G.R. No. 215955 - Metropolitan Waterworks and Sewerage System vs. Central Board of Assessment Appeals

Republic Act No. 6234 (June 19, 1971) created MWSS to ensure adequate water supply and sewerage operations, with supervision and control over Metro Manila, Rizal, and parts of Cavite.
Pursuant to RA No. 8041 (National Water Crisis Act of 1995), MWSS in 1997 entered into a concession agreement with Maynilad Water Services, Inc. to operate the West Zone of Metro Manila, including Pasay City.

On February 21, 2008, MWSS received Real Property Tax Computations from the Pasay City Treasurer for taxable year 2008, demanding P166,629.36.
On the same day, MWSS filed a Protest Letter (dated February 3, 2008) to Pasay City Mayor Wenceslao “Peewee” Trinidad, asserting that as a public utility and government instrumentality its properties are exempt from RPT, citing Manila International Airport Authority v. CA (MIAA) and its then-pending case versus Quezon City (CA-G.R. SP No. 100733).
Due to the Treasurer’s inaction, MWSS appealed to the Pasay Local Board of Assessment Appeals (LBAA).

The LBAA held that MWSS failed to comply with Section 252 of the Local Government Code (LGC) on payment under protest, rendering the assessment final and unappealable.
On the merits, it ruled MWSS is a GOCC, not a government instrumentality; thus, MIAA is inapplicable. It further held that by the concession with Maynilad, the actual use of the properties was turned over to a taxable person, making the assessment “reasonable and collectible.”

In its August 30, 2012 Decision, the Central Board of Assessment Appeals (CBAA) affirmed the finality of the assessment, not for failure under Sec. 252, but for failure to question the assessment before the city assessor per Section 226; it did not reach the merits.
On MR (denied February 27, 2013), the CBAA acknowledged MWSS as a government instrumentality under RA No. 10149 but held that Sec. 133(o) LGC (bar on local taxes on the national government and instrumentalities) does not apply to RPT; it applied PD No. 464 Sec. 40(a) and LGC Sec. 234(a), and stated any prior charter exemptions were withdrawn by LGC Sec. 234’s withdrawal clause.

The Court of Appeals (June 3, 2014) dismissed MWSS’s petition for failure to exhaust administrative remedies under LGC Secs. 206 (proof of exemption) and 252 (payment under protest).
MWSS’s MR was denied on December 11, 2014; MWSS elevated the case to the Supreme Court via Rule 45 (G.R. No. 215955).

Whether the CA erred in dismissing MWSS’s petition for failure to exhaust administrative remedies

Applicability of LGC Sec. 206 (proof of exemption), Sec. 226 (appeal to LBAA), and Sec. 252 (payment under protest) where the challenge is to the authority to tax.

Status of MWSS as a government instrumentality with corporate powers (GICP/GCE) vis-à-vis GOCCs.
Applicability of LGC Sec. 133(o) (bar on local taxes on national government and instrumentalities) and Sec. 234(a) (RPT exemption; beneficial-use exception), and allocation of liability under Sec. 205(d).