G.R. no.

184203

Facts:

1. In 1995, the PEZA was created by virtue of Republic Act No. 7916 or “the Special Economic Zone Act of 1995” to operate,
administer, manage, and develop economic zones in the country. The PEZA was granted the power to register, regulate, and
supervise the enterprises located in the economic zones. By virtue of the law, the export processing zone in Mariveles, Bataan
became the Bataan Economic Zoneand the Mactan Export Processing Zone the Mactan Economic Zone.
2. The City contends that due to the enactment of the LGC, specifically withdrawing all tax exemptions and with the PEZA law
of 1995 which did not have any provisions on tax exemptions, it maintains that PEZA is liable for real property tax.

Issue: Whether or not PEZA should be exempted from real property taxation.

Held: Yes. Under Section 234(a) of the Local Government Code, real properties owned by the Republic of the Philippines are exempt
from real property taxes. Properties owned by the state are either property of public dominion or patrimonial property as per Art. 420.

Citing Manila International Airport Authority: Properties of public dominion, being for public use, are not subject to levy,
encumbrance or disposition through public or private sale. Any encumbrance, levy on execution or auction sale of any property of
public dominion is void for being contrary to public policy. Essential public services will stop if properties of public dominion are
subject to encumbrances, foreclosures and auction sale.

In this case, the properties sought to be taxed are located in publicly owned economic zones. These economic zones are property of
public dominion – sites which were reserved by President Marcos under Proclamation No. 1811, Series of 1979 (Mactan).