SC: Pasig City can’t levy taxes on ‘Payanig’ lot

The Supreme Court has voided the acquisition by the Pasig City government of the sequestered 18.5–hectare property previously occupied by the “Payanig sa Pasig” entertainment center.

Saying the contested property was considered public domain, the tribunal also annulled the P389 million in real property tax the city government demanded from the Presidential Commission on Good Government (PCGG) in 2005.

In 19-page decision, the court’s Second Division said Republic Act No. 7160, otherwise known as the Local Government Code, stated that state-owned lands should not be levied “except when the beneficial use thereof has been granted, for consideration or otherwise, for a taxable person.”

“Thus, the portions of the properties not leased to taxable entities are exempt from real estate tax while the portions of the properties leased to taxable entities are subject to real estate tax,” the court said in a ruling penned by Senior Associate Justice Antonio Carpio.

“The law imposes the liability to pay real estate tax on the Republic of the Philippines for the portions of the properties leased to taxable entities,” it added.

Concurring with Carpio’s opinion were Associate Justices Jose Mendoza, Arturo Brion, Diosdado Peralta and Jose Portugal Perez.

However, they granted the city government’s petition to issue new real property tax assessments to PCGG over the portions of the contested property being leased to private individuals and entities.

“In sum, only those portions of the properties leased to taxable entities are subject to real estate tax for the period of such leases,” the court said, adding:

“Pasig City must, therefore, issue to respondent new real property tax assessments covering the portions of the properties leased to taxable entities.”

The high court affirmed the Oct. 17, 2008, ruling of the Court of Appeals which, in turn, upheld the Nov. 6, 2006, decision of a Pasig Regional Trial Court that voided the city government’s tax assessment for the entire property.

The prime lot, now host to several commercial establishments, was formerly owned by businessman and known Marcos crony Jose Campos.

During the downfall of the Marcos dictatorship in 1986, Campos let the PCGG take over the property, then registered under Mid-Pasig Land Development Corp. and Independent Realty Corp., in a bid to evade prosecution.

Ownership of the lot is being claimed by both PCGG and Blemp Commercial Philippine Inc. (BCPI) which is partly owned by Ilocos Sur Gov. Chavit Singson

On Thursday, BCPI sent several security guards to guard a portion of the property, starting a standoff with security personnel from the PCGG.

Singson, in a phone interview Sunday, vowed to protect what

he claimed was the company’s property despite a Sandiganbayan ruling which favored the PCGG.—With a report from Niña Calleja