THE Court of Appeals has upheld the right of a municipality in Pangasinan to compel the National Grid Corp. of the Philippines (NGCP) to assume the tax obligations of its predecessor, the National Transmission Corp. (NTC) amounting to P221.7 million.
In an 11-page decision written by Associate Justice Rebecca de Guia-Salvador, the CA’s Fourth Division dismissed the petition filed by NGCP seeking the issuance of a temporary restraining order (TRO) or injunction enjoining the municipality of Labrador, Pangasinan, from enforcing the warrant for distraint of its money and/or bank account with Land Bank of the Philippines, and the latter from complying with the same.
A warrant for distraint is issued by a law-enforcement agency to any owners of a property with back taxes owed. The warrant outlines the total amount owed as well as the date it’s due and protects the property from eviction or destruction.
Transco’s tax obligations are based on a municipal ordinance levying a 2 percent tax on its gross receipts.
Based on its preliminary finding, the appellate court found no merit to NGCP’s assertion that it has a separate and distinct personality from Transco, thus, it may not be held answerable for the latter’s tax obligations.
It also did not give credence to NGCP’s contention that the said municipality has no power to issue a warrant for distraint in the absence of an appropriate tax ordinance duly issued by the municipal board.
The CA explained that a warrant for distraint is not being enforced on NGCP personally but on Transco’s property in petitioner's possession.
The Appelate Court noted that the assailed order of enforcement of local government tax claim issued on March 17, 2010 and received by NGCP the following day.
Meanwhile, NGCP took over Transco's business and operations on January 15, 2009.
"The takeover raised the presumption that petitioner has assumed possession of Transco's assets, cash and receivables, including charges for local taxes for the periods concerned. Such property may be distrained under the authority granted to the public respondents by Section 175 of the Local Government Code," the CA ruled.
While it is true that under its concession agreement with Transco, the CA noted that the latter has retained certain obligations, still distraint may be enforced, although not against NGCP but against Transco's property itself which is in its possession.
The CA pointed out that under Section 175 (b) of the Local Government Code, distraint against property may be enforced regardless of whether it is in the owner's or another person's possession.
