GR 185023; (August, 2011) (Digest)
G.R. No. 185023 ; August 24, 2011
CITY OF PASIG, REPRESENTED BY THE CITY TREASURER and THE CITY ASSESSOR, Petitioner, vs. REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT, Respondent.
FACTS
Mid-Pasig Land Development Corporation (MPLDC) owned two parcels of land in Pasig City covered by TCTs under its name. In 1986, its registered owner, Jose Y. Campos, voluntarily surrendered MPLDC to the Republic of the Philippines. In 2002, the Pasig City Assessor sent MPLDC notices of tax delinquency for unpaid real property taxes from 1979 to 2001. MPLDC, through representatives, contested, claiming payment for 1979-1986 and exemption from tax starting 1987. Pasig City insisted the properties were not exempt. In 2005, after a final demand for taxes from 1987 to 2005, MPLDC made a partial payment under protest. Pasig City then issued warrants of levy and, after a public auction where it was the sole bidder, bought the properties. The Republic, through the PCGG, filed a petition with the RTC to annul the assessments, levy, and auction, arguing the properties, as surrendered ill-gotten wealth, were owned by the State and thus exempt from real property tax, and that tax should be assessed against the actual lessees/occupants. The RTC granted the petition, annulling Pasig City’s actions and ordering it to assess the actual occupants. The Court of Appeals reversed the RTC, holding the properties were not tax-exempt as they remained registered under MPLDC’s name and the government’s interest was merely that of a sequestering agency. The Republic appealed to the Supreme Court.
ISSUE
Whether the subject properties, voluntarily surrendered as ill-gotten wealth and under the administration of the PCGG, are exempt from real property tax.
RULING
The Supreme Court GRANTED the petition, REVERSED and SET ASIDE the Court of Appeals Decision, and REINSTATED the RTC Decision with modification.
The Court ruled that properties voluntarily surrendered as part of the ill-gotten wealth of the Marcos administration are owned by the Republic of the Philippines. Upon surrender, there is a constructive reconveyance to the State, and the PCGG holds the properties as an agent of the Republic. Properties owned by the State are exempt from real property tax unless the beneficial use thereof has been granted to a taxable person. The tax exemption attaches to the property itself based on its ownership by the State. The Court held that the real property tax should be assessed against the taxable persons who have actual or beneficial use and possession of the property—in this case, the lessees occupying portions of the land. The Court modified the RTC’s order, directing Pasig City to issue new tax assessments directly against the actual occupants/lessees for the areas they occupy, covering only the period of their respective leases, with interests and penalties to accrue only after receipt of the new assessment.