Lucena fish port spared from paying P45-million tax

MANILA, Philippines –  The 8.7-hectare Lucena Fishing Port Complex in Lucena City was spared from paying over P45 million realty taxes after the Supreme Court Second Division recently declared that it is a property of public dominion intended for public use, and is therefore exempt from real property tax.

Based on the decision penned by Associate Justice Antonio Carpio, the Supreme Court noted LFPC, 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.”

It also serves as a commitment of the Philippine Fisheries Development Authority (PFDA) 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.

PFDA was created to develop the Navotas Fishing Port Complex and such other fishing port complexes that may be established by the authorities. It took over the management and operation of LFPC in February 1992.

As property of public dominion, the LFPC is owned by the Philippines and thus exempt from real estate tax.

In a letter addressed to PFDA, the city government of Lucena on Oct. 26, 1999 demanded payment of realty taxes on the LFPC property for the period from 1993 to 1999 in the total amount of P39,397,880. This was received by PFDA on Nov. 24, 1999.

On Oct. 17, 2000 another demand letter was sent by the city government on the same LFPC property, this time in the amount of P45,660,080 covering the period from 1993 to 2000.

On Dec. 18, 2000 PFDA filed its appeal before the Local Board of Assessment Appeals of Lucena City, which was dismissed for lack of merit.

Because of this, PFDA filed on Nov. 6, 2001 a motion for reconsideration, but his was rejected by the Appellee Local Board on Dec. 10, 2001.

In the same decision promulgated Dec. 15, 2010, Carpio also declared as void all real property tax assements issued by the Lucena City government on LFPC, except for the “portions that the PFDA” has leased to private properties.

The Court of Tax Appeals earlier  held that as a government-owned or controlled corporation, PFDA is subject to real property tax imposed by local government units having jurisdiction over its real properties pursuant to Section 232 of the Local Government Code.

According to the Court of Tax Appeals, Section 193 of the Local Government Code withdrew all tax exemptions granted to government-owned or controlled corporations.

Section 234 of the Local Government Code explicitly provides that any exemption from payment of real property tax granted to government-owned or controlled corporations have already been withdrawn upon the effectivity of the Local Government Code.

But the High Court noted that the CTA’s ruling is anchored on the wrong premise that the PFDA is a government-owned or controlled corporation.

“On the contrary, this Court has already ruled that the PFDA is a government instrumentality and not a government-owned or controlled corporation,” said Carpio.

The Supreme Court’s decision was concurred in by Associate Justices Eduardo Nachura, Diosdado Peralta, Roberto Abad and Jose Mendoza.