G.R. No.

180884

June 27, 2008

EMERLINDA TALENTO in her capacity as the Provincial Treasurer of the Province of

Bataan vs. HON. REMIGIO ESCALADA, JR., Presiding Judge of the Regional Trial
Court of Bataan, Branch 3 and PETRON CORPORATION
FACTS:
Petron received from the Provincial Assessors Office a notice of revised assessment over its
machineries and pieces of equipment. Based on the revised assessment, the Provincial Treasurer
of Bataan issued a notice informing Petron that its total liability is P1,731,025,403.06,
representing deficiency real property tax.
Petron then filed a petition with the Local Board of Assessment Appeals (LBAA) contesting the
revised assessment on the following grounds:
Subject assessment pertained to properties that have been previously declared
Assessment covered periods of more than 10 years which is not allowed under the LGC
Fair market value or replacement cost used by the Provincial Treasurer included items
which should be properly excluded
Prompt payment of discounts were not considered in determining the FMV
Subject assessment should take effect a year after or on January 1, 2008
Petron also sought the approval of a surety bond in the amount of P1,286,057,899.54.
Petron then received a final notice from the Provincial Treasurer of delinquent real property tax
with a warning that the subject properties would be sold should Petron fail to pay. Petron replied,
stating that in view of the pendency of its appeal with the LBAA, any action by the Treasurers
Office on the subject properties would be premature.
With the issuance of a Warrant of Levy against its machineries and pieces of equipment, Petron
filed an urgent motion to lift the final notice of delinquent real property tax and warrant of levy
with the LBAA.
Subsequently, Petron received a notice of sale of its properties and withdrew its motion to lift the
final notice of delinquent tax. Petron then filed with the RTC for prohibition with prayer for the
issuance of TRO and preliminary injunction.
The RTC issued a TRO for 20 days, enjoining the Provincial Treasurer from proceeding with the
public auction. It then issued an order granting Petrons petition for issuance of writ of
preliminary injunction, subject to Petron posting a bond in addition to its previously posted
surety.
ISSUES: Whether the collection of taxes may be suspended by reason of the filing of an appeal
and posting of a surety bond
LAWS:
Sec. 231, Local Government Code
Section 231. Effect of Appeal on the Payment of Real Property Tax. - Appeal on assessments of
real property made under the provisions of this Code shall, in no case, suspend the collection of
the corresponding realty taxes on the property involved as assessed by the provincial or city
assessor, without prejudice to subsequent adjustment depending upon the final outcome of the
appeal.

 Sec. 252, Local Government Code

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.
Sec. 7, Rule V, Rules of Procedure of the LBAA
Section 7. Effect of Appeal on Collection of Taxes. An appeal shall not suspend the collection of
the corresponding realty taxes on the real property subject of the appeal as assessed by the
Provincial, City or Municipal Assessor, without prejudice to the subsequent adjustment
depending upon the outcome of the appeal. An appeal may be entertained but the hearing thereof
shall be deferred until the corresponding taxes due on the real property subject of the appeal shall
have been paid under protest or the petitioner shall have given a surety bond, subject to the
following conditions:
(1) the amount of the bond must not be less than the total realty taxes and penalties due as
assessed by the assessor nor more than double said amount;
(2) the bond must be accompanied by a certification from the Insurance Commissioner (a) that
the surety is duly authorized to issue such bond; (a) that the surety bond is approved by and
registered with said Commission; and (c) that the amount covered by the surety bond is within
the writing capacity of the surety company; and
(3) the amount of the bond in excess of the surety companys writing capacity, if any, must be
covered by Reinsurance Binder, in which case, a certification to this effect must likewise
accompany the surety bond.
Sec. 11, RA 9282
Section 11. Who may Appeal; Mode of Appeal; Effect of Appeal;
xxxx
No appeal taken to the Court of Appeals from the Collector of Internal Revenue x x x shall
suspend the payment, levy, distraint, and/or sale of any property for the satisfaction of his tax
liability as provided by existing law. Provided, however, That when in the opinion of the Court
the collection by the aforementioned government agencies may jeopardize the interest of the
Government and/or the taxpayer the Court at any stage of the processing may suspend the

collection and require the taxpayer either to deposit the amount claimed or to file a surety bond
for not more than double the amount with the Court.
ARGUMENTS:
COMPLAINANT (TALENTO)
RESPONDENT (PETRON)
Only payment under protest shall bar the In view of the pendency of the appeal with the
collection of the realty taxes due, pursuant to LBAA, any action by the Treasurers Office on
Sections 231 and 252 of the LGC.
the subject properties would be premature.
COURTS RULING:
YES.
The general rule is based on the doctrine that taxes are the lifeblood of the government, and thus
appeal shall not suspend the collection of realty taxes. However, an exception is when the
taxpayer has shown a clear and unmistakable right to refuse or to hold in abeyance the payment
of taxes.
In this case, there is urgency and paramount necessity for the issuance of a writ of injunction,
since what is being enjoined is the sale by public auction of the properties of Petron amounting
to at least P1.7 billion and which properties are vital to its business operations.
The grounds given by Petron in contesting the assessment have a direct bearing on the
assessment made by the Provincial Treasurer. It is necessary that these issues must first be passed
upon before the properties of Petron are sold in public auction.
Furthermore, Petron has posted a surety bond equivalent to the amount of assessment due. The
posting of this bond is in accordance with Section 7, Rule V of the LBAA Rules of Procedure, as
well as with Sec. 11 of RA 9282.
Therefore, the petition of Talento, as Provincial Treasurer, should be dismissed.

G.R. No. 180200

November 25, 2013

DIGITAL TELECOMMUNICATIONS PHILIPPINES, INC. vs. JESSIE E. CANTOS

FACTS:
Digital Telecommunications Philippines was granted a legislative franchise to install and
maintain telecommunications systems throughout the Philippines. Upon seeking the renewal of
its Mayors Permit in Balayan, Batangas, it was informed by the mayor that its business
operation would be restrained should it fail to pay the assessed real property taxes. After its
failure to pay, the Permit and License Division of Balayan, Batangas, issued a Cease and Desist
Order, enjoining it from further operations.
Digital filed a case for Annulment of the Cease and Desist order before the RTC, which was
ruled in its favor. The RTC declared that the issuance of the Cease and Desist Order was without
legal basis. The RTC also ruled that Digital is only liable to pay real property taxes on properties
not used in connection with the operation of its franchise, relying on Sec. 5, RA 7678, and
construing the phrase exclusive of this franchise as limiting Digitals exemption from paying
real property tax only to properties used in furtherance of its legislative franchise to provide
telecommunications services. This ruling was elevated to the CA but was dismissed, and the
dismissal became final and executory.
Subsequently, Jessie Cantos, in his capacity as Provincial Treasurer, issued 7 Warrants of Levy
certifying that several real properties of Digital are delinquent in the payment of real property
taxes. Digital wrote to Cantos, requesting the lifting of the warrants, invoking the final decision
in the previous case decreeing Digitals exemption from payment of real property taxes.
However, the warrants remained unlifted. Thus, Digital filed a Petition for Indirect Contempt and
Prohibition with prayer for issuance of a Writ of Preliminary Injunction and/or TRO.
The RTC granted the TRO but Cantos manifested that when the TRO was served upon him, he
had already effected the sale. Thus, Digital filed a Very Urgent Manifestation and Motion to
recall and nullify the sale. The RTC denied Digitals prayer for issuance of Writ of Preliminary
Injunction, holding that it had already become moot and academic since the sale was already
consummated. The RTC also dismissed Digitals Petition for Indirect Contempt and Prohibition
against Cantos.
ISSUES:

Whether Cantos is guilty of indirect contempt when it issued the Warrants of Levy and
when it effected the public auction sale of Digitals real properties
Whether Cantos is bound by the Decision in the previous civil case which involved the
Mayor and the Chief of the Permit and License Division

LAWS:
Sec. 5, RA 7678: The grantee shall be liable to pay the same taxes on its 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 x x x
Sec. 176, RA 7160: After the expiration of the time required to pay the delinquent tax,
fee, or charge, real property may be levied on, before, simultaneously, or after the
distraint of personal property belonging to the delinquent taxpayer x x x

 Sec. 177, RA 7160: x x x any local treasurer who fails to issue or execute the warrant of
distraint or levy after the expiration of the time prescribed x x x shall be automatically
dismissed from the service after due notice and hearing.
Sec. 206, RA 7160: Every person by or for whom real property is declared, who shall
claim tax exemption for such property under this Title shall filed with the provincial, city
or municipal assessor x x x sufficient documentary evidence in support of such claim x x
x
ARGUMENTS:
COMPLAINANT (DIGITAL)
Cantos is bound by the final decision rendered
in the previous civil case under the principle of
res judicata. Cantos has a shared interest with
the defendants in that case since they are all
interested in the levy, imposition and collection
of real property tax.

RESPONDENT (CANTOS)
Cantos cannot be held liable for contempt or
for having disobeyed the court since the
decision in the previous civil case is an action
in personam and binds only the parties
impleaded therein and their successors in
interest.

The declaration that Digital is exempt from Claim for tax exemption cannot be collaterally
real property tax for properties used in the presented and resolved in a contempt
operation of its franchise is considered in rem proceeding.
and binds the property itself.
In Digital Telecommunications Philippines
Inc. vs. Province of Pangasinan, the SC ruled
that real properties that are actually, directly,
and exclusively used in the franchise are
exempt from realty tax.
COURTS RULING:
I. NO. The acts of Cantos in issuing the Warrants and in effecting the sale were not intended to
undermine the authority of the court because he merely performed a ministerial function which
he is bound to perform under Sections 176 and 177 of RA 7160.
As to the claim for exemption, there is nothing in the records which shows that Digital availed of
the tax exemption or submitted the requirements to establish that it is exempted from paying real
property taxes. Neither did Digital avail of the remedy of paying the assessed real property tax
under protest as prescribed in Sec. 252, RA 7160.
Due to Digitals non-availment of these remedies, Cantos remained duty bound to perform such
acts, otherwise he may be subjected to the penalties prescribed for non-performance of his
ministerial duties as provincial treasurer.
Furthermore, the ruling in the case of Digital Telecommunications Philippines vs. Province of
Pangasinan has already been abandoned. In the latter case of Digital Telecommunications
Philippines vs. City Government of Batangas, the SC ruled that the phrase exclusive of this
franchise in Section 5 merely qualifies the phrase personal property to exclude petitioners
legislative franchise, which is an intangible personal property. Thus, there is no grant of
exemption in Section 5. Besides, the heading of Section 5 is Tax Provisions and not Tax
Exemptions.

II. NO. There is no identity of parties between the two cases thus res judicata does not apply. The
previous civil case was directed against the Mayor and Chief of Permit and License Division,
while in the present case, Cantos is sued in his capacity as Provincial Treasurer. While the
defendants in both cases similarly sought to enforce the tax obligation of Digital, they were sued
under different capacities. There is also no identity of causes of action. The previous civil case
involved the closure of Digitals business operation while in the present case, the subject is the
act of issuing Warrants of Levy and the act of proceeding with the auction sale.
Therefore, Digitals real properties, whether used in the furtherance of its franchise or not, are
subject to real property tax.