Case Digest (G.R. No. 210191)
Facts:
National Power Corporation v. The Province of Pangasinan and the Provincial Assessor of Pangasinan, G.R. No. 210191, February 24, 2020, the Supreme Court Second Division, Reyes, Jr., J., writing for the Court.Petitioner National Power Corporation (NPC) is a government-owned and controlled corporation created under R.A. No. 6395 with authority to generate and transmit electric power. On May 20, 1994 NPC entered into an Energy Conversion Agreement (ECA) with CEPA Pangasinan Electric Ltd. (later Mirant Sual Corporation, hereafter "Mirant") under a Build-Operate-Transfer (BOT) scheme for the construction, operation and eventual transfer of the Sual coal-fired power station. Paragraph 11.1 of the ECA provided that NPC would assume payment of all real property taxes on the site, its infrastructures and equipment.
A separate Memorandum of Agreement (MOA) among NPC, Pangasinan Electric Corporation (Mirant’s predecessor), the Province of Pangasinan, the Municipality of Sual and Barangay Pangascasan reiterated certain obligations, including compliance with the Local Government Code on payment of realty tax upon project site acquisition by NPC. Mirant began operating the plant in 1998. NPC paid real property taxes from 1998 until the first quarter of 2003 but stopped in the second quarter of 2003, invoking exemptions under R.A. No. 7160 (the Local Government Code).
The Municipal Treasurer of Sual issued a Notice of Assessment dated September 10, 2003. NPC filed a petition for exemption with the Local Board of Assessment Appeals (LBAA) as LBAA Case No. P-03-001, asserting that the machinery and equipment were exempt under Section 234(c) (and alternatively should be given special classification under Section 216), and later filed LBAA Case No. P-06-001 after an updated assessment. The LBAA dismissed the petitions (Resolution, April 15, 2004; Order, July 18, 2007), finding Mirant to be the actual, direct, exclusive and beneficial owner and user of the facilities and observing NPC’s failure to file timely claims under Section 206 and its prior payment of taxes.
NPC appealed to the Central Board of Assessment Appeals (CBAA) in CBAA Case Nos. L-52 and L-81 (consolidated April 2, 2009). The CBAA denied relief in a Decision dated April 12, 2012 and denied reconsideration on July 31, 2012, holding that Mirant — not NPC — owned and actually used the machinery and equipment and that NPC therefore lacked legal personality to claim exemptions or privileges under Sections 234(c) and 234(e), Section 225 (depreciation allowance), and Section 216 (special classification). The Court of Tax Appeals (CTA) En Banc, in CTA EB Case No. 937, rendered a Decision dated November 11, 2013 affirming the LBAA and CBAA rulings for the same reasons and rejecting estopp...(Pro-only)
Issues:
- Does NPC have the legal personality and interest to question the assessment and claim exemptions, privileges, or depreciation allowances on the subject machinery and equipment?
- Are the subject machinery and equipment exempt from real property tax under Section 234(c) of R.A. No. 7160?
- Are the subject machinery and equipment exempt under Section 234(e) of R.A. No. 7160 (machinery used for pollution control and environmental protection)?
- Can the subject properties be classified as a special class under Section 216 of R.A. No. 7160 to warrant a lower assessment level?
- Is NPC entitled to the depreciati...(Pro-only)
Ruling:
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Ratio:
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Doctrine:
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