A denial of the tax-exempt status of NPC, as sought by respondents, would not only be legally untenable and subversive of doctrinal stability but would also lead to disastrous practical consequences. It should be noted that in this case, respondent province has already auctioned off, purchased and caused to be registered in its name the subject real properties of petitioner on which the Agus II Hydroelectric Power Plant Complex is built. Thus, should the FIRB resolutions be deemed void, then the ownership of the auctioned properties including the hydro-electric plant would be legally vested in respondent province. Additionally, other local government entities might even be induced to covet and grab other properties of the NPC in the guise of collecting local taxes. The far-reaching consequence of such eventuality would not be difficult to imagine. Definitely, it would seriously impair the capacity of the National Power Corporation to fulfill its statutory mandate to carry out the "total electrification of the Philippines through the development of power from all sources to meet the needs of industrial development and rural electrification."
In the end, the Supreme Court has the constitutional duty not only of interpreting and applying the law in accordance with prior doctrines but also of protecting society from the improvidence and wantonness wrought by needless upheavals in such interpretations and applications. Interest rei publicae ut finis sit litium.
NPC vs. Province of Lanao del Sur, et. al.
G.R. No. 96700 November 19, 1996
PANGANIBAN, J.:
A Case Digest
FACTS:
Petitioner National Power Corporation (NPC) is the owner of certain real properties situated in Saguiaran, Lanao del Sur, more particularly described in Tax Declarations issued by the Office of the Provincial Assessor of Lanao del Sur. Said properties comprise petitioner's Agus II Hydroelectric Power Plant Complex. Petitioner was assessed real estate taxes on said properties in the amount of one hundred fifty four million one hundred fourteen thousand eight hundred fifty four pesos and eighty two centavos (P154,114,854.82) covering the period from June 14, 1984 to December 31, 1989, allegedly because petitioner's exemption from realty taxes had been withdrawn.
Two demand letters was sent by respondent provincial treasurer to the petitioner for the payment of real property taxes due on the properties. With the second demand letter issuing a warning that unless the obligation was settled, legal remedies would be resorted to by the respondent province.
On December 14, 1990, a Notice of Auction (Sale) covering the subject properties was served on petitioner. A copy of said notice was posted for one month from December 17, 1990 to January 17, 1991 at the main entrance of the provincial capitol building in Marawi City and at the plant site in Saguiaran, Lanao del Sur. It was also published in the issues of the Philippine Daily Inquirer and of the Lake Lanao Times in various dates.
The auction sale was scheduled to be held at 10:00 A.M. of January 22, 1991 at the Office of the Provincial Treasurer in Marawi City.
On January 18, 1991, petitioner filed directly with the Court the instant petition for prohibition with prayer for a writ of preliminary injunction and/or temporary restraining order. On January 21, 1991, the Court issued a temporary restraining order enjoining respondents from proceeding with and conducting the auction sale of the subject properties.
The auction sale was however held as scheduled with the Province of Lanao del Sur as the sole bidder. A certificate of sale was immediately issued and registered with the Register of Deeds of the province at 1:30 p.m. of the same day.
At 2:30 and 3:00 p.m. of the same day, respondents provincial governor and provincial treasurer respectively received telegraphic notices of this Court's restraining order.
Respondents submitted their comment on February 14, 1991 to which petitioner filed its reply on April 29, 1991. Rejoinder was submitted on October 25, 1993. Thereafter, the Court gave due course to the petition and the parties thus filed their respective memoranda.
ISSUE/S:
1. WON petitioner has ceased to enjoy its tax and duty exemption privileges, including its exemption from payment of real property taxes.
2. WON respondent province and provincial officials can validly and lawfully assess real property taxes for the period June 14, 1984 to December 31, 1989 against, and thereafter sell at public auction, the subject properties of petitioner to effect collection of alleged deficiencies in the payment of such taxes.
RULING:
1. Although Section 1 of PD 1931 withdrew all tax exemptions presumably including those of petitioner, Section 2 thereof authorized and empowered the President and/or the Minister of Finance to restore the same to deserving entities. In order to reinstate the petitioner's tax exemptions, Hon. De Roda, Jr., in his concurrent capacities as Acting Minister of Finance and as Acting Chairman of FIRB, signed FIRB Resolution No. 10-85 which was made effective as of June 11, 1984, the promulgation date of PD 1931, until June 30, 1985. On the other hand, by virtue of FIRB Resolution No. 1-86, Hon. Virata fully restored the tax exemption as of July 1, 1985, to continue for an indefinite period. He also signed the same in his dual capacities as Minister of Finance and as Chairman of the FIRB. The resolution specifically provided that:
2. The NPC as a government corporation is exempt from the real property tax on land and improvements owned by it . . . pursuant to the provisions of Section 40 (a) of the Real Property Tax Code, as amended.
While EO 93 again withdrew the tax exemption of petitioner, through its Section 1, as follows:
Sec. 1. The provisions of any general or special law to the contrary notwithstanding, all tax and duty incentives granted to government and private entities are hereby withdrawn, except:
xxx xxx xxx
f) those approved by the President upon the recommendation of the Fiscal Incentives Review Board.
nevertheless, it also stated:
Sec. 2. The Fiscal Incentives Review Board created under PD 776, as amended, is hereby authorized to:
(a) restore tax and/or duty exemptions withdrawn hereunder in whole or in part; (emphasis supplied)
Pursuant thereto, FIRB Resolution No. 17-87 restored the tax exemption privileges of the petitioner effective March 10, 1987. Again, the resolution was signed by De Roda, Jr. in his dual capacities as Acting Secretary of Finance and as Chairman, FIRB. This resolution was confirmed and approved by then Acting Executive Secretary Macaraig, by the authority of the President.
Considering the entire chain of events, it is clear that petitioner's tax exemptions for the period in question (1984-1989) had effectively been preserved intact by virtue of their restoration through FIRB resolutions.
There can thus be no question that petitioner's tax exemptions withdrawn by PD 1931 were validly restored by FIRB Resolutions Nos. 10-85 and 1-86. Again withdrawn by EO 93, they were once more restored by FIRB Resolution No. 17-87, effective as of March 10, 1987. Moreover, this Court, in the same case of Maceda vs. Macaraig, Jr., reaffirmed the determination in Albay that EO 93 along with PDs 776 and were 1931 were all valid, and that FIRB Resolution No. 17-87 and the tax exemptions restored thereunder were "valid and effective." The Court in Maceda also held —
True it is that the then Secretary of Justice in Opinion No. 77, dated August 6, 1977 was of the view that the powers conferred upon the FIRB by Sections 2(a), (b), (c) and (d) of Executive Order No. 93 constitute undue delegation of legislative power and is therefore unconstitutional. However, he was overruled by the respondent Executive Secretary in a letter to the Secretary of Finance dated March 30, 1989. The Executive Secretary, by authority of the President, has the power to modify, alter or reverse the construction of a statute given by a department secretary.
and laid emphasis on the fact that EO 93 constituted a valid delegation of legislative power to the FIRB, thus:
The latest in our jurisprudence indicates that delegation of legislative power has become the rule and its non-delegation the exception. The reason is the increasing complexity of modern life and many technical fields of governmental functions as in matters pertaining to tax exemptions. This is coupled by the growing inability of the legislature to cope directly with the many problems demanding its attention. The growth of society has ramified its activities and created peculiar and sophisticated problems that the legislature cannot be expected reasonably to comprehend. Specialization even in legislation has become necessary. To many of the problems attendant upon present day undertakings, the legislature may not have the competence, let alone the interest and the time, to provide the required direct and efficacious, not to say specific solutions.
The inescapable conclusion is that the tax exemption privileges of petitioner had been validly restored and preserved by said FIRB resolutions.
The Court has consistently held that "(r)epeals by implication are not favored, and will not be decreed, unless it is manifest that the legislature so intended. As laws are presumed to be passed with deliberation and with full knowledge of all existing ones on the subject, it is but reasonable to conclude that in passing a statute it was not intended to interfere with or abrogate any former law relating to same matter, unless the repugnancy between the two is not only irreconcilable, but also clear and convincing, and flowing necessarily from the language used, unless the later act fully embraces the subject matter of the earlier, or unless the reason for the earlier act is beyond peradventure removed. Hence, every effort must be used to make all acts stand and if, by any reasonable construction, they can be reconciled, the later act will not operate as a repeal of the earlier."
2.
Main Issue: Subject Properties Exempt From Realty Taxes
The Court held that the exemption is not only legally defensible, but also logically unassailable. The properties in question comprise the site of the entire Agus II Hydroelectric Power Plant Complex, which generates and supplies relatively cheap electricity to the island of Mindanao. These are government properties, wholly owned by petitioner and devoted directly and solely for public service and utilized in the implementation of the state policy of bringing about the total electrification of the country at the least cost to the public, through the development of power from all sources to meet the needs of industrial development and rural electrification. It can be noted, from RA 6395, PD 380 and PD 938, that petitioner's non-profit character has been maintained throughout its existence, and that petitioner is mandated to devote all its returns from capital investment and excess revenues from operations to its expansion. On account thereof, and to enable petitioner to pay its indebtedness and obligations and in furtherance of the state policy on electrification and power generation, petitioner has always been exempted from taxes.
Consequently, the assessment and levy on (as well as the sale of) the properties of petitioner by respondents were null and void for having been in made in violation of Section 10 of P.D. 938 and Section 40 (a) of the Real Property Tax Code.
The Court hastened to point out that the foregoing ruling is solely with respect to the purported realty tax liabilities of petitioner for the period from June 14, 1984 to December 31, 1989. The Court, in this Decision, however, did not rule upon the effect (if any) of Republic Act No. 7160, otherwise known as the Local Government Code of 1991, upon petitioner's tax-exempt status; it merely make mention of the fact that the exemption claimed by petitioner is partly based on PD 464 which, though repealed by the Local Government Code in its paragraph (c), Section 534, Title Four of Book IV, was still good law during the period the exemption was being claimed in the instant case.
Nullity of the Auction Sale of Petitioner's Properties
Inasmuch as the realty tax assessment levied against and auction sale of petitioner's properties had been premised on respondents' erroneous belief that FIRB Resolutions Nos. 10-85, 1-86 and 17-87 are void, the judicial declaration of the validity of said resolutions ipso jure renders such assessment and sale void.
The assessment of realty tax being void, petitioner never became delinquent in the payment of said taxes to respondent province, and the latter never acquired any right to sell nor to purchase the said properties at auction. In short, there were never any taxes, delinquent or otherwise, to satisfy. This is borne out by Section 65 of the Real Property Tax Code, by virtue of which respondent Provincial Treasurer was authorized to sell real property at auction:
Sec. 65. Notice of delinquency in the payment of the real property tax. — Upon the real property tax or any installment thereof becoming delinquent, the provincial or city treasurer shall immediately cause notice of the fact to be posted . . .
Such notice shall specify the date upon which the tax became delinquent, and shall state . . . that unless the tax and penalties be paid before the expiration of the year for which the tax is due, or the tax shall have been judicially set aside, the entire delinquent real property will be sold at public auction, and that thereafter the full title to the property will be and remain with the purchaser, subject only to the right of the delinquent taxpayer or any other person in his behalf to redeem the sold property within one year from the date of sale.
As clearly spelled out above, the power to sell at public auction is premised on the real property tax or any portion thereof first becoming delinquent. The properties in this case being exempt from payment of realty taxes, no such delinquency was possible to begin with.
Further, Section 73 of the Real Property Tax Code, as amended, excludes properties of the petitioner from advertisement of real properties to be sold at public auction. Section 73 provides in part:
Sec. 73. Advertisement of sale of real property at public auction. — After the expiration of the year for which the tax is due, the province or city treasurer shall advertise the sale at public auction of the entire delinquent real property, except real property mentioned in subsection (a) of Section forty hereof , to satisfy all the taxes and penalties due and the costs of sale. . . .
The fact that the telegraphic temporary restraining order issued by this Court was received by the respondent governor of Lanao del Sur at 2:30 p.m. and by respondent provincial treasurer at 3:00 p.m. of January 22, 1991, or an hour and an hour and a half, respectively, after the registration of the sale with the Register of Deeds of the province, and several hours after the close of the auction sale, is of no moment. Ordinarily, this Court would have been overjoyed to hear about said Register of Deeds (or any government functionary for that matter) moving with blinding speed, except that in this case, it is more than patent that such precipitate action was prompted not in the least by respondents' anticipation that this Court was about to act on petitioner's application for a writ of preliminary injunction and/or temporary restraining order. The respondents' all-too-obvious attempt at rendering nugatory and inutile any injunctive relief this Court may grant is useless and brings them only rebuke and condemnation. Clearly, legally and equitably rooted in and proceeding from the foregoing discussion is the ineludible conclusion that the auction sale and registration of subject properties are totally bereft of any legal basis and therefore null and void, and cannot vest title over the said real properties nor the hydroelectric power plant complex built upon them, in favor of respondent province.
WHEREFORE, the petition is hereby GRANTED. Judgment is hereby rendered:
a) ENJOINING respondents and their agents from selling and disposing of the subject properties of petitioner;
b) DECLARING the auction sale conducted on January 22, 1991 and the registration of the same as NULL AND VOID;
c) ORDERING the Register of Deeds of Lanao del Sur to CANCEL the registration of the auction sale in favor of respondent province; and
d) HOLDING that said properties including the hydroelectric power plant complex thereat remain in petitioner's ownership and control as if the assessment and auction sale never took place.
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