LGUs can't auction government properties to collect tax delinquency.

Here's a recent landmark decision by the Supreme Court affecting local government units' power of taxation.

Facts of the case. The Iloilo City government through the City Treasurer, attempted to sell at public auction the properties of the Iloilo Fishing Port Complex (IFPC) in order to collect the latter's unpaid real property tax amounting to Php 5.07 million. The Philippine Fisheries Development Authority (PFDA) under which the IFPC belongs, questioned the move and filed a case before the lower court - until it finally reached the Supreme Court.

The ruling. The Supreme Court ruled in favor of the PFDA stating that "the Authority should be classified as an instrumentality of the National Government which is liable to pay taxes only with respect to the portions of the property, the beneficial use of which were vested in private entities". In other words, the high court affirmed that subject property is taxable and the IFPC is liable to pay the tax. BUT . . . "Notwithstanding said tax delinquency on the leased portions of the IFPC, the latter or any part thereof, being a property of public domain cannot be sold at public auction". This means that the city government has to resort to other means to collect the tax obligation other than the sale at public auction.