SC: MWSS doesn’t have to pay P237-M real property taxes in Quezon City

MANILA, Philippines – The Supreme Court (SC) has declared the Metropolitan Waterworks and Sewerage System (MWSS) exempt from paying P237.10 million in real property taxes to the Quezon City government.

In a 25-page decision penned by Associate Justice Marvic Leonen, the SC’s 3rd Division granted the petition of MWSS to reverse the Court of Appeal’s October 19, 2010 decision that it was liable to pay real property taxes despite being a government instrumentality.

“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 properties,” the Court added.

The decision bars the Quezon City government from auctioning off MWSS properties for real estate tax payment. 

The local government unit was supposed to auction off the properties – including MWSS pipelines, reservoirs, and aqueducts – on September 27, 2007, but the CA issued a temporary restraining order (TRO) at the time in response to an MWSS petition.

The CA had earlier ruled that the MWSS did not perform a purely governmental function so it cannot invoke immunity from real property tax payment, and that MWSS properties were not part of the public dominion.

The MWSS elevated the case before the High Court following its loss at the CA, paving the way for a new TRO in 2011.

Gov’t instrumentality with corporate powers

In its decision, the High Court cited executive issuances and a law that declared the MWSS as a government instrumentality with corporate powers.

Executive Order No. 596 signed by then-president Gloria Macapagal Arroyo recognized the SC’s categorization of government instrumentalities vested with corporate powers, following the Court’s ruling on the Manila International Airport Authority (MIAA) vs Parañaque City government case in 2006.

In that case, the SC ruled that the MIAA is exempt from real estate tax payment as it is a government instrumentality vested with corporate powers to perform governmental functions.

The SC also cited Republic Act No. 10149 or the GOCC Governance Act of 2011 which lists the MWSS with other government agencies previously deemed by the Court as exempt from real property tax payment.

The Court said that in view of this, the MWSS  is not liable to pay real property taxes to the Quezon City government, except if the beneficial use of the MWSS properties had been extended to a taxable person.

Associate Justices Diosdado Peralta and Ramon Paul Hernando concurred with the ruling while Associate Justices Alexander Gesmundo and Jose Reyes Jr did not vote as they were on wellness leave during the promulgation.

MWSS has jurisdiction, supervision, and control over all waterworks and sewerage systems within Metropolitan Manila, Rizal province, and part of Cavite province. Its office is in Balara, Quezon City. – Rappler.com