CITY OF PASIG v. REPUBLIC
The two properties were levied by warrant received by MPLDC in
24 Aug 2011 | Carpio, J. | R45 certiorari
PETITIONER: City of Pasig, represented by the City Treasurer and Assessor
RESPONDENT: Republic of the Philippines, represented by the Presidential
Commission on Good Governance
SUMMARY
Mid-Pasig Land Devt. Corp. (MPLDC) was part of the ill-gotten wealth of
President Marcos that was surrendered by crony Jose Campos to the
Republic. The two parcels of land in Pasig City were assessed real property
tax of 256M for 1979-2001, so the Republic through the PCGG filed petition
with the RTC so that the tax would be assessed and collected against the
business establishments-lessees instead. The RTC granted the PCGG
petition saying the lands was public property owned by the Republic, but the
CA reversed and said that the lands had not been declared as such by the
Sandiganbayan. SC voided the assessments, warrants of levy and auction
sale as the Republic did own the property and only the leased portions were
subject to tax.
DOCTRINE Section 234(a) of Republic Act No. 7160 states that properties
owned by the Republic are RPT-exempt except when beneficial use thereof
has been granted to a taxable person. Thus, the portions not leased to taxable
entities are exempt while the portions leased to such entities are not exempt.
The law imposes the liability to pay real estate tax on the Republic of the
Philippines for the portions of the properties leased to taxable entities, and it is
assumed that the Republic of the Philippines passes on the real estate tax as
part of the rent to the lessees.
FACTS
1. Mid-Pasig Land Devt. Corp. (MPLDC) was surrendered in 1986 by its
registered owner Jose Campos to the Republic. MPLDC then owned 2
parcels of land in Pasig City covered by TCT and tax declarations in its
name, portions which were leased to business establishments.
2. In September 2002, the Pasig City Assessor’s Office sent MPLDC two
notices of real property tax (RPT) delinquency for 1979-2001 amounting
to P256.86 million. Independent Realty Corp. (IRC) president Ernesto
Jalandoni and Treasurer Rosario Rason told the City Treasurer that the
1979-1986 taxes were paid. They claimed properties were tax-exempt
from 1987 on, but the Treasurer told MPLDC and IRC that they were not.
3. In February 2004, MPLDC General Manager Antonio Merelos wrote to
the City Treasurer saying again that the properties were tax-exempt which
the Treasurer responded with a denial.
4. A final demand for payment was sent by the Assessor’s Office in October
2005 for 1987-2005 taxes of P389.03 million, which MPLDC partially paid
under protest in the amount of P2 million.
5.
November 2005. The Republic, owner of MPLDC, filed with the RTC
through the PCGG a petition for prohibition with prayer for issuance of
TRO/WPI to enjoin Pasig City from auctioning the properties and collecting
real property tax.
6. In December 2005, Pasig City was able to, absent other bidders,
purchase the properties at the auction sale held by the City Treasurer. The
PCGG then filed with the RTC an amended petition for certiorari,
prohibition and mandamus against Pasig City, praying for
a. Declaration that the assessments for payment of real property tax
and penalty, the warrants of levy, the public auction, and the
issuance of certificates of sale to Pasig City are void;
b. Order to Pasig City to assess and collect RPT and penalty from the
actual occupants of the properties
7. In November 2006 the RTC granted the petition for certiorari, prohibition
and mandamus of the Republic. In two issues, it held that:
a. The RTC can assume jurisdiction over a legal issue--of whether
respondent has authority to assess and collect RPT
b. The payanig properties (surrendered ill-gotten wealth of former
President Marcos) assumed a public character by surrender and
constructive reconveyance, therefore belongs to the Republic and
are exempt from RPT. It is only when beneficial use is granted to
a taxable person that the properties are taxable, and in this case
the leasing businesses are liable.
8. Pasig appealed to the CA which reversed the RTC in March 2008, saying
the properties were not public but private properties.
a. Although the government through the PCGG sequestered MPLDC,
the sequestration per se, did not operate to convert Mid-Pasig and
its properties to public property. The PCGG cannot do acts of strict
ownership over sequestered property. It is a conservator which
can act only by court declaration.
b. Mid-Pasig and its properties have not been validly declared by the
Sandiganbayan as ill-gotten wealth. The TCT covering the subject
parcels of land in the name of Mid-Pasig have not been cancelled
due to an order of the Sandiganbayan.
c. The lands are being litigated between Ortigas and Company Limited
Partnership and the PCGG in Civil Case 93 pending before the
Sandiganbayan. Pasig City appealed to the CA.
d. The land is taxable as lessees occupied different areas of the
subject parcels of land beginning 1992 until 2005.
e. The LGC outlined remedies which make the special civil actions
premature, as there should be no other adequate recourse.
Unreasonable/excessive assessment: Section 252
directs payment under protest, then protest within 30 days
to the LGU treasurer to be decided within 60 days; Section
226 provides that denial or inaction may be appealed to
 the LBAA within 60 days. The LBAa decision may be banks, shores, roadsteads. Neither are they intended for some public
elevated to the CBAA within 30 days, then to the CTA by service or for the development of the national wealth. MPLDC leases
R42 petition for review, then to the CTA en banc, and portions of the properties to different business establishments. Thus,
finally to the SC via R45 certiorari. the portions of the properties leased to taxable entities are not only
9. Upon MR by PCGG, the CA reversed itself in October 2008, ruling that: subject to real estate tax, they can also be sold at public auction to
a. The subject properties were not sequestered without due process satisfy the tax delinquency.
of law; they were voluntarily surrendered to the State by Campos, 5. In sum, only those portions of the properties leased to taxable entities
a self-admitted Marcos crony, so judicial declaration that the same are subject to real estate tax for the period of such leases. Pasig City
were ill-gotten was unnecessary. must, therefore, issue to respondent new real property tax
b. By its nature, ill-gotten wealth is owned by the State. assessments covering the portions of the properties leased to taxable
entities. If the Republic of the Philippines fails to pay the real property
ISSUE: Whether the lower courts erred in ordering Pasig City to assess and tax on the portions of the properties leased to taxable entities, then
collect real property tax from the lessees of the properties—YES such portions may be sold at public auction to satisfy the tax
delinquency.
RATIO
1. The Republic is the presumptive owner of the properties for taxation in DISPOSITIVE
view of the voluntary surrender of MPLDC by its former registered Petition partially granted. CA decision set aside, and RPT assessment,
owner, Campos, to the State. However, such transfer does not prevent warrants of levy and auction sale are void. Pasig City is directed to issue new
a third party with a better right from claiming such properties. assessments covering the portions actually leased to taxable entities, and only
2. Section 234(a) of Republic Act No. 7160 states that properties owned for the period of such leases.
by the Republic are RPT-exempt except when beneficial use thereof
has been granted to a taxable person.
a. Thus, the portions not leased to taxable entities are exempt
while the portions leased to such entities are not exempt. The
law imposes the liability to pay real estate tax on the Republic
of the Philippines for the portions of the properties leased to
taxable entities, and it is assumed that the Republic of the
Philippines passes on the real estate tax as part of the rent to
the lessees.
b. The Court cited a line of jurisprudence to prove that
instrumentalities of the government are enerally exempt from
the payment of real property tax except the portions leased to
private entities, and that property of public dominion cannot
be sold at public auction to satisfy the tax delinquency (PFDA
v. CBAA, GSIS v. Manila City Treasurer, MIAA v. CA, Lung
Center of the PH v. QC).
3. Article 420 of the Civil Code classifies as properties of public dominion
those that are intended for public use, such as roads, canals, rivers,
torrents, ports and bridges constructed by the State, banks, shores,
roadsteads and those that are intended for some public service or for
the development of the national wealth. Properties of public dominion
are not only exempt from RPT, they are exempt from sale at public
auction.
4. In the present case, the parcels of land are not properties of public
dominion because they are not intended for public use, such as roads,
canals, rivers, torrents, ports and bridges constructed by the State,