2025 Bar Chair's Cases Bar Q and A Taxation Law - Q1

 

The Light Rail Transit Authority (LRTA) received Statements of Delinquency and Final Notices of Tax Delinquency from Quezon City, which assessed real property taxes on LRTA’s properties, including lands, buildings, carriageways, passenger terminal stations, machinery, and equipment. Citing MIAA v. Central Board of Assessment Appeals (CBAA), LRTA claimed exemption from real property tax as a government instrumentality. Quezon City later auctioned the affected properties, which were subsequently sold to the city due to a lack of bidders.

LRTA filed a petition for certiorari, prohibition, and injunction before the Regional Trial Court (RTC), which dismissed the petition, ruling that LRTA’s properties were taxable under the Local Government Code and the Constitution. The RTC held that LRTA v. Central Board of Assessment Appeals was controlling, and that LRTA’s reliance on MIAA v. CBAA was misplaced. LRTA then elevated the case to the Supreme Court.

Is the LRTA exempt from real property taxes?

Ans:

Yes, the LRTA as a government instrumentality is exempt from real property taxes because it is use for public purposes.

In one of the cases decided by the Supreme Cout, the court ruled that LRTA’s railroads, carriageways, terminal stations, and the lots on which they are found and/or constructed are properties of public dominion intended for public use. As such, they are exempt from real property tax.

Here, The fact that the LRTA may have entered into transactions with, short of alienating them, to private parties in relation to the establishment, operation, maintenance, and viability of a light rail transit in the country, does not detract from the characterization of the LRTA’s properties as properties of public dominion for public use or public service. Hence, LRTA’s properties of public dominion, intended for public use, are exempt from real property taxes.