1.PHILIPPINE FISHERIES DEVELOPMENT AUTHORITY vs.

CENTRAL BOARD OF ASSESSMENT Real Property Tax

Category: Real Property Taxation

PHILIPPINE FISHERIES DEVELOPMENT AUTHORITY vs. CENTRAL BOARD OF ASSESSMENT APPEALS- Real Property Tax
FACTS:
Petitioner owned the Iloilo Fishing Port Complex which was on reclaimed land and consisted of a breakwater, landing quay, water and fuel oil supply system, refrigeration building, market hall and a municipal shed. Petitioner then leased portions of the IFPC to private firms engaged in the fishing business. Iloilo city then assessed the entire IFPC for Real Property Tax.

ISSUE:
Is the entirety of the IFPC subject to the Real Property Tax?

HELD:
NO. The Real Property Tax liability of the IFPC is only on portions leased out to private entities. PFDA is not a GOCC but is actually an instrumentality of the national government exempt from Real Property Tax. Given this, it will only be subject to Real Property Tax on the portions of the IFPC which is leased to private entities. It is not a GOCC since a GOCC must satisfy two requirements: (i) capital stock divided into shares and (ii) authorized to distribute dividends/profits. PFDA does have capital stock but the same is not divided into shares and neither is it a non-stock corporation because it does not have members. (Note: This was the same decision reached in MIAA vs. Paranaque (July 20, 2006) and again in MIAA vs. Pasay (April 2, 2009) where the property in question was the airport premises. In those cases, the Court additionally provided that other examples of government instrumentalities vested with corporate powers or what are know as government corporate entities are Philippine Ports Authority, BSP and University of the Philippines.)

2. DIGITAL TELECOMMUNICATIONS, INC. vs. CITY GOVERNMENT OF BATANGAS- Real Property Tax

Category: Real Property Taxation

DIGITAL TELECOMMUNICATIONS, INC. vs. CITY GOVERNMENT OF BATANGASReal Property Tax

FACTS:
Petitioner was granted a 25-year franchise to install telecommunications systems under a law which states that The grantee shall be liable to pay the same taxes on its real estate, buildings, and personal property exclusive of this franchise x x x. As they were not being issued a Mayors permit, Petitioner paid the Real Property Tax under protest arguing that the phrase exclusive of this franchise means that only the real properties not used in furtherance of its franchise are subject to Real Property Tax while those real properties which are used in its telecommunications business are exempt from Real Property Tax.

ISSUE:
Are Petitioners real properties used in its telecommunications business exempt from Real Property Tax?

HELD:
NO. Petitioners real properties, whether or not used in its telecommunications business, are subject to Real Property Tax. The phrase exclusive of this franchise qualifies the term personal property. This means that Petitioners legislative franchise, which is an intangible personal property, shall not be subject to taxes. This is to put franchise grantees in parity with non-franchisees as the latter obviously do not have franchises which may potentially be subject

to realty tax. There is nothing in the first sentence of Section 5 which expressly or even impliedly exempts Petitioner from Real Property Tax. Petitioners reliance on the BLGFs opinion stating that real properties owned by telecommunications companies are exempt from Real Property Tax is without basis as the BLGF has no authority to rule on claims for exemption from Real Property Tax.

3. NATIONAL POWER CORPORATION vs. PROVINCE OF QUEZON - Real Property Tax

Category: Real Property Taxation

NATIONAL POWER CORPORATION vs. PROVINCE OF QUEZON - Real Property Tax

FACTS:
NPC is a GOCC that entered into an Energy Conversion Agreement (ECA) under a buildoperate-transfer (BOT) arrangement with Mirant Pagbilao Corp. Under the agreement, Mirant will build and finance a thermal power plant in Quezon, and operate and maintain the same for 25 years, after which, Mirant will transfer the power plant to the Respondent without compensation. NPC also undertook to pay all taxes that the government may impose on Mirant. Quezon then assessed Mirant real property taxes on the power plant and its machineries.

ISSUES:
(1) Can Petitioner file the protest against the real property tax assessment? (2) Can Petitioner claim exemption from the RPT given the BOT arrangement with Mirant? (3) Is payment under protest required before an appeal to the LBAA is made?

HELD:
(1) NO. The two entities vested with personality to contest an assessment are (a) the owner or (b) the person with legal interest in the property. NPC is neither the owner nor the possessor/user of the subject machineries even if it will acquire ownership of the plant at the end of 25 years. The Court said that legal interest should be an interest that is actual and material, direct and immediate, not simply contingent or expectant. While the Petitioner does indeed assume responsibility for the taxes due on the power plant and its machineries, the tax liability referred to is the liability arising from law that the local government unit can rightfully and successfully enforce, not the contractual liability that is enforceable between the parties to a contract. The local government units can neither be compelled to recognize the protest of a tax assessment from the Petitioner, an entity against whom it cannot enforce the tax liability. (2) NO. To successfully claim exemption under Section 234 (c) of the LGC, the claimant must prove two elements: a) the machineries and equipment are actually, directly, and exclusively used by local water districts and government-owned or controlled corporations; and b) the local water districts and government-owned and controlled corporations claiming exemption must be engaged in the supply and distribution of water and/or the generation and transmission of electric power. Since neither the Petitioner nor Mirant satisfies both requirements, the claim for exemption must fall. (3) YES. If a taxpayer disputes the reasonableness of an increase in a real property tax assessment, he is required to "first pay the tax" under protest. The case of Ty does not apply as it involved a situation where the taxpayer was questioning the very authority and power of the assessor, acting solely and independently, to impose the assessment and of the treasurer to collect the tax. A claim for tax exemption, whether full or partial, does not question the authority of local assessors to assess real property tax.