Provincial Assessor of Marinduque v. Marcopper Mining Corporation
REITERATIONFacts
The Antecedents: Marcopper Mining Corporation (respondent) was issued an assessment notice for real property taxes on its Siltation Dam and Decant System. The respondent paid the tax but appealed, asserting the property was exempt under Section 234(e) of Republic Act No. 7160 (Local Government Code of 1991) as machinery and equipment used for pollution control and environmental protection. Supporting this claim, the respondent submitted an affidavit from its Chief Mining Engineer and a certification from the Department of Environment and Natural Resources (DENR) stating the property's purpose was pollution control. Procedural History: The Local Board of Assessment Appeals (LBAA) dismissed the respondent's appeal, deeming it filed out of time and classifying the property as a taxable improvement. The Central Board of Assessment Appeals (CBAA) reversed the LBAA's timeliness ruling but agreed that the property was not a machinery or equipment, but a permanent improvement not exempt from tax. The CBAA also noted the property had been out of operation since 1993. The respondent appealed to the Court of Appeals (CA), which reversed the CBAA, declaring the Siltation Dam and Decant System exempt from real property tax, holding it to be a pollution control device under both the Local Government Code and the Philippine Mining Act of 1995. The CA denied the petitioner's motion for reconsideration. The Petition: The Provincial Assessor of Marinduque (petitioner) filed a Petition for Certiorari under Rule 65 of the Rules of Court, assailing the CA's decision and resolution. The petitioner argues that the CA gravely abused its discretion by disregarding established facts that the Siltation Dam and Decant System was damaged and out of operation since 1993, and that the respondent lacked a certificate of tax exemption from the DENR. The petitioner contends the CA erred in classifying the property as tax-exempt machinery or equipment, and incorrectly applied the Philippine Mining Act of 1995, which was enacted after the assessment period. The petitioner also questions the propriety of the CA's ruling given the procedural issues raised regarding the mode of appeal.
Issue(s)
Whether the Provincial Assessor's Petition for Certiorari under Rule 65 is the proper remedy. Whether the Siltation Dam and Decant System of Marcopper Mining Corporation is exempt from real property tax under Section 234(e) of R.A. No. 7160. Whether the Court of Appeals committed grave abuse of discretion in exempting the subject property from real property tax.
Ruling
The Supreme Court granted the petition, reversed and set aside the decision and resolution of the Court of Appeals, and declared the Assessment Notice dated March 28, 1994, valid under R.A. No. 7160. The Court held that the Siltation Dam and Decant System is not exempt from real property tax.
Ratio Decidendi
On the proper mode of appeal: The Court acknowledged that the petitioner erred in filing a Petition for Certiorari under Rule 65 when a Petition for Review on Certiorari under Rule 45 was the proper remedy from the CA's decision. However, the Court gave due course to the petition pro hac vice due to the higher interest of public welfare involving the power of taxation of a local government unit and its stewardship of the environment, thereby suspending its rules. On whether the subject property is exempt from real property taxation: The Court clarified that the assessment notice in question took effect on January 1, 1995, and its validity is governed by R.A. No. 7160, which was effective January 1, 1992. The Court emphasized that R.A. No. 7942, which came into effect on April 14, 1995, had no bearing on the matter. The exemption under Section 234(e) of R.A. No. 7160 is based on usage, requiring actual, direct, and exclusive application of the property to the exempting purpose. The Court found no evidence that the subject property was actually, directly, and exclusively used for pollution control and environmental protection during the period covered by the assessment. The CBAA's finding that the property was out of commission since 1993 was undisputed by the respondent. On the nature of the property and evidentiary requirements: The Court reiterated that the burden is on the taxpayer to prove exemption by clear and convincing evidence. The subject property, described as a "zoned earth siltation dam" composed of clay core, random fill, and filters, was found to be a structure adhered to the soil, not a machinery or equipment as defined under Section 199(o) of R.A. No. 7160. The DENR certification and project design further underscored its nature as a "structure." The Court also noted that respondent failed to comply with Section 206 of R.A. No. 7160, which requires submission of sufficient documentary evidence for exemption claims within 30 days from the declaration of the property. The expanded definition of "pollution control device" in R.A. No. 7942, which includes "infrastructure" and "improvement," could not benefit the respondent as tax laws are prospective unless expressly provided otherwise, and R.A. No. 7942 did not provide for retroactive application.
Main Doctrine
A siltation dam and decant system, by its nature, composition, and function as a structure adhered to the soil, does not qualify as 'machinery' or 'equipment' used for pollution control under Section 234(e) of R.A. No. 7160. Furthermore, for an exemption under this provision to be valid, the property must be actually, directly, and exclusively used for pollution control and environmental protection during the period covered by the assessment, and the taxpayer must comply with the evidentiary requirements under Section 206 of R.A. No. 7160.