REPUBLIC OF THE PHILIPPINES, represented by the PHILIPPINE RECLAMATION AUTHORITY

(PRA), Petitioner, vs.CITY OF PARANAQUE, Respondent.

G.R. No. 191109, July 18, 2012
Justice, Jose C. Mendoza
FACTS:
Petitioner Philippines Reclamation Authority issued an Original Certificate of Title to their reclaimed
lands located in several portions of the offshore and foreshore areas in Manila Bay, including those located
in Paranaque City. On February 19, 2003, the treasurer of the Paranaque City Mr. Liberato M. Carabeo,
issued a warrant of Levy on Philippines Reclamation Authority reclaimed properties which are Central
Business Park and Barangay San Dionisio. This means that the PRA has real property taxes made in 2001
and 2002, it was assessed by Paranaque City Assessor Ms. Soledad Medina Cue.

On March 26, 2003, the Philippines Reclamation Authority filed a petition for prohibition for a temporary
restraining order in the Regional Trial Court because the petitioner believe that they will suffer irreparable
injury but, it was denied by the RTC in April 3, 2003. A day after, PRA sent a letter to Mr. Carabeo
requesting to not proceed to a public auction of the reclaimed properties but, Mr. Carabeo replied through a
letter that the public auction cannot be stopped because of the Regional Trial Court already denied the
temporary restraining order application.

After several exchanges of pleadings and both parties failed to arrive at a compromise agreement. On
January 8, 2010, Regional Trial Court decided to dismiss the PRA petition, which is the motion for leave to
file and admit supplemental petition that aims to declare the assessment for real property taxes as null and
void. Therefore, the RTC decides that the Philippines Reclamation is not exempted from paying the real
property taxes because under Section 3 of P.D No. 1084 it was considered as a government-owned and
controlled corporation and, it was organized as a stock corporation because it had an authorized capital stock
and divided into no par value shares. According to Section 193 of Republic Act No. 7160 Local Government
Code, when the corporation is a GOCC the local tax was not implemented because this is the prevailing law
in 2001 and 2002 concerning real property taxation.

Philippines Reclamation Authority filed another petition it claimed that the petitioner was an incorporated
instrumentality of the nationalism government and should be exempted from payment of real property tax
under Section 234 and 133 of Republic Act 7160. After several checking of the issues, the Supreme Court
decided to grant the petition because they believe that the Philippines Reclamation Authority is not a GOCC
that is subject to real property taxes but instead an instrumentality of the government vested with corporate
powers and performing an essential public service.

ISSUE:

Whether or not the Philippines Reclamation Authority is a non-stock corporation, stock corporation, or a
government-owned and controlled corporation.

RULLING:

According to Section 2(13) of the Introductory Provisions of the Administrative Code, the Philippines
Reclamation Authority is not a government-owned and controlled corporation because it doesn't meet the
two conditions only the first condition was met. After all, the Philippines Reclamation Authority was
established for common good but, it doesn't meet the test of economic viability, which means the creation of
PRA was not for economic and commercial activities or neither to compete in the marketplace.

The Philippines Reclamation Authority is also not considered as a stock corporation because it is not an
authorized retailer that distributes dividends and allotment if surplus and profits to its stockholders. It does
not meet one of the requisites of the stock corporation, which is the distribution of dividends even though, it
has a capital stock divided into shares.

The Philippines Reclamation Authority is also not considered as a non-stock corporation, because
according to Section 88 of the corporation code, a Non-stock corporation may be formed or organized for
charitable, religious, educational, professional, cultural, fraternal, literary, scientific, social, civic service, or
similar purpose, like trade, industry, agricultural and like chambers. Philippines Reclamation Authority
doesn't create because of this purpose. Additionally, the Philippines Reclamation Authority also doesn't have
members which are don't issue shares of stocks. In order to be classified as a non-stock corporation, it
should be composed of members and governed by a Board of Trustees.

Therefore, the Philippines Reclamation Authority is an incorporated government instrumentality and

exempted from payment of real property tax. Moreover, the reclaimed lands are part of the public domain
for public use. That's why the assessment of real property taxes, levies, and public sales that happened on
April 7, 2003, was invalid.