Case Digest (G.R. No. 152675)
Facts:
Batangas Power Corporation v. Batangas City and National Power Corporation, G.R. Nos. 152675 and 152771, April 28, 2004, Supreme Court Second Division, Puno, J., writing for the Court.Petitioner Batangas Power Corporation (BPC) and petitioner National Power Corporation (NPC) sought review of the Makati Regional Trial Court (RTC), Branch 66, Judge Ricardo R. Rosario's February 27, 2002 Decision in Civil Case No. 00-205. The dispute traces to the 1990s power crisis and the government’s use of Build-Operate-Transfer (BOT) arrangements to attract private investment. On June 29, 1992 NPC and Enron Power Development Corporation entered a Fast Track BOT Agreement under which NPC agreed to assume payment of taxes on the power station (Section 11.02). Enron later assigned its BOT rights and obligations to BPC.
BPC registered with the Board of Investments (BOI) as a BOI-certified pioneer enterprise and received a certificate entitling it to a six-year tax holiday. Construction was completed and commercial operations commenced in the City of Batangas. Batangas City, through its legal officer, demanded business taxes and penalties beginning in 1994 under the city tax code; BPC refused, asserting a six-year tax holiday under Section 133(g) of the Local Government Code (LGC). The City treasurer later narrowed the claim to taxes for 1998–1999, taking the view that the six-year holiday expired six years after BPC’s BOI registration.
BPC maintained the holiday should run from the date of commercial operation as certified by the BOI (BOI communication cited July 16, 1993), and alternatively argued NPC—per the BOT Agreement—was obligated to pay its taxes. NPC intervened, admitting assumption of the tax obligation under the BOT but refusing to pay because it claimed exemption under its charter (RA 6395, Sec. 13). BPC filed a declaratory relief action in the Makati RTC against Batangas City and NPC; when the City refused to issue a business permit on February 23, 2000 unless taxes were paid, BPC filed a supplemental petition converting the action into one for injunction to compel issuance of the permit.
The Makati RTC admitted the supplemental petition but, in its February 27, 2002 decision, dismissed the petition for injunction, ruling (1) BPC was liable for the business taxes; (2) NPC’s tax exemption had been withdrawn by the LGC; ...(Subscriber-Only)
Issues:
- Did BPC’s six-year BOI pioneer-enterprise tax holiday for local business taxes commence on the date of BOI registration or on the date of its actual commercial operation as certified by the BOI?
- Did the Makati RTC have jurisdiction to entertain BPC’s supplemental petition converting the declaratory relief into a petition for injunction against Batangas City?
- Were NPC’s tax-exemption privileges under its charter withdrawn by Se...(Subscriber-Only)
Ruling:
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Ratio:
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Doctrine:
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