THE SUPREME COURT (SC) declared that Metropolitan Waterworks and Sewerage System (MWSS) is exempted from paying real property tax on its properties in Quezon City.
In a 25-page decision dated Nov. 7, 2018 and penned by Associate Justice Marvic M.V.F. Leonen, the SC’s third division sided with MWSS, saying it is a “government instrumentality” that is exempted from paying real property tax.
According to the Administrative Code, an “instrumentality” is “any agency of the National Government, not integrated within the department framework vested within 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.”
“The real properties of the Metropolitan Waterworks and Sewerage System located in Quezon City are declared exempt from the real estate tax imposed by the Local Government of Quezon City,” the SC said.
“All the real estate tax assessments, including the final notices of real estate tax delinquencies, issued by the Local Government of Quezon City on the real properties of the Metropolitan Waterworks and Sewerage System located in Quezon City are declared void, except for the portions that are alleged and proven to have been leased to private parties,” it added.
The SC, in effect, reversed the October 2010 decision of the Court of Appeals (CA) which said that even if MWSS was an instrumentality of the government, it cannot invoke immunity from real property tax as it is not performing “purely governmental function.”
In finding MWSS exempt from tax, the High Court cited the Executive Order No. 569 issued by President Gloria Macapagal-Arroyo, which cited the SC’s categorization of “government instrumentalities with corporate powers” in the case of Manila International Airport Authority vs. CA, which recognized MWSS as an “instrumentality.”
According to Section 113 (o) of the Local Government Code, taxing power of provinces, cities, municipalities and barangays shall not extend to the national government, its agencies and instrumentalities, and local government units.
Section 234 of the Local Government Code also states that real property of the government is exempt from tax “except when the beneficial use thereof has been granted, for consideration or otherwise, to a taxable person. — Vann Marlo M. Villegas