[ G.R. No. 184203, November 26, 2014 ] 7/11/19, 9:33 AM [ G.R. No.

7/11/19, 9:33 AM [ G.R. No. 184203, November 26, 2014 ] 7/11/19, 9:33 AM

66 aimed “to encourage and promote foreign commerce as a means of making the
748 Phil. 473
Philippines a center of international trade, of strengthening our export trade and foreign
exchange position, of hastening industrialization, of reducing domestic unemployment,
SECOND DIVISION
and of accelerating the development of the country.”[7]

[ G.R. No. 184203, November 26, 2014 ] To carry out this policy, the Export Processing Zone Authority (EPZA) was created to
operate, administer, and manage the export processing zones established in the Port of
CITY OF LAPU-LAPU, PETITIONER, VS. PHILIPPINE ECONOMIC Mariveles, Bataan[8] and such other export processing zones that may be created by
ZONE AUTHORITY, RESPONDENT. virtue of the decree.[9]

[G.R. NO. 187583]

The decree declared the EPZA non-profit in character[10] with all its revenues devoted to

PROVINCE OF BATAAN, REPRESENTED BY GOVERNOR ENRIQUE T. its development, improvement, and maintenance.[11] To maintain this non-profit
GARCIA, JR., AND EMERLINDA S. TALENTO, IN HER CAPACITY AS character, the EPZA was declared exempt from all taxes that may be due to the Republic
PROVINCIAL TREASURER OF BATAAN, PETITIONERS, VS. of the Philippines, its provinces, cities, municipalities, and other government agencies and
PHILIPPINE ECONOMIC ZONE AUTHORITY, RESPONDENT. instrumentalities.[12] Specifically, Section 21 of Presidential Decree No. 66 declared the
EPZA exempt from payment of real property taxes:
DECISION
Section 21. Non-profit Character of the Authority; Exemption from Taxes. The
LEONEN, J.: Authority shall be non-profit and shall devote and use all its returns from its
capital investment, as well as excess revenues from its operations, for the
The Philippine Economic Zone Authority is exempt from payment of real property taxes. development, improvement and maintenance and other related expenditures
of the Authority to pay its indebtedness and obligations and in furtherance and
These are consolidated[1] petitions for review on certiorari the City of Lapu-Lapu and the effective implementation of the policy enunciated in Section 1 of this Decree.
Province of Bataan separately filed against the Philippine Economic Zone Authority In consonance therewith, the Authority is hereby declared exempt:
(PEZA).
....

In G.R. No. 184203, the City of Lapu-Lapu (the City) assails the Court of Appeals’
(b) From all income taxes, franchise taxes, realty taxes and all
decision[2] dated January 11, 2008 and resolution[3] dated August 6, 2008, dismissing other kinds of taxes and licenses to be paid to the National
the City’s appeal for being the wrong mode of appeal. The City appealed the Regional Government, its provinces, cities, municipalities and other
Trial Court, Branch 111, Pasay City’s decision finding the PEZA exempt from payment of government agencies and instrumentalities[.]
real property taxes.

In G.R. No. 187583, the Province of Bataan (the Province) assails the Court of Appeals’ In 1979, President Marcos issued Proclamation No. 1811, establishing the Mactan Export
decision[4] dated August 27, 2008 and resolution[5] dated April 16, 2009, granting the Processing Zone. Certain parcels of land of the public domain located in the City of Lapu-
PEZA’s petition for certiorari. The Court of Appeals ruled that the Regional Trial Court, Lapu in Mactan, Cebu were reserved to serve as site of the Mactan Export Processing
Branch 115, Pasay City gravely abused its discretion in finding the PEZA liable for real Zone.
property taxes to the Province of Bataan.
In 1995, the PEZA was created by virtue of Republic Act No. 7916 or “the Special
Facts common to the consolidated petitions Economic Zone Act of 1995”[13] to operate, administer, manage, and develop economic
zones in the country.[14] The PEZA was granted the power to register, regulate, and
In the exercise of his legislative powers,[6] President Ferdinand E. Marcos issued supervise the enterprises located in the economic zones.[15] By virtue of the law, the
Presidential Decree No. 66 in 1972, declaring as government policy the establishment of export processing zone in Mariveles, Bataan became the Bataan Economic Zone[16] and
export processing zones in strategic locations in the Philippines. Presidential Decree No.

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the Mactan Export Processing Zone the Mactan Economic Zone.[17]

Pursuant to Rule 63, Section 3 of Rules of Court,[30] the Office of the Solicitor General
As for the EPZA, the law required it to “evolve into the PEZA in accordance with the filed a comment[31] on the PEZA’s petition for declaratory relief. It agreed that the PEZA
guidelines and regulations set forth in an executive order issued for [the] purpose.”[18] is exempt from payment of real property taxes, citing Sections 24 and 51 of the Special
Economic Zone Act of 1995.
On October 30, 1995, President Fidel V. Ramos issued Executive Order No. 282, directing
the PEZA to assume and exercise all of the EPZA’s powers, functions, and responsibilities The trial court agreed with the Solicitor General. Section 24 of the Special Economic Zone
“as provided in Presidential Decree No. 66, as amended, insofar as they are not Act of 1995 provides:
inconsistent with the powers, functions, and responsibilities of the PEZA, as mandated
under [the Special Economic Zone Act of 1995].”[19] All of EPZA’s properties, equipment,
SEC. 24. Exemption from National and Local Taxes. – Except for real property
and assets, among others, were ordered transferred to the PEZA.[20] taxes on land owned by developers, no taxes, local and national, shall be
imposed on business establishments operating within the ECOZONE. In lieu
Facts of G.R. No. 184203 thereof, five percent (5%) of the gross income earned by all business
enterprises within the ECOZONE shall be paid and remitted as follows:
In the letter[21] dated March 25, 1998, the City of Lapu-Lapu, through the Office of the
Treasurer, demanded from the PEZA ?32,912,350.08 in real property taxes for the period a. Three percent (3%) to the National Government;
from 1992 to 1998 on the PEZA’s properties located in the Mactan Economic Zone.
b. Two percent (2%) which shall be directly remitted by the business
The City reiterated its demand in the letter[22] dated May 21, 1998. It cited Sections 193 establishments to the treasurer’s office of the municipality or city where the
and 234 of the Local Government Code of 1991 that withdrew the real property tax enterprise is located.
exemptions previously granted to or presently enjoyed by all persons. The City pointed
out that no provision in the Special Economic Zone Act of 1995 specifically exempted the
Section 51 of the law, on the other hand, provides:
PEZA from payment of real property taxes, unlike Section 21 of Presidential Decree No.
66 that explicitly provided for EPZA’s exemption. Since no legal provision explicitly
exempted the PEZA from payment of real property taxes, the City argued that it can tax SEC. 51. Ipso-Facto Clause. – All privileges, benefits, advantages or
the PEZA. exemptions granted to special economic zones under Republic Act No. 7227,
shall ipso-facto be accorded to special economic zones already created or to
The City made subsequent demands[23] on the PEZA. In its last reminder[24] dated May be created under this Act. The free port status shall not be vested upon new
13, 2002, the City assessed the PEZA ?86,843,503.48 as real property taxes for the special economic zones.
period from 1992 to 2002.

On September 11, 2002, the PEZA filed a petition for declaratory relief[25] with the Based on Section 51, the trial court held that all privileges, benefits, advantages, or
Regional Trial Court of Pasay City, praying that the trial court declare it exempt from exemptions granted to special economic zones created under the Bases Conversion and
payment of real property taxes. The case was raffled to Branch 111. Development Act of 1992 apply to special economic zones created under the Special
Economic Zone Act of 1995. Since these benefits include exemption from payment of
national or local taxes, these benefits apply to special economic zones owned by the
The City answered[26] the petition, maintaining that the PEZA is liable for real property
PEZA.
taxes. To support its argument, the City cited a legal opinion dated September 6, 1999
issued by the Department of Justice,[27] which stated that the PEZA is not exempt from According to the trial court, the PEZA remained tax-exempt regardless of Section 24 of
payment of real property taxes. The Department of Justice based its opinion on Sections the Special Economic Zone Act of 1995. It ruled that Section 24, which taxes real
193 and 234 of the Local Government Code that withdrew the tax exemptions, including property owned by developers of economic zones, only applies to private developers of
real property tax exemptions, previously granted to all persons. economic zones, not to public developers like the PEZA. The PEZA, therefore, is not liable
for real property taxes on the land it owns.
A reply[28] was filed by the PEZA to which the City filed a rejoinder.[29]

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Characterizing the PEZA as an agency of the National Government, the trial court ruled Regional Trial Court of the City of Lapu-Lapu.[45]
that the City had no authority to tax the PEZA under Sections 133(o) and 234(a) of the
Local Government Code of 1991. Moreover, the Province of Bataan, the City of Baguio, and the Province of Cavite allegedly
demanded real property taxes from the PEZA. The City argues that the PEZA should have
In the resolution[32] dated June 14, 2006, the trial court granted the PEZA’s petition for likewise impleaded these local government units as respondents in its petition for
declaratory relief and declared it exempt from payment of real property taxes. declaratory relief. For its failure to do so, the PEZA violated Rule 63, Section 2 of the
Rules of Court, and the trial court should have dismissed the petition.[46]
The City filed a motion for reconsideration,[33] which the trial court denied in its
resolution[34] dated September 26, 2006. This court ordered the PEZA to comment on the City’s petition for review on certiorari.[47]

The City then appealed[35] to the Court of Appeals. At the outset of its comment, the PEZA argues that the Court of Appeals’ decision dated
January 11, 2008 had become final and executory. After the Court of Appeals had denied
The Court of Appeals noted the following issues the City raised in its appellant’s brief: (1) the City’s appeal, the City filed a motion for extension of time to file a motion for
whether the trial court had jurisdiction over the PEZA’s petition for declaratory relief; (2) reconsideration. Arguing that the time to file a motion for reconsideration is not
whether the PEZA is a government agency performing governmental functions; and (3) extendible, the PEZA filed its motion for reconsideration out of time. The City has no
whether the PEZA is exempt from payment of real property taxes. more right to appeal to this court.[48]

The issues presented by the City, according to the Court of Appeals, are pure questions of The PEZA maintains that the City availed itself of the wrong mode of appeal before the
law which should have been raised in a petition for review on certiorari directly filed Court of Appeals. Since the City raised pure questions of law in its appeal, the PEZA
before this court. Since the City availed itself of the wrong mode of appeal, the Court of argues that the proper remedy is a petition for review on certiorari with this court, not an
Appeals dismissed the City’s appeal in the decision[36] dated January 11, 2008. ordinary appeal before the appellate court. The Court of Appeals, therefore, correctly
dismissed outright the City’s appeal under Rule 50, Section 2 of the Rules of Court.[49]
The City filed a motion for extension of time to file a motion for reconsideration,[37] which
On the merits, the PEZA argues that it is an agency and instrumentality of the National
the Court of Appeals denied in the resolution[38] dated April 11, 2008.
Government. It is therefore exempt from payment of real property taxes under Sections

Despite the denial of its motion for extension, the City filed a motion for reconsideration. 133(o) and 234(a) of the Local Government Code.[50] It adds that the tax privileges
[39] In the resolution[40] dated August 6, 2008, the Court of Appeals denied that motion. under Sections 24 and 51 of the Special Economic Zone Act of 1995 applied to it.[51]

Considering that the site of the Mactan Economic Zone is a reserved land under
In its petition for review on certiorari with this court,[41] the City argues that the Court of
Proclamation No. 1811, the PEZA claims that the properties sought to be taxed are lands
Appeals “hid under the skirts of technical rules”[42] in resolving its appeal. The City
of public dominion exempt from real property taxes.[52]
maintains that its appeal involved mixed questions of fact and law. According to the City,
whether the PEZA performed governmental functions “cannot completely be addressed by
As to the jurisdiction issue, the PEZA counters that the Regional Trial Court of Pasay had
law but [by] the factual and actual activities [the PEZA is] carrying out.”[43]
jurisdiction to hear its petition for declaratory relief under Rule 63, Section 1 of the Rules
of Court.[53] It also argued that it need not implead the Province of Bataan, the City of
Even assuming that the petition involves pure questions of law, the City contends that the
Baguio, and the Province of Cavite as respondents considering that their demands came
subject matter of the case “is of extreme importance with [far-reaching] consequence
that [its magnitude] would surely shape and determine the course of our nation’s after the PEZA had already filed the petition in court.[54]

future.”[44] The Court of Appeals, the City argues, should have resolved the case on the
Facts of G.R. No. 187583
merits.

After the City of Lapu-Lapu had demanded payment of real property taxes from the PEZA,
The City insists that the trial court had no jurisdiction to hear the PEZA’s petition for
declaratory relief. According to the City, the case involves real property located in the the Province of Bataan followed suit. In its letter[55] dated May 29, 2003, the Province,
City of Lapu-Lapu. The petition for declaratory relief should have been filed before the through the Office of the Provincial Treasurer, informed the PEZA that it would be sending

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a real property tax billing to the PEZA. Arguing that the PEZA is a developer of economic In its order[71] dated June 18, 2004, the trial court issued a temporary restraining order
zones, the Province claimed that the PEZA is liable for real property taxes under Section
against the Province. After the PEZA had filed a P100,000.00 bond,[72] the trial court
24 of the Special Economic Zone Act of 1995.
issued a writ of preliminary injunction,[73] enjoining the Province from selling the PEZA’s
real properties at public auction.
In its reply letter[56] dated June 18, 2003, the PEZA requested the Province to suspend
the service of the real property tax billing. It cited its petition for declaratory relief
On March 3, 2006, the PEZA and Province both manifested that each would file a
against the City of Lapu-Lapu pending before the Regional Trial Court, Branch 111, Pasay
memorandum after which the case would be deemed submitted for decision. The parties
City as basis.
then filed their respective memoranda.[74]
The Province argued that serving a real property tax billing on the PEZA “would not in any
way affect [its] petition for declaratory relief before [the Regional Trial Court] of Pasay In the order[75] dated January 31, 2007, the trial court denied the PEZA’s petition for
injunction. The trial court ruled that the PEZA is not exempt from payment of real
City.”[57] Thus, in its letter[58] dated June 27, 2003, the Province notified the PEZA of its
property taxes. According to the trial court, Sections 193 and 234 of the Local
real property tax liabilities for June 1, 1995 to December 31, 2002 totalling ?
Government Code had withdrawn the real property tax exemptions previously granted to
110,549,032.55.
all persons, whether natural or juridical.[76] As to the tax exemptions under Section 51
After having been served a tax billing, the PEZA again requested the Province to suspend of the Special Economic Zone Act of 1995, the trial court ruled that the provision only
collecting its alleged real property tax liabilities until the Regional Trial Court of Pasay City applies to businesses operating within the economic zones, not to the PEZA.[77]
resolves its petition for declaratory relief.[59]
The PEZA filed before the Court of Appeals a petition for certiorari[78] with prayer for
The Province ignored the PEZA’s request. On January 20, 2004, the Province served on issuance of a temporary restraining order.
the PEZA a statement of unpaid real property tax for the period from June 1995 to
December 2004.[60] The Court of Appeals issued a temporary restraining order, enjoining the Province and its
Provincial Treasurer from selling PEZA's properties at public auction scheduled on October
The PEZA again requested the Province to suspend collecting its alleged real property 17, 2007.[79] It also ordered the Province to comment on the PEZA’s petition.
taxes.[61] The Province denied the request in its letter[62] dated January 29, 2004, then
served on the PEZA a warrant of levy[63] covering the PEZA’s real properties located in In its comment,[80] the Province alleged that it received a copy of the temporary
Mariveles, Bataan. restraining order only on October 18, 2007 when it had already sold the PEZA’s properties
at public auction. Arguing that the act sought to be enjoined was already fait accompli,
the Province prayed for the dismissal of the petition for certiorari.
The PEZA’s subsequent requests[64] for suspension of collection were all denied by the
Province.[65] The Province then served on the PEZA a notice of delinquency in the
The PEZA then filed a supplemental petition for certiorari, prohibition, and mandamus[81]
payment of real property taxes[66] and a notice of sale of real property for unpaid real
against the Province, arguing that the Provincial Treasurer of Bataan acted with grave
property tax.[67] The Province finally sent the PEZA a notice of public auction of the abuse of discretion in issuing the notice of delinquency and notice of sale. It maintained
latter’s properties in Mariveles, Bataan.[68] that it is exempt from payment of real property taxes because it is a government
instrumentality. It added that its lands are property of public dominion which cannot be
On June 14, 2004, the PEZA filed a petition for injunction[69] with prayer for issuance of a sold at public auction.
temporary restraining order and/or writ of preliminary injunction before the Regional Trial
Court of Pasay City, arguing that it is exempt from payment of real property taxes. It The PEZA also filed a motion[82] for issuance of an order affirming the temporary
added that the notice of sale issued by the Province was void because it was not restraining order and a writ of preliminary injunction to enjoin the Province from
published in a newspaper of general circulation as required by Section 260 of the Local consolidating title over the PEZA’s properties.
Government Code.[70]
In its resolution[83] dated January 16, 2008, the Court of Appeals admitted the
The case was raffled to Branch 115. supplemental petition for certiorari, prohibition, and mandamus. It required the Province
to comment on the supplemental petition and to file a memorandum on the PEZA’s prayer

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for issuance of temporary restraining order. the PEZA’s petition since it involved a local tax case decided by a Regional Trial Court.[98]

The Province commented[84] on the PEZA’s supplemental petition, to which the PEZA The Province reiterates that the PEZA is not exempt from payment of real property taxes.
replied.[85] The Province points out that the EPZA, the PEZA’s predecessor, had to be categorically
exempted from payment of real property taxes. The EPZA, therefore, was not inherently
exempt from payment of real property taxes and so is the PEZA. Since Congress omitted
The Province then filed a motion[86] for leave to admit attached rejoinder with motion to
from the Special Economic Zone Act of 1995 a provision specifically exempting the PEZA
dismiss. In the rejoinder with motion to dismiss,[87] the Province argued for the first
from payment of real property taxes, the Province argues that the PEZA is a taxable
time that the Court of Appeals had no jurisdiction over the subject matter of the action.
entity. It cited the rule in statutory construction that provisions omitted in revised
statutes are deemed repealed.[99]
According to the Province, the PEZA erred in filing a petition for certiorari. Arguing that
the PEZA sought to reverse a Regional Trial Court decision in a local tax case, the Province
With respect to Sections 24 and 51 of the Special Economic Zone Act of 1995 granting tax
claimed that the court with appellate jurisdiction over the action is the Court of Tax
exemptions and benefits, the Province argues that these provisions only apply to business
Appeals. The PEZA then prayed that the Court of Appeals dismiss the petition for
certiorari for lack of jurisdiction over the subject matter of the action. establishments operating within special economic zones,[100] not to the PEZA.

The Court of Appeals held that the issue before it was whether the trial court judge This court ordered the PEZA to comment on the Province’s petition for review on
gravely abused his discretion in dismissing the PEZA’s petition for prohibition. This issue, certiorari.[101]
according to the Court of Appeals, is properly addressed in a petition for certiorari over
which it has jurisdiction to resolve. It, therefore, maintained jurisdiction to resolve the In its comment,[102] the PEZA argues that the Court of Appeals had jurisdiction to hear
PEZA’s petition for certiorari.[88] its petition for certiorari since the issue was whether the trial court committed grave
abuse of discretion in denying its petition for injunction. The PEZA maintains that it is
Although it admitted that appeal, not certiorari, was the PEZA’s proper remedy to reverse exempt from payment of real property taxes under Section 21 of Presidential Decree No.
the trial court’s decision,[89] the Court of Appeals proceeded to decide the petition for 66 and Section 51 of the Special Economic Zone Act of 1995.
certiorari in “the broader interest of justice.”[90]
The Province filed its reply,[103] reiterating its arguments in its petition for review on
The Court of Appeals ruled that the trial court judge gravely abused his discretion in certiorari.
dismissing the PEZA’s petition for prohibition. It held that Section 21 of Presidential
Decree No. 66 and Section 51 of the Special Economic Zone Act of 1995 granted the PEZA On the PEZA’s motion,[104] this court consolidated the petitions filed by the City of Lapu-
exemption from payment of real property taxes.[91] Based on the criteria set in Manila Lapu and the Province of Bataan.[105]
International Airport Authority v. Court of Appeals,[92] the Court of Appeals found that
the PEZA is an instrumentality of the national government. No taxes, therefore, could be The issues for our resolution are the following:
levied on it by local government units.[93]
I. Whether the Court of Appeals erred in dismissing the City of Lapu-Lapu’s appeal for
raising pure questions of law;
In the decision[94] dated August 27, 2008, the Court of Appeals granted the PEZA’s
petition for certiorari. It set aside the trial court’s decision and nullified all the Province’s
II. Whether the Regional Trial Court, Branch 111, Pasay City had jurisdiction to hear, try,
proceedings with respect to the collection of real property taxes from the PEZA.
and decide the City of Lapu-Lapu’s petition for declaratory relief;

The Province filed a motion for reconsideration,[95] which the Court of Appeals denied in III. Whether the petition for injunction filed before the Regional Trial Court, Branch 115,
the resolution[96] dated April 16, 2009 for lack of merit. Pasay City, is a local tax case appealable to the Court of Tax Appeals; and

In its petition for review on certiorari with this court,[97] the Province of Bataan insists IV. Whether the PEZA is exempt from payment of real property taxes.
that the Court of Appeals had no jurisdiction to take cognizance of the PEZA’s petition for
certiorari. The Province maintains that the Court of Tax Appeals had jurisdiction to hear We deny the consolidated petitions.

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to the proper court for resolution:

I.

Sec. 3. Where appealed case erroneously, brought. — Where the appealed

The Court of Appeals did not err in case has been erroneously brought to the Court of Appeals, it shall not dismiss
dismissing the City of Lapu-Lapu’s the appeal, but shall certify the case to the proper court, with a specific and
appeal for raising pure questions of law clear statement of the grounds therefor.

Under the Rules of Court, there are three modes of appeal from Regional Trial Court
With respect to appeals by certiorari directly filed before this court but which raise
decisions. The first mode is through an ordinary appeal before the Court of Appeals
questions of fact, paragraph 4(b) of Circular No. 2-90 dated March 9, 1990 states that
where the decision assailed was rendered in the exercise of the Regional Trial Court’s
this court “retains the option, in the exercise of its sound discretion and considering the
original jurisdiction. Ordinary appeals are governed by Rule 41, Sections 3 to 13 of the
attendant circumstances, either itself to take cognizance of and decide such issues or to
Rules of Court. In ordinary appeals, questions of fact or mixed questions of fact and law
refer them to the Court of Appeals for determination.”
may be raised.[106]

In Indoyon, Jr. v. Court of Appeals,[111] we said that this court “cannot tolerate ignorance
The second mode is through a petition for review before the Court of Appeals where the
of the law on appeals.”[112] It is not this court’s task to determine for litigants their
decision assailed was rendered by the Regional Trial Court in the exercise of its appellate
jurisdiction. Rule 42 of the Rules of Court governs petitions for review before the Court of proper remedies under the Rules.[113]
Appeals. In petitions for review under Rule 42, questions of fact, of law, or mixed
We agree that the City availed itself of the wrong mode of appeal before the Court of
questions of fact and law may be raised.[107]
Appeals. The City raised pure questions of law in its appeal. The issue of whether the
Regional Trial Court of Pasay had jurisdiction over the PEZA’s petition for declaratory relief
The third mode is through an appeal by certiorari before this court under Rule 45 where
is a question of law, jurisdiction being a matter of law.[114] The issue of whether the
only questions of law shall be raised.[108]
PEZA is a government instrumentality exempt from payment of real property taxes is
likewise a question of law since this question is resolved by examining the provisions of
A question of fact exists when there is doubt as to the truth or falsity of the alleged facts.
[109] the PEZA’s charter as well as other laws relating to the PEZA.[115]
On the other hand, there is a question of law if the appeal raises doubt as to the
applicable law on a certain set of facts.[110]
The Court of Appeals, therefore, did not err in dismissing the City’s appeal pursuant to
Rule 50, Section 2 of the Rules of Court.
Under Rule 50, Section 2, an improper appeal before the Court of Appeals is dismissed
outright and shall not be referred to the proper court:
Nevertheless, considering the important questions involved in this case, we take
cognizance of the City’s petition for review on certiorari in the interest of justice.
SEC. 2. Dismissal of improper appeal to the Court of Appeals. – An appeal
under Rule 41 taken from the Regional Trial Court to the Court of Appeals In Municipality of Pateros v. The Honorable Court of Appeals,[116] the Municipality of
raising only questions of law shall be dismissed, issues purely of law not being Pateros filed an appeal under Rule 42 before the Court of Appeals, which the Court of
reviewable by said court. Similarly, an appeal by notice of appeal instead of by Appeals denied outright for raising pure questions of law. This court agreed that the
petition for review from the appellate judgment of a Regional Trial Court shall Municipality of Pateros “committed a procedural infraction”[117] and should have directly
be dismissed. filed a petition for review on certiorari before this court. Nevertheless, “in the interest of
justice and in order to write finis to [the] controversy,”[118] this court “opt[ed] to relax
An appeal erroneously taken to the Court of Appeals shall not be transferred to
the rules”[119] and proceeded to decide the case. This court said:
the appropriate court but shall be dismissed outright.

While it is true that rules of procedure are intended to promote rather than
Rule 50, Section 2 repealed Rule 50, Section 3 of the 1964 Rules of Court, which provided
frustrate the ends of justice, and while the swift unclogging of the dockets of
that improper appeals to the Court of Appeals shall not be dismissed but shall be certified

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the courts is a laudable objective, it nevertheless must not be met at the the subject matter of litigation in an action for declaratory relief being incapable of
expense of substantial justice. pecuniary estimation.[121] Section 19 of the Judiciary Reorganization Act of 1980
provides:
The Court has allowed some meritorious cases to proceed despite inherent
procedural defects and lapses. This is in keeping with the principle that rules
of procedure are mere tools designed to facilitate the attainment of justice, SEC. 19. Jurisdiction in Civil Cases. – Regional Trial Courts shall exercise
and that strict and rigid application of rules which should result in exclusive original jurisdiction:
technicalities that tend to frustrate rather than promote substantial justice
must always be avoided. It is a far better and more prudent cause of action for (1) In all civil actions in which the subject of litigation is incapable of pecuniary
the court to excuse a technical lapse and afford the parties a review of the estimation[.]
case to attain the ends of justice, rather than dispose of the case on
technicality and cause grave injustice to the parties, giving a false impression Consistent with the law, the Rules state that a petition for declaratory relief is
of speedy disposal of cases while actually resulting in more delay, if not a filed “in the appropriate Regional Trial Court.”[122]
miscarriage of justice.[120]

A special civil action for declaratory relief is filed for a judicial determination of any
Similar to Municipality of Pateros, we opt to relax the rules in this case. The PEZA question of construction or validity arising from, and for a declaration of rights and duties,
operates or otherwise administers special economic zones all over the country. Resolving under any of the following subject matters: a deed, will, contract or other written
the substantive issue of whether the PEZA is taxable for real property taxes will clarify the instrument, statute, executive order or regulation, ordinance, or any other governmental
taxing powers of all local government units where special economic zones are operated. regulation.[123] However, a declaratory judgment may issue only if there has been “no
This case, therefore, should be decided on the merits.
breach of the documents in question.”[124] If the contract or statute subject matter of
the action has already been breached, the appropriate ordinary civil action must be filed.
II. [125] If adequate relief is available through another form of action or proceeding, the

The Regional Trial Court of Pasay had other action must be preferred over an action for declaratory relief.[126]
no jurisdiction to hear, try, and decide
the PEZA’s petition for declaratory relief In Ollada v. Central Bank of the Philippines,[127] the Central Bank issued CB-IED Form
against the City of Lapu-Lapu No. 5 requiring certified public accountants to submit an accreditation under oath before
they were allowed to certify financial statements submitted to the bank. Among those
Rule 63 of the Rules of Court governs actions for declaratory relief. Section 1 of Rule 63 financial statements the Central Bank disallowed were those certified by accountant Felipe
provides: B. Ollada. [128]

Claiming that the requirement “restrained the legitimate pursuit of one’s trade,”[129]
SECTION 1. Who may file petition. – Any person interested under a deed, will,
Ollada filed a petition for declaratory relief against the Central Bank.
contract or other written instrument, or whose rights are affected by a statute,
executive order or regulation, ordinance, or any other governmental regulation
This court ordered the dismissal of Ollada’s petition “without prejudice to [his] seeking
may, before breach or violation, thereof, bring an action in the appropriate
Regional Trial Court to determine any question of construction or validity relief in another appropriate action.”[130] According to this court, Ollada’s right had
arising, and for a declaration of his rights or duties, thereunder. already been violated when the Central Bank refused to accept the financial statements
he prepared. Since there was already a breach, a petition for declaratory relief was not
An action for reformation of an instrument, to quiet title to real property or proper. Ollada must pursue the “appropriate ordinary civil action or proceeding.”[131] This
remove clouds therefrom, or to consolidate ownership under Article 1607 of court explained:
the Civil Code, may be brought under this Rule.

Petitioner commenced this action as, and clearly intended it to be one for
The court with jurisdiction over petitions for declaratory relief is the Regional Trial Court, Declaratory Relief under the provisions of Rule 66 of the Rules of Court. On the

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question of when a special civil action of this nature would prosper, we have of serious erosion of the people’s faith in the electoral process[;] and
already held that the complaint for declaratory relief will not prosper if filed reinforc[ing] their belief that religious leaders determine the ultimate result of
after a contract, statute or right has been breached or violated. In the present elections," which would then be violative of the separation clause.
case such is precisely the situation arising from the facts alleged in the petition
for declaratory relief. As vigorously claimed by petitioner himself, respondent Such premise is highly speculative and merely theoretical, to say the least.
had already invaded or violated his right and caused him injury — all these Clearly, it does not suffice to constitute a justiciable controversy. The Petition
giving him a complete cause of action enforceable in an appropriate ordinary does not even allege any indication or manifest intent on the part of any of the
civil action or proceeding. The dismissal of the action was, therefore, proper in respondents below to champion an electoral candidate, or to urge their so-
the light of our ruling in De Borja vs. Villadolid, 47 O.G. (5) p. 2315, and called flock to vote for, or not to vote for, a particular candidate. It is a time-
Samson vs. Andal, G.R. No. L-3439, July 31, 1951, where we held that an honored rule that sheer speculation does not give rise to an actionable right.
action for declaratory relief should be filed before there has been a breach of a
contract, statutes or right, and that it is sufficient to bar such action, that Obviously, there is no factual allegation that SJS’ rights are being subjected to
there had been a breach — which would constitute actionable violation. The any threatened, imminent and inevitable violation that should be prevented by
rule is that an action for Declaratory Relief is proper only if adequate relief is the declaratory relief sought. The judicial power and duty of the courts to
not available through the means of other existing forms of action or settle actual controversies involving rights that are legally demandable and
proceeding (1 C.J.S. 1027-1028). [132] enforceable cannot be exercised when there is no actual or threatened
violation of a legal right.

It is also required that the parties to the action for declaratory relief be those whose All that the 5-page SJS Petition prayed for was "that the question raised in
rights or interests are affected by the contract or statute in question.[133] “There must paragraph 9 hereof be resolved." In other words, it merely sought an opinion
be an actual justiciable controversy or the ‘ripening seeds’ of one”[134] between the of the trial court on whether the speculated acts of religious leaders endorsing
elective candidates for political offices violated the constitutional principle on
parties. The issue between the parties “must be ripe for judicial determination.”[135] An
the separation of church and state. SJS did not ask for a declaration of its
action for declaratory relief based on theoretical or hypothetical questions cannot be filed
rights and duties; neither did it pray for the stoppage of any threatened
for our courts are not advisory courts.[136] violation of its declared rights. Courts, however, are proscribed from rendering
an advisory opinion.[141]
In Republic v. Roque,[137] this court dismissed respondents’ petition for declaratory relief
for lack of justiciable controversy. According to this court, “[the respondents’] fear of
prospective prosecution [under the Human Security Act] was solely based on remarks of In sum, a petition for declaratory relief must satisfy six requisites:
certain government officials which were addressed to the general public.”[138]

[F]irst, the subject matter of the controversy must be a deed, will, contract or
In Velarde v. Social Justice Society,[139] this court refused to resolve the issue of
other written instrument, statute, executive order or regulation, or ordinance;
“whether or not [a religious leader’s endorsement] of a candidate for elective office or in
second, the terms of said documents and the validity thereof are doubtful and
urging or requiring the members of his flock to vote for a specific candidate is violative [of
require judicial construction; third, there must have been no breach of the
the separation clause].”[140] According to the court, there was no justiciable controversy documents in question; fourth, there must be an actual justiciable controversy
and ordered the dismissal of the Social Justice Society’s petition for declaratory relief. This or the "ripening seeds" of one between persons whose interests are adverse;
court explained: fifth, the issue must be ripe for judicial determination; and sixth, adequate
relief is not available through other means or other forms of action or
proceeding.[142] (Emphases omitted)
Indeed, SJS merely speculated or anticipated without factual moorings that, as
religious leaders, the petitioner and his co-respondents below had endorsed or
threatened to endorse a candidate or candidates for elective offices; and that We rule that the PEZA erred in availing itself of a petition for declaratory relief against the
such actual or threatened endorsement "will enable [them] to elect men to City. The City had already issued demand letters and real property tax assessment
public office who [would] in turn be forever beholden to their leaders, enabling against the PEZA, in violation of the PEZA’s alleged tax-exempt status under its charter.
them to control the government"[;] and "pos[ing] a clear and present danger The Special Economic Zone Act of 1995, the subject matter of PEZA’s petition for

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declaratory relief, had already been breached. The trial court, therefore, had no contract to which it refers. A petition for declaratory relief gives a practical
jurisdiction over the petition for declaratory relief. remedy for ending controversies that have not reached the state where
another relief is immediately available; and supplies the need for a form of
There are several aspects of jurisdiction.[143] Jurisdiction over the subject matter is “the action that will set controversies at rest before they lead to a repudiation of
power to hear and determine cases of the general class to which the proceedings in obligations, an invasion of rights, and a commission of wrongs.
question belong.”[144] It is conferred by law, which may either be the Constitution or a
Where the law or contract has already been contravened prior to the filing of
statute.[145] Jurisdiction over the subject matter means “the nature of the cause of
an action for declaratory relief, the courts can no longer assume jurisdiction
action and the relief sought.”[146] Thus, the cause of action and character of the relief over the action. In other words, a court has no more jurisdiction over an
sought as alleged in the complaint are examined to determine whether a court had action for declaratory relief if its subject has already been infringed or
jurisdiction over the subject matter.[147] Any decision rendered by a court without transgressed before the institution of the action.[158] (Emphasis supplied)
jurisdiction over the subject matter of the action is void.[148]

Another aspect of jurisdiction is jurisdiction over the person. It is “the power of [a] court The trial court should have dismissed the PEZA’s petition for declaratory relief for lack of
to render a personal judgment or to subject the parties in a particular action to the jurisdiction.

judgment and other rulings rendered in the action.”[149] A court automatically acquires
Once an assessment has already been issued by the assessor, the proper remedy of a
jurisdiction over the person of the plaintiff upon the filing of the initiatory pleading.[150] taxpayer depends on whether the assessment was erroneous or illegal.
With respect to the defendant, voluntary appearance in court or a valid service of
summons vests the court with jurisdiction over the defendant’s person.[151] Jurisdiction An erroneous assessment “presupposes that the taxpayer is subject to the tax but is
over the person of the defendant is indispensable in actions in personam or those actions disputing the correctness of the amount assessed.”[159] With an erroneous assessment,
based on a party’s personal liability.[152] The proceedings in an action in personam are the taxpayer claims that the local assessor erred in determining any of the items for
void if the court had no jurisdiction over the person of the defendant.[153] computing the real property tax, i.e., the value of the real property or the portion thereof
subject to tax and the proper assessment levels. In case of an erroneous assessment,
Jurisdiction over the res or the thing under litigation is acquired either “by the seizure of the taxpayer must exhaust the administrative remedies provided under the Local
the property under legal process, whereby it is brought into actual custody of the law; or Government Code before resorting to judicial action.
as a result of the institution of legal proceedings, in which the power of the court is
recognized and made effective.”[154] Jurisdiction over the res is necessary in actions in The taxpayer must first pay the real property tax under protest. Section 252 of the Local
rem or those actions “directed against the thing or property or status of a person and Government Code provides:

seek judgments with respect thereto as against the whole world.”[155] The proceedings
in an action in rem are void if the court had no jurisdiction over the thing under litigation. SECTION 252. Payment Under Protest. -(a) No protest shall be entertained
[156]
unless the taxpayer first pays the tax. There shall be annotated on the tax
receipts the words "paid under protest". The protest in writing must be filed
In the present case, the Regional Trial Court had no jurisdiction over the subject matter of within thirty (30) days from payment of the tax to the provincial, city
the action, specifically, over the remedy sought. As this court explained in Malana v. treasurer or municipal treasurer, in the case of a municipality within
Tappa:[157] Metropolitan Manila Area, who shall decide the protest within sixty (60) days
from receipt.

. . . an action for declaratory relief presupposes that there has been no actual
(b) The tax or a portion thereof paid under protest, shall be held in trust by
breach of the instruments involved or of rights arising thereunder. Since the
the treasurer concerned.
purpose of an action for declaratory relief is to secure an authoritative
statement of the rights and obligations of the parties under a statute, deed, or
(c) In the event that the protest is finally decided in favor of the taxpayer, the
contract for their guidance in the enforcement thereof, or compliance
amount or portion of the tax protested shall be refunded to the protestant, or
therewith, and not to settle issues arising from an alleged breach thereof, it
applied as tax credit against his existing or future tax liability.
may be entertained only before the breach or violation of the statute, deed, or

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(d) In the event that the protest is denied or upon the lapse of the sixty day concurs in the revision or the assessment, it shall be his duty to notify the
period prescribed in subparagraph (a), the taxpayer may avail of the remedies owner of the property or the person having legal interest therein of such fact
as provided for in Chapter 3, Title II, Book II of this Code. using the form prescribed for the purpose. The owner of the property or the
person having legal interest therein or the assessor who is not satisfied with
the decision of the Board, may, within thirty (30) days after receipt of the
Should the taxpayer find the action on the protest unsatisfactory, the taxpayer may decision of said Board, appeal to the Central Board of Assessment Appeals, as
appeal with the Local Board of Assessment Appeals within 60 days from receipt of the herein provided. The decision of the Central Board shall be final and executory.
decision on the protest: (Emphasis supplied)

SECTION 226. Local Board of Assessment Appeals. - Any owner or person On the other hand, an assessment is illegal if it was made without authority under the
having legal interest in the property who is not satisfied with the action of the
law.[162] In case of an illegal assessment, the taxpayer may directly resort to judicial
provincial, city or municipal assessor in the assessment of his property may,
action without paying under protest the assessed tax and filing an appeal with the Local
within sixty (60) days from the date of receipt of the written notice of
and Central Board of Assessment Appeals.
assessment, appeal to the Board of Assessment Appeals of the provincial or
city by filing a petition under oath in the form prescribed for the purpose,
In Ty v. Trampe,[163] the Municipal Assessor of Pasig sent Alejandro B. Ty a notice of
together with copies of the tax declarations and such affidavits or documents
assessment with respect to Ty’s real properties in Pasig. Without resorting to the
submitted in support of the appeal.
administrative remedies under the Local Government Code, Ty filed before the Regional
Trial Court a petition, praying that the trial court nullify the notice of assessment. In
Payment under protest and appeal to the Local Board of Assessment Appeals are assessing the real property taxes due, the Municipal Assessor used a schedule of market
“successive administrative remedies to a taxpayer who questions the correctness of an values solely prepared by him. This, Ty argued, was void for being contrary to the Local
assessment.”[160] The Local Board Assessment Appeals shall not entertain an appeal Government Code requiring that the schedule of market values be jointly prepared by the
provincial, city, and municipal assessors of the municipalities within the Metropolitan
“without the action of the local assessor”[161] on the protest.
Manila Area.

If the taxpayer is still unsatisfied after appealing with the Local Board of Assessment
This court ruled that the assessment was illegal for having been issued without authority
Appeals, the taxpayer may appeal with the Central Board of Assessment Appeals within
of the Municipal Assessor. Reconciling provisions of the Real Property Tax Code and the
30 days from receipt of the Local Board’s decision:
Local Government Code, this court held that the schedule of market values must be
jointly prepared by the provincial, city, and municipal assessors of the municipalities
SECTION 229. Action by the Local Board of Assessment Appeals. - (a) The within the Metropolitan Manila Area.
Board shall decide the appeal within one hundred twenty (120) days from the
date of receipt of such appeal. The Board, after hearing, shall render its As to the issue of exhaustion of administrative remedies, this court held that Ty did not
decision based on substantial evidence or such relevant evidence on record as err in directly resorting to judicial action. According to this court, payment under protest
a reasonable mind might accept as adequate to support the conclusion. is required only “where there is a question as to the reasonableness of the amount
assessed.”[164] As to appeals before the Local and Central Board of Assessment Appeals,
(b) In the exercise of its appellate jurisdiction, the Board shall have the power they are “fruitful only where questions of fact are involved.”[165]
to summon witnesses, administer oaths, conduct ocular inspection, take
depositions, and issue subpoena and subpoena duces tecum. The proceedings Ty raised the issue of the legality of the notice of assessment, an issue that did not go
of the Board shall be conducted solely for the purpose of ascertaining the facts into the reasonableness of the amount assessed. Neither did the issue involve a question
without necessarily adhering to technical rules applicable in judicial of fact. Ty raised a question of law and, therefore, need not resort to the administrative
proceedings. remedies provided under the Local Government Code.

(c) The secretary of the Board shall furnish the owner of the property or the In the present case, the PEZA did not avail itself of any of the remedies against a notice
person having legal interest therein and the provincial or city assessor with a of assessment. A petition for declaratory relief is not the proper remedy once a notice of
copy of the decision of the Board. In case the provincial or city assessor assessment was already issued.

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The City was objecting to the venue of the action, not to the jurisdiction of the Regional
Instead of a petition for declaratory relief, the PEZA should have directly resorted to a Trial Court of Pasay. In essence, the City was contending that the PEZA’s petition is a real
judicial action. The PEZA should have filed a complaint for injunction, the “appropriate action as it affects title to or possession of real property, and, therefore, the PEZA should
ordinary civil action”[166] to enjoin the City from enforcing its demand and collecting the have filed the petition with the Regional Trial Court of Lapu-Lapu City where the real
assessed taxes from the PEZA. After all, a declaratory judgment as to the PEZA’s tax- properties are located.
exempt status is useless unless the City is enjoined from enforcing its demand.
However, whatever objections the City has against the venue of the PEZA’s action for
Injunction “is a judicial writ, process or proceeding whereby a party is ordered to do or declaratory relief are already deemed waived. Objections to venue must be raised at the
refrain from doing a certain act.”[167] “It may be the main action or merely a provisional earliest possible opportunity.[181] The City did not file a motion to dismiss the petition on
the ground that the venue was improperly laid. Neither did the City raise this objection in
remedy for and as incident in the main action.”[168] The essential requisites of a writ of
its answer.
injunction are: “(1) there must be a right in esse or the existence of a right to be
protected; and (2) the act against which the injunction is directed to constitute a violation
In any event, the law sought to be judicially interpreted in this case had already been
of such right.”[169]
breached. The Regional Trial Court of Pasay, therefore, had no jurisdiction over the
PEZA’s petition for declaratory relief against the City.
We note, however, that the City confused the concepts of jurisdiction and venue in
contending that the Regional Trial Court of Pasay had no jurisdiction because the real
III.
properties involved in this case are located in the City of Lapu-Lapu.

On the one hand, jurisdiction is “the power to hear and determine cases of the general
The Court of Appeals had no jurisdiction
class to which the proceedings in question belong.”[170] Jurisdiction is a matter of over the PEZA’s petition for certiorari
substantive law.[171] Thus, an action may be filed only with the court or tribunal where against the Province of Bataan
the Constitution or a statute says it can be brought.[172] Objections to jurisdiction cannot
Appeal is the remedy “to obtain a reversal or modification of a judgment on the
be waived and may be brought at any stage of the proceedings, even on appeal.[173]
When a case is filed with a court which has no jurisdiction over the action, the court shall merits.”[182] A judgment on the merits is one which “determines the rights and liabilities
of the parties based on the disclosed facts, irrespective of the formal, technical or dilatory
motu proprio dismiss the case.[174]
objections.”[183] It is not even necessary that the case proceeded to trial.[184] So long
On the other hand, venue is “the place of trial or geographical location in which an action as the “judgment is general”[185] and “the parties had a full legal opportunity to be heard
or proceeding should be brought.”[175] In civil cases, venue is a matter of procedural law. on their respective claims and contentions,” [186] the judgment is on the merits.
[176] A party’s objections to venue must be brought at the earliest opportunity either in a
On the other hand, certiorari is a special civil action filed to annul or modify a proceeding
motion to dismiss or in the answer; otherwise the objection shall be deemed waived.[177]
When the venue of a civil action is improperly laid, the court cannot motu proprio dismiss of a tribunal, board, or officer exercising judicial or quasi-judicial functions.[187]
the case.[178] Certiorari, which in Latin means “to be more fully informed,”[188] was originally a remedy
in the common law. This court discussed the history of the remedy of certiorari in
The venue of an action depends on whether the action is a real or personal action. Spouses Delos Santos v. Metropolitan Bank and Trust Company:[189]
Should the action affect title to or possession of real property, or interest therein, it is a
real action. The action should be filed in the proper court which has jurisdiction over the
In the common law, from which the remedy of certiorari evolved, the writ of
area wherein the real property involved, or a portion thereof, is situated.[179] If the
certiorari was issued out of Chancery, or the King’s Bench, commanding
action is a personal action, the action shall be filed with the proper court where the
agents or officers of the inferior courts to return the record of a cause pending
plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the
before them, so as to give the party more sure and speedy justice, for the writ
principal defendants resides, or in the case of a non-resident defendant where he may be
would enable the superior court to determine from an inspection of the record
found, at the election of the plaintiff.[180] whether the inferior court’s judgment was rendered without authority. The
errors were of such a nature that, if allowed to stand, they would result in a

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substantial injury to the petitioner to whom no other remedy was available. If substantial justice,”[199] has treated petitions for certiorari as an appeal: “(1) if the
the inferior court acted without authority, the record was then revised and petition for certiorari was filed within the reglementary period within which to file a
corrected in matters of law. The writ of certiorari was limited to cases in which petition for review on certiorari; (2) when errors of judgment are averred; and (3) when
the inferior court was said to be exceeding its jurisdiction or was not
there is sufficient reason to justify the relaxation of the rules.”[200] Considering that “the
proceeding according to essential requirements of law and would lie only to
nature of an action is determined by the allegations of the complaint or the petition and
review judicial or quasi-judicial acts.[190]
the character of the relief sought,”[201] a petition which “actually avers errors of
judgment rather than errors than that of jurisdiction”[202] may be considered a petition
In our jurisdiction, the term “certiorari” is used in two ways. An appeal before this court for review.
raising pure questions of law is commenced by filing a petition for review on certiorari
under Rule 45 of the Rules of Court. An appeal by certiorari, which continues the However, suspending the application of the Rules has its disadvantages. Relaxing
proceedings commenced before the lower courts,[191] is filed to reverse or modify procedural rules may reduce the “effective enforcement of substantive rights,”[203]
judgments or final orders.[192] Under the Rules, an appeal by certiorari must be filed leading to “arbitrariness, caprice, despotism, or whimsicality in the settlement of
within 15 days from notice of the judgment or final order, or of the denial of the disputes.”[204] Therefore, for this court to suspend the application of the Rules, the
appellant’s motion for new trial or reconsideration.[193] accomplishment of substantial justice must outweigh the importance of predictability of
court procedures.
A petition for certiorari under Rule 65, on the other hand, is an independent and original
action filed to set aside proceedings conducted without or in excess of jurisdiction or with The PEZA’s petition for certiorari may be treated as an appeal. First, the petition for
certiorari was filed within the 15-day reglementary period for filing an appeal. The PEZA
grave abuse of discretion amounting to lack or excess of jurisdiction.[194] Under the
Rules, a petition for certiorari may only be filed if there is no appeal or any plain, speedy, filed its petition for certiorari before the Court of Appeals on October 15, 2007,[205] which

or adequate remedy in the ordinary course of law.[195] The petition must be filed within was 12 days from October 3, 2007[206] when the PEZA had notice of the trial court’s
order denying the motion for reconsideration.
60 days from notice of the judgment, order, or resolution.[196]

Second, the petition for certiorari raised errors of judgment. The PEZA argued that the
Because of the longer period to file a petition for certiorari, some litigants attempt to file
trial court erred in ruling that it is not exempt from payment of real property taxes given
petitions for certiorari as substitutes for lost appeals by certiorari. However, Rule 65 is
Section 21 of Presidential Decree No. 66 and Sections 11 and 51 of the Special Economic
clear that a petition for certiorari will not prosper if appeal is available. Appeal is the
proper remedy even if the error, or one of the errors, raised is grave abuse of discretion Zone Act of 1995.[207]

on the part of the court rendering judgment.[197] If appeal is available, a petition for
Third, there is sufficient reason to relax the rules given the importance of the substantive
certiorari cannot be filed.
issue presented in this case.

In this case, the trial court’s decision dated January 31, 2007 is a judgment on the
However, the PEZA’s petition for certiorari was filed before the wrong court. The PEZA
merits. Based on the facts disclosed by the parties, the trial court declared the PEZA
should have filed its petition before the Court of Tax Appeals.
liable to the Province of Bataan for real property taxes. The PEZA’s proper remedy
against the trial court’s decision, therefore, is appeal.
The Court of Tax Appeals has the exclusive appellate jurisdiction over local tax cases
decided by Regional Trial Courts. Section 7, paragraph (a)(3) of Republic Act No. 1125,
Since the PEZA filed a petition for certiorari against the trial court’s decision, it availed
as amended by Republic Act No. 9282, provides:
itself of the wrong remedy. As the Province of Bataan contended, the trial court’s decision
dated January 31, 2007 “is only an error of judgment appealable to the higher level court
and may not be corrected by filing a petition for certiorari.”[198] That the trial court judge Sec. 7. Jurisdiction. – The [Court of Tax Appeals] shall exercise:
allegedly committed grave abuse of discretion does not make the petition for certiorari
the correct remedy. The PEZA should have raised this ground in an appeal filed within 15 a. Exclusive appellate jurisdiction to review by appeal, as herein provided:
days from notice of the assailed resolution.
....
This court, “in the liberal spirit pervading the Rules of Court and in the interest of

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3. Decisions, orders or resolutions of the Regional Trial Courts in local tax jurisdiction in cases falling within the exclusive appellate jurisdiction of the tax
cases originally decided or resolved by them in the exercise of their original or court.”[216] We further elaborated:
appellate jurisdiction[.]

Indeed, in order for any appellate court to effectively exercise its appellate
The local tax cases referred to in Section 7, paragraph (a)(3) of Republic Act No. 1125, as jurisdiction, it must have the authority to issue, among others, a writ of
amended, include cases involving real property taxes. Real property taxation is governed certiorari. In transferring exclusive jurisdiction over appealed tax cases to the
by Book II of the Local Government Code on “Local Taxation and Fiscal Matters.” Real CTA, it can reasonably be assumed that the law intended to transfer also such
property taxes are collected by the Local Treasurer,[208] not by the Bureau of Internal power as is deemed necessary, if not indispensable, in aid of such appellate
Revenue in charge of collecting national internal revenue taxes, fees, and charges.[209] jurisdiction. There is no perceivable reason why the transfer should only be
considered as partial, not total.
Section 7, paragraph (a)(5) of Republic Act No. 1125, as amended by Republic Act No.
9282, separately provides for the exclusive appellate jurisdiction of the Court of Tax ....
Appeals over decisions of the Central Board of Assessment Appeals involving the
assessment or collection of real property taxes: If this Court were to sustain petitioners' contention that jurisdiction over their
certiorari petition lies with the CA, this Court would be confirming the exercise
by two judicial bodies, the CA and the CTA, of jurisdiction over basically the
Sec. 7. Jurisdiction. – The [Court of Tax Appeals] shall exercise: same subject matter – precisely the split-jurisdiction situation which is
anathema to the orderly administration of justice. The Court cannot accept
a. Exclusive appellate jurisdiction to review by appeal, as herein provided: that such was the legislative motive, especially considering that the law
expressly confers on the CTA, the tribunal with the specialized competence
.... over tax and tariff matters, the role of judicial review over local tax cases
without mention of any other court that may exercise such power. Thus, the
5. Decisions of the Central Board of Assessment Appeals in the exercise of its Court agrees with the ruling of the CA that since appellate jurisdiction over
appellate jurisdiction over cases involving the assessment and taxation of real private respondents' complaint for tax refund is vested in the CTA, it follows
property originally decided by the provincial or city board of assessment that a petition for certiorari seeking nullification of an interlocutory order
appeals[.] issued in the said case should, likewise, be filed with the same court. To rule
otherwise would lead to an absurd situation where one court decides an appeal
in the main case while another court rules on an incident in the very same
This separate provision, nevertheless, does not bar the Court of Tax Appeals from taking case.
cognizance of trial court decisions involving the collection of real property tax cases.
Sections 256[210] and 266[211] of the Local Government Code expressly allow local Stated differently, it would be somewhat incongruent with the pronounced
government units to file “in any court of competent jurisdiction” civil actions to collect judicial abhorrence to split jurisdiction to conclude that the intention of the law
basic real property taxes. Should the trial court rule against them, local government is to divide the authority over a local tax case filed with the RTC by giving to
units cannot be barred from appealing before the Court of Tax Appeals – the “highly the CA or this Court jurisdiction to issue a writ of certiorari against
specialized body specifically created for the purpose of reviewing tax cases.”[212] interlocutory orders of the RTC but giving to the CTA the jurisdiction over the
appeal from the decision of the trial court in the same case. It is more in
We have also ruled that the Court of Tax Appeals, not the Court of Appeals, has the consonance with logic and legal soundness to conclude that the grant of
exclusive original jurisdiction over petitions for certiorari assailing interlocutory orders appellate jurisdiction to the CTA over tax cases filed in and decided by the RTC
issued by Regional Trial Courts in a local tax case. We explained in The City of Manila v. carries with it the power to issue a writ of certiorari when necessary in aid of
Hon. Grecia-Cuerdo[213] that while the Court of Tax Appeals has no express grant of such appellate jurisdiction. The supervisory power or jurisdiction of the CTA to
issue a writ of certiorari in aid of its appellate jurisdiction should co-exist with,
power to issue writs of certiorari under Republic Act No. 1125,[214] as amended, the tax
and be a complement to, its appellate jurisdiction to review, by appeal, the
court’s judicial power as defined in the Constitution[215] includes the power to determine final orders and decisions of the RTC, in order to have complete supervision
“whether or not there has been grave abuse of discretion amounting to lack or excess of
over the acts of the latter.[217] (Citations omitted)
jurisdiction on the part of the [Regional Trial Court] in issuing an interlocutory order of

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following the procedure under Rule 43 of the Rules of Court.[225]

In this case, the petition for injunction filed before the Regional Trial Court of Pasay was a
local tax case originally decided by the trial court in its original jurisdiction. Since the The Court of Tax Appeals’ decision may then be appealed before this court through a
PEZA assailed a judgment, not an interlocutory order, of the Regional Trial Court, the petition for review on certiorari under Rule 45 of the Rules of Court raising pure questions
PEZA’s proper remedy was an appeal to the Court of Tax Appeals.
of law.[226]

Considering that the appellate jurisdiction of the Court of Tax Appeals is to the exclusion
In case of an illegal assessment where the assessment was issued without authority,
of all other courts, the Court of Appeals had no jurisdiction to take cognizance of the
exhaustion of administrative remedies is not necessary and the taxpayer may directly
PEZA’s petition. The Court of Appeals acted without jurisdiction in rendering the decision
resort to judicial action.[227] The taxpayer shall file a complaint for injunction before the
in CA-G.R. SP No. 100984. Its decision in CA-G.R. SP No. 100984 is void.[218]
Regional Trial Court[228] to enjoin the local government unit from collecting real property
taxes.
The filing of appeal in the wrong court does not toll the period to appeal. Consequently,
the decision of the Regional Trial Court, Branch 115, Pasay City, became final and
The party unsatisfied with the decision of the Regional Trial Court shall file an appeal, not
executory after the lapse of the 15th day from the PEZA’s receipt of the trial court’s
a petition for certiorari, before the Court of Tax Appeals, the complaint being a local tax
decision.[219] The denial of the petition for injunction became final and executory.
case decided by the Regional Trial Court.[229] The appeal shall be filed within fifteen (15)
days from notice of the trial court’s decision.
IV.

The Court of Tax Appeals’ decision may then be appealed before this court through a
petition for review on certiorari under Rule 45 of the Rules of Court raising pure questions
The remedy of a taxpayer depends on the
stage in which the local government unit is of law.[230]
enforcing its authority to impose real
property taxes In case the local government unit has issued a notice of delinquency, the taxpayer may
file a complaint for injunction to enjoin the impending sale of the real property at public
The proper remedy of a taxpayer depends on the stage in which the local government auction. In case the local government unit has already sold the property at public
unit is enforcing its authority to collect real property taxes. For the guidance of the auction, the taxpayer must first deposit with the court the amount for which the real
members of the bench and the bar, we reiterate the taxpayer’s remedies against the property was sold, together with interest of 2% per month from the date of sale to the
erroneous or illegal assessment of real property taxes. time of the institution of action. The taxpayer may then file a complaint to assail the
validity of the public auction.[231] The decisions of the Regional Trial Court in these cases
Exhaustion of administrative remedies under the Local Government Code is necessary in shall be appealable before the Court of Tax Appeals,[232] and the latter’s decisions
cases of erroneous assessments where the correctness of the amount assessed is appealable before this court through a petition for review on certiorari under Rule 45 of
assailed. The taxpayer must first pay the tax then file a protest with the Local Treasurer
the Rules of Court.[233]
within 30 days from date of payment of tax.[220] If protest is denied or upon the lapse of
the 60-day period to decide the protest, the taxpayer may appeal to the Local Board of V.
Assessment Appeals within 60 days from the denial of the protest or the lapse of the 60-
day period to decide the protest.[221] The Local Board of Assessment Appeals has 120 The PEZA is exempt from payment
days to decide the appeal.[222] of real property taxes

If the taxpayer is unsatisfied with the Local Board’s decision, the taxpayer may appeal The jurisdictional errors in this case render these consolidated petitions moot. We do not
before the Central Board of Assessment Appeals within 30 days from receipt of the Local review void decisions rendered without jurisdiction.
Board’s decision.[223]
However, the PEZA alleged that several local government units, including the City of
Baguio and the Province of Cavite, have issued their respective real property tax
The decision of the Central Board of Assessment Appeals is appealable before the Court of
assessments against the PEZA. Other local government units will likely follow suit, and
Tax Appeals En Banc.[224] The appeal before the Court of Tax Appeals shall be filed
either the PEZA or the local government units taxing the PEZA may file their respective

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actions against each other.

The person liable for real property taxes is the “taxable person who had actual or
In the interest of judicial economy[234] and avoidance of conflicting decisions involving beneficial use and possession [of the real property for the taxable period,] whether or not

the same issues,[235] we resolve the substantive issue of whether the PEZA is exempt [the person owned the property for the period he or she is being taxed].”[239]
from payment of real property taxes.
The exceptions to the rule are provided in the Local Government Code. Under Section
Real property taxes are annual taxes levied on real property such as lands, buildings, 133(o), local government units have no power to levy taxes of any kind on the national
machinery, and other improvements not otherwise specifically exempted under the Local government, its agencies and instrumentalities and local government units:

Government Code.[236] Real property taxes are ad valorem, with the amount charged
based on a fixed proportion of the value of the property.[237] Under the law, provinces, SEC. 133. Common Limitations on the Taxing Powers of Local Government
cities, and municipalities within the Metropolitan Manila Area have the power to levy real Units. – Unless otherwise provided herein, the exercise of taxing powers of
property taxes within their respective territories.[238] provinces, cities, municipalities, and barangays shall not extend to the levy of
the following:
The general rule is that real properties are subject to real property taxes. This is true
especially since the Local Government Code has withdrawn exemptions from real property ....
taxes of all persons, whether natural or juridical:
(o) Taxes, fees or charges of any kind on the National Government, its
agencies and instrumentalities and local government units.
SEC. 234. Exemptions from Real Property Tax. – The following are exempted
from payment of real property tax:
Specifically on real property taxes, Section 234 enumerates the persons and real property
(a) Real property owned by the Republic of the Philippines or any of its exempt from real property taxes:
political subdivisions except when the beneficial use thereof has been granted,
for consideration or otherwise, to a taxable person;
SEC. 234. Exemptions from Real Property Tax. – The following are exempted
from payment of real property tax:
(b) Charitable institutions, churches, parsonages or convents appurtenant
thereto, mosques, nonprofit or religious cemeteries and all lands, buildings,
(a) Real property owned by the Republic of the Philippines or any of its
and improvements actually, directly, and exclusively used for religious,
political subdivisions except when the beneficial use thereof has been granted,
charitable or educational purposes;
for consideration or otherwise, to a taxable person;
(c) All machineries and equipment that are actually, directly and exclusively
(b) Charitable institutions, churches, parsonages or convents appurtenant
used by local water districts and government-owned or –controlled
thereto, mosques, nonprofit or religious cemeteries and all lands, buildings,
corporations engaged in the supply and distribution of water and/or generation
and improvements actually, directly, and exclusively used for religious,
and transmission of electric power;
charitable or educational purposes;
(d) All real property owned by duly registered cooperatives as provided under
(c) All machineries and equipment that are actually, directly and exclusively
R.A. No. 6938; and
used by local water districts and government-owned or –controlled
corporations engaged in the supply and distribution of water and/or generation
(e) Machinery and equipment used for pollution control and environmental
and transmission of electric power;
protection.

(d) All real property owned by duly registered cooperatives as provided under
Except as provided herein, any exemption from payment of real property
R.A. No. 6938; and
taxes previously granted to, or presently enjoyed by, all persons, whether
natural or juridical, including government-owned or -controlled corporations
(e) Machinery and equipment used for pollution control and environmental
are hereby withdrawn upon the effectivity of this Code. (Emphasis supplied)

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protection.
Usage exemptions are exemptions based on the use of the real property. Thus, no real
Except as provided herein, any exemption from payment of real property tax property taxes may be levied on real property such as: (1) lands and buildings actually,
previously granted to, or presently enjoyed by, all persons, whether natural or directly, and exclusively used for religious, charitable or educational purpose; (2)
juridical, including all government-owned or -controlled corporations are machineries and equipment actually, directly and exclusively used by local water districts
hereby withdrawn upon the effectivity of this Code. (Emphasis supplied) or by government-owned or controlled corporations engaged in the supply and
distribution of water and/or generation and transmission of electric power; and (3)
machinery and equipment used for pollution control and environmental protection.[243]
For persons granted tax exemptions or incentives before the effectivity of the Local
Government Code, Section 193 withdrew these tax exemption privileges. These persons
Persons may likewise be exempt from payment of real properties if their charters, which
consist of both natural and juridical persons, including government-owned or controlled
were enacted or reenacted after the effectivity of the Local Government Code, exempt
corporations:
them payment of real property taxes.[244]

SEC. 193. Withdrawal of Tax Exemption Privileges. – Unless otherwise V. (A)

provided in this code, tax exemptions or incentives granted to or presently
enjoyed by all persons, whether natural or juridical, including government- The PEZA is an instrumentality of the national government
owned or controlled corporations, except local water districts, cooperatives
duly registered under R.A. 6938, non stock and non profit hospitals and An instrumentality is “any agency of the National Government, not integrated within the
educational institutions, are hereby withdrawn upon effectivity of this Code. department framework, vested with special functions or jurisdiction by law, endowed with
some if not all corporate powers, administering special funds, and enjoying operational
autonomy, usually through a charter.”[245]
As discussed, Section 234 withdrew all tax privileges with respect to real property taxes.

Examples of instrumentalities of the national government are the Manila International

Nevertheless, local government units may grant tax exemptions under such terms and
Airport Authority,[246] the Philippine Fisheries Development Authority,[247] the
conditions as they may deem necessary:
Government Service Insurance System,[248] and the Philippine Reclamation Authority.
[249] These entities are not integrated within the department framework but are
SEC. 192. Authority to Grant Tax Exemption Privileges. – Local government nevertheless vested with special functions to carry out a declared policy of the national
units may, through ordinances duly approved, grant tax exemptions, government.
incentives or reliefs under such terms and conditions as they may deem
necessary. Similarly, the PEZA is an instrumentality of the national government. It is not integrated
within the department framework but is an agency attached to the Department of Trade
and Industry.[250] Book IV, Chapter 7, Section 38(3)(a) of the Administrative Code of
In Mactan Cebu International Airport Authority v. Hon. Marcos,[240] this court classified
1987 defines “attachment”:
the exemptions from real property taxes into ownership, character, and usage
exemptions.
SEC. 38. Definition of Administrative Relationship. – Unless otherwise
Ownership exemptions are exemptions based on the ownership of the real property. The expressly stated in the Code or in other laws defining the special relationships
exemptions of real property owned by the Republic of the Philippines, provinces, cities, of particular agencies, administrative relationships shall be categorized and
municipalities, barangays, and registered cooperatives fall under this classification.[241] defined as follows:

Character exemptions are exemptions based on the character of the real property. Thus, ....
no real property taxes may be levied on charitable institutions, houses and temples of
prayer like churches, parsonages, or convents appurtenant thereto, mosques, and non (3) Attachment.–(a) This refers to the lateral relationship between the
profit or religious cemeteries.[242] department or its equivalent and the attached agency or corporation for

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purposes of policy and program coordination. The coordination may be functions or jurisdiction by law. Congress created the PEZA to operate, administer,
accomplished by having the department represented in the governing board of manage and develop special economic zones in the Philippines.[259] Special economic
the attached agency or corporation, either as chairman or as a member, with zones are areas with highly developed or which have the potential to be developed into
or without voting rights, if this is permitted by the charter; having the agro-industrial, industrial tourist/recreational, commercial, banking, investment and
attached corporation or agency comply with a system of periodic reporting
financial centers.[260] By operating, administering, managing, and developing special
which shall reflect the progress of the programs and projects; and having the
economic zones which attract investments and promote use of domestic labor, the PEZA
department or its equivalent provide general policies through its
carries out the following policy of the Government:
representative in the board, which shall serve as the framework for the
internal policies of the attached corporation or agency[.]
SECTION 2. Declaration of Policy. — It is the declared policy of the
government to translate into practical realities the following State policies and
Attachment, which enjoys “a larger measure of independence”[251] compared with other mandates in the 1987 Constitution, namely:
administrative relationships such as supervision and control, is further explained in Beja,
Sr. v. Court of Appeals:[252] (a) “The State recognizes the indispensable role of the private sector,
encourages private enterprise, and provides incentives to needed
investments.” (Sec. 20, Art. II)
An attached agency has a larger measure of independence from the
Department to which it is attached than one which is under departmental (b) “The State shall promote the preferential use of Filipino labor, domestic
supervision and control or administrative supervision. This is borne out by the materials and locally produced goods, and adopt measures that help make
“lateral relationship” between the Department and the attached agency. The them competitive.” (Sec. 12, Art. XII)
attachment is merely for “policy and program coordination.” With respect to
administrative matters, the independence of an attached agency from In pursuance of these policies, the government shall actively encourage,
Departmental control and supervision is further reinforced by the fact that promote, induce and accelerate a sound and balanced industrial, economic and
even an agency under a Department’s administrative supervision is free from social development of the country in order to provide jobs to the people
Departmental interference with respect to appointments and other personnel especially those in the rural areas, increase their productivity and their
actions “in accordance with the decentralization of personnel functions” under individual and family income, and thereby improve the level and quality of
the Administrative Code of 1987. Moreover, the Administrative Code explicitly their living condition through the establishment, among others, of special
provides that Chapter 8 of Book IV on supervision and control shall not apply economic zones in suitable and strategic locations in the country and through
to chartered institutions attached to a Department.[253] measures that shall effectively attract legitimate and productive foreign
investments.[261]

With the PEZA as an attached agency to the Department of Trade and Industry, the 13-
person PEZA Board is chaired by the Department Secretary.[254] Among the powers and Being an instrumentality of the national government, the PEZA cannot be taxed by local
functions of the PEZA is its ability to coordinate with the Department of Trade and government units.
Industry for policy and program formulation and implementation.[255] In strategizing and
prioritizing the development of special economic zones, the PEZA coordinates with the Although a body corporate vested with some corporate powers,[262] the PEZA is not a
Department of Trade and Industry.[256] government-owned or controlled corporation taxable for real property taxes.

The PEZA also administers its own funds and operates autonomously, with the PEZA Section 2(13) of the Introductory Provisions of the Administrative Code of 1987 defines
Board formulating and approving the PEZA’s annual budget.[257] Appointments and other the term “government-owned or controlled corporation”:
personnel actions in the PEZA are also free from departmental interference, with the PEZA
Board having the exclusive and final authority to promote, transfer, assign and reassign
SEC. 2. General Terms Defined. – Unless the specific words of the text, or the
officers of the PEZA.[258] context as a whole, or a particular statute, shall require a different meaning:

As an instrumentality of the national government, the PEZA is vested with special

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.... performing governmental or public functions need not meet the test of
economic viability. These instrumentalities perform essential public services for
(13) Government-owned or controlled corporation refers to any agency the common good, services that every modern State must provide its citizens.
organized as a stock or non-stock corporation, vested with functions relating These instrumentalities need not be economically viable since the government
to public needs whether governmental or proprietary in nature, and owned by may even subsidize their entire operations. These instrumentalities are not the
the Government directly or through its instrumentalities either wholly, or, "government-owned or controlled corporations" referred to in Section 16,
where applicable as in the case of stock corporations, to the extent of at least Article XII of the 1987 Constitution.
fifty-one (51) per cent of its capital stock: Provided, That government-owned
or controlled corporations may be further categorized by the Department of Thus, the Constitution imposes no limitation when the legislature creates
the Budget, the Civil Service Commission, and the Commission on Audit for government instrumentalities vested with corporate powers but performing
purposes of the exercise and discharge of their respective powers, functions essential governmental or public functions. Congress has plenary authority to
and responsibilities with respect to such corporations. create government instrumentalities vested with corporate powers provided
these instrumentalities perform essential government functions or public
services. However, when the legislature creates through special charters
Government entities are created by law, specifically, by the Constitution or by statute. In corporations that perform economic or commercial activities, such entities —
the case of government-owned or controlled corporations, they are incorporated by virtue known as "government-owned or controlled corporations" — must meet the
of special charters[263] to participate in the market for special reasons which may be test of economic viability because they compete in the market place.
related to dysfunctions or inefficiencies of the market structure. This is to adjust reality
as against the concept of full competition where all market players are price takers. ....
Thus, under the Constitution, government-owned or controlled corporations are created in
the interest of the common good and should satisfy the test of economic viability.[264] Commissioner Blas F. Ople, proponent of the test of economic viability,
Article XII, Section 16 of the Constitution provides: explained to the Constitutional Commission the purpose of this test, as
follows:

Section 16. The Congress shall not, except by general law, provide for the
formation, organization, or regulation of private corporations. Government- MR. OPLE: Madam President, the reason for this concern is really
owned or controlled corporations may be created or established by special that when the government creates a corporation, there is a sense
charters in the interest of the common good and subject to the test of in which this corporation becomes exempt from the test of
economic viability. economic performance. We know what happened in the past. If a
government corporation loses, then it makes its claim upon the
taxpayers' money through new equity infusions from the
Economic viability is “the capacity to function efficiently in business.”[265] To be government and what is always invoked is the common good. That
economically viable, the entity “should not go into activities which the private sector can is the reason why this year, out of a budget of P115 billion for the
do better.”[266] entire government, about P28 billion of this will go into equity
infusions to support a few government financial institutions. And
To be considered a government-owned or controlled corporation, the entity must have this is all taxpayers' money which could have been relocated to
agrarian reform, to social services like health and education, to
been organized as a stock or non-stock corporation.[267]
augment the salaries of grossly underpaid public employees. And
yet this is all going down the drain.
Government instrumentalities, on the other hand, are also created by law but partake of
sovereign functions. When a government entity performs sovereign functions, it need not
Therefore, when we insert the phrase "ECONOMIC VIABILITY"
meet the test of economic viability. In Manila International Airport Authority v. Court of
together with the "common good," this becomes a restraint on
Appeals,[268] this court explained:
future enthusiasts for state capitalism to excuse themselves from
the responsibility of meeting the market test so that they become
viable. And so, Madam President, I reiterate, for the committee's
In contrast, government instrumentalities vested with corporate powers and
consideration and I am glad that I am joined in this proposal by

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Commissioner Foz, the insertion of the standard of "ECONOMIC Section 21. Non-profit Character of the Authority; Exemption from Taxes. The
VIABILITY OR THE ECONOMIC TEST," together with the common Authority shall be non-profit and shall devote and use all its returns from its
good. capital investment, as well as excess revenues from its operations, for the
development, improvement and maintenance and other related expenditures
.... of the Authority to pay its indebtedness and obligations and in furtherance and
effective implementation of the policy enunciated in Section 1 of this Decree.
In consonance therewith, the Authority is hereby declared exempt:
Clearly, the test of economic viability does not apply to government entities
vested with corporate powers and performing essential public services. The ....
State is obligated to render essential public services regardless of the
economic viability of providing such service. The non-economic viability of (b) From all income taxes, franchise taxes, realty taxes and all
rendering such essential public service does not excuse the State from other kinds of taxes and licenses to be paid to the National
withholding such essential services from the public.[269] (Emphases and Government, its provinces, cities, municipalities and other
citations omitted) government agencies and instrumentalities[.]

The law created the PEZA’s charter. Under the Special Economic Zone Act of 1995, the The Special Economic Zone Act of 1995, on the other hand, does not specifically exempt
PEZA was established primarily to perform the governmental function of operating, the PEZA from payment of real property taxes.
administering, managing, and developing special economic zones to attract investments
and provide opportunities for preferential use of Filipino labor. Nevertheless, we rule that the PEZA is exempt from real property taxes by virtue of its
charter. A provision in the Special Economic Zone Act of 1995 explicitly exempting the
Under its charter, the PEZA was created a body corporate endowed with some corporate PEZA is unnecessary. The PEZA assumed the real property exemption of the EPZA under
Presidential Decree No. 66.
powers. However, it was not organized as a stock[270] or non-stock[271] corporation.
Nothing in the PEZA’s charter provides that the PEZA’s capital is divided into shares.[272]
Section 11 of the Special Economic Zone Act of 1995 mandated the EPZA “to evolve into
The PEZA also has no members who shall share in the PEZA’s profits.
the PEZA in accordance with the guidelines and regulations set forth in an executive order
issued for this purpose.” President Ramos then issued Executive Order No. 282 in 1995,
The PEZA does not compete with other economic zone authorities in the country. The
ordering the PEZA to assume the EPZA’s powers, functions, and responsibilities under
government may even subsidize the PEZA’s operations. Under Section 47 of the Special
Presidential Decree No. 66 not inconsistent with the Special Economic Zone Act of 1995:
Economic Zone Act of 1995, “any sum necessary to augment [the PEZA’s] capital outlay
shall be included in the General Appropriations Act to be treated as an equity of the
national government.”[273] SECTION 1. Assumption of EPZA’s Powers and Functions by PEZA. All the
powers, functions and responsibilities of EPZA as provided under its Charter,
The PEZA, therefore, need not be economically viable. It is not a government-owned or Presidential Decree No. 66, as amended, insofar as they are not inconsistent
controlled corporation liable for real property taxes. with the powers, functions and responsibilities of the PEZA, as mandated
under Republic Act No. 7916, shall hereafter be assumed and exercised by the
V. (B) PEZA. Henceforth, the EPZA shall be referred to as the PEZA.

The PEZA assumed the non-profit character, including the tax exempt status, of
The following sections of the Special Economic Zone Act of 1995 provide for the PEZA’s
the EPZA
powers, functions, and responsibilities:
The PEZA’s predecessor, the EPZA, was declared non-profit in character with all its
revenues devoted for its development, improvement, and maintenance. Consistent with SEC. 5. Establishment of ECOZONES. – To ensure the viability and
this non-profit character, the EPZA was explicitly declared exempt from real property geographical dispersal of ECOZONES through a system of prioritization, the
taxes under its charter. Section 21 of Presidential Decree No. 66 provides: following areas are initially identified as ECOZONES, subject to the criteria
specified in Section 6:

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ECOZONES: Provided, That the said area shall be developed only through local
.... government and/or private sector initiative under any of the schemes allowed
in Republic Act No. 6957 (the build-operate-transfer law), and without any
The metes and bounds of each ECOZONE are to be delineated and more financial exposure on the part of the national government: Provided, further,
particularly described in a proclamation to be issued by the President of the That the area can be easily secured to curtail smuggling activities: Provided,
Philippines, upon the recommendation of the Philippine Economic Zone finally, That after five (5) years the area must have attained a substantial
Authority (PEZA), which shall be established under this Act, in coordination degree of development, the indicators of which shall be formulated by the
with the municipal and / or city council, National Land Use Coordinating PEZA.
Committee and / or the Regional Land Use Committee.
SEC. 7. ECOZONE to be a Decentralized Agro-Industrial, Industrial,
SEC. 6. Criteria for the Establishment of Other ECOZONES. – In addition to the Commercial / Trading, Tourist, Investment and Financial Community. - Within
ECOZONES identified in Section 5 of this Act, other areas may be established the framework of the Constitution, the interest of national sovereignty and
as ECOZONES in a proclamation to be issued by the President of the territorial integrity of the Republic, ECOZONE shall be developed, as much as
Philippines subject to the evaluation and recommendation of the PEZA, based possible, into a decentralized, self-reliant and self-sustaining industrial,
on a detailed feasibility and engineering study which must conform to the commercial/trading, agro-industrial, tourist, banking, financial and investment
following criteria: center with minimum government intervention. Each ECOZONE shall be
provided with transportation, telecommunications, and other facilities needed
(a) The proposed area must be identified as a regional growth center in the to generate linkage with industries and employment opportunities for its own
Medium-Term Philippine Development Plan or by the Regional Development inhabitants and those of nearby towns and cities.
Council;
The ECOZONE shall administer itself on economic, financial, industrial, tourism
(b) The existence of required infrastructure in the proposed ECOZONE, such as development and such other matters within the exclusive competence of the
roads, railways, telephones, ports, airports, etc., and the suitability and national government.
capacity of the proposed site to absorb such improvements;
The ECOZONE may establish mutually beneficial economic relations with other
(c) The availability of water source and electric power supply for use of the entities within the country, or, subject to the administrative guidance of the
ECOZONE; Department of Foreign Affairs and/or the Department of Trade and Industry,
with foreign entities or enterprises.
(d) The extent of vacant lands available for industrial and commercial
development and future expansion of the ECOZONE as well as of lands Foreign citizens and companies owned by non-Filipinos in whatever proportion
adjacent to the ECOZONE available for development of residential areas for may set up enterprises in the ECOZONE, either by themselves or in joint
the ECOZONE workers; venture with Filipinos in any sector of industry, international trade and
commerce within the ECOZONE. Their assets, profits and other legitimate
(e) The availability of skilled, semi-skilled and non-skilled trainable labor force interests shall be protected: Provided, That the ECOZONE through the PEZA
in and around the ECOZONE; may require a minimum investment for any ECOZONE enterprises in freely
convertible currencies: Provided, further, That the new investment shall fall
(f) The area must have a significant incremental advantage over the existing under the priorities, thrusts and limits provided for in the Act.
economic zones and its potential profitability can be established;
SEC. 8. ECOZONE to be Operated and Managed as Separate Customs Territory.
(g) The area must be strategically located; and – The ECOZONE shall be managed and operated by the PEZA as separate
customs territory.
(h) The area must be situated where controls can easily be established to
curtail smuggling activities. The PEZA is hereby vested with the authority to issue certificate of origin for
products manufactured or processed in each ECOZONE in accordance with the
Other areas which do not meet the foregoing criteria may be established as prevailing rules or origin, and the pertinent regulations of the Department of

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Trade and Industry and/or the Department of Finance.

(e) To create, operate and/or contract to operate such agencies and functional
SEC. 9. Defense and Security. – The defense of the ECOZONE and the security units or offices of the authority as it may deem necessary;
of its perimeter fence shall be the responsibility of the national government in
coordination with the PEZA. Military forces sent by the national government for (f) To adopt, alter and use a corporate seal; make contracts, lease, own or
the purpose of defense shall not interfere in the internal affairs of any of the otherwise dispose of personal or real property; sue and be sued; and
ECOZONE and expenditure for these military forces shall be borne by the otherwise carry out its duties and functions as provided for in this Act;
national government. The PEZA may provide and establish the ECOZONES’
internal security and firefighting forces. (g) To coordinate the formulation and preparation of the development plans of
the different entities mentioned above;
SEC. 10. Immigration. – Any investor within the ECOZONE whose initial
investment shall not be less than One Hundred Fifty Thousand Dollars (h) To coordinate with the National Economic Development Authority (NEDA),
($150,000.00), his/her spouse and dependent children under twenty-one (21) the Department of Trade and Industry (DTI), the Department of Science and
years of age shall be granted permanent resident status within the ECOZONE. Technology (DOST), and the local government units and appropriate
They shall have freedom of ingress and egress to and from the ECOZONE government agencies for policy and program formulation and implementation;
without any need of special authorization from the Bureau of Immigration. and

The PEZA shall issue working visas renewable every two (2) years to foreign (i) To monitor and evaluate the development and requirements of entities in
executives and other aliens, processing highly-technical skills which no Filipino subsection (a) and recommend to the local government units or other
within the ECOZONE possesses, as certified by the Department of Labor and appropriate authorities the location, incentives, basic services, utilities and
Employment. The names of aliens granted permanent resident status and infrastructure required or to be made available for said entities.
working visas by the PEZA shall be reported to the Bureau of Immigration
within thirty (30) days after issuance thereof. SEC. 17. Investigation and Inquiries. – Upon a written formal complaint made
under oath, which on its face provides reasonable basis to believe that some
SEC. 13. General Powers and Functions of the Authority. – The PEZA shall anomaly or irregularity might have been committed, the PEZA or the
have the following powers and functions: administrator of the ECOZONE concerned, shall have the power to inquire into
the conduct of firms or employees of the ECOZONE and to conduct
(a) To operate, administer, manage and develop the ECOZONE according to investigations, and for that purpose may subpoena witnesses, administer
the principles and provisions set forth in this Act; oaths, and compel the production of books, papers, and other evidences:
Provided, That to arrive at the truth, the investigator(s) may grant immunity
(b) To register, regulate and supervise the enterprises in the ECOZONE in an from prosecution to any person whose testimony or whose possessions of
efficient and decentralized manner; documents or other evidence is necessary or convenient to determine the
truth in any investigation conducted by him or under the authority of the PEZA
(c) To coordinate with local government units and exercise general supervision or the administrator of the ECOZONE concerned.
over the development, plans, activities and operations of the ECOZONES,
industrial estates, export processing zones, free trade zones, and the like; SEC. 21. Development Strategy of the ECOZONE. - The strategy and priority of
development of each ECOZONE established pursuant to this Act shall be
(d) In coordination with local government units concerned and appropriate formulated by the PEZA, in coordination with the Department of Trade and
agencies, to construct, acquire, own, lease, operate and maintain on its own Industry and the National Economic and Development Authority; Provided,
or through contract, franchise, license, bulk purchase from the private sector That such development strategy is consistent with the priorities of the national
and build-operate-transfer scheme or joint venture, adequate facilities and government as outlined in the medium-term Philippine development plan. It
infrastructure, such as light and power systems, water supply and distribution shall be the policy of the government and the PEZA to encourage and provide
systems, telecommunication and transportation, buildings, structures, Incentives and facilitate private sector participation in the construction and
warehouses, roads, bridges, ports and other facilities for the operation and operation of public utilities and infrastructure in the ECOZONE, using any of
development of the ECOZONE; the schemes allowed in Republic Act No. 6957 (the build-operate-transfer

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law). SEC. 32. Shipping and Shipping Register. – Private shipping and related
business including private container terminals may operate freely in the
SEC. 22. Survey of Resources. The PEZA shall, in coordination with ECOZONE, subject only to such minimum reasonable regulations of local
appropriate authorities and neighboring cities and application which the PEZA may prescribe.

municipalities, immediately conduct a survey of the physical, natural assets The PEZA shall, in coordination with the Department of Transportation and
and potentialities of the ECOZONE areas under its Communications, maintain a shipping register for each ECOZONE as a
business register of convenience for ocean-going vessels and issue related
jurisdiction. certification.

SEC. 26. Domestic Sales. – Goods manufactured by an ECOZONE enterprise Ships of all sizes, descriptions and nationalities shall enjoy access to the ports
shall be made available for immediate retail sales in the domestic market, of the ECOZONE, subject only to such reasonable requirement as may be
subject to payment of corresponding taxes on the raw materials and other prescribed by the PEZA In coordination with the appropriate agencies of the
regulations that may be adopted by the Board of the PEZA. national government.

However, in order to protect the domestic industry, there shall be a negative SEC. 33. Protection of Environment. - The PEZA, in coordination with the
list of Industries that will be drawn up by the PEZA. Enterprises engaged in the appropriate agencies, shall take concrete and appropriate steps and enact the
industries included in the negative list shall not be allowed to sell their proper measure for the protection of the local environment.
products locally. Said negative list shall be regularly updated by the PEZA.
SEC. 34. Termination of Business. - Investors In the ECOZONE who desire to
The PEZA, in coordination with the Department of Trade and Industry and the terminate business or operations shall comply with such requirements and
Bureau of Customs, shall jointly issue the necessary implementing rules and procedures which the PEZA shall set, particularly those relating to the clearing
guidelines for the effective Implementation of this section. of debts. The assets of the closed enterprise can be transferred and the funds
con be remitted out of the ECOZONE subject to the rules, guidelines and
SEC. 29. Eminent Domain. – The areas comprising an ECOZONE may be procedures prescribed jointly by the Bangko Sentral ng Pilipinas, the
expanded or reduced when necessary. For this purpose, the government shall Department of Finance and the PEZA.
have the power to acquire, either by purchase, negotiation or condemnation
proceedings, any private lands within or adjacent to the ECOZONE for: SEC. 35. Registration of Business Enterprises. - Business enterprises within a
designated ECOZONE shall register with the PEZA to avail of all incentives and
a. Consolidation of lands for zone development purposes; benefits provided for in this Act.

b. Acquisition of right of way to the ECOZONE; and SEC. 36. One Stop Shop Center. - The PEZA shall establish a one stop shop
center for the purpose of facilitating the registration of new enterprises in the
c. The protection of watershed areas and natural assets valuable to the ECOZONE. Thus, all appropriate government agencies that are Involved In
prosperity of the ECOZONE. registering, licensing or issuing permits to investors shall assign their
representatives to the ECOZONE to attend to Investor’s requirements.
If in the establishment of a publicly-owned ECOZONE, any person or group of
persons who has been occupying a parcel of land within the Zone has to be SEC. 39. Master Employment Contracts. - The PEZA, in coordination with the
evicted, the PEZA shall provide the person or group of persons concerned with Department of Tabor and Employment, shall prescribe a master employment
proper disturbance compensation: Provided, however, That in the case of contract for all ECOZONE enterprise staff members and workers, the terms of
displaced agrarian reform beneficiaries, they shall be entitled to the benefits which provide salaries and benefits not less than those provided under this
under the Comprehensive Agrarian Reform Law, including but not limited to Act, the Philippine Labor Code, as amended, and other relevant issuances of
Section 36 of Republic Act No. 3844, in addition to a homelot in the relocation the national government.
site and preferential employment in the project being undertaken.
SEC. 41. Migrant Worker. - The PEZA, in coordination with the Department of

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Labor and Employment, shall promulgate appropriate measures and programs phased out and only the management level and an appropriate number of
leading to the expansion of the services of the ECOZONE to help the local personnel shall be retained.
governments of nearby areas meet the needs of the migrant workers.
Government personnel whose services are not retained by the PEZA or any
SEC. 42. Incentive Scheme. - An additional deduction equivalent to one- half government office within the ECOZONE shall be entitled to separation pay and
(1/2) of the value of training expenses incurred in developing skilled or such retirement and other benefits they are entitled to under the laws then in
unskilled labor or for managerial or other management development programs force at the time of their separation: Provided, That in no case shall the
incurred by enterprises in the ECOZONE can be deducted from the national separation pay be less than one and one-fourth (1 1/4) month of every year of
government's share of three percent (3%) as provided In Section 24. service.

The PEZA, the Department of Labor and Employment, and the Department of
Finance shall jointly make a review of the incentive scheme provided In this The non-profit character of the EPZA under Presidential Decree No. 66 is not inconsistent
section every two (2) years or when circumstances so warrant. with any of the powers, functions, and responsibilities of the PEZA. The EPZA’s non-profit
character, including the EPZA’s exemption from real property taxes, must be deemed
SEC. 43. Relationship with the Regional Development Council. - The PEZA shall assumed by the PEZA.
determine the development goals for the ECOZONE within the framework of
national development plans, policies and goals, and the administrator shall, In addition, the Local Government Code exempting instrumentalities of the national
upon approval by the PEZA Board, submit the ECOZONE plans, programs and government from real property taxes was already in force[274] when the PEZA’s charter
projects to the regional development council for inclusion in and as inputs to was enacted in 1995. It would have been redundant to provide for the PEZA’s exemption
the overall regional development plan. in its charter considering that the PEZA is already exempt by virtue of Section 133(o) of
the Local Government Code.
SEC. 44. Relationship with the Local Government Units. - Except as herein
provided, the local government units comprising the ECOZONE shall retain As for the EPZA, Commonwealth Act No. 470 or the Assessment Law was in force when
their basic autonomy and identity. The cities shall be governed by their the EPZA’s charter was enacted. Unlike the Local Government Code, Commonwealth Act
respective charters and the municipalities shall operate and function In No. 470 does not contain a provision specifically exempting instrumentalities of the
accordance with Republic Act No. 7160, otherwise known as the Local national government from payment of real property taxes.[275] It was necessary to put
Government an exempting provision in the EPZA’s charter.

Code of 1991. Contrary to the PEZA’s claim, however, Section 24 of the Special Economic Zone Act of
1995 is not a basis for the PEZA’s exemption. Section 24 of the Special Economic Zone
SEC. 45. Relationship of PEZA to Privately-Owned Industrial Estates. – Act of 1995 provides:
Privately-owned industrial estates shall retain their autonomy and
independence and shall be monitored by the PEZA for the implementation of
incentives. Sec. 24. Exemption from National and Local Taxes. — Except for real property
taxes on land owned by developers, no taxes, local and national, shall be
SEC. 46. Transfer of Resources. - The relevant functions of the Board of imposed on business establishments operating within the ECOZONE. In lieu
Investments over industrial estates and agri-export processing estates shall be thereof, five percent (5%) of the gross income earned by all business
transferred to the PEZA. The resources of government-owned Industrial enterprises within the ECOZONE shall be paid and remitted as follows:
estates and similar bodies except the Bases Conversion Development
Authority and those areas identified under Republic Act No. 7227, are hereby
(a) Three percent (3%) to the National Government;
transferred to the PEZA as the holding agency. They are hereby detached from
their mother agencies and attached to the PEZA for policy, program and
(b) Two percent (2%) which shall be directly remitted by the
operational supervision.
business establishments to the treasurer's office of the municipality
or city where the enterprise is located. (Emphasis supplied)
The Boards of the affected government-owned industrial estates shall be

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(1) Those intended for public use, such as roads, canals, rivers, torrents, ports
Tax exemptions provided under Section 24 apply only to business establishments and bridges constructed by the State, banks, shores, roadsteads, and others
operating within economic zones. Considering that the PEZA is not a business of similar character;
establishment but an instrumentality performing governmental functions, Section 24 is
inapplicable to the PEZA. (2) Those which belong to the State, without belonging for public use, and are
intended for some public service or for the development of the national
Also, contrary to the PEZA’s claim, developers of economic zones, whether public or wealth.
private developers, are liable for real property taxes on lands they own. Section 24 does
not distinguish between a public and private developer. Thus, courts cannot distinguish.
[276] Properties of public dominion are outside the commerce of man. These properties are
Unless the public developer is exempt under the Local Government Code or under
its charter enacted after the Local Government Code’s effectivity, the public developer exempt from “levy, encumbrance or disposition through public or private sale.”[278] As
must pay real property taxes on their land. this court explained in Manila International Airport Authority:

At any rate, the PEZA cannot be taxed for real property taxes even if it acts as a
Properties of public dominion, being for public use, are not subject to levy,
developer or operator of special economic zones. The PEZA is an instrumentality of the
encumbrance or disposition through public or private sale. Any encumbrance,
national government exempt from payment of real property taxes under Section 133(o)
levy on execution or auction sale of any property of public dominion is void for
of the Local Government Code. As this court said in Manila International Airport
being contrary to public policy. Essential public services will stop if properties
Authority, “there must be express language in the law empowering local governments to
of public dominion are subject to encumbrances, foreclosures and auction
tax national government instrumentalities. Any doubt whether such power exists is
sale[.][279]
resolved against local governments.”[277]

V. (C) On the other hand, all other properties of the state that are not intended for public use or
are not intended for some public service or for the development of the national wealth are
Real properties under the PEZA’s title are owned by the Republic of the patrimonial properties. Article 421 of the Civil Code of the Philippines provides:
Philippines

Art. 421. All other property of the State, which is not of the character stated in
Under Section 234(a) of the Local Government Code, real properties owned by the the preceding article, is patrimonial property.
Republic of the Philippines are exempt from real property taxes:

Patrimonial properties are also properties of the state, but the state may dispose of its
SEC. 234. Exemptions from Real Property Tax. – The following are exempted patrimonial property similar to private persons disposing of their property. Patrimonial
from payment of real property tax: properties are within the commerce of man and are susceptible to prescription, unless
otherwise provided.[280]
(a) Real property owned by the Republic of the Philippines or any of its
political subdivisions except when the beneficial use thereof has been granted, In this case, the properties sought to be taxed are located in publicly owned economic
for consideration or otherwise, to a taxable person[.] zones. These economic zones are property of public dominion. The City seeks to tax
properties located within the Mactan Economic Zone,[281] the site of which was reserved
by President Marcos under Proclamation No. 1811, Series of 1979. Reserved lands are
Properties owned by the state are either property of public dominion or patrimonial
lands of the public domain set aside for settlement or public use, and for specific public
property. Article 420 of the Civil Code of the Philippines enumerates property of public
dominion: purposes by virtue of a presidential proclamation.[282] Reserved lands are inalienable
and outside the commerce of man,[283] and remain property of the Republic until
withdrawn from public use either by law or presidential proclamation.[284] Since no law
Art. 420. The following things are property of public dominion:
or presidential proclamation has been issued withdrawing the site of the Mactan Economic

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Zone from public use, the property remains reserved land.

(2) For property belonging to the Republic of the Philippines, but titled in the
As for the Bataan Economic Zone, the law consistently characterized the property as a name of any political subdivision or of any corporate agency or
port. Under Republic Act No. 5490, Congress declared Mariveles, Bataan “a principal port instrumentality, by the executive head of the agency or instrumentality.
of entry”[285] to serve as site of a foreign trade zone where foreign and domestic (Emphasis supplied)
merchandise may be brought in without being subject to customs and internal revenue
laws and regulations of the Philippines.[286] Section 4 of Republic Act No. 5490 provided In Manila International Airport Authority, this court explained:
that the foreign trade zone in Mariveles, Bataan “shall at all times remain to be owned by
the Government”:
[The exemption under Section 234(a) of the Local Government Code] should
be read in relation with Section 133(o) of the same Code, which prohibits local
SEC. 4. Powers and Duties. – The Foreign Trade Zone Authority shall have the
governments from imposing “[t]axes, fess or charges of any kind on the
following powers and duties:
National Government, its agencies and instrumentalities x x x.” The real
properties owned by the Republic are titled either in the name of the Republic
a. To fix and delimit the site of the Zone which at all times remain to be
itself or in the name of agencies or instrumentalities of the National
owned by the Government, and which shall have a contiguous and
Government. The Administrative Code allows real property owned by the
adequate area with well defined and policed boundaries, with adequate
Republic to be titled in the name of agencies or instrumentalities of the
enclosures to segregate the Zone from the customs territory for
national government. Such real properties remained owned by the Republic of
protection of revenues, together with suitable provisions for ingress and
the Philippines and continue to be exempt from real estate tax.
egress of persons, conveyance, vessels and merchandise sufficient for
the purpose of this Act[.] (Emphasis supplied)
The Republic may grant the beneficial use of its real property to an agency or
instrumentality of the national government. This happens when title of the real
The port in Mariveles, Bataan then became the Bataan Economic Zone under the Special property is transferred to an agency or instrumentality even as the Republic
Economic Zone Act of 1995.[287] Republic Act No. 9728 then converted the Bataan remains the owner of the real property. Such arrangement does not result in
the loss of the tax exemption/ Section 234(a) of the Local Government Code
Economic Zone into the Freeport Area of Bataan.[288]
states that real property owned by the Republic loses its tax exemption only if
the “beneficial use thereof has been granted, for consideration or otherwise, to
A port of entry, where imported goods are unloaded then introduced in the market for
public consumption, is considered property for public use. Thus, Article 420 of the Civil a taxable person.” . . .[290] (Emphasis in the original; italics supplied)
Code classifies a port as property of public dominion. The Freeport Area of Bataan, where
the government allows tax and duty-free importation of goods,[289] is considered Even the PEZA’s lands and buildings whose beneficial use have been granted to other
property of public dominion. The Freeport Area of Bataan is owned by the state and persons may not be taxed with real property taxes. The PEZA may only lease its lands
cannot be taxed under Section 234(a) of the Local Government Code.
and buildings to PEZA-registered economic zone enterprises and entities.[291] These
PEZA-registered enterprises and entities, which operate within economic zones, are not
Properties of public dominion, even if titled in the name of an instrumentality as in this
subject to real property taxes. Under Section 24 of the Special Economic Zone Act of
case, remain owned by the Republic of the Philippines. If property registered in the name
1995, no taxes, whether local or national, shall be imposed on all business establishments
of an instrumentality is conveyed to another person, the property is considered conveyed
operating within the economic zones:
on behalf of the Republic of the Philippines. Book I, Chapter 12, Section 48 of the
Administrative Code of 1987 provides:
SEC. 24. Exemption from National and Local Taxes. – Except for real property
on land owned by developers, no taxes, local and national, shall be imposed
SEC. 48. Official Authorized to Convey Real Property. – Whenever real
on business establishments operating within the ECOZONE. In lieu thereof, five
property of the government is authorized by law to be conveyed, the deed of
percent (5%) of the gross income earned by all business enterprises within the
conveyance shall be executed in behalf of the government by the following:
ECOZONE shall be paid and remitted as follows:

....

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a. Three percent (3%) to the National Government; Petitioners, therefore, are not deprived of revenues from the operations of economic
zones within their respective territorial jurisdictions. The national government ensured
b. Two percent (2%) which shall be directly remitted by the business that local government units comprising economic zones shall retain their basic autonomy
establishments to the treasurer’s office of the municipality or city where the and identity.[295]
enterprise is located.[292] (Emphasis supplied)
All told, the PEZA is an instrumentality of the national government. Furthermore, the
lands owned by the PEZA are real properties owned by the Republic of the Philippines.
In lieu of revenues from real property taxes, the City of Lapu-Lapu collects two-fifths of The City of Lapu-Lapu and the Province of Bataan cannot collect real property taxes from
5% final tax on gross income paid by all business establishments operating within the the PEZA.
Mactan Economic Zone:
WHEREFORE, the consolidated petitions are DENIED.

SEC. 24. Exemption from National and Local Taxes. – Except for real property
SO ORDERED.
on land owned by developers, no taxes, local and national, shall be imposed
on business establishments operating within the ECOZONE. In lieu thereof, five
percent (5%) of the gross income earned by all business enterprises within the Carpio, (Chairperson), Del Castillo, Mendoza, and Reyes,* JJ., concur.
ECOZONE shall be paid and remitted as follows:

a. Three percent (3%) to the National Government;

* Designated Acting Member per Special Order No. 1881 dated November 25, 2014.

b. Two percent (2%) which shall be directly remitted by the business

[1] Resolution dated March 14, 2011.
establishments to the treasurer’s office of the municipality or city where the
enterprise is located.[293] (Emphasis supplied)
[2] Rollo (G.R. No. 184203), pp. 51–54. This decision in CA-G.R. CV No. 88318 was

penned by Associate Justice Josefina Guevara-Salonga with Associate Justices Vicente Q.

For its part, the Province of Bataan collects a fifth of the 5% final tax on gross income Roxas and Ramon R. Garcia concurring.
paid by all business establishments operating within the Freeport Area of Bataan:
[3] Id. at 48–49.

Section 6. Imposition of a Tax Rate of Five Percent (5%) on Gross Income

[4] Rollo (G.R. No. 187583), pp. 57–68. This decision in CA-G.R. SP No. 100984 was
Earned. - No taxes, local and national, shall be imposed on business
establishments operating within the FAB. In lieu thereof, said business penned by Associate Justice Marlene Gonzales-Sison with Associate Justices Juan Q.
establishments shall pay a five percent (5%) final tax on their gross income Enriquez, Jr. and Isaias P. Dicdican concurring.
earned in the following percentages:
[5] Id. at 69–71.

(a) One per centum (1%) to the National Government;

[6] Proc. No. 1081 dated September 21, 1972.
(b) One per centum (1%) to the Province of Bataan;
[7] Pres. Decree No. 66 (1972), sec. 1.
(c) One per centum (1%) to the treasurer's office of the Municipality of
Mariveles; and
[8] Rep. Act No. 5490 (1969), sec. 2.

(d) Two per centum (2%) to the Authority of the Freeport of Area of Bataan.
[9] Pres. Decree No.66 (1972), sec. 4(a).
[294] (Emphasis supplied)

[10] Pres. Decree No. 66 (1972), sec. 21.

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[30] RULES OF COURT, Rule 63, sec. 3 provides:

[11] Pres. Decree No. 66 (1972), sec. 21.

Notice on Solicitor General. – In any action which involves the validity of a statute,
[12] Pres. Decree No. 66 (1972), sec. 21(a). executive order or regulation, or any other governmental regulation, the Solicitor General
shall be notified by the party assailing the same and shall be entitled to be heard upon
[13] Rep. Act No. 7916 (1995), sec. 11. such question.

[31] RTC records, pp. 137–166.

[14] Rep. Act No. 7916 (1995), sec. 13(a).

[32] Id. at 179–191. This resolution was penned by Judge Wilhelmina B. Jorge-Wagan.
[15] Rep. Act No. 7916 (1995), sec. 13(b).

[33] Id. at 200–227.

[16] Rep. Act No. 7916 (1995), sec. 5(ll).

[34] Id. at 262.

[17] Rep. Act No. 7916 (1995), sec. 5(m).

[35] CA rollo (CA-G.R. CV No. 88318), pp. 12–44.

[18] Rep. Act No. 7916 (1995), sec. 11.

[36] Rollo (G.R. No. 184203), pp. 51–54.

[19] Exec. Order No. 282 (1995), sec. 1.

[37] CA rollo (CA-G.R. CV No. 88318), pp. 127–130.

[20] Exec. Order No. 282 (1995), sec. 2.

[38] Id. at 131.

[21] RTC records (Civil Case No. 02-0410), p. 16.

[39] Id. at 132–149.

[22] Id. at 17–20.

[40] Rollo (G.R. No. 184203), pp. 48–49.

[23] RTC records, pp. 20–21, dated July 14, 1998; p. 22, dated December 22, 1998; p.

23, dated January 28, 1999; pp. 24–25, dated March 8, 1999; p. 26, dated May 29,
[41] Id. at 21–46.
2000; pp. 27–31, dated December 13, 1999; pp. 32–33, dated May 2, 2000.

[24] RTC records, pp. 34–35. [42] Id. at 36.

[25] Id. at 2–15. [43] Id. at 33.

[26] Id. at 79–88. [44] Id. at 34.

[27] Id. at 83–87. [45] Id. at 40–42.

[28] Id. at 119–124. [46] Id. at 76.

[29] Id. at 167–173. [47] Rollo (G.R. No. 184203), p. 91, resolution dated November 17, 2008.

[48] Id. at 118–124.

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[49] Id. at 124–128. [69] Id. at 126–135.

[50] Id. at 129–135. [70] Rep. Act No. 7160 (1991), sec. 260 provides:

[51] Id. at 136–138. SECTION 260. Advertisement and Sale. – Within thirty (30) days after service of the
warrant of levy, the local treasurer shall proceed to publicly advertise for sale or auction
[52] Id. at 138–139. the property or a usable portion thereof as may be necessary to satisfy the tax
delinquency and expenses of sale. The advertisement shall be effected by posing a notice
at the main entrance of the provincial, city or municipal building, and in a publicly
[53] Id. at 141–145.
accessible and conspicuous place in the barangay where the real property is located, and
by publication once a week for two (2) weeks in a newspaper of general circulation in the
[54] Id. at 145–149.
province, city or municipality where the property is located. The advertisement shall
specify the amount of the delinquent tax, the interest due thereon and expense of sale,
[55] CA rollo (CA-G.R. SP No. 100984), p. 100. the date and place of sale, the name of the owner of the real property or person having
legal interest therein, and a description of the property to be sold[.]
[56] Id. at 101.
[71] CA rollo (CA-G.R. SP No. 100984), p. 140.

[57] Id. at 102.

[72] Id. at 143–144.

[58] Id.
[73] Id. at 141–142.

[59] Id. at 103.

[74] Id. at 14.

[60] Id. at 104–106.

[75] Id. at 51–52. This decision was penned by Judge Francisco G. Mendiola.

[61] Id. at 107.

[76] Id. at 52.

[62] Id. at 108–109.

[77] Id. at 53.

[63] Id. at 110–111.

[78] Id. at 2–49.

[64] CA rollo (CA-G.R. SP No. 100984), pp. 112–113, dated April 28, 2004; pp. 115–116,

dated May 5, 2004. [79] Id. at 244–245.

[65] Id. at 114, dated April 30, 2004; p. 117, dated May 7, 2004. [80] Id. at 251–260.

[66] Id. at 118–119. [81] Id. at 261–299.

[67] Id. at 120–122. [82] Id. at 300–330.

[68] Id. at 123–125. [83] Id. at 332–334.

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[104] Id. at 158–190.

[84] Id. at 369–393.

[105] Resolution dated March 14, 2011.

[85] Id. at 414–440.

[106] RULES OF COURT, Rule 41, sec. 2(a).

[86] Id. at 459–163.

[107] RULES OF COURT, Rule 41, sec. 2(b).

[87] Id. at 464–482.

[108] RULES OF COURT, Rule 41, sec. 2(c).

[88] Rollo (G.R. No. 187583), p. 68.

[109] Far Eastern Surety and Insurance Co., Inc., v. People, G.R. No. 170618, November
[89] Id. at 61. 20, 2013, 710 SCRA 358, 365 [Per J. Brion, Second Division]; Republic v. Malabanan,
G.R. No. 169067, October 6, 2010, 632 SCRA 338, 345 [Per J. Villarama, Jr., Third
[90] Id. at 62. Division].

[91] Id. at 62–64. [110] Far Eastern Surety and Insurance Co., Inc. v. People, G.R. No. 170618, November

20, 2013, 710 SCRA 358, 365 [Per J. Brion, Second Division]; Republic v. Malabanan,
[92] 528 Phil. 181 (2006) [Per J. Carpio, En Banc]. G.R. No. 169067, October 6, 2010, 632 SCRA 338, 345 [Per J. Villarama, Jr., Third
Division].
[93] Rollo (G.R. No. 187583), p. 65.
[111] G.R. No. 193706, March 12, 2013, 693 SCRA 201 [Per C.J. Sereno, En Banc].

[94] Id. at 57–68.

[112] Id. at 207, citing Ybañez v. Court of Appeals, 323 Phil. 643 (1996) [Per J. Francisco,

[95] CA rollo (CA-G.R. SP No. 100984), pp. 496–520.

Third Division].

[113] Id. at 207–208.

[96] Rollo (G.R. No. 187583), pp. 69–70.

[114] Municipality of Pateros v. Hon. Court of Appeals, et al., 607 Phil. 104, 114 (2009)
[97] Id. at 16–56.
[Per J. Nachura, Third Division]; Sevilleno v. Carilo, 559 Phil. 789, 792 (2007) [Per J.
Sandoval-Gutierrez, First Division].
[98] Id. at 25–29.

[115] See Republic v. City of Parañaque, G.R. No. 191109, July 18, 2012, 677 SCRA 246,
[99] Id. at 41–42.
257–260 [Per J. Mendoza, Third Division]; Government Service Insurance System v. City
Assessor of Manila, G.R. No. 186242, December 23, 2009, 609 SCRA 330, 349 [Per J.
[100] Id. at 46–48. Velasco, Jr., Third Division]; National Housing Authority v. Iloilo City, et al., 584 Phil. 604,
609–610 (2008) [Per J. Tinga, Second Division]; Philippine Fisheries Development
[101] Id. at 76, resolution dated July 29, 2009. Authority v. The Honorable Court of Appeals, 560 Phil. 738, 748 (2007) [Per J. Azcuna,
First Division]; Manila International Airport Authority v. Court of Appeals, 528 Phil. 181,
[102] Id. at 94–120. 209–213 (2006) [Per J. Carpio, En Banc].

[116] Municipality of Pateros v. The Honorable Court of Appeals, 607 Phil. 104 (2009) [Per
[103] Id. at 129–143.
J. Nachura, Third Division].

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[117] Id. at 114. [134] Id.

[118] Id. [135] Id.

[119] Id. [136] Velarde v. Social Justice Society, G.R. No. 159357, April 28, 2004, 428 SCRA 283,

293 [Per J. Panganiban, En Banc].

[120] Id. at 115, citing Tabujara III v. People, 591 Phil. 216, 231 (2008) [Per J. Chico-

Nazario, Third Division]. [137] G.R. No. 204603, September 24, 2013, 706 SCRA 273 [Per J. Perlas-Bernabe, En

Banc].
[121] See Spouses Sabitsana v. Muertegui, G.R. No. 181359, August 5, 2013, 703 SCRA

145, 158–159 [Per J. Del Castillo, Second Division]; See also Allied Broadcasting Center, [138] Id. at 284.

Inc. v. Republic, 268 Phil. 852, 857 (1990) [Per J. Gancayco, En Banc] cited in W. B.
Riano, II Civil Procedure (The Bar Lecture Series) 216 (2012). [139] G.R. No. 159357, April 28, 2004, 428 SCRA 283 [Per J. Panganiban, En Banc].

[122] RULES OF COURT, Rule 63, sec. 1. [140] Id. at 286.

[123] RULES OF COURT, Rule 63, sec. 1. [141] Id. at 291–293.

[124] Republic v. Roque, G.R. No. 204603, September 24, 2013, 706 SCRA 273, 283 [Per [142] Id. at 283, citing Almeda v. Bathala Marketing Industries, Inc., 566 Phil. 458, 467
J. Perlas-Bernabe, En Banc]. (2008) [Per J. Nachura, Third Division].

[125] Ollada v. Central Bank of the Philippines, 115 Phil. 284, 291 (1962) [Per J. Dizon, En [143] Boston Equity Resources, Inc. v. Court of Appeals, G.R. No. 173946, June 19, 2013,
Banc]. 699 SCRA 16, 28 [Per J. Perez, Second Division].

[126] Republic v. Roque, G.R. No. 204603, September 24, 2013, 706 SCRA 273, 283 [Per [144] Villagracia v. Fifth (5th) Shari’a District Court, G.R. No. 188832, April 23, 2014 [Per
J. Perlas-Bernabe, En Banc]. J. Leonen, Third Division].

[127] 115 Phil. 284 (1962) [Per J. Dizon, En Banc]. [145] Id.

[128] Id. [146] Philippine Association of Free Labor Unions (PAFLU) v. Padilla, 106 Phil. 591, 593

(1959) [Per J. Labrador, En Banc]; Perkins v. Roxas, 72 Phil. 514, 517 (1941) [Per J.
[129] Id. at 285. Laurel, En Banc].

[130] Id. at 291. [147] Villagracia v. Fifth (5th) Shari’a District Court, G.R. No. 188832, April 23, 2014 [Per

J. Leonen, Third Division].

[131] Id.
[148] Id.

[132] Id.
[149] Id.

[133] Republic v. Roque, G.R. No. 204603, September 24, 2013, 706 SCRA 273, 283 [Per

J. Perlas-Bernabe, En Banc]. [150] Id.

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[151] Id. [168] Id.

[152] Id. [169] Agoo Rice Mill Corporation v. Land Bank of the Philippines, G.R. No. 173036,

September 26, 2012, 682 SCRA 36, 46 [Per J. Brion, Second Division].
[153] Id.
[170] Villagracia v. Fifth (5th) Shari’a District Court, G.R. No. 188832, April 23, 2014 [Per

[154] Id. J. Leonen, Third Division].

[155] Id. [171] Nocum v. Tan, 507 Phil. 620, 626 (2005) [Per J. Chico-Nazario, Second Division].

[156] Id. [172] Villagracia v. Fifth (5th) Shari’a District Court, G.R. No. 188832, April 23, 2014 [Per

J. Leonen, Third Division].

[157] 616 Phil. 177 (2009) [Per J. Chico-Nazario, Third Division].
[173] Id., citing Ibrahim v. Commission on Elections, G.R. No. 192289, January 8, 2013,

[158] Id. at 188–189. 688 SCRA 129, 145 [Per J. Reyes, En Banc], citing Republic v. Bantigue Point
Development Corporation, G.R. No. 162322, March 14, 2012, 668 SCRA 158 [Per J.
Sereno, Second Division]; Figueroa v. People of the Philippines, 580 Phil. 58, 76 (2008)
[159] National Power Corporation v. Province of Quezon, G.R. No. 171586, January 25,
[Per J. Nachura, Third Division]; Mangaliag v. Catubig-Pastoral, 510 Phil. 637, 648 (2005)
2010, 611 SCRA 71, 91 [Per J. Brion, Special Second Division].
[Per J. Austria-Martinez, Second Division]; Calimlim v. Ramirez, 204 Phil. 25, 35 (1982)
[Per J. Vasquez, First Division].
[160] Id. at 95.

[174] Rules of Court, Rule 9, sec. 1; Villagracia v. Fifth (5th) Shari’a District Court, G.R.
[161] Id.
No. 188832, April 23, 2014 [Per J. Leonen, Third Division].

[162] Ty v. Trampe, 321 Phil. 81, 101 (1995) [Per J. Panganiban, En Banc]. See J. Carpio, [175] Nocum v. Tan, 507 Phil. 620, 629 (2005) [Per J. Chico-Nazario, Second Division].
concurring opinion, in Camp John Hay Development Corporation v. Central Board of
Assessment Appeals, G.R. No. 169234, October 2, 2013, 706 SCRA 547, 578 [Per J. [176] Id. at 626.
Perez, Second Division].
[177] RULES OF COURT, Rule 9, sec. 1.
[163] 321 Phil. 81 (1995) [Per J. Panganiban, En Banc].

[178] Rudolf Lietz Holding, Inc. v. The Registry of Deeds of Parañaque City, 398 Phil. 626,
[164] Id. at 101.
633 (2000) [Per J. Ynares-Santiago, First Division]. However, a court may motu proprio
dismiss the case on any grounds for the dismissal of a civil action if the case falls under
[165] Id.
summary procedure per Section 4 of the 1991 Revised Rule on Summary Procedure.

[166] Ollada v. Central Bank of the Philippines, 115 Phil. 284, 291 (1962) [Per J. Dizon, En [179] RULES OF COURT, Rule 4, sec. 1.
Banc].
[180] RULES OF COURT, Rule 4, sec. 2.
[167] Agoo Rice Mill Corporation v. Land Bank of the Philippines, G.R. No. 173036,

September 26, 2012, 682 SCRA 36, 46 [Per J. Brion, Second Division]; Garayblas v. [181] RULES OF COURT, Rule 9, sec. 1.
Atienza, Jr,. 525 Phil. 291, 306 (2006) [Per J. Callejo, Sr., First Division]; Bacolod City
Water District v. Labayen, 487 Phil. 335, 346 (2004) [Per J. Puno, Second Division]. [182] Samson v. Hon. Fiel-Macaraig, G.R. No. 166356, February 2, 2010, 611 SCRA 345,

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351 [Per J. Carpio, Second Division]; Bugarin v. Palisoc, 513 Phil. 59, 66 (2005) [Per J. [197] Bugarin v. Palisoc, 513 Phil. 59, 66 (2005) [Per J. Quisumbing, First Division];
Quisumbing, First Division]; Association of Integrated Security Force of Bislig (AISFB)-ALU Association of Integrated Security Force of Bislig (AISFB)-ALU v. Hon. Court of Appeals,
v. Hon. Court of Appeals, 505 Phil. 10, 18 (2005) [Per J. Chico-Nazario, Second Division]. 505 Phil. 10, 18 (2005) [Per J. Chico-Nazario, Second Division].

[183] Mendiola v. Court of Appeals, 327 Phil. 1156, 1164 (1996) [Per J. Hermosisima, Jr., [198] Rollo (G.R. No. 187583), pp. 31–32.
First Division]; Nabus v. The Honorable Court of Appeals, 271 Phil. 768, 779 (1991) [Per
J. Regalado, Second Division]. [199] The City of Manila v. Hon. Grecia-Cuerdo, G.R. No. 175723, February 4, 2014 [Per J.

Peralta, En Banc]; Oaminal v. Castillo, 459 Phil. 542, 556 (2003) [Per J. Panganiban,
[184] Mendiola v. Court of Appeals, 327 Phil. 1156, 1164 (1996) [Per J. Hermosisima, Jr.,
Third Division].
First Division]; Nabus v. The Honorable Court of Appeals, 271 Phil. 768, 779–780 (1991)
[Per J. Regalado, Second Division]. [200] The City of Manila v. Hon. Grecia-Cuerdo, G.R. No. 175723, February 4, 2014 [Per J.

Peralta, En Banc]; Oaminal v. Castillo, 459 Phil. 542, 556 (2003) [Per J. Panganiban,
[185] Mendiola v. Court of Appeals, 327 Phil. 1156, 1164 (1996) [Per J. Hermosisima, Jr.,
Third Division].
First Division]; Nabus v. The Honorable Court of Appeals, 271 Phil. 768, 780 (1991) [Per
J. Regalado, Second Division]. [201] Oaminal v. Castillo, 459 Phil. 542, 557 (2003) [Per J. Panganiban, Third Division].

[186] Mendiola v. Court of Appeals, 327 Phil. 1156, 1165 (1996) [Per J. Hermosisima, Jr.,
[202] Id., citing Delsan Transport Lines, Inc. v. CA, 335 Phil. 1066, 1075 (1997) [Per J.
First Division]; Nabus v. The Honorable Court of Appeals, 271 Phil. 768, 780 (1991) [Per
Mendoza, Second Division].
J. Regalado, Second Division].
[203] Sebastian v. Morales, 445 Phil. 595, 605 (2003) [Per J. Quisumbing, Second
[187] RULES OF COURT, Rule 65, sec. 1.
Division].

[188] Black’s Law Dictionary, Eighth Edition 241 (2004).

[204] Id.

[189] G.R. No. 153852, October 24, 2012, 684 SCRA 410 [Per J. Bersamin, First Division].
[205] CA rollo (CA-G.R. SP No. 100984), p. 2.

[190] Id. at 420–421.

[206] Id. at 7.

[191] Madrigal Transport, Inc. v. Lapanday Holdings Corp., 479 Phil. 768, 780–781 (2004)
[207] Id. at 33–34.
[Per J. Panganiban, Third Division].
[208] LOCAL GOVT. CODE, sec. 247 provides;
[192] Id. at 781.

SEC. 247. Collection of Tax. - The collection of the real property tax with interest thereon
[193] RULES OF COURT, Rule 45, sec. 2.
and related expenses, and the enforcement of the remedies provided for in this Title or
any applicable laws, shall be the responsibility of the city or municipal treasurer
[194] Madrigal Transport, Inc. v. Lapanday Holdings Corp., 479 Phil. 768, 781 [Per J. concerned. The city or municipal treasurer may deputize the barangay treasurer to collect
Panganiban, Third Division]. all taxes on real property located in the barangay: Provided, That the barangay treasurer
is properly bonded for the purpose: Provided, further, That the premium on the bond shall
[195] RULES OF COURT, Rule 65, sec. 1. be paid by the city or municipal government concerned.

[196] RULES OF COURT, Rule 65, sec. 4. [209] TAX CODE, Title I, sec. 2 provides:

SEC. 2. Powers and duties of the Bureau of Internal Revenue. - The Bureau of Internal

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Revenue shall be under the supervision and control of the Department of Finance and its
powers and duties shall comprehend the assessment and collection of all national internal [218] See City of Iriga v. Camarines Sur III Electric Cooperative, Inc. (CASURECO III),
revenue taxes, fees, and charges, and the enforcement of all forfeitures, penalties, and G.R. No. 192945, September 5, 2012, 680 SCRA 236, 244 [Per J. Perlas-Bernabe, Second
fines connected therewith, including the execution of judgments in all cases decided in its Division].
favor by the Court of Tax Appeals and the ordinary courts. The Bureau shall give effect to
and administer the supervisory and police powers conferred to it by this Code or other [219] See Land Bank of the Philippines v. Court of Appeals, G.R. No. 190660, April 11,
laws.
2011, 647 SCRA 561, 567 [Per J. Carpio Morales, Third Division].

[210] LOCAL GOVT CODE, sec. 256 provides:

[220] Rep. Act No. 7160, sec. 252.

SEC. 256. Remedies For The Collection Of Real Property Tax. - For the collection of the
[221] Rep. Act No. 7160, sec. 226.
basic real property tax and any other tax levied under this Title, the local government unit
concerned may avail of the remedies by administrative action thru levy on real property
[222] Rep. Act No. 7160, sec. 229(a).
or by judicial action.

[211] LOCAL GOVT CODE, sec. 266 provides: [223] Rep. Act No. 7160, sec. 229(c).

SEC. 266. Collection of Real Property Tax Through the Courts. – The local government [224] Rep. Act No. 1125, as amended by Rep. Act No. 9282, sec. 7(a)(5); Rules of

unit concerned may enforce the collection of the basic real property tax or any other tax Procedure in the COURT OF TAX APPEALS, Rule 4, sec. 2(e).
levied under this Title by civil action in any court of competent jurisdiction. The civil action
shall be filed by the local treasurer within the period prescribed in Section 270 of this [225] Rules of Procedure in the COURT OF TAX APPEALS, Rule 8, sec. 4(c).
Code.
[226] Rep. Act No. 1125 (1954), as amended by Rep. Act No. 9282 (2004), sec. 19.
[212] Phil. Refining Co. v. Court of Appeals, 326 Phil. 680, 689 (1996) [Per J. Regalado,

Second Division]. [227] Ty v. Trampe, 321 Phil. 81, 101–102 (1995) [Per J. Panganiban, En Banc].

[213] G.R. No. 175723, February 4, 2014 [Per J. Peralta, En Banc].

[228] Batas Blg. 129 (1994), sec. 19; Bank of the Philippine Islands v. Hong, G.R. No.

161771, February 15, 2012, 666 SCRA 71, 78 [Per J. Villarama, Jr., First Division].
[214] AN ACT CREATING THE COURT OF TAX APPEALS (1954).

[229] Rep. Act No. 1125 (1954), as amended by Rep. Act No. 9282 (2004), sec. 7(a)(3).
[215] CONST., art. viii, sec. 1 provides:

[230] Rep. Act No. 1125 (1954), as amended by Rep. Act No. 9282 (2004), sec. 19.
Section 1. The judicial power shall be vested in one Supreme Court and in such lower
courts as may be established by law.
[231] Rep. Act No. 7160 (1991), sec. 267.

Judicial power includes the duty of the courts of justice to settle actual controversies
[232] Rep. Act No. 1125 (1954), as amended by Rep. Act No. 9282 (2004), sec. 7(a)(3).
involving rights which are legally demandable and enforceable, and to determine whether
or not there has been a grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of any branch or instrumentality of the Government. [233] Rep. Act No. 1125 (1954), as amended by Rep. Act No. 9282 (2004), sec. 19.

[216] The City of Manila v. Hon. Grecia-Cuerdo, G.R. No. 175723, February 4, 2014 [Per J. [234] Salud v. The Court of Appeals, G.R. No. 100156, June 27, 1994, 233 SCRA 384, 389

Peralta, En Banc]. [Per J. Puno, Second Division].

[217] Id. [235] See Pryce Corporation v. China Banking Corporation, G.R. No. 172302, February 18,

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2014, 716 SCRA 207, 235 [Per J. Leonen, En Banc]. [Per J. Romero, En Banc].

[236] LOCAL GOVT. CODE, sec. 232. [252] G.R. No. 97149, March 31, 1992, 207 SCRA 689, 697 [Per J. Romero, En Banc].

[237] LOCAL GOVT. CODE, sec. 198(c). [253] Id. at 697.

[238] LOCAL GOVT. CODE, sec. 232. [254] Rep. Act No. 7916 (1995), sec. 11.

[239] Government Service Insurance System v. City Treasurer and City Assessor of the [255] Rep. Act No. 7916 (1995), sec. 13(h).

City of Manila, 623 Phil. 964, 982 (2009) [Per J. Velasco, Jr., Third Division], citing Testate
Estate of Concordia T. Lim v. City of Manila, 261 Phil. 602, 607 (1990) [Per J. Gutierrez, [256] Rep. Act No. 7916 (1995), sec. 21.
Jr., Third Division]; Manila Electric Company v. Barlis, 410 Phil. 167, 178 (2001) [Per J.
De Leon, Jr., Second Division]. [257] Rep. Act No. 7916 (1995), sec. 12(d) and 19.

[240] 330 Phil. 392 (1996) [Per J. Davide, Jr., Third Division].
[258] Rep. Act No. 7916 (1995), sec. 16.

[241] Id. at 410.

[259] Rep. Act No. 7916 (1995), sec. 13(a).

[242] Id.
[260] Rep. Act No. 7916 (1995), sec. 4(a)

[243] Id.
[261] Rep. Act No. 7916 (1995).

[244] Government Service Insurance System v. City Treasurer and City Assessor of the
[262] Rep. Act No. 7916 (1995), sec. 11.
City of Manila, 623 Phil. 964, 976–977 (2009) [Per J. Velasco, Jr., Third Division].
[263] CONST., art. XII, sec. 16.
[245] Exec. Order No. 292, Introductory Provisions, sec. 2(10).

[264] Republic v. City of Parañaque, G.R. No. 191109, July 18, 2012, 677 SCRA 246, 259
[246] Manila International Airport Authority v. Court of Appeals, 528 Phil. 181, 212–214
[Per J. Mendoza, Third Division], citing Manila International Airport Authority v. Court of
(2006) [Per J. Carpio, En Banc].
Appeals, 528 Phil. 181, 234–237 (2006) [Per J. Carpio, En Banc].

[247] Philippine Fisheries Development Authority v. The Honorable Court of Appeals, 555
[265] Republic v. City of Parañaque, G.R. No. 191109, July 18, 2012, 677 SCRA 246, 262
Phil. 661, 668 (2007) [Per J. Azcuna, First Division].
[Per J. Mendoza, Third Division], citing Manila International Airport Authority v. Court of
Appeals, 528 Phil. 181, 237 (2006) [Per J. Carpio, En Banc], citing J. G. Bernas, The 1987
[248] Government Service Insurance System v. City Treasurer and City Assessor of the
CONSTITUTION OF THE REPUBLIC OF THE PHILIPPINES: A COMMENTARY 1181 (2003).
City of Manila, 623 Phil. 964, 978–981 (2009) [Per J. Velasco, Jr., Third Division].
[266] Republic v. City of Parañaque, G.R. No. 191109, July 18, 2012, 677 SCRA 246, 262
[249] Republic of the Philippines v. City of Parañaque, G.R. No. 191109, July 18, 2012,
[Per J. Mendoza, Third Division], citing Manila International Airport Authority v. Court of
677 SCRA 247, 263 [Per J. Mendoza, Third Division]. Appeals, 528 Phil. 181, 237 (2006) [Per J. Carpio, En Banc], citing J. G. Bernas, The 1987
CONSTITUTION OF THE REPUBLIC OF THE PHILIPPINES: A COMMENTARY 1181 (2003).
[250] Rep. Act No. 7916 (1995), sec. 11.
[267] Manila International Airport Authority v. Court of Appeals, 528 Phil. 181, 210 (2006)
[251] Beja, Sr. v. Court of Appeals, G.R. No. 97149, March 31, 1992, 207 SCRA 689, 697 [Per J. Carpio, En Banc].

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(c) Churches and parsonages or convents appurtenant thereto, and all lands, buildings,
[268] 528 Phil. 181 (2006) [Per J. Carpio, En Banc]. and improvements used exclusively for religious, charitable, scientific, or educational
purposes.
[269] Id. at 235–237.
(d) When the entire assessed valuation of real property in any one municipality or
municipal district belonging to a single owner is not in excess of one hundred pesos, or
[270] CORP. CODE, sec. 3 provides:
when the assessed valuation of a house, used as residence of the owner thereof, together
with the lot on which the same is built, does not exceed three hundred pesos and such
Classes of corporations. – Corporations formed or organized under this Code may be
owner has no other property, the tax thereon shall not be collected, nor shall the tax be
stock or non-stock corporations. Corporations which have capital stock divided into shares
collected on a dwelling house built on the field, nor or an adjacent orchard, if any, as
and are authorized to distribute to the holders of such shares dividends or allotments of
improvement, if the assessed value of each assessed separately, is not in excess of one
the surplus profits on the basis of the shares held are stock corporations. All other
hundred pesos, though in any event of the property shall be valued for the purposes of
corporations are non-stock corporations.
assessment and record shall be kept thereof as in other cases.

[271] CORP. CODE, sec. 87 provides:

(e) Land held by a homesteader under an application filed in accordance with law prior to
the approval by the Director of lands of the final evidence as required by law; but this
Definition. – For the purposes of this Code, a non-stock corporation is one where no part exemption does not extend to buildings and improvements thereon the title to which is
of its income is distributable as dividends to its members, trustees, or officers, subject to not in the Government.
the provisions of this Code on dissolution: Provided, That any profit which a non-stock
corporation may obtain as an incident to its operations shall, whenever necessary or (f) Machinery, which term shall embrace machines, mechanical contrivances, instruments,
proper, be used for the furtherance of the purpose or purposes for which the corporation appliances, and apparatus attached to the real estate, used for industrial agricultural or
was organized, subject to the provisions of this Title. manufacturing purposes, during the first five years of the operation of the machinery.

Republic v. City of Parañaque, G.R. No. 191109, July 18, 2012, 677 SCRA 246, 258 [Per (g) Fruit trees and bamboo plants, except where the land upon which they grow is
J. Mendoza, Third Division], citing Manila International Airport Authority v. Court of planted principally in such growth.
Appeals, 528 Phil. 181, 211–212 (2006) [Per J. Carpio, En Banc].
(h) Until December thirty-first, nineteen hundred thirty-nine, land not exceeding one
[272] Pres. Decree No. 66, sec. 5 in relation to Exec. Order No. 282 dated October 30, hundred hectares used for airports or landing fields open to all aircraft operations, either
1995, sec. 1. free of charge or upon the payment of a nominal charge, together with such
improvements thereon as are used exclusively for aeronautical purposes, when such
[273] Rep. Act No. 7916 (1995), sec. 47. airports are necessary facilities for air commerce. The airports or landing files herein
exempted from taxation shall revert to their original taxation status upon the certification
[274] The Local Government Code became effective on January 1, 1992. Miguel v. Court of of the Secretary of Public Works and Communications that they are no longer necessary
or suitable facilities for air commerce.
Appeals, G.R. No. 111749, February 23, 1994, 230 SCRA 339, 340 [Per J. Quiason, First
Division].
The provisions hereof notwithstanding, depreciation allowance shall be made for
machinery mentioned in section three (f) equivalent to an amount not exceeding ten per
[275] COMMONWEALTH ACT No. 470 (1939), sec. 3 provides:
centum of its value for its year of use.

Property exempt from tax. — The exemptions shall be as follows: [276] Cruz v. Commission on Audit, 420 Phil. 102, 109 (2001) [Per J. Pardo, En Banc].

(a) Property owned by the United States of America, the Commonwealth of the
[277] Manila International Airport Authority v. Court of Appeals, 528 Phil. 181, 215 (2006)
Philippines, any province, city, municipality or municipal district.
[Per J. Carpio, En Banc].
(b) Cemeteries or burial grounds.
[278] Id. at 219.

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otherwise directed by law. The reserved land shall thereafter remain subject to the
[279] Id. specific public purpose indicated until otherwise provided by law or proclamation.

[280] CIVIL CODE, art. 1113. ....

[281] RTC records (Civil Case No. 02-0410), p. 29.

Manila International Airport Authority v. Court of Appeals, 528 Phil. 181, 221 (2006) [Per
J. Carpio, En Banc].

[282] EXEC. ORDER NO. 292 (1987), Book III, title I, chapter 4, sec. 14 provides:
[285] Rep. Act No. 5490 (1969), sec. 2 provides:

SEC. 14. Power to Reserve Lands of the Public and Private Domain of the Government.
SEC. 2. Mariveles Port: establishment of foreign trade zone therein: admission of foreign
(1) The President shall have the power to reserve for settlement or public use, and for
and domestic merchandise.-To attain the above policy, Mariveles, Province of Bataan, is
specific public purposes, any of the lands of the public domain, the use of which is not
hereby made a principal port of entry by further amending section seven hundred one of
otherwise directed by law. The reserved land shall thereafter remain subject to the
Republic Act Numbered Nineteen hundred thirty-seven, otherwise known as Tariff and
specific public purpose indicated until otherwise provided by law or proclamation.
Customs Code of the Philippines, as amended. . . .

....
....

Manila International Airport Authority v. Court of Appeals, 528 Phil. 181, 220–221 (2006)
There is hereby established in the Mariveles Port a foreign trade zone herein referred to
[Per J. Carpio, En Banc].
as the Zone. Foreign and domestic merchandise of every description, except such as is
prohibited by law, may, without being subject to the customs and internal revenue laws
[283] PUBLIC LAND ACT, secs. 83 and 88 provide:
and regulations of the Philippines, except as otherwise provided in this Act, be brought
into the Zone and may be stored, sold, exhibited, broken up, repacked, assembled,
SECTION 83. Upon the recommendation of the Secretary of Agriculture and Natural distributed, sorted, graded, cleaned, mixed with foreign or domestic merchandise, or.
Resources, the President may designate by proclamation any tract or tracts of land of the otherwise manipulated, or be manufactured except as otherwise provided in this Act, and
public domain as reservations for the use of the Republic of the Philippines or of any of its be exported, destroyed or sent into customs territory of the Philippines therefrom, in the
branches, or of the inhabitants thereof, in accordance with regulations prescribed for this original package or otherwise[.]
purpose, or for quasi-public uses or purposes when the public interest requires it,
including reservations for highways, rights of way for railroads, hydraulic power sites, [286] Rep. Act No. 5490, sec. 2.
irrigation systems, communal pastures or leguas comunales, public parks, public quarries,
public fishponds, workingman’s village and other improvements for the public benefit.
[287] Rep. Act No. 7916 (1995), sec. 5 (ll).

SECTION 88. The tract or tracts of land reserved under the provisions of section eighty-
[288] Rep. Act No. 9728 (2009), sec. 3 provides:
three shall be non-alienable and shall not be subject to occupation, entry, sale, lease, or
other disposition until again declared alienable under the provisions of this Act or by
proclamation of the President. SEC. 3. Conversion of the Bataan Economic Zone (BEZ) into the Freeport Area of Bataan.
— The existing Bataan Economic Zone located in the Municipality of Mariveles, Province of
Manila International Airport Authority v. Court of Appeals, 528 Phil. 181, 219–221 (2006) Bataan is hereby converted into a special economic zone and Freeport to be known as the
[Per J. Carpio, En Banc]. Freeport Area of Bataan (FAB). The FAB shall cover the Municipality of Mariveles, Province
of Bataan.
[284] EXEC. ORDER NO. 292 (1987), Book III, title I, chapter 4, sec. 14 provides:
[289] Rep. Act No. 9728 (2009), sec. 4(e).

SEC.14. Power to Reserve Lands of the Public and Private Domain of the Government. (1)
The President shall have the power to reserve for settlement or public use, and for [290] Manila International Airport Authority v. Court of Appeals, 528 Phil. 181, 224–225

specific public purposes, any of the lands of the public domain, the use of which is not (2006) [Per J. Carpio, En Banc].

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[291] RULES AND REGULATIONS TO IMPLEMENT REPUBLIC ACT NO. 7916, Rule V, sec. 1

provides:

SECTION 1. Qualifications. – Lands and buildings within an ECOZONE can be leased only
to ECOZONE enterprises/entities authorized by or registered with the PEZA and owned or
controlled by Philippine nationals or by aliens under such terms and conditions as the
Board may formulate.

[292] Rep. Act No. 7916 (1995).

[293] Rep. Act No. 7916 (1995).

[294] Rep. Act No. 9728 (2009).

[295] Rep. Act No. 7916 (1995), sec. 44 provides:

SEC. 44. Relationship with Local Government Units. – Except as herein provided, the local
government units comprising the ECOZONE shall retain their basic autonomy and identity.
The cities shall be governed by their respective charters and the municipalities shall
operate and function in accordance with Republic Act No. 7160, otherwise known as the
Local Government Code of 1991.

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