National Grid Corp. of the Philippines v. Ruiz

[CBAA CASE NO. M-35. February 27, 2015.] LBAA Case No. 01-2013 NATIONAL GRID CORPORATION OF THE PHILIPPINES , petitioner-appellant , vs. LOCAL BOARD OF ASSESSMENT APPEALS FOR THE PROVINCE OF AGUSAN DEL SUR , appellee , STARLITA G. RUIZ, in her official capacity as the MUNICIPAL ASSESSOR of San Francisco, Agusan del Sur; and CESAR T. RUFILA, JR., in his official capacity as the ACTING PROVINCIAL ASSESSOR OF Agusan del Sur , respondents-appellees . DECISION This is an Appeal from the Resolution of the Local Board of Assessment Appeals for the Province of Agusan del Sur (the "LBAA") dated February 28, 2013, the dispositive portion of which reads thus: HTcADC "The Local Board cannot entertain this petition for it is without jurisdiction to do so. As correctly put by respondents citing Section 252 (a) of R.A. 7160, no protest shall be entertained unless the taxpayer pays first his tax. There being no indication from the petition that the said legal requirement was complied by herein petitioner, this petition is hereby ordered Dismissed. So resolved." The "Notice of Appeal with Memorandum on Appeal" was sent by Petitioner-Appellant through registered mail on April 15, 2013 and reached this Board on April 19, 2013. Petitioner-Appellant invokes Sections 1, 2 and 3 of Rule IV of the "Rules of Procedure before the CBAA" to establish timeliness of the filing of the instant appeal within the thirty (30)-day period acknowledging that it received a copy of the assailed Resolution on 15 March 2013, thirty-one (31) days before the April 15, 2013 filing of the instant appeal. CAIHTE Respondents-Appellees Municipal Assessor of San Francisco Agusan del Sur, and the Provincial Assessor of Agusan del Sur, despite receipt from this Board of the Advice to Answer Appeal dated May 27, 2013, chose not to do so, hence the issues and arguments raised by petitioner-appellant stand uncontroverted. However, in view of the substantive issues being raised in the instant appeal, this Board opted to adjudicate this case on those substantive issues rather than on mere technicalities. In its detailed "STATEMENT OF MATERIAL DATES," the instant appeal incorporates the Procedural Backdrop of events that transpired, leading to the filing hereof, in this wise: aScITE "8. On 05 November 2012, NGCP received a letter 1 dated 19 September 2012 from the Provincial Assessment and Treasury Office with the attached copy of Tax Declarations 2 of the properties declared in the name of TRANSCO as owner and NGCP as beneficial user , 3 and the Summary of Assessment and Billing Statement of Real Property Tax Liability of NGCP to the Province of Agusan del Sur, for the Calendar Years 2011-2012, in the total amount of Five Million Eight Hundred Forty Three Thousand Six Hundred Thirty Two and 40/100 Pesos (PhP5,843,632.40)" ; 4 "9. On 27 December 2012, NGCP filed a Petition by registered mail before the Respondent-Appellee, LBAA of Agusan del Sur, docketed as LBAA Case No. 01-2013, against the Respondents-Appellees Municipal Assessor, Starlita G. Ruiz and Acting Provincial Assessor, Cescar Rufila, Jr. Copy of the Petition is hereto attached as Annex "B" " ; "10. On 5 February 2013, the LBAA issued an Order directing Respondents-Appellees, Municipal Assessor, Starlita G. Ruiz and Acting Provincial Assessor, Cesar Rufila, Jr., to file Answers within ten (10) days from receipt of the Order, explaining why the subject Petition be not granted, and that after the lapse of said period, the Petition shall be deemed submitted for resolution" ; DETACa "11. On 11 February 2013, Respondents-Appellees filed Motion to Dismiss (Annex "C" hereof) on the ground that the LBAA has not acquired jurisdiction over the case for failure of NGCP to first pay the tax under protest, citing Section 252(a) of the Local Government Code, which provides" : Payment under Protest . No protest shall be entertained unless the taxpayer first pays the tax. There shall be annotated on the tax receipts the words "paid under protest." "12. Copy of the Motion to Dismiss was received by NGCP on 1 March 2013 and on 15 March 2013, NGCP filed an Opposition to the Motion to Dismiss. Copy of the Opposition to the Motion to Dismiss is hereto attached as Annex "D" " ; "13. However, in a Resolution dated 28 February 2013 which was received by NGCP on 15 March 2013 the LBAA granted the motion and dismissed the Petition of NGCP on the ground of lack of jurisdiction" ; "14. Hence, NGCP institutes this Appeal and concomitantly assails said Resolution on the grounds that: (a) the said Resolution was made with grave abuse of discretion, amounting to lack or excess of jurisdiction; and (b) it was issued in a manner that is contrary to existing laws, rules and jurisprudence; . . . x x x." The instant appeal is anchored on the following assignment of errors and GROUNDS FOR THE APPEAL. HEITAD "1. THE RESPONDENT-APPELLEE LBAA ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION IN DISMISSING NGCP'S PETITION FOR LACK OF JURISDICTION BASED ON NGCP'S ALLEGED FAILURE TO PAY FIRST THE TAX UNDER PROTEST." "2. RESPONDENT APPELLEE LBAA ERRED WHEN IT FAILED TO CONSIDER NGCP'S VALID AND MERITORIOUS ARGUMENTS STATED IN ITS PETITION." In support of the FIRST ASSIGNED ERROR/GROUND FOR APPEAL, the petitioner-appellant submitted the following arguments: "28. Section 252(a) of the LGC pertains to the filing of the protest before the Provincial or City Treasurer or Municipal Treasurer in the case of Municipality within the Metropolitan Manila Area. It is not applicable when a taxpayer's appeal is taken to the LBAA under Section 226 of the Local Government Code to contest the assessment issued by the Provincial, City or Municipal Assessor "; "29. In filing the Petition before the Respondent-Appellee LBAA, NGCP based its action on Section 226 of the LGC , which provides": aDSIHc "Any owner or person having legal interest in the property who is not satisfied with the action of the provincial, city or municipal assessor in the assessment of his property may, within sixty (60) days from the date of receipt of the written notice of assessment, appeal to the Board of Assessment appeals of the province or city by filing a petition under oath in the form prescribed for the purpose, together with copies of the tax declarations and such affidavits or documents submitted in support of the appeal." (Emphasis supplied) "30. NGCP is asserting exemption from payment of real property (sic) under its franchise, R.A. No. 9511 (RA 9511) and contesting the assessments made therein. It is, thus, appealing the act of the Respondents-Appellees Provincial and Municipal Assessors in assessing the properties used in connection with the franchise for taxation purposes"; "31. In the case of System Plus Computer College of Caloocan City vs. Local Government of Caloocan City , G.R. No. 146382, August 7, 2003, 408 SCRA, 494, the Honorable Supreme Court held": "Under Section 226 of R.A. 7160, the remedy of appeal to the Local Board of Assessment Appeals is available from an adverse ruling or action of the provincial, city or municipal assessor in the assessment of property, x x x" (Emphasis supplied) "32. In the same case, the Honorable Supreme Court further held": ATICcS "Under Section 199(f), Title II, Book II, of the Local Government Code, of 1991, "assessment" is defined as the act or process of determining the value of a property, or proportion thereof subject to tax, including the discovery, listing, classification and appraisal of properties. Viewed from this broader perspective, the determination made by the respondent City Assessor with regard to the taxability of the subject real properties squarely falls within its power to assess properties for taxation purposes subject to appeal before the Local Board of Assessment Appeals ." (Emphasis supplied) "33. Thus, Respondents-Appellees are clearly mistaken when they cited Section 252(a) of the LGC which is only applicable to protest filed before the Provincial, City or Municipal Treasurer. There is no provision under the LGC or any other law that requires prior payment of the tax under protest before the Local Board of Assessment Appeals (LBAA) can acquire jurisdiction over cases appealing the assessments made by the Provincial, City or Municipal Assessor "; In support of the SECOND ASSIGNMENT OF ERROR/GROUND FOR APPEAL, the petitioner-appellant asserted in its Memorandum on Appeal: "34. Further, NGCP respectfully submits that Respondent-Appellee LBAA committed grave error when it failed to consider the following meritorious and valid arguments of NGCP against the assessment issued on the real properties which are used in connection with its franchise, to wit": ETHIDa I The properties described as control house, pump house, microwave tower, transmission towers, gen set, clark fire pump, Paterson jockey, control panel, diesel engine, submersible pump, substation street lights, lighting fixtures, distribution transformer, and airconditioner, should be exempt from the payment of RPT because ownership over the same is retained by TransCo, a government owned and controlled corporation (GOCC) . "35. Under the Concession Agreement entered into by NGCP with TranCo (sic) and PSALM, NGCP was granted the privilege to operate and maintain the transmission assets (including the CONTROL HOUSE, PUMP HOUSE, MICROWAVE TOWER, TRANSMISSION TOWERS, GEN SET, CLARK FIRE PUMP, PATERSON JOCKEY, CONTROL PANEL, DIESEL ENGINE, SUBMERSIBLE PUMP, SUBSTATION STREET LIGHTS, LIGHTING FIXTURES, DISTRIBUTION TRANSFORMER AND AIRCONDITIONER) but the ownership over these properties was retained by TRANSCO . 5 Likewise, NGCP merely assumed the responsibility of TRANSCO to pay RPT on its properties, not otherwise exempt from the payment thereof, during the concession period"; "36. Prior to NGCP's assumption of operation of TRANSCO's transmission business on 15 January 2009, TRANSCO was not paying RPTs on the aforementioned properties as such properties are classified as " machineries and equipment that are actually, directly and exclusively used in the transmission of electric power " and are exempt under Section 234(c) of the LGC. The relevant provisions of the LGC state as follows": TIADCc "(o) "Machinery" embraces machines, equipment, mechanical contrivances, instruments, appliances or apparatus which may or may not be attached permanently or temporarily, to the real property. It includes the physical facilities for the production, the installations and appurtenant service facilities , those which are mobile, self-powered or self-propelled, and those not permanently attached to the real property which are actually, directly and exclusively used to meet the needs of the particular industry, business or activity and which by their very nature and purpose are designed for, or necessary to its manufacturing, mining, logging, commercial, industrial or agricultural purposes " ; xxx xxx xxx. Section 234. Exemptions for (sic) Real Property Tax. 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 . (b) x x x . cSEDTC (c) All machineries and equipment that are actually, directly and exclusively used by local water districts and government owned or controlled corporation engaged in the supply and distribution of water and/or generation and transmission of electric power, x x x " (Sections 199 (o) and 234 (c) of the LGC) . "37. These properties are integral components of the San Francisco, Agusan del Sur Substation, the day to day operation of which is vital to the transmission and delivery of electric power within the area. The same are indispensable parts of the nationwide power transmission system or grid, without which TRANSCO/NGCP cannot effectively and efficiently operate the transmission grid system and deliver electricity to the public"; "38. Moreover, considering that the aforesaid properties are still actually, directly and exclusively used in connection with the transmission of electric power, the assessment should be based on actual use regardless who the beneficial user is. Section 217 of the LGC provides as follows": "Section 217. Actual Use of Real Property as Basis for Assessment . Real property shall be classified, valued and assessed on the basis of its actual use regardless of where located, whoever owns it, and whoever uses it." (Underscoring supplied) "39. Considering further that the ownership over the aforementioned properties is retained by TRANSCO, said properties should continue to be classified as EXEMPT from the payment of RPT, and that NGCP shall not also be required to pay the RPT thereon"; AIDSTE II The ownership of the properties described as warehouse guardhouse, fence, water tank, fuel storage tank, sentry tower, 6,030, and 2,520 square meters of land is also retained by TransCo; hence, these should have been classified as special and assessed at not more than 10% level of assessment . "40. Except for the 2,520 square meters of land covered by Tax Declaration No. 11-08-0006-00661 which was assessed at 5% level, all the aforementioned real properties covered by the Notice of Assessment were all assessed at a level higher than 10% of their fair market values, for calendar year 2012 (Annex "CC of the Petition"). While we have not received copy of the Tax Declaration Nos. 06-08-0006-00556 and 06-08-0006-00557 pertaining to the 6,030 and 2,520 sq.m. parcels of land respectively, effective for calendar year 2011 only, the level of assessment used per our computation is higher than 10%. The said assessments (higher than 10%) are not in accordance with the level of assessment applicable to the special class of real property (land and other improvements) to which these properties belong as provided for under Section 216 of the LGC, to wit": SDAaTC "Section 216. Special Class of Real Property. All lands, and other improvements thereon actually, directly and exclusively used for hospitals, cultural, or scientific purposes, and those owned and used by local water districts, and government-owned and controlled corporation rendering essential public services in the supply and distribution of water and/or generation and transmission of electric power shall be classified as special ." (emphasis ours) "41. As previously stated, the properties (land and buildings) subject matter of this Petition are owned by TRANSCO, a government-owned and controlled corporation (GOCC) created under R.A. 9136 (EPIRA). NGCP was only granted a concession to operate the electric power transmission facilities of TRANSCO under the Concession Agreement dated 28 February 2008. NGCP's franchise under R.A. 9511 [which became effective on 20 December 2008], merely authorized it to assume the electric power transmission functions of TRANSCO. However, ownership over the properties remained with TRANSCO "; "42. With TRANSCO retaining the ownership over said properties subject matter of this Petition, the same should continue to be classified as special class pursuant to Section 216 of the LGC. NGCP should only be made to pay the taxes which TRANSCO was paying prior to the commencement Date of 15 January 2009 as NGCP merely assumed the responsibility of TRANSCO to pay RPT on the said properties, not otherwise exempt from the payment thereof, during the concession period "; AaCTcI "43. As the aforementioned properties should have been classified as special class , the applicable level of assessment should have been 10% of the market value based on Section 218 of the LGC, which provides": "Section 218. Assessment Levels. The assessment levels to be applied to the fair market value of real property to determine its assessed value shall be fixed by ordinances of the sangguniang panlalawigan, sangguniang panlungsod, or sangguniang bayan of a municipality within Metropolitan Manila area, at the rates not exceeding the following" : acEHCD "xxx xxx xxx" "(d) On Special Classes : The assessment levels for all lands, buildings, machineries and other improvements :" "xxx xxx xxx" "Actual Use Assessment Levels" "xxx xxx xxx" " Government-owned and controlled corporations engaged in the supply and distribution of water and/or generation and transmission of electric power 10% " (emphasis ours) "44. It must be emphasized that prior to the execution of the Concession Agreement and prior to the Commencement Date (15 January 2009) TRANSCO was being assessed and was paying for the real properties subject matter of this Petition at the level of ten percent (10%) applicable to Special Class of properties under Sections 216 and 218 of the LGC. Hence, we reiterate that NGCP should only be made to pay such RPTs that TRANSCO was paying prior to Commencement Date"; "45. To reiterate, the subject properties are still GOCC-owned and still used in rendering essential public services, i.e. , transmission of electric power "; EcTCAD "46. Moreover, NGCP, despite its exemption provided under its charter, has assumed the payment or TRANSCO's of NPC's obligation for real property taxes on their properties not otherwise exempt from the payment thereof pursuant to the Concession Agreement between NGCP, TRANSCO and PSALM. NGCP maintains that it should be required to pay the taxes only on the properties for which TRANSCO or NPC is obligated to pay based on the assessment level for special classes of properties pursuant to Sections 216 and 218 (d) of the LGC"; "47. Based on the foregoing, the properties described as machinery" (sic) should continue to be "exempt" from real property tax under Section 234(c) of LGC, and the properties described as "Building or Land" should continue to be classified as "Special Class" and assessed at 10% of the Fair Market Value pursuant to Sections 216 and 218(d) of the LGC"; III NGCP is exempt from the payment of RPT under R.A. No. 9511 (NGCP franchise); hence, it should only be made to pay those RPT obligations which TransCo was paying prior to 15 January 2009, and which NGCP has assumed to pay under the Concession Agreement. "48. Under its franchise, R.A. No. 9511, NGCP is expressly exempted from the payment of RPT, or any other tax for that matter, even as beneficial user of the properties subject matter of the questioned assessment"; "49. Section 9 of R.A. No. 9511 (Annex "A" of the Petition) expressly provides, thus": "SEC. 9. Tax Provisions. In consideration of the franchise and rights 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 be 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 . x x x" (Emphasis and underscoring supplied) SDHTEC "50. It is clear from the foregoing provision that apart from the 3% franchise tax due to the national government, NGCP is exempt from payment of the RPT and any and all taxes, duties, fees and charges or any kind, nature or description levied, established or collected by any authority whatsoever, local or national , including local government units (LGUs)"; "51. The properties subject of the Notice of Assessment and Billing Statement mentioned above, are by their very nature and purpose necessary for the operation and maintenance of NGCP's power transmission business which is the very subject matter of its franchise (R.A. No. 9511). Thus, these properties should have been covered by the exemption of NGCP from the payment of real property tax under said Section 9 of R.A. No. 9511"; "52. If Congress intended to make NGCP liable to pay the real property tax in connection with its franchise following the Honorable Supreme Court's declaration in the recent case of Commissioner of Internal Revenue vs. Philippine Airlines, G.R. No. 180043, 04 July 2009 , to wit": HSAcaE "The language used in Section 13 of Presidential Decree No. 1590, granting respondent tax exemption, is clearly all-inclusive. The basic corporate income tax or franchise tax paid by respondent shall be "in lieu of all other taxes, duties, royalties, registration, license, and other fees and charges or any kind, nature, or description imposed, levied, established, assessed or collected by any municipal, city, provincial, or national authority or government agency, now or in the future x x x, except only real property tax . Even a meticulous examination of Presidential Decree No. 1590 will not reveal any provision therein limiting the tax exemption of respondent to final withholding tax on interest income or excluding from said exemption the OCT." "53. Under the franchise, NGCP is expressly given tax exemption privilege and is not required to pay taxes on real estate, buildings and personal property that are used or related to the operation of the franchise for nationwide power transmission system of the Philippine grid and other ancillary business that capitalize on the utilization of assets "; "54. Unlike Section 234 (c) of R.A. No. 7160, NGCP's franchise (R.A. No. 9511) does not limit the coverage of NGCP's exemption to "machineries and equipment," nor does it distinguish between real and personal properties. As long as the properties are used in connection with NGCP's nationwide power transmission business, they are not subject to real property taxation"; AScHCD "55. The clause "on properties used in connection with its franchise" in Section 9 of R.A. No. 9511 refers to all properties of NGCP used in connection with its franchise . The tax provision does not distinguish whether the properties referred to are personal or real, tangible or intangible, or transmission lines, or substations or machineries and appurtenances thereto"; "56. As a matter of fact, the tax provision does not even distinguish how these properties are used. All that is required is that, these properties are used in connection with the franchise of NGCP. When the law does not distinguish the properties referred to, then there is no reason to make a distinction"; "57. To further amplify our arguments, NGCP's tax exemption under Section 9 of R.A. 9511 has the following": HESIcT "a. The "in lieu of faxes" Proviso The 3% franchise tax shall be in lieu of income tax, and any and all kinds of taxes, duties, fees and charges of any kind, nature or description levied, established or collected by any authority whatsoever, local or national, on (1) its franchise, (ii) rights, (iii) privileges, (iv) receipts, (v) revenues and profits, and (vi) on properties used in connection with its franchise, from which taxes, duties and charges, NGCP is expressly exempted ;" and "b) The "Exclusive of this Franchise" Proviso NGCP, its successors or assigns, shall be liable to pay their real estate, buildings, and personal property, exclusive of this franchise , as other corporations are now or hereby (sic: hereafter) may be required by law to pay." "58. The "in lieu of all taxes" proviso has been interpreted to mean that none other than the specified can be demanded. Thus, in the case of Philippine Airlines vs. Court of Tax Appeals and Commissioner of Internal Revenue , 6 the Court of Appeals, interpreting the "in lieu of all taxes" proviso in Philippine Airlines' tax exemption stated": "The phrase 'in lieu of' means instead of; in place of; or in substitution for (Black v. Barnes, 46 p. 2d 625, 142, Kan. 381; Rutherland vs. Oroville-Wyandotte Irr. Dis., 22P. 2d 505, 218 Cal. 242; Words and phrases, vol. 21, p. 472). It does not mean 'In addition to' (Glassman Const. Co. v. Baltimore Brick Co., 246 Md. 478, 228 A. 2d 472, 474, Black's Law Dictionary, 6th ed., 1990, p. 787). The 'in lieu of' implies the existence of something for which a substitution is being made. Thus, 'in lieu of all other taxes' means that none other than the tax specified however described, can be demanded. It limits the liability to the specific tax (State of Tennessee vs. Bank of Commerce, 53 F. 735, 736, Words and phrases, Vol. 21, p. 474)." AcICHD "59. Moreover, the Court of Appeals further held that: " (t)he phrase 'all taxes of every name and nature' is a very inclusive statement, especially when it names, in connection therewith, the only government entities who have a right to collect taxes, it not only includes all payments which might be regarded as taxes, but it excludes which might by any possibility, be denominated taxes . . ."; 7 60. In the case at bar, NGCP's Charter has the "in lieu of all taxes" proviso, in addition to the "exclusive of this franchise" proviso. In fact, NGCP's "in lieu of all taxes" proviso is very clear, explicit and specific with respect to the taxes that it is exempt from paying"; "61. NGCP's Charter is clear and unequivocal, NGCP is expressly exempted from": caITAC "a. Any and all taxes, duties, fees and charges"; "b. Of any kind and nature or description"; "c. Levied or collected by any authority whatsoever, local or national"; and "d. On properties used in connection with its franchise." "62. It is therefore clear that the tax exemption granted to NGCP is wider in scope, broader in extent, and more encompassing in nature. Therefore, the only logical conclusion is that NGCP is only liable for the 3% franchise tax and NO other tax can be imposed or demanded by the national or local authorities "; "63. Further, it is respectfully submitted that Smart vs. City of Davao 8 is a case that is closer in point since the legislative franchise of Smart has both the "in lieu of all taxes" as well as the "exclusive of this franchise" provides, in part": "Section 9. Tax Provisions. The grantee, its successors or assigns shall be liable to pay the same taxes on their real estate buildings and personal property exclusive of this franchise , as other person (sic) or corporations which are now or thereafter (sic) may be required by law to pay. In addition thereto, the grantee, its successor-in-interest shall pay a franchise tax equivalent to three percent (3%) of all gross receipts of the business transacted under this franchise by the grantee, its successors or assigns and the said percentage shall be in lieu of all taxes on this franchise or earnings thereof; x x x." [Underscoring supplied] . TAIaHE "64. The Supreme Court, in Smart vs. City of Davao 9 held that Smart is not entitled to exemption from local taxes despite the inclusion of the "in lieu of all taxes" clause because there was no express exemption from municipal or provincial taxes. The Court stated thus": "If Congress intended the 'in lieu of all taxes' clause in Smart's franchise to also apply to local taxes, Congress would have expressly mentioned the exemption from municipal and provincial taxes. Congress could have used the language in Section 9(b) of Clavecilla's old franchise as follows": 'x x x in lieu of all taxes of any kind, nature and description, levied collected by any authority whatsoever, municipal and provincial or national from which the grantee is expressly exempted x x x.' "65. Thus, Smart failed to get exemption from local taxes since there was no express exemption from local or municipal taxes in its franchise. Smart vs. City of Davao 10 applies conversely to the case at bar"; "66. In this case, NGCP's Charter expressly states that the franchise fee is in lieu of all taxes of any kind and nature levied or collected by any authority whatsoever, local or national, on its properties used in connection with its franchise from which NGCP is expressly exempted . It cannot be anymore clearer, express, broader and more expansive that this"; ICHDca "67. NGCP's Charter not only mentions " local or national " authorities specifically, it even qualifies this by using the broader phrase: " any authority whatsoever ." It does not stop there. To remove any doubts, NGCP's Franchise further provides that from these taxes the Grantee (NGCP) is hereby expressly exempted "; "68. In other words, NGCP's Charter more than satisfies the requirement of the Supreme Court in Smart vs. City of Davao 11 that the "in lieu of taxes" (sic) proviso should expressly mention local or national taxes. Therefore, applying the principle in Smart vs. Davao , 12 NGCP should be exempt from real property taxes"; "69. In the same token, the ratio in Digitel vs. Batangas 13 would apply conversely to NGCP"; "70. It will be recalled that in Digitel vs. Batangas 14 the Supreme Court held that the " exclusive of this franchise " clause is not a grant of exemption from real estate taxes, because there was no language in Digitel's Charter expressly exempting Digitel from realty taxes. The Supreme Court held": cDHAES "There is no language in the sentence of Section 5 expressly or even impliedly exempting petitioner from the realty tax. The phrases "exemption from real estate tax," do not appear in the first sentence. No matter how one reads the first sentence, there is no grant of exemption, express or implied, from realty tax. In fact, the first sentence expressly imposes taxes on both real and personal properties, excluding only the intangible personal property that is the franchise." "71. Conversely, as long as there is language conveying an exemption from real property tax, expressly or impliedly, then there will be a grant of exemption from real estate tax"; "72. In this case, it is respectfully submitted that this standard is met with the inclusion of the "in lieu of all taxes" proviso in NGCP's Charter"; "73. Conversely applying the ruling of the Supreme Court in Digitel vs. Batangas case, 15 it can be concluded that NGCP is in fact granted real property tax exemption"; "74. To reiterate, under Section 9 of NGCP's Charter, NGCP is expressly exempted from": TCAScE "a. Any and all taxes, duties, fees and charges"; "b. Of any kind and nature or description"; "c. Levied or collected by any authority whatsoever, local or national"; and "d. On properties used in connection with its franchise." "75. The phrase "on properties used in connection with its franchise, from which taxes, duties and charges, the Grantee is hereby expressly exempted" could not be clearer. It constitutes the express and categorical statement that NGCP is exempt from payment of real property tax on all properties that are actually, directly and exclusively used in transmission of electricity, including its machineries and buildings, thus used in the operation of its franchise"; "76. Moreover, the phrase "all taxes, duties, fees, and charges of any kind, nature or description" is broad and general enough, local or national in scope, to cover real property tax which is a form of local tax"; "77. It is established that legislative intent must be ascertained from a consideration of the whole statute. Clauses and phrases of the statutes should not be taken as detached and isolated expressions, but the whole and every part thereof must be considered in fixing the meaning of any of its parts. 16 Every section, provision or clause of the statute must be expounded by reference to each other in order to arrive at the effect contemplated by the legislature. 17 The intention of the legislature must be ascertained from whole text of the law and every part of the act is to be taken in view"; 18 ASEcHI "78. The phrase "exclusive of this franchise" should be read in the context of the whole provision. It is not possible that NGCP be expressly exempted from payment of real property tax for all properties used in connection with its franchise then in another clause under the same section be imposed such real property tax on real estate, buildings and other properties still used in the operation of its franchise. This is an absurd and illogical conclusion"; "79. In the case of City Government of Quezon City vs. Bayan Telecommunications, Inc. 19 and another case of Digitel 20 the Supreme Court interpreted the phrase "exclusive of this franchise" to distinguish between two (2) sets of properties, namely a) those actually, directly and exclusively used in the business of franchise, and b) those properties which are not so used. Following these decisions, the "exclusive of this franchise" clause, as used in the franchise of NGCP, means that NGCP will be liable to pay taxes only on its properties that are NOT actually, directly and exclusively used in its high voltage transmission business"; "80. The tax provision in the NGCP Charter should be read in the light of the foregoing decisions as such was the prevailing doctrine when the franchise of NGCP was filed, deliberated and approved in Congress. These foregoing cases were decided in 2006 and 2007, respectively. The franchise of NGCP was filed with the House of Representatives on 10 March 2008 and was deliberated and approved in the House of representatives, and later in the Senate on 19 November 2008 and 17 November 2008, respectively. The President of the Philippines thereafter signed it into law on 01 December 2008. On the other hand, the Digitel vs. Batangas case 21 was promulgated only on 11 December 2008. Therefore, it can be deduced that when the provisions of NGCP's Charter was deliberated and approved by the Congress, it was with the understanding that the Supreme Court had decisively settled the meaning and implication of "exclusive of this franchise" which means "real estate, buildings, and personal property not actually, directly and exclusively used is (sic) the operation of its franchise" ; cTDaEH "81. The exemption of NGCP from real property taxes is not presumed, rather, it is clear and categorical as its franchise plainly provides. It is expressly exempt from any and all taxes, duties, fees, and charges of any kind, nature or description levied by any authority, local or national, on its properties used in connection with its franchise"; "82. Moreover, the intent of Congress to exempt NGCP from any and all taxes by any local or national authority on properties used in connection with its franchise is further amplified when Congress even included the words "expressly exempted" in Section 9 of NGCP's Charter"; "83. The intent to exempt NGCP from any and all taxes . . . x x x"; "84. Senate President Juan Ponce Enrile further explained . . ."; "85. The imposition of real property tax by the Local Government Unit of Agusan Del Sur will be ultimately borne by the consumers because additional expense for payment of real property taxes by NGCP shall be passed on and added to electric bills of its consumers. This will defeat the declared legislative intent of providing lower consumption costs of electricity to end users"; ITAaHc "86. Moreover, according to the Japan External Trade Organization, Metro Manila residents pay the highest bills in Asia and Oceania. The same issue was raised during the Euromoney Investment Forum, where high electricity costs were seen as "significant hindrance that must be overcome to encourage foreign direct investments to flock to the country in greater numbers." 22 Additionally, the Semiconductor and Electronics Industry of the Philippines, Inc., said that a number of companies have opted to expand their business outside of the Philippines due to the country's prohibitive cost of power"; 23 "87. Hence, if NGCP's exemption from real estate taxes are disregarded, contrary to the clear and express mandate of the NGCP's Charter and contrary to the clear legislative intent, then higher power costs should be further exacerbated to the detriment of the consumers as well as the economy"; cSaATC "88. Lastly, NGCP's Charter was enacted in order to upgrade and modernize the country's transmission grid facilities. It was noted in Sen. Enrile's sponsorship speech that there were several failed attempts to privatize TRANSCO before the concession was finally awarded to NGCP. The grant of tax exemption is, therefore, a commitment from the government and an incentive to NGCP in consideration of the capital it has to invest in upgrading and modernizing the transmission grid facilities"; "89. As stated by the Supreme Court in San Roque Power Corporation vs. CIR , 24 " The legislative grant of tax relief (whether in the EPIRA Law or the tax code) constitutes a sovereign commitment of Government to taxpayers that the later (sic) can avail themselves of certain tax reliefs and incentives in the course of their business activities here. Such a commitment is particularly vital to foreign investors who have been enticed to invest heavily in our country's infrastructure, and who have been (sic) done so on the firm assurance that certain tax reliefs and incentives can be availed of in order to enable their projected returns on these very long-term and heavily funded investments . While the government's ability to keep its commitment is put in doubt, credit ratings turns to worse; the costs of borrowings becomes higher and the harder it will be to attract foreign investors. The country's earnest efforts to move forward will all be put to naught"; (underscoring supplied). "90. Thus, by virtue of its tax exemption under its franchise, NGCP should only be made to pay those TRANSCO real property tax obligations which NGCP assumed to pay under the Concession Agreement and which TRANSCO was paying prior to 15 January 2009." CHTAIc " PRAYER " " WHEREFORE , premises considered, NGCP respectfully prays of this Honorable Board that the Resolution dated 28 February 2013 of Respondent-Appellee LBAA be REVERSED and a new one be rendered as follows": "I) Declaring NGCP as EXEMPTED from the payment of real property tax pursuant to Section 9 of R.A. 9511"; and "II) Declaring the Summary of Assessment and Billing Statement issued by the Agusan del Sur Provincial Assessor's Office as NULL AND VOID"; " OR IN THE ALTERNATIVE ": "i) Declaring that NGCP should pay the real property taxes legally imposable upon TRANSCO for the subject properties"; cHDAIS "ii) Directing that the properties described a CONTROL HOUSE, PUMP HOUSE, MICROWAVE TOWER, TRANSMISSION TOWERS, GEN SET, CLARK FIRE PUMP, PATERSON JOCKEY, CONTROL PANEL, DIESEL ENGINE, SUBMERSIBLE PUMP, SUBSTATION STREET LIGHTS, LIGHTING FIXTURES, DISTRIBUTION TRANSFORMER AND AIRCONDITIONER, and subject matter of the Summary of Assessment and Billing Statement, be Reclassified as EXEMPT from the payment of RPT in the Assessment Roll"; and "iii) Directing that the properties described as WAREHOUSE, GUARDHOUSE, FENCE, WATER TANK, FUEL STORAGE TANK, SENTRY TOWER, 6,030 AND 2,520 SQUARE METERS OF LAND and subject matter of the Summary Assessment and Billing Statement, be Reclassified as belonging to SPECIAL CLASS of properties and assessed at 10% level of assessment only ." "Other reliefs, just and equitable under the premises, are likewise prayed for." EATCcI CBAA'S FINDINGS/RULINGS Culled from Petitioner-Appellant's extensive and learned dissertations as embodied in the instant petition, the issues in this instant appeal are the following: 1. WHETHER OR NOT THE LBAA OF AGUSAN DEL SUR ERRED IN DISMISSING NGCP'S APPEAL THEREAT FOR LACK OF JURISDICTION; 2. WHETHER OR NOT THE SUBJECT REAL PROPERTIES ARE EXEMPTED FROM PAYMENT OF THE REAL PROPERTY TAX UNDER THE PROVISIONS OF SECTION 234 (C) OF THE LGC; 3. WHETHER OR NOT THE SUBJECT PROPERTIES CAN BE CLASSIFIED AS "SPECIAL CLASS OF REAL PROPERTIES" UNDER SECTION 216 OF THE LGC; AND 4. WHETHER OR NOT NGCP IS EXEMPTED FROM PAYMENT OF THE REAL PROPERTY TAX ON SUBJECT PROPERTIES BY VIRTUE OF THE PROVISIONS OF SECTION 9 OF R.A. 9511, NGCP'S LEGISLATIVE FRANCHISE. Issue No. 1: WHETHER OR NOT THE LBAA OF AGUSAN DEL SUR ERRED IN DISMISSING NGCP'S APPEAL THEREAT FOR LACK OF JURISDICTION. The Local Board of Assessment Appeals for the Province of Agusan del Sur (the "LBAA"), in its LBAA Case No. 01-2013, rendered a Resolution on February 28, 2013, 25 the dispositive portion of which reads as follows: ISHCcT "The Local Board cannot entertain this petition for it is without jurisdiction to do so. As correctly put by respondents citing Section 252 (a) of R.A. 7160, no protest shall be entertained unless the taxpayer pays first his tax. There being no indication from the petition that the said legal requirement was complied by herein petitioner, this petition is hereby ordered dismissed." The LBAA must have been thinking of another case or petition when it rendered the Resolution referred to above. From the wording of paragraphs 10 to 12 of the Petition 26 sent by NGCP by registered mail on December 27, 2012 to the LBAA, it is clear that the Petition or Appeal was made pursuant to the provisions of Section 226 NOT Section 252 of R.A. 7160, otherwise known as the Local Government Code of 1991 (LGC): Section 252. Payment under Protest . (a) No protest shall be entertained unless the 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 provincial, city treasurer or municipal treasurer, in the case of a municipality within Metropolitan Manila Area, who shall decide the protest within sixty (60) days from receipt. (b) The tax or a portion thereof paid under protest, shall be held in trust by the treasurer concerned. (c) In the event that the protest is finally decided in favor of the taxpayer, the amount or portion of the tax protested shall be refunded to the protestant, or applied as tax credit against his existing or future tax liability. (d) In the event that the protest is denied or upon the lapse of the sixty-day period prescribed in subparagraph (a), the taxpayer may avail of the remedies as provided for in Chapter 3, Title II, Book II of this Code. DHITCc The Appellee has committed a reversible error in misconstruing the rule that prior payment of the tax involved is a condition "sine qua non" only in "protests" filed with the treasurer, not in appeals filed before the LBAA assailing real property assessments. Refusing to entertain a protest unless the tax involved therein is first paid is the sole prerogative of the treasurer . The LBAA just arrogated unto itself such power of refusal. Therefore, it is the considered view of this CENTRAL BOARD OF ASSESSMENT APPEALS that the LBAA erred in dismissing NGCP's Appeal thereat for lack of jurisdiction due to non-payment of the realty tax involved. However, believing that justice and equity would be better served if we decided the Appeal on its merits rather than remanding the same to the Board of origin, we have opted to so resolve the substantive issues raised therein . Issue No. 2: WHETHER OR NOT THE SUBJECT REAL PROPERTIES ARE EXEMPTED FROM PAYMENT OF THE REAL PROPERTY TAX UNDER THE PROVISIONS OF SECTION 234 (C) OF THE LGC. Pursuant to the Concession Agreement dated 28 February 2008, the power transmission operation of TRANSCO was formally turned-over to NGCP, along with the properties used in connection with said operation, on 15 January 2009. CAacTH NGCP states that, before it (NGCP) took over the power transmission operation from TRANSCO, the latter (TRANSCO) and NPC before it were exempted from payment of the real property tax on their machinery and equipment pursuant to the provisions of Section 234 (c) of the LGC and their lands, buildings and other improvements were classified as Special Class of Real Property with an assessment level of ten percent (10%), pursuant to the provisions of Sections 216 and 218 of the LGC. NGCP argues that, since it is just a Concessionaire and the ownership of the properties used in the concession were not transferred from TRANSCO to NGCP, the latter should enjoy the same privileges as TRANSCO enjoyed before 15 January 2009. Section 234 of the LGC provides: "SEC. 234. Exemption from Real Property Tax . The following are exempted from payment of the real property tax": "xxx xxx xxx" "(c) All machineries and equipment that are actually, directly and exclusively used by local water districts and government-owned or -controlled corporations engaged in the supply and distribution of water and/or generation and transmission of electric power ;" (Emphasis supplied) cEaSHC "xxx xxx xxx" Section 234 (c) of the LGC is clear and unequivocal in its mandate to the effect that, in order to be exempt from real property tax, the machineries and equipment must be actually, directly, and exclusively used either: (1) by local water districts or government-owned or -controlled corporations (2) in the supply and distribution of water and/or generation and transmission of electric power . (Underscoring supplied) The exemption from real property tax under Section 234 (c) of the LGC cannot be applied to the subject machinery and equipment because the same (machinery and equipment) are: (1) NOT actually, directly, and exclusively used by a local water district or by a government-owned or -controlled corporation ; and (2) NOT actually, directly, and exclusively used in the supply and distribution of water and/or generation AND transmission of electric power . NGCP is neither a local water district nor a government-owned or -controlled corporation and its business does not include generation but only transmission of electric power. IAETDc NGCP points out that, although the subject real properties were turned-over to NGCP for the latter's use, TRANSCO retains the ownership of the same properties. This does not matter. The Honorable Supreme Court, in National Power Corporation v. Province of Quezon, et al. , 27 citing the case of Testate of Concordia Lim v. Manila , 28 had ruled that " the unpaid realty tax attaches to the property and is directly chargeable against the taxable person who has actual and beneficial use and possession of the property regardless of whether or not that person is the owner ." Parenthetically, the last paragraph of Section 234 of the LGC is clear and incapable of any interpretation, under the rule of Statutory Construction: "verba legis non derogatur," to wit: "Except as provided herein, any exemption from payment of real property tax previously granted to, or presently enjoyed by, all persons whether natural or juridical, including all government-owned or controlled corporations are hereby withdrawn upon the effectivity of this Code ." Issue No. 3: WHETHER OR NOT THE SUBJECT PROPERTIES CAN BE CLASSIFIED AS "SPECIAL CLASS OF REAL PROPERTIES" UNDER SECTION 216 OF THE LGC. The provisions of the LGC which are applicable to Issue No. 3 are Sections 216 and 218 thereof, thus: CTIEac "SEC. 216. Special Classes of Real Property . All lands, buildings, and other improvements thereon, actually, directly and exclusively used for hospitals, cultural, or scientific purposes, and those owned and used by local water districts, and government-owned or -controlled corporations rendering essential public services in the supply and distribution of water and/or generation and transmission of electric power shall be classified as special ." (emphasis supplied) As far as this case is concerned, the lands, buildings and other improvements thereon, in order to be classified as Special Classes of Real Property , the following factors must be present: (a) The lands, buildings and other improvements thereon must be owned and used by local water districts or owned and used by government-owned or -controlled corporations ; (b) The local water districts or the government-owned or -controlled corporations concerned must be rendering essential public services in the supply and distribution of water AND/OR IN THE GENERATION AND TRANSMISSION OF ELECTRIC POWER . DcHSEa Consistent with the ruling of this Board on Issue No. 1, it follows that the subject properties do not fall under the category of EXEMPTION FROM REAL PROPERTY TAX. However, they may be deemed as "Special Classes" of real property because (a) their ownership is retained by TRANSCO, a government-owned and -controlled corporation, and (b) they are rendering essential services in the generation and TRANSMISSION OF ELECTRIC POWER. It is clear from the charter of the NGCP, that inspite of its character as a private corporation it has been vested by law with certain powers and functions inherent in and appurtenant to the sovereign powers of the State, under the express provisions of R.A. 9511, "An Act Granting the National Grid Corporation of the Philippines a Franchise to Engage in the Business of Conveying or Transmitting Electricity through High Voltage Back-Bone System of Interconnected Transmission Lines, Substations and Related Facilities, and for Other Purposes." Such grant of powers to the NGCP under its charter includes the partial exercise of the sovereign powers of the state, such as the power of Eminent Domain under Section 4 of R.A. 9511. Likewise, the NGCP charter embodies certain tax privileges/exemptions under Section 9 thereof, to wit: SaCIDT 1) shall pay a franchise tax equivalent to three percent (3%) of all gross receipts in lieu of income taxes, duties, fees and charges collected by any authority, local or national, on its franchise, rights, privileges, receipts, revenues and profits; and 2) provided, that the Grantee . . . shall be liable to pay the same taxes on their real estate, buildings and personal property, exclusive of this franchise, as other corporations are now or hereby may be required by law to pay. Section 1 of R.A. 9511 defines the nature and scope of the NGCP franchise, thus: "Section 1. Nature and Scope of Franchise. Subject to the provisions of the Constitution and applicable laws, rules and regulations, and subject to the terms and conditions of the concession agreement and other documents executed with the National Transmission Corporation (TRANSCO) and the Power Sector Assets & Liabilities Management Corporation (PSALM) pursuant to Section 21 of Republic Act No. 9136, which are not inconsistent herewith, there is hereby granted to the National Grid Corporation of the Philippines, hereunder referred to as the Grantee, its successors or assigns, a franchise to operate, manage and maintain, and in connection therewith, to engage in the business of conveying or transmitting electricity through high voltage back-bone system of interconnected transmission lines, substations and related facilities, system operations, and other activities that are necessary to support the safe and reliable operation of the transmission system and to construct, install, finance, manage, improve, expand, operate, maintain, rehabilitate repair and refurbish the present nationwide transmission system of the Republic of the Philippines . The Grantee shall continue to operate and maintain the subtransmission system which have not been disposed by TRANSCO. Likewise, the Grantee is authorized to engage in construct, install, finance, improve, expand, rehabilitate and repair the nationwide transmission system and the grid of the Republic of the Philippines, ancillary business and any related business which maximizes utilization of its assets such as, but not limited to, telecommunications system, pursuant to Section 20 of Republic Act No. 9136. The scope of the franchise shall be nationwide in accordance with the Transmission Development Plan, subject to amendments or modifications of the said Plan, as may be approved by the Department of Energy of the Republic of the Philippines." SCaITA Section 9 provides for tax incentives in favor of NGCP, thus: "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: Provided, That the Grantee, its successors or assigns, shall be liable to pay the same taxes on their real estate, buildings and personal property, exclusive of this franchise, as other corporations are now or hereby may be required by law to pay : Provided, further, That payment by Grantee of the concession fees due to PSALM under the concession agreement shall not be subject to income tax and value-added tax (VAT)." cHECAS In interpreting and applying the aforequoted provisions of R.A. 9511, the Petitioner-Appellant NGCP attempted in paragraphs 82 to 90 of the instant Appeal to establish the intent of the law. "RATIO LEGIS" to grant NGCP an unlimited exemption from "all taxes . . . including real property taxes." But such resort to the RATIO LEGIS behind R.A. 9511 cannot prevail over the letter of the law "VERBA LEGIS" embodied in R.A. 7160 particularly Section 234 thereof, withdrawing such tax exemptions. However, although the last paragraph of Section 234 specifically refers only to "any exemption from payment of real property tax PREVIOUSLY GRANTED TO OR PRESENTLY ENJOYED BY all persons . . . including government-owned or -controlled corporations; it is further provided in Sections 216 and 218 of the same R.A. 7160 regarding the classification of SPECIAL CLASSES OF REAL PROPERTY. Thus, under the constitutional restriction that taxation must be uniform and equitable, there is a proscription against the imposition and enforcement of tax collection which does not comply with the said rule. Uniform taxation means that property of the same kind must belong to the proper class and must be appraised UNIFORMLY and subject to the same ASSESSMENT LEVEL. Equitable taxation means that the appraisal and assessment must be based on fair standards so as to be equitable. Thus, it is required that the assessment must be on the basis of a uniform classification within each LGU, devoid of unjust or improper discrimination. aTHCSE In the case of Mactan Cebu International Airport Authority vs. Hon. Ferdinand J. Marcos, in his capacity as the Presiding Judge of the Regional Trial Court, Branch 20, Cebu City, the City of Cebu, represented by its Mayor, Hon. Tomas R. Osmea, and Eustaquio B. Cesa , G.R. No. 120082, September 11, 1996: "As a general rule, the power to tax is an incident of sovereignty and is unlimited in its range , acknowledging in its very nature no limits, so that security against its abuse is to be found only in the responsibility of the legislature which imposes the tax on the constituency who are to pay it . Nevertheless, effective limitations thereon may be imposed by the people through their Constitutions. Our Constitution, for instance, provides that the rule of taxation shall be uniform and equitable and Congress shall evolve a progressive system of taxation. So potent indeed is the power that it was once opined that 'the power to tax involves the power to destroy.' Verily, taxation is a destructive power which interferes with the personal and property rights of the people and takes from them a portion of their property for the support of the government. Accordingly, tax statutes must be construed strictly against the government and liberally in favor of the taxpayer. But since taxes are what we pay for civilized society, or are the lifeblood of the nation, the law frowns against exemptions from taxation and statutes granting tax exemptions are thus construed strictissimi juris against the taxpayer and liberally in favor of the taxing authority . A claim of exemption from tax payments must be clearly shown and based on language in the law too plain to be mistaken. Elsewise stated, taxation is the rule, exemption therefrom is the exception. However, if the grantee of the exemption is a political subdivision or instrumentality, the rigid rule of construction does not apply because the practical effect of the exemption is merely to reduce the amount of money that has to be handled by the government in the course of its operations. (Underscoring and emphasis supplied). AHDacC The power to tax is primarily vested in the Congress; however, in our jurisdiction, it may be exercised by local legislative bodies, no longer merely by virtue of a valid delegation as before, but pursuant to direct authority conferred by Section 5, Article X of the Constitution. Under the latter, the exercise of the power may be subject to such guidelines and limitations as the Congress may provide which, however, must be consistent with the basic policy of local autonomy." In the case of Benguet Corporation vs. Central Board of Assessment Appeals, Local Board of Assessment Appeals of the Province of Benguet and Municipal Assessor of Itogon, Benguet, G.R. No. 100959 , June 29, 1992: "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, in 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.' cAaDHT 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 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." In the performance of its duties and functions to adjudicate appeals in the assessment of real properties on the basis of substantial and relevant evidence, as mandated under Section 230 of R.A. 7160, this Board must now blaze a trail to reconcile the apparent conflicts and contradictions in the provisions of R.A. 9511 and R.A. 7160 in the spirit of the Rule in Statutory Construction "UT MAGIS VALEAT QUAM PEREAT" (Provisions of law must be viewed in their totality; that they should stand together rather than fall apart). The clauses and phrases of a statute must not be taken separately, but in relation to the statute's totality. Unless clearly repugnant, the provisions of statutes must be reconciled. 29 Thus we find relevance in the dissertations of petitioner-appellant NGCP raised in paragraphs 82 to 90 of the instant Appeal, but only as applied to the intent "RATIO LEGIS" of the grant of tax privileges under R.A. 9511, Section 9 in relation to the provision of R.A. 7160, Sections 16 and 18 allowing for the classification of certain SPECIAL CLASSES OF REAL PROPERTY, including improvements thereon, by way of incentives for entities rendering essential services on health, water, electricity, etc. Although under Section 234 of R.A. 7160, NGCP cannot claim outright tax exemptions on the subject real properties, there is yet an avenue for reliefs by way of Sections 16 and 18 of the same Local Government Code, R.A. 7160. Such grant of tax incentives may be viewed as consistent with the doctrines laid down by the Supreme Court in the aforecited cases of Mactan Cebu International Airport Authority vs. Hon. Ferdinand Marcos, et al. ; and Benguet Corporation vs. CBAA, et al. The restrictions on the actual exercise of the delegated power granted by the Legislature to the LGUs must be subject to the Constitutional mandate "that the rule on taxation must be uniform and equitable." Thus, although NGCP may not be exempt from payment of taxes on the subject real properties, the level of assessment must not be so arbitrary, diverse and disproportionate as to be violative of the Constitutional limitations that taxation must be uniform and equitable. The September 19, 2012 Summary of Assessment/Billing Statement of Real Property which was sent to NGCP by Respondents-Appellees Provincial and Municipal Assessor demanding the total amount of P5,843,632.40 is now being assailed by petitioner-appellant NGCP before the LBAA and before this Central Board of Assessment Appeals, embodied in paragraph 22 of the instant petition. The subject Summary of Assessment and Billing Statement reads thus: IDSEAH "22. Based on the Tax Declarations, the real properties covered by the Assessment are parcels of land, buildings and machineries classified as industrial/agricultural at different assessment levels up to 80%, as follows: TD Number (CY 2011) Kind of Property Classification Assessment Level TD Number (CY 2012) Assessment Level Period Covered Total Tax Due 06-08-0006-02288 Control House Industrial Building 70% 11-08-0006-00650 65% 2011-2012 P66,420.40 06-08-0006-02289 Warehouse Industrial Building 75% 11-08-0006-00651 70% 2011-2012 254,527.20 06-08-0006-02290 Pump House Industrial Building 35% 11-08-0006-00652 30% 2011-2012 4,568.80 06-08-0006-02291 Guard House Industrial Building 30% 11-08-0006-00653 25% 2011-2012 2,267.20 06-08-0006-02292 Fence Industrial Structure 50% 11-08-0006-00654 45% 2011-2012 17,087.80 06-08-0006-02293 Water Tank Industrial Structure 30% 11-08-0006-00655 30% 2011-2012 3,611.00 06-08-0006-02294 Fuel Storage Tank Industrial Structure 30% 11-08-0006-00656 25% 2011-2012 845.80 06-08-0006-02295 Sentry Tower Industrial Structure 60% 11-08-0006-00657 55% 2011-2012 28,624.00 06-08-0006-02296 Microwave Tower Industrial Structure 60% 11-08-0006-00658 55% 2011-2012 31,580.80 06-08-0006-02297 Transmission Towers Industrial Structure 75% 11-08-0006-00659 70% 2011-2012 275,261.20 06-08-0006-02298 Gen. Set, Clark Fire pump, Paterson Jockey, control panel, diesel engine, submersible pump Industrial Machinery 80% 11-08-0006-00662 80% 2011-2012 690,935.20 06-08-0006-02299 Substation, street lights, lighting fixtures, distribution transformer Industrial Structure 80% 11-08-000-00663 80% 2011-2012 4,449.846.00 06-08-0006-02300 Air-conditioner Industrial Machinery 80% 11-08-0006-00664 80% 2011-2012 5,928.00 06-08-0006-00556 30 Land Industrial Land 11-08-0006-00661 5% 2011-2012 11,962.60 06-08-0006-00557 31 Land Agri Land 11-08-0006-00670 20% 2011 166.40 P5,843,632.40 The Bureau of Local Government Finance (BLGF) of the Department of Finance (DOF), in the exercise of its rule-making power, laid down the specific guidelines on the application of the provisions of R.A. No. 7160 on local taxation. In said DOF-BLGF Circular No. 01-2007, the BLGF categorically stated that lands, buildings and improvements owned by Transco shall be assessed for real property taxation based on the ten percent (10%) assessment level pursuant to Section 218 of R.A. 7160 . HCaDIS The logic and rationale of this conclusion is fortified by the recent enactment of Executive Order No. 173, s. 2014 entitled "Reduction and Condonation of Real Property Taxes and Interest/Penalties Assessed on the Power Generation Facilities of Independent Power Producers under Build-Operate-Transfer Contracts with Government-Owned and/or -Controlled Corporations. The RATIO LEGIS behind the recent enactment by the President of E.O. No. 173 could be applied to the proper interpretation of Section 9 R.A. 9511 to justify the conclusion that under existing laws and regulations, the subject properties of NGCP may be deemed as included under the rule on SPECIAL CLASSES OF REAL PROPERTY under Section 16, R.A. 7160 and therefore NGCP may be entitled to ten percent (10%) assessment levels on the subject properties. E.O. No. 173 enumerates the purposes for those tax reliefs/incentives for government-owned or private entities within the context of the present conditions and the impending or incipient power crisis, thus: "WHEREAS, under Section 234 of Republic Act No. 7160 (Local Government Code of 1991), Government-Owned and/or -Controlled Corporations (GOCCs) engaged in the generation and transmission of electricity enjoy a number of exemptions/privileges with respect to real property taxes, including an assessment of 10% on all its lands, buildings, machineries and other improvements (Sections 216 and 218), as well as an exemption for all machinery and equipment that are actually, directly and exclusively used in the generation and transmission of electric power and machinery and equipment used for pollution control and environmental protection." aCIHcD "WHEREAS, various Local Government Units have taken the position. . . x x x" "WHEREAS, the payment of said real property taxes by the affected IPPs, some of which obligation have been contractually assumed by the GOCCs and carries the full faith of the National Government, threatens the financial stability of the GOCCs, the government's fiscal consolidation efforts, and the stability of energy prices." "WHEREAS, the forcible collection of the subject real property taxes by the LGUs concerned will trigger massive direct liabilities on the part of National Power Corporation/Power Sector Assets and Liabilities Management Corporation and other affected GOCCs, may increase the cost of electricity, and may trigger further cross-defaults and significant economic losses across all sectors." Issue No. 4: WHETHER OR NOT NGCP IS EXEMPTED FROM PAYMENT OF THE REAL PROPERTY TAX ON SUBJECT PROPERTIES BY VIRTUE OF SECTION 9 OF R.A. 9511, NGCP'S LEGISLATIVE FRANCHISE. NGCP says that it is exempted from payment of the real property tax by virtue of Section 9 of R.A. 9511, NGCP's franchise, enacted by Congress on December 1, 2008 and made effective on December 20, 2008. As quoted by NGCP, said Section 9 of R.A. 9511 provides as follows: AHCETa "SEC. 9. Tax Provisions. In consideration of the franchise and rights 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 the franchise . Said tax shall be 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 . "Provided, That the Grantee, its successors or assigns, shall be liable to pay the same taxes on their real estate, buildings and personal property, exclusive of this franchise, as other corporations are now or hereby ( sic , should be "hereafter") may be required by law to pay: Provided, further, That payment by Grantee of the concession fees due to PSALM under the concession agreement shall not be subject to income tax and value-added tax (VAT)." From NGCP's point of view, "It is clear from the foregoing provision that apart from the 3% franchise tax due to the national government, NGCP is exempt from payment of the RPT 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 , including local government units (LGUs)." 32 cHaCAS NGCP conveniently omitted the phrase " on its franchise, rights, privileges, receipts, revenues and profits ." The phrase "any and all taxes" contemplated by the "in lieu of all taxes" clause in the first paragraph of Section 9, R.A. 9511, refers to franchise tax and other taxes that any authority may try to impose on the franchise, or earnings thereof apart from, and in addition to, the three percent (3%) franchise tax imposed under Section 9, R.A. 9511. NGCP argues that "The phrase 'on properties used in connection with its franchise, from which taxes, duties and charges, the Grantee is hereby expressly exempted' could not be clearer. It construes the above-cited provision to be a categorical statement that NGCP is exempt from payment of real property tax on all properties that are actually, directly and exclusively used in transmission of electricity, including its machineries and buildings, thus used in the operation of its franchise." ScHADI NGCP apparently believes that the phrase "exclusive of this franchise" means that "NGCP is liable to pay only for the taxes on the real estate, buildings and personal properties that are not used or related to the operation of its franchise." In support of this contention, NGCP cites the rulings by the Supreme Court in the cases of The City Government of Quezon City, et al. vs. Bayan Telecommunications, Incorporated (Bayantel) 33 and Digital Telecommunications Philippines, Incorporated (Digitel) vs. Province of Pangasinan, et al. 34 Section 11 of RA 7633, which amended on July 20, 1992 RA 3259 (Bayantel's original franchise), reads as follows: "SEC. 11. The grantee, its successors or assigns shall be liable to pay the same taxes on their real estate, buildings and personal property, exclusive of this franchise, as other persons or corporations are now or hereafter may be required by law to pay. In addition thereto , the grantee, its successors or assigns shall pay a franchise tax equivalent to three percent (3%) of all gross receipts of the telephone or other telecommunications businesses transacted under this franchise by the grantee, its successors or assigns and the said percentage shall be in lieu of all taxes on the franchise or earnings thereof. Provided, That the grantee, its successors or assigns shall continue to be liable for income taxes payable under Title II of the National Internal Revenue Code x x x." (Emphasis supplied) Section 5 of RA 7678 (Digitel's franchise approved on February 17, 1994), states: "SECTION 5. Tax Provisions. The grantee shall be liable to pay the same taxes on their real estate, buildings, and personal property, exclusive of this franchise, as other persons or corporations are now or hereafter may be required by law to pay. In addition thereto , the grantee shall pay to the Bureau of Internal Revenue each year, within thirty (30) days after the audit and approval of the accounts, a franchise tax as may be prescribed by law of all gross receipts of the telephone or other telecommunications businesses transacted under this franchise by the grantee: Provided, That the grantee shall continue to be liable for income tax payable under Title II of the National Internal Revenue Code pursuant to Section 2 of Executive Order No. 72 unless the latter enactment is amended or repealed, in which case the amendment or repeal shall be applicable thereto x x x." (Emphasis supplied) The Second Division of the Supreme Court ruled in the Bayantel case that the phrase " exclusive of this franchise" means that "all of the franchisee's (Bayantel's) properties that are actually, directly and exclusively used in the pursuit of its franchise" are exempt from realty taxes. The Third Division of the Court, in the Digitel case, adopted the Second Division's ruling in the Bayantel case. Webster's Third International Dictionary of the English Language Unabridged (1966 ed., p. 793) defines the phrase " exclusive of " as a preposition meaning " not taking into consideration; excluding from consideration ." Webster's New World Dictionary, Warner Books Paperback Edition (1990), and Webster's New World Pocket Dictionary, Third Edition (1997), both define the phrase " exclusive of " as " not including ." Reader's Digest Encyclopaedic Dictionary, First Edition (1994), classifies the phrase " exclusive of " as a quasi-adverb meaning " not including; not counting ." In jurisprudence, a franchise, as a right and privilege, is regarded as property, separate and distinct from the property which the corporation itself may acquire. 35 HSCATc Applying the above-cited meaning of the phrase "exclusive of" and considering the fact that a franchise is an intangible personal property, the opening sentence of the second paragraph of Section 9, R.A. 9511, as simplified, would read as follows: "Provided, That the Grantee, its successors or assigns, shall be liable to pay the same taxes as other persons or corporations are now or hereafter may be required by law to pay on their (a) real estate, buildings and (b) personal property, not including this franchise, . . ." There is nothing in the wording of Section 9 of R.A. 9511 which remotely exempts NGCP from payment of the real property tax on the subject real properties. On the contrary, it is clearly stated in the second paragraph of said Section 9, that " the Grantee, its successors or assigns, shall be liable to pay the same taxes on their real estate, buildings . . . as other corporations are now or hereafter may be required by law to pay." However, in Digital Telecommunications Philippines, Inc. vs. City Government of Batangas, et al. , 36 the Supreme Court, en banc , reversed the decisions of its Second and Third Divisions in the Bayantel and Digitel cases, respectively, saying that: EHaASD "The interpretation of the phrase "exclusive of this franchise" in the Bayantel and Digitel cases goes against the basic principle of construing tax exemptions. In PLDT v. City of Davao (G.R. No. 143867, 25 March 2003, 399 SCRA 442, 453), the Court held that tax exemptions should be granted only by clear and unequivocal provision of law on the basis of language too plain to be mistaken. They cannot be extended by mere implication or inference." NGCP argues that " properties used in connection with its franchise " are exempt from payment of the real property tax and other taxes, duties and charges. A similar provision is found in R.A. 2036, as amended by R.A. 4054, the franchise of Radio Communications of Philippines, Inc. (RCPI), Section 14 of which provides: "Sec. 14. In consideration of the franchise and rights granted and any provision of law to the contrary notwithstanding, the grantee shall pay the same taxes as are now or may hereafter be required by law from other individuals, co-partnerships, private, public or quasi-public associations, corporations or joint stock companies, on real estate, buildings and other personal property except radio equipment, machinery and spare parts needed in connection with the business of the grantee, which shall be exempt from customs duties, tariffs and other taxes , as well as those properties declared exempt in this section. In consideration of the franchise , a tax equal to one and on-half per centum of all gross receipts from the business transacted under this franchise by the grantee shall be paid to the Treasurer of the Philippines each year, within ten days after the audit and approval of the accounts as prescribed in this Act. Said tax shall be in lieu of any and all taxes of any kind, nature or description levied, established or collected by any authority whatsoever, municipal, provincial or national, from which taxes the grantee is hereby expressly exempted." (Emphasis supplied) IDTSEH In RCPI vs. Provincial Assessor of South Cotabato, et al. (G.R. No. 144486, April 13, 2005), the Supreme Court ruled that "The 'in lieu of all taxes' clause in Section 14 of RA 2036, as amended by RA 4054, cannot exempt RCPI from the real estate tax because the same Section 14 expressly states that RCPI "shall pay the same taxes x x x on real estate, buildings x x x." As in the case of RCPI, the exemption from customs duties, tariffs and other taxes is on the properties IMPORTED and used in connection with NGCP's franchise . The process of importation does not involve real property taxation. NGCP quoted the case of Smart vs. City of Davao 37 where the Supreme Court, as quoted by NGCP itself, ruled: "If Congress intended the 'in lieu of all taxes' clause in Smart's franchise to also apply to local taxes, Congress would have expressly mentioned the exemption in Section 9(b) of Clavecilla's old franchise, as follows: DaIAcC 'x x x in lieu of any or all taxes of any kind, nature and description, levied, collected by any authority whatsoever, municipal and provincial or national, from which the grantee is hereby expressly exempted, x x x (Emphasis supplied.)' "However, Congress did not expressly exempt Smart from local taxes , x x x. (Emphasis CBAA's) "Smart's legislative franchise under R.A. 7229 states: 'Section 9. Tax Provisions. The grantee, its successor or assign shall be liable to pay the same taxes on their real estate, buildings and personal property, exclusive of this franchise, as other persons or corporations are now or hereafter may be required by law to pay. In addition thereto , the grantee, its successor-in-interest shall pay a franchise tax equivalent to three percent (3%) of all gross receipts of the business transacted under this franchise by the grantee, its successors or assigns and the said percentage shall be in lieu of all taxes on this franchise or earnings thereof : x x x.' (Omission NGCP's) SICDAa NGCP also cited the case of Commissioner of Internal Revenue vs. Philippine Airlines 38 where the Supreme Court, also as quoted by NGCP, ruled: "The language used in Section 13 of Presidential Decree No. 1590, granting respondent tax exemption, is clearly all-inclusive. The basic corporate income tax or franchise tax paid by respondent shall be " in lieu of all other taxes, duties, royalties, registration, license, and other fees and charges of any kind, nature, or description imposed, levied, established, assessed or collected by any municipal, city, provincial, or national authority or government agency, now or in the future x x x," except only real property tax. Even a meticulous examination of Presidential Decree No. 1590 will not reveal any provision therein limiting the tax exemption of respondent to final withholding tax on interest income or excluding from said exemption the OCT." NGCP did not bother to quote the provisions of Section 13 of P.D. 1590, upon which the Court based the above-quoted "ruling." The pertinent portions of Section 13 of Presidential Decree No. 1590, as quoted by the Court in the above-entitled case, follow: "Section 13. In consideration of the franchise and rights hereby granted, the grantee shall pay to the Philippine Government during the life of this franchise, whichever of subsections (a) and (b) hereunder will result in a lower tax: (a) The basic corporate income tax based on the grantee's annual net taxable income computed in accordance with the provisions of the National Internal Revenue Code; or TAacHE (b) A franchise tax of two per cent (2%) of the gross revenues, derived by the grantee from all sources, without distinction as to transport or non-transport operations; provided, that with respect to international air-transport service, only the gross passenger, mail and freight revenues from its outgoing flights shall be subject to this tax. The tax paid by grantee under either of the above alternatives shall be in lieu of all other taxes, duties, royalties, registration, license, and other fees and charges of any kind, nature, or description imposed, levied, established, assessed or collected by any municipal, city, provincial, or national authority or government agency, now or in the future x x x. xxx xxx xxx The grantee, shall, however, pay the tax on its real property in conformity with existing law . " (Emphasis supplied) As the Supreme Court pointed out in both the Smart and Philippine Airlines cases, the imposition of the franchise tax does not in any way affect the liability to pay the real property tax. Simply stated, the Philippine Airlines was exempted from all taxes, duties, etc., except : (a) The basic corporate income tax; or (b) A franchise tax of two per cent (2%), whichever is lower; but it shall pay real property tax in conformity with existing law . DHIcET WHEREFORE , in view of all the foregoing, this Board hereby renders judgment finding merit in the instant appeal insofar as the FIRST ASSIGNMENT OF ERROR is concerned and hereby rules: I. THAT THE HEREIN APPEALED RESOLUTION of the Respondent LBAA dated February 18, 2013 be DECLARED NULL AND VOID, FOR BEING CONTRARY TO LAW; 2. That the Reliefs prayed for by petitioner-appellant be partially DENIED INSOFAR AS THE PRINCIPAL PRAYER FOR EXEMPTION from Real Property Taxes on the subject properties relative to the foregoing disquisitions of this Board in the Issues Nos. 2 and 4 as discussed above. 3. However, as to the Alternative Prayer for Reliefs as discussed under Issue No. 3 above, the same is hereby GRANTED, and hence the subject properties of NGCP as listed in its ALTERNATIVE PRAYER FOR RELIEF should be CLASSIFIED under SPECIAL CLASSES OF REAL PROPERTY and should be subject to a uniform and equitable assessment level of 10%, to wit: HDICSa a) Warehouse b) Guardhouse c) Fence d) Water Tank e) Fuel Storage Tank f) Sentry Tower g) 6,030 and 2,520 square meters of land SO ORDERED. Manila, Philippines, February 27, 2015. HcDSaT (SGD.) MANUEL DE JESUS SIAYNGCO Chairman (SGD.) ROBERTO D. GEOTINA Member (SGD.) THELMA A. MARIANO Member Footnotes 1. "Annex "B" of the Petition, letter signed by Mr. Alvin G. Elorde, Provincial Treasurer, and noted by Mr. Adolph Edward G. Plaza, Provincial Governor"; Records, p. 59. 2. "Attached as Annexes "C" to "DD" of the Petition"; Records, pp. 60-87. 3. "Except for properties covered by Tax Declaration Nos. 11-08-0006-00661 (Annex "CC" of the Petition) and 11-08-0006-00670 (Annex "DD" of the Petition)." 4. "Annex "EE" of the Petition." 5. "Section 5.01 of the Concession Agreement, a certified true copy of the said provision as Annex "FF" of the Petition." 6. "CA-G.R. SP. 69388, November 25, 2003." 7. " Ibid. " 8. "G.R. No. 155491 (16 September 2008)." 9. " Id. " 10. " Id. " 11. " Id. " 12. " Id. " 13. "G.R. No. 156040, 11 December 2008." 14. " Id. " 15. " Id. " 16. " Gaanan vs. Intermediate Appellate Court , n 145 SCRA 112 (1986; Aisporna vs. Court of Appeals , 113 SCRA 459 (1982)." 17. " Commissioner of Internal Revenue vs. TMX Sales , G.R. No. 83736, 15 January 1992, 205 SCRA 184." 18. " Aboitiz Shipping Corporation vs. City of Cebu , G.R. No. L-14526, 31 March 1965, 13 SCRA 449; Lopez vs. El Hogar Filipino , n 47 Phil. 249 (1925); Chartered Bank vs. Imperial , 48 Phil. 931 (1921)." 19. "G.R. No. 162015, 06 March 2006." 20. " Digitel Communications, Philippines vs. Province of Pangasinan , G.R. No. 152534, 23 February 2007." 21. " Supra , note 38." 22. "Electricity Rate Highest in Asia and Oceania Region, Myrna Velasco, Business World On Line, March 28, 2012." 23. "High cost, uncertain supply of electricity driving away electronics firms seipi," Paulo Anonuevo, Interacksyon.com. February 12, 2013." 24. "G.R. No 180345, 25 November 2009." 25. Annex "A" NGCP's Appeal; Records, pp. 32-33. 26. Annex "B" to NGCP's Petition before the LBAA. 27. G.R. No. 171586, July 15, 2009. 28. G.R. No. 90639, February 21, 1990, 182 SCRA 482. 29. Sajonas vs. Court of Appeals , 258 SCRA 79 (1996). 30. "There is no copy of the Tax Declaration but it was mentioned in Tax Declaration No. 11-08-0006-00661 (Annex "CC" of the Petition)." 31. "There is no copy of the Tax Declaration but it was mentioned in Tax Declaration No. 11-08-0006-00670 (Annex "DD" of the Petition)." 32. Par. 50, "Notice of Appeal with Memorandum on Appeal, Records, p. 17. 33. G.R. No. 162015, March 6, 2006. 34. G.R. No. 152534, February 23, 2007. 35. Fletcher's Cyclopaedia of the Law of Private Corporation, Vol. 6A, pages 427-428, citing Horn Silver Min. Co. vs. New York , 143 U.S. 305 36 L. Ed. 164 12 Sup. Ct.-403; City of Campbell vs. Arkansas-Missouri Power Co. , 55F (2d) 560, as quoted in The City Government of Batangas vs. Republic Telephone Company, Inc. , CA-G.R. CV No. 21897, January 21, 1992. 36. G.R. No. 156040, December 11, 2008. 37. G.R. No. 155491, 16 September 2008. 38. G.R. No. 180043, 04 July 2009. n Note from the Publisher: Written as Gaanon vs. Intermediate Appellate Court in the original document. n Note from the Publisher: Written as Lopes vs. El Hogar Filipino in the original document.