Republic of the Philippines
CENTRAL BOARD OF ASSESSMENT APPEALS Manila
PILILLA POULTRY PROCESSING PLANT, INC.,
Petitioner-Appellant,
– versus –
CBAA Case No. L-22 THE PROVINCIAL BOARD OF
ASSESSMENT APPEALS OF RIZAL, Appellee,
– and –
THE MUNICIPAL ASSESSOR OF PILILLA AND THE PROVINCIAL ASSESSOR OF RIZAL,
Respondents-Appellees, x – – – – – – – – – – – – – – – – – – – – – – – – – – – – x
D E C I S I O N
This appeal steams from the decision of the Provincial Board of
Assessment Appeals of Rizal as assailed by Pililla Poultry Processing Plant,
Inc. the penultimate portion of which is herein below quoted, viz:
“WHEREFORE, for failure on the part of the petitioner to prove its cause of action, this Board thereby holds the petitioner liable and bound to pay the realty tax for the year 1997 and declares this petition DISMISSED for lack of merit and for being without basis in fact and in law”.
In this case, the parties dwell on the sole issue of whether or not Pililla
Poultry Processing Plant, Inc. (“PPPPI” for brevity) is liable to pay real
property tax for the year 1997.
As culled from the records of the case and the findings of the Board as
well, it shows that:
On April 30, 1998, PPPPI received a notice of assessment from the
Provincial Assessor of Rizal through the Municipal Assessor of Pililla Rizal, Mr.
Alejandro V. Amores, effectivity of which retroacts to the year 1997.
On the matter of the request for a first year consideration on the
effectivity of the notice of assessment contending that 1997 was a dry run for
the firm to operate, a letter addressed to the above-named assessor was sent
Reference: Book VIII, pp. 279-286
by Mr. Louie L. Borja, general manager of PPPPI on May 12, 1998.
Unfortunately, that same request was referred to Mr. Oscar R. Baraquero,
provincial assessor of Rizal, only on July 6, 1998. For the purpose of proving
their point, it submitted copies of building and Mayor’s permits which have
bearing on their case. Since there was an apparent lapse of time when such
letter was referred to assessor Baraquero, the latter advised Mr. Amores to
make the necessary immediate reply to the letter of reconsideration being made
by the said company official. In compliance therewith, Mr. Amores informed the
Provincial Assessor of Rizal that based on their findings “PPPPI” assumed
operation in 1996 when buildings were already completed, machineries were
installed and operated and contractual employees were hired such that,
impliedly, it should be held liable for taxes for the year 1997.
Seeing the possibility that its request will be turned down and will go
nowhere, PPPPI elevated the case to the Local Board of Assessment Appeals
of Rizal on October 15, 1998, almost six (6) months from the time the firm
received the notice of assessment. However, in its appeal, it abandoned the
premise that the subject business started only in the year 1997 and relied much
on the certification by Hon. Nicodemes F. Patenia, municipal mayor of Pililla on
the matter of Tax Holiday allegedly granted by the said municipality to foreign
and local investors. Sticking on its position, petitioner anchored its claim on that
ground alone and took its refuge on the legality of the action of said town Mayor
based on the provisions of the Local Government Code of 1991 more
particularly sections 444, 30, and 192, to wit:
“’(b) For efficient, effective and economical governance the purpose of which is the general welfare of the municipality and its inhabitants pursuant to section 16 of this Code, the Municipal Mayor shall:
(1) Exercise general supervision and control over all programs, projects, services and activities of the municipal government, and in this connection, shall:
(i) Determine the guidelines of municipal policies and be responsible to the Sanggunian Bayan for the program of government;
Reference: Book VIII, pp. 279-286
(ii) Direct the formulation of the municipal development plan, with the assistance of the municipal development council and upon approval thereof by the Sangguniang Bayan, implement the same;
x x x
(3) Initiate and maximize the generation of resources and revenues and apply the same to the implementation of development plans, program objectives and priorities as provided for under Section 18 of this Code, particularly those resources and revenues programmed for agro-industrial development and countrywide growth and progress, x x x’”
“’Section (30) (a) Except as otherwise provided under the Constitution and special statutes, the governor shall review all executive orders promulgated by component city or municipal mayor within his jurisdiction. The city or municipal mayor shall review all executive orders promulgated by the punong barangay within his jurisdiction. Copies of such order shall be forwarded to the governor or the city or municipal mayor, as the case may be, within three (3) days from their issuance. In all instances of review, the local chief executive concerned shall ensure that such executive orders are within the powers granted by law and in conformity with provincial, city or municipal ordinances.
(b) If the governor or the city or municipal mayors fails to act on said executive orders within thirty (30) days after submission, the same shall be deemed consistent with law and therefore valid.’”
As it rely on these cited provisions of law, it is their conclusion that there
is nothing illegal nor anomalous with the exemption granted by the Municipality
of Pililla to PPPPI and that in the absence of any executive order nullifying the
certification issued by Mayor Patenia, the same will remain valid and in
accordance with law. Aside from this argument, it is of the opinion that the
Principle of Estoppel has already set in with respect to the non-payment of
taxes due to the representation allegedly made by Mayor Patenia regarding the
grant of a one (1) year tax exemption.
On the ground of fair play that the appellant exerted its effort, manifested
by its long and tireless follow ups and the seeming negligence on the part of the
municipal assessor to transmit the request to the Provincial assessor for
appropriate action, the appellees on their part did not invoke prescription
considering that more than five (5) months have already elapsed before the
petitioner has brought is appeal to the jurisdiction of the LBAA of Rizal.
On July 26, 1999, the pertinent portion of which is therein extracted, the
Local Board of Assessment Appeals of Rizal laid down its ruling which states
that:
Reference: Book VIII, pp. 279-286
“The certification alone issued by the mayor without any ordinance duly approved cannot be made as basis for exemption of payment of the 1997 realty tax of the petitioner. It is very clear and explicit in the language of the law, Section 192 of the local Government Code which was even cited by the petitioner in its position paper which says “Local government units may, through ordinances duly approved, grant tax exemptions, incentives or reliefs under such terms and conditions as they may deem necessary.” Neither can the principle of estoppel be applied in this case because it is the belief of this Board that the certification made by the mayor was without basis and therefore has no force and effect, hence the reliance by the PPPPI on this representation by the Mayor cannot be the basis of estoppel.”
HENCE, this appeal.
Subject to the following discussions, we find for respondents-appellees.
Prefatorily, there are two (2) concomitant reasons catapulted by the
appellant in support of their appeal. First, it is the argument of the herein
appellant that the Notice of Assessment it received was made in the year 1998
and therefore effective only in the year 1999, citing Section 221 of the Local
Government Code which provides:
“All assessments or reassessments made after the first (1st) day of January of any year shall take effect on the first (1st) day of the succeeding year: xxx”
Apparently, PPPPI quoted the wrong provision of law because Section
222 of that same Code so states that:
“Real Property declared for the first time shall be assessed for taxes for the period during which it would have been liable but in no case for more than ten (10) years prior to the date of initial assessment: Provided, however, That such taxes shall be computed on the basis of the applicable schedule of values in force during the corresponding period”
Since the property of PPPPI was assessed for the first time in the year
1998, it is safe and perfectly correct for the provincial assessor to apply the
provision explicitly provided by section 222 (LGC), thereby giving the
assessment a retroactive effect. And for failure to invoke that 1997 was a dry
run year while the case is in the appellate Local Board, the facts of the case
unequivocably manifest as it affirms the fact that indeed it is liable to pay realty
taxes for the said year.
Secondly, Petitioner-appellant is on the honest belief that a certification
by the Pililla Mayor is a valid exercise of his function as chief executive of the
local unit concerned to give a tax holiday in order to attract local as well as
Reference: Book VIII, pp. 279-286
foreign investors which is consonant with the goal of the government of
promoting investments. But granting EN ARGUENDO that indeed, in issuing a
tax holiday, he may have been motivated by noble intentions and that his
inclinations were directed towards the welfare of their municipality, this order is
wanting of color of legality considering that there are legal prerequisites that
have to be sufficiently complied with to make it perfectly valid. These
requirements are the very safeguards of executive issuances from capricious,
whimsical and arbitrary decisions. Equally important to note is the fact that even
if said issuance is not tainted with arbitrariness or that capriciousness does not
come into the picture, the spirit and the letter of the law must not have to be
dispensed with for that is the very intent of such enactment by the legislature.
Unquestionably, Section 5 Article X of the 1987 Constitution vividly points
out that a general delegation of the power to tax is granted in favor of the local
government units, as stated:
“Sec. 5 Each local government unit shall have the power to create its own sources of revenues and to levy taxes, fees and charges subject to such guidelines and limitations as the Congress may provide consistent with the basic policy of local autonomy. XXX”.
Enunciated in the case of Manila Electric Company vs. Province of
Laguna and Benito Balazo, (G.R. No. 131359 May 5, 1999) “Where there is
neither a grant nor a prohibition by statute, the tax power must be deemed to
exist although Congress may provide statutory limitations and guidelines. The
basic rationale for the current rule is to safeguard the viability and self-
sufficiency of local government units by directly granting these general and
broad tax powers. The fundamental law did not intend the delegation to be
absolute and unconditional”.
Now, it is a basic principle in taxation that the power to tax carries with it
the power to grant exemption such that when Congress passed R.A. 7160
otherwise known as the Local Government Code of 1991, it provided the
limitations for the grant of tax exemptions in accordance with the mandate of
the fundamental law of the land, one of which is Section 192 of the same Code.
Reference: Book VIII, pp. 279-286
Clear as it is that even if such tax holiday is said to be pursuant to an
ordinance passed, which in this case is not, by the Sanggunian, a claim of
statutory exemption from taxation should be manifest and unmistakable from
the language of the law on which it is based. It is construed strictissimi juris
(Commissioner of Internal Revenue vs. C.A. G.R. No. 124043).
So, in the discussions made by the appellees as reflected in their answer
to the appeal and surprisingly, even in the position paper submitted by the
herein petitioner while the case is still pending before the Local Board of
Assessment Appeals of Rizal, they both focused on Section 192 of the local
Government Code of 1991. Expressly stated therein is the primordial condition
that it is only through an ordinance duly approved that the local Government
Units may grant tax exemptions, incentives or reliefs under such terms and
conditions as they may deem necessary. In citing said provision, the appellant
itself indirectly then admits the need for the passing of an ordinance before a
person, whether juridical or not, can avail of the benefit of the exemption.
During the hearing, the appellant was ordered to submit a copy of the
ordinance passed by the Sanggunian granting such tax exemption to PPPPI or
to local investors. For failure to furnish this Board a copy, it became obvious
that there is no such thing in the municipality concerned and that the
certification given by Mayor Patenia dated December 5, 1997 was Ultra Vires.
And lastly, it is the observation of this Board that the grant of the alleged
tax holiday was made verbally by the Mayor and that it was not concretized in
any written order or issuances. So, PPPPI’s contention is laid on soft ground
and may not be able stand firm for its root is attached on something that is
abstract.
WHEREFORE, in view of the foregoing, the decision of the Board of
Assessment Appeals of Rizal declaring subject properties as taxable is hereby
affirmed in toto and that the herein appeal of PPPPI is hereby dismissed for
lack of merit.
Reference: Book VIII, pp. 279-286
SO ORDERED.
Manila, Philippines, April 23, 2001.
(Signed) CESAR S. GUTIERREZ
Chairman
(Signed)
ANGEL P. PALOMARES Member
(Signed) BENJAMIN M. KASALA
Member
Reference: Book VIII, pp. 279-286