rights of the applicant respecting the subject of the action or proceeding, and tending to render the judgment ineffectual.

The requisites for the issuance of a writ of preliminary injunction are: (1) the existence of a clear and unmistakable right that must be protected; and (2) an urgent and paramount necessity for the writ to prevent serious damage.[22]

The urgency and paramount necessity for the issuance of a writ of injunction becomes relevant in the instant case considering that what is being enjoined is the sale by public auction of the properties of Petron amounting to at least P1.7 billion and which properties are vital to its business operations. If at all, the repercussions and far-reaching implications of the sale of these properties on the operations of Petron merit the issuance of a writ of preliminary injunction in its favor. We are not unaware of the doctrine that taxes are the lifeblood of the government, without which it can not properly perform its functions; and that appeal shall not suspend the collection of realty taxes. However, there is an exception to the foregoing rule, i.e., where the taxpayer has shown a clear and unmistakable right to refuse or to hold in abeyance the payment of taxes. In the instant case, we note that respondent contested the revised assessment on the following grounds: that the subject assessment pertained to properties that have been previously declared; that the assessment covered periods of more than 10 years which is not allowed under the LGC; that the fair market value or replacement cost used by petitioner included items which should be properly excluded; that prompt payment of discounts were not considered in determining the fair market value; and that the subject assessment should take effect a year after or on January 1, 2008. To our mind, the resolution of these issues would have a direct bearing on the assessment made by petitioner. Hence, it is necessary that the issues must first be passed upon before the properties of respondent is sold in public auction.

In addition to the fact that the issues raised by the respondent would have a direct impact on the validity of the assessment made by the petitioner, we also note that respondent has posted a surety bond equivalent to the amount of the assessment due. The Rules of Procedure of the LBAA, particularly Section 7, Rule V thereof, provides:

Section 7. Effect of Appeal on Collection of Taxes. An appeal shall not suspend the collection of the corresponding realty taxes on the real property subject of the appeal as assessed by the Provincial, City or Municipal Assessor, without prejudice to the subsequent adjustment depending upon the outcome of the appeal. An appeal may be entertained but the hearing thereof shall be deferred until the corresponding taxes due on the real property subject of the appeal shall have been paid under protest or the petitioner shall have given a surety bond, subject to the following conditions:

(1) the amount of the bond must not be less than the total realty taxes and penalties due as assessed by the assessor nor more than double said amount;

(2) the bond must be accompanied by a certification from the Insurance Commissioner (a) that the surety is duly authorized to issue such bond; (a) that the surety bond is approved by and registered with said Commission; and (c) that the amount covered by the surety bond is within the writing capacity of the surety company; and

(3) the amount of the bond in excess of the surety companys writing capacity, if any, must be covered by Reinsurance Binder, in which case, a certification to this effect must likewise accompany the surety bond.

Corollarily, Section 11 of Republic Act No. 9282,[23] which amended Republic Act No. 1125 (The Law Creating the Court of Tax Appeals) provides:

Section 11. Who may Appeal; Mode of Appeal; Effect of Appeal; -

xxxx

No appeal taken to the Court of Appeals from the Collector of Internal Revenue x x x shall suspend the payment, levy, distraint, and/or sale of any property for the satisfaction of his tax liability as provided by existing law. Provided, however, That when in the opinion of the Court the collection by the aforementioned government agencies may jeopardize the interest of the Government and/or the taxpayer the Court at any stage of the processing may suspend the collection and require the taxpayer either to deposit the amount claimed or to file a surety bond for not more than double the amount with the Court.

WHEREFORE, in view of all the foregoing, the instant petition is DISMISSED.

SO ORDERED.