Republic of the Philippines, Represented by the Philippine Reclamation

Authority
vs
City of Paranaque
July 18, 2012

Facts:
The pubic Estates Authority is a government corporation created to
provide a coordinated, economical and efficient reclamation of lands, and the
administration and operation of lands belonging to, managed by the
government with the object of maximizing their utilization and hastening
their development consistent with public interest. By virtue of EO No. 525
issued by the President Marcos, PEA was designated as the agency primarily
responsible for integrating, directing and coordinating all reclamation
projects for and on behalf of the national government. Then President Gloria
Macapagal Arroyo issued an order transforming PEA into PRA, which shall
perform the same functions of the PEA for reclamation activities.

By virtue of its mandate, PRA reclaimed several portions of the forehor

and offshore areas of Manila Bay, including those Paraaque City and was
subsequently issued the corresponding title. then Paraaque City Treasurer
issued Warrants of Levy on PRAs reclaimed properties located in Paraaque
City based on the assessment for delinquent real property taxes made by
then Paraaque City Assessor. PRA filed a petition for prohibition with prayer
for temporary restraining order or writ of preliminary injunction against
Carabeo before the RTC, it also issued an order denying PRAs petition for the
issuance of a temporary restraining order. PRA sent a letter to Carabeo
requesting the latter not to proceed with the public auction of the subject
reclaimed properties. In response, Carabeo sent a letter stating that the
public auction could not be deferred because the RTC had already denied
PRAs TRO application. The RTC denied PRAs prayer for the issuance of a
writ of preliminary injunction for being moot and academic considering the
sale has been consummated already.

PRA filed a Motion for Leave to File and Admit Attached Supplemental
Petition which sought to declare as null and void the assessment for real
property taxes, the levy based on the said assessment and the sale
conducted. The RTC rendered its decision dismissing PRAs petition. Hence,
this petition.

Issues:

1. Whether or not PRA is government incorporated instrumentality and

is, therefore, exempt from real property tax and of the local
government code taxation.
2. Whether or not the lower court erred in failing to consider that
reclaimed lands are part of the public domain. Hence, tax exempt.
Laws:

a. Section 16, Article XII of the 1987 Constitution

b. Section 133 of the Local Government Code

Petitioner Respondent
1. PRA asserts that it is not a 1. City of Paraaque argues that
GOCC under Section 2(13) of PRA since its creation
the Introductory Provisions of consistently represented itself
the Administrative Code. to be a GOCC. PRAs very own
Neither is it a GOCC under charter declared it to be a
Section 16, Article XII of the GOCC and that it has entered
1987 Constitution because it is into several thousands of
not required to meet the test of contracts where it represented
economic viability. itself to be a GOCC.
2. PRA insists that, as an
incorporated instrumentality of
the National Government, it is
exempt from payment of real
property tax except when the
beneficial use of the real
property is granted to a taxable
person

Ruling:

1. PRA is not a GOCC either under Section 2(3) of the Introductory

Provisions of the Administrative Code or under Section 16, Article XII of
the 1987 Constitution. The facts, the evidence on record and
jurisprudence on the issue support the position that PRA was not
organized either as a stock or a non-stock corporation. Neither was it
created by Congress to operate commercially and compete in the
private market. Instead, PRA is a government instrumentality vested
with corporate powers and performing an essential public service
pursuant to Section 2(10) of the Introductory Provisions of the
Administrative Code. Being an incorporated government
instrumentality, it is exempt from payment of real property tax.
Respondent has no valid or legal basis in taxing the subject reclaimed
lands managed by PRA. On the other hand, Section 234(a) of the LGC,
in relation to its Section 133(o), exempts PRA from paying realty taxes
and protects it from the taxing powers of local government units. It is
clear from Section 234 that real property owned by the Republic is
exempt from real property tax unless the beneficial use thereof has
 been granted to a taxable person. At bar, there is no proof that PRA
granted the beneficial use of the subject reclaimed lands to a taxable
entity. There is no showing on record either that PRA leased the subject
reclaimed properties to a private taxable entity.
2. The subject lands are reclaimed lands, specifically portions of the
foreshore and offshore areas of Manila Bay. As such, these lands
remain public lands and form part of the public domain. They are
properties of public dominion. The ownership of such lands remains
with the State unless they are withdrawn by law or presidential
proclamation from public use. Thus, the assessment, levy and
foreclosure made on the subject reclaimed lands by respondent, as
well as the issuances of certificates of title in favor of respondent, are
without basis.