THE Court of Appeals (CA) junked the bid of the Manila City government to collect P768.87 million in real-property tax from the Philippine National Railways (PNR).
In a 13-page decision penned by Associate Justice Maria Luisa C. Quijano-Padilla, the CA’s Special Eight Division (SED) held that the Manila City government should have directly filed its appeal before the Supreme Court (SC) since the issues it raised involve pure questions of law. The CA also ordered the local government of Manila to return the properties that the PNR earlier ceded to settle its other tax obligations.
The PNR elevated the case to the CA after the Regional Trial Court (RTC) in Manila Branch 12 granted its petition for certiorari, prohibition and mandamus.
The city government, how-ever, insisted that the PNR is liable to pay the amount covering the real-property tax for the period of 1992 to 2007 of the Tutuban properties.
But the trial court held that the PNR is a government instrumentality and, thus, exempt from payment of real-estate tax levied by local government units. The RTC also directed the Manila City government to return to the PNR its properties in San Lazaro, Santibañez, Pandacan, Cordillera/Bacorba and Tayuman-Dagupan.
The said subject properties, which were not being used by PNR in its railway or train operations, were ceded in 2003 by the PNR to the city government by virtue of a memorandum of agreement (MOA) or a dacion en pago to settle its real-property tax obligations
In upholding the trial court’s decision, the CA’s SED held that the issues raised in the petition filed by the Manila City government are pure questions of law that should have been raised in a petition for review and directly filed with the SC.
In its petition, the Manila City government insisted that, although the PNR is referred to as a government instrumentality, its existence proved otherwise. It noted that the PNR is engaged in a railroad or transportation business and is not vested with a special function or jurisdiction by law.
Furthermore, the Manila City government argued that Republic Act 10149 or the GOCC Governance Act of 2011, did not include the PNR as an instrumentality. The Manila City government added that PNR’s prayer to have its MOA with the latter is already barred by prescription since it was executed on December 3, 2003.
But the CA pointed out that based on records, as well as arguments of the parties involved, the issue revolves around the correct application of the law, as well as the jurisprudence to determine liability of the PNR’s properties.
“As can be gleaned from the foregoing, the remaining issues in the preset involve the determination of the nature of PNR’s property and the latter’s corresponding tax liability, if any,” the CA explained. “This requires an examination of PNR’s charter along with other related laws. Seeing these matters involve pure questions of law, the appeal is deemed improper and the dismissal thereof becomes the unavoidable outcome.” Concurring with the ruling were Associate Justices Rodil Zalameda and Carmelita Salandanan Manahan.