PHILIPPINE FISHERIES DEVELOPMENT AUTHORITY, petitioner, vs.

THE HONORABLE COURT OF APPEALS, THE HONORABLE REGIONAL TRIAL COURT, BRANCH 169, MALABON, METRO MANILA, THE MUNICIPALITY OF NAVOTAS, METRO MANILA, HON. FLORANTE M. BARREDO, in his o i!i"# !"$"!i%& "s M'ni!i$"# T()"s'()( o N"*o%"s, M)%(o M"ni#", "n+ HON. NORBERTO E. A,ARCON, in his !"$"!i%& "s Ch"i(-"n o %h) P'.#i! A'!%ion S"#) Co--i%%)) o N"*o%"s, M)%(o M"ni#", respondent. G.R. No. 1/0101 FACTS 4 The controversy arose when respondent Municipality of Navotas assessed the real estate taxes allegedly due from petitioner Philippine Fisheries Development Authority for the period !" # !!$ on properties under its %urisdiction, management and operation located inside the Navotas Fishing Port &omplex 'NFP&(. The assessed taxes had remained unpaid despite the demands made )y the municipality which prompted it, through Municipal Treasurer Florante *arredo, to give notice to petitioner on +cto)er ,!, !!$ that the NFP& will )e sold at pu)lic auction on Novem)er -$, !!$ in order that the municipality will )e a)le to collect on petitioners delin.uent realty taxes which, as of /une -$, !!$, amounted to P,-, ,",-$0.1 , inclusive of penalties. Petitioner sought the deferment of the auction sale claiming that the NFP& is owned )y the 2epu)lic of the Philippines, and pursuant to P.D. No. !33, it is not a taxa)le entity. 4n view of the refusal of PFDA to pay the assessed realty taxes, the matter was referred to the Department of Finance. +n /uly 0, !!$ the D+F stated that the use of the property should first )e identified to determine its tax lia)ility. 4f used )y a non#taxa)le person other than PFDA itself, it remains to )e non#taxa)le. +therwise, if said properties are )eing used )y taxa)le persons, same )ecomes taxa)le properties. Notwithstanding the D+F5s instruction, respondent Municipality proceeded to pu)lish the notice of sale of NFP& in the Novem)er ,, !!$ issue of Balita, a local newspaper. +n Novem)er !, !!$, petitioner instituted &ivil &ase in the 2T& of Mala)on, Metro Manila against respondent Municipality, and its officers. Petitioner as6ed the 2T& to )n5oin the auction of the NFP& on the ground that the properties comprising the NFP& are o6n)+ .& %h) R)$'.#i! o %h) Phi#i$$in)s and are, thus, )7)-$% (o- %"7"%ion. According to petitioner, only a small portion of NFP& which had )een leased to private parties may )e su)%ected to real property tax which should )e paid )y the latter. +n Decem)er ", !!$, the 2T& issued a writ of preliminary in%unction en%oining respondent Municipality from proceeding with the pu)lic auction. +n Fe)ruary !, !!-, the 2T& dismissed the case and dissolved the writ of preliminary in%unction, ruling in favor of the Municipality5s O!%o.)( 2, 2003

right to collect said tax. The &A affirmed the ruling of the 2T&. Motion for 2econsideration was filed )ut the same was denied )y the &A. ISSUES4 . 7hether or not the NFP& property is a property owned )y the 8tate and is intended for pu)lic use and pu)lic service. As such, it is, hence, exempt from real property tax. ,. 7hether or not the NFP& can )e sold at pu)lic auction to satisfy the tax delin.uency assessments made )y the Municipality of Navotas on the entire complex. HELD4 1.9ocal government units, pursuant to the fiscal autonomy granted )y the provisions of 2epu)lic Act No. 3 :$ or the !! 9ocal ;overnment &ode, can impose realty taxes on %uridical persons su)%ect to the limitations enumerated in 8ection -- of the &ode<
8=&. --. &ommon 9imitations on the Taxing Power of 9ocal ;overnment >nits. >nless otherwise provided herein, the exercise of the taxing powers of provinces, cities, municipalities, and )arangays shall not extend to the levy of the following< 'o( taxes, fees, charges of any 6ind on the national government, its agencies and instrumentalities, and local government units.

Nonetheless, the a)ove )7)-$%ion +o)s no% "$$#& when the .)n) i!i"# 's) of the government property has )een 8("n%)+ %o " %"7".#) $)(son. Section 234 (a) of the &ode states that real property owned )y the 2epu)lic of the Philippines or any of its political su)divisions is exempted from payment of the real property tax "except when the beneficial use thereof has been granted, for consideration or otherwise, to a taxable person." Thus, as a ('#), petitioner PFDA, )eing an instrumentality of the national government, is )7)-$% (o- ()"# $(o$)(%& %"7 .'% %h) )7)-$%ion +o)s no% )7%)n+ %o %h) $o(%ions o %h) NFPC %h"% 6)() #)"s)+ %o %"7".#) o( $(i*"%) $)(sons "n+ )n%i%i)s o( %h)i( .)n) i!i"# 's). 2.NO.This is in consonance with the ruling in Philippine Fisheries Development Authority v. ourt of Appeals where this &ourt held that< The real property tax assessments issued )y the &ity of 4loilo should )e upheld only with respect to the portions leased to private persons. 4n case the Authority fails to pay the real property taxes due thereon, said portions !"nno% .) so#+ "% $'.#i! "'!%ion to satisfy the tax delin.uency.The port )uilt )y the 8tate in the 4loilo fishing complex is a $(o$)(%& o $'.#i! +o-inion and cannot therefore )e sold at pu)lic auction as provided for under A(%i!#) 920 o %h) Ci*i# Co+). 8imilarly, for the same reason, the NFP& !"nno% .) so#+ "% $'.#i! "'!%ion in satisfaction of the tax delin.uency assessments made )y the Municipality of Navotas on the entire complex. Additionally, the land on which the NFP& property sits is a reclaimed land, which )elongs to the 8tate. 4n have! v. Public "states Authority, the &ourt declared that reclaimed lands are lands of the pu)lic domain and cannot, without &ongressional fiat, )e su)%ect of a sale, pu)lic or private.