FIRST DIVISION
[G.R. No. 212925. June 18, 2018.]
LIGHT RAIL TRANSIT AUTHORITY, petitioner,vs. CITY OF MANILA, REPRESENTED BY THE CITY TREASURER AND THE CITY ASSESSOR, respondent.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, First Division, issued a Resolution datedJune 18, 2018which reads as follows:
"G.R. No. 212925 — Light Rail Transit Authority vs. City of Manila, represented by the City Treasurer and the City Assessor
For review is the assailed Decision 1 dated June 3, 2014 of the Court of Appeals (CA) in CA-G.R. SP No. 134159, dismissing the appeal.
The case stemmed from a Petition for Certiorari, Prohibition and Mandamus under Rule 65 of the Rules of Court, filed by petitioner Light Rail Transit Authority (LRTA) against the respondent City of Manila represented by the City Treasurer and the City Assessor before the Regional Trial Court (RTC) of Manila, docketed as Case No. 12-129031. LRTA sought, among others, the nullification of the City of Manila's assessments for the payment of real property taxes and penalties on parcels of land and their improvements registered under the name of LRTA. 2 CAIHTE
On July 24, 2000, LRTA wrote a letter addressed to the City Treasurer of Manila, seeking the recall of tax assessments made for the payment of transfer tax relative to the sale of the Sampaloc Market by the City of Manila in favor of LRTA. 3 The subject property was purchased by LRTA to give way to its MRT Line 2 Project. LRTA raised that the transaction the assessment relates to is excluded from coverage of the local tax ordinance, considering the limitations of the City of Manila's taxing authority over local government units (LGU) under Section 133 (o) 4 of the Local Government Code (LGC). 5
In a Letter 6 dated November 16, 2000, the Office of the City Treasurer of Manila denied LRTA's request for recall of assessment and requested that LRTA pay the transfer tax subject of the assessment.
On October 16, 2002, LRTA received two (2) Warrants of Levy 7 for properties covered by Tax Declaration Nos. B-071-0417 and B-029-807, for tax delinquency in the amount of P264,951,249.64 and P292,857,870.73, respectively.
On November 26, 2007, LRTA received three (3) Notices of Realty Tax Delinquency 8 on properties covered by Tax Declaration Nos. C-101-00019, C-101-00020 and C-071-00021.
In a Letter 9 dated February 14, 2008, the City of Manila demanded LRTA to pay unpaid real property taxes amounting to a total of P6,373,572.00 for delinquencies dating back to the year 2004.
On June 30, 2008, LRTA received a Notification of Sale 10 of its various properties to the City of Manila. DETACa
In a Letter 11 dated May 25, 2011, LRTA wrote the Assistant City Treasurer of the City of Manila, relaying its position that pursuant to the case of Manila International Airport Authority v. Court of Appeals, 12 it is a government instrumentality and, as such, is exempt from paying real property tax.
LRTA thereafter filed with the RTC a Petition for Certiorari and Mandamus. 13
The RTC Decision dated July 17, 2013, dismissed the petition. 14 It found that in the case of LRTA v. Central Board of Assessment Appeals, 15 LRTA was categorically declared to be liable for real property tax. It found that the doctrine of res judicata was applicable as the case relating to the subject matter has already been decided.
LRTA appealed the RTC decision to the CA. In the assailed Decision 16 dated June 3, 2014, the CA dismissed the appeal. It ruled that LRTA pursued the wrong mode of appeal. It also stated that the issues raised by LRTA, i.e., whether or not the doctrine of res judicata is applicable; and whether or not LRTA is a government instrumentality exempt from real property taxation are questions of law, which are not within its purview.
LRTA now raises before Us the following issues:
Whether or not the [CA] gravely erred and committed grave abuse of discretion when it did not consider substantial justice to prevail and made subservient to the technicality of the rules[;]
Whether or not the "Doctrine of Res Judicata" is applicable in the instant Petition[; and]
Whether or not [LRTA] is a government instrumentality thus exempt from Real Property Taxation[.] 17
LRTA points out that substantial justice should prevail over technicality of rules. It reasons that although it is true that the issues were pure questions of law, the CA should have relaxed its rules of technicality and considered the merits of the case to resolve the controversy involving tax liabilities of government institutions. 18 it argues that res judicata is not applicable in the case at bar. It points out that it is a government instrumentality, and not a government-owned and controlled corporation (GOCC). It states that the properties belong to the Republic of the Philippines and were acquired in exercise of its power of eminent domain and that the funds for the construction of railways comes from the National Government. It expounds that since the real property owned by the Republic is exempt from paying real property tax, all proceedings pursuant to the tax assessments are void. 19 aDSIHc
The City of Manila counters that in pursuing a wrong mode of appeal, the July 17, 2013 Decision of the RTC has already become final and executory. It stresses that LRTA's taxability has already been ruled on in the case of LRTA v. CBAA, where LRTA was declared liable to pay realty taxes over its carriageways and passenger terminals. 20 It also insists that LRTA is a GOCC and that even if it were a government instrumentality, the assessments are still valid as substantial portions of its terminals are leased out to taxable persons, pursuant to paragraph 1 of Section 234 of the LGC. 21
The petition is denied.
As correctly found by the CA, the issues raised, i.e., whether or not the doctrine of res judicata is applicable; and whether or not LRTA is a government instrumentality exempt from real property taxation were indeed questions of law. 22
In Tongonon Holdings and Dev't. Corp. v. Atty. Escaño, Jr., 23 the Court held that:
A question of law arises when there is doubt as to what the law is on a certain state of facts, while there is a question of fact when the doubt arises as to the truth or falsity of the alleged facts. For a question to be one of law, the same must not involve an examination of the probative value of the evidence presented by the litigants or any of them. The resolution of the issue must rest solely on what the law provides on the given set of circumstances. Once it is clear that the issue invites a review of the evidence presented, the question posed is one of fact. Thus, the test of whether a question is one of law or of fact is not the appellation given to such question by the party raising the same; rather, it is whether the appellate court can determine the issue raised without reviewing or evaluating the evidence, in which case, it is a question of law; otherwise it is a question of fact. 24 (Citation omitted)
Given the foregoing parameters, the issues posed before the CA were questions of law and were thus beyond its jurisdiction.
Curiously, even LRTA itself admitted to raising pure questions of law in its appeal before the CA:
22. While it is true that the issues were pure questions of law, with all due respect to the CA, the court should have relaxed the rules of technicality and considered the merits of the case to resolve the present controversy involving tax liabilities of government institutions. Thus, the technicality of Rules of Court should be relaxed for substantial justice to prevail. 25
Section 2, Rule 50 of the Rules of Court plainly provides that an appeal from the RTC to the CA raising only questions of law shall be dismissed; and that an appeal erroneously taken to the CA shall be dismissed outright, thus:
Sec. 2. Dismissal of improper appeal to the Court of Appeals. — An appeal under Rule 41 taken from the Regional Trial Court to the Court of Appeals raising only questions of law shall be dismissed, issues purely of law not being reviewable by said court. Similarly, an appeal by notice of appeal instead of by petition for review from the appellate judgment of a Regional Trial Court shall be dismissed. ETHIDa
An appeal erroneously taken to the Court of Appeals shall not be transferred to the appropriate court but shall be dismissed outright. (Emphasis ours)
LRTA insists that the controversy in this case merits the relaxation of rules despite the procedural defects or lapses. We disagree. While it is true that we have applied a liberal application of the rules of procedure in a number of cases, We have stressed that this can be invoked only in proper cases and under justifiable causes and circumstances, 26 which are markedly absent in this case.
Furthermore, the issue on whether the LRTA is exempt from payment of real property taxation has been addressed in the case of LRTA27 where it was held that LRTA is liable for real estate tax, thus:
Though the creation of the LRTA was impelled by public service — to provide mass transportation to alleviate the traffic and transportation situation in Metro Manila — its operation undeniably partakes of ordinary business. Petitioner is clothed with corporate status and corporate powers in the furtherance of its proprietary objectives. Indeed, it operates much like any private corporation engaged in the mass transport industry. Given that it is engaged in a service-oriented commercial endeavor, its carriageways and terminal stations are patrimonial property subject to tax, notwithstanding its claim of being a government-owned or controlled corporation.
True, petitioner's carriageways and terminal stations are anchored, at certain points, on public roads. However, it must be emphasized that these structures do not form part of such roads, since the former have been constructed over the latter in such a way that the flow of vehicular traffic would not be impeded. These carriageways and terminal stations serve a function different from that of the public roads. The former are part and parcel of the light rail transit (LRT) system which, unlike the latter, are not open to use by the general public. The carriageways are accessible only to the LRT trains, while the terminal stations have been built for the convenience of LRTA itself and its customers who pay the required fare.
Basis of Assessment
Under the Real Property Tax Code, real property is classified for assessment purposes on the basis of actual use, which is defined as "the purpose for which the property is principally or predominantly utilized by the person in possession of the property." cSEDTC
Petitioner argues that it merely operates and maintains the LRT system, and that the actual users of the carriageways and terminal stations are the commuting public. It adds that the public-use character of the LRT is not negated by the fact that revenue is obtained from the latter's operations.
We do not agree. Unlike public roads which are open for use by everyone, the LRT is accessible only to those who pay the required fare. It is thus apparent that petitioner does not exist solely for public service, and that the LRT carriageways and terminal stations are not exclusively for public use. Although petitioner is a public utility, it is nonetheless profit-earning. It actually uses those carriageways and terminal stations in its public utility business and earns money therefrom.
Petitioner Not Exempt from
In any event, there is another legal justification for upholding the assailed CA Decision. Under the Real Property Tax Code, real property "owned by the Republic of the Philippines or any of its political subdivisions and any government-owned or controlled corporation so exempt by its charter, provided, however, that this exemption shall not apply to real property of the abovenamed entities the beneficial use of which has been granted, for consideration or otherwise, to a taxable person."
Executive Order No. 603, the charter of petitioner, does not provide for any real estate tax exemption in its favor. Its exemption is limited to direct and indirect taxes, duties or fees in connection with the importation of equipment not locally available, as the following provision shows:
"ARTICLE 4TAX AND DUTY EXEMPTIONS
Sec. 8. Equipment, Machineries, Spare Parts and Other Accessories and Materials. — The importation of equipment, machineries, spare parts, accessories and other materials, including supplies and services, used directly in the operations of the Light Rails Transit System, not obtainable locally on favorable terms, out of any funds of the authority including, as stated in Section 7 above, proceeds from foreign loans credits or indebtedness, shall likewise be exempted from all direct and indirect taxes, customs duties, fees, imposts, tariff duties, compensating taxes, wharfage fees and other charges and restrictions, the provisions of existing laws to the contrary notwithstanding."
Even granting that the national government indeed owns the carriageways and terminal stations, the exemption would not apply because their beneficial use has been granted to petitioner, a taxable entity. AaCTcI
Taxation is the rule and exemption is the exception. Any claim for tax exemption is strictly construed against the claimant. LRTA has not shown its eligibility for exemption; hence, it is subject to the tax. 28 (Citations omitted and emphasis ours)
Indeed, although the earlier case of LRTA v. CBAA has for its object the carriageways and terminal stations, the same rationale will apply to the present case — that no real estate tax exemption was provided for in LRTA's charter. All told, We find no reversible error on the part of the CA in its dismissal of the appeal.
WHEREFORE, this Court DENIES the Petition. The Decision dated June 3, 2014 of the Court of Appeals in CA-G.R. SP No. 134159 is hereby AFFIRMED.
SO ORDERED."Leonardo-De Castro, J., designated as Acting Chairperson of the First Division per Special Order No. 2559 dated May 11, 2018;Gesmundo, J., designated as Acting Member of the First Division per Special Order No. 2560 dated May 11, 2018.
Very truly yours,
(SGD.) LIBRADA C. BUENAActing Division Clerk of Court
Footnotes
1. Penned by Associate Justice Celia C. Librea-Leagogo, concurred in by Associate Justices Franchito N. Diamante and Melchor Q.C. Sadang; rollo, pp. 29-39.
2.Id. at 29-30.
3.Id. at 41.
4. (o) Taxes, fees or charges of any kind on the National Government, its agencies and instrumentalities, and local government units.
5.Rollo, p. 42.
6.Id. at 41.
7.Id. at 48-49.
8.Id. at 51-53.
9.Id. at 54.
10. Id. at 55.
11. Id. at 56-57.
12. 528 Phil. 181 (2006).
13. Rollo, p. 11.
14. Id. at 33.
15. 396 Phil. 860 (2000).
16. Rollo, pp. 29-39.
17. Id. at 11.
18. Id. at 12.
19. Id. at 33-34.
20. Id. at 68.
21. Id. at 70.
22. Id. at 36.
23. 672 Phil. 747 (2011).
24. Id. at 756.
25. Rollo, p. 12.
26. Land Bank of the Philippines v. CA, et al., 789 Phil. 577, 583 (2016).
27. LRTA v. Central Board of Assessment Appeals, supra note 14.
28. Id. at 869-873.