MANILA, Philippines — The Supreme Court (SC) has ruled that the National Food Authority (NFA) is a government instrumentality whose properties are exempt from real property tax.
In a decision promulgated on May 21 and penned by Associate Justice Amy Lazaro-Javier but released only on Friday, the SC en banc nullified the notices of delinquency issued by the city treasurer of Tagum City, Davao del Norte against the NFA.
Court records show that in 2016, NFA received seven notices of delinquency issued by the Tagum City treasurer, demanding payment of real property taxes totaling over P2.6 million.
The NFA challenged the notices before a regional trial court, asserting that it is exempt from payment of real property tax as a government instrumentality.
The RTC, however, ruled in favor of the Tagum City local government, claiming that the NFA is “a government-owned and controlled corporation and thus, subject to real property tax.”
The NFA brought the petition before the Court of Tax Appeals Second Division and the CTA en banc. Both courts affirmed the decision of the RTC.
This prompted the NFA to file a petition for review on certiorari before the high court.
In granting NFA’s petition, the SC reversed the ruling of the CTA and voided the notices of delinquency.
Citing Section 133 (o) of the Local Government Code, the SC said local governments cannot tax the national government.
The SC added that Section 234(a) of the same law “further exempts from real property tax property owned by the Republic of the Philippines or any of its political subdivisions, except when beneficial use has been granted to taxable private entities.”
“As a government instrumentality, NFA’s properties are of public dominion intended for public use or service,” the SC said.
“Without evidence that their beneficial use belongs to a taxable person, they are exempt from real property tax,” it added.– Bella Cariaso