EN BANC Section 3.

The City Assessor shall undertake a general

revision of real property assessments using as basis the newly
ALLIED BANKING CORPORATION AS G.R. No. 154126 approved schedule specified in Sections 1 and 2 hereof. He shall
TRUSTEE FOR THE TRUST FUND OF apply the new assessment level of 15% for residential and 40% for
COLLEGE ASSURANCE PLAN commercial and industrial classification, respectively as prescribed
PHILIPPINES, INC. (CAP), Promulgated: in Section 8 (a) of the 1993 Quezon City Revenue Code to
Petitioner, determine the assessed value of the land. Provided; however, that
October 11, 2005 parcels of land sold, ceded, transferred and conveyed for
remuneratory consideration after the effectivity of this
revision shall be subject to real estate tax based on the
-versus- actual amount reflected in the deed of conveyance or the
current approved zonal valuation of the Bureau of Internal
Revenue prevailing at the time of sale, cession, transfer and
conveyance, whichever is higher, as evidenced by the
THE QUEZON CITY GOVERNMENT, certificate of payment of the capital gains tax issued
THE QUEZON CITY TREASURER, THE therefor.[4] (Emphasis and underscoring supplied)
QUEZON CITY ASSESSOR AND THE
CITY MAYOR OF QUEZON CITY,
Respondents. On July 1, 1998, petitioner, as trustee for College Assurance
x---------------------------------------------- --- Plan of the Philippines, Inc., purchased from Liwanag C. Natividad et
----------------x al. a 1,000 square meter parcel of land located along Aurora
Boulevard, Quezon City in the amount of P38,000,000.00.[5]
DECISION
Prior to the sale, Natividad et al. had been paying the total amount
CARPIO MORALES, J.: of P85,050.00[6] as annual real property tax based on the
property’s fair market value of P4,500,000.00 and assessed value of
P1,800,000.00 under Tax Declaration No. D-102-03778.[7]
From the Resolution[1] of April 10, 2002 issued by Branch After its acquisition of the property, petitioner was, in accordance
225 of the Regional Trial Court (RTC) of Quezon City dismissing the with Section 3 of the ordinance, required to pay P102,600.00 as
petition for prohibition and declaratory relief[2] of Allied Banking quarterly real estate tax (or P410,400.00 annually) under Tax
Corporation (petitioner), the present appeal by certiorari was Declaration No. D-102-03780 which pegged the market value of the
lodged. property at P38,000,000.00 – the consideration appearing in the
On December 19, 1995, the Quezon City government enacted City Deed of Absolute Sale, and its assessed value at P15,200,000.00.[8]
Ordinance No. 357, Series of 1995 (the ordinance),[3] Section 3 of
which reads: Petitioner paid the quarterly real estate tax for the property from
the 1st quarter of 1999 up to the 3rd quarter of 2000. Its tax
payments for the 2nd, 3rd, and 4th quarter of 1999, and 1st and
2nd quarter of 2000 were, however, made under protest.[9]
In its written protest[10] with the City Treasurer, petitioner assailed
Section 3 of the ordinance as null and void, it contending that it is
violative of the equal protection and uniformity of taxation clauses
of the Constitution.[11] Petitioner, moreover, contended that the
proviso is unjust, excessive, oppressive, unreasonable, confiscatory
and contrary to Section 130 of the Local Government Code which
provides:
SECTION 130. Fundamental Principles. – The following
fundamental principles shall govern the exercise of the taxing and
revenue-raising powers of local government units:
(a) Taxation shall be uniform in each
local government unit;
(b) Taxes, fees, charges and other
impositions shall:
(1) be equitable and based as far as practicable on the
taxpayer’s ability to pay;
(2) be levied and collected only for public purposes;
(3) not be unjust, excessive, oppressive, or confiscatory;
(4) not be contrary to law, public policy, national economic
policy, or in restraint of trade;
xxx
Petitioner, through its counsel, later sent a March 24, 2000 demand
letter to the Quezon City Treasurer’s Office seeking a refund of the
real estate taxes it erroneously collected from it.[12] The letter was
referred for appropriate action[13] to the City Assessor who, by
letter dated May 7, 2000, denied the demand for refund on the
ground that the ordinance is presumed valid and legal unless
otherwise declared by a court of competent jurisdiction.[14]
Petitioner thereupon filed on August 11, 2000 a petition for
prohibition and declaratory relief before the Quezon City RTC for the
declaration of nullity of Section 3 of the ordinance; the enjoining of
respondents – Quezon City Treasurer, Quezon City Assessor, and
City Mayor of Quezon City – from further implementing the
ordinance; for the Quezon City Treasurer to be ordered to refund
the amount of P633,150.00 representing the real property tax
erroneously collected and paid under protest; and for respondents
to pay attorney’s fees in the amount of P1,000,000.00 and costs of
the suit.[15]
In support of its thesis, petitioner contended that the re-assessment
under the third sentence of Section 3 of the ordinance for purposes
of real estate taxation of a property’s fair market value where it is
sold, ceded, transferred or conveyed for remuneratory
consideration is null and void as it is an invalid classification of real
properties which are transferred, ceded or conveyed and those
which are not, the latter remaining to be valued and assessed in
accordance with the general revisions of assessments of real
properties under the first sentence of Section 3.[16]
Petitioner additionally contended that the proviso of Section 3 of
the ordinance which allows re-assessment every time the property
is transferred, ceded or conveyed violates Sections 219[17] and
220[18] of the Local Government Code which provide that the
assessment of real property shall not be increased oftener than
once every three (3) years except in case of new improvements
substantially increasing the value of said property or of any change
in its actual use.[19]
Before respondents could file any responsive pleading or on March
6, 2001, respondent Quezon City Government enacted Ordinance
No. SP-1032, S-2001[20] which repealed the assailed proviso in
Section 3 of the 1995 Ordinance. The repealing ordinance which
took effect upon its approval on March 28, 2001 reads in part:
“WHEREAS, the implementation of the second (2nd) sentence of
Section 3 of the Ordinance creates a situation whereby owners of
newly acquired land for remuneratory consideration beginning
January 1, 1996 and forward will have to pay higher taxes than its
adjoining/adjacent lot or lots in the adjoining blocks, or nearby lots
within its immediate vicinity which have remained undisturbed, not
having been sold, ceded, transferred, and/or conveyed;
WHEREAS, the owners of the newly acquired property are
complaining/protesting the validity/legality of the second (2nd)
sentence of Section 3 of the ordinance for being either arbitrary,
unjust, excessive, oppressive, and/or contrary to law;
WHEREAS, Section 5 Article X of the Philippine Constitution provides
that: ‘Each local government unit shall have the power to create its
own sources of revenue and to levy taxes, fees and charges subject
to such guidelines and limitations as the Congress may provide,
consistent with the basic policy of local autonomy. Such taxes, fees
and charges shall accrue exclusively to the local government’
(Underscoring supplied);
WHEREAS, the guidelines and limitations imposed on the local
government units in the exercise of their taxing powers have been
expressly stipulated by Congress when it enacted Section 130 of
Republic Act No. 7160, otherwise known as the Local Government
Code of 1991 xxx;
WHEREAS, these fundamental principles of taxation find support
and affirmation in the following applicable cases decided by the
Court of Tax Appeals (sic), on similar cases which held that:
1. An increase in the valuation of land due to sale and transfer of
such property was arbitrary. Uniformity in taxation means that all
kinds of property of the same class shall be taxed at the same rate.
(Churchhill vs. Concepcion, 34 Phi. 969; Eastern Theatrical Co. vs.
Alfonso, 83 Phil. 852) xxx.
2. The law requires the real property shall be assessed at its true
and full value, or cash value, or fair market value. But in
determining or fixing the fair market value of property for tax
purposes it is essential that the rules of uniformity be observed.
More important tha[n] the obligation to seek the fair market value
of property is the obligation of the assessor to see to it that the
“rule of taxation shall be uniform,” for this a (sic) rule which is
guaranteed by the Constitution. A taxpayer should not be made to
pay more taxes on his property while owners of surrounding
properties, under the same circumstance pay less.
WHEREAS, it is clear from the foregoing premises that the second
(2nd) sentence of the Ordinance, fixing the realty tax based on the
actual amount reflected in the deed of conveyance or the current
approved zonal valuation x x x is violative of, and repugnant to, the
uniformity rule of taxation;
WHEREAS, in view of the above considerations there appear to be
merit and validity to the complaints/protests of tax payers, a re-
examination and repeal of the entire second sentence of Section 3
of the Ordinance is in order.”
Petitioner subsequently moved to declare respondents in
default[21] for failure to file a responsive pleading within the period,
as extended. Before the motion could be heard,[22] however,
respondents moved to dismiss the petition,[23] averring that the
passage of the repealing ordinance had rendered the petition moot
and academic.
Petitioner opposed the motion, it alleging that while its action for
the declaration of nullity of the proviso was rendered moot and
academic by its repeal, its claim for refund and attorney’s fees had
not been mooted, and the trial court still had to determine if Section
3 of the ordinance “is null and void ab initio and perforce, may not
be enforced during the intervening period from the time of its
enactment until the time of its repeal.”[24]
Respondents maintained, however, that the assailed proviso
remained in full force and effect until the date of its repeal, based
on the rule that a statute is construed prospectively unless the
legislative intent was to give it retrospective application.[25] And
they called attention to the provision in Section 2 of the repealing
ordinance that “[it] shall take effect upon its approval,” hence,
clearly showing that the local legislative body was to grant it
prospective application.[26]
As to the claim for refund, respondents averred that it was
premature for the trial court to take cognizance thereof as
petitioner had an administrative remedy.[27]
By Resolution of April 10, 2002, the trial court granted respondents’
motion to dismiss in this wise:
There is no need for this Court to resolve whether the subject
Ordinance is null and void as the same was already declared to be
violative of, and repugnant to the “uniformity rule” on taxation by
the Quezon City Council itself thru its pronouncements in Quezon
City Ordinance No. 1032, Series of 2001. x x x
xxx
As to petitioner’s claim for refund, since an administrative remedy
is available for refund of taxes illegally and erroneously collected
and petitioner has not yet availed of it, the Court shall not take
cognizance of this issue considering the rule on “Exhaustion of
Administrative Remedy.”[28] (Underscoring supplied)
Its Motion for Reconsideration[29] having been denied,[30]
petitioner comes before this Court on appeal by certiorari under
Rule 45 on the following issues:
A
WHETHER OR NOT THE TRIAL COURT ERRED IN DISMISSING THE
INSTANT CASE FOR FAILURE OF THE PETITIONER TO EXHAUST
ADMINISTRATIVE REMEDIES.
B
WHETHER OR NOT SECTION 3, QUEZON CITY ORDINANCE NO. 357,
SERIES OF 1995, WHICH WAS ABROGATED FOR BEING
UNCONSTITUTIONAL CAN BE THE BASIS OF COLLECTING REAL
ESTATE TAXES PRIOR TO ITS REPEAL.[31]
Although as a rule, administrative remedies must first be exhausted
before resort to judicial action can prosper, there is a well-settled
exception in cases where the controversy does not involve
questions of fact but only of law.[32]
Nevertheless, while cases raising purely legal questions are
excepted from the rule requiring exhaustion of administrative
remedies before a party may resort to the courts, petitioner, in the
case at bar, does not raise just pure questions of law. Its cause of
action requires the determination of the amount of real property
tax paid under protest and the amount of attorney’s fees.
These issues are essentially questions of fact which preclude this
Court from reviewing the same.[33]
Since the procedure for obtaining a refund of real property taxes is
provided under Sections 252,[34] 226,[35] 229,[36] 230[37] and
231[38] of the Local Government Code, petitioner’s action for
prohibition in the RTC was premature as it had a plain, speedy and
adequate remedy of appeal in the ordinary course of law.[39] As
such, the trial court correctly dismissed its action on the ground
that it failed to exhaust the administrative remedies stated
above.[40]
Raising questions of fact is moreover inappropriate in an
appeal by certiorari under Rule 45 of the Rules of Court where only
questions of law may be reviewed.[41] It is axiomatic that the
Supreme Court is not a trier of facts[42] and the factual findings of
the court a quo are conclusive upon it, except: (1) where the
conclusion is a finding grounded entirely on speculation, surmise
and conjectures; (2) where the inference made is manifestly
mistaken; (3) where there is grave abuse of discretion; and (4)
where the judgment is based on a misapprehension of facts, and
the findings of fact of the trial court are premised on the absence of
evidence and are contradicted by evidence on record.[43]
From a considered scrutiny of the records of the case, this
Court finds that petitioner has shown no cause for this Court to
apply any of the foregoing exceptions.
Petitioner has not put squarely in issue the constitutionality of the
proviso in Section 3 of the ordinance. It merely alleges that the said
proviso can not be the basis for collecting real estate taxes at any
given time, the Sangguniang Panlungsod of Quezon City not having
intended to impose such taxes in the first place. As such the
repealing ordinance should be given retroactive effect.
As a rule, the courts will not resolve the constitutionality of a law, if
the controversy can be settled on other grounds.[44]
Where questions of constitutional significance are raised, the Court
can exercise its power of judicial review only if the following
requisites are complied: First, there must be before the Court an
actual case calling for the exercise of judicial review. Second, the
question before the Court must be ripe for adjudication. Third, the
person challenging the validity of the act must have standing to
challenge. Fourth, the question of constitutionality must have been
raised at the earliest opportunity, and lastly, the issue of
constitutionality must be the very lis mota of the case.[45]
Considering that there are factual issues still waiting to be
threshed out at the level of the administrative agency, there is no
actual case calling for the exercise of judicial review. In addition,
the requisite that the constitutionality of the assailed proviso in
question be the very lis mota of the case is absent. Thus, this Court
refrains from passing on the constitutionality of the proviso in
Section 3 of the 1995 Ordinance.
The factual issues which petitioner interjected in its petition
aside, the only crucial legal query in this case is the validity of the
proviso fixing the appraised value of property at the stated
consideration at which the property was last sold.
This Court holds that the proviso in question is invalid as it
adopts a method of assessment or appraisal of real property
contrary to the Local Government Code, its Implementing Rules and
Regulations and the Local Assessment Regulations No. 1-92[46]
issued by the Department of Finance.[47]
Under these immediately stated authorities, real properties
shall be appraised at the current and fair market value prevailing in
the locality where the property is situated[48] and classified for
assessment purposes on the basis of its actual use.[49]
“Fair market value” is the price at which a property may be
sold by a seller who is not compelled to sell and bought by a buyer
who is not compelled to buy,[50] taking into consideration all uses
to which the property is adapted and might in reason be applied.
The criterion established by the statute contemplates a
hypothetical sale. Hence, the buyers need not be actual and
existing purchasers.[51]

As this Court stressed in Reyes v. Almanzor,[52] assessors, in
fixing the value of real property, have to consider all the
circumstances and elements of value, and must exercise prudent
discretion in reaching conclusions.[53] In this regard, Local
Assessment Regulations No. 1-92[54] establishes the guidelines to
assist assessors in classifying, appraising and assessing real
property.
Local Assessment Regulations No. 1-92 suggests three
approaches in estimating the fair market value, namely: (1) the
sales analysis or market data approach; (2) the income
capitalization approach; and (3) the replacement or reproduction
cost approach.[55]
Under the sales analysis approach, the price paid in actual
market transactions is considered by taking into account valid sales
data accumulated from among the various sources stated in
Sections 202, 203, 208, 209, 210, 211 and 213 of the Code.[56]
In the income capitalization approach, the value of an
income-producing property is no more than the return derived from
it. An analysis of the income produced is necessary in order to
estimate the sum which might be invested in the purchase of the
property.
The reproduction cost approach, on the other hand, is a
factual approach used exclusively in appraising man-made
improvements such as buildings and other structures, based on
such data as materials and labor costs to reproduce a new replica of
the improvement.
The assessor uses any or all of these approaches in analyzing
the data gathered to arrive at the estimated fair market value to be
included in the ordinance containing the schedule of fair market
values.
Given these different approaches to guide the assessor, it
can readily be seen that the Code did not intend to have a rigid rule
for the valuation of property, which is affected by a multitude of
circumstances which no rule could foresee or provide for. Thus,
what a thing has cost is no singular and infallible criterion of its
market value.[57]
Accordingly, this Court holds that the proviso directing that
the real property tax be based on the actual amount reflected in the
deed of conveyance or the prevailing BIR zonal value is invalid not
only because it mandates an exclusive rule in determining the fair
market value but more so because it departs from the established
procedures stated in the Local Assessment Regulations No. 1-92
and unduly interferes with the duties statutorily placed upon the
local assessor[58] by completely dispensing with his analysis and
discretion which the Code and the regulations require to be
exercised. An ordinance that contravenes any statute is ultra vires
and void.[59]
Further, it is noted that there is nothing in the Charter of
Quezon City[60] and the Quezon City Revenue Code of 1993[61]
that authorize public respondents to appraise property at the
consideration stated in the deed of conveyance.
Using the consideration appearing in the deed of conveyance to
assess or appraise real properties is not only illegal since “the
appraisal, assessment, levy and collection of real property tax shall
not be let to any private person,”[62] but it will completely destroy
the fundamental principle in real property taxation – that real
property shall be classified, valued and assessed on the basis of its
actual use regardless of where located, whoever owns it, and
whoever uses it.[63] Necessarily, allowing the parties to a private
sale to dictate the fair market value of the property will dispense
with the distinctions of actual use stated in the Code and in the
regulations.
The invalidity of the assessment or appraisal system adopted by
the proviso is not cured even if the proviso mandates the
comparison of the stated consideration as against the prevailing BIR
zonal value, whichever is higher, because an integral part of that
system still permits valuing real property in disregard of its “actual
use.”
In the same vein, there is also nothing in the Code or the
regulations showing the congressional intent to require an
immediate adjustment of taxes on the basis of the latest market
developments as, in fact, real property assessments may be revised
and/or increased only once every three (3) years.[64]
Consequently, the real property tax burden should not be
interpreted to include those beyond what the Code or the
regulations expressly and clearly state.
Still another consequence of the proviso is to provide a chilling
effect on real property owners or administrators to enter freely into
contracts reflecting the increasing value of real properties in
accordance with prevailing market conditions. While the Local
Government Code provides that the assessment of real property
shall not be increased oftener than once every three (3) years,[65]
the questioned part of the proviso subjects the real property to a
tax based on the actual amount appearing on the deed of
conveyance or the current approved zonal valuation of the Bureau
of Internal Revenue prevailing at the time of sale, cession, transfer
and conveyance, whichever is higher. As such, any subsequent sale
during the three-year period will result in a real property tax higher
than the tax assessed at the last prior conveyance within the same
period. To save on taxes, real property owners or administrators
are forced to hold on to the property until after the said three-year
period has lapsed. Should they nonetheless decide to sell within
the said three-year period, they are compelled to dispose the
property at a price not exceeding that obtained from the last prior
conveyance in order to avoid a higher tax assessment. In these two
scenarios, real property owners are effectively prevented from
obtaining the best price possible for their properties and unduly
hampers the equitable distribution of wealth.
While the state may legitimately decide to structure its tax system
to discourage rapid turnover in ownership of real properties, such
state interest must be expressly stated in the executing statute or it
can at least be gleaned from its provisions.
In the case at bar, there is nothing in the Local Government Code,
the implementing rules and regulations, the local assessment
regulations, the Quezon City Charter, the Quezon City Revenue
Code of 1993 and the “Whereas” clauses of the 1995 Ordinance
from which this Court can draw, at the very least, an intimation of
this state interest. As such, the proviso must be stricken down for
being contrary to public policy and for restraining trade.[66]
In fine, public respondent Quezon City Government exceeded
its statutory authority when it enacted the proviso in question. The
provision is thus null and void ab initio for being ultra vires and for
contravening the provisions of the Local Government Code, its
implementing regulations and the Local Assessment Regulations
No. 1-92. As such, it acquired no legal effect and conferred no
rights from its inception.
A word on the applicability of the doctrine in this decision. It
applies only in the determination of real estate tax payable by
owners or administrators of real property.
In light of the foregoing disquisitions, addressing the issue of
retroactivity of the repealing ordinance is rendered unnecessary.
WHEREFORE, the petition is hereby GRANTED. The
assailed portion of the provisions of Section 3 of Quezon City
Ordinance No. 357, Series of 1995 is hereby declared invalid.
 Petitioner’s claim for refund, however, must be lodged with [17] SECTION 219. General Revision of Assessments and
the Local Board of Assessment Appeals, if it is not barred by the Property Classification. – The provincial, city or municipal assessor
statute of limitations. shall undertake a general revision of real property assessments
within two (2) years after the effectivity of this Code and every
SO ORDERED. three (3) years thereafter.
[18] Section 220. Valuation of Real Property. – In cases where
(a) real property is declared and listed for taxation purposes for the
CONCHITA CARPIO MORALES first time; (b) there is an ongoing general revision of property
Associate Justice classification and assessment; or (c) a request is made by the
person in whose name the property is declared, the provincial, city
[1] Rollo at 35-39. or municipal assessor or his duly authorized deputy shall, in
[2] Id. at 42-60. accordance with the provisions of this Chapter, make a
[3] Entitled “An Ordinance Approving the Schedule of Fair classification, appraisal and assessment of the real property listed
Market Values for Land, Buildings and Other Structures Situated in and described in the declaration irrespective of any previous
Quezon City Jointly Prepared by the City Assessors of the Four (4) assessment or taxpayer’s valuation thereon: Provided, however,
Local Treasury and Assessment Districts Pursuant to Section 9 of That the assessment of real property shall not be increased oftener
P.D. 921 in Relation to the Provisions of the Local Government Code, than once every three (3) years except in case of new
R.A. 7160, as Basis for the General Revision of Real Property improvements substantially increasing the value of said property or
Assessment.” of any change in its actual use.
[4] Rollo at 7. Petitioner failed to attach a certified true copy of [19] Rollo at 54.
the ordinance. [20] Id. at 103.
[5] Id. at 64-66. [21] Records at 68-70.
[6] Id. at 46. [22] Id. at 71.
[7] Id. at 63. [23] Id. at 72-75.
[8] Id. at 67. [24] Id. at 107-108.
[9] Id. at 68-73. [25] CIVIL CODE, ART. 4. Laws shall have no retroactive effect,
[10] Id. at 74-85. unless the contrary is provided.
[11] CONST. art. VI, sec. 28 (1), viz: [26] Rollo at 114-115. Vide Rollo 105.
Section 28. (1). The rule of taxation shall be uniform and [27] Id. at 116.
equitable. xxx [28] Id. at 37-38.
[12] Rollo at 86-87. [29] Id. at 124-133.
[13] Id. at 88-89. [30] Id. at 40-41.
[14] Id. at 92. [31] Id. at 15.
[15] Id. at 42 - 60. [32] Ty v. Trampe, 250 SCRA 500, 518 (1995).
[16] Id. at 50. [33] Ibid.; Vide also PNB v. Romillo, 139 SCRA 320, (1985) where
we held that the determination of whether an appeal involves only
questions of law or both questions of law and fact is best left to the
appellate court.
[34] SECTION 252. Payment Under Protest. — (a) No protest
shall be entertained unless the taxpayer first pays the tax. There
shall be annotated on the tax receipts the words "paid under
protest". The protest in writing must be filed within thirty (30) days
from payment of the tax to the provincial, city treasurer or
municipal treasurer, in the case of a municipality within
Metropolitan Manila Area, who shall decide the protest within sixty
(60) days from receipt.
(b) The tax or a portion thereof paid under protest, shall
be held in trust by the treasurer concerned.
(c) In the event that the protest is finally decided in favor
of the taxpayer, the amount or portion of the tax protested shall be
refunded to the protestant, or applied as tax credit against his
existing or future tax liability.
(d) In the event that the protest is denied or upon the
lapse of the sixty day period prescribed in subparagraph (a), the
taxpayer may avail of the remedies as provided for in Chapter 3,
Title II, Book II of this Code.
[35] SECTION 226. Local Board of Assessment Appeals. —
Any owner or person having legal interest in the property who is not
satisfied with the action of the provincial, city or municipal assessor
in the assessment of his property may, within sixty (60) days from
the date of receipt of the written notice of assessment, appeal to
the Board of Assessment Appeals of the provincial or city by filing a
petition under oath in the form prescribed for the purpose, together
with copies of the tax declarations and such affidavits or documents
submitted in support of the appeal.
[36] SECTION 229. Action by the Local Board of
Assessment Appeals. — (a) The Board shall decide the appeal
within one hundred twenty (120) days from the date of receipt of
such appeal. The Board, after hearing, shall render its decision
based on substantial evidence or such relevant evidence on record
as a reasonable mind might accept as adequate to support the
conclusion.
(b) In the exercise of its appellate jurisdiction, the Board shall
have the power to summon witnesses, administer oaths, conduct
ocular inspection, take depositions, and issue subpoena and
subpoena duces tecum. The proceedings of the Board shall be
conducted solely for the purpose of ascertaining the facts without
necessarily adhering to technical rules applicable in judicial
proceedings.
(c) The secretary of the Board shall furnish the owner of the
property or the person having legal interest therein and the
provincial or city assessor with a copy of the decision of the Board.
In case the provincial or city assessor concurs in the revision or the
assessment, it shall be his duty to notify the owner of the property
or the person having legal interest therein of such fact using the
form prescribed for the purpose. The owner of the property or the
person having legal interest therein or the assessor who is not
satisfied with the decision of the Board, may, within thirty (30) days
after receipt of the decision of said Board, appeal to the Central
Board of Assessment Appeals, as herein provided. The decision of
the Central Board shall be final and executory.
[37] SECTION 230. Central Board of Assessment
Appeals. — The Central Board of Assessment Appeals shall be
composed of a chairman, and two (2) members to be appointed by
the President, who shall serve for a term of seven (7) years, without
reappointment. Of those first appointed, the chairman shall hold
office for seven (7) years, one member for five (5) years, and the
other member for three (3) years. Appointment to any vacancy
shall be only for the unexpired portion of the term of the
predecessor. In no case shall any member be appointed or
designated in a temporary or acting capacity. The chairman and the
members of the Board shall be Filipino citizens, at least forty (40)
years old at the time of their appointment, and members of the Bar
or Certified Public Accountants for at least ten (10) years
immediately preceding their appointment. The chairman of the
Board of Assessment Appeals shall have the salary grade
equivalent to the rank of Director III under the Salary
Standardization Law exclusive of allowances and other emoluments.
The members of the Board shall have the salary grade equivalent to
the rank of Director II under the Salary Standardization Law
exclusive of allowances and other emoluments. The Board shall
have appellate jurisdiction over all assessment cases decided by
the Local Board of Assessment Appeals.
There shall be Hearing Officers to be appointed by the Central
Board of Assessment Appeals pursuant to civil service laws, rules
and regulations, one each for Luzon, Visayas and Mindanao, who
shall hold office in Manila, Cebu City and Cagayan de Oro City,
respectively, and who shall serve for a term of six (6) years, without
reappointment until their successors have been appointed and
qualified. The Hearing Officers shall have the same qualifications as
that of the Judges of the Municipal Trial Courts.
The Central Board Assessment Appeals, in the performance of its
powers and duties, may establish and organize staffs, offices, units,
prescribe the titles, functions and duties of their members and
adopt its own rules and regulations.
Unless otherwise provided by law, the annual appropriations for
the Central Board of Assessment Appeals shall be included in the
budget of the Department of Finance in the corresponding General
Appropriations Act.
[38] SECTION 231. Effect of Appeal on the Payment of
Real Property Tax. — Appeal on assessments of real property made
under the provisions of this Code shall, in no case, suspend the
collection of the corresponding realty taxes on the property
involved as assessed by the provincial or city assessor, without
prejudice to subsequent adjustment depending upon the final
outcome of the appeal.
[39] Rule 65, Section 1, Rules of Court.
[40] Manila Electric Company v. Barlis, 357 SCRA 832, 843
(2001).
[41] Rule 45, Section 1, Rules of Court.
[42] Macapagal v. Court of Appeals, et al.,/Silverio v. Court of
Appeals, et al., 297 SCRA 429 (1998).
[43] Pareño v. Sandiganbayan, 256 SCRA 242, 265 (1996).
[44] Ty v. Trampe, supra, note 32 at 520.
[45] Board of Optometry v. Colet, 260 SCRA 88, 103 (1996)
citing Garcia v. Executive Secretary, 204 SCRA 516, 522 (1991);
Santos v. Northwest Orient Airlines, 210 SCRA 256, 261 (1992).
[46] Dated October 6, 1992.
[47] Pursuant to the authority granted by Rep. Act No. 7160
(1991), Section 201.
[48] Rep. Act No. 7160 (1991), Sec. 201.
[49] Rep. Act No. 7160 (1991), Sec. 198 (b).
[50] Rep. Act No. 7160 (1991), Sec. 198 (l).
[51] Army and Navy Club, Manila v. Trinidad, 44 Phil. 383 at
387.
[52] 196 SCRA 322, 327 (1991).
[53] Army and Navy Club, Manila v. Trinidad, supra, note 51.
[54] Dated October 6, 1992.
[55] Section 21. Approaches Used to Estimate Values – As
discussed in Section 34 hereof, to estimate value, three approaches
may be used in the construction of the schedule of fair market
values. Sales Analysis Approach (also called Market Data
Approach), the Income Capitalization Approach, and the
Replacement or Reproduction Cost Approach.
A. Under the Sales Analysis Approach, the price pain in actual
market transactions is considered. It requires the accumulation of
valid sales data. Such data can be secured from the office of the
Registrar of Deeds and notaries public, who are required under
Section 278 of the Code to furnish the provincial, city or municipal
assessors with copies of all contracts, conveying, leasing, or
mortgaging of real property, received or acknowledged before
them. Other evidences of market values to augment sales data re:
bids, offers to sell, opinions of informed real estate appraisers,
brokers, salesmen, dealers or bank officials. Values declared by
property owners or administrators embodied in sworn statements
filed pursuant to Section 202 of the Code fully evaluated, may also
be considered as additional source of information of Market Data
Analysis.
In the absence or unavailability of valid sales, data, price
indices of real property situated in the different provinces, cities
and municipalities, compiled in the National Statistics Office and the
Economic Research Division of the Central Bank of the Philippines,
may be used as primary basis in computing the fair market value
that will be incorporated in the schedule of market values.
1. Analysis of Sales Transactions – The elements that enter
into sales transactions should be analyzed thoroughly, to determine
the relationship between the amount of consideration contained
therein and the current value of subject property. Only sales
transactions which meet more or less the following criteria shall be
considered for the sales analysis:
(a) The date of the transaction must be reasonably near the
general assessment date. Sales transactions for the current year or
preceding year, if adequate, would also serve as a good basis for
studies on trends of market values.
If the data derived therefrom are inadequate, studies
may extend to preceding year, but in no case shall it be for more
than three (3) years from the general re-assessment date.
(b) Type of conveyance representing a normal transaction is
one which envisions willing, able and well-informed, buyers and
sellers. Quitclaims, transfers between relatives, inter-related
corporations and the like, should not be considered.
(c) The amount of consideration reflects a strong presumption
of the fair market value of the property involved.
2. Abstraction Method – Where sales cover land and
improvements, a method called abstraction method is used to
estimate value of land. The value of the improvement is first
estimated pursuant to Section 210 of the Code and later deducted
from the total sales of the property to derive the land price which,
when divided by the area of the land, result in the estimated price
per hectare or per square meter. For this process to have validity,
as in other techniques for estimating value, it has to be applied to
sales of similar real properties so that a range of value may be
prepared as basis for studying fair market value for purposes of
construction of the schedule of market values.
B. Income Capitalization Approach – Is a direct approach to
estimate the value of property. It is based on the theory that the
value of an income producing property is no more than the return
derived from it. It requires an analysis of the income produced by a
property in order to estimate the sum which might be invested in
the purchase of the property. A detailed financial study must be
made of the property. Gross annual income is either determined
from actual figures or is estimated. Annual expense figures are
obtained from the owner. The income, operating expenses and
fixed charges of the subject property are analyzed and the
expenses derived thereof are then subtracted from the gross
income. The resultant net income capitalized at a rate which the
investor of the property can expect as reasonable return or interest
prevailing in the locality. The capitalized value of the income
represents the present value of the property.
Income method may be utilized to check results derived
from sales analysis approach in the case of rental or income
producing property.
C. Reproduction Cost (New) Approach – This is a factual
approach used exclusively in appraising man-made improvements
such as buildings and other structures. This method depends on
guides and standards, based on such data as materials and labor
costs.
The “reproduction or replacement cost approach” makes
use of a value estimate of reproducing a new replica property within
the same or closely similar materials and labor costs. Unit base
construction cost is developed on a per square meter or per cubic
meter basis for typical buildings or structures. The unit cost is
multiplied by the ground area or volume, as the case may be, of the
subject structure to derive its total reproduction or replacement
cost, allowance for depreciation is deducted to arrive at the
depreciated cost of subject property.
(1) Quantitative Analysis Method – The schedule of unit base
construction cost for buildings shall be established by the
quantitative analysis method of the reproduction cost (new)
approach. A base unit cost for each type and sub-type of typical
buildings in the province or city or municipality shall be established.
By this method, a detailed inventory of all materials and
labor that went into the finished building is made.
The first step in this method is collection or preparation of
plans and specifications for adopted typical (sample) buildings,
representing each type. Data on cost of construction materials
prevailing in the city or province or municipality shall then be
gathered and listed. Labor cost and others that contribute to the
construction cost may be estimated by proper consultation with
building contractors, engineers, architects and labor agencies.
From the plans and specifications, materials and labor quantities
are then computed for all parts of the structures. The materials
cost shall be determined by applying the price for building materials
computed from the material quantities that went with finished
buildings. The amount added to the estimated labor cost and
miscellaneous expenses, results in the total cost of the subject
building. The base unit cost shall be then determined by dividing
this total cost by average area in square meters of the subject
structure.
[56] SECTION 202. Declaration of real Property by the
Owner or Administrator. — It shall be the duty of all persons, natural
or juridical, owning or administering real property, including the
improvements therein, within a city or municipality, or their duly
authorized representative, to prepare, or cause to be prepared, and
file with the provincial, city or municipal assessor, a sworn
statement declaring the true value of their property, whether
previously declared or undeclared, taxable or exempt, which shall
be the current and fair market value of the property, as determined
by the declarant. Such declaration shall contain a description of the
property sufficient in detail to enable the assessor or his deputy to
identify the same for assessment purposes. The sworn declaration
of real property herein referred to shall be filed with the assessor
concerned once every three (3) years during the period from
January first (1st) to June thirtieth (30th) commencing with the
calendar year 1992.
SECTION 203. Duty of Person Acquiring Real Property or
Making Improvement Thereon. — It shall also be the duty of any
person, or his authorized representative, acquiring at any time real
property in any municipality or city or making any improvement on
real property, to prepare, or cause to be prepared, and file with the
provincial, city or municipal assessor, a sworn statement declaring
the true value of subject property, within sixty (60) days after the
acquisition of such property or upon completion or occupancy of the
improvement, whichever comes earlier.
SECTION 208. Notification of Transfer of Real Property
Ownership. — Any person who shall transfer real property
ownership to another shall notify the provincial, city or municipal
assessor concerned within sixty (60) days from the date of such
transfer. The notification shall include the mode of transfer, the
description of the property alienated, the name and address of the
transferee.
SECTION 209. Duty of Registrar of Deeds to Appraise
Assessor of Real Property Listed in Registry. — (a) To ascertain
whether or not any real property entered in the Registry of Property
has escaped discovery and listing for the purpose of taxation, the
Registrar of Deeds shall prepare and submit to the provincial, city or
municipal assessor, within six (6) months from the date of
effectivity of this Code and every year thereafter, an abstract of his
registry, which shall include brief but sufficient description of the
real properties entered therein, their present owners, and the dates
of their most recent transfer or alienation accompanied by copies of
corresponding deeds of sale, donation, or partition or other forms of
alienation.
(b) It shall also be the duty of the Registrar of Deeds to require
every person who shall present for registration a document of
transfer, alienation, or encumbrance of real property to accompany
the same with a certificate to the effect that the real property
subject of the transfer, alienation, or encumbrance, as the case
may be, has been fully paid of all real property taxes due thereon.
Failure to provide such certificate shall be a valid cause for the the municipalities within the Metropolitan Manila Area to prepare of
Registrar of Deeds to refuse the registration of the document. cause to be prepared a schedule of market values as the basis for
SECTION 210. Duty of Official Issuing Building Permit or the appraisal and assessment of lands, buildings and other
Certificate of Registration of Machinery to Transmit Copy to improvements situated in their respective jurisdictions within one
Assessor. — Any public official or employee who may now or (1) year after the effectivity of the Code and every three (3) years
hereafter be required by law or regulation to issue to any person a thereafter; and
permit for the construction, addition, repair, or renovation of a Market values for real property situated within the province shall be
building, or permanent improvement on land, or a certificate of prepared by the provincial assessors who shall be assisted by the
registration for any machinery, including machines, mechanical municipal assessors of municipalities within his jurisdiction.
contrivances, and apparatus attached or affixed on land or to [59] Vide Magtajas v. Pryce Properties Corp., Inc., 234 SCRA
another real property, shall transmit a copy of such permit or 255, at 268 and 274.
certificate within thirty (30) days of its issuance, to the assessor of [60] Rep. Act No. 537 (1950), as amended.
the province, city or municipality where the property is situated. [61] City Ordinance No. SP-91, S-93.
[62] Rep. Act. No. 7160, Sec. 198 (d).
SECTION 211. Duty of Geodetic Engineers to Furnish [63] Id., Secs. 198 (b) and 217.
Copy of Plans to Assessor. — It shall be the duty of all geodetic [64] Id., Secs. 219 and 220, supra, notes 17 & 18.
engineers, public or private, to furnish free of charge to the [65] Id., Sec. 220.
assessor of the province, city or municipality where the land is [66] Id., Sec. 130 (4).
located with a white or blue print copy of each of all approved
original or subdivision plans or maps of surveys executed by them
within thirty (30) days from receipt of such plans from the Lands
Management Bureau, the Land Registration Authority, or the
Housing and Land Use Regulatory Board, as the case may be.

SECTION 213. Authority of Assessor to Take Evidence. —

For the purpose of obtaining information on which to base the
market value of any real property, the assessor of the province, city
or municipality or his deputy may summon the owners of the
properties to be affected or persons having legal interest therein
and witnesses, administer oaths, and take deposition concerning
the property, its ownership, amount, nature, and value.
[57] Vide Army and Navy Club, Manila v. Trinidad, supra, note
51 at 385.
[58] Vide also Local Assessment Regulations No. 1-92 (1992),
Section 19. Duty of the Provincial/City/Municipal Assessor – It is the
duty of all provincial and city assessors, and municipal assessors of

THIRD DIVISION
[G.R. No. 127316. October 12, 2000]
LIGHT RAIL TRANSIT AUTHORITY, petitioner, vs. CENTRAL BOARD OF
ASSESSMENT APPEALS, BOARD OF ASSESSMENT APPEALS OF
MANILA and the CITY ASSESSOR OF MANILA, respondents.
DECISION
PANGANIBAN, J.:
The Light Rail Transit Authority and the Metro Transit Organization
function as service-oriented business entities, which provide
valuable transportation facilities to the paying public. In the
absence, however, of any express grant of exemption in their favor,
they are subject to the payment of real property taxes.
The Case
In the Petition for Review before us, the Light Rail Transit Authority
(LRTA) challenges the November 15, 1996 Decision of the Court of
Appeals (CA) in CA-GR SP No. 38137, which disposed as follows:
"WHEREFORE, premises considered, the appealed decision (dated
October 15, 1994) of the Central Board of Assessment Appeals is
hereby AFFIRMED, with costs against the petitioner."
The affirmed ruling of the Central Board of Assessment Appeals
(CBAA) upheld the June 26, 1992 Resolution of the Board of
Assessment Appeals of Manila, which had declared petitioner's
carriageways and passenger terminals as improvements subject to
real property taxes.
The Facts
The undisputed facts are quoted by the Court of Appeals (CA) from
the CBAA ruling, as follows:
"1. The LRTA is a government-owned and controlled corporation
created and organized under Executive Order No. 603, dated July
12, 1980 'x x x primarily responsible for the construction, operation,
maintenance and/or lease of light rail transit system in the
Philippines, giving due regard to the [reasonable requirements] of
the public transportation of the country' (LRTA vs. The Hon.
Commission on Audit, GR No. No. 88365);
"2. x x x [B]y reason of x x x Executive Order 603, LRTA acquired
real properties x x x constructed structural improvements, such as
buildings, carriageways, passenger terminal stations, and installed
various kinds of machinery and equipment and facilities for the
purpose of its operations;
"3. x x x [F]or x x x an effective maintenance, operation and
management, it entered into a Contract of Management with the
Meralco Transit Organization (METRO) in which the latter undertook
to manage, operate and maintain the Light Rail Transit System
owned by the LRTA subject to the specific stipulations contained in
said agreement, including payments of a management fee and real
property taxes (Add'l Exhibit "I", Records)
"4. That it commenced its operations in 1984, and that sometime
that year, Respondent-Appellee City Assessor of Manila assessed
the real properties of [petitioner], consisting of lands, buildings,
carriageways and passenger terminal stations, machinery and
equipment which he considered real propert[y] under the Real
Property Tax Code, to commence with the year 1985;
"5. That [petitioner] paid its real property taxes on all its real
property holdings, except the carriageways and passenger terminal
stations including the land where it is constructed on the ground not engaged in purely governmental or public service, the latter's
that the same are not real properties under the Real Property Tax endeavors were proprietary. Indeed, petitioner was deemed as a
Code, and if the same are real propert[y], these x x x are for public profit-oriented endeavor, serving as it did, only the paying public.
use/purpose, therefore, exempt from realty taxation, which claim
was denied by the Respondent-Appellee City Assessor of Manila; Hence, this Petition.
and
The Issues
"6. x x x [Petitioner], aggrieved by the action of the Respondent-
Appellee City Assessor, filed an appeal with the Local Board of In its Memorandum, petitioner urges the Court to resolve the
Assessment Appeals of Manila x x x. Appellee, herein, after due following matters:
hearing, in its resolution dated June 26, 1992, denied [petitioner's]
appeal, and declared that carriageways and passenger terminal "I
stations are improvements, therefore, are real propert[y] under the
Code, and not exempt from the payment of real property tax. The Honorable Court of Appeals erred in not holding that the
carriageways and terminal stations of petitioner are not
"A motion for reconsideration filed by [petitioner] was likewise improvements for purposes of the Real Property Tax Code.
denied."
"II
The CA Ruling
The Honorable Court of Appeals erred in not holding that being
The Court of Appeals held that petitioner's carriageways and attached to national roads owned by the national government,
passenger terminal stations constituted real property or subject carriageways and terminal stations should be considered
improvements thereon and, as such, were taxable under the Real property of the national government.
Property Tax Code. The appellate court emphasized that such
pieces of property did not fall under any of the exemptions listed in "III
Section 40 of the aforementioned law. The reason was that they
were not owned by the government or any government-owned
The Honorable Court of Appeals erred in not holding that payment
corporation which, as such, was exempt from the payment of real
of charges or fares in the operation of the light rail transit system
property taxes. True, the government owned the real property upon
does not alter the nature of the subject carriageways and terminal
which the carriageways and terminal stations were built. However,
stations as devoted for public use.
they were still taxable, because beneficial use had been transferred
to petitioner, a taxable entity.
"IV
The CA debunked the argument of petitioner that carriageways and
The Honorable Court of Appeals erred in failing to consider the view
terminals were intended for public use. The former agreed, instead,
advanced by the Department of Finance, which takes charge of the
with the CBAA. The CBAA had concluded that since petitioner was
overall collection of taxes, that subject carriageways and terminal
stations are not subject to realty taxes.
"V
The Honorable Court of Appeals erred in failing to consider that
payment of the realty taxes assessed is not warranted and should
the legality of the questioned assessment be upheld, the amount of
the realty taxes assessed would far exceed the annual earnings of
petitioner, a government corporation."
The foregoing all point to one main issue: whether petitioner's
carriageways and passenger terminal stations are subject to real
property taxes.
The Court's Ruling
The Petition has no merit.
Main Issue:
May Real Property Taxes be Assessed and Collected?
The Real Property Tax Code, the law in force at the time of the
assailed assessment in 1984, mandated that "there shall be levied,
assessed and collected in all provinces, cities and municipalities an
annual ad valorem tax on real property such as lands, buildings,
machinery and other improvements affixed or attached to real
property not hereinafter specifically exempted."
Petitioner does not dispute that its subject carriageways and
stations may be considered real property under Article 415 of the
Civil Code. However, it resolutely argues that the same are
improvements, not of its properties, but of the government-owned
national roads to which they are immovably attached. They are thus
not taxable as improvements under the Real Property Tax Code. In
essence, it contends that to impose a tax on the carriageways and
terminal stations would be to impose taxes on public roads.
The argument does not persuade. We quote with approval the
solicitor general's astute comment on this matter:
"There is no point in clarifying the concept of industrial accession to
determine the nature of the property when what is fundamentally
important for purposes of tax classification is to determine the
character of the property subject [to] tax. The character of tax as a
property tax must be determined by its incidents, and form the
natural and legal effect thereof. It is irrelevant to associate the
carriageways and/or the passenger terminals as accessory
improvements when the view of taxability is focused on the
character of the property. The latter situation is not a novel issue as
it has already been resolved by this Honorable Court in the case of
City of Manila vs. IAC (GR No. 71159, November 15, 1989) wherein
it was held:
'The New Civil Code divides the properties into property for public
and patrimonial property (Art. 423), and further enumerates the
property for public use as provincial road, city streets, municipal
streets, squares, fountains, public waters, public works for public
service paid for by said [provinces], cities or municipalities; all
other property is patrimonial without prejudice to provisions of
special laws. (Art. 424, Province of Zamboanga v. City of
Zamboanga, 22 SCRA 1334 [1968])
xxx
'...while the following are corporate or proprietary property in
character, viz: 'municipal water works, slaughter houses, markets,
stables, bathing establishments, wharves, ferries and fisheries.'
Maintenance of parks, golf courses, cemeteries and airports, among
others, are also recognized as municipal or city activities of a
proprietary character (Dept. of Treasury v. City of Evansville; 60 NE
2nd 952)'
"The foregoing enumeration in law does not specify or include
carriageway or passenger terminals as inclusive of properties
strictly for public use to exempt petitioner's properties from taxes.
Precisely, the properties of petitioner are not exclusively considered
as public roads being improvements placed upon the public road,
and this separability nature of the structure in itself physically
distinguishes it from a public road. Considering further that
carriageways or passenger terminals are elevated structures which
are not freely accessible to the public, viz-a-viz roads which are
public improvements openly utilized by the public, the former are
entirely different from the latter.
"The character of petitioner's property, be it an improvements as
otherwise distinguished by petitioner, needs no further
classification when the law already classified it as patrimonial
property that can be subject to tax. This is in line with the old ruling
that if the public works is not for such free public service, it is not
within the purview of the first paragraph of Art. 424 if the New Civil
Code."
Though the creation of the LRTA was impelled by public service -- to
provide mass transportation to alleviate the traffic and
transportation situation in Metro Manila -- its operation undeniably
partakes of ordinary business. Petitioner is clothed with corporate
status and corporate powers in the furtherance of its proprietary
objectives. Indeed, it operates much like any private corporation
engaged in the mass transport industry. Given that it is engaged in
a service-oriented commercial endeavor, its carriageways and
terminal stations are patrimonial property subject to tax,
notwithstanding its claim of being a government-owned or
controlled corporation.
True, petitioner's carriageways and terminal stations are anchored,
at certain points, on public roads. However, it must be emphasized
that these structures do not form part of such roads, since the
former have been constructed over the latter in such a way that the
flow of vehicular traffic would not be impeded. These carriageways
and terminal stations serve a function different from that of the
public roads. The former are part and parcel of the light rail transit
(LRT) system which, unlike the latter, are not open to use by the
general public. The carriageways are accessible only to the LRT
trains, while the terminal stations have been built for the
convenience of LRTA itself and its customers who pay the required
fare.
Basis of Assessment Is Actual Use of Real Property
Under the Real Property Tax Code, real property is classified for
assessment purposes on the basis of actual use, which is defined as
"the purpose for which the property is principally or predominantly
utilized by the person in possession of the property."
Petitioner argues that it merely operates and maintains the LRT
system, and that the actual users of the carriageways and terminal
stations are the commuting public. It adds that the public-use
character of the LRT is not negated by the fact that revenue is
obtained from the latter's operations.
We do not agree. Unlike public roads which are open for use by
everyone, the LRT is accessible only to those who pay the required
fare. It is thus apparent that petitioner does not exist solely for
public service, and that the LRT carriageways and terminal stations
are not exclusively for public use. Although petitioner is a public
utility, it is nonetheless profit-earning. It actually uses those
carriageways and terminal stations in its public utility business and
earns money therefrom.
Petitioner Not Exempt from Payment of Real Property Taxes
In any event, there is another legal justification for upholding the
assailed CA Decision. Under the Real Property Tax Code, real
property "owned by the Republic of the Philippines or any of its
political subdivisions and any government-owned or controlled
corporation so exempt by its charter, provided, however, that this
exemption shall not apply to real property of the abovenamed
entities the beneficial use of which has been granted, for
consideration or otherwise, to a taxable person."
Executive Order No. 603, the charter of petitioner, does not provide
for any real estate tax exemption in its favor. Its exemption is
limited to direct and indirect taxes, duties or fees in connection with
the importation of equipment not locally available, as the following
provision shows:
"ARTICLE 4
TAX AND DUTY EXEMPTIONS
Sec. 8. Equipment, Machineries, Spare Parts and Other Accessories
and Materials. - The importation of equipment, machineries, spare
parts, accessories and other materials, including supplies and
services, used directly in the operations of the Light Rails Transit
System, not obtainable locally on favorable terms, out of any funds
of the authority including, as stated in Section 7 above, proceeds
from foreign loans credits or indebtedness, shall likewise be
exempted from all direct and indirect taxes, customs duties, fees,
imposts, tariff duties, compensating taxes, wharfage fees and other
charges and restrictions, the provisions of existing laws to the
contrary notwithstanding."
Even granting that the national government indeed owns the
carriageways and terminal stations, the exemption would not apply
because their beneficial use has been granted to petitioner, a
taxable entity.
Taxation is the rule and exemption is the exception. Any claim for
tax exemption is strictly construed against the claimant. LRTA has
not shown its eligibility for exemption; hence, it is subject to the
tax.
WHEREFORE, the Petition is hereby DENIED and the assailed
Decision of the Court of Appeals AFFIRMED. Costs against the
petitioner.
SO ORDERED.
Melo, (Chairman), Vitug, and Purisima, JJ., concur.
Gonzaga-Reyes, J., no part.
Penned by Justice Ramon Mabutas Jr., with the concurrence of
Justices Minerva P. Gonzaga-Reyes (Division chairperson and now a
member of this Court) and Salvador J. Valdez (member).
Rollo, p. 43.
CA Decision, pp. 2-3; rollo, pp. 29-30.
This Petition was deemed submitted for decision on October 13,
1999, upon receipt by the Court of the Explanation filed by Attys.
Melchor R. Monsod and Jose A. Perello Jr. of the Office of the City
Legal Officer of Manila, who clarified that they were adopting as
memorandum their February 28, 1998 Comment. Received by the
Court on November 3, 1998 was Petitioner LRTA's Memorandum
signed by Government Corporate Counsel Jun Valerio, Assistant
Government Corporate Counsel Antonio M. Brillantes, and
Government Corporate Attorney IV Isabelo G. Gumaru. On
September 30, 1998, the Office of the Solicitor General filed a
"Manifestation and Motion for Leave to Adopt Comment as
Memorandum for the Central Board of Assessment Appeals." The
OSG's May 2, 1997 Comment was signed by Assistant Solicitor
General Mariano M. Martinez and Solicitors Luis F. Simon and
Brigido Artemon M. Luna.
Rollo, pp. 151-152; original written entirely in upper case.
Presidential Decree No. 464. See also the Local Government Code of
1991 or Republic Act No. 7160, which took effect on January 1,
1992.
Ibid., §38. This is identical to §232 of the Local Government Code
(LGC), which reads:
"Section 232. Power to Levy Real Property Tax. A province or city or
a municipality within the Metropolitan Manila Area may levy an
annual ad valorem tax on real property such as land, building,
machinery, and other improvement not hereinafter specifically
exempted."
Comment of the Office of the Solicitor General, pp. 8-10; rollo, pp.
70-72.
See Section 4 of Executive Order No. 603, the LRTA charter, which
provides:
"ARTICLE 2
CORPORATE POWERS
"Sec. 4. General Powers. - The Authority, through the Board of
Directors, may undertake such action as are expedient for or
conducive to the attainment of the purposes and objectives of the
Authority, or of any purpose reasonably incidental to or
consequential upon any of these purposes. As such, the Authority
shall have the following general powers:
(1) To have continuous succession under its corporate name, until
otherwise provided by law;
(2) To prescribe, amend, and/or repeal its by-laws;
(3) To adopt and use a seal and alter it at its pleasure;
(4) To sue and be sued;
(5) To contract any obligation or enter into, assign or accept the
assignment of, and vary or rescind any agreement, contract of
obligation necessary or incidental to the proper management of the
Authority;
(6) To borrow funds from any source, private or public, foreign or
domestic, and to issue bonds and other evidence of indebtedness,
the payment of which shall be guaranteed by the National
Government, subject to pertinent borrowing law;
(7) To acquire, receive, take, and hold by bequest, devise, gift,
purchase or lease, either absolutely or in trust for any of its
purposes, from foreign and domestic sources, any asset, grant or
property, real or personal, subject to such limitations as are
provided in existing laws; to convey or dispose of such assets,
grants, or properties, movable and immovable; and invest and/or
reinvest such proceeds and deal with and expand its assets and
income in such a manner as will best promote its objectives;
(8) To improve, develop or alter any property held by it;
(9) To carry on any business, either alone or in partnership with any
other person or persons;
(10) To employ an agent or contractor or perform such things as the
Authority may perform;
(11) To exercise the right of eminent domain, whenever the
Authority deems it necessary for the attainment of its objectives;
(12) To prescribe rules and regulations in the conduct of its general
business as well as to fix and implement the terms and conditions
of its related activities;
(13) To determine the fares payable by persons traveling on the
light rail system, in consultation with the Board of Transportation;
Section 40 (a) of the Real Property Code and Section 234 (a) of the
Local Government Code. Thus, petitioner will not find solace under
the Local Government Code either, for the reasons discussed
above.
Mactan Cebu International Airport Authority v. Marcos, 261 SCRA
667, September 11, 1996.

(14) To establish, operate, and maintain branches or field offices

when required by the exigencies of its business;

(15) To determine its organizational structure and the number,

positions and salaries of its personnel, subject to pertinent
organization and compensation law; and

(16) To exercise such powers and perform such duties as may be

necessary to carry out the business and purposes for which the
Authority was established or which, from time to time may be
declared by the Board of Directors to be necessary, useful,
incidental or auxiliary to accomplish such purposes; and generally,
to exercise all powers of an Authority under the Corporation Law
that are not inconsistent with the provisions of this Order, or with
orders pertaining to government corporate budgeting, organization,
borrowing, or compensation."

§19 of the Real Property Tax Code reads: "Real property shall be
classified for assessment on the basis of its actual use, regardless
of where located and whoever uses it." See also §198 (b) of the
LGC, an identical proviso which reads: "Real property shall be
classified for assessment purposes on the basis of its actual use."

See §3 (a) of the Real Property Tax Code and §199 (b) of the LGC.
 On November 16, 1990, the City Treasurer sent a “Notice of Right to
Redeem” to the petitioner advising it that it had only until October
30, 1991 within which to redeem the properties. The petitioner
SECOND DIVISION forthwith filed its complaint against the respondents, the City of
Iloilo, its City Treasurer and its Assessor with the Regional Trial Court
[G.R. No. 143214. November 11, 2004] (RTC) of Iloilo City, Branch 36, for the nullification of the assessment
and the sale with a prayer for a temporary restraining order and/or
PHILIPPINE PORTS AUTHORITY, petitioner, vs. THE CITY OF ILOILO; a writ of preliminary injunction. In its complaint, the petitioner
ROMEO MANIKAN, in his capacity as Treasurer of Iloilo City; alleged, inter alia, that the properties belonged to the Bureau of
FRANKLIN CORDERO, JR., in his capacity as Assessor of Iloilo City, Customs and/or the national government; hence, the properties
respondents. were exempt from the payment of realty taxes. To support its
argument, the petitioner cited Section 25 of P.D. No. 857, Section
40(a) of P.D. No. 464 and Section 1(e) of Executive Order (E.O.) No.
DECISION
93 issued on December 17, 1986.
CALLEJO, SR., J.:
In their answer to the complaint, the respondents alleged that the
petitioner’s exemption had already been withdrawn under P.D. No.
On October 9, 1990, the respondent City of Iloilo sent a “Notice of
1931 which took effect on June 11, 1984. Consequently, the sale of
Sale of Delinquent Real Properties” to petitioner Philippine Ports
the petitioner’s properties at public auction was in accord with law.
Authority (PPA) for non-payment of real property taxes covering its
facilities and edifices at the Iloilo port for the years 1985-1989, to
On October 22, 1992, the trial court rendered judgment in favor of
wit:
the respondents and ordered the dismissal of the complaint. The
Tax Dec. No. Kind of Property Assessment
decision was elevated to the Court of Appeals via a petition for
56325 Warehouse P 81,369.26 review, which rendered judgment affirming the decision of the RTC
61745 Building (Shed) 5,793.22 on September 15, 1999. In its Decision,[2] the appellate court ruled
61747 Residential House 1,754.68 that since the petitioner had acquired the properties, it was liable
59949 Building 13,959.42 for realty taxes due thereon. The petitioner’s motion for
61741 Building 10,294.10 reconsideration of the said decision was denied by the appellate
61742 Building 9,998.86 court; hence, the instant petition for review on certiorari for the
61744 Building 2,821.41[1] reversal thereof.

The respondent city was the only winning bidder at the public
auction conducted by the City Treasurer and the Assessor.
Consequently, the said properties were sold to it, and, conformably
with Section 76 of Presidential Decree (P.D.) No. 464, a certificate of
sale over the properties was executed in its favor.
The petitioner contends that the subject properties are owned by
the Republic of the Philippines. It avers that while under Section 30
of P.D. No. 857, the said properties were transferred to the
petitioner, the Republic of the Philippines retained ownership over
the same. It claims that while it administers and operates the port
of Iloilo, it does so for the benefit of the general public and not for
taxable persons. As such, the said properties are exempt from
realty taxes under Section 40 of P.D. No. 464. The petitioner further
asserts that P.D. No. 1931 and E.O. No. 93 have no application to
properties owned by the Republic of the Philippines.
In their comment on the petition, the respondents aver that by
virtue of P.D. No. 857 issued on December 23, 1975, the petitioner
became the owner of the subject properties. They point out that the
petitioner even declared the properties for taxation purposes under
its name. The respondents, likewise, posit that the exemption on
realty taxes in favor of the petitioner had effectively been withheld
under P.D. No. 1931, and that the petitioner cannot invoke P.D. No.
464 because the subject properties are being leased to taxable
private persons. The respondents appended to their comment the
tax declarations on the properties under the name of the petitioner.
The petition has no merit.
Petitioner PPA Became the Owner
Of the Port Facilities and
Appurtenances under P.D. No. 857
When P.D. No. 857 took effect on December 23, 1975, the petitioner
became the owner of the facilities and appurtenances, conformably
to Sections 30 to 33 thereof, to wit:
SEC. 30. Transfer of Existing and Completed Physical Facilities – In
accordance with the transitory provisions of this Decree, there shall
be transferred to the Authority all existing and completed public
port facilities, quays, wharves, docks, lands, buildings and other
property, movable or immovable, belonging to those ports declared
as Ports Districts for purposes of this Decree.
SEC. 31. Transfer of Intangible Assets – In accordance with the
transitory provisions of this Decree, there shall be transferred to the
Authority all intangible assets, powers, rights, foreshore rights,
interests and privileges belonging to the Bureau of Customs, and
Bureau of Public Works and other agencies relating to port works or
port operations, subject to terms to be arranged by and between
the Authority and agencies concerned. Any disagreement relating
to such transfer shall be elevated to the President for decision.
SEC. 32. Projects in Progress – In accordance with the transitory
provisions of this Decree, all ongoing projects relating to the
construction of ports and port facilities shall be continued by the
agency or agencies involved until completion. After completion,
such projects shall be transferred to the Authority in accordance
with the agreement among agencies concerned. Any disagreement
relating to such transfer shall be elevated to the President for
decision.
SEC. 33. Transfer of Liabilities and Debts – Upon the transfer and
acceptance by the Authority of the existing physical facilities,
intangible assets, and completed projects referred to in the Sections
immediately preceding, all debts, liabilities, and obligations of the
Bureau of Customs, the Bureau of Public Works, and other
government agencies or entities concerned in respect of such
physical facilities, intangible assets and completed projects within
the Port Districts shall, likewise, be transferred to or deemed
incurred by the Authority.
Section 40 of the law further provides that any and all other
powers, rights, duties and functions vested in and all properties,
authority or instrumentality pertaining to every matter concerning
port facilities, ports operations, or port works were transferred to
and were vested in the petitioner. These provisions are self-
executory, without need of any other formalities or documentations
to implement the same.
That the petitioner has not been issued any torrens title over the
port and port facilities and appurtenances is of no legal
consequence. A torrens title does not, by itself, vest ownership; it is
merely an evidence of title over real properties.[3] The torrens
system does not create or vest title. It has never been recognized
as a mode of acquiring ownership over real properties.[4]
That the petitioner became the owner of said facilities and
appurtenances is bolstered by the fact that under Article VI, Section
10(b) of P.D. No. 857, the initial paid up capital of the petitioner
consists of the following:
(i) The value of assets (including port facilities, quays, wharves, and
equipment) and such other properties, movable and immovable as
may be contributed by the Government or transferred by the
Government or any of its agencies as valued at the date of such
contribution or transfer and after deducting or taking into account
the loans and other liabilities of the Authority at the time of the
takeover of the assets and other properties.
As we held in Mactan Cebu International Airport Authority v.
Marcos:[5]
It may be reasonable to assume that the term “lands” refer to
“lands” in Cebu City then administered by the Lahug Air Port and
includes the parcels of land the respondent City of Cebu seeks to
levy on for real property taxes. This section involves a “transfer” of
the “lands,” among other things, to the petitioner and not just the
transfer of the beneficial use thereof, with the ownership being
retained by the Republic of the Philippines.
This “transfer” is actually an absolute conveyance of the ownership
thereof because the petitioner’s authorized capital stock consists of,
inter alia, “the value of such real estate owned and/or administered
by the airports.” Hence, the petitioner is now the owner of the land
in question and the exception in Section 234(c) of the LGC is
inapplicable.[6]
The Petitioner is Liable
For Realty Taxes on its
Facilities and Appurtenances
The petitioner cannot escape liability from the payment of realty
taxes by invoking its exemption in Section 40(a) of P.D. No. 464,[7]
which reads:
“SEC. 40. Exemptions from Real Property Tax – The exemption shall
be as follows:
a) Real Property owned by the Republic of the Philippines or any of
its political subdivisions and any government-owned corporation so
exempt by its charter, provided, however, that this exemption shall
not apply to real property of the above-named entities the
beneficial use of which has been granted, for consideration or
otherwise, to a taxable person. …
The petitioner cannot, likewise, find solace in Section 25 of P.D. No.
857,[8] to wit:
SEC. 25. Exemption from Realty Taxes – The Authority shall be
exempt from the payment of real property taxes imposed by the
Republic of the Philippines, its agencies, instrumentalities or
political subdivisions; Provided, That no tax exemptions shall be
extended to any subsidiaries of the Authority that may be
organized; Provided, finally, That investments in fixed assets shall
be deductible for income tax purposes.
First. Section 1, P.D. No. 1931 which took effect on June 11, 1984,
effectively withdrew the exemption granted to the petitioner, a
government-owned or controlled corporation –
Section 1. The provisions of special or general law to the contrary
notwithstanding, all exemptions from the payment of duties, taxes,
fees, imports and other charges heretofore granted in favor of
government-owned or controlled corporations including their
subsidiaries, are hereby withdrawn.
Second. Under the last paragraph of Section 234 of Republic Act
No. 7160, otherwise known as the Local Government Code (LGC),
the petitioner’s exemptions from the real property tax were
withdrawn upon the effectivity of the law. Thus:
SEC. 234. Exemptions from Real Property Tax. – The following are
exempted from payment of the real property tax:
(a) Real property owned by the Republic of the Philippines or any of
its political subdivisions except when the beneficial use thereof had
been granted, for consideration or otherwise, to a taxable person;
(b) Charitable institutions, churches, parsonages or convents
appurtenant thereto, mosques, nonprofit or religious cemeteries
and all lands, buildings and improvements actually, directly, and
exclusively used for religious, charitable or educational purposes;
(c) All machineries and equipment that are actually, directly and
exclusively used by local water districts and government-owned or
controlled corporations engaged in the supply and distribution of
water and/or generation and transmission of electric power;
(d) All real property owned by duly-registered cooperatives as
provided for under R.A. No. 6938; and
(e) Machinery and equipment used for pollution control and
environmental protection.
Except as provided herein, any exemption from payment of real
property tax previously granted to, or presently enjoyed by, all
persons, whether natural or juridical, including all government-
owned or controlled corporations are hereby withdrawn upon the
effectivity of this Code.[9]
Patently then, it was the intention of Congress to withdraw the tax
exemptions granted to or presently enjoyed by all persons,
including government-owned or controlled corporations, upon the
effectivity of the LGC as shown by Section 193 thereof:
Section 193. – Withdrawal of Tax Exemption Privileges. – Unless
otherwise provided in this Code, tax exemptions or incentives
granted to, or presently enjoyed by all persons, whether natural or
juridical, including government-owned or controlled corporations,
except local water districts, cooperatives duly registered under R.A.
6938, non-stock and non-profit hospitals and educational
institutions, are hereby withdrawn upon the effectivity of this Code.
Furthermore, under the repealing clause, Section 534(f) of the LGC,
all general and special laws, acts, decrees, or part or parts thereof
which are inconsistent with any of the provisions of the law were
repealed:
Section 534(f) – Repealing Clause. – All general and special laws,
acts, city charters, decrees, executive orders, proclamations and
administrative regulations, or part or parts thereof which are
inconsistent with any of the provisions of this code are hereby
repealed or modified accordingly.
The clause partakes of the nature of a general repealing clause
because it fails to designate the specific act or acts identified by
number or title that are submitted to be repealed.[10]
Thus, Section 25 of P.D. No. 857 and Section 40 of P.D. No. 464 were
repealed by Rep. Act No. 7160. We emphasized the raison d’etre for
the withdrawal of the exemption in Mactan Cebu International
Airport Authority v. Marcos[11] as follows:
SEC. 40. Exemptions from Real Property Tax. –The exemption shall
be as follows:
(a) Real property owned by the Republic of the Philippines or any of
its political subdivisions and any government-owned or controlled
corporation so exempt by its charter: Provided, however, That this
exemption shall not apply to real property of the above-mentioned
entities the beneficial use of which has been granted, for
consideration or otherwise, to a taxable person.
Note that as reproduced in Section 234(a), the phrase “and any
government-owned or controlled corporation so exempt by its
charter” was excluded. The justification for this restricted
exemption in Section 234(a) seems obvious: to limit further tax
exemption privileges, especially in light of the general provision on
withdrawal of tax exemption privileges in Section 193 and the
special provision on withdrawal of exemption from payment of real
property taxes in the last paragraph of Section 234. These policy
considerations are consistent with the State policy to ensure
autonomy to local governments and the objective of the LGC that
they enjoy genuine and meaningful local autonomy to enable them
to attain their fullest development as self-reliant communities and
make them effective partners in the attainment of national goals.
The power to tax is the most effective instrument to raise needed
revenues to finance and support myriad activities of local
government units for the delivery of basic services essential to the
promotion of the general welfare and the enhancement of peace,
progress, and prosperity of the people. It may also be relevant to
recall that the original reasons for the withdrawal of tax exemption
privileges granted to government-owned and controlled
corporations and all other units of government were that such
privilege resulted in serious tax base erosion and distortions in the
tax treatment of similarly situated enterprises, and there was a
need for these entities to share in the requirements of
development, fiscal or otherwise, by paying the taxes and other
charges due from them.[12]
It is wont to state that even under Section 40 of P.D. No. 464, the
petitioner is considered a taxable person. The bare fact that the
port and its facilities and appurtenances are accessible to the
general public does not exempt it from the payment of real property
taxes. It must be stressed that the said port facilities and
appurtenances are the petitioner’s corporate patrimonial
properties, not for public use, and that the operation of the port and
its facilities and the administration of its buildings are in the nature
of ordinary business. The petitioner is clothed, under P.D. No. 857,
with corporate status and corporate powers in the furtherance of its
proprietary interests:
SEC. 6. Corporate Powers and Duties –
a) The corporate duties of the Authority shall be:
(i) To formulate in coordination with the National Economic and
Development Authority a comprehensive and practicable Port
Development plan for the State and to program its implementation,
renew and update the same annually in coordination with other
national agencies.
(ii) To supervise, control, regulate, construct, maintain, operate, and
provide such facilities or services as are necessary in the ports
vested in, or belonging to the Authority.
(iii) To prescribe rules and regulations, procedures, and guidelines
governing the establishment, construction, maintenance, and
operation of all other ports, including private ports in the country.
(iv) To license, control, regulate, supervise any construction or
structure within any Port District.
(v) To provide services (whether on its own, by contract, or
otherwise) within the Port Districts and the approaches thereof,
including but not limited to --
-berthing, towing, mooring, moving, slipping, or docking any vessel;
-loading or discharging any vessel;
-sorting, weighing, measuring, storing, warehousing, or otherwise
handling goods.
(vi) To exercise control of or administer any foreshore rights or
leases which may be vested in the Authority from time to time.
(vii) To coordinate with the Bureau of Lands or any other
government agency or corporation, in the development of any
foreshore area.
(viii) To control, regulate, and supervise pilotage and the conduct of
pilots in any Port District.
(ix) To provide or assist in the provision of training programs and
training facilities for its staff of port operators and users for the
efficient discharge of its functions, duties and responsibilities.
(x) To perform such acts or provide such services as may be
deemed proper or necessary to carry out and implement the
provisions of this Decree.
b) The corporate powers of the Authority shall be as follows:
(i) To succeed in its corporate name.
(ii) To sue and be sued in such corporate name.
(iii) To adopt, alter, and use a corporate seal which shall be
judicially noticed.
(iv) To adopt, amend, or repeal its by-laws.
(v) To create or alter its own organization or any Port Management
Unit, and staff such an organization or Port Management Unit with
appropriate and qualified personnel in accordance with what may
be deemed proper or necessary to achieve the objectives of the
Authority.
(vi) To make or enter contracts of any kind or nature to enable it to
discharge its functions under this Decree.
(vii) To acquire, purchase, own, lease, mortgage, sell, or otherwise
dispose of any land, port facility, wharf, quay, or property of any
kind, whether movable or immovable.
(viii) To exercise the right of eminent domain, by expropriating the
land or areas surrounding the Port of harbor, which in the opinion of
the Authority, are vital or necessary for the total development of
the Port District.
(ix) To levy dues, rates, or charges for the use of the premises,
works, appliances, facilities, or for services provided by or
belonging to the Authority, or any other organization concerned
with port operations.
(x) To reclaim, excavate, enclose, or raise any part of the lands
vested in the Authority.
(xi) To dredge or provide dredging services, within a Port District or
elsewhere.
(xii) To acquire any undertaking affording or intending to afford
facilities for the loading and discharging or warehousing of goods in
the Port Districts.
(xiii) To supply water or bunker for ships.
(xiv) To obtain, insure for or require the insurance of any property,
movable or immovable, belonging to the Authority and/or goods in
the custody of the Authority.
(xv) To do all such other things and to transact all such business
directly or indirectly necessary, incidental or conducive to the
attainment of the purposes of the Authority.
(xvi) Generally, to exercise all the powers of a corporation under the
Corporation Law insofar as they are not inconsistent with the
provisions of this Decree.
The petitioner is even empowered to invest its funds in such
government securities approved by the Board of Directors, and
derives its income from rates, charges or fees for the use by vessels
of the port premises, appliances or equipment.
SEC. 20. Rates and Charges –
a) The Authority may impose, fix, prescribe, increase or decrease
such rates, charges or fees for the use of port premises, works,
appliances or equipment belonging to the Authority and port
facilities provided, and for services rendered by the Authority or by
any private organization within a Port District.
Provided, that upon the coming into operation of this Decree, the
rates of storage and arrastre charges in all ports of the Philippines
shall be those now provided under Parts 4 and 5 of Title VII, Book II
of the Tariff and Customs Code until such time when the President
of the Philippines upon recommendation of the Board may order
that the revised rates, charges or fees are in effect.
b) The Authority shall regulate the rates or charges for port services
or port-related services so that taking one year with another, such
rates or charges furnish adequate working capital and produce an
adequate return on the assets of the Authority. In regulating the
rates or charges for individual ports, the Authority shall take into
account the development needs of the port’s hinterland.
c) All dues, fees, charges and other sums, imposed and collected by
the Authority shall accrue to the Authority and shall be disposed of
in accordance with the provisions of this Decree.
Clearly then, the petitioner is a profit-earning corporation; hence, its
patrimonial properties are subject to tax.[13]
We reject the petitioner’s claim that it is exempt from the payment
of real property taxes, considering that it does not use the port
facilities and buildings. This Court overruled a similar submission as
follows:
Under the Real Property Tax Code, real property is classified for
assessment purposes on the basis of actual use, which is defined as
“the purpose for which the property is principally or predominantly
utilized by the person in possession of the property.
Petitioner argues that it merely operates and maintains the LRT
system, and that the actual users of the carriageways and terminal
stations are the commuting public. It adds that the public-use
character of the LRT is not negated by the fact that revenue is
obtained from the latter’s operations.
We do not agree. Unlike public roads which are open for use by
everyone, the LRT is accessible only to those who pay the required
fare. It is, thus, apparent that petitioner does not exist solely for [2] Penned by Associate Justice Angelina Sandoval-Gutierrez (now
public service, and that the LRT carriageways and terminal stations an Associate Justice of the Supreme Court), with Associate Justices
are not exclusively for public use. Although petitioner is a public Romeo A. Brawner and Martin S. Villarama, Jr., concurring.
utility, it is nonetheless profit-earning. It actually uses those
carriageways and terminal stations in its public utility business and [3] Strait Times, Inc. v. Court of Appeals, 294 SCRA 714 (1998).
earns money therefrom.
[4] De la Cruz v. Court of Appeals, 286 SCRA 230 (1998).
…
[5] 261 SCRA 667 (1996).
In any event, there is another legal justification for upholding the
assailed CA Decision. Under the Real Property Tax Code, real [6] Id. at 691-692.
property “owned by the Republic of the Philippines or any of its
political subdivisions and any government-owned or controlled [7] P.D. No. 464 took effect on July 1, 1974.
corporation so exempt by its charter, provided, however, that this
exemption shall not apply to real property of the abovenamed [8] P.D. No. 857 took effect on December 23, 1975.
entities the beneficial use of which has been granted, for
consideration or otherwise, to a taxable person.[14]
[9] Underscoring supplied.
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. No
[10] City Government of San Pablo, Laguna v. Reyes, 305 SCRA 353
costs.
(1999).
SO ORDERED.
[11] Supra.
Austria-Martinez, (Acting Chairman), and Chico-Nazario, JJ., concur.
[12] Id. at 689-690.
Puno, J., (Chairman), on official leave.
[13] Light Rail Transit Authority v. Central Board of Assessment
Appeals, 342 SCRA 692 (2000).
Tinga, J., on leave.
[14] Id. at 701-702.

[1] Rollo, p. 6.

FIRST DIVISION
[G.R. No. 109791. July 14, 2003]
PHILIPPINE PORTS AUTHORITY, petitioner, vs. CITY OF ILOILO,
respondent.
D E CI S I O N
AZCUNA, J.:
Before us is a petition for review on certiorari assailing the Decision
of the Regional Trial Court of Iloilo City, Branch 39, dated February
26, 1993 in Civil Case No. 18477, a case for collection of a sum of
money. Seeking to raise questions purely of law, petitioner
Philippine Ports Authority (PPA) would want us to set aside the
ruling ordering it to pay real property and business taxes to
respondent City of Iloilo.
The factual antecedents are summarized by the trial court:
This is an action for the “recovery of sum of money” filed by
[respondent] City of Iloilo, a public corporation organized under the
laws of the Republic of the Philippines, represented by the Hon.
Rodolfo T. Ganzon as City Mayor, against petitioner, Philippine Ports
Authority (PPA), a government corporation created by P.D. 857.
[Respondent] seeks to collect from [petitioner] real property taxes
as well as business taxes, computed from the last quarter of 1984
up to fourth quarter of 1988.
[Respondent] alleges that [petitioner] is engaged in the business of
arrastre and stevedoring services and the leasing of real estate for
which it should be obligated to pay business taxes. It further alleges
that [petitioner] is the declared and registered owner of a
warehouse which is used in the operation of its business and is also
thereby subject to real property taxes.
It demands the aggregate amount of P510,888.86 in realty and
business taxes as of December 1988 (real property tax – last
quarter of 1984 to 1988; business tax- 1984 to 1988) including its
corresponding interests and penalty charges.
On July 19, 1989, [petitioner] filed a motion to dismiss but [it] was
denied by this court. A motion for reconsideration was filed, but the
same was still denied, after which [petitioner] filed its answer.
During the pre-trial conference, the following factual and legal
issues were defined and clarified.
Factual Issues:
1. Whether or not [petitioner] is engaged in business;
2. Whether or not the assessment of tax by [respondent] is
accurate as of 4th quarter of 1988 from the year 1984; real
property tax in the amount of P180,953.93 and business tax in the
amount of P329,934.93 as of December 31, 1988.
Legal Issues:
1. Whether or not Philippine Ports Authority is exempt from the
payment of real property tax and business tax;
2. Whether by filing a motion to dismiss, [petitioner] impliedly
admitted the allegations in the complaint;
3. Whether Philippine Ports Authority is engaged in business. If in
the negative, whether or not it is exempt from payment of business
taxes.
During trial, [respondent] presented two witnesses, namely: Mrs.
Rizalina F. Tulio and Mr. Leoncio Macrangala.
x x x x
x xxx
After [respondent] had rested its case, [petitioner] did not present
any evidence. Instead, its counsel asked the court to give him time
to file a memorandum, as said counsel is convinced that the issues
involved in this case are purely legal issues.
He has no quarrel as regards the computation of the real property
and business taxes made by [respondent]. He is convinced,
however, that the issue in this case involves a question of law and
that [petitioner] is not liable to pay any kind of taxes to the City of
Iloilo.
The court a quo rendered its decision holding petitioner liable for
real property taxes from the last quarter of 1984 to December
1986, and for business taxes with respect to petitioner’s lease of
real property from the last quarter of 1984 up to 1988. It, however,
held that respondent may not collect business taxes on petitioner’s
arrastre and stevedoring services, as these form part of petitioner’s
governmental functions. The dispositive portion of said decision
states:
WHEREFORE, premises considered, judgment is hereby rendered in
favor of the plaintiff and against the defendant, ordering the latter
to pay the plaintiff, as follows:
1. the amount of P98,519.16 as real property tax, from [the] last
quarter of 1984 up to December 1986;
2. the amount of P3,828.07, as business tax, for leasing of real
estate from [the] last quarter of 1984 up to 1988.
Petitioner now seeks a review of the case, contending that the court
x a quo decided a question of substance which has not been decided
by us in that:
(i) It decreed a property of public dominion (port facility) as subject
to realty taxes just because the mentioned property is being
administered by what it perceived to be a taxable government
corporation. And,
(ii) It declared that petitioner PPA is subject to “business taxes” for
leasing to private persons or entities real estate without considering
that petitioner PPA is not engaged in “business.”
In its Comment, respondent in addition raises the issue of whether
or not petitioner may change its theory on appeal. It points out that
petitioner never raised the issue that the subject property is of
public dominion during the trial nor did it mention it in the
memorandum it filed with the lower court. It further contends that
such change of theory patently contradicts petitioner’s admission in
its pleadings and is disallowed under applicable jurisprudence.
The records show that the theory of petitioner before the trial court
was different from that of the present petition. In fact, even while at
the trial court stage, petitioner was not consistent in its theory.
Initially in its pleadings therein, it argued that as a government-
owned corporation, it is exempt from paying real property taxes by
virtue of its specific exemption in its charter, Section 40 of the Real
Property Tax Code and Executive Order No. 93. Subsequently, in the
memorandum it filed with the trial court, it omitted its earlier
argument and changed its theory by alleging that it is a
government instrumentality, which, according to applicable
jurisprudence, may not be taxed by the local government. After
obtaining an adverse decision from the trial court, it adopts yet
another stance on appeal before us, contesting the taxability of its
warehouse. It argued for the first time that since “ports
constructed by the State” are considered under the Civil Code as
properties of public dominion, its warehouse, which it insists to be
part of its port, should be treated likewise. To support this, it
invokes Article 420 of the Civil Code, which provides:
Art. 420. The following things are property of public dominion:
Those intended for public use, such as roads, canals, rivers,
torrents, ports and bridges constructed by the State, banks, shores,
roadsteads, and others of similar character;
x x x x
x xxx
[Emphasis supplied]
Insisting that the subject warehouse is considered as part of its
port, it points to Section 3 (e) of its charter quoted hereunder:
e) “port” means a place where ships may anchor or tie up for the
purpose of shelter, repair, loading or discharge of cargo, or for other
such activities connected with water-borne commerce, and
including all the land and water areas and the structures,
equipment and facilities related to these functions. [Emphasis
supplied]
A perusal of the records shows that this thesis was never presented
nor discussed at the trial stage.
As a rule, a party who deliberately adopts a certain theory upon
which the case is tried and decided by the lower court will not be
permitted to change theory on appeal. Points of law, theories,
issues and arguments not brought to the attention of the lower
court need not be, and ordinarily will not be, considered by a
reviewing court, as these cannot be raised for the first time at such
late stage. Basic considerations of due process underlie this rule. It
would be unfair to the adverse party who would have no
opportunity to present further evidence material to the new theory,
which it could have done had it been aware of it at the time of the
hearing before the trial court. To permit petitioner in this case to
change its theory on appeal would thus be unfair to respondent,
and offend the basic rules of fair play, justice and due process.
Petitioner however cites an exception to the rule, as enunciated in
Lianga Lumber Co. v. Lianga Timber Co., Inc., wherein we said:
x
[I]n the interest of justice and within the sound discretion of the
appellate court, a party may change his theory on appeal only when
the factual bases thereof would not require presentation of any
further evidence by the adverse party in order to enable it to
properly meet the issue raised in the new theory.
Petitioner contends that its new theory falls under the aforecited
exception, as the issue does not involve any disputed evidentiary
matter.
Contrary to petitioner’s claim, we find that the new issue raised is
not a purely legal question. It must be emphasized that the
enumeration of properties of public dominion under Article 420 of
the Civil Code specifically states “ports constructed by the State.”
Thus, in order to consider the port in the case at bar as falling under
the said classification, the fact that the port was constructed by the
State must first be established by sufficient evidence. This fact
proved crucial in Santos v. Moreno, where the issue raised was
whether the canals constructed by private persons were of public or
private ownership. We ruled that the canals were privately owned,
thus:
Under Art. 420, canals constructed by the State and devoted and
devoted to public use are of public ownership. Conversely, canals
constructed by private persons within private lands and devoted
exclusively for private use must be of private ownership.
In the case at bar, no proof was adduced to establish that the port
was constructed by the State. Petitioner cannot have us
automatically conclude that its port qualified as “property of public
dominion.” It would be unfair to respondent, which would be
deprived of its opportunity to present evidence to disprove the
factual basis of the new theory. It is thus clear that the Lianga
exception cannot apply in the case at bar.
Moreover, as correctly pointed out by respondent, we cannot ignore
the fact that petitioner’s new position runs contrary to its own
admission in the pleadings filed in the trial court. Under paragraph
3 of respondent’s complaint quoted hereunder, the fact of
petitioner’s ownership of the property was specifically alleged as
follows:
III
Defendant is likewise the declared and registered owner of a
warehouse standing on Lot No. 1065 situated at Bgy. Concepcion,
City Proper, declared under Tax Declaration No. 56325. Xerox copy
of the said Tax Declaration is hereto attached as annex “D” and
form[s] an integral part of herein complaint;
In its Answer, referring to the abovecited complaint, petitioner
stated, “Paragraph 3 is admitted.” Notably, this admission was
never questioned nor put at issue during the trial.
Now before us, petitioner contradicts its earlier admission by
claiming that the subject warehouse is a property of public
dominion. This inconsistency is made more apparent by looking
closely at what public dominion means. Tolentino explains this in
this wise:
Private ownership is defined elsewhere in the Code; but the
meaning of public dominion is nowhere defined. From the context of
various provisions, it is clear that public dominion does not carry
the idea of ownership; property of public dominion is not owned by
the State, but pertains to the State, which as territorial sovereign
exercises certain judicial prerogatives over such property. The
ownership of such property, which has the special characteristics of
a collective ownership for the general use and enjoyment, by virtue
of their application to the satisfaction of collective needs, is in the
social group, whether national, provincial, or municipal. Their
purpose is not to serve the State as a juridical person, but the
citizens; they are intended for the common and public welfare, and
so they cannot be the object of appropriation, either by the State or
by private persons. [Emphasis supplied]
Following the above, properties of public dominion are owned by
the general public and cannot be declared to be owned by a public
corporation, such as petitioner.
As the object of the pleadings is to draw the lines of battle, so to
speak, between the litigants and to indicate fairly the nature of the
claims or defenses of both parties, a party cannot subsequently
take a position contrary to, or inconsistent, with his pleadings.
Unless a party alleges palpable mistake or denies such admission,
judicial admissions cannot be controverted. Petitioner is thus bound
by its admission of ownership of the subject property and is barred
from claiming otherwise.
We also note that petitioner failed to raise the issue of ownership
during the pre-trial. In its petition, it insists that to determine
liability for real property tax, the ownership of the property must
first be ascertained. In the pre-trial order, however, to which
petitioner did not object, nowhere was the issue of ownership
included in the stipulated factual or legal issues.
We have ruled that a pre-trial is primarily intended to make certain
that all issues necessary to the disposition of a case are properly
raised. Thus to obviate the element of surprise, parties are
expected to disclose at the pre-trial conference all issues of law and
fact which they intend to raise at the trial. Consequently, the
determination of issues at a pre-trial conference bars the
consideration of other questions on appeal. Hence, in the case at
bar, the fact that the issue of ownership is outside of what has been
delimited during the pre-trial further justifies the disallowance of
petitioner’s new theory.
Therefore, on the basis of the foregoing considerations and in the
absence of compelling reasons to rule otherwise, we hold that
petitioner may not be permitted to change its theory at this stage.
Well-settled is the rule that questions that were not raised in the
lower court cannot be raised for the first time on appeal.
In any case, granting that petitioner’s present theory is allowed at
this stage, we nevertheless find it untenable. Concededly, “ports
constructed by the State” are properties of the public dominion, as
Article 420 of the Civil Code enumerates these as properties
“intended for public use.” It must be stressed however that what is
being taxed in the present case is petitioner’s warehouse, which,
although located within the port, is distinct from the port itself. In
Light Rail Transit Authority v. Central Board of Assessment Appeals et al.,
petitioner therein similarly sought an exemption from real estate
taxes on its passenger terminals, arguing that said properties are
considered as part of the “public roads,” which are classified as
property of public dominion in the Civil Code. We ruled therein that:
…[T]he properties of petitioner are not exclusively considered as
public roads being improvements placed upon the public road, and
this [separable] nature of the structure in itself physically
distinguishes it from a public road. Considering further that
carriageways or passenger terminals are elevated structures which
are not freely accessible to the public, vis-à-vis roads which are
public improvements openly utilized by the public, the former are
entirely different from the latter.
Using the same reasoning, the warehouse in the case at bar may
not be held as part of the port, considering its separable nature as
an improvement upon the port, and the fact that it is not open for
use by everyone and freely accessible to the public. In the same
way that we ruled in one case that the exemption of public property
from taxation does not extend to improvements made thereon by
homesteaders or occupants at their own expense, we likewise
uphold the taxability of the warehouse in the instant case, it being a
mere improvement built on an alleged property of public dominion,
assuming petitioner’s port to be so. Moreover, petitioner may not
invoke the definition of “port” in its charter to expand the meaning
of “ports constructed by the State” in the Civil Code to include
improvements built thereon. It must be noted that the charter itself
limited the use of said definition only for the interpretation of
Presidential Decree (P.D.) No. 857, its by-laws, regulations and rules,
and not of other statutes such as the Civil Code. Given these
parameters, therefore, petitioner’s move to present its new theory,
even if allowed, would nonetheless prove to be futile.
The trial court correctly ruled that for the assessed period of 1984
to 1988, petitioner’s exemption from real property taxes was
withdrawn by P.D. No. 1931, at least for the period of 1984 to 1986.
Originally, petitioner was exempt from real property taxes on the
basis of the Real Property Tax Code then governing, which provided:
SECTION 40. Exemptions from Real Property Tax. – The exemption
shall be as follows:
(a) Real property owned by the Republic of the Philippines or any of
its political subdivisions and any government-owned corporation so
exempt by its charter: Provided; however, That this exemption shall
not apply to real property of the above-named entities the
beneficial use of which has been granted, for consideration or
otherwise, to a taxable person.
Petitioner’s charter, P.D. 857, further specifically exempted it from
real property taxes:
SECTION 25. Exemption from Realty Taxes – The Authority shall be
exempt from the payment of real property taxes imposed by the
Republic of the Philippines, its agencies, instrumentalities or
political subdivisions; Provided, That no tax exemptions shall be
extended to any subsidiaries of the Authority that may be
organized; Provided, finally, That investments in fixed assets shall
be deductible for income tax purposes.
It can thus be seen from the foregoing that petitioner, as a
government-owned or controlled corporation, enjoyed an exemption
from real property taxes.
On June 11, 1984, however, P.D. 1931 effectively withdrew all tax
exemption privileges granted to government-owned or controlled
corporations as stated in Section 1 thereof, which reads:
Sec. 1. The provisions of special or general law to the contrary
notwithstanding, all exemptions from the payment of duties, taxes,
fees, imposts and other charges heretofore granted in favor of
government-owned or controlled corporations including their
subsidiaries, are hereby withdrawn.
Under the same law, the exemption can be restored in special cases
through an application for restoration with the Secretary of Finance,
which, notably, petitioner did not avail.
Subsequently, Executive Order (E.O.) No. 93 was enacted on
December 17, 1986 restoring tax exemptions provided under
certain laws, one of which is the Real Property Tax Code. The
pertinent portion of said law provides:
SECTION 1. The provisions of any general or special law to the
contrary notwithstanding, all tax and duty incentives granted to
government and private entities are hereby withdrawn, except:
x x x x x
x xxx
e) those conferred under four basic codes namely:
(i) the Tariff and Customs Code, as amended;
(ii) the National Internal Revenue Code, as amended;
(iii) the Local Tax Code, as amended;
(iv) the Real Property Tax Code, as amended;
[Emphasis supplied]
The abovecited laws, therefore, indicate that petitioner’s tax
exemption from real property taxes was withdrawn by P.D. 1931
effective June 11, 1984, but was subsequently restored by virtue of
E.O. 93, starting December 17, 1986. Hence, petitioner is liable for
real property taxes on its warehouse, computed from the last
quarter of 1984 up to December 1986.
Petitioner, however, seeks to be excused from liability for taxes by
invoking the pronouncement in Basco v. PAGCOR (Basco) quoted
hereunder:
PAGCOR has a dual role, to operate and to regulate gambling
casinos. The latter role is governmental, which places it in the
category of an agency or instrumentality of the Government. Being
an instrumentality of the Government, PAGCOR should be and
actually is exempt from local taxes. Otherwise, its operation might
be burdened, impeded or subject to control by a mere Local
government. [Emphasis supplied]
Petitioner points out that its exercise of regulatory functions as
decreed by its charter places it within the category of an “agency or
instrumentality of the government,” which, according to Basco, is
beyond the reach of local taxation.
Reliance in the abovecited case is unavailing considering that P.D.
1931 was never raised therein, and given that the issue in said case
focused on the constitutionality of P.D. 1869, the charter of
PAGCOR. The said decision did not absolutely prohibit local
governments from taxing government instrumentalities. In fact we
stated therein:
The power of local government to “impose taxes and fees” is
always subject to “limitations” which Congress may provide by law.
Since P.D. 1869 remains an “operative” law until “amended,
repealed or revoked”…its “exemption clause” remains an
exemption to the exercise of the power of local governments to
impose taxes and fees.
Furthermore, in the more recent case of Mactan Cebu International
Airport Authority v. Marcos, where the Basco case was similarly
invoked for tax exemption, we stated: “[N]othing can prevent
Congress from decreeing that even instrumentalities or agencies of
the Government performing governmental functions may be subject
to tax. Where it is done precisely to fulfill a constitutional mandate
and national policy, no one can doubt its wisdom.” The fact that tax
exemptions of government-owned or controlled corporations have
been expressly withdrawn by the present Local Government Code
clearly attests against petitioner’s claim of absolute exemption of
government instrumentalities from local taxation.
Petitioner also contends that the term “government-owned or
controlled corporations” referred in P.D. 1931 covers only those not
performing governmental functions. This argument is without legal
basis for it reads into the law a distinction that is not there. It runs
contrary to the clear intent of the law to withdraw from all units of
the government, including government-owned or controlled
corporations, their exemptions from taxes. Had it been otherwise,
the law would have said so.
Moreover, the trial court correctly pointed out that if indeed
petitioner were not subject to local taxation, petitioner’s charter
would not have specifically provided for its exemption from the
payment of real property tax. Its exemption therein therefore
proves that it was only an exception to the general rule of taxability
of petitioner. Given that said privilege was withdrawn by
subsequent law, petitioner’s claim for exemption from real property
taxes for the entire assessed period fails.
We affirm the finding of the lower court on petitioner’s liability for
business taxes for the lease of its building to private corporations.
During the trial, petitioner did not present any evidence to refute
respondent’s proof of petitioner’s income from the lease of its
property. Neither did it present any proof of exemption from
business taxes. Instead, it emphasized its charter provisions
defining its functions as governmental in nature. It averred that it
allowed port users to occupy certain premises within the port area
only to ensure order and convenience in discharging its
governmental functions. It hence claimed that it is not engaged in
business, as the act of leasing out its property was not motivated
by profit, but by its duty to manage and control port operations.
The argument is unconvincing. As admitted by petitioner, it leases
out its premises to private persons for “convenience” and not
necessarily as part of its governmental function of administering
port operations. In fact, its charter classifies such act of leasing out
port facilities as one of petitioner’s corporate powers. Any income
or profit generated by an entity, even of a corporation organized
without any intention of realizing profit in the conduct of its
activities, is subject to tax. What matters is the established fact that
it leased out its building to ten private entities from which it
regularly earned substantial income. Thus, in the absence of any
proof of exemption therefrom, petitioner is liable for the assessed
business taxes.
In closing, we reiterate that in taxing government-owned or
controlled corporations, the State ultimately suffers no loss. In
National Power Corp. v. Presiding Judge, RTC, Br. XXV, we
elucidated:
Actually, the State has no reason to decry the taxation of
NAPOCOR’s properties, as and by way of real property taxes. Real
property taxes, after all, form part and parcel of the financing
apparatus of the Government in development and nation-building,
particularly in the local government level.
x x x x
x xxx
To all intents and purposes, real property taxes are funds taken by
the State with one hand and given to the other. In no measure can
the government be said to have lost anything.
Finally, we find it appropriate to restate that the primary reason for
the withdrawal of tax exemption privileges granted to government-
owned and controlled corporations and all other units of
government was that such privilege resulted in serious tax base
erosion and distortions in the tax treatment of similarly situated
enterprises, hence resulting in the need for these entities to share
in the requirements of development, fiscal or otherwise, by paying
the taxes and other charges due from them.
WHEREFORE, the Petition is DENIED and the assailed Decision
AFFIRMED.
No pronouncement as to costs.
SO ORDERED.
Davide, Jr., (Chairman), Vitug, Ynares-Santiago, and Carpio, JJ.,
concur.
Rollo, pp. 35-38.
Id. at 51.
Id. at 14-15.
Id. at 4-6.
Id. at 38.
x
P.D. No. 857.
Lianga Lumber Co. v. Lianga Timber Co., Inc., 76 SCRA 197 (1977).
Del Rosario v. Bonga, 350 SCRA 101 (2001).
China Airlines Ltd., v. CA et al., 185 SCRA 449 (1990).
Siredy Enterprises, Inc., v. CA et al., G.R. No. 129039, September 17, CIVIL CODE, art. 420.
2002.
National Development Co. v. Cebu City, 215 SCRA 382 (1992).
Supra, note 7.
Sec. 3 of P.D. 857 provides: Definitions – For the purpose of this
21 SCRA 1141 (1967). Decree and of the by-laws, regulations, or rules promulgated
thereunder, the terms or words used herein, shall, unless the
Records, p. 2. context indicates otherwise, mean or be understood to mean, as
follows: xxx
Id. at 97.
P.D. 464, which took effect on June 1, 1974, is the precursor of the
2 A. TOLENTINO, COMMENTARIES AND JURISPRUDENCE ON THE Local Government Code of 1991.
CIVIL CODE 30 (1994), citing 3 Manresa 66-69.
Revised Charter of the Philippine Ports Authority effective
Lianga Lumber Co. v. Lianga Timber Co., Inc., supra, note 7. December 23, 1975.

Santiago v. Delos Santos, 61 SCRA 146 (1974). See also Sec. 4, Sec. 2, P.D. 1931.
Rule 129 of the 1997 Rules of Civil Procedure, which provides:
Note: In National Power Corp. v. Province of Albay, (186 SCRA 198
Judicial admissions- An admission, verbal or written, made by a [1990]), E.O. 93 was declared to be prospective in character.
party in the course of the proceedings in the same case does not
require proof. The admission may be contradicted only by showing 197 SCRA 52 (1991).
that it was made through palpable mistake or that no such
admission was made. P.D. 857, Secs. 26-29.

Rollo, p. 17. Basco v. PAGCOR, supra, note 30.

Records, pp. 113-114. 261 SCRA 667 (1996).

Son v. Son, 251 SCRA 556 (1995). Sec. 234, R.A. 7160, effective January 1, 1992, provides:
Exemptions from Real Property Tax – The following are exempted
Lianga Lumber Co. v. Lianga Timber Co., Inc., supra, note 7. from payment of the real property tax:

342 SCRA 692 (2000). xxx xxx xxx

Except as provided herein, any exemption from payment of real
property tax previously granted to or presently enjoyed by, all
persons, whether natural or juridical, including all government-
owned or controlled corporations are hereby withdrawn upon the
effectivity of this Code.

National Power Corp. v. Presiding Judge, RTC, Br. XXV, 190 SCRA 477
(1990).

Sec. 6, P.D. 857 reads:

(b) The corporate powers of the Authority shall be as follows:

xxx xxx xxx

(vii) To acquire, purchase, own, lease, mortgage, sell, or otherwise

dispose of any land, port facility, wharf, quay, or property of any
kind, whether movable or immovable.

CIR v. CA and Commonwealth Management and Services Corp., 329

SCRA 237 (2000).

Supra, note 35.

Mactan Cebu International Airport Authority v. Marcos, citing P.D.

No. 1931, supra, note 33.