Taxation I
Case Digest Compilation
and 234 of the LGC. Furthermore, the Court of Tax
Philippine Fisheries Development Authority v. Appeals ruled that PFDA failed to prove that it is
Central Board of Assessment exempt from real property tax pursuant to Section
Appeals et. al., Lucena City 234 of the LGC or any of its provisions.
December 15, 2010
2nd Division ISSUE: WON PFDA is liable for the real property
tax assessed on the Lucena Fishing Port
Facts: Lucena Fishing Port Complex (LFPC) is one of Complex – NO.
the fishery infrastructure projects undertaken by the
National Government under the Nationwide Fish Port- RULING:
Package. The fish port was constructed on a
reclaimed land with, at a total cost of PHP PFDA is a government instrumentality.
296,764,618.77 financed through a loan from the The Court of Tax Appeals held that as a government-
Overseas Economic Cooperation Fund (OECF) of owned or controlled corporation, PFDA is subject to
Japan. real property tax imposed by LGUs having
jurisdiction over its real properties pursuant to
The Philippine Fisheries Development Authority Section 232 of the LGC. According to the Court of
(PFDA) was created by virtue of P.D. 977 as Tax Appeals, Section 193 of the LGC withdrew all tax
amended by E.O. 772, with functions and powers to exemptions granted to government-owned or
manage, operate, and develop the Navotas Fishing controlled corporations. Furthermore, Section 234 of
Port Complex and such other fishing port complexes the LGC explicitly provides that any exemption from
that may be established by the Authority. Pursuant payment of real property tax granted to government-
thereto, PFDA took over the management and owned or controlled corporations have already been
operation of LFPC in February 1992. withdrawn upon the effectivity of the LGC.
In a letter addressed to PFDA, the City The ruling of the Court of Tax Appeals is anchored on
Government of Lucena demanded payment of the wrong premise that the PFDA is a government-
realty taxes on the LFPC property for the period owned or controlled corporation. On the contrary,
from 1993 to 1999 in the total amount of this Court has already ruled that the PFDA is a
P39,397,880.00. Another demand letter was sent, government instrumentality and not a government-
this time covering the period from 1993 to 2000. owned or controlled corporation.
PFDA filed its Appeal, which was dismissed by the In the 2007 case of Philippine Fisheries Development
CBAA. Authority v. Court of Appeals, the City of Iloilo
assessed real property taxes on the Iloilo Fishing Port
Ruling of CBAA Complex (IFPC), which was managed and operated
Ownership of LFPC has been handed over to the by PFDA. The Court held that PFDA is an
PFDA, as provided for under Sec. 11 of P.D. No. 977. instrumentality of the government and is thus
The allegations therefore that PFDA is not the exempt from the payment of real property tax.
beneficial user of LFPC and not a taxable person are
rendered moot and academic by such ownership of Reason Why PFDA is a Government Instrumentality
PFDA over LFPC. The Authority is actually a national government
instrumentality which is defined as an agency of
PFDA’s Charter, P.D. 977, provided for exemption the national government, not integrated within the
from income tax under Par. 2, Sec. 10 thereof. department framework, vested with special functions
Nothing was said however about PFDA’s or jurisdiction by law, endowed with some if not all
exemption from payment of real property tax. corporate powers, administering special funds, and
PFDA therefore was not to lay claim for realty tax enjoying operational autonomy, usually through a
exemption on its Fishing Port Complexes. LFPC is charter.
owned by the Republic of the Philippines, PFDA is
only tasked to manage, operate, and develop the When the law vests in a government instrumentality
same. Hence, LFPC is exempted from payment of corporate powers, the instrumentality does not
realty tax. become a corporation. Unless the government
instrumentality is organized as a stock or non-stock
The ownership of LFPC was passed on by the corporation, it remains a government instrumentality
Republic of the Philippines to PFDA under P.D. 977. exercising not only governmental but also corporate
Therefore, PFDA’s claim for realty tax exemption on powers.
LFPC is untenable.
The Authority has a capital stock but it is not divided
Ruling of CTA into shares of stocks. Also, it has no stockholders or
PFDA is a government-owned or controlled voting shares. Hence it is not a stock corporation.
corporation and is therefore subject to the real Neither is it a non-stock corporation because it has
property tax imposed by local government units no members.
pursuant to Section 232 in relation to Sections 193
1
Based on the syllabus of Atty. Kriska Marna A. Buena
Ateneo De Davao University S.Y. 2020-2021
Digested by: Ampatuan, Ballos, Mahusay, Malicay, Nono, Paclibar, Picot, Teng
Taxation I
Case Digest Compilation
Similarly, we hold that as a government
instrumentality, the PFDA is exempt from real
property tax imposed on the Lucena Fishing
Port Complex, except those portions which are
leased to private persons or entities.
Application of Sec. 133 of the LGC
The exercise of the taxing power of local government
units is subject to the limitations enumerated in
Section 133 of the Local Government Code.
Under Section 133(o) of the Local Government Code,
local government units have no power to tax
instrumentalities of the national government like the
PFDA.
Thus, PFDA is not liable to pay real property tax
assessed by the Office of the City Treasurer of
Lucena City on the Lucena Fishing Port Complex,
except those portions which are leased to private
persons or entities.
Application of Sec. 234 of the LGC
Besides, the Lucena Fishing Port Complex is a
property of public dominion intended for public use,
and is therefore exempt from real property tax under
Section 234(a) of the Local Government Code.
Properties of public dominion are owned by the State
or the Republic of the Philippines.
Art. 420. The following things are property of public
dominion:
(1) Those intended for public use, such as
roads, canals, rivers, torrents, ports and
bridges constructed by the State, banks,
shores, roadsteads, and others of similar
character;
(2) Those which belong to the State, without
being for public use, and are intended for
some public service or for the
development of the national wealth.
The Lucena Fishing Port Complex, which is one of the
major infrastructure projects undertaken by the
National Government under the Nationwide Fishing
Ports Package, is devoted for public use and falls
within the term "ports."
The Lucena Fishing Port Complex serves as PFDA’s
commitment to continuously provide post-harvest
infrastructure support to the fishing industry,
especially in areas where productivity among the
various players in the fishing industry need to be
enhanced. As property of public dominion, the
Lucena Fishing Port Complex is owned by the
Republic of the Philippines and thus exempt
from real estate tax.
2
Based on the syllabus of Atty. Kriska Marna A. Buena
Ateneo De Davao University S.Y. 2020-2021
Digested by: Ampatuan, Ballos, Mahusay, Malicay, Nono, Paclibar, Picot, Teng
