cta_decision CTA Case No. AC-350AC-350 2026-03-13

THE MUNICIPALITY OF PAGBILAO, SHIERRE ANN PORTES-PALICPIC in her capacity as Municipal Mayor of the Municipality of Pagbilao and RIZALINO O. TI?A in his capacity as the Assistant Municipal Treasurer of the Municipality of Pagbilao v. TEAM ENERGY CORPORATION

CTA Form No. 8 111111111111 1111111111 11111 11111 111111111111111 111111111111111 111111111111111111 24-000670-0013 REPUBLIC OF THE PIDLIPPINES COURT OF TAX APPEALS QUEZON CITY SPECIAL FIRST DIVISION CTA AC NO. 350 THE MUNICIPALITY OF NOTICE OF DECISION PAGBILAO, SHIERRE ANN PORTES-PALICPIC in her capacity as Municipal Mayor of the Municipality ofPag_bilao and RIZALINO 0. TINA in his capacity as the Assistant Municipal Treasurer of the Municipality of Pagbilao, Petitioners, -versus- TEAM ENERGY CORPORATION, Respondent. To: QUEZON PROVINCIAL LEGAL OFFICE Thru: Atty. Julienne Therese V. Salvacion Atty. Rei C. Baligod (Counselfor Petitioners) 2nd Floor, Capitol Building, Quezon Capitol Compound, Lucena City GATMAYTAN YAP PATACSIL GUTIERREZ PROTACIO (Counselfor Respondent) 30th Floor, Corporate Center, Sedeiio comer Valero Streets, Salcedo Village, Makati City HON. ALLAN C. LOBO Presiding Judge Thru: Atty. Kristine D. Pabico Branch Clerk of Court Regional Trial Court Fourth Judicial Region Branch 59, Lucena City Hall of Justice, Lucena City 430 I Quezon Province GREETINGS: You are hereby notified by these presents that on March 13, 2026, a Decision was rendered in the above-entitled case, copy of which is attached hereto. Quezon City, Philippines, March 17, 2026. AttyE. xMecaurtiiaveJoc~ i~~hIaInI-Te Page 1 of I

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY SPECIAL FIRST DIVISION THE MUNICIPALITY OF CTA AC Case No. 350 PAGBILAO, SHIERRE ANN PORTES-PALICPIC, in her Members: capacity as Municipal Mayor of BACORRO-VILLENA, Acting Chairperson, and the Municipality of Pagbilao, CUI-DAVID, Jj. and RIZALINO P. TINA, in his capacity as the Assistant Municipal Treasurer of the Municipality ofPagbilao, Petitioners, - versus - TEAM ENERGY a: CORPORATION, Promulgated: Respondent. MAR 13, 2026,' f/off/ x --- --- ----- ----- - - ------ -------- --- ~ -------------- x DECISION BACORRO-VILLENA, L.: Disagreeing with the 29 August 20241 Decision (assailed Decision) of the Regional Trial Court (RTC/court a quo) of Lucena City, Quezon, Branch 59, in Civil Case No. 2019-22, entitled "Team Energy Corporation v. The Municipality ofPagbilao, Shierre Ann Portes- Palicpic in her capacity as Municipal Mayor of the Municipality of Pagbilao, and Rizalino P. Tina in his capacity as Assistant Municipal Treasurer of the Municipality of Pagbilao," petitioners Municipality of Pagbilao, former Municipal Mayor Shierre Ann Portes-Palicpic (Portes- Palicpic) and former Assistant Municipal Treasurer Rizalino P. Tifia (Tifia) (collectively known as petitioners) filed this Petition fot f RTC Records, Volume II, pp. 11 04-11 20.

CTA AC Case No. 350 The Municipality of Pagbilao, Shierre Ann Portes-Palicpic, in her capacity as Municipal Mayor of the Municipality of Pagbilao, and Rizalino P. Tina, in his capacity as the Assistant Municipal Treasurer of the Municipality of Pagbilao v. TeaM Energy Corporation DECISION x--------------------------------------------------------------------x Review2 on 25 October 2024, pursuant to Section 3(a)(3),3 Rule 4 of the Revised Rules of the Court of Tax Appeals (RRCTA). In the petition, petitioners pray that judgment be rendered setting aside the assailed Decision and dismissing respondent TeaM Energy Corporation's (respondent's) Complaint dated 14 February 20194 for lack of merit.s PARTIES TO THE CASE Petitioner Municipality ofPagbilao, Quezon is a local government unit (LGU) created by law. Meanwhile, petitioners Portes-Palicpic and Tifia were the former Municipal Mayor and Assistant Municipal Treasurer, respectively, of the said LGU. They were impleaded as defendants in the Complaint filed in the court a quo. Collectively, petitioners may be served with notices, orders and processes through their counsel, the Quezon Provincial Legal Office, with address at 2nd Floor, Capitol Building, Quezon Capitol Compound, Lucena City. Respondent, on the other hand, is a domestic corporation duly organized and existing under the laws of the Philippines, with principal office at 25F W Fifth Ave. Building, 5th Avenue, Bonifacio Global City, Taguig City.6 Based on the Amended Articles of Incorporation, respondent is primarily engaged to design, construct, erect, assemble commission and operate gas-turbine and other power-generating plants and related facilities for the conversion into electricity of coal, distillate and other fuel provided by and under contract with the government of the Republic of the Philippines, or any subdivision, instrumentality or agency thereof, or any government-owned or controlled corporation, or other entity engaged in the development, supply or distribution of energy.7 J Division Docket, pp. 8-7 1. SEC. 3. Cases within thejurisdiction ofthe Court in Division. - The Court in Division shall exercise: (a) Exclusive original over or appe llate jurisdiction to review by appeal the following: (3) Decisions, resolutions or orders of the Regional Trial Courts in local tax cases decided or resolved by them in the exercise of their original jurisdiction[.] Id., Volume I, pp. 4-28. See Prayer in the Petition for Review, supra at note 2, p. 65 . 6 See Amended Articles of Incorporation, Exhibit "A", RTC Records, Volume II, p. 597. Id., p. 44 1.

CTA AC Case No. 350 The Municipality of Pagbilao, Shierre Ann Portes-Palicpic, in her capacity as Municipal Mayor of the Municipality of Pagbilao, and Rizalino P. Tina, in his capacity as the Assistant Municipal Treasurer of the Municipality of Pagbilao v . TeaM Energy Corporation DECISION X- -- ----- - ------------ - ----- - -- - ---- - ------ - - - ------ - ----------- --- - - X FACTS OF THE CASE On 16 January 2018, respondent submitted its Schedule of Gross Receipts8 for calendar year (CY) 2017 to petitioner Municipal Treasurer.9 There, it declared its gross receipts amounting to P12,101,969,s63.15, with 70% thereof attributable to Pagbilao, Quezon, or equivalent to P8,471,378,694�50.10 Based on respondent's submissions, Tifia issued a Statement of Account of Business Tax for the year 201811 (First Statement) which imposed against respondent an annual local business tax (LBT) for a contractor in the total amount of P46,594,232.81, or a quarterly LBT ofPn,648,ss8.2o. On 22 January 2018, respondent tendered (to petitioners) an amount ofP12,115,779�o2 for the payment ofLBT, permit, fees and other charges for the first (1st) quarter of CY 2018.12 Petitioner Tifia refused to accept the said payment allegedly due to petitioner Portes-Palicpic's directive.13 On 20 April 2018, respondent tendered a total of P23,764,337.22, which included the supposed previous payment and the LBT for the second (znd) quarter of CY 2018.14 Petitioners, through Municipal Treasurer Ana Evangelista (Evangelista), also did not accept it. Subsequently, on 19 July 2018, respondent tendered payment for the three (3) quar ters of CY 2018 in the amount of P35A12,895�42 .15 Similarly, petitioners, through Evangelista, refused to process the payment. Thereafter, on 10 August 2018, respondent wrote a letter16 (of even date) addressed to petitioner Partes-Palicpic to formally tender the LBT payments for the three (3) quarters of CY 2018 and to seek the removal of the imposed surcharges and penalties. According to respondent, it had faithfully tendered the subject LBT payments as early J. as January, April, and July 2018. However, based on petitioner Portes- Exhibit "B", id., pp. 452-457. 9 Par. 9, The Material Facts, Complaint, supra at note 4, p. 6. 10 See Total Figures in Exhibit " B", RTC Records, Vo lume II, p. 457. II Exhibit " C", id., p. 458. 12 Exhibit "0 ", id ., p. 459. 13 See par. II , Complaint, supra at note 4, p. 7. 14 Exhibit " E", RTC Records, Volume II, p. 460. 15 Exhibit " F" , id., p. 46 1. 16 Exhi bit "G", id., pp. 462-463 .

CTA AC Case No. 350 The Municipality of Pagbilao, Shierre Ann Portes-Palicpic, in her capacity as Municipal Mayor of the Municipality of Pagbilao, and Rizalino P. Tina, in his capacity as the Assistant Municipal Treasurer of the Municipality of Pagbilao v . TeaM Energy Corporation DECISION x---- - -------------------------------------------- - - - ----------------x Palicpic's instructions, they were refused thus the delay could not be attributed to it. Respondent further prayed for the issuance of the company's business permit for CY 2018. On 20 September 2018, respondent again tendered the LBT payments for the three (3) quarters of CY 2018 and submitted a check in the amount of P30,572,112.oo as payment for the assessed real property taxes (RPT) for CY 2018 for the Power Plant Assets. Likewise, it submitted a check in the amount of P1,037,24o.o6 as RPT payment for the years 2013-2018 as previously assessed for the access road and weigh bridge properties.17 Later, petitioners sent a letter dated 29 August 201818 and alleged that there were no RPT transactions recorded under respondent's name. Moreover, although respondent tendered LBT payments amounting to P35,412,895�42, the said amount was significantly lower than the purported LBT liability of Ps3,816,921.30, thus, resulting in a deficiency tax of P18,404,025.88. Attached to the said letter was the 'Second Statement' that imposed the amended LBT ofPs3,816,921.30.19 Aggrieved, on 01 October 2018, respondent tendered the LBT of Ps3,816,921.30 as 'Payment under Protest'.20 However, petitioners refused to accept it.21 Instead, petitioners issued the 'Third Statement' which indicated the modified LBT for CY 2018 in the total amount of P6sA97A95�24.22 Consequently, respondent paid the said LBT on 24 October 2018.23 On 20 November 2018, respondent filed its written protest and claimed that the amount of P18,436,541.62, composed of the surcharges and penalties, and the excess LBT assessed using the increased tax rate under the Revised Revenue Code 2017 of the Municipality of Pagbi lao 2 ) ( ' ; (zo17 RRC), should be refunded.'' Without petitioners' action on thLJ � 17 Exhibit "H", id., p. 464. 18 Exhibit "I", id., pp. 465-468. 19 Exhibit "J", id., p. 469. 20 Exhibit "K", id., pp. 470-47 1. 21 See par. 19, Complaint, supra at note 4, p. I0. 22 Exhibit "L", RTC Records, Volume II, p. 473. 23 See Exhibits "M- 1", " M-2", " M-3", id., pp. 474-476. 24 Exhibit "3", id., Exhibits, pp. 1-7 1. 25 Exhibit "N" , RTC Records, Vo lume II, pp. 477-486-E.

CTA AC Case No. 350 The Municipality of Pagbilao, Shierre Ann Portes-Palicpic, in her capacity as Municipal Mayor of the Municipality of Pagbilao, and Rizalino P. Tina, in his capacity as the Assistant Municipal Treasurer of the Municipality of Pagbilao v. TeaM Energy Corporation DECISION x------------------------------ ------ --------------------------------x written protest, on 18 February 2019, respondent (then plaintiff) filed its Complaine6 before the court a quo. PROCEEDINGS BEFORE THE COURT A QUO On 04 March 2019, Summons were issued to petitioners (as then defendants) directing them to file an Answer within fifteen (15) days from notice thereof.27 On 07 May 2019, petitiOners filed their Answer28 where they interposed the following affirmative and special defenses, to wit: (1) under Resolution No. 2007-35929 of the Sangguniang Panlalawigan of Quezon Province (Resolution No. 2007-359) and Resolution No. 2016- 2443o (which approved Provincial Ordinance No. 2016-6o, otherwise known as "The 2016 Revenue Code of the Province of Quezon"3l [2016 Provincial Revenue Code]), it was proper for petitioners to refuse respondent's tender of payments after it failed to present proof of updated RPT payments for CY 2018; and (2) the Complaint is bereft of a cause of action as the modified LBT was properly computed based on the provisions of the 2017 RRC. Initially, the case was set for mediationY However, the parties failed to arrive at an amicable settlement,33 Likewise, the case was set for Judicial Dispute Resolution34 (JDR) but the parties again did not reach any plausible agreement.35 Eventually, the court a quo set the case for a Pre-Trial Conference on o6 August 2021, but it was later reset ~o 0 26 Supra at note 4. , 27 RTC Records, Volume I, p. 91. 28 Id., pp. 96-106. 29 A RESOLUTION REQUIRING ALL APPLICANTS OF A BUSINESS PERMIT IN THE PROVINCE TO PRESENT A CERTIFICATION ISSUED BY THE MUN ICIPAL TREAUSRERS OF THEIR RESPECTIVE MUN ICIPALITI ES THAT THEIR REAL PROPERTY TAX PAYMENT IS UPDATED BEFORE THE SAID BUSINESS PERMIT IS ISSUED IN THEIR FAVOR. Exhibit " I", id., Exhibits, pp. 72-73. 30 A RESOLUTION ENACTING PROVINCIAL ORDINANCE NO. 201 6-60 ENTITLED: "AN ORDINANCE APPROIVING THE 20 16 REVENUE TAX CODE OF THE PROVINCE OF QUEZON["]. Exhibit "2", RTC Records, Volume II, pp. 614-703. 31 See Exhibit "6", id., Vo lume I, pp. 76-1 66. 32 See Order dated 15 May 2019, id., pp. I07-108 . 33 See Mediator's Report dated 30 Ju ly 20 19, id. , p. 11 2. 34 See Order dated 13 October 2020, id., p. 124. 35 See Order dated I0 November 2020, id., p. 126.

CTA AC Case No. 350 The Municipality of Pagbilao, Shierre Ann Portes-Palicpic, in her capacity as Municipal Mayor of the Municipality of Pagbilao, and Rizalino P. Tina, in his capacity as the Assistant Municipal Treasurer of the Municipality of Pagbilao v . TeaM Energy Corporation DECISION x---------------- ------ ----------------------------------------------x 01 December 2021.36 Ahead of the schedule, the parties filed their respective Pre-Trial Briefs.37 On 01 December 2021, petitioners manifested that they had yet to file their judicial affidavits since they failed to locate the intended witness. Consequently, after they moved for an additional time to submit the judicial affidavit, the court a quo extended the time for their submission. Further, petitioners requested the court a quo to rule on their affirmative defenses incorporated in their Answer. Respondent asked for a period of ten (1o) days to file its memorandum on the said affirmative defenses, which the court a quo likewise granted.38 Accordingly, respondent filed its Memorandum related to the affirmative defenses on 18 December 2021.39 In the Resolution dated 21 February 2022,4o the court a quo denied petitioners' affirmative defenses. In so ruling, it explained that respondent's Complaint sufficiently stated a cause of action for a tax protest. It also raised factual and legal issues that may only be resolved after the conduct of trial on the merits. Subsequently, on 16 November 2022, the pre-trial ensued. After the termination thereof, the court a quo issued the Pre-Trial OrderY When the case proceeded to trial, respondent presented its lone witness, Roger B. Quingquing (Quingquing), who testified that: (1) he is respondent's Manager for tax, accounts payable, and payroll section; (2) petitioners issued the three (3) statements relative to respondent's supposed LBT for CY 2018; (3) based on the First Statement (that imposed an annual tax of P47,o61,453�63 inclusive of LBT, permit, fees and other charges), respondent tendered the quarterly payments which petitioners refused to accept; (4) petitioners later informed respondent , 0. that its supposed LBT payments were insufficient and furnished it with 36 See Notice of Pre-Trial dated 03 February 2021 , id., pp. 129- 130; Notice dated II November 2021, id., p. 132. 37 See Petitioners' Pre-Trial Brief, id., pp. 133- 138; and Respondent's Pre-Trial Brief, id ., pp. 139- 165. 38 See Order dated 0 I December 2021 , id., pp. 242-243. 39 !d., pp. 324-335. 40 !d., Volume II, pp. 577-581. 41 !d., pp. 728-73 1.

CTA AC Case No. 350 The Municipality of Pagbilao, Sh ierre Ann Portes-Palicpic, in her capacity as Municipal Mayor of the Municipality of Pagbilao, and Rizalino P. Tina, in his capacity as the Assistant Municipal Treasurer of the Municipality of Pagbilao v. TeaM Energy Corporation DECISION x - - - ------------------- ------- - --- -------------------------------- - --x the Second Statement that imposed against respondent a total taxes of P53,816,g21.30 for the three (3) quarters of CY 2018, including the surcharges and penalties; (s) respondent tried to pay the modified liability under protest but petitioners refused and declared that 'Payment under Protest' does not apply to LBTs; (6) petitioners issued the Third Statement, which allegedly superseded the Second Statement, and imposed a total tax ofP65A97A95�24; (7) after respondent paid the taxes (indicated in the Third Statement), it filed its written protest to claim a refund ofP18,436,541.62; and (8) due to petitioners' inaction, the Complaint was filed before the court a quo.42 On cross-examination, Quingquing declared that he personally tendered the quarterly payments to petitioners. However, the latter's refusal to accept them is not shown on the letters43 accompanying such tenders (of payment). Also, although he was aware of Resolution No. 2007-359, he deemed that it was not part of the requirements to accept the LBT payments. When confronted with an official receipt for an RPT and after he examined it, he asserted that it was respondent's RPT payment in October 2018. As for the rate used in the LBT's computation, Quingquing claimed that it was 55% of one percent (1o/o) of groSS receipts based on the prior revenue code considering that the 2017 RRC only took effect in May 2018.44 On redirect examination, Quingquing reiterated petitioners' refusal to accept respondent's quarterly payments. As for Resolution No. 2007-359, he maintained that there had been no mention that a certification of updated RPT payments is required before the LBT payment could accepted.4S On re-cross examination, Quingquing confirmed that, indeed, he did not note petitioners' refusal to accept the LBT payments on the letters accompanying the payments. When asked if he knew of 'j; Resolution No. 2007-359, he replied that it was always mentioned in the discussion whenever he tendered the quarterly payments.46 42 See Judicial Affidav it of Roger B. Quingquing dated 26 November 202 1, id ., pp. 4 17-437. 43 See Exhibits " D", " E", " F", "G", " H", "I" and " K", supra at notes 12, 14, IS, 16, 17, 18 and 20 res pecti ve ly. 44 TSN dated 24 May 2023, RTC Records, Volume III, pp. 142 1- 1436. 45 ld., pp. 1436- 1437. 46 !d., p. 1438.

CTA AC Case No. 350 The Municipality of Pagbilao, Shierre Ann Portes-Palicpic, in her capacity as Municipa l Mayor of the Municipality of Pagbilao, and Rizalino P. Tina, in his capacity as the Assistant Municipal Treasurer of the Municipality of Pagbilao v. TeaM Energy Corporation DECISION X----------------- --------------- --- --------- -- ---------------------- X Subsequently, respondent filed its Formal Offer of Documentary Evidence (FOE), to which petitioners filed their Comment/ Opposition47 thereto. After respondent's Reply to the Comment/Opposition,48 the Court issued the Order of n July 202349 admitting all of respondent's offered exhibits. For petitioners' part, Evangelista and Jerome R. De Rama (De Rama) took the stand as witnesses. Evangelista testified that: (1) petitioners refused to accept the LBT payments due to respondent's supposed failure to pay the RPT for CY 2018; (2) she based her actions on Resolution No. 2007-359 and the 2016 Provincial Revenue Code; (3) the recomputed LBT amount was based on the 2017 RRC; (4) respondent did not challenge the validity of the recent revenue code before the proper institution; (s) petitioners refused respondent's 'Payment under Protest' contending that the same does not apply to LBTs under the Local Government Code (LGC) of 1991, as amended; and (6) she stressed that when respondent tendered the LBT payments in January, April, July, September and October 2018, its RPT for CY 2018 remained unpaid thus she refused to accept the LBT payments. 50 During cross-examination, Evangelista explained that based on her understanding of Resolution No. 2007-359, the LGU may refuse the LBT payment when the RPT is unpaid. However, when asked whether the title of the said resolution (which she read) provides that petitioners can refuse to accept LBT payments without the proof of RPT payments, she answered in the negative. However, when she was again asked why she refused to accept the tender of LBT payments, she referred to Resolution No. 2007-359. In the course of Evangelista's testimony, the court a quo asked if there is a difference between the certification of the updated RPT ' payments and the payment of the RPTs, to which respondent's counselo 47 See " Comment/Opposition (To: PlaintiffTeaM Energy Corporation 's Formal Offer of Documentary Ev idence dated 7 June 2023)", RTC Records, Volume II, pp. 800-821. 48 See " Reply (to the Defendant's Com ment/Opposition dated June 29, 2023)", id. , pp. 824-836 . 49 Jd., pp. 852-854. 50 See Judicial Affidavit of Ana Aya la Evangelista dated 16 February 2022, id. , pp. 562-568 .

CTA AC Case No. 350 The Municipality of Pagbilao, Shierre Ann Portes-Palicpic, in her capacity as Municipal Mayor of the Municipality of Pagbilao, and Rizali no P. Tina, in his capacity as the Assistant Municipal Treasurer of the Municipality of Pagbilao v. TeaM Energy Corporation DECISION X-- ----------------- ----- - -- ------------ - ---------------- - -- ---- ----- X (instead of Evangelista) said that the certification will be issued after the RPT is paid. Nonetheless, respondent's counsel maintained that the subject resolution requires the presentation of updated RPT payments for the issuance ofbusiness permit and not for the payment ofLBT.s1 On redirect examination, Evangelista claimed that the issuance of the business permit is the same as the processing for LBT payments. She explained that taxpayers should first secure a certification of updated RPT payments (from the Municipal Treasurer's office) before the documentary requirements and the payment for LBT are processed. If the taxpayer pays both the RPT and the LBT, then the Municipal Mayor's office will issue the business permit. Evangelista averred that this sequence of processing and payment are based on Resolution No. 2007- 359 and the 2017 RRC. In respondent's case, no proof of RPT payment was produced, thus, the tenders of LBT payment were refused. The court a quo also sought clarification on whether the Municipal Treasurer's Office issues the certification of updated RPT payments. To this, Evangelista answered affirmatively. She went on to declare that the said office did not issue the said certification to respondent as the latter had not paid the RPT for CY 2o18Y On re-cross examination, when Evangelista was asked if the payment of the RPT should precede before the statement for LBT is issued, she answered that based on the process (as explained above), the Municipal Treasurer's Office needs to determine first the actual receipt or payment of RPT before they process the documentary requirements for LBT. Thus, after the taxpayers complete the requirements, the business permit will be issued to them. Nonetheless, respondent's counsel pointed out that petitioners already issued the three (3) statements of accounts which demanded the payment of LBT despite Evangelista's explanation that petitioners' initial step in processing the LBT is the determination of respondent's actual RPT payments.53 De Rama took the witness stand next. He testified mainly on the ' existence of the 2 017 RRC. According to him, the said Code took effec:!J 51 TSN dated 06 September 2023, id. , pp. 863 . 52 !d., pp. 867-868. 53 !d., pp. 869-870.

CTA AC Case No. 350 The Municipality of Pagbilao, Shierre Ann Portes-Palicpic, in her capacity as Municipal Mayor of the Municipality of Pagbilao, and Rizalino P. Tina, in his capacity as the Assistant Municipal Treasurer of the Municipality of Pagbilao v. TeaM Energy Corporation DECISION X--- - ------------------------- -- ----------------------- --------------X There, the court a quo held that prior exhaustion of administrative remedies under Section 18764 of the LGC of 1991, as amended, was unnecessary before assailing the 2017 RRC's relevant provision before a court. It pointed out that while petitioners' witness (De Rama) testified that the 2017 RRC was enacted for purposes of generating revenue for the LGU, nonetheless, petitioners had declared in their Memorandum that the imposed business taxes are a species of license fees which are imposed in the exercise of the LGU's police power. Considering the nature of the said imposition, the court a quo cited City of Cagayan De Oro v. Cagayan Electric Power & Light Co., Inc.65 (City o f Cagayan) and echoed that ordinances that impose regulatory fees need not be challenged before the Secretary of Justice (SOJ). Here, based on petitioners' own declarations, the court a quo determined that the subject LBT is a regulatory fee, and thus excluded from the ambit of Section 187 of the LGC of 1991, as amended. As regards petitioners' refusal to accept respondent's LBT payments (which resulted in the imposition of surcharges and penalties thereon), the court a quo declared that the refusal was unwarranted and without legal basis. According to it, neither Resolution No. 2007-359 nor the 2017 RRC expressly prohibits the LGU from processing and accepting LBT payments in the absence of a certification showing updated RPT payments. Quoting the relevant provisions, the court a quo declared that o� Resolution No. 2007-359 specifically pertains to the issuance of the business permit (or Mayor's permit), and not to the LBT's payment. 64 Sec. 187. Procedure for Approval and Effectivity of Tax, Ordinances and Revenue Measures; Mandatory Public Hearings. - The procedure for approval of local tax ordinances and revenue measures shall be in accordance with the provisions of this Code: Provided, That public hearings shall be conducted for the purpose prior to the enactment thereof: Provided, further, That any question on the constitutionality or legality of tax ordinances or revenue measures may be raised on appeal within thirty (30) days from the effectivity thereof to the Secretary ofJustice who shall render a decision within sixty (60) days from the date of receipt of the appeal: Provided, however, That such appeal shall not have the effect of suspending the effectivity of the ordinance and the accrual and payment of the tax, fee, or charge levied therein: Provided, finally, That within thirty (30) days after receipt of the decision or the lapse of the sixty-day period without the Secretary of Justice acting upon the appeal, the aggrieved party may fi le appropriate proceedings with a court of competent jurisdiction. 65 G.R. No. 224825, 17 October20 18.

CTA AC Case No. 350 The Municipality of Pagbilao, Shierre Ann Portes-Palicpic, in her capacity as Municipal Mayor of the Municipality of Pagbilao, and Rizalino P. Tina, in his capacity as the Assistant Mun icipal Treasurer of the Municipality of Pagbilao v. TeaM Energy Corporation DECISION x--------------------- - ----- - ------------------------------ --- - -- ----x As for the 2017 RRC, Section 2C.o466 thereof only requires the procurement of Mayor's permit and the payment of business tax before a business may operate in its jurisdiction. Hence, absent a categorical requirement, the court a quo deemed petitioners' actions invalid. The court a quo also stressed that although 'Payment under Protest' is not required for LBTs, there is nothing in the LGC of 1991, as amended, which forbids respondent from making one. Echoing the case of Hon. Lourdes R. jose v. Tigerway Facilities and Resources, Inc., 67 a taxpayer may pay the protested tax to avoid penalties. Hence, in this case, petitioners are unjustified in refusing respondent's (Payment under Protest'. As the alleged delay in the LBT payment is not attributable to respondent's fault but on petitioners' refusal to accept the payment, the court a quo struck down the surcharges and penalties. Lastly, the court a quo ruled that the rates indicated under the 2017 RRC for the LBT are invalid for being violative of Section 19168 of the LGC of 1991, as amended. Hence, in the computation of the proper LBT amount, it declared that the assessments for the 1st and 2ndquarters of CY 2018 should be maintained, while the third (3rd) and fourth (4th) quarters should be based on the 2017 RRC, subject to the limitations imposed under Section 191 of the LGC of 1991, as amended. The pertinent part of the court a quo's assailed Decision69 reads - o Hence, the 1st state ment is va lid for the first two (2) quarters of 2018, while the last two (2) quarters, however, should be based on RRC , 2017, but subject to the limitations set forth under Sec. 191 of the LGC: 66 SEC. 2C.04. Administrative Provisions; Rules and Regulations. - a.) Requirement. Any person who shall establish, operate or conduct any business, trade or activity mentioned in this Article in this municipality shall fi rst obtain a Mayor's Permit and pay fee thereof and the business tax imposed under this article. 67 G.R. No. 24733 1, 26 February 2024. 68 Sec. 191. Authority of Local Government Units to Adjust Rates of Tax Ordinances. - Local government units shall have the authority to adjust the tax rates as prescribed herein not oftener than once every five (5) years, but in no case sha ll such adj ustment exceed ten percent ( I0%) of the rates fixed under this Code. 69 Supra at note 3, p. 111 9.

CTA AC Case No. 350 The Municipality of Pagbilao, Shierre Ann Portes-Palicpic, in her capacity as Municipal Mayor of the Municipality of Pagbilao, and Rizalino P. Tina, in his capacity as the Assistant Municipal Treasurer of the Municipality of Pagbilao v. TeaM Energy Corporation DECISION x-- ---- ------------------------------------ - --------- -- --------------x Petitioners also fault the court a quo's finding that the subject LBT is a regulatory fee and not a tax. They assail that a reading of the 2017 RRC would already prove that the imposition of the LBT on those under the LGU's jurisdiction is primarily for the generation of revenue. Hence, any attack on the constitutionality and validity of the 2017 RRC should have been raised before the SOJ pursuant to Section 18778 of the LGC of 1991, as amended. However, petitioners emphasize that from the effectivity of the 2017 RRC in May 2018, respondent did not file any appeal to contest the same. Petitioners further underscore that they are not prohibited from implementing additional requirements for the payment of the LBT as the imposition itself is in the exercise of its police power. Hence, although the LBT is imposed to generate revenues for the LGU, petitioners aver that they are not precluded from imposing other conditions (such as the payment of the RPT) before they process the LBT. Finally, considering the foregoing arguments, petitioners assert that the imposition of surcharges and penalties on respondent's LBT payments was proper. For them, respondent repeatedly tendered its quarterly LBT payments without the corresponding RPT payment for CY 2018, despite having due notice and prior knowledge of the requirement to settle the said obligation. Respondent counters that the Petition for Review should be denied for lack of merit. According to respondent, the tax rate imposed under the 2017 RRC contravenes the limitations under Section 19179 of the LGC of 1991, as amended. Respondent computes the maximum rate that petitioners may impose is up to ss% of 1% only. Any higher rate than that is already a violation of the LGC. Respondent also contends that the issue at hand involves a pure question of law, hence the doctrine of exhaustion of administrative !J remedy is inapplicable. Moreover, respondent reiterates that the subject , LBT is a regulatory fee as ruled in the case of Bases Conversion and 78 Supra at note 64. 79 Supra at note 68.

CTA AC Case No. 350 The Municipality of Pagbilao, Shierre Ann Portes-Palicpic, in her capacity as Municipal Mayor of the Municipality of Pagbilao, and Rizalino P. Tina, in his capacity as the Assistant Mun icipal Treasurer of the Municipality of Pagbilao v. TeaM Energy Corporation DECISION x--------------------------------------------------------------------x Although pertaining to principles related to statutes and law, in Cynthia S. Bolos v. Danilo T. Bolos,9� the Supreme Court discussed the maxim verba legis in this manner - A cardinal rule in statutory construction is that when the law is clear and free from any doubt or ambiguity, there is no room for construction or interpretation. There is only room fo r application. As the statute is clear, plain, and free from ambiguity, it must be given its literal meaning and applied without attempted interpretation. This is what is known as the plain-meaning rule or verba legis. It is expressed in the maxim, index animi sermo, or "speech is the index of intention." Furthermore, there is the maxim verba legis non est recedendum , or "from the words of a statute there should be no departure." Applying by analogy, the above-quoted provisions merely enumerate the requisites for the issuance of permits. They do not authorize the suspension ofthe processing ofLBT payments in instances where the taxpayer fails to present a certification of updated RPT payment. Neither do they contain any language that would reasonably indicate such an intent. Thus, absent a clear and categorical mandate from the above issuances, We are left with no alternative but to apply the same according to its clear language. We can only pronounce on what the law is and what the rights of the parties thereunder are . Fidelity to such a task precludes construction or interpretation, unless application is impossible or inadequate without it. Thus, it is only when the law is ambiguous or of doubtful meaning may the court interpret or construe its true intent.91 From the foregoing, the Court can only then conclude that petitioners' refusal to accept respondent's LBT payments on the sole ground of its alleged failure to present proof of RPT payment cannot be upheld. Consequently, petitioners' imposition of the surcharges and , penalties lacks sufficient legal basis and, thus, are invalid. We find that 90 G.R. No. 186400, 20 October 201 0; Citatio ns om ined, italics in the original text and emphasis supplied. 91 H. Villarica Pawnshop, Inc. , et at. v. Social Security Commission, et a/., G. R. No. 228087, 24 January 2018.

CTA AC Case No. 350 The Municipality of Pagbilao, Shierre Ann Portes-Palicpic, in her capacity as Municipal Mayor of the Municipality of Pagbilao, and Rizalino P. Tina, in his capacity as the Assistant Municipal Treasurer of the Municipality of Pagbilao v. TeaM Energy Corporation DECISION X----------- ---- ----------------- -- ---------------------------------- X the court a quo did not err 1n ordering the refund of the imposed surcharges and penalties. THE DOCTRINE OF EXHAUSTION OF ADMINISTRATIVE REMEDIES IS NOT APPLICABLE TO ISSUES INVOLVING PURE QUESTIONS OF LAW. Petitioners assert that respondent is estopped from questioning the validity of the 2017 RRC since it failed to file a timely appeal contesting the legality thereof before the SO]. Again, We disagree. In the case of Evelyn Ongsuco and Antonio Salaya v. Hon. Mariano M. Malones, both in his private and official capacity as Mayor of the Municipality ofMaasin, Iloilo,92 the Supreme Court ruled that where the issue raised is purely a legal question, the court's intervention is allowed even if petitioner failed to exhaust the administrative remedies, viz - The doctrine of exhaustion of administrative remedies is based on practical and legal reasons. The availment of administrative remedy entails lesser expenses and prQvides for a speedier disposition of controversies. Furthermore, the courts of justice, for reasons of comity and convenience, will shy away from a dispute until the system of administrative redress has been completed and complied with, so as to give the administrative agency concerned every opportunity to correct its error and dispose of the case. However, there are several exceptions to this rule. The rule on the exhaustion of administrative remedies is intended to preclude a court from arrogating unto itself the authority to resolve a controversy, the jurisdiction over which is initially lodged with an administrative body of special competence. Thus, a case where the issue raised is a purely legal question, well within the competence; and the jurisdiction of the court and not the , tJ administrative agency, would clearly constitute an exception. )(. Resolving questions oflaw, which involve the interpretation and 92 G.R. No. 182065, 27 October 2009; Citations omitted and emphasis supplied.

CTA AC Case No. 350 The Municipality of Pagbilao, Shierre Ann Portes-Palicpic, in her capacity as Municipal Mayor of the Municipality of Pagbilao, and Rizali no P. Tiria, in his capacity as the Assistant Municipal Treasurer of the Municipality of Pagbilao v. TeaM Energy Corporation DECISION x--------------- --------------------- --------------------------------x application oflaws, constitutes essentiallyan exercise ofjudicial power that is exclusively allocated to the Supreme Court and such lower courts the Legislature may establish. A purely legal question or a question of law exists when the doubt centers on what the law is on a certain set of facts. On the contrary, a question of fact results when the issue revolves around the truth or falsity of the alleged facts . To be considered as a question of law, it must not involve an examination of the probative value of the evidence presented by any of the parties. The resolution of the issue must solely depend on what the law provides on the given set of circumstances. Once it is obvious that the issue invites a review of the evidence presented, the question posed is one of fact. 93 In this case, as regards the LBT rate for contractors under the 2017 RRC, the parties are not disputingany factual matter thereon. The issue raised concerns the validity of the increased business tax rate vis-a-vis the limitations under Section 191 of the LGC of 1991, as amended. Hence, its resolution rests on what the law and jurisprudence provide on the given set of facts. Undoubtedly, being a pure question of law, the same is within the Court's competence to resolve despite non- appeal before the SOJ under Section 187 of the same code. THE LOCAL BUSINESS TAX (LBT) RATE FOR CONTRACTORS UNDER THE REVISED REVENUE CODE 2017 OF THE MUNICIPALITY OF PAGBILAO (2017 RRC) IS VALID. Referring to the case of Honorable Leila M. De Lima, in her capacity as Secretary ofjustice v. City ofManila, represented by Mayor joseph Ejercito Estrada94 (De Lima), petitioners claim that the basis of the 10% limitation is reckoned on the adjusted tax rate in the LGU's J prevailing ordinance. Petitioners further declare that based on the 2001 .. RRC, the business tax rate on the contractors was previously fixed at 55% 93 Magna Ready Mix Concrete Corporation v. Andersen Bjornstad Kane Jacobs, Inc., G. R. No. 1961 58, 20 January 202 1. 94 G .R. No. 222886, 17 October 20 18.

CTA AC Case No. 350 The Municipality of Pagbilao, Shierre Ann Portes-Palicpic, in her capacity as Municipal Mayor of the Municipality of Pagbilao, and Rizalino P. Tina, in his capacity as the Assistant Municipal Treasurer of the Municipality of Pagbilao v. TeaM Energy Corporation DECISION x------- --------------------------------------------- - ------------- - -x of 1%. Hence, the subsequent increase to 6o% of 1% of the LBT on the contractors is within the allowed 10% ceiling prescribed under Section 191 of the LGC of 1991, as amended. We agree. Section 191 of the LGC of 1991, as amended states - Sec. 191. Authority ofLocal Government Units to Adjust Rates of Tax Ordinances. - Local government units shall have the authority to adjust the tax rates as prescribed herein not oftener than once every five (s) years, but in no case shall such adjustment exceed ten percent (w%) of the rates fixed under this Code. Section 191 of the LGC presupposes that the following requirements are present for it to apply, to wit: (i) there is a tax ordinance that already imposes a tax in accordance with the provisions of the LGC; and (ii) there is a second tax ordinance that made adjustment on the tax rate fixed by the first tax ordinance.9s As petitioners forwarded, De Lima96also clarified that the option to increase tax rates under Section 191 is reckoned from the enactment of the ordinance that is sought to be adjusted. Applying the foregoing to the instant case, anent the first requirement, prior to the enactm�ent of the 2017 RRC, petitioner LGU followed the tax rate for contractors imposed under Tax Ordinance No. 197 (previously referred as the 2001 RRC) which was enacted on 26 November 2001 through Resolution No. 234. 98 The 2001 RRC imposed /J on contractors whose gross sales or receipts exceed P2 million a business . tax rate of 55% of 1% in excess of the P2 million sales/receipt.99 95 Mindanao Shopping Destination Corporation, et a/. v. Hon. Rodrigo R. Duterte, et at., G. R. No. 2 11 093 , 06 June 2017. 96 Supra at note 94. 97 AN ORDINANCE REVISING THE REVENUE CODE OF THE MUN ICIPALITY OF PAGB ILAO, QUEZON. Division Docket, pp. 471 -578. 98 A RESOLUTION ENACTING MUNICIPAL TAX ORDINANCE NO. I, OTHERWISE KNOW AS THE REVISED MUNICIPAL REVENUE CODE OF PAGBILAO, QUEZON (200 1). Annex "S", id., pp. 465-466. 99 See Sec. 2A.02(e) of the 200 I Revised Revenue Code, id., pp. 48 1-483.

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