Case Digest (G.R. No. 226716)
Facts:
In this case, the petitioner National Power Corporation (NPC) received a Notice of Assessment dated September 23, 2010, from the Municipality of Sual, Pangasinan demanding payment of local business taxes for the taxable year 2010. This assessment was based on the Supreme Court's decision holding NPC liable for local taxes and pursuant to Municipal Ordinance No. 121. Subsequently, the respondent Municipality filed a complaint for collection of local business taxes for taxable years 2006 to 2009 in the Regional Trial Court (RTC) of Lingayen, docketed as Civil Case No. 19070. In response, NPC filed an appeal contesting liability for business tax for taxable years 2006 to 2009, docketed as Civil Case No. 19076. On January 3, 2011, the Municipality issued a Notice of Seizure of NPC's properties amounting to P48,703,713.14 representing unpaid business tax and interest for 2010. The Philippine National Bank (PNB), respondent bank, informed NPC of a Warrant of Distraint on the same amou...
Case Digest (G.R. No. 226716)
Facts:
- Background and Assessment
- On September 23, 2010, the Municipality of Sual, Pangasinan issued a Notice of Assessment to the National Power Corporation (NPC), demanding payment of local business taxes for the taxable year 2010.
- The assessment was based on a purported ruling by the Supreme Court in National Power Corporation v. City of Cabanatuan and an ordinance (Sual Municipal Ordinance No. 121).
- Prior to this, the Municipality filed a complaint against NPC for unpaid local business taxes for taxable years 2006 to 2009 before the Regional Trial Court (RTC) of Lingayen, Pangasinan.
- NPC appealed this to another RTC branch seeking to be declared not liable for business tax for 2006 to 2009.
- Distress Warrant and Challenges
- On January 3, 2011, the Municipality issued a Notice of Seizure or Confiscation of NPC’s personal properties equivalent to P48,703,713.14 representing unpaid local taxes and interests for 2010.
- Philippine National Bank (PNB) notified NPC of a Warrant of Distraint issued by the Municipality for the same amount and intended garnishment.
- NPC responded emphasizing the pendency of the 2006-2009 tax case and sought to restrain execution through an injunction case in the Quezon City RTC, which was dismissed for forum shopping and non-interference doctrines.
- Proceedings Before the Court of Tax Appeals (CTA)
- NPC filed a Petition for Review before the CTA questioning the dismissal of injunction and validity of the assessment.
- The CTA Second Division dismissed the petition, affirming the finality and collectibility of the 2010 Notice of Assessment, stating NPC failed to file a written protest within the 60-day period stipulated under Section 195 of the Local Government Code.
- CTA en banc affirmed the Second Division’s ruling, denying NPC’s motion for reconsideration.
- Arguments by NPC
- NPC argued that the 2010 assessment was illegal because:
- NPC no longer conducted business activities liable to local business tax due to the Electric Power Industry Reform Act (EPIRA) of 2001, which transferred operational functions to the Power Sector Assets and Liabilities Management Corporation (PSALM).
- There was no valid municipal ordinance imposing the tax.
- NPC is a government instrumentality exempt from the tax.
- The 2010 assessment lacked factual basis and was issued against the improper party.
Issues:
- Whether the 2010 Notice of Assessment became final and executory due to NPC’s failure to file a written protest under Section 195 of the Local Government Code.
- Whether NPC is the proper party subject to the local business tax assessment.
- Whether the Electric Power Industry Reform Act (EPIRA) transfers the business activity and tax liability to PSALM, relieving NPC of local business tax for 2010.
- Whether the 2010 Notice of Assessment and related enforcement processes were valid and lawful.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)