G.R. No. 191109 ; July 18, 2012
Republic of the Philippines, represented by the Philippine Reclamation Authority (PRA), Petitioner, vs. City of Paranaque, Respondent.

FACTS

The Philippine Reclamation Authority (PRA), formerly the Public Estates Authority, is a government entity created by P.D. No. 1084 tasked with reclaiming lands. It holds titles to reclaimed properties in Paranaque City. For the tax years 2001 and 2002, the City of Paranaque assessed real property taxes on these lands. The City Treasurer subsequently issued warrants of levy and, after a denied petition for a TRO by the PRA, conducted a public auction of the properties in April 2003.
PRA filed a petition for prohibition, arguing it was exempt from real property tax. The Regional Trial Court dismissed the petition, ruling that PRA was a government-owned and controlled corporation (GOCC) and, under the Local Government Code, such entities are no longer exempt from local taxes. The court also noted that any prior tax exemption under its charter had been repealed.

ISSUE

Whether the Philippine Reclamation Authority (PRA) is exempt from payment of real property taxes on its reclaimed lands.

RULING

The Supreme Court ruled that PRA is NOT exempt from real property tax. The Court applied the principles established in Manila International Airport Authority (MIAA) v. Court of Appeals. The test for exemption under Sections 133(o) and 234(a) of the Local Government Code is whether the entity is a government instrumentality performing governmental functions, whose properties are owned by the Republic and devoted for public use.
The Court distinguished PRA from MIAA. While both are government instrumentalities vested with corporate powers, MIAA’s properties are owned by the Republic and devoted to the public use of air transportation, making them exempt. In contrast, PRA’s reclaimed lands are not inherently for public use. P.D. No. 1084 explicitly grants PRA the power to hold and dispose of its properties, including selling, leasing, or mortgaging them. The titles to the disputed properties are registered in PRA’s own name, not in the name of the Republic of the Philippines. This demonstrates that PRA holds a proprietary, patrimonial interest in these lands, not merely holding them in trust for public use. Since the lands are not exclusively for public use but are held for economic or proprietary purposes, they constitute assets of PRA as a corporate entity. Therefore, they are subject to real property tax under the Local Government Code. The Court affirmed the RTC’s dismissal of the petition.