NATIONAL DEVELOPMENT COMPANY, DEFENDANT-APPELLANT, VS. PROVINCE OF NUEVA ECIJA AND HON. EUFROCINIO S. DELA MERCED, PRESIDING JUDGE, COURT OF FIRST INSTANCE OF NUEVA ECIJA, PLAIN…

On October 16, 1972, the
Province of Nueva Ecija filed with the then Court of First Instance of Nueva Ecija
a complaint against the National Development Company (NDC, for short) for the collection of real estate taxes.

On April 17, 1975, the
trial court rendered judgment in favor of the plaintiff and against the
defendant ordering the latter “to pay the sum of P32,402.94, representing
the unpaid real estate taxes and penalties from the fourth quarter of 1970 up
to the year 1972, and to continue paying up to the present, and to pay the
costs.” (p. 35, Record on Appeal)

The NDC, not satisfied
with the aforementioned judgment, appealed on the following assignment of
errors:

“1.    The trial court erred in holding that the
defendant-appellant National Development Company is liable for real estate
taxes on the land subject of the case.

“2.    The trial court erred in not ruling that
plaintiff-appellee, Province of Nueva Ecija should refund to
defendant-appellant National Development Company the amount paid as real estate
taxes for the land subject matter of this case from 1952 to 1970.”

Defendant-appellant NDC
submits that it is a govern­ment-owned and controlled corporation duly
organized and existing by virtue of Commonwealth Act No. 182, as amended, and
Executive Order No. 399, otherwise known as the Uniform Charter for Government
Corporations; that under Section 2 of said Act, fifty-one per centum of the
capital stock shall be subscribed by the government of the Commonwealth of the
Philippines and the remainder thereof may be
offered to the provincial, municipal and city governments; and, that the NDC
being owned by the Republic of the Philippines, it follows that its real
properties, particularly those situated at Gabaldon, Nueva Ecija, are exempt
from payment of real estate taxes. In
support of this contention, defendant-appellant cited the case of Board of
Assessment Appeals of Laguna vs. Court of Tax Appeals and NAWASA, 8 SCRA 225,
where the Court ruled that “Section 3(a) of Commonwealth Act No. 470 makes
no distinction between property held in a sovereign, govern­mental or political
capacity and those possessed in a private, proprietary or patrimonial
character. x x x Section 1 of Republic
Act No. 104 only refers to the pay­ment by corporations, agencies or
instrumentalities owned or controlled by the government, of duties, taxes, fees
and other charges upon ‘transactions, business industry, sale, or income,’ but
does not include taxes on property like real estate taxes.”

We find no merit in the
appeal.

1.  Commonwealth Act No. 182
which created the NDC contains no provision exempting it from the payment of
real estate tax on properties it may acquire. Subject properties are situated in the town of Gabaldon, Nueva Ecija,
and are more particularly described as follows:

(p. 33, Record on Appeal)

These properties are not devoted to
public use but were acquired for resale to qualified persons. They were developed for the purpose of
reselling the same for consideration to qualified tenants. Thus, defendant-appellant is not exempt from
payment of real estate tax over said properties. There is justification in the contention of plaintiff-appellee
that –

“x x x the 11,500 hectares of real properties of the National
Development Company in the town of Gabaldon, Nueva Ecija must perforce, owing
to its big area, constitute a very substantial territory of the said town
should be considered. It is undeniable that to any municipality the
principal source of revenue with which it would defray its operation will come
from real property taxes: If the
National Development Company would be exempt from paying real property taxes
over these properties, the town of Gabaldon will be deprived of much needed
revenues with which it will maintain itself and finance the compelling needs of
its inhabitants.” (p. 6, Brief of Plaintiff-Appellee)

2.   Defendant-appellant NDC does not come under
the classification of municipal or public corporation in the sense that it may
sue and be sued in the same manner as any other private corporations, and in
this sense, it is an entity different from the government. Unlike the government, defendant corporation
may be sued without its consent, and is subject to taxation. In the case of NDC vs. Jose Yulo Tobias, 7
SCRA 692, it was held that “x x x plaintiff is neither the Government of
the Republic nor a branch or subdivision thereof, but a government owned and
controlled corporation which cannot be
said to exercise a sovereign function (Associacion Cooperativa de Credito
Agricola de Miagao vs. Monteclaro, 74 Phil. 281), it is a business corporation,
and as such, its causes of action are subject to the statute of limitations. x x x That plaintiff herein does not
exercise sovereign powers – and, hence, can not invoke the exemp­tions thereof
– but is an agency for the performance of purely corporate, proprietary or
business functions, is apparent from its Organic Act (Commonwealth Act 182, as
amended by Commonwealth Act 311) pursuant to Section 3 of which it ‘shall be
subject to the provisions of the Corporation Law in so far as they are not
inconsistent’ with the provisions of said Commonwealth Act, ‘and shall have the
general powers mentioned in said’ Corporation Law, and, hence, ‘may engage in
commercial, industrial, mining, agricultural, and other enterprises which may
be necessary or contributory to the economic development of the country, or
important in the public interest,’ as well as ‘acquire, hold, mortgage, and
alienate personal and real property in the Philippines or
elsewhere; x x x make contracts of any kind and description’; and ‘perform any
and all acts which a corporation or natural person is authorized to perform
under the laws now existing or which may be enacted hereafter.”

WHEREFORE, the appeal of defendant-appellant National
Development Company is dismissed and the decision, dated April 17, 1975, of the lower court is hereby AFFIRMED.

SO ORDERED.

Teehankee, (Chairman), Melencio-Herrera, Plana, and Gutierrez, Jr., JJ., concur.