Republic of the Philippines
CENTRAL BOARD OF ASSESSMENT APPEALS
M a n i l a
METROPOLITAN WATERWORKS AND SEWERAGE SYSTEM,
Petitioner-Appellant, CBAA CASE NO. L-98
(LBAA CASE NO. 2008-01)
-versus- Antipolo City
LOCAL BOARD OF ASSESSMENT APPEALS OF THE CITY OF ANTIPOLO,
THE CITY OF ANTIPOLO, THE CITY TREASURER AND THE CITY ASSESSOR OF ANTIPOLO CITY,
X- – – — – – – – – – – – – – – – – – – – – – – /
O R D E R
Before us is a Motion for Reconsideration of this Board’s Decision dated July 20, 2012 in the above-entitled case.
Alleging that it received a copy of the assailed Decision on 13 September 2012, Petitioner-Appellant Metropolitan Waterworks and Sewerage Authority (“MWSS”) filed the instant Motion by registered mail on September 28, 2012, which Motion eventually reached this Board on October 18, 2012.
Petitioner-Appellant’s “Arguments to Support Reconsideration” are as follows:
ARGUMENTS TO SUPPORT RECONSIDERATION
THE HONORABLE OFFICE ERRED IN RULING THAT MWSS IS NOT A GOVERNMENT INSTRUMENTALITY.
THE HONORABLE OFFICE ERRED IN RULING THAT MWSS IS LIABLE FOR THE PAYMENT OF REAL PROPERTY TAX BY VIRTUE OF THE WITHDRAWAL OF TAX EXEMPTIONS UNDER SEC. 234 OF THE LOCAL GOVERNMENT CODE.
THE HONORABLE OFFICE ERRED IN RULING THAT THE PROPERTIES SUBJECT OF THE CONTESTED ASSESSMENT ARE NOT PROPERTIES OF THE PUBLIC DOMINION.
THE HONORABLE OFFICE ERRED IN FAILING TO APPRECIATE THAT THE ASSESSMENT WILL CAUSE UNDUE DAMAGE TO THE PUBLIC.”
In our view, the above-listed “arguments” are actually the “grounds” for the instant Motion for Reconsideration. The same grounds were also the “errors” attributed by MWSS to the LBAA-Antipolo City Decision which is the subject of the Appeal to this Board.
Respondents-Appellees, in their “COMMENT/OPPOSITION (To the Motion for Reconsideration dated 28 September 2012)” dated November 5, 2012, which was received by this Board of November 20, 2012, stated:
“1. A reading of the Motion for Reconsideration would show that it merely reiterates substantially the arguments stated in the Appeal Memorandum dated July 31, 2009 and in the Memorandum dated April 1, 2011 of the Petitioner-Appellant;
“2. The Decision dated July 20, 2012 sought to be reconsidered is intelligently written and already discussed all the issues raised by the Petitioner-Appellant in its Appeal Memorandum, Memorandum, (sic) and in the Motion for Reconsideration;
“3. The Decision dated July 20, 2012 is fully supported by laws and jurisprudence;”
However, in view of the passage of R.A. 10149 which was signed into law by the President on June 06, 2011, we have to clarify the status of MWSS as an instrumentality of the National Government, vis-a-vis the real property tax.
Appellant MWSS, as specifically provided in Section 3(n) of R.A. 10149, is indeed a government instrumentality, thus:
“Section 3. Definition of Terms. –
“x x x
“(n) Government Instrumentalities with Corporate Powers (GICP)/Government Corporate Entities (GCE) refer to instrumentalities or agencies of the government, which are neither corporations nor agencies integrated within the departmental framework, but vested by law with special functions or jurisdiction, endowed with some if not all corporate powers, administering special funds, and enjoying operational autonomy usually through a charter including, but not limited to, the following: the Manila International Airport Authority (MIAA), the Philippine Ports Authority (PPA), the Philippine Deposit Insurance Corporation (PDIC), the Metropolitan Waterworks and Sewerage System (MWSS), the Laguna Lake Development Authority (LLDA), the Philippine Fisheries Development Authority (PFDA), the Bases Conversion and Development Authority (BCDA), the Cebu Port Authority (CPA), the Cagayan de Oro Port Authority, the San Fernando Valley Port Authority, the Local Water Utilities Administration (LWUA) and the Asian Productivity Organization (APO).” (Emphasis supplied)
It would seem that both Section 2(10) of the Introductory Provisions of the Administrative Code and Section 25, Chapter 6, Title V, Book IV of Executive Order No. 292 were impliedly modified by Section 3(n) of R.A. 10149.
Relying heavily on the Supreme Court’s Decisions in Manila International Airport Authority v. Court of Appeals (the “MIAA Case”), G.R. No. 155650, 20 July 2006, and in Philippine Fisheries Development Authority v. Court of Appeals (the “Philippine Fisheries Case”), G.R. No. 169836, 31 July 2007, Petitioner-Appellant claims that, being an instrumentality of the government, it is not subject to the payment of the real property tax by virtue of the provisions of Section 133(o) of R.A. 7160 (the “LGC”) which provides:
“SEC. 133.Common Limitations on the Taxing Powers of Local Government Units. – Unless otherwise provided herein, the exercise of the taxing powers of provinces, cities, municipalities, and barangays shall not extend to the levy of the following:
“x x x
“(o) Taxes, fees, or charges of any kind on the National Government, its agencies and instrumentalities, and local government units.”
With all due respect, Section 133(o) of the LGC was misapplied by the Court to the MIAA case. This particular Section is part of the provisions of Title One, Book II of the LGC which is titled “Local Government Taxation” and governs local taxes, fees, and charges imposable by Local Government Units (LGUs).
The applicable provisions is found in Title Two, Book II of the LGC which is titled “Real Property Taxation,” governs the real property tax which is imposed by the National Government, but administered by the provinces, cities and municipalities within the Metropolitan Manila Area as provided under Section 200 of the LGC, thus:
“SEC. 200. Administration of the Real Property Tax. – The provinces and cities, including the municipalities within the Metropolitan Manila Area, shall be primarily responsible for the proper, efficient and effective administration of the real property tax.”
The first Section of Title Two, Book II of the LGC provides:
“SEC. 197. Scope. – This Title shall govern the administration, appraisal, assessment, levy and collection of real property tax.” (Emphasis supplied)
The first Section of Title One, Book II of the LGC reads:
“SEC. 128. Scope. – The provisions herein shall govern the exercise by provinces, cities, municipalities, and barangays of their taxing and other revenue-raising powers.”
Pursuant to Section 128 under the “Local Government Taxation” of the LGC, all the local government units, including all municipalities and barangays, have the power to impose local taxes, fees, and other charges. On the other hand, only a province or city or a municipality within the Metropolitan Manila Area has the power to levy real property tax. Thus, Section 232 of the LGC provides:
“SEC. 232. Power to Levy Real Property Tax. – A province or city or a municipality within the Metropolitan Manila Area may levy an annual ad valorem tax on real property such as land, building, machinery, and other improvement not hereinafter specifically exempted.”
The “Local Government Taxation” and the “Real Property Taxation” are juxtaposed under Book II of the LGC and the provisions of the entire LGC are consecutively numbered from Section 1 to Section 536. The Supreme Court might have been misled by these facts and thought that the provisions of Title One, Book II of the LGC are applicable, not only to local taxes, fees, and charges, but also to real property taxes.
The provisions of Local Government Taxation (Title One, Book II) were substantially taken from the provisions of the “Local Tax Code” promulgated under PD 231 which took effect on July 1, 1973 and subsequently amended by PD 426 which took effect upon its issuance on May 30, 1974.
The provisions of the Real Property Taxation (Title Two, Book II), in turn, were substantially taken from the provisions of the “Real Property Tax Code”, PD 464, which was promulgated by the President on May 20, 1974 and took effect on June 1, 1974.
Considering their respective dates of proclamation, it may be safely concluded that the provisions of PD 231, as amended, were never intended to have overlapping effects with the provisions of PD 464 as far as real property taxation is concerned, just as the provisions of Title One, Book II of the LGC were never meant to encroach on or upon the domain of Title Two, Book II of the LGC.
Appellant MWSS says that our interpretation of Sections 133, 193 and 234 of the LGC is a “novel” one.
We disagree. Our said interpretation, which MWSS assails, coincides with the rulings of the Honorable Supreme Court in Benguet Corporation vs. Central Board of Assessment Appeals, et al., (the “Benguet Case), and in Luz R. Yamane, in her capacity as the City Treasurer of Makati City vs. BA Lepanto Condominium Corporation, (the “Yumane Case”).
In the Benguet Case, the Court ruled:
“Petitioner argues that realty taxes are local taxes because they are levied by local government units, citing Sec. 39 of P.D. 464, which provides:
‘Sec. 39. Rates of Levy. – The provincial, city or municipal board or council shall fix a uniform rate of real property tax applicable to their respective localities x xxx’
“While local government units are charged with fixing the rate of real property taxes, it does not necessarily follow from that authority the determination of whether or not to impose the tax. In fact, local governments have no alternative but to collect taxes as mandated in Sec. 38 of the Real Property Tax Code, which states:
‘Sec. 38. Incidence of Real Property Tax. – There shall be levied, assessed and collected in all provinces, cities and municipalities an annual ad valorem tax on real property, such as land, buildings, machinery and other improvements affixed or attached to real property not hereinafter specifically exempted.’
“It is thus clear from the foregoing that it is the national government, expressing itself through the legislative branch, that levies the real property tax. Consequently, when local governments are required to fix the rates, they are merely constituted as agents of the national government in the enforcement of the Real Property Tax Code. The delegation of the taxing power is not even involved here because the national government has already imposed realty tax in Sec. 38 above-quoted, leaving only the enforcement to be done by local governments.
“The challenge of petitioner against the applicability of Meralco Securities Industrial Corporation v. Central Board of Assessment Appeals, et al. (199 Phil. 453; G.R. No. L-46245, May 31, 1982), is unavailing, absent any cogent reason to overturn the same. Thus –
‘Meralco Securities argues that the realty tax is a local tax or levy and not a tax of general application. This argument is untenable because the realty tax has always been imposed by the lawmaking body and later by the President of the Philippines in the exercise of his lawmaking powers, as shown in Sections 342 et seq. of the Revised Administrative Code, Act No. 3995, Commonwealth Act No. 470 and Presidential Decree No. 464.
‘The realty tax is enforced throughout the Philippines and not merely in a particular municipality or city but the proceeds of the tax accrue to the province, city, municipality and barrio where the realty taxed is situated (Sec. 86, P.D. No. 464). In contrast, a local tax is imposed by the municipal or city council by virtue of the Local Tax Code, Presidential Decree No. 231, which took effect on July 1, 1973 (69 O.G. 6197).’
“Consequently, the provisions of Sec. 52 of the Mineral Resources Development Decree of 1974 (P.D. 463), and Secs. 5 (m), 17 (d) and 22 (c) of The Local Tax Code (P.D. 231) cited by petitioner are mere limitations on the taxing power of local government units; they are not pertinent to the issue before Us and, therefore, cannot and should not affect the imposition of real property tax by the national government.” (Emphasis supplied) (Sections 38 and 39 of P.D. No. 464 are now Sections 232 and 233, respectively of Title Two, Book II of the LGC.)
In the Yamane Case, the Court, while considering whether a local government unit can, under the Local Government Code, impel a condominium corporation to pay business taxes, stated:
“The most well-known mode of local government taxation is perhaps the real property tax, which is governed by Title II, Book II of the Code, and which bears no application in this case. A different set of provisions, found under Title I of Book II, governs other taxes imposable by local government units, including business taxes. . . .” (Emphasis supplied)
The Local Tax Code under P.D. 231, as amended, evolved into Chapter 2, Title One, Book II of the LGC enumerates the local taxes, fees or charges which the LGUs may levy, thus:
“Article One – Provinces
SEC. 134. Scope of Taxing Powers. – Except as otherwise provided in this Code, the province may levy only the taxes, fees, and charges as provided in this Article. (Emphasis supplied)
SEC. 135. Taxes on Transfer of Real Property Ownership. . . .
SEC. 136. Tax on Business of Printing and Publication. . . .
SEC. 137. Franchise Tax. . . .
SEC. 138. Tax on Sand, Gravel and Other Quarry Resources. . . .
SEC. 139. Professional Tax. . . .
SEC. 140. Amusement Tax. . . .
SEC. 141. Annual Fixed Tax for Every Delivery Truck or Van of Manufacturers or Producers, Wholesalers of, Dealers, or Retailers in, Certain Products.
Article Two – Municipalities
SEC. 142. Scope o Taxing Powers. – Except as otherwise provided in this Code, municipalities may levy taxes, fees, and charges not otherwise levied by provinces.
SEC. 143. Tax on Business. . . .
SEC. 147. Fees and Charges. . . .
SEC. 148. Fees for Sealing and Licensing of Weights and Measures. . . .
SEC. 149. Fishery Rentals.
Article Three – Cities
SEC. 151. Scope of Taxing Powers. – Except as otherwise provided in this Code, the city may levy the taxes, fees, and charges which the province or municipality may impose: x xx.
Article Four – Barangays
SEC. 152. Scope of Taxing Powers. – The barangays may levy taxes, fees, and charges, as provided in this Article, which shall exclusively accrue to them:
(a) Taxes – On stores or retailers with fixed business establishments . .
(b) Service Fees or Charges – Barangays may collect reasonable fees or charges for services rendered . . .
(c) Barangay Clearance – No city or municipality may issue any license or permit for any business or activity unless a clearance is first obtained from the barangay where such business or activity is located or conducted. For such clearance, the sangguniang barangay may impose a reasonable fee. . .
(d) Other Fees and Charges – The barangay may levy reasonable fees and charges:
(1) On commercial breeding of fighting cocks, cockfighting and cockpits;
(2) On places of recreation which charge admission fees; and
(3) On billboards, signboards, neon signs, and outdoor advertisements.
Article Five – Common Revenue-Raising Powers
SEC. 153. – Service Fees and Charges. – Local government units may impose and collect such reasonable fees and charges for services rendered.
SEC. 154. Public Utility Charges. . . .
SEC. 155. Toll Fees or Charges. . . .
Article Six – Community Tax
SEC. 156. Community Tax. – Cities or municipalities may levy a community tax in accordance with the provisions of this Article.”
The real property tax is not mentioned in Chapter 2 of Title One, Book II, or anywhere in said Title. It follows that, under said Title One, Book II of the Code, the LGUs have no power to impose real property taxes. Therefore, it would be quite absurd to limit the LGUs’ power to levy the real property tax when such power does not exist in the first place. The real property tax is governed by Title Two, Book II – the law on real property taxation – of the Code.
Section 133(o) under “Local Government Taxation” (Title One, Book II of the LGC) prohibits the LGUs from imposing local taxes, fees and charges on the National Government, its agencies and instrumentalities, and other LGUs. In other words, the National Government, its agencies and instrumentalities and other LGUs are exempt from payment of the local taxes, fees and charges.
The exemption of the real properties owned by the Republic of the Philippines and any of its political subdivisions from payment of the real property tax is found in Section 234(a) under “Real Property Taxation” (Title Two, Book II of the LGC), thus:
“SEC. 234. Exemptions from Real Property Taxation. – The following are exempted from payment of the real property tax:
“(a) Real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial use thereof has been granted, for consideration or otherwise, to a taxable person;”
Now, if the Honorable Supreme Court was or is correct in exempting government instrumentalities from payment of the real property tax by virtue of Section 133(o) of the LGC, Section 234(a) of the same Code is rendered ineffectual. In fact, since the Honorable Supreme Court did not state that, of the provisions on “Local Government Taxation”, only Section 133(o) is applicable to Real Property Taxation, it follows that all of the provisions of Title One, Book II of the LGC are also applicable, not only to local taxes, fees, and charges, but to real property taxes as well. In which case, Title Two, Book II (Real Property Taxation) of the LGC would have no use at all.
On the doctrine of stare decisis, we believe that this doctrine applies only when the precedent-setting decision on a given subject was correctly rendered and the times have not altered the perceptions that existed when the same precedent-setting decision was rendered. But, what if the supposedly precedent-setting decision is patently erroneous?
The Honorable Supreme Court, in a number of cases, had the occasion to rule on the doctrine of stare decisis, thus:
“The principle of stare decisis does not mean blind adherence to precedents. The doctrines or rule laid down, which has been followed for years, no matter how sound it may be, if found to be contrary to law, must be abandoned. The principle of stare decisis does not and should not apply when there is conflict between the precedent and the law. The duty of this Court is to forsake and abandon any doctrine or rule found to be in violation of the law in force.” (Jose Tan Chong v. Secretary of Labor, G.R. No. 47616, September 16, 1947; and Lam Swee Sang v. The Commonwealth of the Philippines, G.R. No. 47623, September 16, 1947, 79 Phil. 249).
“The rule of stare decisis is entitled to respect. Stability in the law, particularly in the business field, is desirable. But idolatrous reverence for precedent, simply as precedent, no longer rules. More important than anything else is that the court should be right.” (Philippine Trust Company et al. v. L. P. Mitchell et al.,G.R. No.L-38398 December 8, 1933, 59 Phil. 39).
“Thus, the Court rules that the Office of the Solicitor General is not authorized to represent a public official at any stage of a criminal case. For this reason, the doctrine announced in Anti-Graft League of the Philippines, Inc. v. Hon. Ortega and Solicitor General v. Garrido, and all decided cases affirming the same; in so far as they are inconsistent with this pronouncement, should be deemed abandoned. The principle of stare decisis notwithstanding, it is well-settled that a doctrine which should be abandoned or modified should be abandoned or modified accordingly. After all, more important than anything else is that this Court should be right.” (Iluminado Urbano and Marcial Acapulco vs. Francisco I. Chavez, et al., G.R. No. 87977 March 19, 1990 and Nemesio G. Co vs. Regional Trial Court of Pasig [Branch 165], et al., G.R. No. 88578 March 19, 1990, citing Phil Trust Company and Smith, Bell & Co. v. Mitchell, 59 Phil. 30, 36 (1933), cited with approval in Koppel (Phil.), Inc. v. Yatco, 77 Phil, 496, 515 (1946) and Olaguer v. Military Commission No. 34, 150 SCRA 144,165 (1987).
Incidentally the “Benguet Case” (29 June 1992) and the “Yumane Case” (25 October 2005) preceded the “MIAA Case” (20 July 2006) and the “Philippine Fisheries Case” (31 July 2007).
WHEREFORE, premises considered, the instant Motion for Reconsideration is hereby DENIED.
Manila, Philippines, February 27, 2013.
OFELIA A. MARQUEZ
ROBERTO D. GEOTINA CAMILO L. MONTENEGRO