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Petitioner,
-versus-
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
THE CASE
This is a Petition for Review pursuant to Section 11 of Republic Act (R.A.) No. 1125,
as amended by R.A. No. 9282, of the decision of the Central Board of Assessment Appeals
(CBAA) in the exercise of its appellate jurisdiction, entitled North Luzon Renewable Energy
Corporation, Petitioner-Appellant, versus, The Local Board of Assessment Appeals of the
Province of Ilocos Norte, Appellee, and Josephine P. Calajate, acting as the Provincial
Treasurer of the Province of Ilocos Norte, Respondent Appellee, which, pursuant to Rule VI
of the Consolidated and Revised Rules of Procedure before the Local Boards of Assessment
Appeals and the Central Board of Assessment Appeals, the appeal of the of the Petitioner-
Appellant mainly on the ground that the one and a half percent (1.5%) maximum realty tax
rate provided by the Republic Act No. 9513, otherwise known as the Renewable Energy Act
of 2008 (RE Law) applies to realty and all other taxes including the tax for the Special
Education Fund (SEF).
THE PARTIES
Petitioner is the Provincial Treasurer of the Provincial Government of Ilocos Norte with
office address at Ilocos Norte Capitol, J.P. Rizal Street, Brgy. 10, Laoag City, Ilocos Norte
AND the Respondent-Appellee in CBAA Case No. L-134-2016 (LBAA Case No. 2016-01).
Respondent is a corporation organized and existing under the laws of the Republic of
the Philippines AND the Petitioner-Appellant in CBAA Case No. L-134-2016 (LBAA Case No.
2016-01).
On 23 November 2017, the undersigned counsel received the decision of CBAA dated
10 October 2017, the dispositive portion of which reads:
Within the period provided by law or on 08 December 2017, Petitioner filed a motion
to reconsider the above-mentioned decision. However, on 31 January 2018, the CBAA
rendered a resolution, which was received by Petitioner on 15 February 2018, denying the
latter’s Motion for Reconsideration.
Under Section 11 of R.A. No. 1125, as amended by R.A. No. 9282, with respect to
the decisions or rulings of the Central Board of Assessment Appeals and the Regional Trial
Court in the exercises of its appellate jurisdiction, appeal shall be made by filing a petition for
review under a procedure analogous to that provided for under Rule 43 of the 1997 Rules of
Civil Procedure with the CTA. Hence, Petitioner has fifteen (15) days within which to file her
Petition for Review.
This petition is, thus, timely filed as it is hereby filed today, 02 March 2018, by
registered mail due to distance and unavailability of delivery personnel.
Statement of Facts
The pivotal issue in the instant case is in relation to Section 15(c) of the RE Law, to
wit:
Respondent claims1 that it had overpaid its realty tax imposed upon its machinery
and equipment located in the Municipalities of Bacarra, Pasuquin, Bangui and Pagudpud,
Ilocos Norte for the years 2015 and 2016.
Respondent anchors its claim of overpayment of realty tax on the ground that the
assessments upon its machinery and equipment for the aforesaid years were erroneous
because respondent should have been exempted from paying the additional levy on real
property for the SEF.
Respondent maintains that the special realty tax rate of 1.5% prescribed in Section
15(c) covers all realty taxes imposed by the local government unit, be it basic realty tax, SEF,
and other realty taxes provided under the Local Government Code of 1991. Thus,
Respondent maintains that it is not liable for SEF.
On the other hand, Petitioner maintains that no overpayment of realty tax on the
machinery and equipment of the respondent occurred.
The Local Board of Assessment Appeals (LBAA), in its resolution denying the
Respondent’s petition before it, ruled in favor of the Petitioner, that:
1
Arguments of the Respondent are found in its Memorandum of Appeal, Position Paper and/or Reply to herein
Petitioners Position Paper submitted before the CBAA (hereto attached and marked as ANNEXES “A”, “B” and “C”,
respectively).
As a bureau tasked in overseeing the affairs of all local government
units’ finances, BLGF opinion on the matters carries great weight. But aside
from being an expert in the field of taxation, BLGF has found a reference
directly interpreting the disputed provision. It said:
‘In view hereof, this Bureau finds no other recourse but rely on the
view of Senator Angara…, in effect adopting the opinion issued by the Senate
Tax Study and Research Office (STSRO) under Memorandum dated 10
August 2011, item 15 of which provides;
Respondent appealed before the CBAA. The CBAA, in its decision dated 10 October
2017 (hereto attached and marked as ANNEX “D”) ruled in favor of the Respondent, holding
that:
Petitioner filed a Motion for Reconsideration and maintained that (a) there is
ambiguity on the term, “realty and other taxes “ under Section 15(c) of R.A. No. 9513 in view
of the different interpretations of the STSRO, the BLGF, the LBAA and the CBAA; (b) this
ambiguity must be strictly construed against the Respondent and in favor of the Government;
(c) SEF is not included in Section 15(c) of the RE Law; and (d) herein Respondent is liable
for interests.
The CBAA, in its Resolution dated 31 January 2018 (hereto attached and marked as
ANNEX “E”), denied the aforementioned Motion for Reconsideration.
ARGUMENTS/DISCUSSIONS
A. SEF is not intended to be included in Special Realty Tax provided under the
RE Law by its framers.
Contrary to the holding of the CBAA and claim of the Respondent, the intent of the law
is to exclude SEF from Special Realty Tax provided under the RE Law. As cited by the CBAA
and Respondent, herein is a portion of the deliberation during the Bicameral Conference
Committee on the Disagreeing Provisions of the RE Law, to wit:
“xxx
REP. MAGSAYSAY. Mr. Chairman, I just like to ask in the present set
up of the mga - who are engaged in this business, are they paying special realty
tax already on the equipment and machine and how much?
It is apparent from the above conversation that right after Representative Magsaysay
asked if those who are engaged in RE business are already paying special realty tax on their
equipment and machine, Representative Villafuerte immediately answered in the affirmative
and expressly stated that what will not be included in such exemption is the “special education
fund”.
REP. JAVIER. I think, the rate under the Local Government Code is 1
percent ‘no plus the additional assessment of 1 percent for SEF so its total, 2.
So, total 2 percent.
While it is true the SEF was mentioned twice during the Bicam Conference, it was
mentioned for the purpose of clarifying that the SEF is expressly, as it is the intention of the
law, excluded from the Special Realty Tax under Section 15(c) of the RE Law. In addition,
while Representative Javier made mention of the rate under the LGC of one percent (1%)
basic real property tax and the additional assessment of one percent (1%) for SEF, this was
immediately corrected by Representative Villafuerte, as it was not the real subject of the
conversation, since the basis of the aforementioned rates is ASSESSED VALUE AND NOT
BOOK VALUE.
B. SEF is bases on the ASSESSED VALUE while Special Realty Tax under the
RE Law is based on the NET BOOK VALUE.
The preceding claim by Petitioner should be so due to the fact the special levy for SEF
and the Special Realty Tax under the RE Law have different bases. Petitioner agrees with
the CBAA and Respondent that the RE Law intend to provide fiscal and non-fiscal incentives
to RE Developer which includes the grant of Special Realty Tax. However, contrary to the
holding and claims of the latter, Special Realty Tax cannot include special levy for SEF as the
same is based on the ASSESSED VALUE of the real property involved. Has it been the
intention of the law to base the Special Realty Tax on the assessed value of the real property,
then it would have not expressly stated that it shall be based on the net original cost less
accumulated normal depreciation or net book value of the real property. (Emphasis
supplied.)
It will be observed from the pleadings2 of Respondent before the CBAA, it highlighed
and emphasized the 1.5%f tax rate by underlining and boldfacing it, but intentionally did not
emphasize its tax base which is Net Book Value. Such act is misleading because a tax rate
without a tax base is useless. The appropriate tax base for the Special Realty Tax under the
RE Law is 1.5% of the NET BOOK VALUE of the real property. (Emphasis supplied.)
It will be observed that the realty taxes imposed by the LGC were all based on the
“assessed value” and NOT on NET BOOK VALUE of the real property. (Emphases
supplied.)
Assessed value is the fair market value of the real property multiplied by the
assessment level. It is synonymous to taxable value.3 Assessment level is the percentage
applied to the fair market value to determine the taxable value of the property.4 Fair market
value is the price at which a property may be sold by a seller who is not compelled to sell and
bought by a buyer who is not compelled to buy.5 From these definitions alone, it can be
surmised that the Special Levy for SEF and the Special Realty Tax under the RE Law, if
multiplied by their respective bases, will never arrive at the same amount. Hence, even
assuming without admitting, that the Special Realty Tax under the RE Law includes the basic
realty tax and the special levy for SEF, in as much as Petitioner based its assessment of the
tax due to Respondent by multiplying basic real property tax and the special levy for the SEF
against the ASSESSED VALUE of the its real properties, the latter cannot claim
overpayment since there is no showing that the tax due collected is in excess of the 1.5% of
the net original cost less accumulated normal depreciation or net book value of its real
properties, representing Special Realty Taxes under the RE Law. (Emphases supplied.)
C. The RE Law cannot impliedly repeal Section 235 of the Local Government
Code of 1991 inasmuch as Section 15(c) is concerned.
However, in this instance case, Petitioner does not agree with the Respondent that
insofar as Section 15(c) is concerned, the RE Law is considered a special statute; thus, it
should prevail over Section 235 of the LGC which states:
2
Annexes “A”, “B” and “C”.
3
Section 199 (h), LGC.
4
Section 199(g), Ibid.
5
Section 199 (l), Ibid.
6
Laguna Lake Development Authority vs. Court of Appeals, G.R. No.s. 120865-71, 07 December 1995.
“Section 235. Additional Levy on Real Property for the Special
Education Fund. - A province or city, or a municipality within the
Metropolitan Manila Area, may levy and collect an annual tax of one
percent (1%) on the assessed value of real property which shall be
in addition to the basic real property tax. The proceeds thereof shall
exclusively accrue to the Special Education Fund (SEF). “
A general statute is one which embraces a class of subjects or places and does not
omit any subject or place naturally belonging to such class. A special statute, as the term is
generally understood, is one which relates to particular persons or things of a class or to a
particular portion or section of the state only.7
Judicial precedents are conclusive to the effect that no implied repeal of a special
provisions of the character of the one now under consideration will result from the enactment
of broader provision of a general nature. In other words, a general statute without negative
words does not repeal a previous statute which is particular, even though the provisions of
one be different from the other.9
A general law and a special law on the same subject are statutes in pari materia
and should, accordingly, be read together and harmonized, if possible, with a view to giving
effect to both. The rule is that where there are two acts, one of which is special and particular
and the other general which, if standing alone, would include the same matter and thus
7
Agpalo, Statutory Construction, Second Edition (1990), p. 197.
8
Bagatsing v. Ramirez, G.R. No. L-41613, December 17, 1976, 74 SCRA 306, 311-312.
9
Rymer vs. Luzerne County, 12 L. R. A., 192; Petri vs. F. E. Creelman Lumber Co., 199 U. S., 487; 50 L. ed., 281.
conflict with the special act, the special law must prevail since it evinces the legislative intent
more clearly than that of a general statute and must not be taken as intended to affect the
more particular and specific provisions of the earlier act, unless it is absolutely necessary so
to construe it in order to give its words any meaning at all.10 (Emphasis added.)
The circumstance that the special law is passed before or after the general act does
not change the principle. Where the special law is later, it will be regarded as an exception
to, or a qualification of, the prior general act; and where the general act is later, the special
statute will be construed as remaining an exception to its terms, unless repealed expressly or
by necessary implication.11
A perusal of the above provisions shows that as regards the imposition of taxes,
Section 10(1) of the R.A. 7156, otherwise known as the Mini-Hydro Electric Power Incentive
Act, has been expressly repealed, despite the phrase added under Section 15(c) of the RE
Law, “any law to the contrary notwithstanding.” (Emphasis supplied.)
If it is, indeed the intention of the law to repeal, modify or amend Section 235 of the
LGC, it would have likewise stated so. It is well settled that repeals by implication are not to
be favored. And where two statutes cover, in whole or in part, the same matter, and are not
absolutely irreconcilable, the duty of the court — no purpose to repeal being clearly expressed
or indicated — is, if possible, to give effect to both. In other words, it must not be supposed
that the Legislature intended by a latter statute to repeal a prior one on the same subject,
unless the last statute is so broad in its terms and so clear and explicit in its words as to show
that it was intended to cover the whole subject, and therefore to displace the prior statute.12
It is in this sense and to this extent that the RE Law did not divest the Petitioner of her
authority, as conferred by the LGC, to collect special levy for SEF so long as it is based on
10
Id. at 197-198.
11
Id. at 198.
12
Frost vs. Wenie, 157 U. S., 46; 39 L. ed., 614, 619.
the ASSESSED VALUE of the real property. Hence, the additional lavey on real property for
the SEF is apart and distinct from the Special Realty Tax imposed under the RE Law.
The different interpretations of the STSRO, BLGF, LBAA and CBAA, given their
respective competencies, where based upon by the Petitioner only in support to her claim
that there is indeed ambiguity in the subject provision, REGARDLESS of who among
them has a better position to interpret or who has the best interpretation. (Emphasis
ours.)
The STSRO was of the opinion that the SEF imposed under the Local Government
Code (LGC) is apart and distinct from the special realty tax levied pursuant under
Republic Act (R.A.) No. 9513. Ergo, both impositions should be applied by the Local
Government Units (LGUs) concerned, separately as clearly provided by the cited respective
laws. (Emphasis ours).
This interpretation of the STSRO was adopted and relied upon by the BLGF in the
latter’s letters13 to the queries of Ormoc City and the province of Ifugao. The BLGF viewed
that the applicable Special Real Property Tax (RPT) Rates for the civil works, equipment,
machinery, and other improvements of a registered Renewable Energy (RE)
Developer/Operator and the power plant of an integrated RE Resource Development and
Generation Facility should not exceed one percent (1%) basic RPT and an additional levy of
one percent (1%) for the SEF.
Convinced by STRSO and BLGF, the Local Board joins the same position. In doing
so, it ruled14 that:
xxx
2. In addition to the Basic Real Property Tax, an additional levy of
1% of the Net Book Value shall accrue to the SEF.”
At this point, it is worthy to mention that the basis of the STSRO, and so are the BLGF
and the Local Board, is the view of Senator Edgardo Angara, Chairman of the Senate Panel,
during the Bicameral Conference (Bi-cam Conference) Committee on the Disagreeing
Provisions of Senate Bill No. 2046 and House Bill No. 4193 on 07 October 2008. The Bi-cam
Conference is the same basis which the Honorable Board relied upon in ruling that the SEF
is also included in crafting the disputed provision, Section 15 (c) of the RE Law.
Petitioenr maintains that even assuming that BLGF or the STSRO had no authority in
interpreting the subject provision, the mere actuality that they have, different interpretation
sas compared to that of the Honorable Board, already ignites ambiguity on the REAL
INTENTION of the law. (Emphasis ours).
Inasmuch as the intention of the legislature is open to doubt and the undertaking to
uncover its true purpose only led to different versions of conclusion, then, it cannot be said
that the words of the subject provisions are too plain to be mistaken and too categorical to be
misinterpreted.
It follows, thereofre, ncertainty in the term, “realty and other taxes” in Section 15(c) of
the RE Law on whether or not it includes SEF must be construed strictly against herein
Respondent.
13 Letter dated August 24, 2012 sent to the Ormoc City and letter dated November 29, 2012 addressed to
Governor Eugene M. Balintang of Ifugao.
14 Page 6, LBAA Resolution.
Tax exemptions are never presumed and are strictly construed against the taxpayer
and liberally in favor of the taxing authority.15 They can only be given force when the grant is
clear and categorical.16 The surrender of the power to tax, when claimed, must be clearly
shown by a language that will admit of no reasonable construction consistent with the
reservation of the power. If the intention of the legislature is open to doubt, then the intention
of the legislature must be resolved in favor of the State.17
Time and again, the Supreme Court has stated that taxation is the rule and exemption
is the exception. The law does not look with favor on tax exemptions and the entity that would
seek to be thus privileged must justify it by words too plain to be mistaken and too categorical
to be misinterpreted.18
PRAYER
15 Commissioner of Internal Revenue v. Visayan Electric Company, 132 Phil. 203, 215 (1968).
16 Commissioner of Internal Revenue v. Rio Tuba Nickel Mining Corporation, G.R. Nos. 83583-84, September 30,
1991, 202 SCRA 137.
17 Philippine Long Distance Telephone Company, Inc. v. City of Davao, 415 Phil. 764, 775 (2001).
18 National Power Corporation, vs. Central Board Of Assessment Appeals (CBAA), Local Board Of Assessment
Appeals (LBAA) of La Union, Provincial Treasurer, La Union and Municipal Assessor Of Bauang, La Union, G.R.
No. 171470, January 30, 2009
19 Mactan Cebu International Airport Authority v. Marcos, G.R. No. 120082, September 11,1996, 261 SCRA 667,
679.
20 CONSTITUTION, Section 25, Article II, and Section 2, Article X.
21 Mactan Cebu International Airport Authority v. Marcos, G.R. No. 120082, September 11,1996, 261 SCRA 667,
679.
22 Energy, Inc. v. The Province of Batangas, G.R. No. 170628, February 16, 2007, 516 SCRA 186.
Other just and equitable relief are likewise asked and prayed for.
Respectfully submitted.
1. I am the Petitioner in the above-captioned case and I have caused the preparation of the
foregoing Petition for Review.
2. I have read and understood the contents thereof and the facts stated therein are true and
correct of my personal knowledge and/or on the basis of the documents and records in
my possession;
3. I have not commenced any other action or proceeding involving the same issues in any
tribunal, agency or body;
4. To the best of my knowledge and belief, no such action or proceeding is pending before
any tribunal, agency or body;
5. If I should thereafter learn that a similar actions has been filed before any tribunal, agency
or body, I undertake to report the fact within five (5) days therefrom to this Honorable
Court;
IN WITNESS WHEREOF, I have hereunto set my hand this 2nd day of March 2018 at
Laoag City, Ilocos Norte.
JOSEPHINE P. CALAJATE
Petitioner
PGIN ID. No. ___________
SUBSCRIBED AND SWORN to before me, this 2nd day of March 2018, affiant who is
personally known to me and who exhibited to me her Identification Card issued by the
Provincial Government of Ilocos Norte indicated below her name. I have examined the
Petitioner and that she declared to me that she has read and understood the foregoing and
the same are true to the best of her knowledge and based on authentic records.
EXPLANATION
Pursuant to the Rules, service is done by registered mail with return card owing to the distance
and want of personnel to effect personal service.
JOSEPHINE P. CALAJATE
Petitioner
PGIN ID. No. ___________