Case Summary (G.R. No. 233861)
Applicable Law
This case is governed by the 1987 Philippine Constitution, the Local Government Code (Republic Act No. 7160), and other prevailing laws regarding taxation and government instruments.
Background of the Case
On November 3, 2005, the DBP received a Notice of Garnishment from the City of Iloilo aimed at levying PPA’s bank deposits for realty and business tax delinquencies amounting to Php44,298,470.11. PPA contended that its tax obligations pertaining to previous judgments of the Supreme Court, specifically cases G.R. Nos. 109791 and 143214, were already settled, and thus requested the cancellation of the garnishment. When these requests were ignored, PPA initiated legal action in the Regional Trial Court (RTC) of Manila to declare the Notice of Garnishment null and void.
Procedural History
The RTC ultimately dismissed PPA's complaint for lack of merit on September 19, 2012, ruling that the garnishment covered liabilities beyond those adjudicated in the aforementioned Supreme Court cases. PPA appealed this decision to the Court of Appeals (CA), which subsequently reversed the RTC’s ruling and found in favor of PPA on November 22, 2016. The CA ruled the Notice of Garnishment invalid, stating that PPA, as a government instrumentality, should be exempt from local taxes on properties used for public purposes.
Issues Raised by the Petitioner
The City of Iloilo raised two principal issues for the Supreme Court’s consideration:
- The CA erred in asserting jurisdiction over the case, claiming that the issue concerning the validity of local tax collection through garnishment should fall under the exclusive jurisdiction of the Court of Tax Appeals (CTA).
- The CA also allegedly overstepped its authority by rejecting the application of Section 196 of RA 7160 in this instance.
Ruling on Jurisdiction
The Supreme Court clarified that the CA had jurisdiction over the appeal from the RTC's decision. Jurisdiction is determined by the nature of the case, specifically whether it involves a tax matter. PPA's complaint was primarily about the validity of the garnishment rather than the tax liabilities themselves, and thus did not classify it as a local tax case requiring CTA intervention.
Nature of Government Instrumentalities
PPA, recognized as a government instrumentality, is exempt from being subjected to garnishment or any form of execution through the established case law such as the MIAA ruling. Properties and funds belonging to government instrumentalities are declared to be out of the commerce of men, emphasizing the public interest and the necessity for these properties to be free from encumbrance.
Execution of the Judgment
The Supreme Court emphasized that any collection of tax should follow the proper procedures as laid out in the Local Government Code. The Notice of Garnishment, which sought to procure amount
...continue readingCase Syllabus (G.R. No. 233861)
Background of the Case
- The case involves a petition for review on certiorari under Rule 45, assailing the Decision of the Court of Appeals dated 22 November 2016 and Resolution dated 28 July 2017 in CA G.R. CV No. 102578.
- On 03 November 2005, the Development Bank of the Philippines (DBP) received a Notice of Garnishment from the City of Iloilo, levying bank deposits of the Philippine Ports Authority (PPA) for outstanding realty and business tax liabilities amounting to Php44,298,470.11.
- The PPA contended that its liabilities had already been settled and requested the City of Iloilo to recall the notice, to no avail.
- Subsequently, on 05 June 2009, PPA filed a complaint against the City of Iloilo and DBP for declaration of nullity of the notice of garnishment, along with a prayer for a Temporary Restraining Order (TRO) before the Regional Trial Court (RTC) of Manila.
Procedural History
- The DBP acknowledged the local government's authority to issue a notice of garnishment but claimed it could not verify PPA's tax payments.
- The RTC denied PPA's application for a writ of injunction on 23 July 2009.
- PPA's petition for certiorari to the Court of Appeals was also denied, and this decision was later affirmed by the Supreme Court in G.R. No. 204908.
- On 19 September 2012, the RTC dismissed PPA's complaint, stating the notice of garnishment was valid since it covered not only liabilities from prior judgments but also other debts related to the Iloilo Port Complex.
- PPA appealed the RTC decision, and only DBP filed