CITY OF LAPU LAPU v. PEZA; PROVINCE OF BATAAN v PEZA City of Lapu Lapu are purely questions of law.

(EMKAY) Under the Rules of Court, there are three modes of appeal from Regional
Nov, 26, 2014 | Leonen, J. | Topic (JURISDICTION) Trial Court decisions. The first mode is through an ordinary appeal before
Flow of the case: (RTC - MR - CA - MR - SC) the Court of Appeals where the decision assailed was rendered in the
exercise of the Regional Trial Court’s original jurisdiction. In ordinary
PETITIONER: City of Lapu Lapu appeals, questions of fact or mixed questions of fact and law may be raised.
RESPONDENTS: PEZA The second mode is through a petition for review before the Court of
Appeals where the decision assailed was rendered by the Regional Trial
PETITIONER: Province of Bataan Court in the exercise of its appellate jurisdiction. In petitions for review
RESPONDENTS: PEZA under Rule 42, questions of fact, of law, or mixed questions of fact and law
may be raised. The third mode is through an appeal by certiorari before
SUMMARY: City of Lapu Lapu and Province of Bataan wants to tax PEZA. They this court (SC) under Rule 45 where only questions of law shall be
argue that upon the passing of the LGC, tax exemptions of PEZA were removed. On raised
the other hand, PEZA argues that it is tax exempt by virtue of the Special Economic
Zone Act of 1995 (SEZA 1995). A question of fact exists when there is doubt as to the truth or falsity of the
alleged facts. On the other hand, there is a question of law if the appeal
City of Lapu Lapu first filed a petition for declaratory relief in Pasay RTC praying raises doubt as to the applicable law on a certain set of facts.
that the trial court declare it exempt from payment of real property taxes. RTC ruled
that PEZA is exempt from paying RPT by virtue of the SEZA 1995. City of Lapu Under Rule 50, Section 2, an improper appeal before the Court of
Lapu filed an MR but was denied. City of Lapu Lapu filed an appeal to the CA but Appeals is dismissed outright and shall not be referred to the proper
was also dismissed. According to CA, City of Lapu Lapu used the wrong mode of court.
appeal since all the issues it raised are only questions of law. Hence, City of Lapu
Lapu filed a petition for review on certiorari in SC. The City insists that the trial In Indoyon, Jr. v. Court of Appeals, we said that this court "cannot
court had no jurisdiction to hear the PEZA's petition for declaratory relief. According tolerate ignorance of the law on appeals." It is not this court's task to
to the City, the case involves real property located in the City of Lapu-Lapu. The determine for litigants their proper remedies under the Rules.
petition for declaratory relief should have been filed before the Regional Trial Court
of the City of Lapu-Lapu. We agree that the City availed itself of the wrong mode of appeal before the
Court of Appeals. The City raised pure questions of law in its appeal. The
On the other hand, Province of Bataan wants to sell via public auction the properties issue of whether the Regional Trial Court of Pasay had jurisdiction over the
of PEZA when it refused to pay real property taxes. PEZA filed a petition for PEZA’s petition for declaratory relief is a question of law, jurisdiction
injunction with TRO for the Province to stop selling the properties of PEZA. RTC being a matter of law. The issue of whether the PEZA is a government
initially issued a TRO but RTC finally ruled that PEZA is not exempt from paying instrumentality exempt from payment of real property taxes is likewise a
taxes. PEZA filed a petition for certiorari with TRO in CA. CA issued a TRO for the question of law since this question is resolved by examining the provisions
Province to stop selling the properties of PEZA. However, Province said that it of the PEZA’s charter as well as other laws relating to the PEZA. The
already conducted a public auction because it received the TRO late. The Province Court of Appeals, therefore, did not err in dismissing the City’s appeal
filed a motion to dismiss saying that it is CTA and not CA which has jurisdiction. pursuant to Rule 50, Section 2 of the Rules of Court.
The CA denied the MTD and granted the petition for review of PEZA. Hence,
Province of Bataan filed a petition for review in SC.
2. Whether the Regional Trial Court, Branch 111, Pasay City had jurisdiction
This decision is a consolidation of the two petitions for review. to hear, try, and decide the City of Lapu-Lapu's petition for declaratory
relief; - NO. RTC has no jurisdiction over the subject matter. There
The SC answered in four parts: were already demand letters so a petition for declaratory relief is not
the right petition.
1. Whether the Court of Appeals erred in dismissing the City of Lapu-Lapu's
appeal for raising pure questions of law; - NO. All the issues raised by We rule that the PEZA erred in availing itself of a petition for
declaratory relief against the City. The City had already issued demand
 letters and real property tax assessment against the PEZA, in violation
of the PEZA’s alleged tax-exempt status under its charter. The Special
Economic Zone Act of 1995, the subject matter of PEZA’s petition for DOCTRINES:
declaratory relief, had already been breached. The trial court, therefore, 1. There is a question of law if the appeal raises doubt as to the applicable law on a
had no jurisdiction over the petition for declaratory relief. certain set of facts. For questions of law, SC has jurisdiction. Under Rule 50,
Section 2, an improper appeal before the Court of Appeals is dismissed outright
There are several aspects of jurisdiction. Jurisdiction over the subject matter and shall not be referred to the proper court.
is "the power to hear and determine cases of the general class to which the
proceedings in question belong." Another aspect of jurisdiction is 2. Jurisdiction is "the power to hear and determine cases of the general class to
jurisdiction over the person. It is "the power of [a] court to render a personal which the proceedings in question belong." Jurisdiction is a matter of substantive
judgment or to subject the parties in a particular action to the judgment and law. Thus, an action may be filed only with the court or tribunal where the
other rulings rendered in the action." Jurisdiction over the res or the thing Constitution or a statute says it can be brought. When a case is filed with a court
under litigation is acquired either "by the seizure of the property under legal which has no jurisdiction over the action, the court shall motu proprio dismiss the
process, whereby it is brought into actual custody of the law; or asa result of case. On the other hand, venue is "the place of trial or geographical location in
the institution of legal proceedings, in which the power of the court is which an action or proceeding should be brought." In civil cases, venue is a matter of
recognized and made effective." procedural law. A party’s objections to venue must be brought at the earliest
opportunity either in a motion to dismiss or in the answer; otherwise the objection
In the present case, the Regional Trial Court had no jurisdiction over shall be deemed waived. When the venue of a civil action is improperly laid, the
the subject matter of the action, specifically, over the remedy sought. court cannot motu propriodismiss the case.

3. The PEZA should have filed its petition before the Court of Tax Appeals. The
3. Whether the petition for injunction filed before the Regional Trial Court, Court of Tax Appeals has the exclusive appellate jurisdiction over local tax cases
Branch 115, Pasay City, is a local tax case appealable to the Court of Tax decided by Regional Trial Courts.
Appeals; - YES. CTA and not CA has jurisdiction
FACTS:
The PEZA’s petition for certiorari was filed before the wrong court. 1. These are consolidated petitions for review on certiorari by City of Lapu
The PEZA should have filed its petition before the Court of Tax Lapu and Province of Bataan vs. PEZA
Appeals. The Court of Tax Appeals has the exclusive appellate
jurisdiction over local tax cases decided by Regional Trial Courts. Facts common to the consolidated petitions
In this case, the petition for injunction filed before the Regional Trial Court 2. EPZA (Export Processing Zone Authority) was created under the Marcos
of Pasay was a local tax case originally decided by the trial court in its Administration via PD 66 which declared that EPZA is exempt from all
original jurisdiction. Since the PEZA assailed a judgment, not an taxes that may be due to the Republic of the Philippines, its provinces,
interlocutory order, of the Regional Trial Court, the PEZA’s proper remedy cities, municipalities, and other government agencies and instrumentalities.
was an appeal to the Court of Tax Appeals. 3. PEZA was created via RA 7916 (Special Economic Zone Act of 1995) to
operate, administer, manage, and develop economic zones in the country.
4. Whether the PEZA is exempt from payment of real property taxes. – YES. On 1995, President Fidel V. Ramos issued Executive Order No. 282,
PEZA is exempt since it is a GI. directing the PEZA to assume and exercise all of the EPZA's powers,
functions, and responsibilities
The PEZA is an instrumentality of the national government. Being
an instrumentality of the national government, the PEZA cannot be I. City of Lapu Lapu vs PEZA
taxed by local government units. 4. City of Lapu lapu demanded PEZA to pay real property taxes from 1992 to
1998 on PEZA’s properties in Mactan Economic Zones. It cited Sections
193 and 234 of the Local Government Code of 1991 that withdrew the real
Hence, SC denied the consolidated petitions. property tax exemptions previously granted to or presently enjoyed by all
persons. The City pointed out that no provision in the Special Economic
 Zone Act of 1995 specifically exempted the PEZA from payment of real declaratory relief. For its failure to do so, the PEZA violated Rule 63,
property taxes. Section 2 of the Rules of Court, and the trial court should have
5. RTC: dismissed the petition.
a) PEZA filed a petition for declaratory relief with the RTC of Pasay b) PEZA filed its comment. As to the jurisdiction issue, the PEZA
City, praying that the trial court declare it exempt from payment of counters that the Regional Trial Court of Pasay had jurisdiction to hear
real property taxes its petition for declaratory relief under Rule 63, Section 1 of the Rules
b) City of Lapu Lapu answered and cited a legal opinion by the DOJ of Court. 53 It also argued that it need not implead the Province of
which stated that the PEZA is not exempt from payment of real Bataan, the City of Baguio, and the Province of Cavite as respondents
property taxes because of the LGC considering that their demands came after the PEZA had already filed
c) The OSG gave its comment agreed that the PEZA is exempt from the petition in court.
payment of real property taxes, citing Sections 24 and 51 of the
Special Economic Zone Act of 1995.
d) The RTC ruled that PEZA is exempt from payment of RPT citing II. Province of Bataan vs PEZA
the Special Economic Zone Act of 1995. Characterizing the PEZA as 8. Province of Bataan informed the PEZA that it would be sending a real
an agency of the National Government, the trial court ruled that the property tax billing to the PEZA. Arguing that the PEZA is a developer of
City had no authority to tax the PEZA under Sections 133 (o) and 234 economic zones, the Province claimed that the PEZA is liable for real
(a) of the Local Government Code of 1991. property taxes under Section 24 of the Special Economic Zone Act of 1995.
e) City of Lapu Lapu fiiled an MR 9. PEZA requested the Province to suspend the service of the real property tax
f) The RTC denied the MR billing. It cited its petition for declaratory relief against the City of Lapu-
Lapu pending before the Regional Trial Court, Branch 111, Pasay City as
6. CA: basis.
a) City of Lapu Lapu appealed and raised the following issues: (1) 10. The Province ignored the PEZA's request. It then served on the PEZA a
whether the trial court had jurisdiction over the PEZA's petition for warrant of levy covering the PEZA's real properties located in Mariveles,
declaratory relief; (2) whether the PEZA is a government agency Bataan.
performing governmental functions; and (3) whether the PEZA is 11. The PEZA's subsequent requests for suspension of collection were all
exempt from payment of real property taxes. denied by the Province.
b) CA ruled that the issues presented by City of Lapu Lapu are pure 12. The Province then served on the PEZA a notice of delinquency in the
questions of law and an appeal is a wrong mode of appeal. Hence it payment of real property taxes and a notice of sale of real property for
dismissed City’s appeal. unpaid real property tax. The Province finally sent the PEZA a notice of
c) City of Lapu Lapu fiiled an MR public auction of the latter's properties in Mariveles, Bataan.
d) The CA denied the MR 13. RTC:
a) PEZA filed a petition for injunction with prayer for issuance of a
7. SC: temporary restraining order and/or writ of preliminary injunction before
a) City of Lapu Lapu filed a petition for review on certiorari. According the Regional Trial Court of Pasay City, arguing that it is exempt from
to City of Lapu Lapu, its appeal in CA involved mixed questions of fact payment of real property taxes. It added that the notice of sale issued by
and law. Even assuming that the petition involves pure questions of the Province was void because it was not published in a newspaper of
law, the City contends that the subject matter of the case "is of extreme general circulation as required by the LGC.
importance with [far-reaching] consequence. The City insists that the b) The RTC issued a TRO against the Province. After the PEZA had filed
trial court had no jurisdiction to hear the PEZA's petition for a P100,000.00 bond, the trial court issued a writ of preliminary
declaratory relief. According to the City, the case involves real property injunction, enjoining the Province from selling the PEZA's real
located in the City of Lapu-Lapu. The petition for declaratory relief properties at public auction.
should have been filed before the Regional Trial Court of the City of c) Three years after, the trial court denied the PEZA's petition for
Lapu-Lapu. Moreover, the Province of Bataan, the City of Baguio, and injunction. The trial court ruled that the PEZA is not exempt from
the Province of Cavite allegedly demanded real property taxes from the payment of real property taxes. According to the trial court, Sections
PEZA. The City argues that the PEZA should have likewise impleaded 193 and 234 of the Local Government Code had withdrawn the real
these local government units as respondents in its petition for
 property tax exemptions previously granted to all persons, whether were already demand letters so a petition for declaratory relief is not
natural or juridical. the right petition.
7. Whether the petition for injunction filed before the Regional Trial Court,
14. CA: Branch 115, Pasay City, is a local tax case appealable to the Court of Tax
a) PEZA filed a petition for review on certiorari with prayer for TRO Appeals; - YES. CTA and not CA has jurisdiction
b) The CA issued a temporary restraining order, enjoining the Province 8. Whether the PEZA is exempt from payment of real property taxes. – YES.
and its Provincial Treasurer from selling PEZA's properties at public PEZA is exempt since it is a GI.
auction
c) In its comment, the Province alleged that it received a copy of the RULING: SC denied the consolidated petitions.
temporary restraining order only on October 18, 2007 when it had
already sold the PEZA's properties at public auction. Arguing that the RATIO:
act sought to be enjoined was already fait accompli, the Province I. Whether the Court of Appeals erred in dismissing the City of Lapu-Lapu's appeal
prayed for the dismissal of the petition for certiorari. for raising pure questions of law; - NO. All the issues raised by City of Lapu Lapu
d) PEZA submitted a supplemental petition while Province filed its are purely questions of law
comment.
e) The Province then filed a motion for leave to admit attached rejoinder 1. Under the Rules of Court, there are three modes of appeal from Regional
with motion to dismiss. The Province argued for the first time that the Trial Court decisions. The first mode is through an ordinary appeal before
Court of Appeals had no jurisdiction over the subject matter of the the Court of Appeals where the decision assailed was rendered in the
action and claimed that the court with appellate jurisdiction over the exercise of the Regional Trial Court’s original jurisdiction. Ordinary
action is the Court of Tax Appeals. The PEZA then prayed that the appeals are governed by Rule 41, Sections 3 to 13 of the Rules of Court. In
Court of Appeals dismiss the petition for certiorari for lack of ordinary appeals, questions of fact or mixed questions of fact and law may
jurisdiction over the subject matter of the action. be raised.
f) The Court of Appeals held that the issue before it was whether the trial The second mode is through a petition for review before the Court of
court judge gravely abused his discretion in dismissing the PEZA's Appeals where the decision assailed was rendered by the Regional Trial
petition for prohibition. This issue, according to the Court of Appeals, Court in the exercise of its appellate jurisdiction. Rule 42 of the Rules of
is properly addressed in a petition for certiorari over which it has Court governs petitions for review before the Court of Appeals. In petitions
jurisdiction to resolve. The CA reversed the ruling of the RTC. The CA for review under Rule 42, questions of fact, of law, or mixed questions of
found that the PEZA is an instrumentality of the national fact and law may be raised.
government. No taxes, therefore, could be levied on it by local The third mode is through an appeal by certiorari before this court under
government units. Rule 45 where only questions of law shall be raised
g) The Province filed an MR 2. A question of fact exists when there is doubt as to the truth or falsity of the
h) CA denied the MR alleged facts. On the other hand, there is a question of law if the appeal
raises doubt as to the applicable law on a certain set of facts.
15. SC 3. Under Rule 50, Section 2, an improper appeal before the Court of
a) Province of Bataan filed a petition for review on certiorari claiming Appeals is dismissed outright and shall not be referred to the proper
that CTA and not CA has jurisdiction court.
4. In Indoyon, Jr. v. Court of Appeals, we said that this court "cannot
tolerate ignorance of the law on appeals." It is not this court's task to
ISSUE/s: determine for litigants their proper remedies under the Rules.
5. Whether the Court of Appeals erred in dismissing the City of Lapu-Lapu's 5. We agree that the City availed itself of the wrong mode of appeal before the
appeal for raising pure questions of law; - NO. All the issues raised by Court of Appeals. The City raised pure questions of law in its appeal. The
City of Lapu Lapu are purely questions of law issue of whether the Regional Trial Court of Pasay had jurisdiction over the
6. Whether the Regional Trial Court, Branch 111, Pasay City had jurisdiction PEZA’s petition for declaratory relief is a question of law, jurisdiction being
to hear, try, and decide the City of Lapu-Lapu's petition for declaratory a matter of law. The issue of whether the PEZA is a government
relief; - NO. RTC has no jurisdiction over the subject matter. There instrumentality exempt from payment of real property taxes is likewise a
question of law since this question is resolved by examining the provisions
 of the PEZA’s charter as well as other laws relating to the PEZA. The 12. Injunction "is a judicial writ, process or proceeding whereby a party is
Court of Appeals, therefore, did not err in dismissing the City’s appeal ordered to do or refrain from doing a certain act." "It may be the main
pursuant to Rule 50, Section 2 of the Rules of Court. action or merely a provisional remedy for and as incident in the main
6. Nevertheless, considering the important questions involved in this case, we action." The essential requisites of a writ of injunction are: "(1) there must
take cognizance of the City’s petition for review on certiorari in the interest be a right in esse or the existence of a right to be protected; and (2) the act
of justice. against which the injunction is directed to constitute a violation of such
right."
II. Whether the Regional Trial Court, Branch 111, Pasay City had jurisdiction to 13. We note, however, that the City confused the concepts of jurisdiction
hear, try, and decide the City of Lapu-Lapu's petition for declaratory relief; - NO. and venue in contending that the Regional Trial Court of Pasay had no
RTC has no jurisdiction over the subject matter. There were already demand jurisdiction because the real properties involved in this case are located
letters so a petition for declaratory relief is not the right petition. in the City of Lapu-Lapu.
14. On the one hand, jurisdiction is "the power to hear and determine cases of
7. A petition for declaratory relief must satisfy six requisites: [F]irst, the the general class to which the proceedings in question belong." Jurisdiction
subject matter of the controversy must be a deed, will, contract or other is a matter of substantive law. Thus, an action may be filed only with the
written instrument, statute, executive order or regulation, or ordinance; court or tribunal where the Constitution or a statute says it can be brought.
second, the terms of said documents and the validity thereof are doubtful Objections to jurisdiction cannot be waived and may be brought at any stage
and require judicial construction; third, there must have been no breach of of the proceedings, even on appeal. When a case is filed with a court which
the documents in question; fourth, there must be an actual justiciable has no jurisdiction over the action, the court shall motu proprio dismiss the
controversy or the "ripening seeds" of one between persons whose interests case.
are adverse; fifth, the issue must be ripe for judicial determination; and 15. On the other hand, venue is "the place of trial or geographical location in
sixth, adequate relief is not available through other means or other forms of which an action or proceeding should be brought." In civil cases, venue is a
action or proceeding. matter of procedural law. A party’s objections to venue must be brought at
8. We rule that the PEZA erred in availing itself of a petition for the earliest opportunity either in a motion to dismiss or in the answer;
declaratory relief against the City. The City had already issued demand otherwise the objection shall be deemed waived. When the venue of a civil
letters and real property tax assessment against the PEZA, in violation action is improperly laid, the court cannot motu propriodismiss the case.
of the PEZA’s alleged tax-exempt status under its charter. The Special 16. The venue of an action depends on whether the action is a real or personal
Economic Zone Act of 1995, the subject matter of PEZA’s petition for action. Should the action affect title to or possession of real property, or
declaratory relief, had already been breached. The trial court, therefore, interest therein, it is a real action. The action should be filed in the proper
had no jurisdiction over the petition for declaratory relief. court which has jurisdiction over the area wherein the real property
9. There are several aspects of jurisdiction. Jurisdiction over the subject matter involved, or a portion thereof, is situated. If the action is a personal action,
is "the power to hear and determine cases of the general class to which the the action shall be filed with the proper court where the plaintiff or any of
proceedings in question belong." Another aspect of jurisdiction is the principal plaintiffs resides, or where the defendant or any of the
jurisdiction over the person. It is "the power of [a] court to render a personal principal defendants resides, or in the case of a non-resident defendant
judgment or to subject the parties in a particular action to the judgment and where he may be found, at the election of the plaintiff.
other rulings rendered in the action." Jurisdiction over the res or the thing 17. The City was objecting to the venue of the action, not to the jurisdiction of
under litigation is acquired either "by the seizure of the property under legal the Regional Trial Court of Pasay.. Objections to venue must be raised at
process, whereby it is brought into actual custody of the law; or asa result of the earliest possible opportunity. The City did not file a motion to dismiss
the institution of legal proceedings, in which the power of the court is the petition on the ground that the venue was improperly laid. Neither did
recognized and made effective." the City raise this objection in its answer.
10. In the present case, the Regional Trial Court had no jurisdiction over
the subject matter of the action, specifically, over the remedy sought. III. Whether the petition for injunction filed before the Regional Trial Court, Branch
11. Instead of a petition for declaratory relief, the PEZA should have directly 115, Pasay City, is a local tax case appealable to the Court of Tax Appeals; - YES.
resorted to a judicial action. The PEZA should have filed a complaint for CTA and not CA has jurisdiction
injunction, the "appropriate ordinary civil action"to enjoin the City from
enforcing its demand and collecting the assessed taxes from the PEZA. 18. Appeal is the remedy "to obtain a reversal or modification of a judgment on
the merits. On the other hand, certiorari is a special civil action filed to
 annul or modify a proceeding of a tribunal, board, or officer exercising 26. Real properties under the PEZA’s title are owned by the Republic of
judicial or quasi-judicial functions. the Philippines
19. In this case, the trial court’s decision dated January 31, 2007 is a judgment
on the merits. Based on the facts disclosed by the parties, the trial court
declared the PEZA liable to the Province of Bataan for real property taxes.
The PEZA’s proper remedy against the trial court’s decision, therefore, is
appeal. This court, "in the liberal spirit pervading the Rules of Court and in
the interest of substantial justice," has treated petitions for certiorari as an
appeal.
20. However, the PEZA’s petition for certiorari was filed before the wrong
court. The PEZA should have filed its petition before the Court of Tax
Appeals. The Court of Tax Appeals has the exclusive appellate
jurisdiction over local tax cases decided by Regional Trial Courts.
21. In this case, the petition for injunction filed before the Regional Trial Court
of Pasay was a local tax case originally decided by the trial court in its
original jurisdiction. Since the PEZA assailed a judgment, not an
interlocutory order, of the Regional Trial Court, the PEZA’s proper remedy
was an appeal to the Court of Tax Appeals.
22. Considering that the appellate jurisdiction of the Court of Tax Appeals is to
the exclusion of all other courts, the Court of Appeals had no jurisdiction to
take cognizance of the PEZA’s petition. The Court of Appeals acted
without jurisdiction in rendering the decision.

IV. Whether the PEZA is exempt from payment of real property taxes. – YES. PEZA
is exempt since it is a GI.

23. The jurisdictional errors in this case render these consolidated petitions
moot. We do not review void decisions rendered without jurisdiction. In the
interest of judicial economy and avoidance of conflicting decisions
involving the same issues, we resolve the substantive issue of whether the
PEZA is exempt from payment of real property taxes.
24. The PEZA is an instrumentality of the national government. Being
an instrumentality of the national government, the PEZA cannot be
taxed by local government units.
25. The PEZA assumed the non-profit character, including the tax
exempt status, of the EPZA. At any rate, the PEZA cannot be taxed
for real property taxes even if it acts as a developer or operator of
special economic zones. The PEZA is an instrumentality of the
national government exempt from payment of real property taxes
under Section 133(o) of the Local Government Code. As this court
said in Manila International Airport Authority, "there must be
express language in the law empowering local governments to tax
national government instrumentalities. Any doubt whether such
power exists is resolved against local governments.