GR 169234; (October, 2013) (Digest)
G.R. No. 169234, October 2, 2013
Camp John Hay Development Corporation v. Central Board of Assessment Appeals, et al.
FACTS
The City Assessor of Baguio issued thirty-seven real property tax assessments against Camp John Hay Development Corporation (CJHDevCo) for buildings it owned and for land owned by the Bases Conversion Development Authority (BCDA) but leased to CJHDevCo within the John Hay Special Economic Zone. CJHDevCo appealed to the Local Board of Assessment Appeals (LBAA), arguing the assessments lacked legal basis because it was exempt from all taxes, including real property taxes, pursuant to Republic Act No. 7227 (the Bases Conversion and Development Act of 1992). The LBAA deferred hearings, ordering CJHDevCo to first pay the assessed taxes under protest as required by the Local Government Code.
The Central Board of Assessment Appeals (CBAA) affirmed the LBAA’s order for payment under protest and remanded the case for further proceedings. CJHDevCo elevated the matter to the Court of Tax Appeals En Banc, which dismissed the petition. The CTA held that CJHDevCo failed to comply with the mandatory payment-under-protest requirement and that the issue of tax exemption pertained to the correctness of the assessment, a matter the LBAA must first resolve on the merits.
ISSUE
Whether CJHDevCo must first pay the assessed real property taxes under protest before its claim for tax exemption can be adjudicated by the LBAA.
RULING
Yes. The Supreme Court affirmed the rulings of the lower tribunals. The Court clarified that a claim for tax exemption does not challenge the local assessor’s authority to assess the property but rather questions the correctness of the assessment. Consequently, such a claim falls under the protest mechanism of Section 252 of the Local Government Code, which mandates payment under protest as a condition precedent for an appeal. The law explicitly states that an appeal shall not suspend the collection of the tax, pending final outcome.
The legal logic is procedural and jurisdictional. The requirement for payment under protest is mandatory and jurisdictional for the LBAA to acquire authority to entertain the appeal on the merits, including the claim of exemption. CJHDevCo’s reliance on its alleged tax-exempt status under RA 7227 is a defense that goes into the correctness of the assessment. This substantive issue can only be reached after complying with the procedural prerequisite of payment under protest. The Court emphasized that tax exemptions are construed strictly against the claimant, and the procedural rules for contesting an assessment must be strictly followed. Thus, the remand to the LBAA for further proceedings, contingent upon payment under protest, was proper.