GR 178030; (December, 2010) (Digest)
G.R. No. 178030; December 15, 2010
PHILIPPINE FISHERIES DEVELOPMENT AUTHORITY (PFDA), Petitioner, vs. CENTRAL BOARD OF ASSESSMENT APPEALS, LOCAL BOARD OF ASSESSMENT APPEALS OF LUCENA CITY, CITY OF LUCENA, LUCENA CITY ASSESSOR AND LUCENA CITY TREASURER, Respondents.
FACTS
The City of Lucena demanded payment of real property taxes from the Philippine Fisheries Development Authority (PFDA) for the Lucena Fishing Port Complex (LFPC) for the years 1993 to 2000. The LFPC is a national fishery infrastructure project financed by a Japanese loan and managed by the PFDA, a government-owned and controlled corporation created by P.D. 977. The PFDA refused payment, claiming the property is owned by the Republic of the Philippines and thus exempt from realty tax. The Local and Central Boards of Assessment Appeals dismissed PFDA’s appeal, ruling that PFDA owned the LFPC and its charter did not grant it real property tax exemption. The Court of Tax Appeals affirmed, holding that as a GOCC, PFDA’s tax exemptions were withdrawn by the Local Government Code.
ISSUE
Whether the Lucena Fishing Port Complex managed by the PFDA is subject to real property tax imposed by the City of Lucena.
RULING
The Supreme Court granted the petition and declared the LFPC exempt from real property tax. The Court clarified that the PFDA is not the owner of the LFPC but merely holds it in trust for the Republic. Citing the case of MIAA v. Court of Appeals, the Court held that properties of public dominion, like the LFPC which is a national port, are owned by the State and cannot be subject to levy or execution by local governments. The Local Government Code’s withdrawal of tax exemptions for GOCCs under Section 193 does not apply because the exemption stems from the nature of the property itself as owned by the Republic, not from a grant to the PFDA. Under Section 234(a) of the LGC, real property owned by the Republic is exempt from tax. The beneficial use remains with the State through its instrumentality, the PFDA, which performs a public function. However, portions of the LFPC leased to private entities are subject to tax, as the beneficial use is granted to a taxable person. Thus, the tax assessments on the LFPC were void, except for its leased portions.