G.R. No. 185420 - Lanao Del Norte Electric Cooperative, Inc. vs. Provincial Government of Lanao del Norte

LANECO was granted a franchise by the National Electrification Administration (NEA) on January 8, 1972 to distribute electricity in various municipalities.
Its franchise coverage was expanded on December 14, 1995 to include additional barangays in the municipality of Balo-i, Lanao del Norte.
To finance its operations, LANECO contracted several loans from the NEA between 1972 and 1991, with portions of these loans secured by real estate mortgage contracts.
From 1996 to 2006, LANECO received various grants and subsidies from the NEA to support its rural electrification programs.
Although a substantial amount was borrowed (total loans amounting to over P117 million), a significant portion had already been paid.
With the enactment of R.A. No. 9136 (the Electric Power Industry Reform Act of 2001), PSALM assumed a remaining loan balance of over P32 million pursuant to the statutory provisions.

The Local Government Code of 1991 (R.A. No. 7160) empowered local government units (LGUs) to impose taxes on real properties within their territories.
On January 7, 1993, the Sangguniang Panlalawigan of Lanao del Norte enacted Provincial Tax Ordinance No. 1, Series of 1993 (the Provincial Revenue Code), authorizing the levy of real property taxes.
In January and July 2006, LANECO received letters from the Provincial Treasurer demanding payment for real property taxes for various municipalities.
A final demand letter was issued on September 26, 2006 warning of public auction of LANECO’s properties if the taxes were not paid within fifteen days.

LANECO questioned the validity of the tax assessments and the Provincial Revenue Code, asserting that it had repeatedly requested an original or certified true copy of the said Code for proper verification.
The Provincial Government (PGLN) allegedly refused to provide the requested documentation, leading LANECO to seek a judicial determination on the validity of the assessments.
LANECO’s initial challenge was filed as a Petition for Declaratory Relief with Preliminary Prohibitory Injunction in 2006 before the RTC, which was later dismissed upon an agreement to resolve the issues administratively.

Persistent tax demands by the PGLN led LANECO to file several petitions in different courts, beginning with its petition filed on December 5, 2008 for prohibition and mandamus.
Soon after the filing, another Notice of Delinquency was published (December 1, 2008 issue of Gold Star Daily) and subsequent petitions for TRO and injunction were filed.
In April 2009, the PGLN, via its Provincial Treasurer and deputized municipal treasurers, issued warrants of levy on LANECO’s properties for the deficient real property taxes.
LANECO maintained that while it acknowledged a tax liability, the administrative action (levy and auction) was improper and violated statutory provisions (Section 60 of R.A. No. 9136 and EO 119).

LANECO pursued its claims in Special Civil Cases No. 012-07-2008, No. 015-07-2009, and later No. 020-07-2010, with overlapping issues concerning the validity and enforceability of the Provincial Revenue Code.
The trial courts’ decisions in these cases, including orders declaring the Provincial Revenue Code invalid and issuing injunctions against further tax collection, underscored the dispute.
Respondents, which included the PGLN, NEA, PSALM, DOE, COA, and others, filed consolidated comments arguing that LANECO had engaged in forum shopping and had not exhausted available administrative remedies.
The respondents contended that the levy was a proper administrative remedy based on the Local Government Code and that Section 60 of R.A. No. 9136 did not bar the assessment or further collection actions by the local government.

LANECO asserted that the PGLN’s imposition of a real property tax through administrative levy constituted grave abuse of discretion amounting to a lack or excess of jurisdiction.
It argued that the administrative action violated Section 60 of R.A. No. 9136 and EO 119 by effectively disposing of or transferring its assets while it was under a rehabilitation and modernization program.
Moreover, LANECO contended that the multiple filings on similar issues amounted to forum shopping, seeking to secure an advantageous outcome in its favor.

After the initial filings, LANECO filed urgent ex-parte motions for TROs and later petitions for prohibition, which were denied or dismissed due to lack of merit.
On January 10, 2011, further petitions were noted by the Supreme Court, with respondents reiterating that similar issues were already pending or resolved in lower courts.
Ultimately, the case reached the Supreme Court, which scrutinized both the substantive and procedural aspects of the petition.

Whether the filing of the instant petition constitutes forum shopping, given that LANECO had already pursued similar relief in other courts.
Whether LANECO failed to exhaust available administrative remedies before resorting to direct petition to the Supreme Court.
Whether the PGLN gravely abused its discretion by resorting to the administrative remedy of levy on LANECO’s real properties to collect unpaid real property taxes.
Whether the proposed auction of LANECO’s delinquent properties would amount to grave abuse of discretion or effectively violate statutory and constitutional provisions.