LIGHT RAIL TRANSIT AUTHORITY, petitioner, vs.

CENTRAL BOARD OF ASSESSMENT APPEALS, BOARD OF ASSESSMENT APPEALS OF MANILA and the CITY ASSESSOR OF MANILA, respondents. [G.R. No. 1 !"1#. O$to%e& 1 , ''', PANGANIBAN, J.() TOPIC( Rea* P&o+e&t, TaDOCTRINE( It is not exempt from RPT because the actual use is not for public purpose and LRT operates as a corporation who serves only those who can pay the fare. FACTS( 1. LRTA is a government owned and controlled corporation created and organi!ed under "xecutive #rder $o. %&'( dated )uly 1*( 1+,& a. primarily responsible for the construction( operation( maintenance and-or lease of light rail transit system in the Philippines( giving due regard to the .reasonable re/uirements0 of the public transportation of the country1 *. LRTA ac/uired real properties a. It constructed structural improvements( such as buildings( $a&&.a/e0a,1, +a11en/e& te&2.na* 1tat.on1, and installed various 2inds of machinery and e/uipment and facilities for the purpose of its operations '. it entered into a 3ontract of 4anagement with the 4eralco Transit #rgani!ation 54"TR#6 a. 4"TR# undertoo2 to manage( operate and maintain the Light Rail Transit 7ystem owned by the LRTA sub8ect to the specific stipulations contained in said agreement( .n$*3d.n/ +a,2ent1 o4 a 2ana/e2ent 4ee and &ea* +&o+e&t, ta-e1 9. 1567( 3ity Assessor of 4anila assessed the real properties of .petitioner0( consisting of lands( %3.*d.n/1, $a&&.a/e0a,1 and +a11en/e& te&2.na* 1tat.on1, 2a$h.ne&, and e83.+2ent 0h.$h he $on1.de&ed &ea* +&o+e&t[,) under the Real Property Tax 3ode( to commence with the year 1+,: :. LRT +a.d .t1 &ea* +&o+e&t, ta-e1 on all its real property holdings( e-$e+t the $a&&.a/e0a,1 and +a11en/e& te&2.na* 1tat.on1 .n$*3d.n/ the *and 0he&e .t .1 $on1t&3$ted a. REASON( not real properties under the Real Property Tax 3ode i. I4 .t .1 &ea* +&o+e&t, .t .1 4o& +3%*.$ 31e9+3&+o1e th31 exempt from realty taxation ... Den.ed %, the C.t, A11e1o& o4 Man.*a %. LRT filed an appeal with the Local ;oard of Assessment Appeals of 4anila a. Den.ed and de$*a&ed that $a&&.a/e0a,1 and +a11en/e& te&2.na* 1tat.on1 a&e .2+&o:e2ent1 thus they are real property under the 3ode and not exempt from the payment of real property tax %. MR den.ed <. CA( carriageways and passenger terminal stations constituted real property or improvements such were taxable under the Real Property 3ode a. pieces of property did not fall under any of the exemptions listed in 7ection 9& of the RP3 i. R"A7#$= they were not owned by the government or any government owned corporation 1. the government owned the real property upon which the carriageways and terminal stations were built. >owever( they were still taxable( because beneficial use had been transferred to petitioner( a taxable entity. ii. carriageways and terminals were not intended for public use. 1. petitioner was not engaged in purely governmental or public service( the latter1s endeavors were proprietary a. +et.t.one& 0a1 dee2ed a1 a +&o4.t;o&.ented endea:o&, 1e&:.n/ a1 .t d.d, on*, the paying +3%*.$. ISSUE( ?hether petitioner1s carriageways and passenger terminal stations are sub8ect to real property taxes. HELD( YES ,. PR#@I7I#$7 #A T>" R"AL PR#P"RTB 3#C"= a. Dthere shall be levied( assessed and collected in all provinces( cities and municipalities an annual ad valorem tax on real property such as lands( buildings( machinery and other improvements affixed or attached to real property not hereinafter specifically exempted.E +. 3haracteristic of the improvements 1&. SOLGEN= no point in clarifying the concept of industrial accession to determine the nature of the property when what is fundamentally important 4o& +3&+o1e1 o4 ta- $*a11.4.$at.on .1 to dete&2.ne the $ha&a$te& o4 the +&o+e&t, 13%<e$t [to) ta-. b. The character of tax as a property tax must be determined by its incidents( and form the natural and legal effect thereof. It is irrelevant to associate the carriageways and-or the passenger terminals as accessory improvements when the view of taxability is focused on the character of the property. c. CITY OF MANILA =S IAC( 1The New Civil Code divides the properties into property for public and patrimonial property (Art. 423 ! and further enumerates the property for public use as provincial road! city streets! municipal streets! s"uares! fountains! public waters! public wor#s for public service paid for by said $provinces%! cities or municipalities& all other property is patrimonial without pre8udice to

provisions of special laws. 5Art. 9*9( Province of Famboanga v. 3ity of Famboanga( ** 73RA 1''9 .1+%,06 d. +&o+e&t.e1 o4 +et.t.one& a&e not e-$*31.:e*, $on1.de&ed a1 +3%*.$ &oad1 %e.n/ .2+&o:e2ent1 +*a$ed 3+on the +3%*.$ &oad, and th.1 1e+a&a%.*.t, nat3&e o4 the 1t&3$t3&e .n .t1e*4 +h,1.$a**, d.1t.n/3.1he1 .t 4&o2 a +3%*.$ &oad. i. carriageways or passenger terminals are elevated structures which are not freely accessible to the public( vi! a vi! roads which are public improvements openly utili!ed by the public( the former are entirely different from the latter. ii. OLD RULING( if the public wor2s is not for such free public service( it is not within the purview of the first paragraph of Art. 9*9 if the $ew 3ivil 3ode 1. carriageways and terminal stations are anchored( at certain points( on public roads. >owever( it must be emphasi!ed that these 1t&3$t3&e1 do not4o&2 +a&t o4 13$h &oad1, 1.n$e the 4o&2e& ha:e %een $on1t&3$ted over the *atte& .n 13$h a 0a, that the 4*o0 o4 :eh.$3*a& t&a44.$ 0o3*d not %e .2+eded. The1e $a&&.a/e0a,1 and te&2.na* 1tat.on1 1e&:e a 43n$t.on d.44e&ent 4&o2 that o4 the +3%*.$ &oad1 a. The carriageways are a$$e11.%*e on*, to the LRT t&a.n1( while the terminal stations have been %3.*t 4o& the $on:en.en$e o4 LRTA .t1e*4 and .t1 $31to2e&1 0ho +a, the &e83.&ed 4a&e. 11. LRT operates much li2e any private corporation engaged in the mass transport industry. ;ecause it is clothed with corporate status and corporate powers in the furtherance of its proprietary ob8ectives. 1 . BASIS OF ASSESSMENT( e. ACTUAL USE= Dthe purpose for which the property is principally or predominantly utili!ed by the person in possession of the propertyE i. PETITIONER= actual users of the carriageways and terminal stations are the commuting public. f. SC= LRT is accessible only to those who pay the re/uired fare. i. Although petitioner is a public utility( it is nonetheless profit earning. It actually uses those carriageways and terminal stations in its public utility business and earns money therefrom. 1". NOT E>EMPT FROM REAL PROPERTY TA> g. RP3= Downed by the Republic of the Philippines or any of its political subdivisions and any government owned or controlled corporation so exempt by its charter( provided( however( that this exemption shall not apply to real property of the abovenamed entities the beneficial use of which has been granted( for consideration or otherwise( to a taxable person h. A&t.$*e 7 o4 EO No. #'"= does not provide for any real estate tax exemption in its favor. Its exemption is limited to direct and indirect taxes( duties or fees in connection with the importation of e/uipment not locally available i. "ven granting that the national government indeed owns the carriageways and terminal stations( the e-e2+t.on 0o3*d not a++*, %e$a31e the.& %ene4.$.a* 31e ha1 %een /&anted to +et.t.one&, a ta-a%*e ent.t,.