G.R. No. 213157 & G.R. No. 213558, August 10, 2016.
NATIONAL GRID CORPORATION OF THE PHILIPPINES, Petitioner, vs. OFELIA M. OLIVA, in her official capacity as the CITY TREASURER OF CEBU CITY, Respondent. ( G.R. No. 213157 )

OFELIA M. OLIVA, in her capacity as CITY TREASURER OF CEBU CITY, Petitioner, vs. NATIONAL GRID CORPORATION OF THE PHILIPPINES, Respondent. (G.R. No. 213558)

FACTS

On September 24, 2009, the National Grid Corporation of the Philippines (NGCP) received from the Office of the City Treasurer of Cebu City three Final Notices of Demand dated September 16, 2009, addressed to National Power Corporation/Transco (NPC/TRANSCO) for real property taxes on three commercial buildings for various periods from 2001-2009, totaling ₱2,792,862.41. Pursuant to Section 252 of the Local Government Code, NGCP paid the total amount under protest on November 11, 2009, and filed a written protest on the same day. The City Treasurer did not act on the protest. NGCP sent its appeal by registered mail on March 11, 2010, to the Local Board of Assessment Appeals (LBAA) of Cebu City. The mail was returned with the notation “RTS, insufficient address.” On April 26, 2010, NGCP filed a Motion to Admit Petition with the LBAA. The LBAA dismissed NGCP’s petition for being filed out of time. The Central Board of Assessment Appeals (CBAA) dismissed NGCP’s appeal, finding NGCP liable for real property taxes on the subject properties for the year 2009, and ruled that NGCP should claim from NPC/TRANSCO the amount of taxes paid for the years 2001 to 2008. The Court of Tax Appeals En Banc (CTA-EB) reversed the CBAA, finding NGCP liable only for the real property tax for 2009, reducing NGCP’s liability from ₱2,792,862.41 to ₱338,472.67, and ordering the City Treasurer to refund NGCP the excess payment of ₱2,454,389.74.

ISSUE

Whether the National Grid Corporation of the Philippines (NGCP) is exempt from payment of real property taxes on the subject properties, or alternatively, whether these properties qualify for special assessment as a special class under the Local Government Code.

RULING

The Supreme Court DENIED the petitions and AFFIRMED the Decision of the Court of Tax Appeals En Banc dated November 13, 2013. The Court held:
1. NGCP is not exempt from real property tax. While Section 9 of Republic Act No. 9511 (NGCP’s franchise) contains an “in lieu of all taxes” clause in its first paragraph, the second paragraph explicitly states that NGCP shall be liable to pay taxes on its real estate, buildings, and personal property. Furthermore, the tax exemption privileges of its predecessors, NPC and TRANSCO, were withdrawn by the Local Government Code.
2. The subject properties do not constitute a “special class” of real property under Sections 216 and 218(d) of the Local Government Code. Although NGCP is engaged in the generation and transmission of electric power, it is a private corporation. Sections 216 and 218(d) apply only to real properties owned by the Republic of the Philippines or any of its political subdivisions and any government-owned or controlled corporation, which are not the case here as the properties are owned by NPC/TRANSCO but used by the private entity NGCP.
3. NGCP is liable for real property taxes only for the year 2009. The Court agreed with the CTA-EB that NGCP, as the beneficial user of the properties starting from the formal turn-over on January 15, 2009, is liable for taxes for that year under Section 234(a) of the Local Government Code. However, it is not liable for taxes for the years 2001 to 2008, when NPC and TRANSCO were the owners of record. The City Treasurer of Cebu City was ordered to refund NGCP the excess payment corresponding to those prior years.