Camp John Hay Development Corp. v. Central Board of Assessment Appeals
REITERATIONFacts
The Antecedents: Camp John Hay Development Corporation (CJHDC) received notices of assessment for real property taxes on buildings it owned and parcels of land leased from the Bases Conversion Development Authority (BCDA) within the John Hay Special Economic Zone (JHSEZ) in Baguio City. CJHDC contested these assessments, asserting its exemption from all taxes, including real property taxes, based on Republic Act No. 7227 and Presidential Proclamation No. 420. Procedural History: CJHDC initially appealed the assessments to the Board of Tax Assessment Appeals (BTAA) of Baguio City. The BTAA required payment of the assessed taxes under protest or the posting of a surety bond before proceeding with the hearing. Upon denial of its motion for reconsideration, CJHDC appealed to the Central Board of Assessment Appeals (CBAA). The CBAA remanded the case to the BTAA for further proceedings, contingent upon the full payment of the assessed realty taxes, either in cash or bond. The CBAA subsequently denied CJHDC's motion for reconsideration. Aggrieved, CJHDC filed a Petition for Review with the Court of Tax Appeals (CTA) En Banc, which affirmed the CBAA's resolutions, dismissing CJHDC's petition for failure to comply with the mandatory requirement of payment under protest. The Petition: CJHDC filed a Petition for Review on Certiorari with the Supreme Court, seeking to reverse the CTA En Banc's decision. The core of CJHDC's argument is that the requirement of payment under protest does not apply to entities claiming tax exemption, and that under the doctrine of operative fact, it should not be liable for the taxes. CJHDC contends that the City Assessor lacked the legal basis to issue the assessments against a tax-exempt entity. The Supreme Court, however, found the petition unmeritorious, emphasizing that a claim for tax exemption does not question the assessor's authority but rather the correctness of the assessment, which necessitates compliance with the payment under protest rule as mandated by Section 252 of the Local Government Code of 1991.
Issue(s)
Whether the respondent Court of Tax Appeals En Banc erred in dismissing the petition for lack of merit and affirming the order of the CBAA to remand the case to the LBAA for further proceedings subject to full payment of realty taxes. Whether Section 252 of RA No. 7160 (payment under protest) applies to a tax-exempt entity.
Ruling
The petition is DENIED for lack of merit. The Decision of the Court of Tax Appeals En Banc 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.
Ratio Decidendi
On the issue of whether the CTA En Banc erred in dismissing the petition and affirming the CBAA's order to remand the case subject to payment of taxes: The Supreme Court affirmed the CTA En Banc's decision. The Court reiterated that Section 252 of RA No. 7160 (Local Government Code of 1991) unequivocally mandates that no protest shall be entertained unless the taxpayer first pays the tax. This requirement is a condition sine qua non for the protest or appeal to be considered. The Court emphasized that the language of the law is clear and must be given its literal meaning. The mandatory compliance with "payment under protest" is crucial for the administrative remedies to be validly pursued. The Court cited jurisprudence, including Dr. Olivares v. Mayor Marquez and Meralco v. Barlis, which stressed the importance of exhausting administrative remedies and the procedural requirement of payment under protest before resorting to judicial action. The Court found that CJHDC failed to comply with this mandatory requirement, which was fatal to its appeal. Therefore, the remand to the LBAA for further proceedings, conditioned upon full payment of the assessed realty taxes, was deemed proper. On the issue of whether Section 252 of RA No. 7160 applies to a tax-exempt entity: The Supreme Court ruled that Section 252 of RA No. 7160 applies even to entities claiming tax exemption. The Court clarified that a claim for tax exemption does not question the assessor's authority to assess but rather the correctness or reasonableness of the assessment. Section 206 of RA No. 7160 places the burden of proving exemption on the claimant and requires submission of documentary evidence. Until such exemption is proven and the property is dropped from the assessment roll, the property is considered taxable, and the claimant is deemed a "taxpayer" for the purpose of the "payment under protest" requirement. The Court found that CJHDC failed to present sufficient documentary evidence to establish its tax-exempt status and that the property had been removed from the assessment roll. Therefore, CJHDC, as the declared owner of the buildings, was presumed to be the person with the obligation to pay the tax, and thus mandated to comply with Section 252. The Court also noted that taxation is the rule and exemption is the exception, requiring strict construction of exemption laws.
Main Doctrine
A claim for tax exemption, whether full or partial, does not question the authority of the 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 Local Government Code of 1991 (payment under protest).