Case Summary (G.R. No. 261472)
Background of the NFA
• Originally created under Presidential Decree No. 4 (1972) as the National Grains Authority (NGA) and reconstituted into NFA via P.D. No. 1770 (1981).
• Mandated to stabilize rice and corn prices, maintain national buffer stock, and ensure continuous food supply.
• Exemptions from all taxes, including real property tax, were granted under P.D. No. 4, as amended, and later reinforced by NFA’s sovereign guarantee and funding provisions.
• Republic Act No. 11203 (2019) refocused NFA on maintaining rice buffer stock sourced from local farmers for emergency relief.
Procedural History
• 2007–2008: OGCC issued legal opinions concluding NFA is a government instrumentality vested with corporate powers, exempt from local real property tax. NFA instructed regional offices to cease tax payments.
• 2016: Tagum City Treasurer issued Notices of Delinquency totaling ₱2,643,816.53 for NFA properties in Barangay Magdum.
• NFA filed a Petition for Prohibition before the Tagum City RTC (Branch 31), challenging respondents’ authority to levy real property tax.
• RTC dismissed the petition; CTA Second Division likewise upheld Tagum City’s power, holding NFA to be a GOCC subject to taxation.
• CTA En Banc dismissed NFA’s certiorari petition for lack of jurisdiction, citing failure to exhaust administrative remedies under Sections 226 and 252 of the Local Government Code.
Issues
- Whether the RTC had jurisdiction to entertain NFA’s Petition for Prohibition.
- Whether “payment under protest” and appeal to the Board of Assessment Appeals are prerequisites where the authority to tax a government entity is challenged.
- Whether NFA is a government instrumentality vested with corporate powers or a government-owned or –controlled corporation (GOCC).
- Whether NFA’s properties are exempt from real property tax.
Applicable Law
• Article X, Section 5, 1987 Constitution: LGUs may levy taxes “subject to such guidelines and limitations as the Congress may provide.”
• Section 133(o), Local Government Code: Prohibits local taxation “on the National Government, its agencies and instrumentalities.”
• Section 234(a), Local Government Code: Exempts real property “owned by the Republic of the Philippines or any of its political subdivisions.”
• MIAA v. Court of Appeals: Government instrumentalities vested with corporate powers are exempt from local taxation.
• RA 10149: Defines “Government Instrumentalities with Corporate Powers” (GICP) as agencies not integrated within departmental framework, endowed with corporate powers, administering special funds, enjoying operational autonomy.
Legal Analysis
• Jurisdiction: When a taxpayer challenges the very authority of an assessor or treasurer to tax a government entity, the issue is purely one of law. Prohibition is the proper remedy; exhaustion of administrative remedies and payment under protest are inapplicable.
• Government Instrumentality vs. GOCC:
– NFA was created by presidential decree and chartered to perform special public functions (food security, price stabilization, buffer stock maintenance).
– It is not organized as a stock or non-stock corporation under the Corporation Code; it has no shareholders or dividend-paying authority.
– It enjoys operational autonomy under its charter and supervising executive orders.
– It meets the twin criteria of MIAA and RA 10149 for classification as a government instrumentality vested with corporate powers.
• Tax Exemption:
– Section 133(o) and 234(a) LGC preclude any local taxation of national gove
Case Syllabus (G.R. No. 261472)
Facts of the Case
- The National Food Authority (NFA) evolved through successive charters and decrees since 1936, tracing its origins from the National Rice and Corn Corporation (NARIC), Price Stabilization Corporation (PRISCO), Rice and Corn Administration (RCA), Rice and Corn Authority (RICOB), National Grains Authority (NGA) and finally NFA under P.D. No. 1770 (1981) and later amendments.
- P.D. No. 4, as amended by P.D. 1485 and P.D. 1770, endowed NGA/NFA with broad corporate powers and granted it exemptions from national and local taxes.
- Republic Act No. 11203 (2019) refocused NFA’s mandate on maintaining a rice buffer stock for emergencies, repealing certain regulatory powers but retaining it as a government corporation attached to the Department of Agriculture.
- NFA owns several real properties in Barangay Magdum, Tagum City (TCT Nos. T-59639, T-59640; Tax Declarations Nos. 01-0010-03091 to 03096, 01-0010-00732).
- Under Section 234 of the Local Government Code (LGC) of 1991, NFA’s prior real-property-tax exemptions were withdrawn, prompting local assessment and tax imposition by the City Government of Tagum.
- In 2007, the Office of the Government Corporate Counsel (OGCC) issued two opinions declaring NFA a “government instrumentality vested with corporate powers” and its properties exempt from real property tax, leading NFA to discontinue tax payments.
- In August 2016, Tagum City issued seven Notices of Delinquency demanding payment of ₱2,643,816.53 in real property taxes on NFA’s Tagum properties.
- NFA filed a Petition for Prohibition before the Tagum Regional Trial Court, which dismissed it for lack of merit. NFA’s motion for reconsideration was denied.
- NFA then brought a Petition for Review to the Court of Tax Appeals (CTA) Second Division (CTA AC No. 180), which affirmed the lower court, holding NFA to be a GOCC subject to real property tax. NFA’s motion for reconsideration before the CTA Second Division was denied.
- On CTA E