NATIONAL POWER CORPORATION V. BENGUET under protest, a condition sine qua non for appeal to the LBAA.

Imposition of RPT; Govt Property Exempt | Nov. 14, 2016 | G.R. No. 209303 | Peralta, J.
ARGUMENT OF NPC:
PETITIONER: NATIONAL POWER CORPORATION (NPC) NPC - NPC alleges that payment under protest under Section 252 of the LGC is
RESPONDENTS: THE PROVINCIAL TREASURER OF BENGUET, THE PROVINCIAL required when the reasonableness of the amount assessed is being questioned.
ASSESSOR OF BENGUET, THE MUNICIPAL TREASURER OF ITOGON, BENGUET AND
Challenging the very authority and power of the assessor to impose the assessment
THE MUNICIPAL ASSESSOR OF ITOGON, BENGUET (Benguet)
and of the treasurer to collect the tax is an attack on the very validity on any increase
DOCTRINE: A GOCC (in this case NPC) must comply with the requisites of 1)
and not merely on the amounts of increase in tax. Thus, such payment is not a
claiming for tax exemption of its real property within 30 days from filing of tax
condition sine qua non for the LBAA to entertain the NPC's challenge on the validity
declaration (Sec. 206) and 2) payment under protest (Sec. 252) before its written
of the tax imposed on its tax-exempt properties.
administrative may be entertained.
ISSUE/S & RATIO:
FACTS:
Province of Benguet assessed and demanded payment of RPT from NPC
1. W/N NPC must have paid under protest before their appeal to the LBAA can
● 2000: Sometime in May 2000, the Municipal Assessor of Itogon, Benguet
be entertained? YES.
assessed NPC the amount of P62,645,668.80 real property tax (RPT) for 8
● At the outset, settled is the rule that should the taxpayer/real property owner
properties located within the Binga Hydro-Electric Power Plant.
question the excessiveness or reasonableness of the assessment, Section
● 2006: NPC received a letter dated February 16, 2006 from OIC-Provincial
2521 of the LGC of 1991 directs that the taxpayer should first pay the tax due
Treasurer of Benguet demanding the payment of real property tax
before his protest can be entertained.
delinquency in the amount of P62,645,668.80.
● As settled in jurisprudence, a claim for exemption from the payment of real
NPC challenged the legality of the assessment before the LBAA and filed letters for
property taxes does not actually question the assessor's authority to assess
exemption with the Municipal Assessor of Itogon
and collect such taxes, but pertains to the reasonableness or correctness of
● 2006: NPC challenged before the Local Board of Assessment Appeals
the assessment by the local assessor, a question of fact which should be
(LBAA) the legality of the assessment and the authority of the respondents
resolved, at the very first instance, by the LBAA.
to assess and collect real property taxes from it when its properties are
● Section 2062 of the LGC categorically provides that every person by or for
exempt pursuant to Section 234 (b) and (c) of the LGC. In the letters
dated September 3, 2000 and April 19, 2001, NPC filed its requests for
exemption, which were not acted upon. 1 LGC SEC. 252. Payment Under Protest. — (a) No protest shall be entertained unless the
○ The Province argued in their answer that NPC’s properties were taxpayer first pays the tax. There shall be annotated on the tax receipts the words "paid under
protest". The protest in writing must be filed within thirty (30) days from payment of the tax to the
NOT EXEMPT since the properties were classified in their tax
provincial, city treasurer, or municipal treasurer, in the case of a municipality within Metropolitan
declarations as "industrial," "for industrial use," or "machineries" Area, who shall decide the protest within sixty (60) days from receipt.
and "equipment." There was no evidence that the properties were
being used for generation and transmission of electric power. (b) The tax or a portion thereof paid under protest shall be held in trust by the treasurer
● LBAA: DEFERRED PROCEEDINGS upon NPC’s payment under protest of concerned.
the assessed amount or upon filing of a surety bond to cover the tax.
NPC’s petition for review with the CBAA claiming that payment under protest was not (c) In the event that the protest is finally decided in favor of the taxpayer, the amount or portion
required of the tax protested shall be refunded to the protestant, or applied as tax credits against his
existing or future tax liability.
● NPC filed a petition for review before the Central Board of Assessment
Appeals (CBAA) claiming that payment under protest was not required (d) In the event that the protest is denied or upon the lapse of the sixty-day period prescribed in
before it could challenge the authority of respondents to assess tax on tax subparagraph (a), the taxpayer may avail of the remedies as provided for in Chapter 3, Title
exempt properties before the LBAA. Two, Book II of this Code.
○ The Province reiterated their contentions about the taxability of the
properties, and that pursuant to Sec. 252 of the LGC, payment There shall be annotated on the tax receipts the words "paid under protest." It is only after the
under protest was a necessary condition to a protest against the taxpayer has paid the tax due that he may file a protest in writing within 30 days from payment of
assessment issued by respondents. the tax to the Provincial, City or Municipal Treasurer, who shall decide the protest within sixty
days from receipt. In no case is the local treasurer obliged to entertain the protest unless the tax
● CBAA: DISMISSED THE APPEAL for being filed out of time. NPC
due has been paid.
directed to pay under protest before LBAA could entertain its appeal.
NPC’s petition for review with the CTA En Banc
● 2012: NPC filed a petition for review of the CBAA Order. 2 LGC SEC. 206. Proof of Exemption of Real Properly from Taxation. — Every person by or for
● CTA EN BANC: DENIED for lack of merit. Sec. 252 of the LGC expressly whom real property is declared, who shall claim tax exemption for such property under this Title
provides that a written protest against the assessment may be filed before shall file with the provincial, city or municipal assessor within thirty (30) days from the date of the
the LBAA within 30 days from payment under protest. NPC failed to pay declaration of real property sufficient documentary evidence in support of such claim including
corporate charters, title of ownership, articles of incorporation, bylaws, contracts, affidavits,
 whom real property is declared, who shall claim exemption from payment of
real property taxes imposed against said property, shall file with the
provincial, city or municipal assessor sufficient documentary evidence in Ruling/Dispositive Portion: WHEREFORE, the petition is DENIED for lack of merit.
support of such claim. The burden of proving exemption from local taxation The Decision of the Court of Tax Appeals En Banc in C.T.A. EB No. 891 is
is upon whom the subject real property is declared. AFFIRMED. The case is REMANDED to the Local Board of Assessment Appeals for
○ Thus, if the property being taxed has not been dropped from the further proceedings subject to payment under protest of the assailed assessment..
assessment roll, taxes must be paid under protest if the exemption
from taxation is insisted upon.
● The rationale for payment under protest as a condition sine qua non is found
in Camp John Hay Development Corp. v. Central Board of Assessment
Appeals: “x x x the restriction upon the power of courts to impeach tax
assessment without a prior payment, under protest, of the taxes
assessed is consistent with the doctrine that taxes are the lifeblood of
the nation and as such their collection cannot be curtailed by
injunction or any like action x x x The right of local government units to
collect taxes due must always be upheld to avoid severe erosion. This
consideration is consistent with the State policy to guarantee the
autonomy of local governments and the objective of RA No. 7160 or the
LGC of 1991 that they enjoy genuine and meaningful local autonomy to
empower them to achieve their fullest development as self-reliant
communities and make them effective partners in the attainment of national
goals.”

APPLICATION IN THE CASE:

● NPC filed a petition before the LBAA, without payment under protest of
the assessed real property taxes. Nothing in the said petition before the
LBAA supports NPC’s claim regarding the respondents' alleged lack of
authority.
● Though couched in terms which challenge the validity of the assessment
and authority of the respondents, NPC, as a government-owned and
controlled corporation engaged in the generation and transmission of electric
power, essentially anchors its petition based on a claim of exemption
from real property tax.
● Records are bereft of evidence which proves that, within 30 days from the
filing of its Tax Declaration, NPC filed with the Municipal Assessor of Itogon,
Benguet an application for exemption or any documentary evidence of the
exempt status of its properties.
○ Respondent Municipal Assessor assessed petitioner's properties
for real property tax since they were not dropped from the
assessment roll upon failure of NPC to comply with the
requirements of the law.
● NPC’s failure to prove that that payment under protest requirement has been
complied with renders its administrative protest under Section 206 of the
LGC without any effect. No protest shall be entertained unless the taxpayer
first pays the tax.

certifications and mortgage deeds, and similar documents.

If the required evidence is not submitted within the period herein prescribed, the property shall
be listed as taxable in the assessment roll. However, if the property shall be proven to be tax
exempt, the same shall be dropped from the assessment roll.