CTA AC No. 68

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REPUBLIC OF THE PHILIPPINESCourt Of Tax AppealsQUEZON CITY

NATIONAL TRANSMISSIONCORPORATION,

C. T A. AC NO. 68(RTC Civil CaseNo. Q-O9-64637)Petitioner,

Members:-versus- BAUTISTA, Chairperson,PALANCA-ENRIQUEZ, and

COTANGCO-MANALASTAS, ll.Promulgated:

JAN 5 2(J1f798rPC;?o.~ /c: jf'~ a

THE MUNICIPALITY OFMAGALLANES, AGUSAN DELNORTE, represented by itsMUNICIPAL TREASURER,EDESSA W. DELICANO,Respondent.

xPALANCA-ENRIQUEZ, J.:

The review taken by the RTC over the denial of the protest by thelocal treasurer would fall within the court's original jurisdiction.Labeling said reVIew exerCIse of appellate jurisdiction ISs aninappropriate, since the denial of the protest is not the judgment or orderof a lower court, but of a local government official (Yamanevs. LepantoCondominiumCorporation, 474 SCRA268).

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2.T.A. ACNO. 68RTC Civil CaseNo. Q-O9-64637DECISION

THE CASEThis is an appeal by way of a Petition for Review under Section

7(a) 3) of RA 9282 filed by the National Transmission Corporation

(hereafter "petitioner Transco") from the Order dated December 18,2009, rendered by the Regional Trial Court ("RTC") of Quezon City,Branch 220~ in Civil Case No. Q-O9-6463 , entitled "NationalTransmission Corporation vs. the Municipality of Magallanes, et al.",which reads, as follows:

"Considering that the instant case is not an originalaction but an appeal from the Municipal Treasurer ofMagallanes, Agusan del Norte after it denied the appellant'sProtest of the statement of account on business taxes due tosaid municipality and considering further, that the subject ofthe statement of account on appeal refers to the businessengaged in by TRANSCO in the Municipality ofMagallanes, Agusan, del Norte, the 'court of competentjurisdiction' being referred to in Section 175 ofR.A. 7160 isthe Regional Trial Court of Agusan del Norte which hasterritorial jurisdiction over the Region where theMunicipality of Magallanes is located.

WHEREFORE, in view of the foregoing, the instantappeal s hereby DISMISSED.SO ORDERED."

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Reconsideration", the dispositive portion of which reads, as follows:"WHEREFORE, the Motion for Reconsideration ishereby DENIED for lack of Merit.SO ORDERED."

THE PARTIES

Avenue, Diliman, Quezon City.

government unit duly created and organized under the laws of the

THE FACTSThe facts of the case, as culled from the records, are as follows:

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4.T.A. AC NO. 68RTC Civil CaseNo. Q-O9-64637DECISION

Agusan del Norte, assessing petitioner of business taxes and otherregulatory fees in the total amount of P70 1 841.21 for taxable years 2006and 2007, pursuant to Local Finance Circular No. 1-07 dated June 28,

2007, broken down as follows:-GROSSRECEIPTS -BUSINESS TAX FEES& CHARGES' PENALTIES TOTAL

AMOUNTEAR BaseYear Amount Tax Rate Surchargesmount Interest12906 , 25,725,10293 --I55% ofl% I 141,488.07

PennitFees2,000.00

Regulatory Fees517.00 3(;:"001.27U9,604.56 I 309,610.90I 2006 I -38,090,796.68 --~55% of l~o I 209~499.38' ~OOO.OO' illQ.Q ~ 53.004.10 I 127.209.83 I 392.230.31'

1350,987.45-14,000-:001 1,034]0 I 89,005.371 256,814.391 701,841.21 I

On January 12, 2009, petitioner Transco protested the Statement ofAccount issued by the Municipal Treasurer of Magallanes and requestedthat said Statement of Account be set aside on the following grounds: (1:the local government units cannot impose taxes, fees or charges of anykind on the agencies and instrumentalities of the government; (2) amunicipality has no power to impose business ax on businessesenjoyinga franchise; and (3) Local Finance Circular No. 1-07 cannot give theMunicipality of Magallanes the power to impose taxes, which the lawdoes not provide.

On March 13, 2009, petitioner Transco received a letter from the

Municipal Treasurer denying its Protest Letter, dated Janua7~2, 2009.

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Municipality

Transco filed a "Motion for

Hence, this appeal.

shall be deemed submitted for decision

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In a Resolution dated September 13, 2011, this case was deemedsubmitted for decision.

ISSUE

WHETHER OR NOT THE RTC ERRED IN DISMISSINGTRANSCO'S APPEAL BECAUSE: (a) THE ACTION ISNOT AN ORIGINAL ONE BUT AN APPEAL FROM THEMUNICIPAL TREASURER OF MAGALLANES,AGUSAN DEL NORTE, AND (b) THE COURT OFCOMPETENT JURISDICTION IS THE RTC OF AGUSANDEL NORTE.THE COURT'S RULING

The petition has merit.Petitioner Transco contends that the RTC of Quezon City erred in

dismissing petitioner's appeal since the case filed in the RTC is anoriginal action, and not an appeal from the Municipal Treasurer ofMagallanes, Agusan del Norte, and the court of competent urisdiction isthe RTC of Quezon City and not the RTC of Agusan del Norte.

On the other hand, respondent counters that the Municipality ofMagallanes has the authority to impose business tax and other regulatoryfees under the Local Government Code ("LGC"); the assessmentagainstpetitioner is against a holder of a nationwide franchise9JJ1ed within

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While the

the principal located. Moreover, the

del Norte and Butuan City.

"SEC. 195. Protest of Assessment. -When the localtreasurer or his duly authorized representative finds thatcorrect taxes, fees, or charges have not been paid, he shallissue a notice of assessment tating the nature of the tax, fee,or charge, the amount of deficiency, the surcharges, nterestsand penalties. Within sixty (60) days from the receipt of the

@JJf/

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notice of assessment, he taxpayer may file a written protestwith the local treasurer contesting the assessment; therwise,the assessmentshall become final and executory. The localtreasurer shall decide the protest within sixty (60) days fromthe time of its filing. If the local treasurer finds the protest tobe wholly or partly meritorious, he shall issue a noticecancelling wholly or partially the assessment.However, ifthe local treasurer finds the assessmento be wholly or partlycorrect, he shall deny the protest wholly or partly with noticeto the taxpayer. The taxpayer shall have thirty (30) daysfrom the receipt of the denial of the protest or from the lapseof the sixty-day period prescribed herein within which toappeal with the court of competent urisdiction otherwise theassessment ecomes conclusive and unappealable."Pursuant to the above provision, the taxpayer may file a written

protest with the local treasurer contesting the assessmentwithin 60 daysfrom receipt of the notice of assessment;otherwise the assessmentshall

Within 60 days from the time of the filingecome final and executory.If the localf the protest, the local treasurer shall decide the protest.

treasurer denies the protest, the taxpayer shall have a period of 30 daysfrom receipt of the denial, or if the local treasurer did not act on theprotest, the taxpayer shall have a period of 30 days from the lapse of the60-day period, within which to appeal the denial or inaction with thecourt of competent jurisdiction. Otherwise, the assessmentbecomes

{)gRonclusive and unappealable

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9.T.A.ACNO.68RTC Civil CaseNo. Q-O9-64637DECISION

local government official.

business axes.

the tax is being imposed is devoid of merit

because they are totally different from each other. Jurisdiction is the((2tle

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vs. Eusebio,268SCRA270).

matter.

the jurisdiction of the court. It is meant to provide convenience to the

of trial (Nocumvs. Tan,470 SCRA648).Jurisdiction, the other hand,n substantive thanS more

procedural

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In addition to being conferred by the Constitution and the70 SCRA644)law, the rule is settled that a court's jurisdiction over the subject matter isdetermined by the relevant allegations in the complaint, the law in effect

when the action is filed, and the character of the relief sought irrespectiveof whether the plaintiff is entitled to all or some of the claims asserted(Home Guaranty Corporation vs. R-I/ Builders Inc., 645 SCRA 230-231). Oncejurisdiction is acquired, it continues until the case is finally terminated(PhilippineNational Bankvs. Tejano,Jr., 604 SCRA159)

In the instant case, said Civil Case No. Q-O9-64637 involves thereview taken by the RTC over the denial of the protest by the localtreasurer, thus, pursuant to the Yamane Case, the RTC has jurisdictionover said case. The pertinent question is: where is the venue of theaction?

Since the subject matter of Civil Case No. Q-O9-64637 is anassessment for business taxes and other regulatory fees, which is civil innature and basically a personal action; then, the provision of Section 2,

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Section 2, Rule 4 of the Rules of Civil Procedure, as amended,provides:

"SEC. 2. Venue of personal actions. -All otheractions may be commenced and tried where the plaintiff orany of the principal plaintiffs resides, or where the defendantor any of the principal defendants resides, or in the case of anon-resident defendant where he may be found, at theelection of the plaintiff"In the instant case, the plaintiff is petitioner Transco, a juridical

entity created under RA 9136, with principal office at the Power Center,EDSA corner Quezon A venue, Diliman, Quezon City. Established in ourjurisprudence is the rule that the residence of a corporation is the placewhere its principal office Elevators and EscalatorsS located (Hyatt

This ruling isorporation vs. Goldstar Elevators, Phi/s., Inc., 473 SCRA 7 3).important in determining the venue of an action by or against a

Since petitioner Transco is aorporation, as in the present case (~)juridical entity, then for purposes of instituting personal actions in court,the place where its principal office is located may also be considered as

Therefore, venue in this case was properly laid in thehe proper venue.RTC of Quezon City, the court having territorial jurisdiction overpetitionerTransco. ~

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of Magallanes is located.

Thus, unless and until the defendant

whose convenience the rules on venue had been devised.The trial court

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cannot pre-empt the defendant's prerogative to object to the improperlaying of the venue by motu proprio dismissing the case.

In the instant case, records show that after petitioner filed Appealed

Case No. Q-O9-6463 , the RTC of Quezon City, without necessarilygiving due course to the "appeal", ordered the parties to submit theirposition papers as to the jurisdiction of the court to take cognizance of thecase. Thereafter, the RTC of Quezon City issued the assailed Order datedDecember 18, 2009, dismissing said case. Clearly, the issue of impropervenue was not raised by respondent Municipality of Magallanes, but thesame was pre-empted by the RTC of Quezon City. In fact, Civil CaseNo. Q-O9-64637was motu propio dismissed by the RTC of Quezon City,even before respondenthas the opportunity to file her answer.

In the case of Gumabon vs. Larin, supra, 644-645, the SupremeCourt ruled that wrong venue, being merely a procedural infirmity, not ajurisdictional impediment, does not, without timely exception, disallowthe RTC of Quezon City to take cognizance of, and to proceed with the

Thus, the RTC of Quezon City erred in dismissing motupropio thease,complaint on the ground of improper venue.

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WHEREFORE, premises considered, the Petition for Review isThe assailed Orders dated December 18, 2009 andereby GRANTED.

August 2, 2010, issued by the RTC of Quezon, Branch 220, are hereby

Civil Case No. Q-O9-64637 s herebyEVERSED and SET ASIDE.reinstated. Let this case be remanded o the RTC of Quezon City, Branch220, for further proceedings.

SO ORDERED. ~ f~~~OLG~PALANC~QUEZAssociate Justice

were reached inof the opinion ofI attest that the conclusions in the aboveconsultation before the case was assigned to thethe Court's Division.

Justiceilrpersonh~

AMELIA R. COTANGCO-MANALASTASAssociate Justice

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Pursuant to Article VIII, Section 13 of the Constitution, and theDivision Chairperson's Attestation, it is hereby certified that theconclusions in the above Decision were reached n consultation before thecase was assigned o the writer of the opinion of the Court.

L,-~. Q~ERNESTO D. ACOSTAPresiding Justice

CTA AC No. 68

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Transcript of CTA AC No. 68