THE PROVINCIAL ASSESSOR OF MARINDUQUE v CA & MARCOPPER MINING CORP (2008/ AUSTRIA-MARTINEZ) Assessor issued against Marcopper an Assessment

Notice (dated Mar 28 1994) for real property taxes (RPT) on its properties, including its Siltation Dam and Decant System (subject property). Marcopper paid but appealed before the LBAA. Ground: Dam is exempt from RPT under LGC 234(e): Machinery and equipment used for pollution control and environmental protection. - It attached an Affidavit by its Chief Mining Engineer: that the Dam was constructed to comply with DENRs condition that Marcopper prevent run-offs and silt materials from contaminating the rivers; that Dam is for the purpose of pollution, sediment, and flood control. - It also submitted a Certification issued by DENR Regional Technical Director that Dam is a " structure intended primarily for pollution control of silted materials..." LBAA dismissed appeal bec filed out of time. Also, Dam is taxable as an improvement on the principal real property, citing Benguet Corp v. CBAA that a tailings dam is a permanent improvement not exempt from RPT. CBAA: Dam was neither a machinery nor an equipment but a permanent improvement, so not tax exempt under LGC 234(e). - LGC 199(o) defines machinery. The Dam does not produce anything nor operate as auxiliary to a production process; thus, it is neither a physical facility for production nor a service facility. It is not even necessary to the mining activity, because its purpose is merely to contain silt and sediments. - Based on an ocular inspection, the Dam had not been actually used for pollution control, for it had been out of operation since 1993. - MR denied. CA reversed CBAA. Dam exempt from RPT under RA 79421 Sec 912. - The concept of machinery under LGC 199 is broad enough to include a "machinery consisting of parts whichallow a person to perform a task more efficiently." - The Dam is actually and directly used for the mining business. It was built in compliance with a DENR requirement; thus, it is part and parcel of the mining operations to protect the environment - A pollution control device is defined under DENR AO 95-23 as an "infrastructure, machinery, equipment, and/or improvement used for cleansing mine industrial waste." The definition "extends to all kinds of pollution control devices acquired, constructed, or installed on the land or buildings of the mining corporation." - The non-operational state of the Dam "does not remove it from the purview of the clear provisions of LGC and R.A. No. 7942 [i]n the absence of clear and convincing evidence that the Dam was inutile to achieve its purpose prior to being damaged, and continued to be so x x x." - Assessors MR denied. ISSUES: I. The propriety of the present action for certiorari under R65 II. W/N Dam is exempt from RPT Assessor: CA committed GAD in holding that the Dam is tax exempt, and in discarding factual findings of the CBAA, which factual findings Maropper did not even controvert. - the CBAA found that the subject property had not been used for pollution control because it
The Philippine Mining Act of 1995 Sec. 91. Incentives for Pollution Control Devices. Pollution control devices acquired, constructed or installed by contractors shall not be considered as improvements on the land or building where they are placed, and shall not be subject to real property and other taxes or assessments
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had been out of operation since 1993; and Marcopper admitted this in its Petition for Review. - the CBAA found that Marcopper did not obtain from the DENR a certification of tax exemption. This finding was not controverted by Marcopper Marcopper: Assessor's mode of appeal should have been a Petition for Review on Certiorari under R45. He filed instead a Petition for Certiorari; worse, petitioner raised factual issues which the SC cannot resolve. SC: I. On the proper mode of appeal Revised Admin Circular No. 1-95 provides that appeal from CBAA shall be by Petition for Review with the CA. And from CA, appeal to the SC on questions of law is by Petition for Review on Certiorari under R45. This bars recourse to R65 even if one of the grounds invoked is GAD. Assessor erred in its mode of appeal. Nonetheless, we gave due course to the petition for it involves not only the power of taxation of a LGU, but also its stewardship of the environment. The higher interest of public welfare dictates that the Court suspend its rules pro hac vice. II. On whether the subject property is exempt from real property taxation Appicable law: LGC, not RA 7942 The Assessment Notice is dated March 28, 1994 and effective January 1, 1995. The assessment notice having taken effect on January 1, 1995, its validity is determined by the provisions of Title II of LGC. R.A. No. 7942 has no bearing on the matter, for it came into effect only on Apr 14, 1995. Hence, reference to R.A. No. 7942 are all out of place. LGC 234 grants exemption from real property taxation. - Exemptions are based on the ownership, character, and use of the property. - To help provide a healthy environment in the midst of the modernization, all machinery and equipment for pollution control and environmental protection may not be taxed by local governments. - MCIAA: the exemption under LGC 234(e) to "[m]achinery and equipment used for pollution control and environmental protection" is based on usage. Usage means direct, immediate and actual application of the property itself to the exempting purpose. LGC 199 defines actual use as "the purpose for which the property is principally or predominantly utilized by the person in possession thereof." It contemplates concrete, as distinguished from mere potential, use. Thus, a claim for exemption under LGC 234(e) should be supported by evidence that the property is actually, directly and exclusively used for pollution control and environmental protection. - There is no allegation or evidence by Marcopper that the Dam was actually, directly and exclusively used for pollution control and environmental protection during the period covered by the assessment notice. Rather, the CBAA finding that it is out of order and cannot function as pollution control stands undisputed. Marcopper even admitted this. - LGC 206 prescribes the evidentiary requirements for exemption from RPT. - Sec 206. Proof of Exemption of RPT. - Every person by or for whom real property is declared, who shall claim tax exemption for such propertyshall file with the provincial, city or municipal assessor within 30 days from the date of the declaration of real property sufficient documentary evidence in support of such claims... If the required evidence is not submitted, the property shall be listed as taxable... - The burden is upon the taxpayer to prove, by clear and convincing evidence, that his claim for exemption has legal and factual basis. - There is no allegation nor evidence in Marcopper's pleadings that it had complied with Sec. 206. What respondent submitted are the Affidavit, the project design, and a Certification. These only classify the Dam as anything but machinery or equipment. - The DENR Certification classifies the subject property as a structure intended primarily for pollution control - That the subject property is a structure is further underscored by the project design - That a structure such as the Dam does not qualify as a machinery or equipment used for

pollution control as contemplated under LGC is evident from the adoption of an expanded definition of pollution control device in RA 7942 Sec 3 (am). A pollution control device now also refers to "infrastructure" or "improvement," and not just to machinery or equipment. This new concept, however, cannot benefit Marcopper, for the assessment notice pertains to RPT assessed prior to the amendment of LGC 234 (e) by RA 7942 Sec. 91 in relation to Sec. 3 (am). Tax laws are prospective in application, unless expressly provided to apply retroactively. RA 7942 does not provide for the retroactive application of its provisions. - The CA committed grave abuse of discretion in ignoring irrefutable evidence that the subject property is not a machinery used for pollution control, but a structure adhering to the soil and intended for pollution control, but has not been actually applied for that purpose during the period under assessment. DISPOSITIVE: Petition GRANTED. CA Reversed.