[ G.R. No. 184203, November 26, 2014 ]
CITY OF LAPU-LAPU, PETITIONER, VS.
PHILIPPINE ECONOMIC ZONE AUTHORITY, RESPONDENT.
[G.R. NO. 187583]
PROVINCE OF BATAAN, REPRESENTED BY GOVERNOR ENRIQUE T. GARCIA, JR., AND
EMERLINDA S. TALENTO, IN HER CAPACITY AS PROVINCIAL TREASURER OF BATAAN,
PETITIONERS, VS. PHILIPPINE ECONOMIC ZONE AUTHORITY, RESPONDENT
(Requisites of Petition for Declaratory Relief)
FACTS:
President Ferdinand E. Marcos issued
Presidential Decree No. 66 in 1972, declaring as government policy the
establishment of export processing zones in strategic locations in the
Philippines.
To carry out this policy, the Export Processing
Zone Authority (EPZA) was created to operate, administer, and manage the export
processing zones established in the Port of Mariveles, Bataan and such
other export processing zones that may be created by virtue of the decree.
The EPZA was declared exempt from all taxes that
may be due to the Republic of the Philippines, its provinces, cities,
municipalities, and other government agencies and instrumentalities.
In 1979, President Marcos issued Proclamation No.
1811, establishing the Mactan Export Processing Zone. Certain parcels of
land of the public domain located in the City of Lapu-Lapu in Mactan, Cebu were
reserved to serve as site of the Mactan Export Processing Zone.
In 1995, the PEZA was created by virtue of
Republic Act No. 7916 or “the Special Economic Zone Act of 1995” to
operate, administer, manage, and develop economic zones in the country. The
PEZA was granted the power to register, regulate, and supervise the enterprises
located in the economic zones.
Facts of G.R. No. 184203
In the letter dated March 25, 1998, the City of
Lapu-Lapu, through the Office of the Treasurer, demanded from the PEZA real
property taxes for the period from 1992 to 1998 on the PEZA’s properties
located in the Mactan Economic Zone.
On September 11, 2002, the PEZA filed a petition
for declaratory relief with the Regional Trial Court of Pasay City, praying that the
trial court declare it exempt from payment of real property taxes.
Characterizing the PEZA as an agency of the
National Government, the trial court ruled that the City had no authority to
tax the PEZA under Sections 133(o) and 234(a) of the Local Government Code of
1991.The trial court granted the PEZA’s petition
for declaratory relief and declared it exempt from payment of
real property taxes.
The City then appealed to the Court of
Appeals.
ISSUE:
Whether the trial court had jurisdiction over the PEZA’s
petition for declaratory relief
RULING:
No, the RTC did not have jurisdiction over the
subject matter of the case.
Jurisdiction over the subject matter is
the power to hear and determine cases of the general class to which the
proceedings in question belong. It is conferred by law, which may either be the
Constitution or a statute. Jurisdiction over the subject matter means the
nature of the cause of action and the relief sought. Thus, the cause of action
and character of the relief sought as alleged in the complaint are examined to
determine whether a court had jurisdiction over the subject matter. Any
decision rendered by a court without jurisdiction over the subject matter of
the action is void.
In the present case, the RTC had no jurisdiction
over the action for declaratory relief.
An action for declaratory relief presupposes that
there has been no actual breach of the instruments involved or of rights
arising thereunder. It may be entertained only before the breach or violation
of the statute, deed, or contract to which it refers.
In the instant case, the City had already issued
demand letters and real property tax assessment against the PEZA. The Special
Economic Zone Act of 1995, the subject matter of PEZA’s petition for declaratory
relief, had already been breached.
Rule 63 of the Rules of Court governs actions
for declaratory relief. Section 1 of Rule 63 provides:
SECTION 1. Who may file petition. – Any
person interested under a deed, will, contract or other written instrument, or
whose rights are affected by a statute, executive order or regulation,
ordinance, or any other governmental regulation may, before breach or
violation, thereof, bring an action in the appropriate Regional Trial Court to
determine any question of construction or validity arising, and for a
declaration of his rights or duties, thereunder.
An action for reformation of an instrument, to
quiet title to real property or remove clouds therefrom, or to consolidate
ownership under Article 1607 of the Civil Code, may be brought under this Rule.
A special civil action
for declaratory relief is filed for a judicial determination of
any question of construction or validity arising from, and for a declaration of
rights and duties, under any of the following subject matters: a deed, will,
contract or other written instrument, statute, executive order or regulation,
ordinance, or any other governmental regulation. However, a declaratory
judgment may issue only if there has been “no breach of the documents in
question.” If the contract or statute subject matter of the action has
already been breached, the appropriate ordinary civil action must be filed. If
adequate relief is available through another form of action or proceeding, the
other action must be preferred over an action for declaratory relief.
It is also required that the parties to the action
for declaratory relief be those whose rights or interests are
affected by the contract or statute in question. “There must be an actual
justiciable controversy or the ‘ripening seeds’ of one between the
parties. The issue between the parties “must be ripe for judicial
determination.” An action for declaratory relief based on
theoretical or hypothetical questions cannot be filed for our courts are not
advisory courts.
In sum, a petition
for declaratory relief must satisfy six requisites:
First, the subject matter of the controversy must
be a deed, will, contract or other written instrument, statute, executive order
or regulation, or ordinance;
Second,
the terms of said documents and the validity thereof are doubtful and require
judicial construction;
third,
there must have been no breach of the documents in question;
fourth, there must be an actual justiciable
controversy or the "ripening seeds" of one between persons whose
interests are adverse;
fifth, the
issue must be ripe for judicial determination; and
sixth, adequate relief is not available through other
means or other forms of action or proceeding.
Once an assessment has already been issued by the assessor,
the proper remedy of a taxpayer depends on whether the assessment was erroneous
or illegal.
In the present case, the PEZA did not avail itself of any of
the remedies against a notice of assessment. A petition for declaratory relief is not the proper
remedy once a notice of assessment was already issued.
Instead of a petition for declaratory relief, the PEZA should have directly resorted to a judicial
action. The PEZA should have filed a complaint for injunction, the
“appropriate ordinary civil action to enjoin the City from enforcing its
demand and collecting the assessed taxes from the PEZA. After all, a
declaratory judgment as to the PEZA’s tax-exempt status is useless unless the
City is enjoined from enforcing its demand.
Hence, the RTC had no jurisdiction over the
petition for declaratory relief.
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