Case Digest (G.R. No. 152675)
Facts:
In Batangas Power Corporation v. Batangas City and National Power Corporation, decided on April 28, 2004, the National Power Corporation (NPC) and Enron Power Development Corporation entered into a 1992 Fast Track Build–Operate–Transfer (BOT) Agreement under which Enron, later succeeded by Batangas Power Corporation (BPC), constructed and operated a power plant in Batangas City for ten years. BPC registered as a pioneer enterprise with the Board of Investments (BOI) on September 23, 1992, and the BOI granted it a six-year tax holiday under Section 133(g) of the Local Government Code (LGC). Construction was completed and commercial operations began on July 16, 1993. Beginning in 1998, Batangas City demanded payment of business taxes from 1994 onwards; BPC refused, asserting its six-year local tax exemption and arguing that the holiday ran from the date of commercial operation per a BOI letter. The city treasurer later limited the claim to taxes for 1998–1999, on the theory that tCase Digest (G.R. No. 152675)
Facts:
- Background
- In the early 1990s, severe power outages prompted the National Power Corporation (NPC) to enter into Build–Operate–Transfer (BOT) agreements with private investors, assuming their tax obligations (BOT Agreement, Sec. 11.02).
- On June 29, 1992, NPC and Enron Power Development Corporation executed a Fast Track BOT Project; Enron later assigned its rights and obligations to Batangas Power Corporation (BPC).
- Pioneer Registration and Tax Holiday
- BPC registered with the Board of Investments (BOI) as a pioneer enterprise on September 13, 1992, and obtained a six-year tax‐holiday certificate on September 23, 1992 (Sec. 133(g), Local Government Code).
- BPC’s power station commenced commercial operations on July 16, 1993; BOI later confirmed this as the start date of its income tax holiday due to force majeure delays.
- Batangas City’s Tax Assessment
- On October 12, 1998, Batangas City demanded back business taxes from BPC for tax years 1994–1999 under City Tax Code Ordinance XI; BPC invoked its pioneer status and BOT Agreement tax‐assumption clause.
- On April 15, 1999, the City Treasurer limited the claim to taxes for 1998–1999, asserting BPC’s six-year local tax holiday expired on September 22, 1998 (six years from BOI registration). BPC contended the holiday ran from July 16, 1993.
- Procedural History
- BPC filed a petition for declaratory relief in Makati RTC (Civil Case No. 00-205) against Batangas City and NPC, seeking declaration of non‐liability for business taxes; NPC intervened, admitting the BOT Agreement but claiming exemption under its charter.
- In February 2000, Batangas City refused BPC’s business permit unless the assessed P 29 million tax was paid; BPC filed a supplemental petition converting the case into an injunction proceeding to restrain permit denial.
- On February 27, 2002, the RTC dismissed the petition, ruling:
- BPC liable for city business taxes;
- NPC’s tax‐exemption was withdrawn by R.A. 7160 (LGC); and
- BPC’s six-year local tax holiday began on BOI registration date, per Sec. 133(g) of the LGC.
- BPC and NPC filed separate Rule 45 petitions before the Supreme Court (G.R. Nos. 152675 and 152771), which were consolidated.
Issues:
- Did BPC’s six-year local business tax holiday run from its BOI registration date or from its actual commercial operation date?
- Did the Makati RTC have jurisdiction to entertain BPC’s supplemental petition for injunction against Batangas City?
- Were NPC’s tax‐exemption privileges under its Charter withdrawn by Section 193 of the Local Government Code?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)