Napocor VS Bataan 180654 - Afos

NAPOCOR v.
BATAAN
National Power Corporation Vs. Provincial Government of Bataan, Sangguniang Panlalawigan of Bataan,
Pastor B. Vichuaco (In His Official Capacity as Provincial Treasurer of Bataan) and The Register of Deeds
of the Province of Bataan
G.R. No. 180654
March 6, 2017
FACTS:
On March 28, 2003 petitioner National Power Corporation (NPC) received a notice of franchise tax
delinquency from the respondent Provincial Government of Bataan (the Province) for P45.9 million
covering the years 2001, 2002, and 2003. When NPC chose to reserve its right to contest the
computation pending the decision of the Supreme Court, the Province then sent notices of tax due to
the NPC. The NPC replied, however, that the Province has no right to further assess because NPC had
ceased to be liable for the payment of that tax after Congress enacted Republic Act (R.A.) 9136, also
known as the Electric Power Industry Reform Act (EPIRA) that took effect on June 26, 2001.
Ignoring the NPC’s view, the Province issued a "Warrant of Levy" on 14 real properties that it used to
own in Limay, Bataan. In March 2004 the Province caused their sale at public auction with itself as the
winning bidder. On July 7, 2004 the NPC filed with the Regional Trial Court (RTC) of Mariveles, Bataan, a
petition for declaration of nullity of the foreclosure sale with prayer for preliminary mandatory
injunction against the Province, the provincial treasurer, and the Sangguniang Panlalawigan
On November 3, 2005 the RTC dismissed the NPC’s petition, stating that the franchise tax was not based
on ownership of property but on the NPC’s exercise of the privilege of doing business within Bataan.The
NPC appealed the RTC Decision to the Court of Appeals (CA) but the Province moved to dismiss the
same for lack of jurisdiction of that court over the subject matter of the case because it was essentially a
local tax case questioning the validity of the Province’s imposition of the local franchise tax, therefore,
be lodged with the Court of Tax Appeals (CTA). On November 27, 2007 the CA granted the Province’s
motion and dismissed the petition on the ground cited.
ISSUE:
The issues raised in the motion are:
1. Whether Napocor is the real party in interest; and
2. Whether the foreclosure sale on March 2, 2004 is valid.
HELD:
1. Yes. NPC is a real party interest, which stands to gain or lose from the judgment that the trial court
may render. According to the Rules of Court, Rule 3, Sec. 2 “A real party in interest is the party who
stands to be benefited or injured by the judgment in the suit, or the party entitled to the avails of the
suit.” Napocor ‘s complaint has sought two things: a.) the nullification of the foreclosure sale and also b.)
a declaration from the trial court that it is exempt from local franchise tax. Despite the claim for
exemption by Napocor, the respondents pursued its collection of the franchise tax delinquency by
issuing the warrant of levy and conducting the sale at public auction to enforce collection of the said
delinquency against Napocor. Thus, Napocor had to assail the correctness of the local franchise tax
assessments made against it by instituting the complaint with the Regional Trial Court, otherwise, the
assessment would become conclusive and unappealable.
2. No. The foreclosure sale on March 2, 2004 is null and void because it is quite apparent that at the
time of the levy and auction of the 14 properties sometime in January 2004 and March 2004,
respectively, the properties were by virtue of EPIRA already owned by TRANSCO. Thus, the foreclosure
sale of properties must be declared null and void.
As regards Napocor’s electric transmission function, under Section 8 of Republic Act No. 9136 or the
EPIRA, all transmission assets of Napocor were to be transferred to TRANSCO within six (6) months from
the effectivity of EPIRA, or by December 26, 2001. The EPIRA Implementing Rules and Regulations
further required Napocor, PSALM Corporation, and TRANSCO to “take such measures and execute such
documents to effect the transfer of the ownership and possession of the transmission and
subtransmission facilities of Napocor and all other assets related to transmission operations. Upon such
transfer, the nationwide franchise of Napocor for the operation of the transmission system and the Grid
shall transfer from Napocor to Transco.”

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NAPOCOR v.

G.R. No. 180654

1. Whether Napocor is the real party in interest; and

2. Whether the foreclosure sale on March 2, 2004 is valid.

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