Supreme Court stops Pasay City from collecting property tax from LRTA

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THE SUPREME Court has ordered the Pasay City government to stop imposing real estate tax on the properties of state-owned Light Rail Transit Authority (LRTA)  

The High Court reversed a Court of Appeals ruling which said the LRTA was a taxable entity.  

In a 33-page decision on June 28 and made public on Nov. 8, the SC full court also ordered the city government to void the previous public auctions over the train operator’s buildings, machinery, carriageways, and terminal stations.  

The local government unit was also ordered to void levies on the properties as well as previous real property tax assessments against the government-owned and controlled corporation.  

“Therefore, being properties of public dominion owned by the Republic, there is no doubt that the LRT railroads and terminals are expressly exempt from real estate tax under Section 234(a) of the Local Government Code,” according to the ruling penned by Associate Justice Ramon Paul L. Hernando.  

The case stemmed from a complaint filed by the train operator questioning the authority of the city government’s property tax assessments, which a Pasay City trial court dismissed for lack of merit.  

LRTA argued that it is a government organization created to provide a necessary public service, which makes it exempt from real property tax. 

From 1985 to 2001, the Pasay City government assessed LRTA’s properties and required it to pay its outstanding obligations.   

In 2003, the train operator made a partial payment of P10 million.  

The city government then issued warrants of levy for LRTA’s properties.  

“LRTA as a government instrumentality is not a taxable person because it is not subject to ‘[t]axes, fees or charges of any kind’ by local governments,” said the high tribunal. — John Victor D. Ordoñez