Lanao Del Norte Electric Coop. v. Lanao Del Norte
REITERATIONFacts
The Antecedents: Petitioner Lanao del Norte Electric Cooperative, Inc. (LANECO) was granted a franchise to distribute electricity. It contracted loans from the National Electrification Administration (NEA), which were later assumed by the Power Sector Assets and Liabilities Management (PSALM) Corp. under R.A. No. 9136. Subsequently, the Provincial Government of Lanao del Norte (PGLN) enacted Provincial Tax Ordinance No. 1, Series of 1993 (Provincial Revenue Code), imposing real property taxes. LANECO received demand letters for unpaid real property taxes from 1995 to 2005. LANECO sought copies of the Provincial Revenue Code to facilitate payment and pass on the cost to consumers, but allegedly PGLN refused. LANECO filed a Petition for Declaratory Relief with Preliminary Prohibitory Injunction before the RTC, which was dismissed by agreement of the parties to resolve the issues before the Bureau of Local Government Finance. Despite this, PGLN continued to demand payment and threatened to levy and auction LANECO's assets. LANECO filed the instant Petition for Prohibition and Mandamus before the Supreme Court, arguing that PGLN's recourse through administrative action (levy and auction) was a grave abuse of discretion and want of jurisdiction, violating Section 60 of R.A. No. 9136 and Executive Order No. 119. Procedural History: LANECO filed several cases before the Regional Trial Court (RTC) questioning the PGLN's assessment and collection of real property and franchise taxes. These included Special Civil Action No. 003-07-2006 (dismissed), Special Civil Case No. 012-07-2008 (declared Provincial Revenue Code invalid and unconstitutional, issued permanent injunction), Special Civil Case No. 015-07-2009 (directed PGLN to cease and desist from assessing, imposing, and collecting real property taxes, cancelled warrants of levy), and Special Civil Case No. 020-07-2010 (questioning Provincial Ordinance No. 001-2006). The Supreme Court denied LANECO's urgent ex-parte motions for a TRO. The RTC, in Special Civil Case No. 012-07-2008 and Special Civil Case No. 015-07-2009, ruled in favor of LANECO, declaring the Provincial Revenue Code invalid and unconstitutional and enjoining the PGLN from collecting taxes. PGLN manifested that these cases were pending appeal before the Court of Appeals. The Petition: LANECO filed the present petition for Prohibition and Mandamus, seeking to enjoin PGLN from levying and auctioning its assets to satisfy unpaid real property taxes. LANECO argued that PGLN's resort to administrative action was a grave abuse of discretion and want of jurisdiction, violating Section 60 of R.A. No. 9136 and EO 119. It contended that PGLN should have filed a judicial collection case. LANECO also claimed that PGLN gravely abused its discretion in refusing to provide a certified true copy of the Provincial Revenue Code.
Issue(s)
Whether or not the filing of the instant petition constitutes forum shopping. Whether or not the rule on exhaustion of administrative remedy applies. Whether or not the PGLN gravely abused its discretion when it levied on the real properties of LANECO to enforce payment of unpaid real property taxes, in violation of Section 60 of R.A. No. 9136 and EO 119. Whether or not the PGLN would commit grave abuse of discretion amounting to lack or excess of jurisdiction if it proceeds to auction the delinquent real properties of LANECO.
Ruling
The petition is DISMISSED for lack of merit.
Ratio Decidendi
On the issue of forum shopping: The Court found LANECO guilty of forum shopping. It noted the identity of parties, subject matter, and reliefs prayed for between the present petition and Special Civil Case No. 015-07-2009. LANECO questioned the propriety of the assessment for real property tax in both cases, basing its claims on the single cause of action that PGLN had no authority to assess and collect from it, and conversely, LANECO had no obligation to pay. The reliefs sought in both cases were substantially similar, leading to the possibility of conflicting decisions. The Court emphasized that forum shopping is the act of a litigant repetitively availing of several judicial remedies in different courts, simultaneously or successively, all substantially founded on the same transactions and the same essential facts and circumstances, and all raising substantially the same issues, either pending in or already resolved adversely by some other court, to increase his chances of obtaining a favorable decision. On the issue of exhaustion of administrative remedy: The Court did not explicitly rule on this issue as it dismissed the petition on other grounds. However, it noted that LANECO's direct resort to the Supreme Court was not justified, as it had previously filed several cases before the RTC, demonstrating its cognizance of the RTC's power to settle questions regarding the rights of local government units to impose and collect real property tax. On the issue of grave abuse of discretion in levying on real properties: The Court ruled that the PGLN did not commit grave abuse of discretion. LANECO's argument that Section 60 of R.A. No. 9136 prohibited the levy was found to be without merit. The Court clarified that Section 60 and related provisions of EO 119 and its Implementing Rules and Regulations pertain to the assumption of debts by PSALM and impose limitations on the voluntary transfer and disposition of assets by electric cooperatives, not on the remedies available to LGUs for tax collection. The Local Government Code (LGC) clearly grants LGUs the power to collect real property taxes through administrative action, including levy on real property, as provided in Section 256 of the LGC. This lien is superior to all other liens, charges, or encumbrances, as stated in Section 257 of the LGC. Therefore, the PGLN was within its rights to assess LANECO and exercise its remedies under the LGC. On the issue of grave abuse of discretion in proceeding to auction: The Court found no cogent reason to rule that the PGLN committed grave abuse of discretion amounting to lack or excess of jurisdiction in resorting to the administrative remedy of levy. The Court reiterated that the PGLN was well within its rights to assess LANECO with real property taxes and to exercise its remedies under Section 256 of the LGC for collection, including administrative action through levy on its real properties. The Court also addressed LANECO's argument regarding the impairment of contracts, stating that the constitutional prohibition does not prohibit every change in existing laws, and for impairment to exist, the change must substantially affect the rights of parties with reference to each other, not with respect to non-parties. The Court found that the levy did not impair government contracts entered into by NEA and PSALM, as local government taxes serve as a superior lien over the property subject to the tax.
Main Doctrine
The Local Government Code grants local government units the power to collect real property taxes through administrative remedies, including levy and auction, and this power is not curtailed by provisions of R.A. No. 9136 concerning the assumption of electric cooperative debts by PSALM, as these provisions pertain to voluntary transfers of assets and do not limit the LGUs' remedies for tax collection. Furthermore, the filing of multiple cases with substantially the same issues and reliefs before different fora constitutes forum shopping, warranting dismissal.