Provincial Assessor of Marinduque v. Marcopper Mining
REITERATIONFacts
The Antecedents: The Provincial Assessor of Marinduque issued an Assessment Notice dated March 28, 1994, against Marcopper Mining Corporation for real property taxes on its properties, including the Siltation Dam and Decant System (subject property) at Barangay Lamese, Sta. Cruz, Marinduque, covered by Tax Declaration No. 05-35697 dated November 17, 1993, with a market value of Php36,360,996.19, effective January 1, 1995. Marcopper paid the tax under protest, claiming exemption under Section 234(e) of R.A. No. 7160 as machinery/equipment for pollution control. Supporting documents included an Affidavit from Chief Mining Engineer Ricardo Esquieres, Jr., describing the property as a specialized zoned-earth dam constructed in August 1992 to comply with DENR conditions preventing silt run-off into Mogpog and Boac Rivers, serving pollution/sediment control, water supply, and flood control; and a May 24, 1994 DENR Certification by Regional Technical Director Carlos J. Magno classifying it as a 'structure' for pollution control of silted materials. The dam was damaged by a typhoon in 1993, rendering it out of operation, as admitted by Marcopper and confirmed by CBAA ocular inspection in November 1996. No prior application for exemption was filed with the assessor within 30 days of the tax declaration as required by Sec. 206. Procedural History: Marcopper appealed to the LBAA, which dismissed for late filing and held it taxable as a permanent improvement citing Benguet Corp. v. CBAA. On appeal, CBAA (December 21, 1998) ruled appeal timely but denied exemption, finding it not machinery under Sec. 199(o) as it neither produces nor services production, is unnecessary to mining, and was non-operational; denied reconsideration (July 27, 2000). CA reversed (May 30, 2005), granting exemption under Sec. 234(e) and Sec. 91, R.A. 7942, deeming it machinery actually used in mining for post-production cleanup, non-operation irrelevant absent proof of inutil ity, and directed refund/credit; denied MR (September 29, 2005). The Petition: Petitioner filed certiorari under Rule 65 alleging grave abuse by CA in ignoring CBAA findings on non-operation since 1993, lack of DENR tax exemption certificate, and misclassifying as machinery despite LGC provisions; argued proper remedy was Rule 45 but sought merit review for public welfare. Respondent countered Rule 45 was lost remedy, factual issues improper in certiorari.
Issue(s)
Whether petition for certiorari under Rule 65 is proper despite availability of Rule 45 appeal from CA. Whether the Siltation Dam and Decant System is exempt from real property tax under Sec. 234(e), R.A. 7160 as machinery/equipment for pollution control, considering its nature, non-operation, and lack of exemption proof.
Ruling
The petition is GRANTED. The Decision dated May 30, 2005 and Resolution dated September 29, 2005 are REVERSED and SET ASIDE. The Assessment Notice dated March 28, 1994 is declared VALID under the then applicable Republic Act No. 7160.
Ratio Decidendi
On Issue 1 (Proper Mode of Appeal): Post-R.A. 7902 and Revised Admin. Circular No. 1-95, appeals from CBAA go to CA via petition for review, then to SC via Rule 45 on questions of law, barring Rule 65 even for grave abuse (Madrigal Transport v. Lapanday; Macasasa v. Sicad). Petitioner erred using Rule 65 after losing 15-day Rule 45 period, but SC gave due course pro hac vice for public welfare involving LGU taxation and environmental stewardship (Hydro Resources v. CA; Sanchez v. CA exceptions). This procedural leniency underscores higher interest in resolving merits where public policy demands, avoiding future litigation on tax exemptions. On Issue 2 (Tax Exemption): Exemption under Sec. 234(e), LGC is usage-based (actual, direct, exclusive use per Sec. 199; Mactan Cebu Int'l Airport v. Marcos; Lung Center v. Quezon City), requiring concrete evidence of principal use for pollution control during assessment period (Jan. 1, 1995); non-operation since 1993 typhoon damage (undisputed, CBAA ocular-confirmed) negates it. Subject property is not 'machinery' under Sec. 199(o) (no machines, mechanical contrivances, production facilities, or industry necessities; merely earthen structure with clay core, random fill, filters per Esquieres affidavit/DENR cert/project design). No Sec. 206 compliance (no 30-day proof filed post-Nov. 1993 declaration; burden on taxpayer per CIR v. Acesite). R.A. 7942 Sec. 91 (expanding to 'infrastructure') inapplicable retroactively (tax laws prospective; Pansacola v. CIR), as assessment pre-April 1995 effectivity. CA gravely abused by ignoring facts/evidence, misapplying laws (echoing Benguet v. CBAA on tailings dams as improvements).
Main Doctrine
The exemption from real property tax under Section 234(e) of R.A. No. 7160 for 'machinery and equipment used for pollution control and environmental protection' is a usage exemption requiring actual, direct, and exclusive use of the property for that purpose, as defined by 'actual use' in Section 199 meaning principal or predominant utilization. A siltation dam and decant system, classified as a 'zoned earth siltation dam' composed of clay core, random fill, and filters, does not qualify as 'machinery' under Section 199(o) because it lacks machines, mechanical contrivances, instruments, appliances, or apparatus, and is instead a permanent improvement adhered to the soil without producing mechanical effects. Taxpayers must prove exemption by clear and convincing evidence, including filing sufficient documentary proof with the assessor within 30 days of property declaration under Section 206, failing which the property is listed as taxable. The non-operational status of the property (damaged since 1993) during the assessment period (effective January 1, 1995) negates the exemption, as potential or intended use is insufficient without concrete application. R.A. No. 7942's expanded definition of pollution control devices to include 'infrastructure' and 'improvements' does not apply retroactively to assessments under the pre-1995 LGC, as tax laws are prospective unless expressly stated otherwise.