Case Summary (G.R. No. 214195)
Facts
The property in question spans 61,322 square meters located on Magsaysay Boulevard, Tacloban City, and is governed by Transfer Certificate of Title No. T-1883. UCI entered into a Contract of Lease with APT on September 15, 1994, which stipulates that real property taxes are the responsibility of the lessor, and any taxes paid by the lessee would be credited toward their rental payments. Initially compliant with its rental and tax payments, UCI ceased its obligations starting December 16, 2000, leading to a series of demand letters from the PMO. Despite the expiration of the lease contract without settlement of dues, UCI continued to possess the premises without making payments.
Tax Collection Action
The City Treasurer of Tacloban initiated a collection case against LPHI, UCI, APT, PTA, and the Province of Leyte in the Court of Tax Appeals (CTA) for unpaid real property taxes amounting to approximately P65,969,406.74, covering the years 1989 to 2012. The CTA found UCI liable for P22,826,902.20 in realty taxes. UCI's motion for reconsideration was denied, prompting an appeal to the CTA En Banc, which upheld UCI's tax liability for 1995 to 2004.
Legal Principles Applied
The CTA En Banc ruled that real property taxes attach to the property and are chargeable against the entity that has actual or beneficial use, regardless of ownership status. Section 234 (a) of the Local Government Code provides that properties owned by the Republic are exempt from taxation unless beneficial use is granted to a taxable entity. Therefore, UCI, as a beneficiary under the lease, bears responsibility for the unpaid taxes irrespective of the government entities’ original tax exemption status.
Appellate Arguments
UCI contended that the local government units had contractually assumed the tax liabilities per their lease agreement, arguing that the beneficial use principle should not strip the Republic and its instrumentalities of their tax exemption. UCI invoked past rulings, claiming that the Republic, through PMO, PTA, and the Province of Leyte, should be bound to pay taxes unless they specifically waived this in the contract.
Court's Affirmation
The Supreme Court upheld the lower court's ruling, emphasizing that while the contract may state the lessor's obligation to pay property taxes, it cannot override the tax liabilities imposed by law due to the lapse of exemptions when beneficial use is transferred to a private entity. The Court referenced established jurispr
...continue readingCase Syllabus (G.R. No. 214195)
Overview of the Case
- The case involves a Petition for Review on Certiorari filed by Unimasters Conglomeration Incorporated (UCI) against various respondents, including the Tacloban City Government, regarding liability for unpaid real property taxes.
- The petition was filed under Rule 45 of the Rules of Court, seeking a reversal of the August 22, 2014 Decision rendered by the Court of Tax Appeals En Banc.
Facts of the Case
- Leyte Park Hotel Inc. (LPHI) is a property located on Magsaysay Boulevard, Tacloban City, with an area of 61,322 square meters, co-owned by several entities including the Assets Privatization Trust (APT), the Province of Leyte, and the Philippine Tourism Authority (PTA).
- A lease contract was signed on September 15, 1994, between APT and UCI for a period of 12 years, stipulating that real property taxes would be the responsibility of the lessor (APT).
- UCI initially complied with its payment obligations but ceased paying rentals and taxes starting December 16, 2000, leading to demand letters from PMO and the City Treasurer of Tacloban.
- The City Treasurer filed a collection case for unpaid real property taxes amounting to P65,969,406.74 covering the years 1989 to 2012.
Court Proceedings and Findings
- The Court of Tax Appeals (CTA) found UCI liable for P22,826,902.20 in taxes, recognizi