National Grid v. Oliva
REITERATIONFacts
The Antecedents: This case concerns the real property tax liabilities of certain properties in Cebu City. The National Grid Corporation of the Philippines (NGCP) received notices of demand for real property taxes assessed against properties declared in the name of National Power Corporation/Transco (NPC/TRANSCO) for various periods between 2001 and 2009. NGCP paid the total demanded amount of P2,792,862.41 under protest. Procedural History: NGCP filed a written protest with the City Treasurer of Cebu City, which went unacted upon. NGCP then appealed to the Local Board of Assessment Appeals (LBAA), which dismissed the petition for being filed out of time. The Central Board of Assessment Appeals (CBAA) reversed the LBAA's dismissal, finding NGCP liable for real property taxes for 2009 and directing it to claim taxes paid for 2001-2008 from NPC/TRANSCO. The Court of Tax Appeals En Banc (CTA-EB) modified the CBAA's decision, holding NGCP liable only for the 2009 real property tax and ordering a refund of the excess payment. The Petition: Both NGCP and the City Treasurer of Cebu City filed petitions for review under Rule 45 of the Rules of Civil Procedure with the Supreme Court. NGCP argues it is exempt from real property taxes and that the properties qualify as a special class. The City Treasurer challenges the CTA-EB's order for a refund. The Supreme Court remanded the case to the CBAA to determine the correct tax liabilities for the periods 2001-2008 and 2009, considering NGCP's franchise and the actual use of the properties.
Issue(s)
Whether NGCP is exempt from the payment of real property taxes on the subject properties, and if not, what is the correct amount of taxes due. Whether the subject properties qualify as a "special class" of real property under Section 216 of the Local Government Code. Whether the City of Cebu should refund the amount paid by NGCP, and whether NGCP can seek reimbursement from NPC/TRANSCO.
Ruling
The Supreme Court granted the petition, set aside the decision and resolution of the CTA-EB, and remanded the case to the Central Board of Assessment Appeals (CBAA) for further determination.
Ratio Decidendi
On whether NGCP is liable for real property taxes and the correct amount due: The Court held that the "in lieu of all taxes" clause in Section 9 of RA 9511, NGCP's franchise, does exempt NGCP from real property taxes on properties used in connection with its franchise, subject to the proviso that NGCP remains liable for taxes on its real estate, buildings, and personal property, exclusive of the franchise, as other corporations are required by law to pay. The CBAA must determine whether the subject properties are indeed used in connection with NGCP's franchise. If they are, NGCP is exempt for 2009. If not, they are subject to real property tax under the Local Government Code. For the years 2001 to 2008, when NPC/TRANSCO controlled the properties, NPC/TRANSCO was not exempt from real property tax, and Sections 216 and 218(d) of the Local Government Code apply. The Court also found that the amount of taxes assessed and collected was incorrect and directed the CBAA to determine the correct amount of real property taxes for both periods (2001-2008 for NPC/TRANSCO and 2009 for NGCP) based on the guidelines provided. On whether the subject properties qualify as a "special class" of real property: The Court stated that the CBAA must determine if the properties fall under the special classes defined in Section 216 of the Local Government Code, specifically if they are "owned and used by x x x government-owned or controlled corporations rendering essential public services in the x x x generation and transmission of electric power." The Court remanded this for determination, particularly for the period 2001-2008 when NPC/TRANSCO was the owner. For 2009, the focus shifts to whether the properties are used in connection with NGCP's franchise, which is governed by RA 9511. On whether the City of Cebu should refund the amount paid by NGCP and NGCP's right to reimbursement: The City Treasurer of Cebu City was ordered to refund any excess payment made by NGCP. The Court clarified that NGCP, having paid taxes for NPC/TRANSCO, has a right to seek reimbursement from NPC/TRANSCO for amounts that benefited the latter, as taxes are not debts.
Main Doctrine
The "in lieu of all taxes" clause in a franchise, such as that of NGCP under RA 9511, can exempt the grantee from real property taxes on properties used in connection with its franchise, provided such exemption is clearly and unequivocally stated. However, this exemption is qualified by the grantee's liability to pay the same taxes as other corporations on real estate, buildings, and personal property exclusive of the franchise. The determination of whether properties are used in connection with the franchise requires factual ascertainment.