“Emerlinda S. Talento, in her capacity as the Provincial Treasurer of the Province of Bataan vs. Hon. Remigio M. Escalada, Jr., Presiding Judge of the Regional Trial Court of Bataan, Branch 3 and Petron Corporation”, Supreme Court, Third Division, G. R. No. 180884.
1. In the Decision dated 27 June 2008, as reiterated in the Resolution dated 8 September 2008 dismissing the 1st Motion for Reconsideration (“MR”) in the above-captioned, the SC set forth the ruling that taxpayers can defer payments of real estate tax by simply filing 1) an appeal with the Local Board of Assessment Appeals and 2) a Petition for Prohibition with the Regional Trial Court and by posting a surety bond.
2. This ruling has extremely serious implications, not only to the LGUs of Bataan, but all over the country. It practically amended, through judicial legislation, the expressed provisions of the Local Government Code (“LGC”) of 1991 that a taxpayer cannot defer and must first pay to the LGU the real estate tax due before any appeal can be entertained.
3. Thus, LGUs will no longer receive cash payments from real estate tax collections as they fall due but merely surety bonds, which have no immediate use to LGUs. One-half of the proceeds of RPT accrues to the general funds of provinces, cities, municipalities and barangays, while the other half accrues to the Special Education Fund of their Local School Boards. With such erroneous ruling, LGUs and ultimately the people are bound to suffer, particularly the children from poor families who go to public schools.
Summary of the Relevant Facts:
(1) On 18 June 2007, Petron received from the Provincial Assessor’s Office of Bataan a notice of revised assessment for deficiency real property tax for Petron’s machineries and equipment in Lamao, Limay,
(2) On 17 August 2007, Petron filed a petition with the Local Board of Assessment Appeals (LBAA) contesting the revised assessment.
(4) Petron wrote a letter to Petitioner stating that in view of the pendency of the appeal with the LBAA, any action on the subject properties would be premature. Petitioner replied that only payment by Petron under protest shall bar the collection of the taxes due, pursuant to Sections 231 and 252 of the Local Government Code.
(6) Petron filed with the LBAA on 24 September 2007 an urgent motion to lift final notice of delinquent real property tax and Warrant of Levy.
(7) On 3 October 2007, Petron received a notice of sale of its properties scheduled on 17 October 2007.
(8) Petron subsequently merely withdrew its motion to lift final notice of delinquency and Warrant of Levy with the LBAA on 8 October 2007. On the same date, Petron filed with the Regional Trial Court of Bataan the present case (Civil Case No. 8801) against Petitioner for prohibition with prayer for issuance of temporary restraining order and preliminary injunction. (NOTE: To avoid questions of forum shopping, what Petron should have done was to first withdraw its appeal entirely from the LBAA and then file the Petition for Prohibition with the RTC.)
(9) Civil Case No. 8801 was filed by Petron with the RTC while its petition with the LBAA was still pending. Subsequently, the LBAA dismissed Petron’s petition on the ground of forum shopping.
(10) On 15 October 2007, the RTC issued a TRO for 20 days enjoining Petitioner from proceeding with the public auction of Petron’s properties.
(11) Petitioner filed an urgent motion for the immediate dissolution of the TRO as well as motion to dismiss Petron’s petition for prohibition.
(12) On 5 November 2007, the RTC issued the Order granting Petron’s petition for the issuance of the writ of preliminary injunction subject to Petron’s posting of a PhP 444,967,503.52 bond in addition to its previously posted surety bond of PhP1,286,057,899.54.
(13) In view of the urgent nature of the case and the patently illegal order of the RTC, which was Order was tainted with grave abuse of discretion, Petitioner no longer filed a Motion for Reconsideration of the Order dated 5 November 2007.
(14) On 4 January 2008, Petitioner filed the present Petition for Certiorari, Prohibition and Mandamus (G.R. No. 180884) with the Supreme Court, as an exception to the rule on hierarchy of courts, to annul and set aside the Order of the RTC dated 5 November 2007 to permanently enjoin the RTC from further proceeding with Civil Case No. 8801.
(15) All of the foregoing actions of the Petitioner were consistent with law, particularly with the Local Government Code, contrary to Petron’s allegations.
Issue raised in the Petition for Certiorari, Prohibition and Mandamus:
Whether or not the RTC acted without or in excess of its jurisdiction and with grave abuse of discretion in causing the issuance of the writ of preliminary injunction that effectively renders nugatory the express provisions of Sections 252 and 231 of the Local Government Code.
Summary of The Supreme Court’s Decision dated 27 June 2008:
- In the Decision of the Supreme Court dated 27 June 2008, penned by Justice Consuelo Ynares-Santiago, regarding the above-stated Petition for Certiorari (G.R. No. 180884), it was held that the question posed in the Petition, i.e., whether the collection of taxes may be suspended by reason of filing of an appeal and posting of a surety bond, is a question of law.
- The Decision stated that Petitioner resorted to an erroneous remedy when she filed a Petition for Certiorari under Rule 65, when the proper mode should have been a Petition for Review under Rule 45.
- Under Rule 45, the period to file a Petition for Review is 15 days from receipt of the Order appealed from. The Decision stated that the present Petition was filed beyond the said 15 day period as it was filed 43 days late.
- The Decision further stated that, even on the assumption that a petition under Rule 65 is the proper remedy, the present petition is still dismissable. It was noted that Petitioner did not file a Motion for Reconsideration with the RTC prior to the filing of the present Petition with the Supreme Court.
- The Decision likewise stated that Petitioner disregarded the hierarchy of courts, and that the present Petition should have been filed with the Court of Appeals instead of directly filing the same to the Supreme Court.
- The Decision went on to state that the RTC correctly granted Petron’s petition for issuance of a writ of preliminary injunction based on Section 3, Rule 58 of the Rules of Court.
- It was stated that there was urgency and paramount necessity for the issuance of the writ of injunction considering that what is being enjoined is the sale by public auction of 1.7 Billion Pesos worth of Petron’s properties which are vital to Petron’s operations.
- The Decision also stated in essence that Petron had a clear and unmistakable right to refuse or to withhold in abeyance the payment of the taxes. Citing the grounds used by Petron in contesting the revised assessment, the Decision stated that the resolution of the said issues would have a direct bearing on the assessment made by Petitioner, and that it is necessary that the issues must be first passed upon before the properties of respondent is sold at public auction.
Courses of Action Taken by Petitioner in light of the said Decision Supreme Court dated 27 June 2008:
- Petitioner filed with the Supreme Court a Motion for Reconsideration of the Decision dated 27 June 2008. This Motion for Reconsideration was denied by the Supreme Court in a minute resolution dated 8 September 2008.
- Petitioner filed a Motion to Refer the Case to the Court en Banc. This is due to the fact that the Decision dated 27 June 2008 has in effect abandoned established jurisprudence that Rule 65 is the remedy for interlocutory orders such as the issuance of a writ of preliminary injunction, and the ruling in Manila Electric Company vs. Barlis (G.R. No. 114231, 18 May 2001) that the trial court has no jurisdiction to entertain a Petition for Prohibition absent petitioner’s payment, under protest, of the tax assessed. This motion was likewise denied in the said resolution dated 8 September 2008.
Comments on the Decision of the Supreme Court dated 27 June 2008.
Re: On the finding in the Decision dated 27 June 2008 that Petitioner resorted to an erroneous remedy when she filed a Petition for Certiorari under Rule 65, when the proper mode should have been a Petition for Review under Rule 45.
- The Order of the RTC granting the writ of preliminary injunction prayed for by Petron was an interlocutory order. Hence, Petitioner may validly file a Petition for Certiorari under Rule 65 to question the legality of such order of the RTC.
- In the 7 August 2007 Supreme Court Decision entitled “United Overseas Bank (formerly Westmont Bank) vs. Hon. Judge Reynaldo Rios, Presiding Judge of the Regional Trial Court of Manila, Branch 33, and Rosemoor Mining and Development Corporation”, G.R. No. 171532, it was confirmed that a petition for certiorari under Rule 65, and not Rule 45, is the proper remedy for interlocutory orders.
- In the Supreme Court Decision dated 5 August 2003 which was penned by Justice Consuelo Ynares-Santiago herself, entitled “Land Bank of the Philippines vs. Severino Listana, Jr.”, G. R. 152611, the Supreme Court specifically provided that “an order granting a writ of preliminary injunction is an interlocutory order”. Being an interlocutory order, a special civil action for certiorari under Rule 65 is a proper remedy.
- In light of the established jurisprudence on the matter, it is extremely surprising why the subject Decision dated 27 June 2008 ruled that Petitioner availed of the wrong remedy under Rule 65. The said Decision runs counter to and in effect abandons prevailing jurisprudence that interlocutory orders, such as an order granting a writ of preliminary injunction, may be questioned in a higher court by way of Certiorari under Rule 65.
Re: On the finding that the Petition is fatally defective due to Petitioner’s failure to file a Motion for Reconsideration of the RTC’s Order dated 5 November 2007.
- While it may be true that the general rule is that a motion for reconsideration is a condition sine qua non for the filing of a petition for certiorari, such rule nevertheless is subject to recognized exceptions. The Petition for Certiorari, Prohibition and Mandamus filed by Petitioner specifically alleged that it falls within such recognized exceptions to the general rule. As such, it was pointed out in the said Petition that resort to the Supreme Court without filing of a motion for reconsideration was dictated by considerations of urgency, and that the issues raised are purely legal in nature.
- In the case of Indiana Aerospace University vs. Commission on Higher Education, G.R. No. 139371, cited in Petitioner’s Motion for Reconsideration, the recognized exceptions to the general rule are: (a) the issues raised are purely legal in nature; (b) public interest is involved; (c) extreme urgency is obvious; (d) special circumstances that warrant immediate or more direct action. The case involves the collection of taxes due the local government unit in the amount of 1.7 Billion Pesos and the writ of preliminary injunction has deprived the local government unit the right to immediately collect such real property taxes to the detriment of its constituents. Not only was there urgency involved, but public interest was likewise a principal consideration.
- In view of the foregoing reasons, the Decision should have allowed the Petition to fall under the exception to the general rule on the requirement of a motion for reconsideration.
Re: On the finding that Petitioner disregarded the rule on hierarchy of courts.
- The Decision dated 27 June 2008 likewise faulted Petitioner for filing the Petition directly to the Supreme Court instead of having the same filed with the Court of Appeals. Again, such rule on hierarchy of courts is subject to certain exceptions. The present Petition is one such exception.
- There are compelling reasons to file the Petition directly to the Supreme Court. The case has far reaching implications on the right of local government units to collect real property taxes that it can use for public services and to finance the cost of public education. The resolution of the issue of whether or not a trial court can prohibit a local government unit to collect real property taxes, despite provisions in the Local Government Code favoring such power of the local government units, will affect not only the Province of Bataan, but all local government units in the country as well. It will have significant importance on the finances and economic viability of all local government units.
Re: On the finding that the RTC correctly granted Petron’s petition for issuance of a writ of preliminary injunction.
- The Decision declared that there was urgent and paramount necessity for the issuance of the writ of injunction considering that what is being enjoined is the sale by public auction of the properties of Petron amounting to 1.7 Billion Pesos, which properties are vital to Petron’s operation.
- However, there is no urgent and paramount necessity on the part of Petron. Even assuming that the properties are sold by the Province of Bataan by public auction, under Section 261 of the Local Government Code, Petron has the right to redeem the properties within one (1) year from the date of the sale. During such one (1) year period, Petron shall have possession of the subject properties and Petron shall be entitled to the income and other fruits thereof. In light of this, Petron’s operations will not be immediately affected. As such, there is no urgent and paramount necessity for the issuance of the writ of preliminary injunction.
- The Decision in essence also declared that Petron has a clear and unmistakable right to refuse or hold in abeyance the payment of the taxes. In support of this, the Decision cited the grounds relied upon by Petron in contesting the revised assessment. The Decision then stated that the resolution of the grounds raised by Petron would have a direct bearing on the assessment made by Petitioner and that it is necessary that the issues must first be passed upon before the properties of respondent is sold at public auction.
- It should be noted however that the RTC, in its Order dated 5 November 2007, in justifying the issuance of the writ of preliminary injunction, used as basis the provisions of Section 267 of the Local Government Code. Section 267 provides that:
“SEC. 267. Action Assailing Validity of Tax Sale. - No court shall entertain any action assailing the validity of any sale at public auction of real property or rights therein under this Title until the taxpayer shall have deposited with the court the amount for which the real property was sold, together with interest of two percent (2%) per month from the date of sale to the time of the institution of the action. The amount so deposited shall be paid to the purchaser at the auction sale if the deed is declared invalid but it shall be returned to the depositor if the action fails. Neither shall any court declare a sale at public auction invalid by reason of irregularities or informalities in the proceedings unless the substantive rights of the delinquent owner of the real property or the person having legal interest therein have been impaired.
- The above-quoted Section 267 specifically applies to a case where the property has already been sold at public auction due to delinquency for real property tax. It does not apply in the present case where the property has not yet been sold. It was patently erroneous for the RTC to use Section 267 as legal basis for granting the writ of preliminary injunction in favor of Petron. Such act of the RTC amounts to excess of jurisdiction as the RTC overstepped its lawful authority. There was likewise grave abuse of discretion as such patently erroneous use by the RTC of Section 267 as basis is capricious, whimsical, arbitrary or despotic in manner, and is in effect equivalent to lack of jurisdiction.
- The patently erroneous reliance by the RTC on Section 267 of the Local Government Code is one indication that there was no clear and unmistakable right in favor of Petron. Despite this, the Decision dated 27 June 2008 still validated the writ of preliminary injunction granted by the RTC to Petron.
- On the other hand, Sections 252 and 231 of the Local Government Code gives the clear and unmistakable right to Petitioner to collect the real property taxes due. Under Section 252, no protest shall be entertained unless the taxpayer first pays the tax. Under Section 231, appeal on assessments of real property shall in no case suspend the collection of the corresponding realty taxes on property.
- In Manila Electric Company vs. Barlis, G.R. No. 114231, 18 May 2001, the Supreme Court, interpreting a provision in the previous Real Property Tax Code which similar to Section 252 of the Local Govt. Code, held that the “trial court has no jurisdiction to entertain a Petition for Prohibition absent petitioner’s payment, under protest of the tax assessed as required by Section 64 of the RPTC. It is our view that this ruling is still valid despite the passage of the Local Government Code as the reason behind the law remains the same. In view of this ruling, the RTC had no authority to grant the writ of preliminary injunction in favor of Petron. This is another basis for stating that Petron had no clear and unmistakable right.
- Even assuming that there is doubt in the interpretation of Sections 252 and 231 of the Local Government Code, such doubt should have been resolved in favor of the LGU. Section 5 (a), Chapter 1, Title 1 of the Local Government Code provides that in the interpretation of the provisions of the same, any provision on a power of a local government unit shall be liberally interpreted in its favor, and in case of doubt, any question thereon shall be resolved in favor of devolution of powers and of the local government unit. If further provides that any fair and reasonable doubt as to the existence of the power shall be interpreted in favor of the local government unit concerned. This was no longer taken into consideration in the Decision.
- The amount of deficiency real estate tax due Petron was in fact arrived at following data supplied by Petron itself. Such data consisting of annual acquisition costs of machineries can be seen from the printed copies of the electronic email of one Arvin Frank C. Daquiog of the Government Reports and Compliance Controllers Department of Petron and the attached computation/data send on 20 March 2007 to the Bataan Provincial Assessor. (Annexes “A-MR” and “B-MR” of Petitioner’s Motion for Reconsideration) The said data from Petron itself show that the Sworn Statement of the True Value of the Real Properties previously submitted by Petron was grossly understated. In light of this, it is an error to rule that Petron had a clear and unmistakable right to hold in abeyance the payment of real property tax.
Re: On the issue of forum shopping committed by Petron, which was not discussed and was not ruled upon in the Decision of the Supreme Court.
- The Petition of Petron with the RTC (Case No. 8801) was filed while Petron’s Petition with the LBAA is pending. The case with the RTC and the LBAA filed by Petron involved an identity of parties, identity of rights asserted and reliefs prayed for, and a decision on one case will amount to res adjudicata. Petron was therefore guilty of forum shopping.
- The issue of forum shopping was squarely raised by Petitioner in the Petition for Certiorari, Prohibition and Mandamus. On account of such forum shopping, the RTC should have dismissed the complaint of Petron entirely. Instead, the RTC even issued the subject writ of preliminary injuction.
- The LBAA has in fact dismissed the Petition of Petron on account of such forum shopping committed by Petron.
- However, the Decision dated 27 June 2008 never mentioned anything about this issue of forum shopping.
- Per the ruling of the Supreme Court in City Government of Quezon City vs. Bayan Telecommunications, Inc., G.R. No. 162015, 6 March 2006, the proper procedure is to first withdraw the appeal from the LBAA and then file the Petition for Prohibition with the RTC. However, Petron did not comply with this and instead maintained the LBAA case while it filed the RTC case in violation of the rule against forum shopping and multiplicity of suits based on a single cause of action.
[1 Aside from the Executive Summary, the other articles included are as follows: Petition, Comment, Reply, Decision, Motion for Reconsideration and Motion to Refer the Case to the Court En Banc.]