NATIONAL TRANSMISSION CORPORATION v. PROVINCE OF DAVAO DEL NORTE, REPRESENTED BY ITS PROVINCIAL TREASURER MS. REGINA RICAFORT AND PROVINCE OF COMPOSTELA VALLEY, REPRESENTED BY ITS PROVINCIAL TREASURER MS. CARMEN RAZUL

REPUBLIC OF THE PHILIPPINES Court of Tax Appeals QUEZON CITY SPECIAL SECOND DIVISION NATIONAL TRANSMISSION CTA AC NO. 298 CORPORATION, Petitioner, Present: vs. RINGPIS-LIBAN, P.J & Chairperson, MODESTO-SAN PEDRO, and PROVINCE OF DAVAO DEL FERRER-FLORES, JJ. NORTE, REPRESENTED BY ITS PROVINCIAL TREASURER MS. REGINA RICAFORT AND PROVINCE OF COMPOSTELA VALLEY, REPRESENTED BY ITS PROVINCIAL TREASURER Promulgated: MS. CARMEN RAZUL, APR 102026 Respondents. ----R-E--S-O--L--U--T-I-O--N-\:_)-~/i-~ ~ /'._ � X-------- ----------- -- --------x FERRER-FLORES, J.: Before this Court is respondent Province ofDavao Del Norte's Motion for Reconsideration (Re: Decision Dated October 15, 2025) filed via registered� mail on November 25, 2025, and received by the Court on December 3, 2025, with petitioner's Comment/Opposition (to Respondent Province of Davao del Norte's 25 November 2025 Motion for Reconsideration) filed via registered mail on December 15, 2025, and received by the Court on December 18, 2025. To recall, on October 15, 2025, this Court promulgated a Decision setting aside the Decision dated January 18, 2023 and Order dated May 12, 2023 rendered by the Regional Trial Court (RTC)- Branch 1 ofTagum City, Davao del Norte, in Civil Case No. 4135, finding that the local franchise taxes imposed by respondent Province of Davao Del Norte against petitioner for calendar years 2003 to 2008 were unwarranted, the dispositive portion of which reads as follows: '

RESOLUTION CTA AC No. 298 National Transmission Corporation vs. Province of Davao Del Norte, Represented by its Provincial Treasurer Ms. Regina Ricafort and Province ofCompostela Valley, Represented by its Provincial Treasurer Ms. Carmen Razul Page 2 of6 WHEREFORE, in light of the foregoing considerations, the Petitionfor Review is PARTIALLY GRANTED. Accordingly, the assailed Decision dated January 18, 2023 and the Order dated May 12, 2023, both rendered by the RTC- Branch 1, Tagum City, Davao del Norte in Civil Case No. 4135, is hereby REVERSED and SET ASIDE, but only insofar as it ordered petitioner to pay local franchise taxes for the years 2003 to 2008 in the total amount of P408,620.30, with interest at the legal rate of six percent (6%) per annum. SO ORDERED. In its Motion, respondent Province of Davao Del Norte seeks reconsideration ofthe above Decision by arguing that the Court erred in ruling that petitioner did not exercise its legislative franchise within Davao Del Norte; and, that the Court misapplied the case of City of!riga v. Camarines Sur III Electric Cooperative, Inc. (CASURECO IllY (City of Iriga), in concluding that petitioner is not subject to local franchise tax imposed by respondent Province ofDavao Del Norte. As to the first argument, respondent Province of Davao Del Norte asserts that the Court erroneously concluded that petitioner's franchise was not exercised within the province of Davao Del Norte simply because the entity to which it transmitted electricity to, Davao del Norte Electric Cooperative, Inc. (DANECO), has its principal office in Davao De Oro (formerly Compostela Valley) province. Respondent Province ofDavao Del Norte expounds that the said conclusion ignores the operational reality that the physical act of transmitting electricity to DANECO necessarily passes through, and is supported by, transmission facilities located squarely within the territorial boundaries of Davao Del Norte-which constitutes actual and direct exercise of a franchise. As such, respondent Province of Davao Del Norte maintains that franchise operations are not defined by the address of the customer but by the location of activities, facilities, and infrastructure indispensable to the franchise. Moreover, respondent Province of Davao Del Norte also contends that subsequent distribution of the electricity by DANECO is irrelevant in determining petitioner's franchise tax liability since the latter's transmission activities occur before and independently of DANECO's distribution function. Respondent Province of Davao Del Norte insists that the presence of an intermediary utility, DANECO, cannot shield petitioner from the reach of a valid local franchise tax. Lastly, respondent Province ofDavao Del Norte points out that petitioner's gross receipts are properly sourced, at least in part, 2012. 1

RESOLUTION CTA AC No. 298 National Transmission Corporation vs. Province of Davao Del Norte, Represented by its Provincial Treasurer Ms. Regina Ricafort and Province ofCompostela Valley, Represented by its Provincial Treasurer Ms. Carmen R'azul Page 3 of6 within Davao Del Norte, thereby establishing a clear tax situs for the franchise tax. As to the second argument, respondent Province of Davao Del Norte asserts that the Court erred in applying City of!riga since the factual milieu of the present case is fundamentally different in both factual context and legal parameters. Respondent Province of Davao Del Norte explains that petitioner's operations are not distribution activities but transmission operation conducted through nationwide transmission of assets, some of which are located in Davao Del Norte. As such, respondent Province of Davao Del Norte reiterates that petitioner is liable for franchise taxes in every locality where it conducts its transmission activities, regardless ofthe location of the recipient distribution utility. On the other hand, in its Comment, petitioner maintains that respondent Province of Davao Del Norte has no tax situs over its operation. Petitioner asserts that it has no power customer within respondent's territory since its customer is DANECO, which is located in the City of Digos and outside the province of Davao Del Norte. Petitioner emphasizes the ruling of the Court that respondent Province of Davao Del Norte cannot impose local franchise tax on its gross receipts from DANECO or any portion thereof, absent proof that petitioner's principal office is situated in the province of Davao Del Norte. As held by the Supreme Court in City oflriga, the situs ofthe franchise is where the privilege of a franchise is being exercised which is the principal office where an entity operates. Lastly, petitioner claims that respondent Province ofDavao Del Norte's power to tax as a local government unit must be subject to the limitations imposed by law. After due consideration, the Court finds respondent Province ofDavao Del Norte's Motion for Reconsideration bereft of merit. In the case of National Power Corporation v. City ofCabanatuan,2 the Supreme Court held that to determine whether a franchise tax may be levied on a taxpayer, the following requisites should concur, viz.: (1) that petitioner has a "franchise" in the sense of a secondary or special franchise; and, (2) that it is exercising its rights or privileges under this franchise within the territory 1 ofthe respondent city govemment. G.R. No. 149110, April9, 2003.

� RESOLUTION CTA AC No. 298 National Transmission Corporation vs. Province of Davao Del Norte, Represented by its Provincial Treasurer Ms. Regina Ricafort and Province ofCompostela Valley, Represented by its Provincial Treasurer Ms. Carmen Razul Page 4 of6 To reiterate, petitioner is a government instrumentality created pursuant to Republic Act (R.A.) No. 9136,3 otherwise known as the Electric Power Industry Reform Act of 2001 (EPIRA). It is a government-owned and controlled corporation created to continue the transmission and sub- transmission functions of the National Power Corporation (NPC).4 Specifically, NPC's transmission and sub-transmission facilities and all other assets related to the transmission operations, including the NPC's nationwide franchise for the operation of the transmission system and grid, are all transferred to petitioner under the law. In other words, only the right or privilege to transmit and sub-transmit electricity was granted to petitioner and, based on the provisions of R.A. No. 9136, petitioner has no distribution function. The business involving transmission of electricity is different from the business relating to the distribution thereof. To be sure, the transmission of electricity refers to the conveyance of electricity through the high voltage backbone system; while the distribution of electricity refers to the conveyance of electric power through a distribution system, which, in tum, refers to the system of wires and associated facilities belonging to a franchised distribution utility extending between the delivery points on the transmission or sub- transmission system or generator connection and the point of connection to the premises of the end-user. While the conveyance of electricity is continuous until it reaches the end-user or consumer, the functions of transmission and distribution is distinguishable, and may be performed by different players. Herein, it is clear that the privilege granted by the government to petitioner is limited only to the transmission and sub-transmission of electricity, it will or should not extend to the "business of electric power distribution", which in this case, is shown to have been exercised by DANECO. Hence, the only point of contention now is whether petitioner exercised its franchise within the territorial jurisdiction ofrespondent Province ofDavao Del Norte when it supplied power to DANECO. The Court still finds the Supreme Court's disquisition in City ofIriga5 enlightening. In the said case, the Supreme Court applied the principles laidl ORMS TN THE RLRCTRTC POWER TNDUSTRY, AMENDTNG FOR THE PURPOSE CERTAIN LAWS AND FOR OTHER PURPOSES", approved on June 8, 2001. 4 Refer to Power Sector Assets and Liabilities Management Corporation (PSALM) v. Felisa Agricultural Corporation, et al., G.R. No. 205193, July 5, 2021. Supra Note 1.

RESOLUTION CTA AC No. 298 National Transmission Corporation vs. Province of Davao Del Norte, Represented by its Provincial Treasurer Ms. Regina Ricafort and Province ofCompostela Valley, Represented by its Provincial Treasurer Ms. Carmen Razul Page 5 of6 down in City of Cabanatuan6 and found respondent CASURECO III, who is engaged in the business of electric power distribution, liable for payment of local franchise taxes to the City of Iriga (where it had its principal office) based on its gross receipts within Iriga City, as well as the Rinconada area, of Camarines Sur, thus: x x x. It should be stressed that what the petitioner seeks to collect from CASURECO III is a franchise tax, which as defined, is a tax on the exercise of a privilege. As Section 137 of the LGC provides, franchise tax shall be based on gross receipts precisely because it is a tax on business, rather than on persons or property. Since it partakes of the nature of an excise tax/the situs of taxation is the place where the privilege is exercised, in this case in the City of Iriga, where CASURECO III has its principal office and from where it operates, regardless of the place where its services or products are delivered. Hence, franchise tax covers all gross receipts from Iriga City and the Rinconada area. (Emphasis supplied) The Supreme Court in the above case disregarded where respondent CASURECO III delivered its service in fixing the latter's tax situs. The High Court held that the situs for local franchise tax purposes should be the principal place of business or office from where CASURECO III operates, regardless of the place where its services or products are delivered. Note that the present case has the exact legal issue with that of City of !riga (i.e., situs of taxation for local franchise tax); thus, the doctrine of stare decisis finds application. The principle of stare decisis et non quieta movera ("to adhere to precedents and not to unsettle things which are established") is a bar to any attempt to re-litigate the same issue where the same questions relating to the same event have been put forward by parties similarly situated as in a previous case litigated and decided by a competent court.7 Clearly, the Court properly applied City of!riga to the present case. Thus, petitioner herein cannot be held liable for local franchise taxes by respondent Province ofDavao Del Norte even assuming it delivers or caters its services within the latter's territory. In view of the foregoing, there being no new matter or substantial issue raised by. respondent Province of Davao Del Norte in its Motion for i Reconsideration, the Court finds no compelling reason to reverse or modify the conclusions reached in the Decision promulgated on October 15, 2025. Supra Note 2. 7 Commissioner of Internal Revenue vs. Federation of Golf Clubs of the Philippines, Inc., G.R. No. 226449, July 28,2020, citing Tala Realty Corp., Inc. vs. Banco Filipino Savings & Mortgage Bank, G.R. No. 181369, June 22,2016.

RESOLUTION CTA AC No. 298 National Transmission Corporation vs. Province of Davao Del Norte, Represented by its Provincial Treasurer Ms. Regina Ricafort and Province ofCompostela Valley, Represented by its Provincial Treasurer Ms. Carmen Razul Page 6 of6 ACCORDINGLY, respondent's Motion for Reconsideration (Re: Decision Dated October 15, 2025) is DENIED for lack of merit. SO ORDERED. co~t.&RE~ES Associate Justic WE CONCUR: l,. ~ )- MA. BELEN M. RINGPIS-LffiAN Presiding Justice 'Pinion - vSTO-SAN PEDRO Associate Justice

REPUBLIC OF THE PHILIPPINES Court of Tax Appeals QUEZON CITY Special Second Division NATIONAL TRANSMISSION CTA AC NO. 298 CORPORATION Petitioner, Members: -versus- RINGPIS-LIBAN, Chairperson, MODESTO-SAN PEDRO, and PROVINCE OF DAVAO DEL FERRER-FLORES JJ NORTE, REPRESENTED BY ITS PROVINCIAL TREASURER MS. Promulgated: REGINA RICAFORT AND PROVINCE OF COMPOSTELA VALLEY, REPRESENTED BY ITS v(.s-,~. PROVINCIAL TREASURER MS. CARMEN RAZUL, Respondents. X ---------------------------------------------------------------------------------------------------------------------- X DISSENTING OPINION MODESTO-SAN PEDRO, J.: With utmost respect, I disagree with the ponencia's denial ofthe present Motion for Reconsideration. I am instead of the opinion that the Decision, dated October 25, 2025, should not have partially granted the instant Petition for Review as the Regional Trial Court ("RTC") did not have jurisdiction over the appeal before it. The RTC based its claim of jurisdiction over petitioner's appeal on Section 195 of Republic Act No. 7160, otherwise known as the Local Government Code of1991, as amended ("LGC'). This provision does, indeed, grant the RTC with jurisdiction over appeals against a Local Government Unit's ("LGU") denial of a taxpayer's protest to an assessment for local taxes r against it.

DISSENTING OPINION CTA AC NO. 298 Page 2 of3 This authority is not without exceptions, however. Presidential Decree ("PD")No. 242 requires that controversies between and among entities "under the executive control and supervision of the President of the Philippines" be brought before the Solicitor General, the Government Corporate Counsel, or the Secretary of Justice, depending on the parties involved, instead of before the Courts. This was enacted in response to (1) litigation where, "in the ultimate analysis", the opposing parties constitute "but on real party in interest - the Government itself'; (2) the amount of such cases clogging court dockets; and (3) the observation that the subject entities are, to reiterate, "under the executive control and supervision of the President of the Philippines", who can consequently exert a more direct authority on the parties to resolve the conflict between them. The applicability of the PD No. 242 to disputes around tax assessments was confirmed and thoroughly explained by the Supreme Court in Power Sector Assets and Liabilities Management Corporation v. Commissioner of Internal Revenue1 ("PSALM'), which was most recently affirmed in Department ofEnergy v. Court ofTax Appeals ("DOE"). 2 I am of the opinion that PD No. 242 applies to this case. While relevant Supreme Court rulings, such as PSALM and DOE, cover conflicts with the Commissioner of Internal Revenue over national taxes, their application of PD No. 242 to tax assessment disputes is still relevant to the case at bar, as both parties still fall under the coverage of PD No. 242. As petitioner itself states in the Petition for Review, it is a government instrumentality,3 which are included in the coverage of PD No. 242 and directly enumerated in Section 1 of said law. As for respondents, they are Local Government Units ("LGC"), specifically provincial governments. Such LGUs, however, are also under the "supervisory authority" of the President, following Section 25 ofthe LGC: Section 25. National Supervision over Local Government Units.- (a) Consistent with the basic policy on local autonomy, the President shall exercise general supervision over local government units to ensure that their acts are within the scope of their prescribed powers and functions. The President shall exercise supervisory authority directly over J provinces, highly urbanized cities, and independent component cities; through the province with respect to component cities and G.R. No. 198146, August 8, 2017. G.R. No. 260912, August 17,2022. Petition for Review, p. 2, Rollo, p. 17.

DISSEi\TI\'G OPINION CTA AC NO. 298 Page 3 of3 municipalities; and through the city and municipality with respect to barangays. (Italics supplied.) Considering that petitioner is a government instrumentality and that respondents are provincial LGUs, their dispute over the assessment against petitioner is one among entities "under the executive control and supervision of the President of the Philippines". Petitioner thus availed of the wrong remedy when it brought its appeal to the RTC, which should have dismissed the case outright. Instead, petitioner should have brought its appeal before the Solicitor General.4 In light of the RTC's lack of jurisdiction over this case, I believe that this Court should not have partially overturned the RTC's ruling by partially granting petitioner's protest against the subject assessment. Rather, We should have amended the RTC's ruling to instead dismiss the appeal before it for lack of jurisdiction. The partial grant of petitioner's protest was also improper, to my eyes: the RTC being the wrong venue to question the assessment against petitioner, no valid judicial protest to the assessment was ever filed. Hence, this Court should not have treated petitioner's appeal as valid by partially granting it and modifying the assessment. I thus vote to GRANT respondent's Motion for Reconsideration by rendering an Amended Decision that, instead, amends the RTC' s January 18, 2023 Decision to dismiss the appeal before it for lack ofjurisdiction. Section 3 ofPD No. 242 divides the covered entities into two groups: "departments bureaus, offices and other agencies of the National Government" and "government-owned or controlled corporations or entities being served by the Office of the Government Corporate Counsel". Disputes among the first group exclusively should be brought before the Solicitor General; those among the second ground exclusively should be brought before the Office of the Government Corporate Counsel ("OGCC"); and those among members of both groups (e.g. a dispute between a bureau and a government-owned or controlled corporation) should be brought before the Secretary of Justice. Government "instrumentalities" are not listed among the entities identified in Section 3 ofPD No. 242. However, as they are not served by the OGCC, We can conclude that they belong to the first group. Thus, the present controversy should have been brought to the Solicitor General specifically.