CA junks gov’t plea for help in MRT’s P2 billion tax woes

MANILA, Philippines—The Court of Appeals dismissed the government’s bid to stop Mandaluyong City from taking over the properties of the Metro Rail Transit Corporation (MRTC) for failure to pay over P2-billion worth of property taxes from 2003 to 2005.

In an eight-page decision, the appeals court 6th division through Associate Justice Noel Tijam dismissed for lack of jurisdiction the petition filed by the Department of Transportation and Communication (DOTC) and the MRTC.

DOTC and MRTC, in their petition sought a reversal of the September 15, 2006 and March 9, 2007 decisions by the Mandaluyong City Regional Trial Court.

MRT Train. INQUIRER FILE PHOTO/RAFFY LERMA

The Mandaluyong Court, through Judge Carlos Valenzuela issued the writ of possession placing the City Government of Mandaluyong in possession of the three MRT stations (Ortigas Avenue, Shaw Boulevard and Boni Avenue).

Government lawyers argued that being a government agency, DOTC is exempted from paying taxes.

But the local government maintained that MRT stations covering Ortigas Avenue, Shaw Boulevard and Boni Avenue, although built under a build-lease-transfer agreement, is silent on whether it is exempted from paying real property tax.

The local government added that since improvements have been made, the improvements can also be subject to tax.

The case involves real properties in Mandaluyong that forms part of the Metro Rail Transit System consisting of buildings that serve as MRT stations, railways, carriageways as well as improvements of the stations.

In 2005, Mandaluyong City Assessor issued a notice of delinquency to MRTC and demanded payment of taxes worth P1, 306, 617, 522.96.

The DOTC filed a complaint to nullify the tax assessment and warrant of levy before the Mandaluyong court. It also asked the court to stop the selling of the properties at a public auction but the court denied their petition.

Then, in 2006, the City Treasurer proceeded to the auction of the real properties setting a price of P1.483-billion but since there were no bidders, it was forfeited in favor of the Mandaluyong City.

The MRT has one year to redeem the property but failed to do so prompting the City Treasurer to issue a Final Bill of Sale in favor of the Mandaluyong City government and the City Assessor cancelled the tax declaration in favor of Mandaluyong.

In the recent ruling, the appeals court said under Republic Act 9282 or the law expanding the jurisdiction of the Court of Tax Appeals said that the Tax Court has the jurisdiction to review decisions of the Central Board of Assessment Appeals in the exercise of its appellate jurisdiction over cases involving the assessment and taxation of real property originally decided by the provincial board of assessment appeals.

“In our minds, judicial respect to a co-equal court and broader interests of justice are served by deferring the resolution of the instant issue to the CTA,” the appeals court said.

“In other words, since the appellate jurisdiction over cases involving assessment and taxation of real properties lies with the CTA, it follows that petitions for certiorari seeking the nullification of interlocutory orders issued in such tax cases should likewise be filed before said appellate court,” it added.

Concurring with the decision are Associate Justices Mario Lopez and Myra Garcia-Fernandez.