G.R. No. 211299 , June 21, 2022
LIGHT RAIL TRANSIT AUTHORITY, PETITIONER, VS. CITY OF PASAY, REPRESENTED BY THE CITY TREASURER AND THE CITY ASSESSOR, RESPONDENT.

FACTS

The Light Rail Transit Authority (LRTA) filed a petition assailing the real property tax assessments imposed by the City of Pasay for the years 1985 to 2001. The Regional Trial Court and the Court of Appeals dismissed the petition on the ground of LRTA’s failure to exhaust administrative remedies under the Local Government Code. LRTA argued that the issue involved is a purely legal question regarding its status and the taxability of its properties, making the doctrine of exhaustion of administrative remedies inapplicable. The case involves the jurisprudential evolution starting from the 2000 case of Light Rail Transit Authority v. Central Board of Assessment Appeals up to the 2019 case of Light Rail Transit Authority v. Quezon City, concerning whether LRTA’s properties are exempt from real estate taxes.

ISSUE

1. Whether the doctrine of exhaustion of administrative remedies is applicable, barring LRTA’s direct resort to the courts.
2. Whether LRTA is a government instrumentality with corporate powers (GICP) whose properties are exempt from real property tax.

RULING

1. On the procedural issue: The doctrine of exhaustion of administrative remedies is inapplicable. The case falls under the exception where the issue raised is a purely legal question. The controversy involves the interpretation of LRTA’s charter vis-à-vis jurisprudence and questions the very authority of the City of Pasay to impose the assessment and collect the tax, which is beyond the jurisdiction of administrative bodies. The remedies under the Local Government Code are intended for questions of fact, such as the reasonableness or correctness of the amount assessed, not for purely legal questions. Furthermore, the paradigm shift introduced by the 2006 Manila International Airport Authority v. Court of Appeals (MIAA) case, which distinguished GICPs from GOCCs, rendered the administrative remedies neither plain, speedy, nor adequate for LRTA’s situation. LRTA’s prior actions, such as negotiating payment terms, were based on the prevailing jurisprudence at the time and do not estop it from challenging the assessments after the jurisprudential development.
2. On the substantive issue: LRTA is a government instrumentality with corporate powers (GICP) whose properties are exempt from real property tax. LRTA is not a stock or non-stock corporation but is an instrumentality of the National Government vested with corporate powers by its charter, Executive Order No. 603, series of 1980. It is vested with special functions, administers special funds, and enjoys operational autonomy. As a GICP, its real properties are owned by the Republic of the Philippines and are thus exempt from real property tax under Section 234(a) of the Local Government Code, which exempts real property owned by the Republic of the Philippines or any of its political subdivisions. This characterization is consistent with the rulings in the 2006 MIAA Case, Metropolitan Waterworks and Sewerage System v. Central Board of Assessment Appeals, and the 2019 LRTA Case.