Light Rail Transit Authority v. Central Board of Assessment Appeals (2000)

LIGHT RAIL TRANSIT AUTHORITY VS CENTRAL BOARD OF ASSESSMENT APPEALS

342 SCRA 692 GR NO. 127316, OCTOBER 12, 2000

FACTS: 

The LRTA is a government-owned and controlled corporation created and organized under EO 603, dated July 12, 1980 primarily responsible for the construction, operation, maintenance and/or lease of light rail transit system in the Philippines, giving due regard to the reasonable requirements of the public transportation of the country. LRTA acquired real properties, constructed structional improvements, such as buildings, carriage ways, passenger terminal stations and installed various kinds of machinery and equipment and facilities for the purpose of its operations. For an effective maintenance, operation and management, it entered into a contract of management with the MERALCO transit organization in which the latter undertook to manage, operate and maintain the light rail transit system owned by the LRTA subject to the specific stipulations contained in said agreement, including payments of a management fee and real property taxes. That it commenced its operations in 1984, and that sometime that year, respondent-appellee city of assessor of manila assessed the real properties of petitioner consisting of lands, buildings, carriage ways and passenger terminal stations machinery and equipment which he considered real property under the real property tax code, to commence with the year 1985. That petitioner paid its real property taxes on all its real property holdings, except the carriage ways and passenger terminal stations including the land where it constructed on the ground that the same are not real properties under the real property tax code, and if the same are real property, these are for public use/purpose, therefore exempt from realty taxation which claim was denied by the respondent-appellee city assessor of Manila.

ISSUE: 

Whether or not petitioner’s carriage ways and passenger terminal stations are subject to real property tax.

HELD: 

No. 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 above named entities the beneficial use of which has been granted, for consideration or otherwise, to a taxable person. 

EO 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.

Even granting that the national government indeed owns the carriage ways and terminal stations, the exemption would not apply because their beneficial use has been granted to petitioner, a taxable entity.

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’s subject to tax.