Case #138

TALENTO V. ESCALADA, 556 SCRA 491 (2008)

FACTS:

Private respondent Petron Corporation operates several machineries and equipment in Lamao,
Limay, Bataan. On June of 2007 the Provincial Assessor’s Office of Bataan delivered a notice of
revised assessment over the corporations machineries and equipment totalling to a tax liability
of Php 1, 731, 025, 403 for the period from 1994 to 2006. Petron sought an appeal with the
Local Board of Assessment Appeals on August 17, 2007 averring that the revised assessment
included items already declared and that the period covered by the assessment exceeded 10
years, which is prohibited by the Local Government Code (LGC). Together with the said petition,
Petron sought approval of a surety bond amounting to some Php 1.2 billion. However on August
22, 2008, Petron received from the Provincial Treasurer’s Office a letter of final notice of
delinquent real property tax with a warning that should Petron be unable to settle its tax
liabilities, its properties shall be levied and sold at public auction. Thus Petron sent a letter to the
Provincial Treasurer stating that any levy on thier property pending the LBAA would be
premature, but the treasurer replied by citing Sections 231 and 252 of the LGC whereby on a
payment under protest by Petron will bar the levy and sale of its property.

On September 2008, a warrant for levy was issued prompting Petron to seek its lifting with the
LBAA and posted the surety bond of Php 1.2 billion but the treasurer subsequently issued a
notice of sale of petron’s properties prompting Petron to seek for a TRO with the RTC. The RTC
granted a TRO provided Petron add some Php 500 million to the bond to be equivalent to its
outstanding tax liability. Treasure sought the TRO dissolution but was denied, hence petitioner
treasurer sought recourse before the Supreme Court through Rule 65 of the Rules of Court
questionaing the issuance of the TRO.

ISSUE:

Whether or not Provincial Treasurer acted accordingly in not supending the collection of the tax
liability of Petron and whether the TRO was properly issued?

HELD:

As to the issuance of the TRO, the Supreme Court found it to be an appropriate relief for Petron.
As established by law, a TRO may be issued if and when the conditions for its issuance are met
as required under Rule 58 Section 3 of the Rules of Court enumerating the grounds and also
when the following requisites are met: (1) the existence of a clear and unmistakable right that
must be protected; and (2) an urgent and paramount necessity for the writ to prevent serious
damage. From the facts shown, clearly the entire operation of Petron in Bataan hinges on the
actions of the provincial Treasurer since the value of the property sought to be levied amounted
to Php 1.7 billion, a significant amount that could undoubtedly hamper Petron’s existence in the
area.
Moreover, the recourse sought by petitioner before the Supreme Court was improper; resort to
Rule 65 is only available when all means of appeal are already availed of or are not available, in
this case, the petitioner has not sought reconsideration before the RTC that ordered the TRO
nor did the petitioner seek the proper remedy before the Court of Appeals through Rule 45.
Although litigation is not a battle of technicalities, the SC emphasized that that procedure must
be followed for the orderly and efficient administration of justice and is a matter of jurisdiction. In
fact, petitioner was also beyond the reglementary period to question the order.

With regard to the Provincial Treasurer’s continued enforcement of the levy despite the LBAA
appeal, the SC gave focus to the LBAA Rules of Procedure whereby it is stated in Section 7,
Rule V that:

“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, x x x.
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, x x x.”

Corollarily, Section 11 of Republic Act No. 9282, which amended Republic Act No. 1125 (The
Law Creating the Court of Tax Appeals) provides:

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 t h a n double the amount with the Court.

Thus, although it is true that the LBAA or the courts generally cannot suspend the payment of
taxes even on appeal, however should a bond be posted, it is proper to suspend.