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METROPOLITAN WATERWORKS SEWERAGE SYSTEM v. THE LOCAL GOVERNMENT OF QUEZON CITY

The Metropolitan Waterworks and Sewerage System (MWSS) was created by Congress to ensure an adequate supply of potable water and proper sewerage systems for Metro Manila. Quezon City issued notices of real property tax delinquency and warrants of levy against MWSS properties for failure to pay taxes. MWSS claimed exemption as a government instrumentality. The Supreme Court ruled MWSS exempt from real property taxes, as the Executive and Legislative branches had previously categorized MWSS as a government instrumentality with corporate powers through an Executive Order and law. Quezon City did not allege MWSS extended beneficial use of properties to taxable persons.

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774 views2 pages

METROPOLITAN WATERWORKS SEWERAGE SYSTEM v. THE LOCAL GOVERNMENT OF QUEZON CITY

The Metropolitan Waterworks and Sewerage System (MWSS) was created by Congress to ensure an adequate supply of potable water and proper sewerage systems for Metro Manila. Quezon City issued notices of real property tax delinquency and warrants of levy against MWSS properties for failure to pay taxes. MWSS claimed exemption as a government instrumentality. The Supreme Court ruled MWSS exempt from real property taxes, as the Executive and Legislative branches had previously categorized MWSS as a government instrumentality with corporate powers through an Executive Order and law. Quezon City did not allege MWSS extended beneficial use of properties to taxable persons.

Uploaded by

Charlene Millares
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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METROPOLITAN WATERWORKS SEWERAGE SYSTEM v.

THE LOCAL
GOVERNMENT OF QUEZON CITY
G.R. No. 194388, NOVEMBER 7, 2018 SECOND DIVISION (Leonen, J.)

FACTS:
Congress enacted Republic Act No. 6234, creating the Metropolitan Waterworks
and Sewerage System (MWSS). Under the law, it was mandated "to insure an
uninterrupted and adequate supply and distribution of potable water for domestic and
other purposes and the proper operation and maintenance of sewerage systems." It
was granted the power to exercise supervision and control over all waterworks and
sewerage systems within Metro Manila, Rizal, and a portion of Cavite. It was initially
created as a corporation without capital stock, but then President Ferdinand Marcos
issued Presidential Decree No. 425, authorizing it to have an authorized capital stock
that shall only be suscribed by the government.

MWSS received several Final Notices of Real Property Tax Delinquency from the
Local Government of Quezon City, covering various taxable years. The Local
Government of Quezon City warned it that failure to pay would result in the issuance
of warrants of levy against its properties. The Treasurer's Office of Quezon City issued
Warrants of Levy on the properties due to MWSS's failure to pay.

MWSS claims that it is an instrumentality of the Republic; thus, its real


properties should be exempt from real property tax. Quezon City, on the other hand,
claim that it is a government-owned and -controlled corporation whose tax exemptions
have since been withdrawn with the effectivity of the Local Government Code.

ISSUE:
Is MWSS liable for real property tax on its properties?

RULING:
No. MWSS is not liable for real property tax on its properties because it is a
government instrumentality exempt from taxes.

According to the parameters set Manila International Airport Authority v. court of


Appeals, a government instrumentality is exempt from the local government unit's levy
of real property tax. The government instrumentality must not have been organized as
a stock or non-stock corporation, even though it exercises corporate powers,
administers special funds, and enjoys operational autonomy, usually through its
charter. Its properties are exempt from real property tax because they are properties of
the public dominion: held in trust for the Republic, intended for public use, and
cannot be the subject of levy, encumbrance, or disposition.

Held against the parameters of Manila International Airport Authority, the


Supreme Court cannot but conclude that MWSS is a government owned and
controlled corporation. Under the Local Government Code, only its machinery and
equipment actually, directly, and exclusively used in the supply and distribution of
water can be exempt from the levy of real property taxes.
Be that as it may, the Supreme Court's categorization cannot supplant that
which was previously made by the Executive and Legislative Branches. After the
promulgation of Manila International Airport Authority, then President Gloria
Macapagal-Arroyo issued Executive Order No. 596, which recognized the Supreme
Court's categorization of "government instrumentalities vested with corporate
powers.", and included in its list MWSS as such. In 2011, Congress passed Republic
Act No. 10149 or the GOCC Governance Act of 2011, which adopted the same
categorization and explicitly lists MWSS as a government instrumentality with
corporate powers together with the other government agencies that were previously
held by this Court to be exempt from the payment of real property taxes.

Thus, MWSS is not liable to Local Government of Quezon City for real property
taxes, except if the beneficial use of its properties has been extended to a taxable
person. The Local Government of Quezon City have not alleged that the beneficial use
of any of MWSS’ properties was extended to a taxable person. In the absence of any
allegation to the contrary, MWSS’ properties in Quezon City are not subject to the levy
of real property taxes.

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