Yamane vs.

ba lepanto

In 1998, BA Lepanto Condominium Corporation (Lepanto) received a tax assessment in the

amount of P1.6 million from Luz Yamane, the City Treasurer of Makati, for business taxes.
Lepanto protested the assessment as it averred that Lepanto, as a corporation, is not
organized for profit; that it merely exists for the maintenance of the condominium. Yamane
denied the protest. Lepanto then appealed the denial to the RTC of Makati. RTC Makati
affirmed the decision of Yamane. Lepanto then filed a petition for review under Rule 42 with
the Court of Appeals. The Court of Appeals reversed the RTC.
Yamane now filed a petition for review under Rule 45 with the Supreme Court. Yamane avers
that a.) Lepanto is liable for local taxation because its act of maintaining the condominium is
an activity for profit because the end result of such activity is the betterment of the market
value of the condominium which makes it easier to sell it; that Lepanto is earning profit from
fees collected from condominium unit owners; and that b.) Lepantos petition for review of the
decision of the RTC to the CA is erroneous because when the RTC decided on the appeal
brought to it by Lepanto, the RTC was exercising its original jurisdiction and not its appellate
jurisdiction; that as such, what Lepanto should have done is to file an ordinary appeal under
Rule 41.
ISSUE: Whether or not a RTC deciding an appeal from the decision of a city treasurer on tax
protests is exercising original jurisdiction. Whether or not a condominium corporation
organized solely for the maintenance of a condominium is liable for local taxation.
HELD:
1. Yes. Although the LGC (Section 195) provides that the remedy of the taxpayer whose
protest is denied by the local treasurer is to appeal with the court of competent jurisdiction
or in this case the RTC (considering the amount of tax liability is P1.6 million), such appeal
when decided by the RTC is still in the exercise of its original jurisdiction and not its appellate
jurisdiction. This is because appellate jurisdiction is defined as the authority of a court higher
in rank to re-examine the final order or judgment of a lower court which tried the case
now elevated for judicial review. Here, the City Treasurer is not a lower court.
The Supreme Court however clarifies that this ruling is only applicable to similar cases before
the passage of Republic Act 9282 (effective April 2004). Under RA 9282, the Court of Tax
Appeals (CTA), not CA, exercises exclusive appellate jurisdiction to review on appeal
decisions, orders or resolutions of the Regional Trial Courts in local tax cases whether
originally decided or resolved by them in the exercise of their original or appellate
jurisdiction.
2. No. Lepanto was not organized for profit. The fees it was collecting from the
condominium unit owners redound to the owners themselves because the fees collected are
being used for the maintenance of the condo. Further, it appears that the assessment issued
by Yamane did not state the legal basis for the tax being imposed on Lepanto it merely
states that Makati is authorized to collect business taxes under the Local Government Code
(LGC) but no other reference specific reference to specific laws were cited.