Republic of the Philippines
CENTRAL BOARD OF ASSESSMENT APPEALS
7th Floor, EDPC Building, BSP Complex
Manila

NATIONAL GRID CORPORATION OF THE PHILIPPINES (NGCP),
Petitioner-Appellant,
CBAA CASE NO. L-120
-versus- LBAA Case No. 2011-001
City of Cabanatuan
LOCAL BOARD OF ASSESSMENT APPEALS OF CABANATUAN CITY,
Appellee,

-and-

HEIDE D. PANGILINAN, in her capacity as City Assessor of Cabanatuan City, Nueva Ecija,
Respondent-Appellee.
x- – – – – – – – – – – – – – – – – – – – – – – – – – – – /
NATIONAL GRID CORPORATION OF THE PHILIPPINES (NGCP),
Petitioner-Appellant,
CBAA CASE NO. L-121
-versus- LBAA Case No. 2011-002
City of Cabanatuan
LOCAL BOARD OF ASSESSMENT APPEALS OF CABANATUAN CITY,
Appellee,

-and-

FLORIDA R. OCA, in her capacity as City Treasurer of Cabanatuan City, Nueva Ecija,
Respondent-Appellee.
x- – – – – – – – – – – – – – – – – – – – – – – – – – – – /

RESOLUTION

On January 30, 2013, Decisions were rendered by this Board in the above-entitled cases the dispositive portions of which were as follows, respectively:

In CBAA Case No. L-120:

“WHEREFORE, premises considered, the instant Appeal is hereby DISMISSED for lack of merit.

“SO ORDERED.”

In CBAA Case No. L-121:

“WHEREFORE, premises considered, Judgment is hereby rendered:

“xxx

“(2) Otherwise, DISMISSING the instant Appeal for lack of merit.

“SO ORDERED.”

The instant “Joint Motion for Reconsideration” was filed by herein Petitioner-Appellant by way of registered mail on March 27, 2013, copies of which were received by this Board on April 5, 2013.

Alleging that it received copies of the assailed Decisions on March 12, 2013, Petitioner-Appellant submits that the twin Decisions of this Board were erroneous on the following grounds, to wit:
1. NGCP is exempt from the payment of real property tax on the subject properties pursuant to Section 9 of RA No. 9511, NGCP’s legislative franchise;
2. The “Beneficial User” theory does not apply to NGCP.
3. The subject real properties, specifically those described as “Land” and “Building” should continue to be classified as “Special Class” of real property, while those identified as “Machinery” should continue to be considered as “Exempt” from the payment of real property tax.

Respondents-Appellees filed their “Joint Comment and Opposition” by registered mail on April 24, 2013, copies of which were received by this Board on May 02, 2013.

DISCUSSION
First Ground:
NGCP is exempt from the payment of real property tax on the subject properties pursuant to Section 9 of RA No. 9511, NGCP’s legislative franchise.

We honestly believe that all the important aspects of the cases were amply covered in the respective Decisions being assailed by NGCP. However, in the remote possibility that we failed to deliver our point, we shall indulge Petitioner-Appellant.

NGCP insists that it is exempt from the payment of real property tax on the subject properties pursuant to Section 9 of RA No. 9511, NGCP’s legislative franchise, which is quoted by NGCP in its Appeal as follows:
“SEC. 9. Tax Provisions. – In consideration of the franchise and rights granted, the Grantee, its successors or assigns, shall pay a franchise tax equivalent to three percent (3%) of all gross receipts derived by the Grantee from its operation under this franchise. Said tax shall be in lieu of income tax and any and all taxes, duties, fees and charges of any kind, nature or description levied, established or collected by any authority whatsoever, local or national, on its franchise, rights, privileges, receipts, revenues and profits, and on properties used in connection with its franchise, from which taxes, duties and charges, the Grantee is hereby expressly exempted.

“Provided, That the Grantee, its successors or assigns, shall be liable to pay the same taxes on their real estate, buildings and personal property, exclusive of this franchise, as other corporations are now or hereby (sic) (should be “hereafter”) may be required by law to pay: Provided, further, That payment by Grantee of the concession fees due to PSALM under the concession agreement shall not be subject to income tax and value-added tax (VAT).” (Emphasis, CBAA’s)

NGCP believes that, in view of the “in lieu of all taxes” proviso in Section 9 of its legislative franchise, NGCP is exempt from all taxes including, especially, real property taxes.

Section 9 of RA 9511 contemplates of two groups of objects of taxation, which are:
1. The franchise, the rights and privileges connected therewith, and the receipts, revenues and profits derived from its operation; and

2. The properties used in connection with its franchise,

The objects of taxation of the first group listed above are the objects of the three percent (3%) franchise tax, as well as, the would-be objects of the income tax and any and all taxes which the franchise tax is in lieu of. These “objects of taxation” are personal properties. On the other hand, the objects of the real property tax are, as the name implies, real properties.

NGCP likewise believes that, in view of the phase “and on properties used in connection with its franchise, from which taxes, duties and charges, the Grantee is hereby expressly exempted” in Section 9 of its legislative franchise, NGCP is exempt from all taxes including, especially, real property taxes.

NGCP would have been correct had Congress not used the phrases “and on” and “from which taxes, duties and charges, the Grantee is hereby expressly exempted.” The phrase “and on” separates and distinguishes the “properties used in connection with its franchise” from the franchise itself. The phrase “from which taxes, duties and charges, the Grantee is hereby expressly exempted” implies the importation of the subject properties.

It is of common knowledge that customs duties, sales or compensating taxes or wharfage fees apply only to the importation of goods or materials from abroad, that gross receipts from the operation of a local franchise are not subject to customs duties, etc., and that a franchise is, in itself, a personal property. Simplified, said first paragraph of Section 9 of RA 9511 should appear as follows:
“SEC. 9. Tax Provisions. – In consideration of the franchise and rights granted, the Grantee, its successors or assigns, shall pay a franchise tax equivalent to three percent (3%) of all gross receipts derived by the Grantee from its operation under this franchise. Said tax shall be in lieu of:

“(a) income tax and any and all taxes . . . on its franchise, rights, privileges, receipts, revenues and profits, and

“(b) taxes, duties, fees and charges on properties used in connection with its franchise . . .

“Provided, That the Grantee, its successors or assigns, shall be liable to pay the same taxes as other corporations are now or hereafter may be required by law to pay on their:

“(a) real estate, buildings and

”(b) personal property, not including this franchise . . .”

The second paragraph of Section 9 of RA 9511 is quite clear: NGCP is liable for real property taxes. It is not our place to discuss the taxes on personal properties.

Second Ground:

The “Beneficial User” theory does not apply to NGCP.

Although a part of Section 234(a) of RA 7160 appears to be emphasized in the assailed Decisions, such part was not discussed or considered therein.

Third Ground:
The subject real properties, specifically those described as “Land” and “Building” should continue to be classified as “Special Class” of real property, while those identified as “Machinery” should continue to be considered as “Exempt” from the payment of real property tax.

This particular matter was thoroughly discussed and considered in the assailed Decisions.
WHEREFORE, there being no cogent reason to disturb the assailed Decisions, the instant Joint Motion for Reconsideration is hereby DENIED.

SO ORDERED.

Manila, Philippines, June 18, 2013.

SIGNED
OFELIA A. MARQUEZ
Chairman

SIGNED SIGNED
ROBERTO D. GEOTINA CAMILO L. MONTENEGRO
Member Member