CITY OF LAPU LAPU v. PEZA GR No.

GR No. 184203 certiorari in favor of PEZA where the CA ruled that the Pasay RTC gravely
November 26, 2014 Leonen, J. abused its discretion in finding that the PEZA liable for real property taxes.
TOPIC IN SYLLABUS: Jurisdiction
SUMMARY: (Consolidated cases of Lapu-lapu and Bataan Province against the FACTS:
PEZA. But I think the more important case is the Lapu-Lapu case) COMMON FACTS
The PEZA filed a petition for declaratory relief with the Pasay RTC because the • Marcos issed PD No. 66 declaring as government policy the establishment of
City of Lapu-Lapu, Cebu, is demanding from PEZA the payment of RPT for its export processing zones in strategic locations in the Philippines. The decree
properties in Mactan Export Processing Zone. The RTC ruled in favor of PEZA created the EPZA and declared the EPZA non-profit in character.
and held that PEZA is exempt from the payment of RPT. The City appealed to • Marcos issued PD 1811 establishing the Mactan Export Processing Zone. =
the CA (Rule 41), alleging that RTC has no jurisdiction over the declaratory • The PEZA, the successor of the EPZA, was created by RA 7916 in 1995.
relief filed by PEZA and that PEZA is not exempt from the payment of real • EO 282 issued by Ramos directed the PEZA to assume and exercise all of
property taxes. The CA, however, dismissed the case for being the wrong mode EPZA’s powers, functions, and responsibilities.
of appeal (should have been Rule 45). The SC held that the Pasay RTC has no
jurisdiction over the subject matter of the petition for declaratory relief since its LAPU-LAPU CASE
subject matter has already been breached. • The City of Lapu-Lapu demanded from PEZA P32,912,350.08 in real property
taxes for the period from 1992 to 1998 on the PEZA’s properties located in
PEZA filed a petition for injunction with TRO/WPI in the Pasay RTC against the the Mactan Economic Zone.
Province of Bataan to enjoin it from demanding RPT payments. The RTC issued • City: No provision in the Special Economic Zone Act of 1995 specifically
a TRO but eventually ruled that PEZA should pay the RPT liability. PEZA went exempted the PEZA from payment of real property taxes, unlike Section 21 of
to the CA via a Rule 65 Petition. CA gave due course to the petition even it was Presidential Decree No. 66 that explicitly provided for EPZA’s exemption.
a wrong mode of appeal and ruled that PEZA is not liable for the RPT. The SC Since no legal provision explicitly exempted the PEZA from payment of real
held that PEZA is not liable to pay for RPT but the SC also said that the correct property taxes, the City argued that it can tax the PEZA. It also made
remedy is an appeal (since the RPT’s ruling is a judgment on the merits) and subsequent demands to PEZA in the amount of P 86,843,503.48 as real
that the case should have been filed with the CTA, not CA. property taxes for the period from 1992 to 2002.
• PEZA filed a petition for declaratory relief with the Regional Trial Court of
SHORT DOCTRINES: Pasay City, praying that the trial court declare it exempt from payment of real
• Jurisdiction=/=venue property taxes. To support its argument, the City cited a legal opinion dated
• Difference of Jurisdiction over subject matter, person, and res (check September 6, 1999
discussion.) • issued by the Department of Justice, which stated that the PEZA is not exempt
• Cases should be dismissed for lack of jurisdiction, even if not raised on from payment of real property taxes.
appeal. Even motu propio. • Pursuant to Rule 63, Section 3 of Rules of Court, the Office of the Solicitor
• The proper remedy on cases decided on the merits is an appeal General filed a comment on the PEZA’s petition for declaratory relief. It
• Appeal v. Certiorari agreed that the PEZA is exempt from payment of real property taxes, citing
• Rule 45 v. Rule 65 Sections 24 and 51 of the Special Economic Zone Act of 1995.
• The RTC ruled in favor of PEZA. The PEZA remained tax-exempt regardless of
PROCEDURAL ANTECEDENTS: These are consolidated Rule 45 petitions from Section 24 of the Special Economic Zone Act of 1995. It ruled that Section
the City of Lapu-Lapu, Cebu (“City”) and the Province of Bataan (“Province”) 24, which taxes real property owned by developers of economic zones, only
against the Philippine Economic Zone Authority (PEZA). applies to private developers of economic zones, not to public developers
The City assails the CA’s dismissal of the former’s appeal to the CA for being like the PEZA. The PEZA, therefore, is not liable for real property taxes on the
the wrong mode of appeal. The Province assails the CA’s grant of petition for land it owns. Characterizing the PEZA as an agency of the National
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Government, the trial court ruled that the City had no authority to tax the • The Court of Appeals “hid under the skirts of technical rules” in
PEZA under Sections 133(o) and 234(a) of the Local Government Code of resolving its appeal. The appeal involved mixed questions of fact and
1991. law. Assuming arguendo that the petition involves pure questions of
• RTC granted the petition for declaratory relief. RTC denied the MR of the law, the the subject matter of the case “is of extreme importance with
City. The City appealed to the CA. [far-reaching] consequence that [its magnitude] would surely shape
• The CA dismissed the appeal for being the wrong mode of appeal. The issues and determine the course of our nation’s future.”
presented by the City, according to the Court of Appeals, are pure questions • The case involves real property located in the City of Lapu-Lapu. The
of law which should have been raised in a petition for review on certiorari petition for declaratory relief should have been filed before the
directly filed before this court. Regional Trial Court of the City of Lapu-Lapu. Hence, RTC has no
jurisdiction to hear the petition for declaratory relief.
BATAAN CASE Province of Bataan:
• The office of the Provincial Treasurer of Bataan informed PEZA that it would • The PEZA erred in filing a petition for certiorari. Arguing that the PEZA
be sending a real property tax billing to the PEZA. PEZA claimed that it is sought to reverse a RTC decision in a local tax case, the Province
exempt from the payment of real property taxes under SEC 24 of Special claimed that the court with appellate jurisdiction over the action is the
Economic Zone Act of 1995. PEZA requested to suspend the collection of the Court of Tax Appeals. The PEZA then prayed that the Court of Appeals
RPT. dismiss the petition for certiorari for lack of jurisdiction over the
• Bataan ignored the requests. Bataan sent the PEZA a notice of public auction subject matter of the action.
in PEZA’s property in Mariveles, Bataan.
• PEZA filed a petition for injunction with prayer for issuance of a TRO and/or RESPONDENT’S ARGUMENT(S):
writ of preliminary injunction before the RTC of Pasay, arguing that it is PEZA (LAPU-LAPU):
exempt from the payment of RPT. • The City availed itself of the wrong mode of appeal before the Court of
• Pasay RTC issued a TRO against Bataan. But RTC denied the petition for Appeals. Since the City raised pure questions of law in its appeal, the
injunction. It ruled that PEZA is not exempt from RPT payment. PEZA argues that the proper remedy is a petition for review on
• PEZA filed with the CA a petition for certiorari with prayer for issuance of a certiorari with this court, not an ordinary appeal before the appellate
TRO. court.
• CA issued the TRO, enjoining the Province from selling the properties at a • PEZA is an agency and instrumentality of the National Government. It
public auction. is therefore exempt from payment of real property taxes under Sections
• PEZA filed filed a supplemental petition for certiorari, prohibition, and 133(o) and 234(a) of the Local Government Code.
mandamus against the Province, arguing that the Provincial Treasurer of PEZA (BATAAN)
Bataan acted with grave abuse of discretion in issuing the notice of • The PEZA argues that the Court of Appeals had jurisdiction to hear its
delinquency and notice of sale. It maintained that it is exempt from payment petition for certiorari since the issue was whether the trial court
of real property taxes because it is a government instrumentality. It added that committed grave abuse of discretion in denying its petition for
its lands are property of public dominion which cannot be sold at public injunction. The PEZA maintains that it is exempt from payment of real
auction. property taxes under Section 21 of Presidential Decree No. 66 and
• The CA admitted the certiorari filed by PEZA, in the broader interest of Section 51 of the Special Economic Zone Act of 1995.
justice, even if appeal, not certiorari, was PEZA’s proper remedy.
• CA held that PEZA is not liable for the payment of RPT. ISSUE(S): WON the PASAY RTC has jurisdiction over the subject matter of the
petition for declaratory relief filed by Lapu-Lapu—NO.
PETITIONER’S ARGUMENT(S):
City of Lapu-Lapu: HELD: PETITION DENIED. PEZA NOT LIABLE FOR THE RPT.
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statute, executive order or regulation, ordinance, or any other
I. PROCEDURAL PART governmentalregulation.
• However, a declaratory judgmentmay issue only if there has been “no
Three modes of appeal from the RTC decisions: breach of the documents in question.” If the contract or statute subject
1. Rule 41—Ordinary appeal of decisions rendered by the RTC in its matter of the action has already been breached, the appropriate
original jurisdiction. ordinary civil action must be filed.
2. Rule 42—Petition for review of decisions rendered by the RTC in its • Requisites of a petition for declaratory relief:
appelate jurisdiction. Questions of fact, of law, or mixed questions of 1. The subject matter of the controversy must be a deed, will,
fact and law may be raised. contract or other written instrument, statute, executive order or
3. Rule 45—Petition for review on certiorari to the SC where only regulation, or ordinance;
questions of law shall be raised. 2. The terms of said documents and the validity thereof are doubtful
and require judicial construction;
CA CORRECTLY DISMISSED THE APPEAL OF LAPU-LAPU 3. There must have been no breach of the documents in question;
• The City availed itself of the wrong mode of appeal before the Court of 4. There must be an actual justiciable controversy or the "ripening
Appeals. The City raised pure questions of law in its appeal. The issue seeds" of one between persons whose interests are adverse;
of whether the Regional Trial Court of Pasay had jurisdiction over the 5. The issue must be ripe for judicial determination; and
PEZA’s petition for declaratory relief is a question of law, jurisdiction 6. Adequate relief is not available through other means or other
being a matter of law. The issue of WON PEZA is a government forms of action or proceeding.
instrumentality exempt from payment of real property taxes is likewise
a question of law since this question is resolved by examining the ASPECTS OF JURISDICTION:
provisions of the PEZA’s charter as well as other laws relating to the A. Jurisdiction over the subject matter:
PEZA. • Jurisdiction over the subject matter is “the power to hear and
determine cases of the general class to which the proceedings in
BUT THE SC SHALL TAKE COGNIZANCE OF THE CASE IN THE INTEREST question belong.” It is conferred by law,which may either be the
OF JUSTICE Constitution or a statute. Jurisdiction over the subject matter means
• The PEZA operates or otherwise administers special economic zones “the nature of the cause of action and the relief sought.” Thus, the
all over the country. Resolving the substantive issue of whether the cause of action and character of the relief sought as alleged in the
PEZA is taxable for real property taxes will clarify the taxing powers of complaint are examined to determine whether a court had jurisdiction
all local government units where special economic zones are over the subject matter. Any decision rendered by a court without
operated. This case, therefore, should be decided on the merits. jurisdiction over the subject matter of the action is void.
B. Jurisdiction over the person:
• It is “the power of [a] court to render a personal judgment or to subject
II. SUBSTANTIVE DISCUSSION ON JURISDICTION the parties in a particular action to the judgment and other rulings
rendered in the action.” A court automatically acquires jurisdiction
PASAY RTC HAS NO JURISDICTION TO HEAR, TRY, AND DECIDE THE over the person of the plaintiff upon the filing of the initiatory
PEZA’S PETITION FOR DECLARATORY RELIEF AGAINST LAPU-LAPU pleading. With respect to the defendant, voluntary appearance in court
• A special civil action for declaratory relief is filed for a judicial or a valid service of summons vests the court with jurisdiction over the
determination of any question of construction or validity arising from, defendant’s person. Jurisdiction over the person of the defendant is
and for a declaration of rights and duties, under any of the following indispensable in actions in personam or those actions based on a
subject matters: a deed, will, contract or other written instrument,
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party’s personal liability. The proceedings in an action in personam are • Jurisdiction is “the power to hear and determine cases of the general
void if the court had no jurisdiction over the person of the defendant. class to which the proceedings in question belong.” Jurisdiction is a
C. Jurisdiction over the res or the thing under litigation: matter of substantivelaw. Thus, an action ma ybe filed only with the
• Jurisdiction over the res or the thing under litigation is acquired either court or tribunal where the Constitution or a statute says it can be
“by the seizure of the property under legal process, whereby it is brought. Objections to jurisdiction cannot be waived and may be
brought into actual custody of the law; or as a result of the institution brought at any stage of the proceedings, even on appeal. The court
of legal proceedings, in which the power of the court is recognized shall motu proprio dismiss the case.
and made effective.” Jurisdiction over the res is necessary in actions in VENUE
rem or those actions “directed against the thing or property or status of • Venue is “the place of trial or geographical location in which an action
a person and seek judgments with respect thereto as against the whole or proceeding should be brought.” In civil cases, venue is a matter of
world.” The proceedings in an action in rem are void if the court had procedural law. A party’s objections to venue must be brought at the
no jurisdiction over the thing under litigation. earliest opportunity either in a motion to dismiss or in the answer;
otherwise the objection shall be deemed waived. When the venue of a
THE RTC SHOULD HAVE DISMISSED THE CASE FOR LACK OF civil action is improperly laid, the court cannot motu proprio dismiss
JURISDICTION the case.
• We rule that the PEZA erred in availing itself of a petition for • The venue of an action depends on whether the action is a real or
declaratory relief against the City. The City had already issued demand personal action. Should the action affect title to or possession of real
letters and real property tax assessment against the PEZA, in violation property, or interest therein, it is a real action. The action should be
of the PEZA’s alleged tax-exempt status under its charter. The Special filed in the proper court which has jurisdiction over the area where in
Economic Zone Act of 1995, the subject matter of PEZA’s petition for the real property involved, or a portion thereof, is situated. If the action
declaratory relief, had already been breached. The trial court, is a personal action, the action shall be filed with the proper court
therefore, had no jurisdiction over the petition for declaratory relief. where the plaintiff or any of the principal plaintiffs resides, or where
the defendant or any of the principal defendants resides, or in the case
TAXPAYER’S REMEDY IS TO (1) PAY UNDER PROTEST (2) APPEAL WITH of a non-resident defendant where he may be found, at the election of
THE LBAA (3) APPEAL TO THE CBAA SHOULD NUMBER 2 BE the plaintiff.
UNSATISFACTORY.
• In the present case, the PEZA did not avail itself of any of the remedies LAPU-LAPU WAS ACTUALLY OBJECTING TO THE VENUE, NOT THE
against a notice of assessment. A petition for declaratory relief is not JURISDICTION OF RTC
the proper remedy once a notice of assessment was already issued. • The City was objecting to the venue of the action, not to the
• Instead of a petition for declaratory relief, the PEZA should have jurisdiction of the Regional Trial Court of Pasay. In essence, the City
directly resorted to a judicial action. The PEZA should have filed a was contending that the PEZA’s petition is a real action as it affects title
complaint for injunction, the “appropriate ordinary civil action” to to or possession of real property, and, therefore, the PEZA should have
enjoin the City from enforcing its demand and collecting the assessed filed the petition with the Regional Trial Court of Lapu-Lapu City
taxes from the PEZA. After all, a declaratory judgment as to the PEZA’s where the real properties are located.
tax-exempt status is useless unless the City is enjoined from enforcing • However, whatever objections the City has against the venue of the
its demand. PEZA’s action for declaratory relief are already deemed waived.
Objections to venue must be raised at the earliest possible opportunity.
THE CITY OF LAPU-LAPU CONFUSED VENUE AND JURISDICTION. THESE
ARE TWO DIFFERENT THINGS: CA HAD NO JURISDICTION OVER THE PETITION FOR CERTIORARI OF
JURISDICTION BATAAN PROVINCE
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APPEAL • Since the PEZA filed a petition for certiorari against the trial court’s
• Appeal is the remedy “to obtain a reversal or modification of a decision, it availed itself of the wrong remedy. As the Province of
judgment on the merits.” A judgment on the merits is one which Bataan contended, the trial court’s decision dated January 31, 2007 “is
“determines the rights and liabilities of the parties based on the only an error of judgment appealable to the higher level court and may
disclosed facts, irrespective of the formal, technical or dilatory not be corrected by filing a petition for certiorari.”[198] That the trial
objections.” It is not even necessary that the case proceeded to trial. So court judge allegedly committed grave abuse of discretion does not
long as the “judgment is general” and “the parties had a full legal make the petition for certiorari the correct remedy. The PEZA should
opportunity to be heard on their respective claims and contentions,” have raised this ground in an appeal filed within 15 days from notice
the judgment is on the merits. of the assailed resolution.
CERTIORARI • Instances when petitions for certiorari are treated as appeal:
• Certiorari is a special civil action filed to annul or modify a proceeding (1) if the petition for certiorari was filed within the reglementary period
of a tribunal, board, or officer exercising judicial or quasi-judicial within which to file a petition for review on certiorari;
functions. Certiorari, which in Latin means “to be more fully (2) when errors of judgment are averred; and
informed,” was originally a remedy in the common law. (3) when there is sufficient reason to justify the relaxation of the rules.”
• Rule 45—An appeal before this court raising pure questions of law is
commenced by filing a petition for review on certiorari under Rule 45 PEZA’S PETITION FOR CERTIORARI MAY BE TREATED AS AN APPEAL, BUT
of the Rules of Court. An appeal by certiorari, which continues the FILED IN THE WRONG COURT
proceedings commenced before the lower courts, is filed to reverse or • It was filed within the reglamentary period, it raised errors of
modify judgments or final orders. Under the Rules, an appeal by judgment, and there are sufficient reasons to relax the rules given the
certiorari must be filed within 15 days from notice of the judgment or importance of the issue. However, PEZA should have filed its petition
final order, or of the denial of the appellant’s motion for new trial or before the CTA.
reconsideration. • Considering that the appellate jurisdiction of the Court of Tax Appeals
• Rule 65—is an independent and original action filed to set aside is to the exclusion of all other courts, the Court of Appeals had no
proceedings conducted without or in excess of jurisdiction or with jurisdiction to take cognizance of the PEZA’s petition. The Court of
grave abuse of discretion amounting to lack or excess of jurisdiction. Appeals acted without jurisdiction in rendering the decision. The filing
Under the Rules, a petition for certiorari may only be filed if there is no of appeal in the wrong court does not toll the period to appeal.
appeal or any plain, speedy, or adequate remedy in the ordinary
course of law. The petition must be filed within 60 days from notice of IN SHORT: PEZA IS EXEMPT FROM THE PAYMENT OF RPT.
the judgment, order, or resolution. Because of the longer period to file 1. PEZA is an instrumentality of the national government.
a petition for certiorari, some litigants attempt to file petitions for 2. PEZA assumed th enon-profit character, including the tax exempt
certiorari as substitutes for lost appeals by certiorari. However, Rule 65 status of the EPZA.
is clear that a petition for certiorari will not prosper if appeal is 3. Real properties under the PEZA’s title are owner by the Republic of the
available. Appeal is the proper remedy even if the error, or one of the Philippines
errors, raised is grave abuse of discretion on the part of the court
rendering judgment. If appeal is available, a petition for certiorari CONCLUSION
cannot be filed. All told, the PEZA is an instrumentality of the national government.
Furthermore, the lands owned by the PEZA are real properties owned by the
THE RTC’S DECISION ON BATAAN’S CASE IS A JUDGMENT ON THE Republic of the Philippines. The City of Lapu-Lapu and the Province of Bataan
MERITS; PROPER REMEDY IS AN APPEAL. cannot collect real property taxes from the PEZA.

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