The Court of Appeals has ruled that the non-leased properties of the Bases Conversion and Development Authority in Fort Bonifacio, Taguig City are exempt from payment of real property tax.
In a 28-page decision, the CA’s Eight Division through Associate Justice Celia Librea-Leagogo upheld an earlier ruling by the Taguig regional trial court which partially granted the petition filed by BCDA seeking to declare null and void the P58,708,939 million tax assessment being sought by the Taguig city government.
While agreeing with BCDA, being a government agency, thus it cannot be made to pay real property tax, the Taguig court declared that the tax assessment is valid with respect to the properties leased and conveyed to real-estate developer Megaworld Corp. (8.38 hectares), International School of Manila (69,423 square meters) and Ayala Corp. (9.76 hectares).
The Taguig city government appealed the ruling before the CA, arguing that the lower court erred in declaring that BCDA is a government instrumentality, thus, exempt from payment of real property tax.
In upholding the earlier decision, the appellate court pointed out that under Section 133 of the Local Government Code of 1991, local governments cannot impose any kind of tax on national government instrumentalities.
The CA noted that BCDA is neither a stock nor a nonstock corporation, thus, qualifying as a government-owned and -controlled corporation.
“When the law vests in a government instrumentality corporate powers, the instrumentality does not become a corporation. Many government instrumentalities are vested with corporate powers but they do not become stock or non-stock corporations, which is a necessary condition before an agency or instrumentality is deemed a government-owned or controlled corporation,” the appellate court explained.
“It is clear that the petitioner-appellee’s properties, although alienable and disposable, are properties of the public dominion belonging to the State. Hence, being real properties owned by the Republic of the Philippines, they are exempt from real property tax,” it added.
However, the CA noted that when BCDA grants the beneficial use of the real property owned by the government to a taxable person or entity, the same becomes subject to real property tax.
“Thus, the portions of the properties which are not leased to taxable entities are exempt from real estate tax while the portions of the properties leased to taxable entities are subject to real estate tax,” the CA said.