PNR asks court to stop Manila from collecting P594 in taxes

INQUIRER FILE PHOTO

MANILA, Philippines—The Philippine National Railways has asked a court to stop the city government of Manila from collecting P594 million in taxes for a property that was already taxed twice and to order the city to return parcels of land which were given as payment for previous taxes.

The state-owned railway system, represented by the Office of the Solicitor General, filed the civil case in the Manila Regional Trial Court against the city government, the city treasurer, the city assessor and the register of deeds in Manila, citing the exemption of government instrumentalities from local taxes.

The PNR said that in 2002 the city government sent a summary of taxes due totaling P218 million covering January 1992 to December 2001. When the PNR failed to pay, the city auctioned off the supposed delinquent property in Tutuban. The property was forfeited in favor of the city for lack of bidders and the PNR was given a year to redeem it.

“On the assumption that it was legally obligated to pay the realty taxes imposed by the City of Manila,” the PNR proposed to settle through “dacion en pago” or the transfer of property as payment. The PNR transferred to the city government the ownership of parcels of land in San Lazaro, Santibañez, Pandacan, Cordillera and Tayuman-Dagupan, which the railway company is now asking the court to return.

In 2008, the city issued another summary of tax due in the amount of P594 million covering the taxable years 1992-2007 for a piece of PNR property that was included in the 1992-2001 assessment. “The same parcels of land were taxed twice,” the PNR said. The property was auctioned off again and sold to the City of Manila, a sale which the PNR wants the court to nullify.

The PNR received several notices of delinquency in 2012 and it replied that it was exempt from local real property taxes, being a government instrumentality that renders essential public service to local residents.

The PNR also asked the court to direct the city government to collect property tax from Tutuban Properties Inc., which has been leasing the PNR property in Tutuban since 1993. It said that while the lease contract was silent on who will shoulder the tax, the law provides that should a government property be granted for beneficial use of a taxable entity, the latter will pay the property tax.