Republic of the Philippines

CENTRAL BOARD OF ASSESSMENT APPEALS 7th Floor, EDPC Building, BSP Complex Roxas Boulevard, Manila

LIGHT RAIL TRANSIT AUTHORITY, Petitioner-Appellant,

– versus –

CBAA Case No. L-06
Re: Tax Dec. No. B-071000417 City of Manila

BOARD OF ASSESSMENT APPEALS OF MANILA,
Appellee,

– and –

CITY ASSESSOR OF MANILA,, Respondent-Appellee.
x – – – – – – – – – – – – – – – – – – – – – – – – – – – – – x

R E S O L U T I O N

The dispositive portion of this Board’s decision, dated October 15, 1994,

on the above entitled case reads:

“WHEREFORE, in view of the foregoing, the decision of the Board of Assessment Appeals of Manila declaring subject properties as taxable, is hereby affirmed in toto and that the herein appeal of the LRTA is hereby dismissed for lack of merit.”

Petitioner-Appellant, Light Rail Transit Authority, (LRTA), now files this

motion for reconsideration praying that the decision be “set aside and in lieu

thereof a judgment be rendered by ruling that the train carriageways and

terminal stations of the LRT system are not subject to realty tax.”

Petitioner-Appellant alleges:

“I

CARRIAGEWAYS AND PASSENGER TERMINAL STATIONS ARE NOT TAXABLE IMPROVEMENTS WITHIN THE PURVIEW OF THE REAL PROPERTY TAX CODE.

“II

BEING ATTACHED TO NATIONAL ROADS OWNED BY THE NATIONAL GOVERNMENT, SUBJECT CARRIAGWAYS AND TERMINALS MAY BE CONSIDERED AS PROPERTY OF THE NATIONAL GOVERNMENT.

“III

PAYMENT OF CHARGES OR FARES TO LRTA FOR TRANSPORTATION OPERATION DOES NOT ALTER THE NATURE OF THE CARRIAGEWAYS AND TERMINALS AS BEING DEVOTED FOR PUBLIC USE.

Reference: Book VII, pp. 77-84

“IV

THE DEPARTMENT OF FINANCE WHICH ON THE OVERALL TAKES CHARGE OF COLLECTION OF TAXES, HAS ADVANCED THE VIEW THAT SUBJECT CARRIAGEWAYS AND STATION TERMINALS ARE NOT SUBJECT TO REALTY TAXES.

“V

IF THE LEGALITY OF THE ASSESSMENT IS UPHELD, THE AMOUNT ASSESSED WOULD FAR EXCEED THE ANNUAL EARNINGS OF LRTA.”

The same issues were raised on appeal and clearly resolved in this

Board’s decision on the case. So as memories could be refreshed, an insight

into that resolution is hereby educed:

On the first and second issues:

Carriageways and passenger terminal stations are taxable improvements

within the purview of the Real Property Tax Code; they are not exempt from the

payment of real property taxes albeit being built and/or attached to the road

owned by the national government and may be considered as property of the

national government:

“X x x, upon the effectivity of P.D. 464, otherwise known as the Real Property Tax Code, which took effect in 1974, it changed the basis of real property taxation. It adopted the policy of taxing real property on the basis of ‘actual use’, even if the user is not the owner. The Supreme Court in the case of Nueva Ecija vs. Imperial Mining, Co., Inc., L-59463, November 19, 1982, ruled that P.D. 464,

‘X x x, changed the basis of real property taxation. It adopted the policy of taxing real property on the basis of actual use even if the user is not the owner. (Underlining supplied)

“Sections 3(a) and 19 of P.D. 464 provides as follows:

‘Sec. 3 (a) Actual Use – shall refer to the purpose for which the property is principally or predominantly utilized by the person in possession of the property.’

‘Sec. 19 Actual/Use of Real Property as Basis for Assessment – Real Property shall be assessed on the basis of is actual use regardless of where located and whoever uses it.’

On the third issue:

“As to its contention that the LRT is for public use, hence should be exempt from the payment of real property taxes, the same cannot be countenanced.

“The term public works for public service or use must be viewed in the light of the ruling of the Supreme Court in the case of the City of Cebu, vs. The NAWASA, L-12892, April 30, 1960, as follows:

Reference: Book VII, pp. 77-84

“The term “public works for public service” must be interpreted, following the principle of ejusdem generic, in the concept of the preceding words :provincial roads, city streets, municipal streets, the squares, fountains, public waters and promenades – under Article 424 of the New Civil Code – which are used freely by all. Without distinction. Hence, if the public works is not for free public service, it is not within the purview of the first paragraph, but of the second paragraph of Article 424, and consequently, patrimonial in character. A municipal water system designed to supply water to the inhabitants for profit is a corporate function of the municipality.” (Mendoza vs. De Leon, 33 Phil. 508, citing Omaha Water Co. vs. Omaha 12 L.R.A. (N.S.) 736; 77 C.C.A. 267; 147 Fed. 1; Jodson vs. Borough of Winsted, 80 Conn. 834; 15 L.R.A. (N.S.), 91).

“X x x. The flaw in appellant’s contention that system is a public works for public service is due to an apparent misapprehension that because the System serves the public is not necessarily for public service. The contention overlooks the fact that only those of the general public, who pay the required rental or charge authorized and collected by the System, do make use of the water. In other words, the System serves all who pay the charges. It is open to the public (in this sense, it is public service), but upon the payment only of a certain rental x x x. (Underlining supplied)

“Accordingly, the LRTA was created to serve the needs of the riding public, who pays the required rates for the use of the Light Rail Transit System from which the Authority derives material gains. It is in this concept that the LRTA may not be considered to be engaged in purely governmental or public service which does not qualify the LRTA for tax exemptions.”

On the fourth issue:

“In effect, from the context of the said letter, the Acting Secretary of Finance merely agrees with the opinion of the OGCC which in this particular case is the legal counsel of Petitioner-Appellant. However, she acknowledges in the aforesaid letter that the final disposition of the matter behooves upon this Board. Her opinion is not binding on this Board, being an independent tribunal clothed and entrusted with the specific jurisdiction to decide the issues at hand.”

On the fifth issue:

“It should be noted that additional exhibits submitted by Petitioner-Appellant to bolster its theory that it is exempt from the payment of real property taxes do not justify its allegations. The need therefore to discuss the relevancy of these additional exhibits is believed not necessary.”

This Board’s findings are recapitulated as follows:

“(a) Carriageways and passenger terminal stations are real properties under the provisions of the Real Property Tax Code:

“(b) Actual use of the real property shall be the basis for realty tax assessment and not ownership;

“(c) It is not for public use or public service, its use is limited to the public who can afford to pay the charges of fares imposed and collected by LRTA; and

“(d) The charter creating the LRTA does not so provide realty tax exemption.”

Reference: Book VII, pp. 77-84

As above-stated, the decision sought to be reconsidered has undeniably,

dealt squarely, with the allegations raised by Petitioner-Appellant in its Motion

for Reconsideration. This Board, therefore, finds no sufficient justification to

reconsider that decision.

WHEREFORE, Petitioner-Appellant’s Motion for Reconsideration is

hereby denied, for lack of merit.

SO ORDERED.

Manila, Philippines, July 06, 1995.

(Signed) MARGARITA G. MAGISTRADO
Chairman

(Signed)

ELEANOR A. SANTOS VACANT Member Member

Reference: Book VII, pp. 77-84