Hedcor Sibulan, Inc. v. Ellica

[CBAA CASE NO. M-44-2018. July 7, 2020.] (LBAA Case No. 2017-002) HEDCOR SIBULAN, INC. , petitioner-appellant , vs. LOCAL BOARD OF ASSESSMENT APPEALS OF DAVAO DEL SUR , appellee , MA. LYDIA M. ELLICA, in her capacity as PROVINCIAL TREASURER OF DAVAO DEL SUR and ALEJANDRA A. MANTO, in her capacity as ICO-MUNICIPAL TREASURER OF STA. CRUZ, DAVAO DEL SUR , respondents-appellees . RESOLUTION On October 18, 2019, this Board rendered a Decision in the above-entitled case, the dispositive portion of which reads: " WHEREFORE , in view of all the foregoing, the instant petition is hereby GRANTED and the BOARD further rules the following: 1. Petitioner-Appellant HSI is only liable for Realty Taxes at the maximum rate of one and a half percent (1.5%) to the original cost less accumulated normal depreciation or net book value as provided by Section 15 (c) of the Republic Act No. 9513, which covers basic RPT and SEF on the following properties bearing tax declaration numbers, to wit : A-11-0008-00027 A-11-0008-00028 A-11-0008-00029 A-11-0014-00002 A-11-0014-00003 A-11-0014-00004 A-11-0017-00005 2. Respondent-Appellee shall refund or issue tax credits in favor of HSI in the amount representing the excess of the maximum special realty tax of one and a half percent (1.5%) on the aforementioned described properties for the third quarter of CY 2016; and 3. Respondent-Appellee shall apply a realty tax rate not higher than the one and a half percent (1.5%) provided in Section 15 (c) of the Republic Act No. 9513 for the civil works, equipment, machinery and other improvements actually and exclusively used for RE facilities. SO ORDERED. " Respondents-Appellees received a copy of the said Decision on December 6, 2019 and on January 20, 2020 this Board issued Notice giving the parties ten (10) days from receipt of the said Notice to submit Comment/Opposition on the Motion filed by the adverse party, pursuant to Section 23, Rule VII of the Consolidated and Revised Rules of Procedure before the LBAA and the CBAA dated May 2, 2016. Petitioner-Appellant's Opposition (Re: Motion for Reconsideration dated 18 December 2019) was received by this Board on 5 March 2020. After perusal of the discussions in the Decision dated October 18, 2019, and the arguments advanced by Provincial Treasurer of Davao del Sur and the ICO-Municipal Treasurer of the Municipality of Sta. Cruz, Davao del Sur in the aforesaid Motion for Reconsideration, there are no convincing reasons for the Honorable Central Board to depart from its earlier decision. First, the contention of the movants that Section 235 of R.A. 7160 has not been repealed by Section 15 (c) of R.A. 9513 is misplaced. Enlightening is Section 39 of R.A. 9513 which states: " Section 39. Repealing Clause . Any Law, presidential decree of Issuance, executive order, letter of instruction, administrative rule of regulation contrary to or inconsistent with the provisions of this Act is hereby repealed, modified or amended accordingly ." (emphasis supplied) The above-quoted provision is in harmony with Section 15 (c) of R.A. 9513 which is the law subject matter of the controversy, to wit: "Section 15. Incentives for Renewable Energy Projects and Activities. RE developers of renewable energy facilities, including hybrid systems, in proportion to and to the extent of the RE component, for both power and non-power applications, as duly certified by the DOE, in consultation with the BOI, shall be entitled to the following incentives: xxx xxx xxx (c) Special Realty Tax Rates on Equipment and Machinery. Any law to the contrary notwithstanding, realty and other taxes on civil works, equipment, machinery, and other improvements of a Registered RE Developer actually and exclusively used for RE facilities shall not exceed one and a half percent (1.5%) of their original cost less accumulated normal depreciation or net book value: Provided, That in case of an integrated resource development and generation facility as provided under Republic Act No. 9136, the real property tax shall only be imposed on the power plant." (emphasis ours) A cardinal rule in statutory construction is that when the law is clear and free from any doubt or ambiguity, there is no room for construction or interpretation. Only when the law is ambiguous or of doubtful meaning may the Court interpret or construe its true intent. Henceforth, while Section 15 (c) of R.A. 9513 does not categorically mention the word "Special Education Fund" of Section 235 of R.A. 7160, the imposition of the same on HIS, as a separate and distinct tax obligation, runs counter to the provision under R.A. 9513. R.A. 9513, being the most recent legislative must be viewed as an express and real intention on the part of Congress to limit the local government units' delegated taxing power on renewable energy resources within their jurisdiction. In this light, it cannot be argued otherwise that Section 15 (c) of R.A. 9513, in relation to Section 39 thereof, expressly repealed Section 235 of R.A. 7160. Second, under the present Constitution, where there is neither a grant nor a prohibition by statute, the tax power of municipal corporations must be deemed to exist, although Congress may provide statutory limitations and guidelines. The basic rationale for the current rule on local fiscal autonomy is the strengthening of LGU's and the safeguarding of their viability and self-sufficiency through a direct grant of general and broad tax powers. Nevertheless, the fundamental law did not intend the delegation of to be absolute and unconditional. The legislature must still see to it that (a) the taxpayer will not be over-burdened or saddled with multiple and unreasonable impositions; (6) each LGU will have its fair share of available resources; (c) the resources of the national government will not be unduly disturb; and (d) local taxation will be fair, uniform and just. The Supreme Court in the case of Mactan Cebu International Airport Authority vs. Hon. Marcos , G.R. No. 120082, September 11, 1996 is very clear, to wit: "The power to tax is primarily vested in the Congress, however, in our jurisdiction, it may be exercised local legislative bodies, no longer merely by virtue of valid delegation as before, but pursuant to direct authority conferred by Section 5, Article X of the Constitution 22. 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 basic policy of local autonomy." It is further submitted that the incentives granted under R.A. 9513 are considered tax exemptions which the Congress may grant to certain persons, pursuant to a declared national policy. This power of the Congress cannot be overridden by the power of the local government units to impose taxes. Moreover, as held by the Court of Tax Appeals in Calajate vs. North Luzon Renewable Energy Corporation (2020) , R.A. 9513 and R.A. 7160 must be read in harmony. As held in the case of OSG vs. CA and the Municipal Government of Saguiran, Lanao del Sur , G.R. No. 199027, June 9, 2014, viz. : " It is axiomatic in statutory construction that a statute must be interpreted, not only be consistent with itself, but also harmonize with other laws on the same subject matter, as to form a complete, coherent and intelligible system . The rule is expressed in the maxim, 'interpretare et concordare legibus est optimus interpretandi,' or every statute must be so construed and harmonized with other statutes as to form a uniform system of jurisprudence." (emphasis ours) Finally, indeed tax laws, including tax exemptions, are construed strictly against the taxpayer and liberally in the favor of the government as taxes are its lifeblood to continuously provide essential services to the People. Nevertheless, tax laws, like any other laws, when became the subject of a controversy as regards to its interpretation and purpose, a resort to the legislative intent for its enactment is the best and safest measure on how to understand and implement the same. The declared state policies under Section 2 of R.A. 9513 must be taken into consideration, to wit: " Section 2. Declaration of Policies. It is hereby declared the policy of the State to: xxx xxx xxx (b) Increase the utilization of renewable energy by institutionalizing the development of national and local capabilities in the use of renewable energy systems, and promoting its efficient and cost effective commercial application by providing fiscal and non-fiscal incentives; (c) Encourage the development and utilization of renewable energy resources as tools to effectively prevent or reduce harmful emissions and thereby balance the goals of economic growth and development with the protection of health and the environment; xxx xxx xxx" Thus, the Central Board is correct when it relied on the discussions of Congress prior to the enactment of R.A. 9513. As can be clearly deduced from the Bicameral Conference Committee on the Disagreeing Provisions of Senate Bill No. 2046 and House Bill No. 4193 on October 7, 2008, the goal of Section 15 is to provide as much incentives as can be given to the Renewable Energy industry, where HIS is clearly engaged into. Moreover, the foregoing discussion establishes the conclusion that the Special Education Fund under Section 235 of R.A. 7160 was intended to be part and parcel of the phrase "other taxes" of Section 15 (c) of R.A. 9513. WHEREFORE , in view of the foregoing, the Motion for Reconsideration filed by the Respondents-Appellees is hereby DENIED. SO ORDERED. Manila, Philippines, July 7, 2020. VACANT Chairperson (SGD.) RAMON A. I. BANTA Member (SGD.) SILVERIO Q. CASTILLO Member Officer-in-Charge