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PHILIPPINE RECLAMATION AUTHORITY (PRA)
THIRD DIVISION
G.R. No. 191109 July 18, 2012
REPUBLIC OF THE PHILIPPINES, represented by the PHILIPPINE RECLAMATION AUTHORITY (PRA), Petitioner,
vs.
CITY OF PARANAQUE, Respondent.
Facts:
This is a petition for review on certiorari under the Rule 45 of the 1997 Rules of Civil Procedure, on pure questions of law, assailing the January 8, 2010 Order of the Regional Trial Court, Branch 195, Parañaque City (RTC), which rules that petitioner Philippine Reclamation Authority (PRA) is a government-owned and controlled corporation (GOCC), a taxable entity, and therefore, not exempt from payment of real property taxes. On August 3, 2009, after an exchange of several pleadings and the failure of both parties to arrive at a compromise agreement, PRA filed a Motion for Leave to File and Admit Attached Supplemental Petition which sought to declare as null and void the assessment for real property taxes, the levy based on the said assessment, the public auction sale conducted on April 7, 2003, and the Certificates of Sales issued pursuant to the auction sale. On January 8, 2010, the RTC rendered its decision dismissing PRA’s petition. In ruling that PRA was not exempt from payment of real property taxes the RTC reasoned out that it was a GOCC. It was organized as a stock corporation because it had an authorized capital stock divided into no par value shares.
Issues:
1. Whether or not PRA is classified as a government-owned and controlled corporation.
2. Whether or not the reclaimed lands of PRA are subject to taxation.
Ruling:
PRA is not a GOCC because it is neither a stock nor a non-stock corporation. It cannot be considered as a stock corporation because although it has a capital stock divided into no par value shares as provided in Section 74 of P.D. No. 1084, it is not authorized to distribute dividends, surplus allotments or profits to stockholders. PRA cannot be considered a non-stock corporation either because it does not have members. A non-stock corporation must have members. Moreover, it was not organized for any of the purposes mentioned in Section 88 of the Corporation Code which provides that non-stock corporations are "organized for charitable, religious, educational, professional, cultural, recreational, fraternal, literary, scientific, social, civil service, or similar purposes, like trade, industry, agriculture and like chambers." Specifically, it was created to manage all government reclamation projects. Furthermore, Section 16, Article XII of the Constitution has a twin requirement of common good and economic viability before a government-owned or controlled corporation may be created or established by its special charter. Government instrumentalities vested with corporate powers and performing governmental or public functions like the PRA need not meet the test of economic viability. These instrumentalities perform essential public services for the common good, services that every modern State must provide its citizens. These instrumentalities need not be economically viable since the government may even subsidize their entire operations.
Philippine Reclamation Authority is not classified as a government-owned or controlled corporation rather it is an incorporated government instrumentality and therefore it is exempt from payment of real property tax. As stated in Chavez v. Public Estates Authority and AMARI Coastal Development Corporation the fact that alienable lands of the public domain were transferred to the PEA (now PRA) and issued land patents or certificates of title in PEA’s name did not automatically make such lands private. Reclaimed lands are reserved lands for public use and they are property of public dominion.