Republic of the Philippines

CENTRAL BOARD OF ASSESSMENT APPEALS M a n i l a

NATIONAL GRID CORPORATION OF THE PHILIPPINES,

Petitioner-Appellant,

-versus-

CBAA CASE NO. M-32 LBAA Case No.1
Series of 2009

THE LOCAL BOARD OF ASSESSMENT APPEALS OF THE CITY OF BUTUAN,
Appellee,

-and-

THE CITY TREASURER OF THE CITY OF BUTUAN,
Respondent-Appellee, x—————————————————x

O R D E R

Before us is a Motion for Reconsideration of the Decision rendered on

September 2, 2010 by this Board in the above-entitled case. The dispositive

portion of said Decision reads as follows:

“WHEREFORE, premises considered, the instant Appeal is hereby DISMISSED for lack of merit. Respondent City Assessor of Butuan is hereby ORDERED to revise/correct the subject tax declarations to reflect thereon the following:

‘1. National Transmission Commission (TANSCO) (sic) as the owner of the subject real properties pursuant to Section 8 of Republic Act No. 9136, otherwise known as the ‘Electric Power Industry Reform Act of 2001’’;

‘2. National Grid Corporation of the Philippines (NGCP) as the ‘beneficial user’ of said properties; and

‘3. The assessment levels as provided for under Sections 218(b)(3) for buildings and improvements thereon and 218(c) for industrial machinery, both of the LGC.

‘The dispositive portion of the Decision rendered on December 28, 2009 by the Local Board of Assessment Appeals for the City of Butuan is hereby so amended.’

ROBERTO D. GEOTINA Member

CBAA CASE NO. M-32

R E S O L U T I O N Page 2 of 5

Alleging that it received a copy of said decision on October 5, 2010,

Petitioner-Appellant NGCP posted in its Motion for Reconsideration at the

Quezon City Central Post Office via registered mail on October 20, 2010. Said

Motion reached this Board on October 28, 2010.

Petitioner-Appellant’s Motion for Reconsideration is based on the

following grounds, thus:

1. The Honorable CBAA may have overlooked the fact that Section 9 of Republic Act No. 9511 had expressly granted tax exemption to the Appellant “on properties used in connection with its franchise”, and thus, Appellant should have been declared as exempted from paying realty tax on “the subject properties that are used in connection with its franchise.”

2. The Honorable CBAA should have considered that the realty taxes are obligations of TransCo and National Power Corporation (NPC), both government owned and controlled corporations (GOCC), and that the provisions of Section 234 (c) and 218 (d) are applicable to both TransCo and NPC.

Both “grounds” were thoroughly discussed and considered by this Board

in its Decision of September 2, 2010. NGCP, however, brought up in its instant

motion two (2) new matters, one for each ground.

In support of its assertion under the first ground that Petitioner-Appellant

is exempt from payment of the real property tax because of the phrase found in

Section 9 of RA 9511 which says “properties used in connection with its

franchise, from which taxes, duties and charges the Grantee is hereby

expressly exempted”, NGCP attached to its Motion, as Annex “A” thereof, a

letter from the Department of Finance addressed to the National Grid

Corporation of the Philippines (NGCP), which letter is reproduced hereunder as

follows:

ROBERTO D. GEOTINA Member

CBAA CASE NO. M-32

R E S O L U T I O N Page 3 of 5

“March 3, 2009

Mr. Walter W. Brown President and CEO
National Grid Corporation of the Philippines (NGCP) Quezon Ave. cor. BIR Road, Diliman
Quezon City

Re: Duties and taxes Exemption of NGCP under Republic Act No. 9511

Sir:

This refers to your letter dated February 19, 2009 requesting this Office to affirm NGCP’s exemption from duties, taxes, fees and charges levied, established or collected by any authority whatsoever, local or national, pursuant to RA 9511.

Pertinent provisions of Section 9 of RA 9511 read as follows:

‘Section 9. Tax Provisions. – In consideration of the franchise and rights hereby 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 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. (Emphasis Ours) XXX’

In reply, it may be deduced from the foregoing provision of law that the grantee (NGCP) is exempted from payment of duties and taxes on its importation. It was clearly and distinctly granted by the legislative body under the aforesaid law. It is a basic precept in statutory construction that when a law is clear and unambiguous, there is nothing a body can do about it rather than enforcing it.

Accordingly, this Department Affirms the duty and tax free exemption of the Grantee/NGCP and the grantee may avail its incentives/duty/tax-free exemption under Section 9 of RA 9511 upon submission to this Department (Revenue Office) copies (3 sets) of Letter Request, Sworn Statement and Shipping/Import documents establishing that the said corporation is the importer of record.

Please be guided accordingly.

Very truly yours,

By authority of the Secretary:

SGD: ESTELA V. SALES Undersecretary
Legal and Revenue Operations Group”

The above-quoted letter from the Department of Finance actually affirms

what we stated in our said Decision that the phrase “properties used in

connection with its franchise” refers to properties imported from abroad, the

ROBERTO D. GEOTINA Member

CBAA CASE NO. M-32

R E S O L U T I O N Page 4 of 5

importation of which is exempt from payment of customs duties,

compensating taxes and related charges. The same letter also confirms the

fact that said “properties” are, per se, personal in nature, as contra-

distinguished from real properties. So, it quite ridiculous to talk about these

“properties” being exempted from payment of the realty tax. Everyone knows

that only real properties are subject to the realty tax. Moreover, it bears

reminding the Petitioner-Appellant that the status of being exempt from

payment of the real property tax carries with it the sine qua non that these

“properties”, when found in the hands of persons other than the Grantee, are

subject to payment of the realty tax.

Anent the second ground, NGCP somewhat altered its stand. Instead of

claiming full exemption from the taxes as assessed by Respondent Assessor,

as NGCP did beforehand, Petitioner-Appellant now argues that the taxes

supposedly due before 15 January 2009 should have been assessed and paid

by TransCo or NPC. Thus, in paragraph No. 2.1 of its Motion, NGCP states:

“2.1 Contrary to the Honorable CBAA’s findings, Appellant does not imply that it is now in the same category or situation as TransCo’s before the Appellant assumed the electric power transmission functions of Transco on 15 January 2009. Neither does Appellant argue that since it is now using the properties in question, it is entitled to the privileges used to be enjoyed by TranCo (sic) prior to the take-over date. Instead, what Appellant would like to impress upon this Honorable Board is that Appellant came to possession of the subject properties starting only on January 15, 2009. Hence, the tax liability, if any, on the subject properties prior to 15 January 2009 should have been assessed and paid by TransCo or NPC.” (underlining supplied)

The Board will not countenance this shift by the Petitioner-Appellant. In

Aguinaldo Industries Corporation vs. Commissioner of Internal Revenue and

the Court of Tax Appeals (L-29790, February 25, 1982; 112 SCRA 136), the

Supreme Court said:

ROBERTO D. GEOTINA Member

CBAA CASE NO. M-32

R E S O L U T I O N Page 5 of 5

“To allow a litigant to assume a different posture when he comes before the court and challenge the position he had accepted at the administrative level, would be to sanction a procedure whereby the court – which is supposed to review administrative determination – would not review, but determine and decide for the first time, a question not raised in the administrative forum. This cannot be permitted, for the same reason that underlies the requirement of prior exhaustion of administrative remedies to give administrative authorities the prior opportunity to decide controversies within their competence, and in much the same way that, on the judicial level, issues not raised in the lower court cannot be raised for the first time on appeal.”

Petitioner-Appellant should have brought this matter up in its appeal

before the Local Board of Assessment Appeals of the City of Butuan. By

bringing this matter up for the first time in its current Motion for Reconsideration,

this Board – which is supposed to review determinations by the Local Board –

would not review, but determine and decide for the first time, a question not

raised in the Local Board.

WHEREFORE, there being no cogent reason to disturb our Decision

dated September 2, 2010, the instant Motion for Reconsideration is hereby

DENIED for lack of merit.

SO ORDERED.

Manila, Philippines, June 7, 2011.

OFELIA A. MARQUEZ Chairman

RAFAEL O. CORTES Member

ROBERTO D. GEOTINA Member

ROBERTO D. GEOTINA Member