National Power Corp. v. Provincial Treasurer of Benguet
REITERATIONFacts
The Antecedents: Petitioner, the National Power Corporation (NPC), a government-owned and controlled corporation, operates the Binga Hydro-Electric Power Plant. Respondents, officials of the Province of Benguet and the Municipality of Itogon, assessed NPC for real property taxes amounting to P62,645,668.80 for various properties within the Binga Hydro-Electric Power Plant, including buildings, roads, and equipment. NPC asserted that these properties were exempt from real property tax under Republic Act No. 7160, the Local Government Code (LGC) of 1991, specifically Sections 234(b) and (c). Procedural History: NPC initially challenged the assessment before the Local Board of Assessment Appeals (LBAA), claiming tax exemption and alleging that the respondent municipal treasurer had not acted upon its prior requests for exemption. The respondents countered that the properties were classified as industrial and machinery, and there was no evidence of their exclusive use for power generation. The LBAA deferred proceedings, requiring NPC to pay the assessed amount under protest or post a surety bond, which NPC challenged. NPC then appealed to the Central Board of Assessment Appeals (CBAA), which dismissed the appeal for being filed out of time. The CBAA denied NPC's motion for reconsideration, reiterating that payment under protest was a prerequisite. Subsequently, NPC filed a Petition for Review with the Court of Tax Appeals (CTA) En Banc, which also denied the petition for lack of merit, holding that NPC's failure to pay under protest was a fatal procedural defect. The Petition: Petitioner NPC seeks a reversal of the CTA En Banc's decision through a petition for review on certiorari under Rule 45 of the Rules of Court. NPC argues that the CTA En Banc erred in dismissing its petition based on prescription, contending that the issue of prescription was not raised before the LBAA and that the CBAA had focused on the substantive issue of whether the properties were machinery and equipment used for power generation. NPC asserts that the CTA En Banc should have resolved the case on its merits, given the far-reaching implications for its other similarly situated properties, rather than dismissing it on a technicality. The core of NPC's argument is that the requirement of payment under protest is not applicable when challenging the very authority of the assessor and treasurer to impose the tax, as opposed to merely questioning the reasonableness of the assessment.
Issue(s)
Whether payment under protest is a mandatory requirement before an appeal questioning the taxability of properties, even on the ground of exemption, can be entertained by the Local Board of Assessment Appeals. Whether the Court of Tax Appeals En Banc erred in dismissing the petition based on prescription when said issue was allegedly not raised in the LBAA; and whether the 'fresh period rule' applies to administrative appeals.
Ruling
The Supreme Court denied the petition for lack of merit and affirmed the decision of the Court of Tax Appeals En Banc. The case was remanded to the Local Board of Assessment Appeals for further proceedings, subject to payment under protest of the assailed assessment.
Ratio Decidendi
On the issue of payment under protest: The Court reiterated the settled rule that no protest shall be entertained unless the taxpayer first pays the tax due, as explicitly provided in Section 252 of the LGC. This requirement applies even when claiming tax exemption, as such a claim is considered a challenge to the reasonableness or correctness of the assessment, not an attack on the assessor's authority to assess. The Court cited National Power Corporation v. Province of Quezon to emphasize that a claim for exemption pertains to the correctness of the assessment, a question of fact for the LBAA. Failure to comply with the mandatory requirement of payment under protest was deemed fatal to NPC's appeal. The Court noted that NPC's letters requesting exemption were filed beyond the 30-day period and lacked sufficient supporting documents, leading to the properties being listed as taxable. The LBAA's deferral of proceedings, conditioned on payment under protest, was consistent with the LGC provisions and jurisprudence emphasizing the importance of this requirement. On the issue of prescription and timeliness of appeal, and the applicability of the 'fresh period rule': The Court found that NPC's appeal to the CBAA was filed out of time. The LBAA's Order deferring the hearing was received by NPC on August 9, 2006. While NPC filed a motion for reconsideration on August 25, 2006, the period of appeal to the CBAA is 30 days from receipt of the LBAA's Order. The filing of a motion for reconsideration does not stay the period of prescription for administrative appeals. Therefore, the appeal should have been filed by September 8, 2006. Even if the motion for reconsideration was considered, NPC received the denial of its motion on October 17, 2006, leaving only 14 days of the original period, meaning the appeal should have been filed by October 31, 2006. The appeal was filed on November 22, 2006, which was beyond the allowable period. The Court clarified that the 'fresh period rule' established in Neypes v. Court of Appeals applies only to judicial appeals, not to administrative appeals like the one before the CBAA. Thus, NPC's appeal to the CBAA was indeed filed late.
Main Doctrine
Failure to pay real property tax under protest is fatal to an appeal questioning the assessment, even if the ground is tax exemption, as such claim is considered a challenge to the correctness of the assessment, not the assessor's authority. Furthermore, the 'fresh period rule' does not apply to administrative appeals.