Whether PRA's Reclaimed Lands, Along the Manila Bay Area Are Subject to Real Property Taxes

DOJ OPINION NO. 062, s. 2007 October 19, 2007 Hon. Andrea D. Domingo General Manager and CEO Philippine Reclamation Authority 7th Floor, Legaspi Towers 200 Bldg., 107 Paseo de Roxas Street Legaspi Village, 12226 City of Makati Madam : This refers to your request for opinion on whether or not the Public Reclamation Authority's reclaimed lands, which are titled in its name, and located along the Manila Bay area within the cities of Paraaque, Las Pias and Pasay, respectively, are subject to real property taxes. TaISEH Your query, it appears, precipitated when the treasurers of said local government units assessed and billed the PRA with real property taxes on said reclaimed lands on the strength of the two opinions successively issued by the Department of Finance. You claim that in view of the refusal of said cities to issue real property tax clearances in favor of the PRA, which clearances, you claim, are pre-requisites for the issuance and/or transfer of the titles of said lands, PRA not only failed to comply with its contractual obligations under different reclamation contracts but is also unable to issue title to Nayong Pilipino Foundation over your 15-hectare reclaimed land in Paraaque City in exchange for NPF's 15-hectare land in the old Nayong Pilipino as ordered by President Gloria Macapagal and your failure to secure titles to your newly subdivided reclaimed lands including the 40-hectare reclaimed land which is being purchased by PAGCOR. You also state that since the PRA is not dependent on any budgetary appropriation from the National Government but is mandated to operate on a self-liquidating basis, it was forced to enter into a Compromise Agreement with Pasay City for the settlement of its realty taxes. TCaSAH With regret, this Department is constrained to deny your request for opinion for the following reasons: First. The subject matter of your query undeniably affects the substantive rights of Nayong Pilipino Foundation and PAGCOR, and since the opinion of the Secretary of Justice is merely advisory in nature, such opinion would not be binding upon said parties who, if adversely affected by such opinion, may take issue therewith and contest it before the courts. As a matter of policy, therefore, the Secretary of Justice has consistently refrained from rendering opinion on questions which are justiciable in nature or those which may be the subject of litigation before the courts (Secretary of Justice Op. No. 52, s. 2006; No. 108, s. 1978; No. 6, s. 1981). Second. The resolution of the issue raised would necessarily require us to review not only the actions taken by the City Treasurers of the above-mentioned local government units but also the respective opinions expressed by the Department of Finance (DOF) and the Office of the Government Corporate Counsel (OGCC),in the exercise of their respective duties. By settled policy and precedents, the Secretary of Justice does not pass upon matters acted upon by government officers/officials over which he exercises neither supervisory nor revisory authority ( Ibid , No. 3, s. 1999). This is true especially in the case of the DOF, the government agency empowered to issue hence, the power to interpret the rules and regulations governing classification, appraisal and assessment of real property (See, Sec. 201, R.A. No. 7160; Sec. 5, Real Property Tax Code) SDHAEC Third. It appears that the Office of the Solicitor General has a civil case apparently involving the same issues and subject matter still pending before Branch 195 of the Regional Trial Court of Paraaque City. The Secretary of Justice has consistently refrained from rendering opinion or giving legal advice on matters which are pending before the court for to do so would not only be improper but also impractical, since the ruling of this Department has no binding effect upon the Courts ( Ibid. , No. 19, s. 1981 and No. 84, s. 1982). Nonetheless, and for your information and guidance only, your attention is invited to the ruling of the Supreme Court in the cited Philippine Fisheries Development Authority v. Court of Appeals, et al. ,G.R. No. 169836, dated July 31, 2007, which pertinently reads: IADCES ...(A) national government instrumentality ...is defined as an agency of the national government, not integrated within the department framework, vested with special functions or jurisdiction by law, endowed with some if not all corporate powers, administering special funds, and enjoying operational autonomy, usually through a charter. When the law vests in a government instrumentality corporate powers, the instrumentality does not become a corporation. Unless the government instrumentality is organized as a stock or non-stock corporation, it remains a government instrumentality exercising not only government but also corporate powers. xxx xxx xxx ...(U)nlike GOCCs (government-owned or controlled corporations), instrumentalities of the national government, . . . are exempt from local taxes pursuant to Section 133(o) of the Local Government Code. This exemption, however, admits of exception with respect to real property taxes. Applying Section 234(a) of the Local Government Code, the Court ruled that when an instrumentality of the national government grants to a taxable person the beneficial use of a real property owned by the Republic, said instrumentality becomes liable to pay real property tax. . . . . SDATEc xxx xxx xxx ...When local governments invoke the power to tax on local government instrumentalities, such power is construed strictly against local governments. The rule is that a tax is never presumed and there must be clear language in the law imposing the tax. Any doubt whether a person, article or activity is taxable is resolved against taxation. This rule applies with greater force when local government seek to tax national government instrumentalities. (At pp. 6-9) (stress supplied) TCDHIc Very truly yours, (SGD.) AGNES VST DEVANADERA Acting Secretary