KEPCO ILIJAN CORPORATION v. THE CENTRAL BOARD OF ASSESSMENT APPEALS and THE CITY OF BATANGAS

REPUBLIC OF THE PHILIPPINES Court ofTax Appeals QUEZON CITY En Bane KEPCO ILIJAN CORPORATION, CTA EB CASE NO. 909 Petitioner, (CBAA Case No. L-43) -versus- THE CENTRAL BOARD OF CTA EB CASE NO. 910 ASSESSMENT APPEALS and THE (CBAA Case No. L-43) CITY OF BATANGAS, Present: Respondents. Del Rosario, P.J. Castaneda, Jr., X-----------------------------------------------X Bautista, Uy, NATIONAL POWER Casanova, CORPORATION, Fa bon-Victorino, Mindaro-Grulla, and Petitioner, Cotangco-Manalastas, JJ. -versus- EMELINDA C. ATIENZA, CITY : ; 5 Promulgated: ASSESSOR, and BENJAMIN S. , PARGAS, CITY TREASURER OF BATANGAS CITY, Respondents. MAY 2 9 2013 x------------------------------------------------------------------------------------tc------~---x ~ RESOLUTION On October 31, 2012, petitioner KEPCO Ilijan Corporation, along with respondent City Assessor of Batangas, filed a "Joint Motion for the Approval of Compromise Agreement," over the alleged tax liabilities of petitioner for taxable years 2002 to 2012. ~

RESOLUTION CTA EB Nos. 909 & 910 (CBAA Case No. L-43) On November 13, 2012, "Manifestation," "Motion for Intervention," and "Comment-in-Intervention" were filed by Jose Virgilio Y. Tolentino, Arthur G. Blanco, Dhess Aclan, Maria Kristine Josefina G. Balmes, Carlos Bagon, Hamilton Blanco, Benjamin Espina, Jr., Eduardo Evangelio, Raoul Mendoza, Nicasio G. Plata, Marinel Andal, Benedict Tan Tiu, Christina G. Farol, Joelito M. Santos (collectively referred to herein as "Intervenors"). The Intervenors are all residents of Batangas City ("City") and taxpayers.1 The Intervenors state that under the rules, they are allowed to intervene if one can show an actual, direct and material interest in the said case. As residents of Batangas City, the reduction in the amount which the City may collect would curtail a vast improvement of government services that as residents, they ought to receive.2 Also, Arthur Blanco, being a barangay captain will actually and directly be affected as the funds for the barangay is dependent on the collection of the City.3 In addition, Intervenors state that the only person allowed to authorize a condonation of tax liabilities is the President of the Philippines, and only when public interest so requires it. However, Intervenors point out that this was not the case at hand, and that the Sanggunian had no authority to enter into a compromise agreement, much less empower the Local Chief Executive, Hon. Vilma Abaya Dimacuha, to do so on its behal�.4 On November 26, 2012, petitioner filed an "Opposition to the Motion for Intervention," stating that the Intervenors did not follow the procedure laid out in the Rules of Court, nor did they have any locus standi, and that since the compromise agreement entered into was valid and legal, the issue at hand has become moot and academic.5 On December 14, 2012, respondent City Assessor of Batangas, et. al., filed an "Opposition to the Motion for Intervention," stating several grounds for the denial of the said motion. First, that several parties to the Intervenors participated in the passage of the Sanggunian Resolution, being officials of the City.6 Second, that the 1 Rollo, p. 129. Gj; 2 /d., pp. 129-130. 3 !d., p. 130. 4 /d., pp. 135-137. ; /d., pp. 247-257. 6 /d., pp. 265-267.

RESOLUTION CTA EB Nos. 909& 910(CBAA Case No. L-43) Intervenors have not shown that they actually have any legal interest, or that they will directly be affected in the disposition of this case? Third, that the Executive Order No. 27 s. 20128 issued by the President of the Philippines does not require a compromise agreement between Independent Power Producers ("IPP") and the Local Government Unit ("LGU") to be implemented.9 Fourth, the tax liabilities have been paid, thus rendering the issue moot and academic.1o Fifth, that to permit the "Motion for Intervention" would only unduly delay the termination of the case.11 Sixth, the proper procedure was not observed in filing the "Motion for Intervention."12 Lastly, that it was National Power Corporation, and not petitioner, who actually paid the City of Batangas.13 On December 12, 2012, Intervenors filed a "Reply (to the Opposition to the Motion for Intervention filed by Petitioner KEPCO Ilijan Corporation dated 22 November 2012),"14 and a "Reply (to the Opposition to the Motion for Intervention filed by Respondent City of Batangas dated 3 December 2012)" on December 27, 2012. On May 7, 2013, a Records Verification was issued by the Judicial Records Division stating that the Central Board of Assessment Appeals has not filed a Comment. Thus, the "Joint Motion for the Approval of Compromise Agreement" and "Motion for Intervention" shall now be resolved. After careful consideration of the points raised by all the parties, the Court En Bane finds that the "Motion for Intervention" must be denied. The Court En Bane shall resolve two essential issues: (1) whether or not there is actual and direct harm to the Intervenors, and (2) Applicability of E.O. No. 27 s. 2012. 7 ld., pp. 267-268. s Red uction and Condona tion of Rea l Proper ty Taxes and lnteres t/Pena.l ties Assessed on the Power Generation Facilities of Independent Power Producers Under Buil d-Opera te-Transfer Contracts with Govenunent-Owned Or Controlled Corpora tions in the Province Of Quezon 9 /d ., pp. 269-270. l O /d., pp. 270-271. 11 ld., pp. 271-272. 12 Jd. 13 /d. H Jd., pp. 315-346. ,.------ 0!2

RESOLUTION CTA EB Nos . 909 & 910 (CBAA Case No. L-43) In the case of Office of the Ombudsman v. Maximo D. Sison,15 the Supreme Court held that: "It is fundamental that the allowance or disallowance of a Motion to Intervene is addressed to the sound discretion of the court. The permissive tenor of the rules shows the intention to give to the court the full measure of discretion in permitting or disallowing the intervention, thus: 'SECTION 1. Who may intervene. A person who has a legal interest in the matter in litigation, or in the success of either of the parties, or an interest against both, or is so situated as to be adversely affected by a distribution or other disposition of property in the custody of the court or of an officer thereof may, with leave of court, be allowed to intervene in the action. The court shall consider whether or not the intervention will unduly delay or prejudice the adjudication of the rights of the original parties, and whether or not the intervenor1s rights may be fully protected in a separate proceeding. SECTION 2. Time to intervene. The motion to intervene may be filed at any time before rendition of judgment by the trial court. A copy of the pleading-in-intervention shall be attached to the motion and served on the original parties.' Simply, intervention is a procedure by which third persons, not originally parties to the suit but claiming an interest in the subject matter, come into the case in order to protect their right or interpose their claim.JO Its main purpose is to settle in one action and by a single judgment all conflicting claims of, or the whole controversy among, the persons involved. To warrant intervention under Rule 19 of the Rules of Court, two requisites must concur: (1) the movant has a legal interest in the matter in litigation; and (2) 15 G.R. No. 185954, February 16, 2010, 612 SCRA 702, citing Heirs ofGe rouimo Restrivera v. De Guzma11, G.R. No. 146540, July 14, 2004, 434 SCRA 456, and Uu iou Bauk of the Plt ilippiues v. Cou cepciou, G.R. No. 160727, June 26, 2007, 525 SCRA 672. 8J

RESOLUTION CTA EB Nos . 909 & 910 (CBAA Case No. L-43) intervention must not unduly delay or prejudice the adjudication of the rights of the parties, nor should the claim of the intervenor be capable of being properly decided in a separate proceeding. The interest, which entitles one to intervene, must involve the matter in litigation and of such direct and immediate character that the intervenor will either gain or lose by the direct legal operation and effect of the judgment. Taking note of the above cited case, it is clear that the "Motion for Intervention" must fail. In the first place, Intervenors were not able to establish the direct and immediate harm they would sustain. The allegations that the Intervenors, and that the taxpayers and residents of Batangas City, shall be affected by the compromise agreement is, at this point, purely speculative. As correctly pointed out by petitioner, the original amount being collected is so enormous that there is no assurance that the parties being held responsible would be able to pay the entire liability.16 Intervenors were also unable to show that allocations have been set by the local government unit, and that this collection would be the source of funding for those specific allocations. More importantly, the Court En Bane finds the allegations that the compromise was done without authority of the President of the Philippines incorrect. As pointed out by both petitioner and respondent, the President of the Philippines issued E.O. No. 27 s. 2012 to address the real property tax issues of IPPs and the local government units. The said issuance set out the computation for the reduction of the tax liabilities, as well as the condonation of the fines, penalties and interest on deficiency real property tax. Thus, the parties, by entering into a compromise agreement, were merely applying the computation set by E.O. No. 27 s. 2012. The Court En Bane agrees that the tenor of this issuance clearly shows that it is to be applied to all cases involving an IPP and a Government- Owned and Controlled Corporation ("GOCC"). 16 Rollo, p . 268. (�

RESOLUTION CTA EB Nos. 909 & 910 (CBAA Case No. L-43) Therefore, the Court En Bane sees no reason not to grant the "Joint Motion for Approval of Compromise Agreement," filed by petitioner KEPCO Ilijan Corporation, along with the respondent City Assessor of Batangas, on October 31, 2012. WHEREFORE, petitioner and respondent's "Joint Motion for Approval of Compromise Agreement" is hereby GRANTED, the Petition for Review docketed as CTA EB Case No. 909 is hereby deemed WITHDRAWN. The said case is now considered CLOSED and TERMINATED. On the other hand, the "Motion for Intervention" filed by Intervenors on November 13, 2012 is hereby DENIED. SO ORDERED. Presiding Justice ~~~ c_. ~,SL . Lov CfuANITo c. CASTANEnX,'JR. Associate Justice ER' ~ ~ Associate Justice CAESAR A. CASANOVA Associate Justice ~ N. l\4a.-.~.L... .. ,(;~4t. CIELITO N. MINDARO-GRULLA Associate Justice ~/-4_/ft AMELIA R. COTANGCO-MANALASTAS Associate Justice @