Philippine Ports Authority v. City of Iloilo
REITERATIONFacts
The Antecedents: The City of Iloilo sent a "Notice of Sale of Delinquent Real Properties" to the Philippine Ports Authority (PPA) for non-payment of real property taxes on its facilities and edifices at the Iloilo port for the years 1985-1989. The properties were sold at public auction to the respondent city as the sole bidder, and a certificate of sale was issued. The PPA received a "Notice of Right to Redeem" and subsequently filed a complaint seeking the nullification of the assessment and sale, alleging that the properties belonged to the national government and were thus exempt from realty taxes. Procedural History: The Regional Trial Court (RTC) dismissed the PPA's complaint. The Court of Appeals affirmed the RTC's decision, ruling that since the PPA acquired the properties, it was liable for realty taxes. The PPA's motion for reconsideration was denied. The Petition: The PPA argued that the properties are owned by the Republic of the Philippines and that while transferred to PPA under P.D. No. 857, ownership was retained by the Republic. It claimed exemption under Section 40 of P.D. No. 464 and asserted that P.D. No. 1931 and E.O. No. 93 were inapplicable to properties owned by the Republic. The respondents countered that P.D. No. 857 made PPA the owner, and that tax exemptions were withdrawn under P.D. No. 1931.
Issue(s)
Whether the Philippine Ports Authority (PPA) is the owner of the port facilities and appurtenances in question. Whether the PPA is liable for real property taxes on these facilities and appurtenances. Whether the tax exemptions previously granted to the PPA under P.D. No. 857 and P.D. No. 464 remain valid despite subsequent laws.
Ruling
The petition is denied. The Philippine Ports Authority is liable for real property taxes on its facilities and appurtenances.
Ratio Decidendi
On the ownership of the port facilities and appurtenances: The Court held that under Sections 30 to 33 of P.D. No. 857, the petitioner Philippine Ports Authority (PPA) became the owner of the facilities and appurtenances when the law took effect on December 23, 1975. These provisions mandated the transfer of existing and completed public port facilities, lands, buildings, and other properties to the Authority. The Court emphasized that these provisions are self-executory and do not require further formalities. The fact that the PPA has not been issued a Torrens title does not negate its ownership, as a Torrens title is merely evidence of title and not a mode of acquiring ownership. Furthermore, the initial paid-up capital of the PPA, as defined in Section 10(b) of P.D. No. 857, included the value of assets and properties transferred from the government, indicating an absolute conveyance of ownership. On the liability for real property taxes: The Court ruled that the PPA is liable for real property taxes on its facilities and appurtenances. While Section 40(a) of P.D. No. 464 and Section 25 of P.D. No. 857 provided for exemptions, these exemptions were effectively withdrawn by subsequent laws. Specifically, P.D. No. 1931, which took effect on June 11, 1984, withdrew all exemptions previously granted to government-owned or controlled corporations. Moreover, Section 234 of Republic Act No. 7160 (Local Government Code) and its repealing clause, Section 534(f), further withdrew tax exemptions, including those from real property taxes, upon the effectivity of the LGC. The Court noted that the phrase "and any government-owned or controlled corporation so exempt by its charter" was excluded in the re-enactment of the exemption provision in Section 234(a) of the LGC, indicating a legislative intent to limit such exemptions. The Court also pointed out that the PPA is a profit-earning corporation, operating its facilities and buildings in the nature of ordinary business, and thus its properties are considered corporate patrimonial properties subject to tax. On the validity of tax exemptions: The Court affirmed that the tax exemptions previously enjoyed by the PPA were withdrawn by operation of law. P.D. No. 1931 explicitly withdrew all exemptions granted to government-owned or controlled corporations, notwithstanding any special or general law to the contrary. Subsequently, R.A. No. 7160, the Local Government Code, further withdrew tax exemptions, particularly real property tax exemptions, through Sections 193 and the last paragraph of Section 234. The repealing clause of the LGC, Section 534(f), also repealed inconsistent laws. Therefore, the exemptions provided in Section 25 of P.D. No. 857 and Section 40 of P.D. No. 464 were repealed by R.A. No. 7160. The Court cited Mactan Cebu International Airport Authority v. Marcos to underscore the policy behind the withdrawal of tax exemptions, which was to ensure local government autonomy and provide them with the necessary revenues to finance essential services.
Main Doctrine
Government-owned or controlled corporations that are profit-earning are liable for real property taxes on their patrimonial properties, as tax exemptions previously granted have been withdrawn by P.D. No. 1931 and R.A. No. 7160.