LUNG CENTER OF THE PHILIPPINES, Petitioner, -versus- QUEZON CITY and CONSTANTINO P.

ROSAS, in his capacity as City Assessor of Quezon City, Respondent.

G.R. No. 144104, EN BANC, June 29, 2004, CALLEJO, SR., J.
The exemption claimed by PNOC-EDC hinges on Section 234, paragraph (a) of the LGC. The above
provision exempts from real property taxation properties of the government, provided the beneficial
use
of the property was not transferred to a taxable person. Conversely, if the beneficial use has been
transferred to a taxable entity, such as PNOC-EDC, then the real property owned by the government,
which in this case is the MAGRA, is subject to real property tax.
FACTS:
President Corazon C. Aquino issued Proclamation No. 853 which excluded certain portions of the
land embraced in the Mt. Apo National Park and declared the same as geothermal reservation under
the administration of the PNOC, now referred to as the MAGRA. Thereafter, PNOC-EDC built a 104-
megawatt power plant within the MAGRA which produces electricity through turbines using steam
extracted from the MAGRA as fuel.
Subsequently, the City Treasurer of Kidapawan, Cotabato notified PNOC-EDC of its tax delinquency
after which, he issued a warrant of levy on the 701-hectare MAGRA for failure to pay real property
110DEAN’S CIRCLE 2019 – UST FACULTY OF CIVIL LAW
taxes, covering the tax period from 1993-2002. He sent a notice of sale of delinquent real property to
PNOC-EDC declaring that delinquent real property will be sold through public auction.
PNOC-EDC claimed that it was exempt from real property tax under Section 234, paragraph (a) of the
Local Government Code which reads:
SECTION 234. Exemptions from Real Property Tax. " The following are exempted from
payment of the real property tax:
(a) Real property owned by the Republic of the Philippines or any of its political
subdivisions except when the beneficial use thereof has been granted, for
consideration or otherwise, to a taxable person;"
The trial court found that PNOC-EDC is not exempt from paying the real property taxes and that the
MAGRA is part of the Mt. Apo National Park which has not been re-classified as alienable agricultural
land. Thus, it could not be sold at public auction. However, the trial court ordered that the
improvements on the subject land, not being in the nature of public dominion, may be validly levied
and sold at public auction to satisfy the payment of realty tax delinquencies.
ISSUE:
Whether or not PNOC liable to pay real property taxes? (YES)
RULING:
The exemption claimed by PNOC-EDC hinges on Section 234, paragraph (a) of the LGC. The above
provision exempts from real property taxation properties of the government, provided the beneficial
use of the property was not transferred to a taxable person. Conversely, if the beneficial use has been
transferred to a taxable entity, such as PNOC-EDC, then the real property owned by the government,
which in this case is the MAGRA, is subject to real property tax.
PNOC-EDC exclusively conducts geothermal operations in the area for commercial utilization. It
retains a profit in the amount of 40% of the net value of the amount realized from the sale of
geothermal resources. It is even allowed to charge its operating expenses from the gross value of the
sales. The provisions of the service contract also show that it is the PNOC-EDC which actually utilizes
the MAGRA. Actual use refers to the purpose for which the property is principally or predominantly
utilized by the person in possession thereof. In fact, under the provisions of the service contract,
PNOC-EDC must surrender possession of 25% of the MAGRA to the government after the 3rd year and
another 25% on the 5th year, if the contract is extended. Thus the PNOC-EDC is the beneficial user of
the MAGRA and is liable to pay the real property tax assessments.

MCIAA vs. MARCOS G.R. No. 120082, September 11, 1996 261 SCRA 667 Public Corporation, Taxation,
Local Government Code, Realty Tax,
FACTS:
Mactan Cebu International Airport Authority (MCIAA) was created by virtue of Republic Act 6958.
Since the time of its creation, MCIAA enjoyed the privilege of exemption from payment of realty taxes
in accordance with Section 14 of its Charter. However on 11 October 1994, the Office of the Treasurer
of Cebu, demanded for the payment of realty taxes on several parcels of land belonging to the
petitioner.
Petitioner objected to such demand for payment as baseless and unjustified and asserted that it is an
instrumentality of the government performing governmental functions, which puts limitations on the
taxing powers of local government units.
The City refused to cancel and set aside petitioner’s realty tax account, insisting that the MCIAA is a
government controlled corporation whose tax exemption privilege has been withdrawn by virtue of
Sections 193 and 234 of the Local Government Code (LGC), and not an instrumentality of the
government but merely a government owned corporation performing proprietary functions. MCIAA
paid its tax account “under protest” when City is about to issue a warrant of levy against the MCIAA’s
properties.
MCIAA filed a Petition of Declaratory Relief with the RTC contending that the taxing power of local
government units do not extend to the levy of taxes or fees on an instrumentality of the national
government. It contends that by the nature of its powers and functions, it has the footing of an
agency or instrumentality of the national government; which claim the City rejects. The trial court
dismissed the petition, citing that close reading of the LGC provides the express cancellation and
withdrawal of tax exemptions of Government Owned and Controlled Corporations.
 
ISSUE: Whether the MCIAA is exempted from realty taxes.
RULING:
Tax statutes are construed strictly against the government and liberally in favor of the taxpayer. But
since taxes are paid for civilized society, or are the lifeblood of the nation, the law frowns against
exemptions from taxation and statutes granting tax exemptions are thus construed strictissimi juris
against the taxpayer and liberally in favor of the taxing authority.
A claim of exemption from tax payments must be clearly shown and based on language in the law too
plain to be mistaken. Taxation is the rule, exemption therefrom is the exception. However, if the
grantee of the exemption is a political subdivision or instrumentality, the rigid rule of construction
does not apply because the practical effect of the exemption is merely to reduce the amount of
money that has to be handled by the government in the course of its operations.
Further, since taxation is the rule and exemption therefrom the exception, the exemption may be
withdrawn at the pleasure of the taxing authority. The only exception to this rule is where the
exemption was granted to private parties based on material consideration of a mutual nature, which
then becomes contractual and is thus covered by the non-impairment clause of the Constitution.
MCIAA is a “taxable person” under its Charter (RA 6958), and was only exempted from the payment
of real property taxes. The grant of the privilege only in respect of this tax is conclusive proof of the
legislative intent to make it a taxable person subject to all taxes, except real property tax.
Since Republic Act 7160 or the Local Government Code (LGC) expressly provides that “All general and
special laws, acts, city charters, decrees [sic], executive orders, proclamations and administrative
regulations, or part of parts thereof which are inconsistent with any of the provisions of this Code are
hereby repealed or modified accordingly.”
With that repealing clause in the LGC, the tax exemption provided for in RA 6958 had been expressly
repealed by the provisions of the LGC. Therefore, MCIAA has to pay the assessed realty tax of its
properties effective after January 1, 1992 until the present.

MANILA INTERNATIONAL AIRPORT AUTHORITY vs. COURT OF APPEALS

G.R. No. 155650 July 20, 2006

Facts:

MIAA received Final Notices of Real Estate Tax Delinquency from the City of Parañaque for the taxable
years 1992 to 2001. MIAA’s real estate tax delinquency was estimated at P624 million.

The City of Parañaque, through its City Treasurer, issued notices of levy and warrants of levy on the
Airport Lands and Buildings. The Mayor of the City of Parañaque threatened to sell at public auction
the Airport Lands and Buildings should MIAA fail to pay the real estate tax delinquency.

MIAA filed with the Court of Appeals an original petition for prohibition and injunction, with prayer
for preliminary injunction or temporary restraining order. The petition sought to restrain the City of
Parañaque from imposing real estate tax on, levying against, and auctioning for public sale the Airport
Lands and Buildings.

Paranaque’s Contention: Section 193 of the Local Government Code expressly withdrew the tax
exemption privileges of “government-owned and-controlled corporations” upon the effectivity of the
Local Government Code. Respondents also argue that a basic rule of statutory construction is that the
express mention of one person, thing, or act excludes all others. An international airport is not among
the exceptions mentioned in Section 193 of the Local Government Code. Thus, respondents assert
that MIAA cannot claim that the Airport Lands and Buildings are exempt from real estate tax.

MIAA’s contention: Airport Lands and Buildings are owned by the Republic. The government cannot
tax itself. The reason for tax exemption of public property is that its taxation would not inure to any
public advantage, since in such a case the tax debtor is also the tax creditor.

Issue:

WON Airport Lands and Buildings of MIAA are exempt from real estate tax under existing laws? Yes.
Ergo, the real estate tax assessments issued by the City of Parañaque, and all proceedings taken
pursuant to such assessments, are void.

Held:

1. MIAA is Not a Government-Owned or Controlled Corporation

MIAA is not a government-owned or controlled corporation but an instrumentality of the National

Government and thus exempt from local taxation.

MIAA is not a stock corporation because it has no capital stock divided into shares. MIAA has no
stockholders or voting shares.

MIAA is also not a non-stock corporation because it has no members. A non-stock corporation must
have members.

MIAA is a government instrumentality vested with corporate powers to perform efficiently its
governmental functions. MIAA is like any other government instrumentality, the only difference is
that MIAA is vested with corporate powers.

When the law vests in a government instrumentality corporate powers, the instrumentality does not
become a corporation. Unless the government instrumentality is organized as a stock or non-stock
corporation, it remains a government instrumentality exercising not only governmental but also
corporate powers. Thus, MIAA exercises the governmental powers of eminent domain, police
authority and the levying of fees and charges. At the same time, MIAA exercises “all the powers of a
corporation under the Corporation Law, insofar as these powers are not inconsistent with the
provisions of this Executive Order.”

2. Airport Lands and Buildings of MIAA are Owned by the Republic

a. Airport Lands and Buildings are of Public Dominion

The Airport Lands and Buildings of MIAA are property of public dominion and therefore owned by the
State or the Republic of the Philippines.

No one can dispute that properties of public dominion mentioned in Article 420 of the Civil Code, like
“roads, canals, rivers, torrents, ports and bridges constructed by the State,” are owned by the State.
The term “ports” includes seaports and airports. The MIAA Airport Lands and Buildings constitute a
“port” constructed by the State. Under Article 420 of the Civil Code, the MIAA Airport Lands and
Buildings are properties of public dominion and thus owned by the State or the Republic of the
Philippines.

The Airport Lands and Buildings are devoted to public use because they are used by the public for
international and domestic travel and transportation. The fact that the MIAA collects terminal fees
and other charges from the public does not remove the character of the Airport Lands and Buildings
as properties for public use.

The charging of fees to the public does not determine the character of the property whether it is of
public dominion or not. Article 420 of the Civil Code defines property of public dominion as one
“intended for public use.” The terminal fees MIAA charges to passengers, as well as the landing fees
MIAA charges to airlines, constitute the bulk of the income that maintains the operations of MIAA.
The collection of such fees does not change the character of MIAA as an airport for public use. Such
fees are often termed user’s tax. This means taxing those among the public who actually use a public
facility instead of taxing all the public including those who never use the particular public facility.

b. Airport Lands and Buildings are Outside the Commerce of Man

The Court has also ruled that property of public dominion, being outside the commerce of man,
cannot be the subject of an auction sale.

Properties of public dominion, being for public use, are not subject to levy, encumbrance or
disposition through public or private sale. Any encumbrance, levy on execution or auction sale of any
property of public dominion is void for being contrary to public policy. Essential public services will
stop if properties of public dominion are subject to encumbrances, foreclosures and auction sale. This
will happen if the City of Parañaque can foreclose and compel the auction sale of the 600-hectare
runway of the MIAA for non-payment of real estate tax.

c. MIAA is a Mere Trustee of the Republic

MIAA is merely holding title to the Airport Lands and Buildings in trust for the Republic. Section 48,
Chapter 12, Book I of the Administrative Code allows instrumentalities like MIAA to hold title to real
properties owned by the Republic. n MIAA’s case, its status as a mere trustee of the Airport Lands and
Buildings is clearer because even its executive head cannot sign the deed of conveyance on behalf of
the Republic. Only the President of the Republic can sign such deed of conveyance.

d. Transfer to MIAA was Meant to Implement a Reorganization

The transfer of the Airport Lands and Buildings from the Bureau of Air Transportation to MIAA was
not meant to transfer beneficial ownership of these assets from the Republic to MIAA. The purpose
was merely to reorganize a division in the Bureau of Air Transportation into a separate and
autonomous body. The Republic remains the beneficial owner of the Airport Lands and Buildings.
MIAA itself is owned solely by the Republic. No party claims any ownership rights over MIAA’s assets
adverse to the Republic.

e. Real Property Owned by the Republic is Not Taxable

Sec 234 of the LGC provides that real property owned by the Republic of the Philippines or any of its
political subdivisions except when the beneficial use thereof has been granted, for consideration or
otherwise, to a taxable person following are exempted from payment of the real property tax.

However, portions of the Airport Lands and Buildings that MIAA leases to private entities are not
exempt from real estate tax. For example, the land area occupied by hangars that MIAA leases to
private corporations is subject to real estate tax.

Quezon City Gov't. v. BayanTel Corp., GR No. 162015, March 6, 2006

FACTS:
BAYANTEL is a legislative franchise holder under RA 3259 to establish and operate radio stations for
domestic telecommunications, radiophone, broadcasting and telecasting. On January 1, 2992, RA
7160 of the “Local Government Code of 1991” took effect. Section 232 of the Code grants local
government units within the Metro Manila area the power to levy tax on real properties. Section 234
of the same Code withdrew any exemption from realty tax granted to all persons, natural or juridical.
On July 20, 1992, few months after the LGC took effect, Congress enacted RA 7633, amending
Bayantel’s original franchise. In 1993, the Quezon City government enacted the Quezon City Revenue
Code imposing real property tax on all real properties in Quezon City.
 
ISSUE:
What is the extent of the Power of Local Taxation?
 
RULING:
The power to tax is primarily vested in the Congress; however, it may be exercised by local legislative
bodies pursuant to direct authority conferred by Section 5, Article X of the Constitution. Under the
latter, the exercise of the power may be subject to such guidelines and limitations as Congress may
provide.
Since RA 7633 amended Bayantel’s original franchise and granted it real property tax exemption from
its real properties that is directly used in its operations, the Quezon City government cannot levy real
property taxes on the real properties of Bayantel that are in Quezon City area.
For sure, in Philippine Long Distance Telephone Company, Inc. (PLDT) vs. City of Davao, this Court has
upheld the power of Congress to grant exemptions over the power of local government units to
impose taxes. There, the Court wrote:
Indeed, the grant of taxing powers to local government units under the Constitution and the LGC does
not affect the power of Congress to grant exemptions to certain persons, pursuant to a declared
national policy. The legal effect of the constitutional grant to local governments simply means that in
interpreting statutory provisions on municipal taxing powers, doubts must be resolved in favor of
municipal corporations.

Sta. Lucia Realty and Development, Inc. v. City of Pasig, G.R. No. 166838, June 15,2011
FACTS: Petitioner Sta. Lucia Realty & Development, Inc. (Sta. Lucia) is the registered owner of several
parcels of land with Transfer Certificates of Title (TCT) Nos. 39112, 39110 and 38457, all of which
indicated that the lots were located in Barrio Tatlong Kawayan, Municipality of Pasig (Pasig).
The parcel of land covered by TCT No. 39112 was consolidated with that covered by TCT No. 518403,
which was situated in Barrio Tatlong Kawayan, Municipality of Cainta, Province of Rizal (Cainta). The
two combined lots were subsequently partitioned into three, for which TCT Nos. 532250, 598424, and
599131, now all bearing the Cainta address, were issued.
TCT No. 39110 was also divided into two lots, becoming TCT Nos. 92869 and 92870.
The lot covered by TCT No. 38457 was not segregated, but a commercial building owned by Sta. Lucia
East Commercial Center, Inc., a separate corporation, was built on it.
Upon Pasig’s petition to correct the location stated in TCT Nos. 532250, 598424, and 599131, the Land
Registration Court, on June 9, 1995, ordered the amendment of the TCTs to read that the lots with
respect to TCT No. 39112 were located in Barrio Tatlong Kawayan, Pasig City.
On January 31, 1994, Cainta filed a petition for the settlement of its land boundary dispute with Pasig
before the RTC, Branch 74 of Antipolo City (Antipolo RTC). This case, docketed as Civil Case No. 94-
3006, is still pending up to this date.
On November 28, 1995, Pasig filed a Complaint, docketed as Civil Case No. 65420, against Sta. Lucia
for the collection of real estate taxes, including penalties and interests, on the lots covered by TCT
Nos. 532250, 598424, 599131, 92869, 92870 and 38457, including the improvements thereon (the
subject properties).
Sta. Lucia, in its Answer, alleged that it had been religiously paying its real estate taxes to Cainta, just
like what its predecessors-in-interest did, by virtue of the demands and assessments made and the
Tax Declarations issued by Cainta on the claim that the subject properties were within its territorial
jurisdiction. Sta. Lucia further argued that since 1913, the real estate taxes for the lots covered by the
above TCTs had been paid to Cainta.
Cainta was allowed to file its own Answer-in-Intervention when it moved to intervene on the ground
that its interest would be greatly affected by the outcome of the case. It averred that it had been
collecting the real property taxes on the subject properties even before Sta. Lucia acquired them.
Cainta further asseverated that the establishment of the boundary monuments would show that the
subject properties are within its metes and bounds.
Sta. Lucia and Cainta thereafter moved for the suspension of the proceedings, and claimed that the
pending petition in the Antipolo RTC, for the settlement of boundary dispute between Cainta and
Pasig, presented a “prejudicial question” to the resolution of the case.
ISSUE: WON THE ISSUE ON GEOGRAPHICAL LOCATION OF THE PROPERTY IS PREJUDICIAL QUESTION
BEFORE A LGC MAY COLLECT REAL PROPERTY TAXES.
HELD: YES. Under Presidential Decree No. 464 or the “Real Property Tax Code,” the authority to
collect real property taxes is vested in the locality where the property is situated:
Sec. 5. Appraisal of Real Property. — All real property, whether taxable or exempt, shall be appraised
at the current and fair market value prevailing in the locality where the property is situated.
xxx xxx xxx
Sec. 57. Collection of tax to be the responsibility of treasurers. — The collection of the real property
tax and all penalties accruing thereto, and the enforcement of the remedies provided for in this Code
or any applicable laws, shall be the responsibility of the treasurer of the province, city or municipality
where the property is situated. (Emphases ours.) SDECAI
This requisite was reiterated in Republic Act No. 7160, also known as the 1991 the Local Government
Code, to wit:
Section 201.  Appraisal of Real Property. — All real property, whether taxable or exempt, shall be
appraised at the current and fair market value prevailing in the locality where the property is situated.
The Department of Finance shall promulgate the necessary rules and regulations for the classification,
appraisal, and assessment of real property pursuant to the provisions of this Code.
Section 233.  Rates of Levy. — A province or city or a municipality within the Metropolitan Manila
Area shall fix a uniform rate of basic real property tax applicable to their respective localities as
follows: . . . . (Emphases ours.)
The only import of these provisions is that, while a local government unit is authorized under several
laws to collect real estate tax on properties falling under its territorial jurisdiction, it is imperative to
first show that these properties are unquestionably within its geographical boundaries.
Accentuating on the importance of delineating territorial boundaries, this Court, in Mariano, Jr. v.
Commission on Elections said:
The importance of drawing with precise strokes the territorial boundaries of a local unit of
government cannot be overemphasized. The boundaries must be clear for they define the limits of
the territorial jurisdiction of a local government unit. It can legitimately exercise powers of
government only within the limits of its territorial jurisdiction. Beyond these limits, its acts are ultra
vires. Needless to state, any uncertainty in the boundaries of local government units will sow costly
conflicts in the exercise of governmental powers which ultimately will prejudice the people’s welfare.
This is the evil sought to be avoided by the Local Government Code in requiring that the land area of
a local government unit must be spelled out in metes and bounds, with technical descriptions.
The significance of accurately defining a local government unit’s boundaries was stressed in City of
Pasig v. Commission on Elections, which involved the consolidated petitions filed by the parties
herein, Pasig and Cainta, against two decisions of the Commission on Elections (COMELEC) with
respect to the plebiscites scheduled by Pasig for the ratification of its creation of two new Barangays.
Ruling on the contradictory reliefs sought by Pasig and Cainta, this Court affirmed the COMELEC
decision to hold in abeyance the plebiscite to ratify the creation of Barangay Karangalan; but set aside
the COMELEC’s other decision, and nullified the plebiscite that ratified the creation of Barangay
Napico in Pasig, until the boundary dispute before the Antipolo RTC had been resolved. The
aforementioned case held as follows:
1. The Petition of the City of Pasig in G.R. No. 125646 is DISMISSED for lack of merit; while
2. The Petition of the Municipality of Cainta in G.R. No. 128663 is GRANTED. The COMELEC Order in
UND No. 97-002, dated March 21, 1997, is SET ASIDE and the plebiscite held on March 15, 1997 to
ratify the creation of Barangay Napico in the City of Pasig is declared null and void. Plebiscite on the
same is ordered held in abeyance until after the courts settle with finality the boundary dispute
between the City of Pasig and the Municipality of Cainta, in Civil Case No. 94-3006.
Clearly therefore, the local government unit entitled to collect real property taxes from Sta. Lucia
must undoubtedly show that the subject properties are situated within its territorial jurisdiction;
otherwise, it would be acting beyond the powers vested to it by law.
Although it is true that “Pasig” is the locality stated in the TCTs of the subject properties, both Sta.
Lucia and Cainta aver that the metes and bounds of the subject properties, as they are described in
the TCTs, reveal that they are within Cainta’s boundaries. This only means that there may be a conflict
between the location as stated and the location as technically described in the TCTs. Mere reliance
therefore on the face of the TCTs will not suffice as they can only be conclusive evidence of the
subject properties’ locations if both the stated and described locations point to the same area.The
Antipolo RTC, wherein the boundary dispute case between Pasig and Cainta is pending, would be able
to best determine once and for all the precise metes and bounds of both Pasig’s and Cainta’s
respective territorial jurisdictions. The resolution of this dispute would necessarily ascertain the
extent and reach of each local government’s authority, a prerequisite in the proper exercise of their
powers, one of which is the power of taxation. This was the conclusion reached by this Court in City of
Pasig v. Commission on Elections, and by the First Division of the Court of Appeals in CA-G.R. SP No.
52874. We do not see any reason why we cannot adhere to the same logic and reasoning in this case.

Ty vs. Trampe, G.R. No. 117577, Dec. 1, 1995- already covered

Callanta vs ombudsman
FACTS: worded letter-complaints dated December 19, 1991, the City of Cebu simultaneously filed
criminal and administrative charges against the above-enumerated officers and staff of the City
Assessor's Office for "violations of Section 106 of the Real Property Tax Code[,] for gross negligence or
willful under-assessment of real properties within the city's taxing jurisdiction and for violation of Sec.
3 (e) of R.A. 3019, otherwise known as the Anti-Graft and Corrupt Practices Act[,] for the act of
causing undue injury to the City Government by giving private persons unwarranted benefits,
advantages or preferences in the discharge of their official and administrative functions through
manifest partiality, evident bad faith or gross inexcusable negligence by reassessing the real
properties of taxpayers without any authority whatsoever, thereby resulting in the reduction of tax
assessments to the prejudice of the city government . . Respondents [herein petitioners], in their joint
counter-affidavit, denied the charges filed against them. They explained that the acts complained of
were done within the bounds of their official duties and functions, citing as their legal basis, Sec. 22 of
P.D. 464. That Sec. 30 of P.D. 464 which is the basis of the complaints does not prohibit the Assessor
from either correcting from whatever error or flaw he and his deputies may have made.
Respondents further alleged that they have not derived any benefit from the adjustments nor caused
injury to any party particularly the City Government of Cebu. They explained that the general revision
of real property assessments for the City of Cebu has not been completed nor hasPetitioners present
the following assignment of errors:
First — The Ombudsman gravely erred in resolving that the assessor acted illegally and in grave
misconduct by adjusting/correcting the valuations of the tax declarations subject of the complaints.
Second — It is gravely erroneous for both respondents to assume that taxes for the subject tax
declarations had accrued and become payable, thereby making petitioners liable for causing undue
injury to the city government of Cebu.
Third — The Ombudsman manifestly overlooked certain relevant facts not disputed by the parties and
which if properly considered would justify a different conclusion.
Fourth — It is both gravely erroneous and a grave abuse in the exercise of discretion for the
Ombudsman to hold liable the rest of the petitioners aside from Mr. Callanta, the city assessor who
alone promulgated the act/policy.
Fifth — The Ombudsman and Mayor Osmeña [of Cebu City] had clearly acted with undue haste
amounting to grave abuse of discretion and violation of existing laws and regulations in effecting the
dismissal of herein petitioners.12
the City Assessor certified its completion to the Secretary of Justice, thus taxes under these revised
tax declarations are not yet due, has [sic] not yet accrued, are not yet collectible and therefore,
cannot reserve as basis for alleged injury.6
RULING: First Issue: Authority of the City Assessor
to Reconsider Real Property Assessments
Second Issue: Injury or Prejudice to the
City Government of Cebu
Third Issue: Penalties Imposed Too Harsh
Under the Circumstances
Mactan vs. Marcos, G.R. No. 120082, Sept. 11, 1996- COVERED
TESTATE ESTATE OF CONCORDIA T. LIM, plaintiff-appellant,
vs.
CITY OF MANILA, JESUS I. CALLEJA, in his capacity as City Treasurer of Manila, NICOLAS CATIIL, in his
capacity as City Assessor of Manila, and/or GOVERNMENT SERVICE INSURANCE SYSTEM,
On February 13, 1969, the late Concordia Lim obtained a real estate loan from the defendant-appellee
Government Service Insurance System (GSIS) in the amount of P875,488.54, secured by a mortgage
constituted on two (2) parcels of land formerly covered by Transfer Certificates of Title Nos. 64075
and 63076 (later changed to TCT Nos. 125718 and 125719) registered in Manila with a three-story
building thereon and located on No. 810 Nicanor Reyes St. (formerly Morayta), Sampaloc, Manila.
When Lim failed to pay the loan, the mortgage was extrajudicially foreclosed and the subject
properties sold at public auction. The GSIS, being the highest bidder, bought the properties. Upon
Lim's failure to exercise her right of redemption, the titles to the properties were consolidated in
favor of the GSIS in 1977.
However, pursuant to Resolution No. 188 of the Board of Trustees of the GSIS dated March 29, 1979,
the estate of Lim, through Ernestina Crisologo Jose (the administratrix) was allowed to repurchase the
foreclosed properties. On April 11, 1979, a Deed of Absolute Sale was executed. (Exhibit B, Table of
Exhibits, pp. 3-5)
The defendant City Treasurer of Manila required the plaintiff-appellant to pay the real estate taxes
due on the properties for the years 1977, 1978 and the first quarter of 1979 in the amount of
P67,960.39, before the titles could be transferred to the plaintiff-appellant. The latter paid the
amount under protest.
On July 11, 1979, the plaintiff-appellants counsel sent a demand letter requesting the GSIS to
reimburse the taxes paid under protest. The GSIS refused.
On September 6, 1979, a demand letter was sent to the City Treasurer of Manila to refund the
amount but the latter also refused.
On March 14, 1980, the plaintiff filed an action before the trial court for a sum of money for the
refund or reimbursement of the real estate taxes paid under protest.
During the pendency of the case, the plaintiff-appellant admitted that the foreclosed properties had
been sold, through the administratrix, to another person. (2nd par. of Plaintiffs Manifestation dated
December 21, 1981, Records, p. 105; TSN, March 4, 1982, p. 37)
After trial, the lower court dismissed the complaint for lack of jurisdiction. It ruled that the case
involves a protested action of the City Assessor which should have been flied before the Local Board
of Assessment Appeals of Manila (citing Section 30 of the Real Property Tax Code [P.D. No. 464]) in
line with the principle that all administrative remedies must first be exhausted. The lower court also
cited by way of obiter dictum, the case of City of Baguio v. Busuego, 100 SCRA 116 (1980) wherein this
Court ruled that while the GSIS may be exempt from the payment of real estate tax, the exemption
does not cover properties the beneficial use of which was granted to other taxable persons. This
ruling supports the lower court's view that the tax had attached to the subject properties for the years
1977, 1978 and first quarter of 1979. The lower court further stated that the plaintiff-appellant had
assumed liability for the real estate taxes because of the provision in the Deed of Sale with the GSIS
that: "any and all the taxes, ... relative to the execution and/or implementation of this Deed, ... shall
be for the account of and paid by the VENDEE" (Exhibit B, Table of Exhibits, p. 5)
Hence, this appeal raising several issues that can be summed up into the following: (1) whether or not
the trial court has jurisdiction over the action for refund of real estate taxes paid under protest; (2)
whether or not plaintiff-appellant has the right to recover; and (3) whether or not the plaintiff-
appellant has personality to sue.
The plaintiff-appellant argues that the lower court has jurisdiction over a complaint for refund as well
as for reimbursement of the real estate taxes erroneously collected by the City of Manila from it and
paid under protest.
The records show that the subject properties were leased to other persons during the time when GSIS
held their titles, as was the case during the ownership of the late Concordia Lim.
However, the real estate taxes later assessed on the said properties for the years 1977, 1978 and the
first quarter of 1979 were charged against the plaintiff-appellant even if the latter was not the
beneficial user of the parcels of land.
In real estate taxation, the unpaid tax attaches to the property and is chargeable against the taxable
person who had actual or beneficial use and possession of it regardless of whether or not he is the
owner. (Sections 3(a) and 19 of P.D. No. 464; Province of Nueva Ecija v. Imperial Mining Co., Inc., 118
SCRA 632 [1982]). Raising doubts on the validity of the imposition and collection of the real property
tax for the designated periods before the title to the properties may be transferred, the plaintiff-
appellant paid under protest. This step was taken in accordance with the provision of Section 62 of
P.D. No. 464, which states:
Sec. 62. Payment under protest. — (a) When a taxpayer desires for any reason to pay his tax under
protest, he shall indicate the amount or portion thereof he is contesting and such protest shall be
annotated on the tax receipts by writing thereon the words paid under protest.' Verbal protest shall
be confirmed in writing, with a statement of the ground, therefor, within thirty days. The tax may be
paid under protest, and in such case it shall be the duty of the Provincial, City or Municipal Treasurers
to annotate the ground or grounds therefor on the receipt.
(b) In case of payments made under protest, the amount or portion of the tax contested shall be held
in trust by the treasurer and the difference shall be treated as revenue.
(c) In the event that the protest is finally decided in favor of the government, the amount or portion
of the tax held in trust by the treasurer shall accrue to the revenue account, but if the protest shall be
decided finally in favor of the protestant, the amount or portion of the tax protested against may
either be refunded to the protestant or applied as tax credit to any other existing or future tax liability
of the said protestant. (Emphasis Supplied)
The Court rules that the plaintiff-appellant correctly filed the action for refund/reimbursement with
the lower court as it is the courts which have jurisdiction to try cases involving the right to recover
sums of money.
Section 30 of the Real Property Tax Code is not applicable because what is questioned is the
imposition of the tax assessed and who should shoulder the burden of the tax. There is no dispute
over the amount assessed on the properties for tax purposes. Section 30 pertains to the
administrative act of listing and valuation of the property for purposes of real estate taxation. It
provides:
Section 30. Local Board of Assessment Appeals — Any owner who is not satisfied with the action of
the provincial or city assessor in the assessment of his property may, within sixty days from the date
of receipt by him of the written notice of assessment as provided in this Code, appeal to the Board of
Assessment Appeals of the province or city by filing with it a petition under oath using the form
prescribed for the purpose, together with copies of the tax declarations and such affidavit or
documents submitted in support of the appeal.
In further support of the conclusion that the lower court has jurisdiction to try the instant case, we
note Section 64 of the Real Property Tax Code which provides that a "court shall entertain a suit
assailing the validity of a tax assessed" after the taxpayer shall have paid under protest.
The issue on the existence or non-existence of the appellant's right to recover the amounts paid
hinges on the basic question of the validity of the tax imposition. If the imposition is valid and in
accordance with law, then there is no right to recover. Otherwise, the amounts paid must be
refunded by the respondent City Treasurer of Manila acting in his official capacity. (Sec. 62 [c], PD
464)
The opinion of the lower court that the ruling in City of Baguio v. Busuego, supra justifies the
imposition of the tax on plaintiff-appellant is erroneous. The facts in that case are different from those
in the case at bar. It was shown that Busuego purchased, by way of installment, a parcel of land and
building within a housing project of the GSIS. In a Contract to Sell with the GSIS, he agreed to: (1) the
delivery of the possession of the properties to him pending the full payment of the price although the
title remained with the GSIS; and (2) his liability to pay and shoulder all taxes and assessments on the
lot and building or improvements thereon during the term of the contract to sell.
Despite the tax exemption enjoyed by the GSIS, the realty tax liability imposed on the purchaser was
held to be valid on the basis of the contractual obligation that he entered into and the fact that
beneficial use had been given to him.
The instant case does not present a similar contractual stipulation. The contract here which is alleged
to include the condition that the buyer shall shoulder the taxes is a Contract of Sale. In
the Busuego case, there was merely a Contract to Sell for the duration of which the party who shall be
liable for the taxes about to be due is the buyer as per agreement. In the case at bar, what was
assumed by the vendee was the liability for taxes and other expenses "relative to the execution
and/or implementation" of the Deed of Absolute Sale "including among others, documentation,
documentary and science stamps, expenses for registration and transfer of titles ... " This clause was
stipulated for the purpose of clarifying which of the parties should bear the costs of execution and
implementation of the sale and to comply with Article 1487 of the Civil Code which states:
ART. 1487 — The expenses for the execution and registration of the sale shall be borne by the vendor,
unless there is a stipulation to the contrary.
Moreover, the taxes mentioned in the clause here refer to those necessary to the completion of the
sale and accruing after the making of such sale on April 11, 1990 such as documentary stamp tax and
capital gains tax.
In the Busuego case, the assumption by the vendee of the liability for real estate taxes prospectively
due was in harmony with the tax policy that the user of the property bears the tax. In the instant case,
the interpretation that the plaintiff-appellant assumed a liability for overdue real estate taxes for the
periods prior to the contract of sale is incongruent with the said policy because there was no
immediate transfer of possession of the properties previous to full payment of the repurchase price.
The facts of the case constrain us to rule that the plaintiff-appellant is not liable to pay the real
property tax due for the years 1977, 1978 and first quarter of 1979. The clause in the Deed of Sale
cannot be interpreted to include taxes for the periods prior to April 11, 1979, the date of repurchase.
To impose the real property tax on the estate which was neither the owner nor the beneficial user of
the property during the designated periods would not only be contrary to law but also unjust. If
plaintiff-appellant intended to assume the liability for realty taxes for the prior periods, the contract
should have specifically stated "real estate taxes" due for the years 1977,1978 and first quarter of
1979. The payments made by the plaintiff-appellant cannot be construed to be an admission of a tax
liability since they were paid under protest and were done only in compliance with one of the
requirements for the consummation of the sale as directed by the City Treasurer of Manila.
Hence, the tax assessed and collected from the plaintiff-appellants is not valid and a refund by the
City government is in order.
The Court rules, however, that the plaintiff-appellant is not entitled to a reimbursement from the
respondent GSIS because: (1) the GSIS is exempt from payment of the real property tax under Sec. 33
of the Revised Charter of the GSIS; and (2) the tax should be based on "actual use" of the property.
Section 40 of the Real Property Tax Code supports the view that not even the GSIS is liable to pay real
property tax on public land leased to other persons. Section 40 provides:
Sec. 40. Exemption from Real Property Tax. — The exemption shall be as follows:
(a) Real property owned by the Republic of the Philippines or any of its political subdivisions and any
government owned corporation so exempt by its charter: Provided, however, That this exemption
shall not apply to real property of the abovenamed entities the beneficial use of which has been
granted, for consideration or otherwise, to a taxable person.
In fact, if there is anyone liable the law and applicable jurisprudence point to the lessees of land
owned by the government-owned and controlled corporations. (Province of Nueva Ecija v. Imperial
Mining Co., Inc., supra) In this case, the Court can only declare the non-liability of a right to a refund.
We cannot rule on the liability of the lessees whose Identities are not even clear because they were
never impleaded.
The contention of the plaintiff-appellant that the respondent GSIS is liable to reimburse the tax
because the latter allegedly failed to exercise its claim to the tax exemption privilege is without merit.
The exemption is explicitly granted by law and need not be applied for.
Regarding the issue on the existence of the personality to sue, the plaintiff-appellant asserts that
since it was the one which paid under protest the amount of P67,960.39 as real property tax, then it is
the real party in interest to sue for refund.
The lower court, noting the transfer of the title to the properties to a third person, ruled that
assuming arguendo that there is a right to seek recovery, the subsequent sale "must have included
the tax" and "as such all the credits including the taxes that were paid was (sic) transfered already to
the buyer." It ruled that plaintiff-appellant had no personality to sue and the right of action must be
between the subsequent buyer and the plaintiff-appellant. The Court finds that the above ruling and
the facts on which it is based are not sufficiently supported by the records of the case. The evidence
merely shows an admission of a subsequent sale of the properties by the plaintiff-appellant, nothing
more.
WHEREFORE, IN VIEW OF THE FOREGOING, the judgment appealed from is hereby REVERSED and SET
ASIDE. The defendants appellees City of Manila, the City Treasurer and City Assessor of Manila are
hereby ordered to refund to the TESTATE ESTATE OF CONCORDIA LIM, through administratrix
ERNESTINA CRISOLOGO-JOSE, the amount of P67,960.39 as real estate taxes paid under protest.
CALTEX (PHILIPPINES) INC., petitioner, vs. CENTRAL BOARD OF ASSESSMENT APPEALS and CITY
ASSESSOR OF PASAY, respondents. (G.R. No. L-50466, May 31, 1982)

FACTS: This case is about the realty tax on machinery and equipment installed by Caltex (Philippines)
Inc. in its gas stations located on leased land.

The machines and equipment consists of underground tanks, elevated tank, elevated water tanks,
water tanks, gasoline pumps, computing pumps, water pumps, car washer, car hoists, truck hoists, air
compressors and tireflators.

Said machines and equipment are loaned by Caltex to gas station operators under an appropriate
lease agreement or receipt. It is stipulated in the lease contract that the operators, upon demand,
shall return to Caltex the machines and equipment in good condition as when received, ordinary wear
and tear excepted.

The lessor of the land, where the gas station is located, does not become the owner of the machines
and equipment installed therein. Caltex retains the ownership thereof during the term of the lease.
ISSUE: Are the pieces of machinery and equipment subject to realty tax despite them having been
placed by a lessee?

HELD: Yes, they are subject to realty tax.

Here, the question is whether the gas station equipment and machinery permanently affixed by
Caltex to its gas station and pavement (which are indubitably taxable realty) should be subject to the
realty tax. This question is different from the issue raised in the Davao Saw Mill case.

Improvements on land are commonly taxed as realty even though for some purposes they might be
considered personalty.
MERALCO vs. CENTRAL BOARD OF ASSESSMENT APPEALS (CBAA) G.R. No. L-46245 May 31, 1982
TAXATION, REALTY TAX, CIVIL LAW, REAL PROPERTY
JANUARY 11, 2018
 
FACTS:
Meralco Securities Industrial Corporation assails the decision of the CBAA, holding that Meralco
Securities’ oil pipeline is subject to realty tax.
The record reveals that pursuant to a pipeline concession issued under the Petroleum Act of 1949, R.
A. No. 387, Meralco Securities installed from Batangas to Manila a pipeline system consisting of
cylindrical steel pipes joined together and buried not less than one meter below the surface along the
shoulder of the public highway. The portion passing through Laguna is about thirty kilometers long.
In order to repair, replace, remove or transfer segments of the pipeline, the pipes have to be cold-cut
by means of a rotary hard-metal pipe-cutter after digging or excavating them out of the ground where
they are buried. In points where the pipeline traversed rivers or creeks, the pipes were laid beneath
the bed thereof. Hence, the pipes are permanently attached to the land.
However, Meralco Securities notes that segments of the pipeline can be moved from one place to
another as shown in the permit issued by the Secretary of Public Works and Communications which
permit provides that the government reserves the right to require the removal or transfer of the pipes
by and at the concessionaire’s expense should they be affected by any road repair or improvement.
Pursuant to the Assessment Law, Commonwealth Act No. 470, the provincial assessor of Laguna
treated the pipeline as real property and issued Tax Declarations Nos. 6535-6537, San Pedro; 7473-
7478, Cabuyao; 7967-7971, Sta. Rosa; 9882-9885, Biñan and 15806-15810, Calamba, containing the
assessed values of portions of the pipeline.
Meralco Securities appealed the assessments to the Board of Assessment Appeals of Laguna. That
board upheld the assessments.
Meralco Securities insists that its pipeline is not subject to realty tax because it is not real property
within the meaning of article 415. This contention is not sustainable under the provisions of the
Assessment Law, the Real Property Tax Code and the Civil Code.
 
ISSUE:
 Whether or not the pipeline of Meralco fall within any of the classes of exempt real property
enumerated in section 3 of the Assessment Law and section 40 of the Real Property Tax Code.
RULING:
Section 2 of the Assessment Law provides that the realty tax is due “on real property, including land,
buildings, machinery, and other improvements” not specifically exempted in section 3 thereof. This
provision is reproduced with some modification in the Real Property Tax Code which provides:
 
SEC.
38.                                                                                                                                                                                   
               Incidence of Real Property Tax.— There shall be levied, assessed and collected in all
provinces, cities and municipalities an annual ad valorem tax on real property, such as land, buildings,
machinery and other improvements affixed or attached to real property not hereinafter specifically
exempted. *
 
It is incontestable that the pipeline of Meralco Securities does not fall within any of the classes of
exempt real property enumerated in section 3 of the Assessment Law and section 40 of the Real
Property Tax Code.
 
Pipeline means a line of pipe connected to pumps, valves and control devices for conveying liquids,
gases or finely divided solids. It is a line of pipe running upon or in the earth, carrying with it the right
to the use of the soil in which it is placed (Note 21[10],54 C.J.S. 561).
 
Article 415[l] and [3] provides that real property may consist of constructions of all kinds adhered to
the soil and everything attached to an immovable in a fixed manner, in such a way that it cannot be
separated therefrom without breaking the material or deterioration of the object.
The pipeline system in question is indubitably a construction adhering to the soil (Exh. B, p. 39, Rollo).
It is attached to the land in such a way that it cannot be separated therefrom without dismantling the
steel pipes which were welded to form the pipeline.
Insofar as the pipeline uses valves, pumps and control devices to maintain the flow of oil, it is in a
sense machinery within the meaning of the Real Property Tax Code.
It should be borne in mind that what are being characterized as real property are not the steel pipes
but the pipeline system as a whole. Meralco Securities has apparently two pipeline systems.
Meralco Securities argues that the realty tax is a local tax or levy and not a tax of general application.
This argument is untenable because the realty tax has always been imposed by the lawmaking body
and later by the President of the Philippines in the exercise of his lawmaking powers.
The realty tax is enforced throughout the Philippines and not merely in a particular municipality or
city but the proceeds of the tax accrue to the province, city, municipality and barrio where the realty
taxed is situated (Sec. 86, P.D. No. 464). In contrast, a local tax is imposed by the municipal or city
council by virtue of the Local Tax Code, Presidential Decree No. 231, which took effect on July 1, 1973
(69 O.G. 6197).
The Court held that the CBAA did not act with grave abuse of discretion, did not commit any error of
law and acted within its jurisdiction in sustaining the holding of the provincial assessor and the local
board of assessment appeals that Meralco Securities’ pipeline system in Laguna is subject to realty
tax.

City of baguiou vs basuego

 
G.R. No. L-29772 September 18, 1980 - CITY OF BAGUIO v. FERNANDO S. BUSUEGO:

That on August 11, 1959 defendant and the Government Service Insurance System, a government
corporation, executed, by and between themselves, a ‘Contract to Sell’ over the property described in
the complaint; a copy of the same is attached as Annex ‘A’ to defendant’s Memorandum in support of
Motion to Dismiss and is hereby reproduced by reference and made an integral part hereof; 1

"2. That the agreed purchase price for the property has not yet been fully paid and the GSIS has, up to
the present time, title of the property in question (per T.C.T. #T-3978 Reg. of Deeds of Baguio City),
although the defendant is using the same;

"3. That under Commonwealth Act No. 186, the GSIS as well as its property are exempt from payment
of all types and kinds of taxes;

"4. That the property involved in this case has been consistently assessed by the City of Baguio in the
name of the GSIS;

"5. That the unpaid realty taxes, per records of the City Treasurer’s Office, on the property for the
period from 1962 to 1966 amounts to 1,P656.00;

"6. That demands were made on the defendant for payment of the aforesaid realty taxes but said
defendant refused and failed to pay the same;

"7. That under the Contract to Sell (Annex ‘A’), the title remains with the GSIS until full payment of
purchase price although actually the possession has already been transferred to the herein defendant
(vendee);

"8. That defendant has paid the amount of P287.80 for realty taxes due for the year 1963; that
demands for refund were made by defendant on plaintiff; and

"9. That defendant contracted to pay his counsel the amount of P1,500.00 as attorney’s fees in this
case.
On the basis of the above stipulation of facts, the city court rendered judgment in favor of plaintiff
sentencing defendant to pay the sum of P1,656.00 with legal interest from the filing of complaint on
August 18, 1966 until the same is fully paid. Upon appeal, the court of first instance, concluding that
the contract entered into by the parties was a perfected contract of sale, likewise held that defendant
as owner was liable for the realty taxes on the property, and, therefore, likewise ordered defendant
to pay the same amount as adjudged by the city court representing taxes for the period from 1962 to
1966, with legal interest from August 18, 1966, deducting therefrom the amount of P287.00 realty
taxes for the year 1963 which he had already paid.chanrobles law library : red

Paragraph 2 of the contract entered into by the GSIS and the defendant-appellant manifests the
latter’s willingness at the signing thereof to pay and shoulder all taxes and assessments on the subject
property and insurance thereon during the term of the said contract. However, appellant-purchaser
after having voluntarily paid taxes due on the property in the amount of P287.00 for the year 1963
backed out of his undertaking upon discovering that section 28(c) of Commonwealth Act 186 2
exempts the GSIS from the payment of taxes. His theory is that while title to the property has not
passed to him, per paragraph 4 of the contract, and ownership remains with the seller, there could
not be any obligation to pay taxes on the property that should be assumed by him as purchaser, since
the owner-seller, in whom title remains, is exempt from taxes.

We affirm. The court of first instance may have erred in pronouncing the "Contract to Sell" as a
perfected contract of sale, contrary to its very terms that title remained with the seller who
undertook to execute a final deed of absolute sale and deliver to the purchaser title to the property
only after completion of the stipulated payments, 3 but this is not decisive of the issue.

What is determinative was its rulings on the merits (not on the nomenclature or classification of the
contract), wherein it correctly held that purchaser-appellant agreed to the contractual stipulation "to
pay and shoulder all taxes and assessments on the lot and building or improvements thereon and
insurance during the term of the contract. In view of his acceptance of this condition, he is now
estopped to deny his liability to pay the taxes. And, on the other hand, when the GSIS sold the
property and imposed said condition, the agency altho exempt from the payment of taxes clearly
indicated that the property became taxable upon its delivery to the purchaser" and that "the sole
determinative factor for exemption from realty taxes is the ‘use’ to which the property is devoted,
And where ‘use’ is the test, the ownership is immaterial. (Martin on the Rev. Adm. Code, 1961, Vol. II,
p. 487, citing Apostolic Prefect of Mt. Province v. Treasurer of Baguio City, 71 Phil. 547). In the instant
case, altho the property was still in the name of the GSIS pending the payment of the full price its use
and possession was already transferred to the defendant." Such contractual stipulation that the
purchaser on installments pay the real estate taxes pending completion of payments, although the
seller who retained title is exempt from such taxes, is valid and binding, absent any law to the
contrary and none has been cited by appellant.chanroblesvirtualawlibrary

Thus, the delivery of possession by the seller GSIS to the purchaser was clearly with the intention of
passing to the latter the possession, use of and control over said property, and all the other attributes
of ownership, short of the naked ownership, such that it included in said transfer the incidental
obligation to pay the taxes thereon, for nothing more was left to the GSIS except its right to receive
full payment of the purchase price. The fact that in the contract to sell, the GSIS although aware of its
own exemption from taxation stipulated and exacted from the purchaser the payment of taxes
amount to an interpretation on its part that such an immunity was to be transmitted to a private
person who becomes the beneficial owner and user of the property. 4 Verily, this interpretative
regulation by the administrative agency officially charged with the duty of administering and
enforcing Commonwealth Act 186 which contains the tax-exempting provision at issue carries great
weight in determining the operation of said provision.

The position taken by the GSIS is but in conformity with Section 40(a) of Presidential Decree No. 464
entitled The Real Property Tax Code promulgated on May 20, 1974 which reads as
follows:jgc:chanrobles.com.ph
"Sec. 40. Exemptions from Real Property Tax. — The exemptions shall be as
follows:jgc:chanrobles.com.ph

"(a) Real property owned by the Republic of the Philippines or any of its political subdivisions and any
government-owned corporation so exempt by its charter; Provided, however, That this exemption
shall not apply to real property of the above named entitles the beneficial use of which has been
granted, for consideration or otherwise, to a taxable person."cralaw virtua1aw library

Thus under this provision, while the GSIS may be exempt from real estate tax 5 the exemption does
not cover property belonging to it "where the beneficial use thereof has been granted for
consideration or otherwise to a taxable person." There can be no doubt that under the provisions of
the contract in question, the purchaser to whose possession the property had been transferred was
granted beneficial use thereof. It follows on the strength of the provision sec. 40(a) of PD 464 that the
said property is not exempt from the real property tax. While this decree just cited was still inexistent
at the time the taxes at issue were assessed on the herein appellant, indeed its above quoted
provision sheds light upon the legislative intent behind the provision of Commonwealth Act 186,
pertaining to exemption of the GSIS from taxes.chanroblesvirtual|awlibrary

The end result is but in consonance with the established rule in taxation that exemptions are held
strictly against the taxpayer and liberally in favor of the taxing authority. 6

ACCORDINGLY, the appealed judgment is hereby affirmed, without pronouncement as to costs.

SSS vs. City of Bacolod, G.R. No. L-35726, July 21, 1982Petitioner Social Security System is a
government agency created under Republic Act No. 1161, whose primary function is to "develop,
establish gradually and perfect a social security system which shall be suitable to the needs of the
people throughout the Philippines, and shall provide protection against the hazards of disability,
sickness, old age, and death." 1
In pursuance of its operations, petitioner, maintains a number of regional offices, one of which is the
five-storey building, known as SSS Building in Bacolod City, occupying four parcels of land. In 1970,
said lands and building were assessed for taxation at P1,744,840.00.
For petitioner's failure to pay the realty taxes for the years 1968, 1969 and 1970 which, including
penalties, amounted to P104,956.06, respondent city sometime in early 1970 levied upon said lands
and building; and on April 3, 1970, it declared said properties forfeited in its favor.
In protest thereto, petitioner addressed a letter dated July 27, 1970 to the City Mayor of Bacolod,
through respondent city treasurer, seeking reconsideration of the forfeiture proceedings on the
ground that petitioner, being a government-owned and controlled corporation, is exempt from
payment of real estate taxes.
When no action thereon was taken by respondent city treasurer, petitioner filed an action in the
Court of First Instance of Negros Occidental for nullification of the forfeiture proceedings. In the same
complaint it sought the issuance of a writ of preliminary injunction to restrain respondent city from
consolidating its ownership over the forfeited properties, and this writ was issued by the court upon
petitioner's posting of a cash bond in the amount of P105,000.00.
After due hearing, the lower court rendered a decision declaring —
... the properties of the Social Security System not exempt from the payment of real property tax
inasmuch as the SSS does not fall under the provisions of Section 29 of the Charter of the City of
Bacolod, and considering further that there is no law which exempts said entity from taxes, the same
should therefore be subject to taxation like any other corporation in accordance with Section 27 of
the City Charter of Bacolod City. The complaint is hereby dismissed with costs against the plaintiff.
Hence, this petition.
We find the petition meritorious. Section 29 of the Commonwealth Act No. 326, otherwise known as
the Charter of the City of Bacolod, provides as follows:
|plain SECTION 29. Exemption from taxation. — Lands and buildings owned by the United States of
America, the Commonwealth of the Philippines, the City of Bacolod, the Province of Occidental
Negros, and cemeteries, churches and their adjacent parsonages and convents, and lands, buildings
and improvements used exclusively for religious, charitable, scientific or educational purposes, and
not for profit, shall be exempt from taxation; but such exemptions shall not extend to lands or
buildings held for investment, though the income therefrom be devoted to religious, charitable,
scientific or educational purposes.
The court a quo restricted the scope of the exemption contemplated by the above section exclusively
to those government agencies, entities and instrumentalities exercising governmental or sovereign
functions. It relied on the ruling laid down in "NACOCO versus Bacani, et al." 2 to the effect that the
National Coconut Corporation, a government agency performing mere ministrant functions, is not
included in the term "Government of the Republic of the Philippines" for purposes of exemption from
the legal fees provided for in Rule 130 of the Rules of Court. 3 Invoking the case of "SSS versus Hon.
Soriano, et al." 4 where this Court definitively categorized the SSS as a government agency performing
proprietary functions, the trial court concluded that petitioner SSS does not fall within the coverage of
Section 29 of the Charter of Bacolod City.
There can be no question that a government owned or controlled corporation is subject to payment
of the legal fees provided for in Rule 130 of the Rules of Court. Such liability is plainly written in
Section 1 of Republic Act No. 104, which reads:
... All corporations, agencies, or instrumentalities owned or controlled by the government shall pay
such duties, taxes, fees and other charges upon their transaction, business, industry, sale, or income
as are imposed by law upon individuals, associations or corporations engaged in any taxable business,
industry, or activity except on goods or commodities imported or purchased and sold or distributed
for relief purposes as may be determined by President of the Philippines.
However, the subject of inquiry in the case at bar is not whether a government corporation exercising
ministrant or proprietary function, such as petitioner SSS, is exempt from the payment of legal fees,
but whether the properties in question, which are concededly owned by the government, are exempt
from realty taxes. We hold that under Section 29 of the Charter of the City of Bacolod they are so
exempt.
It bears emphasis that the said section does not contain any qualification whatsoever in providing for
the exemption from real estate taxes of "lands and buildings owned by the Commonwealth or
Republic of Philippines." Hence, when the legislature exempted lands and buildings owned by the
government from payment of said taxes, what it intended was a broad and comprehensive
application of such mandate, regardless of whether such property is devoted to governmental or
proprietary purpose.
This conclusion is ineluctable from an examination of Commonwealth Act No. 470, a statute which
deals specifically with the incidence of real estate taxes and the exemption thereto. It is to be noted
that Section 3(a) of said statute contains a similarly worded exemption from the payment of realty
taxes of "properties owned by ... the Republic of the Philippines, any province, city, municipality or
municipal district ..." And in "Board of Assessment Appeals vs. Court of Tax Appeals" 5, this Court
interpreted this provision in this wise:
... in exempting from taxation 'property owned by the Republic of the Philippines, any province, city,
municipality or municipal district ... said section 3(a) of Republic Act No. 470 makes no distinction
between property held in a sovereign, governmental or political capacity and those possessed in a
private propriety or patrimonial character. And where the law does not distinguish neither may we,
unless there are facts and circumstances clearly showing that the lawmaker intended the contrary,
but no such facts and circumstances have been brought to our attention. Indeed, the noun 'property'
and the verb 'owned' used in said section, 3 (a) strongly suggest that the object of exemption is
considered more from the view point of dominion, than from that of domain. Moreover, taxes are
financial burdens imposed for the purpose of raising revenues with which to defray the cost of the
operation of the Government, and a tax on property of the Government, whether national or local,
would merely have the effect of taking money from one pocket to put it in another pocket (Cooley on
Taxation, Sec. 621, 4th Edition). Hence, it would not serve, in the final analysis, the main purpose of
taxation. What is more, it would tend to defeat it, on account of the paper work, time and
consequently, expenses it would entail. (The Law on Local Taxation, by Justiniano Y. Castillo, p. 13).
The distinction laid down in "NACOCO vs. Bacani" 6 between government agencies exercising
constituent functions, on the one hand, and those performing ministrant functions, on the other, has
therefore no relevance to the issue before Us. What is decisive is that the properties possessed by the
SSS, albeit devoted to private or proprietary purpose, are in fact owned by the government of the
Philippines. As such they are exempt from realty taxes. It is axiomatic that when public property is
involved, exemption is the rule and taxation, the exception.
In connection with the issue at hand, it would not be amiss to state that Presidential Decree No. 24,
which amended the Social Security Act of 1954, has already removed all doubts as to the exemption
of the SSS from taxation. Thus —
SEC. 16. Exemption from tax, legal process, and lien. — All laws to the contrary notwithstanding, the
SSS and all its assets, all contributions collected and all accruals thereto and income therefrom as well
as all benefit payments and all papers or documents which may be required in connection with the
operation or execution of this Act shall be exempt from any tax, assessment, fee, charge or customs
or import duty; and all benefit payments made by the SSS shall likewise be exempt from all kinds of
taxes, fees or charges, and shall not be liable to attachment, garnishments, levy or seizure by or under
any legal or equitable process whatsoever, either before or after receipt by the person or persons
entitled thereto, except to pay any debt of the covered employee to the SSS.
WHEREFORE, the decision under review is hereby set aside, and the surety bond filed by petitioner
cancelled.
SO ORDERED.
BOAA VS SAMAR MINING
Samar is a domestic corporation engaged in the mining industry.  As the mining claims and the mill
of Samar are located inland and at a great distance from the loading point or pier site, it decided to
construct a gravel road as a convenient means of hauling its ores from the mine site at Buug to the
pier area at Pamintayan, Zamboanga del Sur;
On June 5, 1964, Samar received a letter from the Provincial Assessor of Zamboanga del Sur assessing
the 13.8 kilometer road[2] constructed by it for real estate tax purposes in the total sum of
P1,117,900.00.  On July 14, 1964, Samar appealed to the Board of Assessment Appeals of Zam-
boanga del Sur, (hereinafter referred to as Board, for short), contesting the validity of the assessment
upon the ground that the road having been constructed entirely on a public land cannot be
considered an improvement subject to tax within the meaning of section 2 of Commonwealth Act
470,
After the parties had submitted a stipulation of facts, Samar received a resolution of the Board, dated
December 22, 1964, affirming the validity of the assessment made by the Provincial Assessor
of Zamboanga del Sur under tax declaration No. 3340, but holding in abeyance its enforceability until
the lease contracts were duly executed.
On February 16, 1965, Samar moved to reconsider the resolution of the Board, praying for the
cancellation of tax declaration No. 3340, and on August 3, 1965, Samar received Resolution No. 13 not
only denying its motion for reconsideration but modifying the Board's previous resolution of
December 22, 1964 declaring the assessment immediately enforceable, and that the taxes to be paid
by Samar should accrue or commence with the year 1959.  When its second motion for
reconsideration was again denied by the Board, Samarelevated the case to the Court of Tax Appeals.
 On June 28, 1967, the Court of Tax Appeals ruled that it had jurisdiction to entertain the appeal and
then reversed the resolution of the Board.  The Court of Tax Appeals ruled that since the road is
constructed on public lands such that it is an integral part of the lands and not an independent
improvement thereon, and that upon the termination of the lease the road as an improvement will
automatically be owned by the national government, Samar should be exempt from paying the real
estate tax assessed against it.  D

ISSUE: The issue to be resolved in the present appeal is whether or not respondent Samar should pay
realty tax on the assessed value of the road it constructed on alienable or disposable public
lands tnat are leased to it by the government.
We agree with the foregoing view of the Court of Tax Appeals.  It should be noted that what is
involved in the present case is simply an assessment of realty tax, as fixed by the Provincial Assessor
of Zamboanga del Sur, which was disputed by Samar before the Board of Assessment Appeals of said
province.  There was no demand yet for payment of the realty tax.  
Accordingly Samar appealed to the Board questioning the validity of the assessment.  The Board
rendered a resolution over-ruling the contention of Samar that the assessment was
illegal.  Then Samar availed of its right to appeal from the decision of the Board to the Court of Tax
Appeals as provided in Section 11 of Republic Act 1125.  Section 11 does not require that before an
appeal from the decision of the Board of Assessment Appeals can be brought to the Court of Tax
Appeals it must first be shown that the party disputing the assessment had paid under protest the
realty tax assessed.  In the absence of such a requirement under the law, all that is necessary for a
party aggrieved by the decision of the Board of Assessment Appeals is to file his notice of appeal to
the Court of Tax Appeals within 30 days after receipt of the decision of the Board of Assessment
Appeals, as provided in Section 11 of Republic Act 1125. the only question that may be brought
before the City or Provincial Board of Assessment Appeals is the question which relates to the
reasonableness or legality of the realty tax that is assessed against a taxpayer.  Such being the
case, it would be unjust to require the realty owner to first pay the tax, that he precisely questions,
before he can lodge an appeal to the Court of Tax Appeals.  We believe that it is not the intendment
of the law that in questioning before the Court of Tax Appeals the validity or reasonableness of the
assessment approved by the Board of Assessment Appeals the taxpayer should first pay the
questioned tax.  It is Our view that in so far as appeals from the decision or resolution of the Board of
Assessment Appeals, Section 54 of Commonwealth Act 470 does not apply, and said section can be
considered as impliedly repealed by Sections 7, 11 and 21 of Republic Act 1125.
IN VIEW OF THE FOREGOING, the decision of the Court of Tax Appeals, appealed from, is affirmed,
without pronouncement as to costs.
CITY TREASURER VS QC- NOT FOUND
NATIONAL POWER CORPORATION, petitioner,
vs.
HON. PRESIDING JUDGE, REGIONAL TRIAL COURT, 10TH JUDICIAL REGION BRANCH XXV, CAGAYAN DE
ORO CITY, PROVINCE OF MISAMIS ORIENTAL, MUNICIPALITY OF JASAAN, MISAMIS ORIENTAL AND
BARANGAY APLAYA, JASAAN, MISAMIS ORIENTAL, respondents.
FACTS: On October 10, 1984, the Province of Misamis Oriental filed a complaint 1 with the Regional
Trial Court of Cagayan de Oro City, Branch XXV against NAPOCOR for the collection of real property
tax and special education fund tax in the amounts of P11,105,008.10 and P11,104,658.10,
respectively, covering the period 1978 to 1984.
On March 27, 1985, NAPOCOR filed its answer to the complaint with counterclaim. Treating the same
as a second motion to dismiss and finding the affirmative defenses therein stated to be
unmeritorious, the court a quo issued an order on June 27, 1985, denying the second motion to
dismiss and requiring both parties to appear before the court for the purpose of submitting a
stipulation of facts.
On July 23, 1985, Barangay Aplaya, Municipality of Jasaan, Misamis Oriental filed a complaint in
intervention 5 contending that non-payment by NAPOCOR of real property taxes would adversely
affect its interest since under the law, ten percent (10%) of the real property tax collected on
properties within its jurisdiction shall accrue to the general fund of the barangay. Thereafter, the case
was set for trial pursuant to the court's order dated August 20, 1985. 6
On October 30, 1985, petitioner NAPOCOR filed before this Court the present special civil action for
certiorari 7 
ISSUES: 1) Respondent Court acted without or in excess of jurisdiction and with grave abuse of
discretion when it issued the orders dated January 28, 1985, June 27, 1985 and August 20, 1985,
denying petitioner's motions to have Civil Case No. 9901 dismissed on the grounds of lack of
jurisdiction and/or improper venue.
2) Petitioner is exempt from payment of real property taxes.
It is a basic tenet in statutory construction that between a general law and a special law, the special
law prevails. GENERALIA SPECIALIBUS NON DEROGANT. 8
Where a later special law on a particular subject is repugnant to, or inconsistent with, a prior general
law on the same subject, a partial repeal of the latter win be implied to the extent of the repugnancy
or an exception grafted upon the general law.
A special law must be intended to constitute an exception to the general law in the absence of special
circumstances forcing a contrary conclusion. 9
The conflict in the provisions on jurisdiction between P.D. 242 and P.D. 464 should be resolved in
favor of the latter law, since it is a special law and of later enactment. P.D. 242 must yield to P.D. 464
on the matter of who or which tribunal or agency has jurisdiction over the enforcement and collection
of real property taxes. Therefore, respondent court has jurisdiction to hear and decide Civil Case No.
9901.
On the question of whether or not NAPOCOR is liable to pay real property taxes and special education
fund taxes for the years 1978 to 1984, we rule in the affirmative.
Presidential Decree No. 1177, entitled "REVISING THE BUDGET PROCESS IN ORDER TO
INSTITUTIONALIZE THE BUDGETARY INNOVATIONS OF THE NEW SOCIETY" was passed on July 30,
1977. Section 23 thereof provides:
To all intents and purposes, real property taxes are funds taken by the State with one hand and given
to the other. In no measure can the Government be said to have lost anything.
The proceeds of the real property tax are divided among the province, city or municipality where the
property subject to the tax is situated and shall be applied by the respective local government unit for
its own use and benefit. Even the barrio where the property is situated shares in the real property tax
collections. Likewise, the entire proceeds of the additional one per cent (1%) real property tax levied
for the Special Education Fund created under R.A. 5447, are divided among the province, city and
municipalities where the property is situated.
WHEREFORE, the petition is DISMISSED. Petitioner having been found liable for the taxes being
collected in Civil Case No. 9901, the respondent court is hereby directed to proceed with deliberate
dispatch in hearing the case for the purpose of determining the exac
G.R. Nos. L-49839-46             April 26, 1991
JOSE B. L. REYES and EDMUNDO A. REYES, petitioners,
vs.
PEDRO ALMANZOR, VICENTE ABAD SANTOS, JOSE ROÑO, i
FACTS: Petitioners J.B.L. Reyes, Edmundo and Milagros Reyes are owners of parcels of land situated in
Tondo and Sta. Cruz Districts, City of Manila, which are leased and entirely occupied as dwelling sites
by tenants. Said tenants were paying monthly rentals not exceeding three hundred pesos (P300.00) in
July, 1971. On July 14, 1971, the National Legislature enacted Republic Act No. 6359 prohibiting for
one year from its effectivity, an increase in monthly rentals of dwelling units or of lands on which
another's dwelling is located, where such rentals do not exceed three hundred pesos (P300.00) a
month but allowing an increase in rent by not more than 10% thereafter. The said Act also suspended
paragraph (1) of Article 1673 of the Civil Code for two years from its effectivity thereby disallowing
the ejectment of lessees upon the expiration of the usual legal period of lease. On October 12, 1972,
Presidential Decree No. 20 amended R.A. No. 6359 by making absolute the prohibition to increase
monthly rentals below P300.00 and by indefinitely suspending the aforementioned provision of the
Civil Code, excepting leases with a definite period. Consequently, the Reyeses, petitioners herein,
were precluded from raising the rentals and from ejecting the tenants. In 1973, respondent City
Assessor of Manila re-classified and reassessed the value of the subject properties based on the
schedule of market values duly reviewed by the Secretary of Finance. The revision, as expected,
entailed an increase in the corresponding tax rates prompting petitioners to file a Memorandum of
Disagreement with the Board of Tax Assessment Appeals. They averred that the reassessments made
were "excessive, unwarranted, inequitable, confiscatory and unconstitutional" considering that the
taxes imposed upon them greatly exceeded the annual income derived from their properties. They
argued that the income approach should have been used in determining the land values instead of
the comparable sales approach which the City Assessor adopted (Rollo, pp. 9-10-A).
The Board of Tax Assessment Appeals, however, considered the assessments valid, holding thus:
The Reyeses appealed to the Central Board of Assessment Appeals. On June 10, 1977, the Central
Board of Assessment Appeals rendered its decision, the dispositive portion of which reads: the
appealed decision insofar as the valuation and assessment of the lots covered by Tax Declaration Nos.
(5835) PD-5847, (5839), (5831) PD-5844 and PD-3824 is affirmed. For the lots covered by Tax
Declaration Nos. (1430) PD-1432, PD-1509, 146 and (1) PD-266, the appealed Decision is modified by
allowing a 20% reduction in their respective market values and applying therein the assessment level
of 30% to arrive at the corresponding assessed value. Petitioner's subsequent motion for
reconsideration was denied, hence, this petition.
ISSUES: THE HONORABLE BOARD ERRED IN ADOPTING THE "COMPARABLE SALES APPROACH"
METHOD IN FIXING THE ASSESSED VALUE OF APPELLANTS' PROPERTIES.
RULING: The petition is impressed with merit. Verily, taxes are the lifeblood of the government and so
should be collected without unnecessary hindrance. However, such collection should be made in
accordance with law as any arbitrariness will negate the very reason for government itself It is
therefore necessary to reconcile the apparently conflicting interests of the authorities and the
taxpayers so that the real purpose of taxations, which is the promotion of the common good, may be
achieved (Commissioner of Internal Revenue v. Algue Inc., et al., 158 SCRA 9 [1988]). Consequently, it
stands to reason that petitioners who are burdened by the government by its Rental Freezing Laws
(then R.A. No. 6359 and P.D. 20) under the principle of social justice should not now be penalized by
the same government by the imposition of excessive taxes petitioners can ill afford and eventually
result in the forfeiture of their properties.
PREMISES CONSIDERED, (a) the petition is GRANTED; (b) the assailed decisions of public respondents
are REVERSED and SET ASIDE; and (e) the respondent Board of Assessment Appeals of Manila and the
City Assessor of Manila are ordered to make a new assessment by the income approach method to
guarantee a fairer and more realistic basis of computation (Rollo, p. 71).
SO ORDERED.

PEDRO P. PECSON, petitioner,
vs.
THE HON. COURT OF APPEALS, ERLINDA TAN, JUAN NUGUID, MAMERTO G. NEPOMUCENO, ANSELMO
O. REGIS and REGISTER OF DEEDS OF QUEZON CITY, respondents.
In Civil Case No. Q-41471, petitioner filed a complaint to annul the sale at a public auction conducted
by respondent, Anselmo O. Regis, (City Treasurer of Quezon City) of petitioner's property for non-
payment of real estate taxes, alleging that the sale was made without prior notice to him. The
complaint further alleged that petitioner was not notified of his right to redeem the property, that the
title to the property was transferred by respondent Register of Deeds of Quezon City to respondent
Mamerto G. Nepomuceno (the buyer at the public auction) and that the latter sold the property to
respondents Erlinda Tan and Juan Nuguid.
ISSUE: whether the sale of the property by respondent Regis was valid, which in turn depended on
whether petitioner was duly notified of the public auction.
RTClIn its decision, the trial court upheld the validity of the public auction,
Failing to get any relief from the Court of Appeals, petitioner went to this Court wherein he reiterates
the issue of the validity of the public auction of his property for non-payment of taxes on the ground
that the notices to him were sent to the wrong postal address.
The records show that petitioner was the registered owner of a parcel of land in Quezon City
consisting of 256 sq. meters and covered by TCT No. 79912 of the Registry of Deeds of Quezon City.
ISSUES: (1) Were the notices required under Section 73 of the Real Property Tax Code properly sent to
the delinquent taxpayer? (Petition, pp. 4-12; Rollo, pp. 5-13)
(2) Were respondents Erlinda Tan and Juan Nuguid buyers in good faith? (Petition, pp. 13-14; Rollo,
pp. 14-15)
(3) Were the requirements of posting and announcement of the sale under the Real Property Tax
Code complied with? (Petition, pp. 12-13; Rollo, pp. 13-14)
HELD: The governing law in this case is P.D. No. 464, known as the Real Property Tax Code. Section 73
thereof, with the epigraph "Advertisement of sale of real property at public auction," in pertinent
part, provides:
xxx xxx xxx
Copy of notices shall forthwith be sent either by registered mail or by messenger, or through the
barrio captain, to the delinquent taxpayer, at the address as shown in the tax rolls or property tax
record cards of the municipality or city where the property is located, or at his residence, if known to
said treasurer or barrio captain. Provided, however, that a return of the proof of service under oath
shall be filed by the person making the service with the provincial or city treasurer concerned.
Under the said provisions of the law, notices of the sale of the public auction may be sent to the
delinquent taxpayer, either (i) at the address as shown in the tax rolls or property tax record cards of
the municipality or city where the property is located or (ii) at his residence, if known to such
treasurer or barrio captain.
Petitioner does not claim that the notices issued from 1980 to 1983 should have been sent to him at
his residence in "No. 79 Kamias Road, Quezon City," his residence since 1965 and where the property
in litigation is located. What he claims is that the notices should have been sent to him at his address
at "No. 1009 Paquita St., Sampaloc" even if he was no longer residing there because letters sent to
him at the said address were forwarded to him by the occupants of his former house. As found by the
Court of Appeals, what appeared in the records of the Office of the City Treasurer of Quezon City as
the address of petitioner was "1009 Paquita, Manila," and below the number 1009 was the number
"79". From this entry, one can deduce that the taxpayer had transferred his residence to "No. 79
Paquita, Sampaloc, Manila" from "No. 1009 Paquita, Sampaloc, Manila". In the register for the tax
years starting from 1982 (Exh. S; also Exh. 3), the address of petitioner was recorded as "79 Paquita,
Mla." The Court of Appeals advanced the theory that the number "79" was furnished by petitioner
himself, basing its conclusion on the address given by petitioner in his complaint, which was "No. 79
Kamias Road, Quezon City."
The Court of Appeals concluded that the employees in charge of sending notices in the Treasurer's
Office were not blameworthy in relying on the available tax records.
Petitioner's contention that he would have received the notices had they been sent to "No. 1009
Paquita, Sampaloc, Manila," because the occupants thereof forwarded the letters addressed to him to
his Quezon City residence, loses force when one considers that the Court of First Instance of Quezon
City sent him a notice, in connection with the proceedings for the consolidation of title, at "No. 1009
Paquita St., Sampaloc, Manila," which remained "unclaimed".
For this misfortune that befell petitioner, he has nobody to blame but himself. As a property owner
and a school teacher at that, he should know that if an owner fails to pay the real estate taxes on
property, the said property shall be sold at public auction to recover the delinquent taxes. When
petitioner's property was sold at a public auction in December 1980, the tax delinquency must have
accumulated for several years. It was only on July 12, 1982 that the order for consolidation of title in
the name of respondent Nepomuceno was issued and it was only on December 8, 1983 that the title
over the property was transferred to respondents Tan and Nuguid. All throughout these years,
petitioner never displayed an interest in paying the real estate taxes on the property. Worse, he
introduced improvements thereon without reporting the same for tax purposes. Had he reported the
improvements he had introduced on the property, the Office of the Treasurer of Quezon City could
have been informed of petitioner's new address in Quezon City.
Petitioner also questions the evidence presented by respondent Regis regarding his compliance with
the requirements of the Real Property Tax Code on the posting and announcement of notices of the
sale. (Petition, pp. 9-13; Rollo, pp. 10-14) In this regard, said respondent presented the certificates-
affidavits of eight employees under the supervision of the Market Superintendent and two employees
of the City Treasurer's Office. Like the issue of whether respondents Tan and Nuguid were buyers in
good faith, the issue on the compliance with the posting of the notices and announcement of the sale,
is a question of fact which this Court will not inquire into and review the evidence relied upon by the
lower courts to support their findings (Banaag v. Bartolome, 204 SCRA 924 [1991]; Ching Sui Yong v.
Intermediate Appellate Court, 191 SCRA 187 [1990]).
WHEREFORE, the petition is DENIED and the decision of the Court of Appeals appealed from is
AFFIRMED.
SO ORDERED.
Mathay vs. Sec. of Finance, G.R. No. 102319, Dec. 16, 1993
On March 21, 1991, Ismael A. Mathay, Jr., describing himself as "a member of Congress, and
registered owner of lands in Quezon City and resident of Metro Manila," instituted in this Court a
special civil action of prohibition against Victor Macalincag, then the Undersecretary of Finance, the
City Assessor and the City Treasurer of Quezon City.
The "City Assessors of the Districts created under Section one" above referred to - apart from the City
Assessor of the First District, Manila, who as aforestated, shall act "as Chairman" - are the City
Assessors of the second District: Quezon City, Pasig, Marikina, Mandaluyong, and San Juan; of the
Third District: Caloocan City, Malabon, Navotas, and Valenzuela; of the Fourth District: Pasay City,
Makati, Parañaque, Muntinlupa, Las Piñas, Pateros, Taguig.chanroblesvirtualawlibrarychanrobles
virtual law library
The statutory requirement of joint or collective action is echoed in the regulations promulgated by
the Department of Finance (No. 7-77) on July 25, 1977, Section 1.02 of which provides that "Schedule
of Market Values for real property situated within the Metropolitan Manila area be prepared jointly
by the City Assessors of the Districts created under Section 1 of Presidential Decree No. 921, with the
City Assessor of Manila, acting as Chairman."chanrobles virtual law library
On the same day, March 21, 1991, this Court issued "a TEMPORARY RESTRAINING ORDER effective
immediately and continuing until further orders . . . ordering the respondents to CEASE and DESIST
from implementing the new increased assessments of real properties in Quezon City" it being made
clear, however, that "taxpayers are required to pay under the old assessments." The Court also set
the case for hearing on Tuesday, April 23, 1991.chanroblesvirtualawlibrarychanrobles virtual law
library
Six (6) days later, a similar action was initiated in this Court by Rufino S. Javier - describing himself as
"the Congressman of the Lone District of Pasig, Metro Manila . . . (and) a real property estate owner in
Pasig . . ." - this time against Victor C. Macalincag, as Undersecretary of Finance, and the Municipal
Assessor and the Municipal Treasurer of Pasig, Metro Manila. The action was docketed as G.R. No.
97760. On the same legal theory as that espoused by petitioner Mathay in the first action, Javier's
petition sought the permanent proscription of the enforcement of "the unreasonably burdensome,
unjust and confiscatory increase" in the assessment of real estate in
Pasig.chanroblesvirtualawlibrarychanrobles virtual law library
On April 23, 1991, several persons filed a motion to intervene as petitioners in the action, identifying
themselves as: "Legal Management Council of the Philippines, Eliseo B. Alampay, Custodio G. Parlade,
Vicente A. Macatangay, Jr., Casiano O. Flores, Primo L. Agsaoay, Pepito Abrajano, Leonila P. Reyes, . . .
residents of Quezon City . . . (suing) in their behalf and in behalf of ALL OTHER RESIDENTS OF QUEZON
CITY AND SIMILARLY SITUATED," and alleging that they "have direct, legal and material interest in the
success of the main petition at bar," and the "subject matter of the present controversy is one of
common or general interest to all owners of real estate properties in Quezon City" in whose behalf
the intervention is essayed.chanroblesvirtualawlibrarychanrobles virtual law library
At the hearing of April 23, 1991, the Court heard the petitioners and respondents (who had in the
meantime filed their comments on the petitions) in the two (2) actions: G.R. No. 97618 and G.R. No.
97760. It thereafter issued a Resolution inter alia admitting the petition in intervention and resetting
the hearing of both cases to Thursday, May 16, 1991.chanroblesvirtualawlibrarychanrobles virtual law
library
After the Court had again heard the parties on May 16, 1991, it issued a Resolution containing the
following disposition, to wit:
It being the petitioners' and intervenors' principal complaint that they were not accorded adequate
opportunity to ventilate their objections to the procedure followed in the establishment of the new
assessment levels and to adduce evidence relative to the correctness and reasonableness thereof,
and there being agreement on all sides that in view of the suspension of the "enforcement of the new
real property tax without prejudice to its enforcement when factual factors and considerations later
warrant," a re-examination of the specific rates thereof may be undertaken at this time in light of said
petitioners' and intervenors' objections as well as such evidence as they may wish to submit, the
Court, in the exercise of its extraordinary or certiorari jurisdiction, Resolved to REFER both these
cases, G.R. No. 97618 and G.R. No. 97760, to the Central Board of Assessment Appeals for hearing
and determination upon the issues therein raised and such evidence as the parties may present, and
to DIRECT said Board to SUBMIT to the Court a copy of its final judgment forthwith upon its rendition .
...
On the same day, May 16, 1991, as in the first action (G.R. No. 97618), a temporary restraining order
was issued in this second one, "ordering the respondents to CEASE and DESIST from implementing the
new increased assessments of real properties in Pasig, Metro Manila," it also being made clear,
however, that "taxpayers are required to pay under the old assessments."chanrobles virtual law
library
On November 5, 1991, the Court issued a Resolution clarifying its earlier one of May 16, 1991. It
pointed out that the authority of the Central Board of Assessment Appeals "to take cognizance of the
factual issues raised in these two cases by virtue of referral by this Court in the exercise of its
extraordinary or certiorari jurisdiction should not be confused with its appellate jurisdiction over
appealed assessment cases under Section 36 of P.D. 464 otherwise known as the Real Property Tax
Code. The Board is not acting in its appellate jurisdiction in the instant cases, but rather, it is acting as
a Court-appointed fact-finding commission to assist the Court in resolving the factual issues raised in
G.R. Nos. 97618 and 97760."chanrobles virtual law library
A third special civil action of prohibition impugning the increase of real property assessment levels,
this time in respect of land located in Makati, was instituted on November 4, 1991 by Consuelo Puyat-
Reyes, describing herself as "a registered owner of real estate property in the Municipality of Makati
and
. . . the incumbent Congresswoman of the District in Makati, Metro Manila
. . . ." Impleaded as respondents were the Secretary of Finance (acting through the then
Undersecretary Victor C. Macalincag), the Municipal Assessor and the Municipal Treasurer of Makati.
Acting thereon, the Court, by Resolution dated November 12, 1991, referred the case to the Central
Board of Assessment Appeals "pursuant to the resolution dated May 16, 1991 in G.R. No. 97618
(Mathay vs. Undersecretary of Finance, et al.) and G.R. No. 97760 (Javier vs. Undersecretary of
Finance, et al.) and clarified in the resolution of November 5, 1991," and issued a "TEMPORARY
RESTRAINING ORDER . . . . ordering the respondents to CEASE and DESIST from enforcing the revised
real property assessments and from collecting the increased rates of real estate taxes based thereon
in Makati."chanrobles virtual law library
The Central Board of Assessment Appeals thereupon proceeded to act on the cases. It opted to hear
G.R. No. 97618 (CBAA Case No. 261) separately from G.R. No. 97760 "in order . . . to independently
determine the merits of the said two cases, the issues therein raised and such evidences presented by
the parties."chanrobles virtual law library
In rendered a Decision in G.R. No. 97618 (CBAA Case No. 261) on February 24, 1993, 1which it
transmitted in due course to this Court on March 11, 1993 together with the "records of the case
consisting of 426 pages." It found for one petitioner, Ismael A. Mathay, Jr., and sustained his theory by
the following ratiocination:
Section 9 of P.D. 921 is specific and mandatory. The undisputed fact that the City Assessor of Quezon
City solely prepared the Schedule of Market Values in question, without the participation of the other
City Assessors of Metropolitan Manila, with the City Assessor of Manila acting as Chairman
(SEE Exhibit "K", Letter to Mr. Carlos C. Antonio to Petitioner, dated March 18, 1991), indicates that
the said Schedule of Market Values was prepared contrary to and unauthorized under Section 9 of
P.D. 921 and its implementing rule on Section 1.02 of AR No. 7-77. The conclusion is, therefore,
inevitable that the said Schedule of Market Values, having been prepared by the respondent City
Assessor contrary to the express provision of and without authority under Section 9 is illegal and
therefore void.chanroblesvirtualawlibrarychanrobles virtual law library
This Board is of the considered view that the E.O. No. 392 has not repealed P.D. No.
921.chanroblesvirtualawlibrarychanrobles virtual law library
Laws are repealed only by subsequent ones (Art. 7, New Civil Code). An executive order (like E.O. No.
392) cannot repeal a legislative act (like P.D. 921) (Largado vs. Masaganda, L-17624, June 30, 1962). A
legislative Act, therefore, can only be repealed by another subsequent legislative Act (Hilado vs.
Collector, L-9408, October 31, 1956). Well-recognized by all civilized nations is that a decree issued by
the commander-in-chief of the armed forces who is the head of state and exercising law-making
powers under martial law is in the nature of a legislative act (Ex-parte Milligan, 4 Wall
2).chanroblesvirtualawlibrarychanrobles virtual law library
Granting for the sake of argument, that E.O. No. 392 was a valid repealing act that abolished the
Metropolitan Manila Commission, yet the said Executive Order did not in any manner affect the life of
P.D. 921 nor the assessment districts and committee created therein under Section 9 thereof nor its
provision regarding the preparation of schedule of market values for real properties within the
Metropolitan Manila Area.chanroblesvirtualawlibrarychanrobles virtual law library
So that, whether it is named Metro Manila Commission or Metro Manila Authority, P.D. 921 remains
effective until validly repealed by subsequent legislation through Congress (Hilado vs.
Collector, supra). Furthermore, implied repeals are never favored in our jurisdiction (U.S. vs. Palacio,
33 Phil. 208). Expressed otherwise, the Local Treasury and Assessment Districts created by P.D. 921
has a life independent of the Metropolitan Manila Authority, and the abolition of the Metro Manila
Commission does not follow the abolition also of P.D. 921 or the Treasury and Assessment Districts
under Metropolitan Manila. Moreover, a perusal of E.O. 392 shows that it provides no repealing
clause and it does not contain a specific provision relative to preparation of schedule of values. It is
then clear that Section 9 of P.D. 921 still subsists and is the controlling provision with respect to the
manner of preparation of schedule of values for Metropolitan
Manila.chanroblesvirtualawlibrarychanrobles virtual law library
This Board considers untenable the allegation in this Comment submitted to the Supreme Court for
Respondent Hon. Undersecretary
Victor C. Macalincag, that the Respondent City Assessor has authority to prepare alone the
questioned Schedule of Market Values for the reason that Section 9 of P.D. 921 refers to a general
revision and has no application to selective revaluation or assessment of properties in a certain local
government unit. There is nothing in the provision of Section 9 where we should distinguish between
a general revision or revaluation or reassessment in the preparation of the Schedule of Market Values
for Metropolitan Manila, as basis for the appraisal and assessment of taxation purposes of real
properties located in the area. "Where the law does not distinguish we should not
distinguish."chanrobles virtual law library
As this Board has ruled that the questioned Schedule of Market Values is illegal and, therefore, void,
the review and findings of the created Technical Review Panel, that the said Schedule of Market
Values was prepared in compliance with the "instructions" embodied in the Assessment Regulation
No. 7-77, will not render valid the void Schedule of Market
Values.chanroblesvirtualawlibrarychanrobles virtual law library
Petitioner further assailed the legality of the Schedule of Market Values in question on the ground
that it was not approved by the Secretary of Finance, but by Respondent Undersecretary Victor
Macalincag contrary to Section 15 of P.D. 464.chanroblesvirtualawlibrarychanrobles virtual law library
We believe that it is at this point immaterial to determine whether or not the questioned Schedule of
Market Values should be approved by the secretary of Finance himself. The fact being that the said
Schedule of Market Values as approved by Respondent Undersecretary Macalincag is void from its
preparation.chanroblesvirtualawlibrarychanrobles virtual law library
As repeatedly emphasized by our Supreme Court in a line of jurisprudence, "an illegal act confers no
rights, creates no duties, and in the eyes of the law, it is as if the same had never existed. It can be
slain at sight." Such is the case of the questioned Schedule of Market Values, which is hereby declared
void and without force and effect. Therefore, the realty tax rates based on the Schedule of Market
Values are likewise void and unenforceable.chanroblesvirtualawlibrarychanrobles virtual law library
Further, consisting that this Board in its findings ruled on the illegality of the Schedule of Market
Values as prepared by the Respondent City Assessor, the question of notice of assessment is rendered
moot and academic.chanroblesvirtualawlibrarychanrobles virtual law library
WHEREFORE, judgment is hereby rendered, declaring, as this Board hereby declares, null and void,
and, therefore, unenforceable the subject Schedule of Market Values for all classes of lands in Quezon
City, as prepared solely by Respondent City Assessor being contrary to and in violation of Section 9 of
P.D. No. 921. Respondent City Assessor and Treasurer of Quezon City are hereby ordered to act
accordingly.chanroblesvirtualawlibrarychanrobles virtual law library
This Board hereby declares null and void, and, therefore, unenforceable, the subject Schedule of
Market Values for all classes of lands in Quezon City, as prepared solely by Respondent City Assessor,
being contrary to and in violation of Section 9 of P.D. No. 921.
The Board also rejected the respondents' argument that "the subsequent issuance of Executive Order
No. 392, constituting the Metropolitan Manila Authority on January 9, 1989, has in effect abolished
the Metro Manila Commission, and therefore has ceased to function." It ruled that Executive Order
No. 392 could not repeal a legislative act like P.D. No. 921, and that even assuming that Executive
Order did abolish the Commission, the former "did not in any manner affect the life of P.D. 921 nor
the assessment districts and committee created therein under Section 9 thereof nor its provision
regarding the preparation of schedule of market values for real properties within the Metropolitan
Manila Area."chanrobles virtual law library
The Central Board of Assessment Appeals rendered its decision in the second case, G.R. No. 97760
(CBAA Case No. 262) (Javier vs. Macalincag), on May 7, 1993, which it transmitted to this Court by
letter of its Chairman dated May 17, 1993. It pronounced null and void by its Municipal Assessor. Said
the Board:
The argument of Respondents about the meetings of the League of City and Municipal Assessors to
consider the proposed schedule for Quezon City or Pasig, for that matter, is untenable. The League
has no authority to prepare the Schedule Market of Values, for not having been constituted in
accordance with Section 9 of P.D. 921 and 2nd par. of Section 1.02 of DOF AR No. 7-77 which
pertained only to the Districts created under Section 1 of P.D. 921. But even granting that the League
has authority, the League did not extend any hand in the preparation of said schedule. Consideration
or discussion thereof, is not preparation.chanroblesvirtualawlibrarychanrobles virtual law library
In this Board's Decision on CBAA Case No. 261 G.R. No. 97618, ISMAEL A. MATHAY, JR., Petitioner, vs.
THE HON. VICTOR C. MACALINCAG (Undersecretary of Finance), et al., the dispositive portion thereof
reads as follows:
The Board hereby declares null and void, and, therefore, unenforceable, the subject Schedule of
Market Values for all classes of lands in Quezon City, as prepared solely by Respondent City Assessor,
being contrary to and in violation of Section 9 of P.D. No. 921.
As in the Mathay case, the same issues were substantially raised in the Javier case. It would be utter
folly for this Board to apply the same law differently to the latter case. What is good for the goose
should be good for the gander. The principle of Stare Decisis impels this Board to abide by its Decision
to stand as precedents for future judgments.chanroblesvirtualawlibrarychanrobles virtual law library
WHEREFORE, judgment is hereby rendered, declaring null and void the instant Schedule of Market
Values, prepared solely by the Municipal Assessor of Pasig, for lands in Pasig, Metro Manila, in
violation of Section 9 of P.D. 921. Respondents Municipal Assessor and Municipal Treasurer of Pasig,
Metro Manila, are hereby ordered to act accordingly.
The Board pronounced judgment in the third case, G.R. No. 102319 (CBAA Case No. 263) (Consuelo
Puyat-Reyes v. Secretary of Finance, et al.) on October 5, 1993. This is also sent to this Court, together
with the records, on October 18, 1993.chanroblesvirtualawlibrarychanrobles virtual law library
The decision states that in March, 1993, the Board allowed two (2) firms to make common cause with
petitioner Puyat-Reyes as petitioners-in-intervention, namely: Ayala Land, Inc. (ALI) and Makati
Commercial Estate Association, Inc. (MACEA), "owners/lessees of real properties located within the
Municipality of Makati;" and that compromise agreements were arrived at and submitted by Puyat-
Reyes and the respondents, as well as by the latter and the
intervenors.chanroblesvirtualawlibrarychanrobles virtual law library
The Board declared the compromise agreements to have no legal basis and hence unacceptable
under Article 1306 of the Civil Code. And it disposed of the merits of the controversy as follows:
Still fresh from its memory, this Board cannot simply set aside its decision on CBAA Cases Nos. 261
(Ismael A. Mathay, Jr. vs. the Hon. Victor C. Macalincag, Undersecretary of Finance, et al.), and 262
(Rufino S. Javier vs. the Hon. Victor C. Macalincag, Undersecretary of Finance, et al.) and disregard the
principle of stare decisis. This Board must abide or adhere to decided cases, especially and more so
when such decisions emanate from the Board itself.chanroblesvirtualawlibrarychanrobles virtual law
library
WHEREFORE, judgment is hereby rendered, declaring null and void the instant Schedule of Market
Values, prepared solely by the Municipal Assessor of Makati, for lands in Makati, Metro Manila, in
violation of Section 9, P.D. 921 and the Compromise Agreements, entered into by and between the
Petitioner and Respondents and among and between the Intervenors and Respondents, inexistent
and void and without force and effect. Respondents Municipal Assessor and Municipal Treasurer of
Makati, Metro Manila, are hereby ordered to act accordingly.
The Court has reviewed the records of all these three (3) cases and finds that the Central Board of
Assessment Appeals has proceeded correctly as regards their hearing and determination. It also
agrees with the Board's conclusion that the Schedules of Market Values for real properties located in
Quezon City, the Municipality of Pasig and the Municipality of Makati, respectively prepared solely by
the City Assessor of Quezon City, and the Municipal Assessors of Pasig and Makati, failed to comply
with the
explicit requirements of Presidential Decree No. 921 in relation to the corresponding Administrative
Regulations promulgated by the Department of Finance (No. 7-77) on July 25, 1977, and are on that
account illegal and void. The Court therefore hereby approves and adopts as its own the following
dispositions made by the Central Board of Assessment Appeals in all said case, to wit:chanrobles
virtual law library
1) RE G.R. No. 97618 (CBAA Case No. 261)
This Board hereby declares null and void, and, therefore, unenforceable, the subject Schedule of
Market Values for all classes of lands in Quezon City, as prepared solely by Respondent City Assessor,
being contrary to and in violation of Section 9 of P.D. No. 921.
2) RE G.R. No. 97760 (CBAA Case No. 262)
WHEREFORE, judgment is hereby rendered, declaring null and void the instant Schedule of Market
Values, prepared solely by the Municipal Assessor of Pasig, for lands in Pasig, Metro Manila, in
violation of Section 9 of P.D. 921. Respondents Municipal Assessor and Municipal Treasurer of Pasig,
Metro Manila, are hereby ordered to act accordingly.
3) RE G.R. No. 102319 (CBAA Case No. 263)
WHEREFORE, judgment is hereby rendered, declaring null and void the instant Schedule of Market
Values, prepared solely by the Municipal Assessor of Makati, for lands in Makati, in violation of
Section 9, P.D. 921 and the Compromise Agreements, entered into and between the Petitioner and
Respondents and among and between the Intervenors and Respondents, inexistent and void and
without force and effect. Respondents Municipal Assessor and Municipal Treasurer of Makati, Metro
Manila, are hereby ordered to act accordingly.
IT IS SO ORDERED.

atalinghug v CA (1994)
Patalinghug v CA
GR No 104786, January 27, 1994

FACTS:
A funeral home was constructed in Davao City. Per ordinance, the same should not be less than 50
meters away from residential lots. A building owned by Tepoot is both used as a dwelling and as a
business is located within 50 meters of the funeral home. Under its tax declaration, the commercial
property is labeled as residential tax purposes.

ISSUE:
Is the construction illegal?

RULING:
No. Mr. Tepoot’s building is, whether or not it is residential or not, is a factual determination which we
should not disturb. A tax declaration is not conclusive of the nature of the property for zoning purposes. 
Sesbreño vs. CBAA, G.R. No. 1065 88, March 24, 1997- NOT FOUND

AIME C. LOPEZ, Petitioner, v. CITY OF MANILA and HON. BENJAMIN

A.G. VEGA, Presiding Judge, RTC, Manila, Branch 39, Respondents.

FACTS: Although R.A. 7160 took effect on January 1, 1992, the revision of
real property assessments prescribed therein was not yet enforced in the City
of Manila. However, the process of real property valuation had already been
started and done by the former city assessor. In 1992, the schedule of real
property values in the city was prepared and submitted to the City Council of
Manila, but for unknown reason, was not acted upon. Nevertheless, despite
the inaction of the City Council, there was a continuous update of the fair
market values of the real properties within the city.Until the year 1995, the
basis for collection of real estate taxes in the City of Manila was the old, year-
1979, real estate market values.

Mrs. Lourdes Laderas, the newly appointed City Assessor of Manila, received
Memorandum Circular No. 04-95 dated March 20, 1995, from the Bureau of
Local Government Finance, Department of Finance. This memorandum relates
to the failure of most of the cities and municipalities of Metropolitan Manila,
including the City of Manila, to conduct the general revision of real property.
For this purpose, Mrs. Laderas embarked in a working dialogue with the Office
of the City Mayor and the City Council for the completion of the task.

After obtaining the necessary funds from the City Council, the City Assessor
began the process of general revision based on the updated fair market
values of the real properties.

ISSUES:

I. DID THE RESPONDENT TRIAL COURT IN CIVIL CASE NO. 96-77510 ERR IN
HOLDING THAT THE PETITIONER FAILED TO EXHAUST ALL ADMINISTRATIVE
REMEDIES, AND THEREFORE, THE PETITION OUGHT TO BE DISMISSED?
AND;

II. DID THE RESPONDENT COURT ERR IN FAILING TO CORRECTLY APPLY

SECTIONS 212 AND 221 OF THE LOCAL GOVERNMENT CODE OF 1991?
HELD: As a general rule, where the law provides for the remedies against the
action of an administrative board, body, or officer, relief to courts can be
sought only after exhausting all remedies provided. The reason rests upon the
presumption that the administrative body, if given the chance to correct its
mistake or error, may amend its decision on a given matter and decide it
properly. Therefore, where a remedy is available within the administrative
machinery, this should be resorted to before resort can be made to the
courts, not only to give the administrative agency the opportunity to decide
the matter by itself correctly, but also to prevent unnecessary and premature
resort to courts. 9 This rule, however, admits certain exceptions. 10

Although, we are in full accord with the ruling of the trial court, it is likewise
necessary to stress that Manila Ordinance No. 7905 is favorable to the
taxpayers when it specifically states that the reduced assessment levels shall
be applied retroactively to January 1, 1996. The reduced assessment levels
multiplied by the schedule of fair market values of real properties, provided
by Manila Ordinance No. 7894, resulted to decrease in taxes. To that extent,
the ordinance is likewise, a social legislation intended to soften the impact of
the tremendous increase in the value of the real properties subject to tax.
The lower taxes will ease, in part, the economic predicament of the low and
middle-income groups of taxpayers. In enacting this ordinance, the due
process of law was considered by the City of Manila so that the increase in
realty tax will not amount to the confiscation of the property.

WHEREFORE, the instant petition is hereby DENIED, and the assailed Order of
Regional Trial Court of Manila, Branch 39 in Civil Case No. 96-77510 is hereby
AFFIRMED. COSTS against the petitioner.

SO ORDERED.

CAGAYAN ROBINA SUGAR MILLING CO., Petitioner, v. COURT OF

APPEALS, CENTRAL BOARD OF ASSESSMENT APPEALS, BOARD OF
ASSESSMENT APPEALS, and THE PROVINCIAL ASSESSOR OF
CAGAYAN, Respondents.

FACTS: In 1990, the Assets Privatization Trust (APT) offered for sale all the
assets and properties of the Cagayan Sugar Corporation (CASUCO), which
had been foreclosed and transferred to APT by the Development Bank of the
Philippines. The APT set the floor bid price for the said properties at three
hundred fifty five million pesos (P355,000,000.00). Petitioner, as the highest
bidder, acquired the aforesaid properties for a total price of P464,000,000.00.

Among the properties bought by petitioner were sugar mill machineries

located at the CASUCO millsite in Sto. Domingo, Piat, Cagayan. The market
value of these machineries was pegged at P391,623,520.00 and the assessed
value was set at P313,298,820.00 under Tax Declaration No. 5355.

On October 18, 1990, the Provincial Assessor of Cagayan issued a "Notice of

Assessment of Real Property to petitioner covering the machineries installed
at the CASUCO millsite (Lots 89-F-1 and 89-F-2 of Psd-2-01-005548) based
on the market value of P391,623,520.00 and the assessed value thereof at
P313,298,820.00.

ISSUES: l 1aw library

(1) Did the Court of Appeals err in finding the assessment of petitioner’s
machineries proper and correct under the Real Property Tax Code?

(2) Did the appellate court err in upholding the dismissal of petitioner’s
appeal to the CBAA for being time-barred?

HELD: We agree with petitioner that Section 28 of the Real Property Tax Code
provides for a formula for computing the current market value of machineries.
No error was thus committed by the CBAA when it dismissed petitioner’s
appeal for having been filed out of time and the appellate court was correct in
affirming the dismissal. Well-entrenched is the rule that the perfection of an
appeal within the period therefor is both mandatory and jurisdictional, and
that failing in this regard renders the decision final and executory. 22

WHEREFORE, the instant petition is DENIED and the decision of the Court of
Appeals in CA-G.R. SP No. 37934 AFFIRMED. Costs against petitioners.

LIGHT RAIL TRANSIT AUTHORITY, Petitioner, v. CENTRAL BOARD OF

ASSESSMENT APPEALS, BOARD OF ASSESSMENT APPEALS OF MANILA
and the CITY ASSESSOR OF MANILA, Respondents.

The Facts

The undisputed facts are quoted by the Court of Appeals (CA) from the CBAA
ruling, as follows: 3

1. The LRTA is a government-owned and controlled corporation created and

organized under Executive Order No. 603, dated July 12, 1980 ‘. . . primarily
responsible for the construction, operation, maintenance and/or lease of light
rail transit system in the Philippines, giving due regard to the [reasonable
requirements] of the public transportation of the country’ (LRTA v. The Hon.
Commission on Audit, G.R. No. 88365);

"2. . . . [B]y reason of . . . Executive Order 603, LRTA acquired real

properties . . . constructed structural improvements, such as buildings,
carriageways, passenger terminal stations, and installed various kinds of
machinery and equipment and facilities for the purpose of its operations;chanrob1es virtua1 1aw 1ibrary

"3. . . . [F]or . . . an effective maintenance, operation and management, it

entered into a Contract of Management with the Meralco Transit Organization
(METRO) in which the latter undertook to manage, operate and maintain the
Light Rail Transit System owned by the LRTA subject to the specific
stipulations contained in said agreement, including payments of a
management fee and real property taxes (Add’l Exhibit "I", Records)

"4. That it commenced its operations in 1984, and that sometime that year,
Respondent-Appellee City Assessor of Manila assessed the real properties of
[petitioner], consisting of lands, buildings, carriageways and passenger
terminal stations, machinery and equipment which he considered real
 propert[y] under the Real Property Tax Code, to commence with the year
1985;

"5. That [petitioner] paid its real property taxes on all its real property
holdings, except the carriageways and passenger terminal stations including
the land where it is constructed on the ground that the same are not real
properties under the Real Property Tax Code, and if the same are real
propert[y], these . . . are for public use/purpose, therefore, exempt from
realty taxation, which claim was denied by the Respondent-Appellee City
Assessor of Manila; and

The CA Ruling

The Court of Appeals held that petitioner’s carriageways and passenger

terminal stations constituted real property or improvements thereon and, as
such, were taxable under the Real Property Tax Code.

The Petition has no merit.

Main Issue: chanrob1es virtual 1aw library

May Real Property Taxes be Assessed and Collected?

HELD: Even granting that the national government indeed owns the
carriageways and terminal stations, the exemption would not apply because
their beneficial use has been granted to petitioner, a taxable entity.

Taxation is the rule and exemption is the exception. Any claim for tax
exemption is strictly construed against the claimant. 13 LRTA has not shown
its eligibility for exemption; hence, it is subject to the tax.chanrob1es virtua1 1aw 1ibrary

WHEREFORE, the Petition is hereby DENIED and the assailed Decision of the
Court of Appeals AFFIRMED. Costs against the petitioner.

SO ORDERED.

CAPITOL WIRELESS, INC., PETITIONER, VS. THE PROVINCIAL TREASURER OF

BATANGAS, THE PROVINCIAL ASSESSOR OF BATANGAS, THE MUNICIPAL
TREASURER AND ASSESSOR OF NASUGBU, BATANGAS, RESPONDENTS.D E
CISION
FACTS: Petitioner Capitol Wireless Inc. (Capwire) is a Philippine corporation in the
business of providing international telecommunications services... Petitioner Capwire
claims that it is co-owner only of the so-called "Wet Segment" of the APCN, while the
landing stations or terminals and Segment E of APCN located in Nasugbu, Batangas
are allegedly owned by the Philippine Long Distance Telephone Corporation (PLDT).
Capwire claims that it also reported that the system "interconnects at the PLDT
Landing Station in Nasugbu, Batangas," which is covered by a transfer certificate of
title and tax declarations in the name of PLDT
Provincial Assessor of Batangas (Provincial Assessor) issued the following
Assessments of Real Property (ARP) against Capwire
Capwire received a Warrant of Levy and a Notice of Auction Sale, respectively, from
the respondent Provincial Treasurer of Batangas
Capwire filed a Petition for Prohibition and Declaration of Nullity of Warrant of Levy,
Notice of Auction Sale and/or Auction Sale with the Regional Trial Court (RTC) of
Batangas City…
appeal to the Court of Appeals... the Court of Appeals promulgated its Decision
dismissing the appeal filed by Capwire and affirming the order of the trial court
Issues:
CAPWIRE contends that there is only a pure question of law since the issue is
whether its submarine cable system, which it claims lies in international waters, is
taxable
Ruling:
The petition is denied. No error attended the ruling of the appellate court that the
case involves factual questions that should have been resolved before the
appropriate administrative bodies.
whether submarine wires or cables used for communications may be taxed like other
real estate.We hold in the affirmative.
PROVINCIAL ASSESSOR OF AGUSAN DEL SUR, PETITIONER, VS.
FILIPINAS PALM OIL PLANTATION, INC., RESPONDENT.

DECISION
LEONEN, J.:

The exemption from real property taxes given to cooperatives applies regardless of whether or not the
land owned is leased. This exemption benefits the cooperative's lessee. The characterization of
machinery as real property is governed by the Local Government Code and not the Civil Code.

This Petition[1] for review assails the Decision[2] dated September 26, 2007 and the Resolution [3] dated
May 26, 2008 of the Court of Appeals in CA-G.R. SP No. 74060. The Court of Appeals affirmed the
Decision of the Central Board of Assessment Appeals (CBAA) exempting Filipinas Palm Oil Plantation
Inc. from payment of real property taxes.[4]

Filipinas Palm Oil Plantation Inc. (Filipinas) is a private organization engaged in palm oil plantation[5] with
a total land area of more than 7,000 hectares of National Development Company (NDC) lands in
Agusan del Sur.[6] Harvested fruits from oil palm trees are converted into oil through Filipinas' milling
plant in the middle of the plantation area. [7] Within the plantation, there are also three (3) plantation
roads and a number of residential homes constructed by Filipinas for its employees.[8]

After the Comprehensive Agrarian Reform Law[9] was passed, NDC lands were transferred to
Comprehensive Agrarian Reform Law beneficiaries who formed themselves as the merged NDC-
Guthrie Plantations, Inc. - NDC-Guthrie Estates, Inc. (NGPI-NGEI) Cooperatives. [10] Filipinas entered
into a lease contract agreement with NGPI-NGEI.[11]

The Provincial-Assessor of Agusan del Sur (Provincial Assessor) is a government agency in charge with
the assessment of lands under the public domain.[12] It assessed Filipinas' properties found within the
plantation area,[13] which Filipinas assailed before the Local Board of Assessment Appeals (LBAA) on
the following grounds:

(1.) The [petitioner] Provincial Assessors of Agusan del

Sur ERRED in finding that the Market Value of a single
fruit bearing oil palm tree is P207.00 when it should
only be P42.00 pesos per tree;

(2.) The [petitioner] ERRED in finding that the total

 number of standing and fruit bearing oil palm tree is PI
10 [sic] trees per hectare when it should be only 92
trees;

(3.) The [petitioner] ERRED in finding that the Market

Value[s] of the plantation roads are:
A.) P270,000.00 per kilometer for primary
roads
B.) P135,000.00 for secondary roads
C.) P67,567.00 for tertiary roads constructed
by the company.
It should only be:
A.) P105,000.00 for primary roads
B.) P52,300.00 for secondary roads
C.) P26,250.00 for tertiary roads
Likewise, bridges, culverts, canals and pipes should not
be assessed separately from plantation roads, the same
being components of the roads thereof;

(4.) The [petitioner] ERRED in imposing real property

taxes against the petitioner for roads, bridges,
culverts, pipes and canals as these belonged to the
cooperatives;

([5].) The [petitioner] ERRED in finding that the Market

Value of NDC service area is P11,000.00 per hectare when
it should only be P6,000.00 per hectare;

([6].) The [petitioner] ERRED in imposing realty taxes on

Residential areas built by [respondent] except for three
of them;

([7].) The [petitioner] ERRED when it included haulers

and other equipments [sic] which are unmovable as taxable
real properties.[14]
In its Decision[15 ]dated June 8, 1999, the LBAA found that the P207.00 market value declared in the
assessment by the Provincial Assessor was unreasonable.[16] It found that the market value should not
have been more than P85.00 per oil palm tree.[17] The sudden increase of realty tax assessment level
from P42.00 for each oil palm tree in 1993 to P207.00 was confiscatory.[18]

The LBAA adopted Filipinas' claim that the basis for assessment should only be 98 trees.[19] Although
one (1) hectare of land can accommodate 124 oil palm trees, the mountainous terrain of the plantation
should be considered.[20] Because of the terrain, not every meter of land can be fully planted with trees.
[21]
 The LBAA found that roads of any kind, as well as all their improvements, should not be taxed since
these roads were intermittently used by the public.[22] It resolved that the market valuation should be
based on the laws of the Department of Agrarian Reform since the area is owned by the NDC, a quasi-
governmental body of the Philippines.[23]

The LBAA exempted the low-cost housing units from taxation except those with a market value of more
than P150,000.00 under the Local Government Code.[24] Finally, the LBAA considered the road
equipment and mini haulers as movables that are vital to Filipinas' business.

Filipinas appealed before the CBAA on July 16, 1999.[26] On November 21, 2001, the CBAA rendered a
decision, the dispositive portion of which reads:
 WHEREFORE, this Board has decided to set aside, as it
does hereby set aside, the decision rendered by the Local
Board of Assessment Appeals of the Province of Agusan del
Sur on June 8, 1999 in an unnumbered case entitled
"[F]ilipinas Palm Oil Co., Inc. Petitioner, versus the
Provincial Assessors Office of Agusan del Sur,
Respondent" and hereby orders as follows:

A. The market value for each oil palm tree should be

FIFTY- SEVEN & 55/100 PESOS (57.55), effective January 1,
1991. The assessment for each municipality shall be based
on the corresponding number of trees as listed in
Petitioner-Appellee's "Hectarage Statement" discussed
hereinabove;

B. Petitioner-Appellee should not be made to pay for

the real property taxes due on the roads starting from
January 1, 1991;

C. Petitioner-Appellee is not liable to the Government

for real property taxes on the lands owned by the Multi-
purpose Cooperative;

D. The housing units with a market value of PI75,000.00

or less each shall be subjected to 0% assessment level,
starting 1994;

E. Road Equipment and haulers are not real properties

and, accordingly, Petitioner-Appellee is not liable for
real property tax thereon;

F. Any real property taxes already paid by Petitioner-

Appellee which, by virtue "of this decision, were not
due, shall be applied to future taxes rightfully due from
Petitioner-Appellee.

SO ORDERED.[27] (Emphasis supplied)
The CBAA denied the Motion for Reconsideration filed by the Provincial Assessor.[28] The Provincial
Assessor filed a Petition for Review before the Court of Appeals, which, in turn, sustained the CBAA's
Decision.[29]

The Court of Appeals held that the land owned by NGPI-NGEI, which Filipinas has been leasing, cannot
be subjected to real property tax since these are owned by cooperatives that are tax-exempt.[30] Section
133(n) of the Local Government Code provides:

SECTION 133. Common Limitations on the Taxing Powers of

Local Government Units. — Unless otherwise provided
herein, the exercise of the taxing powers of provinces,
cities, municipalities, and barangays shall not extend to
the levy of the following:
. . . .
 (n) Taxes, fees, or charges, on Countryside
and Barangay Business Enterprises
and cooperatives duly registered under R.A.
No. 6810  and Republic Act Numbered Sixty-
nine hundred thirty-eight (R.A. No. 6938)
otherwise known as the "Cooperative Code of
the Philippines." (Emphasis supplied)
Section 234(d) of the Local Government Code exempts duly registered cooperatives, like NGPI-NGEI,
from payment of real property taxes:

SECTION 234. Exemptions from Real Property Tax. — The

following are exempted from payment of the real property
tax:
. . . .

(d) All real property owned by duly

registered cooperatives as provided for under
R.A. No. 6938[.] (Emphasis supplied)
The Court of Appeals held that the pertinent provisions "neither distinguishes nor specifies" that the
exemption only applies to real properties used by the cooperatives.[31] It ruled that "[t]he clear absence of
any restriction or limitation in the provision could only mean that the exemption applies to wherever the
properties are situated and to whoever uses them."[32] Therefore, the exemption privilege extends to
Filipinas as the cooperatives' lessee.[33]

On the roads constructed by Filipinas, the Court of Appeals held that although it is undisputed that the
roads were built primarily for Filipinas' benefit, the roads should be tax-exempt since these roads were
also being used by the cooperatives and the public.[34] It applied, by analogy, Bislig Bay Lumber
Company, Inc. v. Provincial Government of Surigao:[35]

We are inclined to uphold the theory of appellee. In the

first place, it cannot be disputed that the ownership of
the road that was constructed by appellee belongs to the
government by right accession not only because it is
inherently incorporated or attached to the timber land
leased to appellee but also because upon the expiration
of the concession, said road would ultimately pass to the
national government. In the second place, while the road
was constructed by appellee primarily for its use and
benefit, the privilege is not exclusive, for, under the
lease contract entered into by the appellee and the
government and by public in by the general. Thus, under
said lease contract, appellee cannot prevent the use of
portions, of the concession for homesteading purposes. It
is also in duty bound to allow the free use of forest
products within the concession for the personal use of
individuals residing in or within the vicinity of the
land. . . . In other words, the government has
practically reserved the rights to use the road to
promote its varied activities. Since, as above shown, the
road in question cannot be considered as an improvement
which belongs to appellee, although in part is for its
benefit, it is clear that the same cannot be the subject
 of assessment within the meaning of section 2 of
Commonwealth Act No. 470.[36] (Citations omitted)
Furthermore, the Court of Appeals agreed with the CBAA that the roads constructed by Filipinas had
become permanent improvements on the land owned by NGPI-NGEI.[37] Articles 440 and 445 of the Civil
Code provide that these improvements redound to the benefit of the land owner under the right of
accession:[38]

Article 440. The ownership of property gives the right by

accession to everything which is produced thereby, or
which is incorporated or attached thereto, either
naturally or artificially.
. . . .

Article 445. Whatever is built, planted or sown on the

land of another and the improvements or repairs made
thereon, belong to the owner of the land, subject to the
provisions of the following articles.
On the road equipment and mini haulers as real properties subject to tax, the Court of Appeals affirmed
the CBAA's Decision that these are only movables.[39] Section 199(o) of the Local Government Code
provides a definition of machinery subject to real property taxation:

SECTION 199. Definition of Terms. — When used in this

Title, the term:
. . . .

(o) "Machinery" embraces machines, equipment,

mechanical contrivances, instruments,
appliances or apparatus which may or may not
be attached, permanently or temporarily, to
the real property. It includes the physical
facilities for production, the installations
and appurtenant service facilities, those
which are mobile, self-powered or self-
propelled, and those not permanently attached
to the real property which are actually,
directly, and exclusively used to meet the
needs of the particular industry, business or
activity and which by their very nature and
purpose are designed for, or necessary to its
manufacturing, mining.
The Court of Appeals held that Section 19^(o) of the Local Government Code should be construed to
include machineries covered by the meaning of real properties provided for under Article 415(5) of the
Civil Code:[40]

Article 415. The following are immovable property:

. . . .
(5) Machinery, receptacles, instruments or
implements intended by the owner of the
tenement for an industry or works which may
be carried on in a building or on a piece of
 land, and which tend directly to meet the
needs of the said industry or works[.]
The Court of Appeals cited Davao Sawmill Company v. Castillo,[41] where it has been held that
machinery that is movable by nature becomes immobilized only when placed by the owner of the
tenement, but not so when placed by a tenant or any other person having a temporary right unless this
person acts as an agent of the owner.[42] Thus, the mini haulers and other road equipment retain their
nature as movables.[43]

The Provincial Assessor filed before this Court a Petition for Review raising the following issues:

First, whether the exemption privilege of NGPI-NGEI from payment of real property tax extends to
respondent Filipinas Palm Oil Plantation Inc. as lessee of the parcel of land owned by cooperatives; and

Second, whether respondent's road equipment and mini haulers are movable properties and have not
been immobilized by destination for real property taxation.

Petitioner argues that based on Mactan Cebu International Airport Authority v. Ferdinand J. Marcos,
[44]
 cooperatives cannot extend its exemption from real property tax to taxable persons.[45] It argues that
Sections 198, 199, 205, and 217 of the Local Government Code provide that real property taxes are
assessed based on actual use.[46] Moreover, the exemption of cooperatives applies only when it is the
cooperative that actually, directly, and exclusively uses and possesses the properties.[47] Sections 198,
199, 205, and 217 of the Local Government Code provide:

SECTION 198. Fundamental Principles. — The appraisal,

assessment, levy and collection of real property tax
shall be guided by the following fundamental principles:
. . . .
(b) Real property shall be classified for assessment
purposes on the basis of its actual use[.]
. . . .
SECTION 199. Definition of Terms. — When used in this
Title, the term:
. . . .
(b) "Actual Use" refers to the purpose for which the
property is principally or predominantly utilized by the
person in possession thereof[.]
. . . .
SECTION 205. Listing of Real Property in the Assessment
Rolls. —
. . . .
(d) Real property owned by the Republic of the
Philippines, its instrumentalities and political
subdivisions, the beneficial use of which has been
granted, for consideration or otherwise, to a taxable
person, shall be listed, valued and assessed in the name
of the possessor, grantee or of the public entity if such
property has been acquired or held for resale or lease.
. . . .  

SECTION 217. Actual Use of Real Property as Basis for

Assessment. — Real property shall be classified, valued
and assessed on the basis of its actual use regardless of
where located, whoever owns it, and whoever uses it.
(Emphasis supplied)
Petitioner claims that Section 199(o) of the Local Government Code specifically covers respondent's
road equipment and mini haulers since these are directly and exclusively used to meet the needs of
respondent's industry, business, or activity.[48] Article 415(5) of the Civil Code, which defines real
property, should not be made to control the Local Government Code,[49] a subsequent legislation that
specifically defines "machinery" for taxation purposes.[50]

In the Resolution[51] dated October 13, 2008, this Court denied the Petition for Review due to procedural
missteps, which included the failure to attach legible duplicate original or certified true copies of the
assailed decision and failure to pay proper fees. On November 25, 2008, petitioner moved for
reconsideration,[52] praying for the reversal of the Petition's denial due to mere technicalities.

On January 26, 2009, this Court granted Petitioner's Motion for Reconsideration.[53] It directed the
reinstatement of the Petition and required respondent to comment.[54]

On November 20, 2009, respondent filed its Comment.[55]

Respondent reiterates the rulings of the CBAA and the Court of Appeals that the exemption of
cooperatives from real property taxes extends to it as the lessee.[56] It asserts that under its lease
agreement with NGPI-NGEI, it pays an Annual Fixed Rental, which includes the payment of taxes.[57] It
claims that in case NGPI-NGEI is liable to the local government for real property tax on the land, the tax
should be taken from the Annual Fixed Rental.[58] To make respondent pay real property taxes on the
leased land would be equivalent to assessing it twice for the same property.[59]

On the road equipment and mini haulers being subjected to real property taxation, respondent maintains
that it should be spared from real property tax since the equipment and mini haulers are movables.[60]

The Petition is granted to modify the Court of Appeals Decision, but only with respect to the nature of
respondent's road equipment and mini haulers.

Under Section 133(n) of the Local Government Code, the taxing power of local government units shall
not extend to the levy of taxes, fees, or charges on duly registered cooperatives under the Cooperative
Code.[61] Section 234(d) of the Local Government Code specifically provides for real property tax
exemption to cooperatives:

SECTION 234. Exemptions from Real Property Tax. — The

following are exempted  from payment of the real
property tax:
. . . .

(d) All real property owned by duly registered

cooperatives as provided for under [Republic Act]  No.
6938[.] (Emphasis supplied)
NGPI-NGEI, as the owner of the land being leased by respondent, falls within the purview of the law.
Section 234 of the Local Government Code exempts all real property owned by cooperatives without
distinction. Nothing in the law suggests that the real property tax exemption only applies when the
property is used by the cooperative itself. Similarly, the instance that the real property is leased to either
an individual or corporation is not a ground for withdrawal of tax exemption.[62]

In arguing the first issue, petitioner hinges its claim on a misplaced reliance in Mactan, which refers to
the revocation of tax exemption due to the effectivity of the Local Government Code. However, Mactan
does not refer to the tax exemption extended to cooperatives. The portion that petitioner cited
specifically mentions that the exemption granted to cooperatives has not been withdrawn by the
effectivity of the Local Government Code:

[S]ection 232 must be deemed to qualify Section 133.

Thus, reading together Sections 133, 232, and 234 of the

L[ocal] G[overnment] C[ode], we conclude that as a
general rule, as laid down in Section 133, the taxing
powers of local government units cannot extend to the
levy of, inter alia, "taxes, fees and charges of any
kind on the National Government, its agencies and
instrumentalities, and local government units"; however,
pursuant to Section 232, provinces, cities, and
municipalities in the Metropolitan Manila Area may impose
the real property tax except on, inter alia, "real
property owned by the Republic of the Philippines or any
of its political subdivisions except when the beneficial
use thereof has been granted, for consideration or
otherwise, to a taxable person," as provided in item (a)
of the first paragraph of Section 234.

As to tax exemptions or incentives granted to or

presently enjoyed by natural or juridical persons,
including government-owned and controlled corporations,
Section 193 of the L[ocal] G[overnment] C[ode] prescribes
the general rule, viz., they are withdrawn upon the
effectivity of the L[ocal] G[overnment]
C[ode], except those granted to local water districts,
cooperatives duly registered under R.A. No. 6938, non-
stock and non-profit hospitals and educational
institutions, and unless otherwise provided in the
L[ocal] Gfovernment] C[ode]. The latter proviso could
refer to Section 234 which enumerates the properties
exempt from real property tax. But the last paragraph of
Section 234 further qualifies the retention of the
exemption insofar as real property taxes are concerned by
limiting the retention only to those enumerated therein;
all others not included in the enumeration lost the
privilege upon the effectivity of the L[ocal]
G[overnment] C[ode]. Moreover, even as to real property
owned by the Republic of the Philippines or any of its
political subdivisions covered by item (a) of the first
paragraph of Section 234, the exemption is withdrawn if
the beneficial use of such property has been granted to a
taxable person for consideration or otherwise.

Since the last paragraph of Section 234 unequivocally

withdrew, upon the effectivity of the L[ocal]
G[overnment] C[ode], exemptions from payment of real
property taxes granted to natural or juridical persons,
including government-owned or controlled corporations,
except as provided in the said section, and the
petitioner is, undoubtedly, a government-owned
corporation, it necessarily follows that its exemption
from such tax granted it in Section 14 of its Charter,
R.A. No. 6958, has been withdrawn. Any claim to the
contrary can only be justified if the petitioner can seek
refuge under any of the exceptions provided in Section
234, but not under Section 133, as it now asserts, since,
 as shown above, the said section is qualified by Sections
232 and 234.

In short, the petitioner can no longer invoke the general

rule in Section 133 that the taxing powers of the local
government units cannot extend to the levy of:

(o) taxes, fees or charges of any kind on the

National Government, its agencies or
instrumentalities, and local government
units.

It must show that the parcels of land in question, which

are real property, are any one of those enumerated in
Section 234, either by virtue of ownership, character, or
use of the property.[63] (Emphasis supplied)
The roads that respondent constructed within the leased area should not be assessed with real property
taxes. Bislig Bay finds application here. Bislig Bay Lumber Company, Inc. (Bislig Bay) was a timber
concessionaire of a portion of public forest in the provinces of Agusan and Surigao.[64] To aid in
developing its concession, Bislig Bay built a road at its expense from a barrio leading towards its area.
[65]
 The Provincial Assessor of Surigao assessed Bislig Bay with real property tax on the constructed
road, which was paid by the company under protest.[66] It claimed that even if the road was constructed
on public land, it should be subjected to real property tax because it was built by the company for its
own benefit.[67] On the other hand, Bislig Bay asserted that the road should be exempted from real
property tax because it belonged to national government by right of accession.[68] Moreover, the road
constructed already became an inseparable part of the land.[69] The records also showed that the road
was not only built for the benefit of Bislig Bay, but also of the public.[70] This Court ruled for Bislig Bay,
thus:

We are inclined to uphold the theory of appellee. In the

first place, it cannot be disputed that the ownership of
the road that was constructed by appellee belongs to the
government by right accession not only because it is
inherently incorporated or attached to the timber land
leased to appellee but also because upon the expiration
of the concession, said road would ultimately pass to the
national government. ... In the second place, while the
road was constructed by appellee primarily for its use
and benefit, the privilege is not exclusive, for, under
the lease contract entered into by the appellee and the
government and by public in by the general. Thus, under
said lease contract, appellee cannot prevent the use of
portions, of the concession for homesteading
purposes. ... It is also in duty bound to allow the free
use of forest products within the concession for the
personal use of individuals residing in or within the
vicinity of the land. ... In other words, the government
has practically reserved the rights to use the road to
promote its varied activities. Since, as above shown, the
road in question cannot be considered as an improvement
which belongs to appellee, although in part is for its
benefit, it is clear that the same cannot be the subject
 of assessment within the meaning of section 2 of
Commonwealth Act No. 470.[71]
This was reiterated in Board of Assessment Appeals ofZamboanga del Sur v. Samar Mining Company,
Inc.[72] Samar Mining Company, Inc. (Samar Mining) was a domestic corporation engaged in the mining
industry.[73] Since Samar Mining's mining site and mill were in an inland location entailing long distance
from its area to the loading point, Samar Mining was constrained to construct a road for its convenience.
[74]
 Initially, Samar Mining filed miscellaneous lease applications for a road right of way covering lands
under the jurisdiction of the Bureau of Lands and the Bureau of Forestry where the proposed road would
pass through.[75] Samar Mining was given a "temporary permit to occupy and use the lands applied for
by it";[76] hence, it was able to build what was eventually known as the Samico Road. Samar Mining was
assessed by the Provincial Assessor of Zamboanga del Sur with real property taxes on the road, which
prompted it to appeal before the Board of Assessment Appeals.[77] Invoking Bislig Bay, Samar Mining
claimed that it should not be assessed with real property tax since the road was constructed on public
land. This Court ruled for Samar Mining, thus:

There is no question that the road constructed by

respondent Saimar on the public lands leased to it by the
government is an improvement. But as to whether the same
is taxable under the aforequoted provision of the
Assessment Law, this question has already been answered
in the negaitive by this Court. In the case of Bislig Bay
Lumber Co., Inc. vs. Provincial Government of Surigao,
where a similar issue was raised. . ..
. . . .

. . . What is emphasized in the Bislig case is that the

improvement is exempt from taxation because it is an
integral part of the public land on which it is
constructed and the improvement is the property of the
government by right of accession. Under Section 3(a) of
the Assessment Law, all properties owned by the
government, without any distinction, are exempt from
taxation.[79] (Emphasis supplied, citations omitted)
The roads that respondent constructed became permanent improvements on the land owned by the
NGPI-NGEI by right of accession under the Civil Code, thus:

Article 440. The ownership of property gives the right by

accession to everything which is produced thereby, or
which is incorporated or attached thereto, either
naturally or artificially.
. . . .
Article 445. Whatever is built, planted or sown on the
land of another and the improvements or repairs made
thereon, belong to the owner of the land[.]
Despite the land being leased by respondent when the roads were constructed, the ownership of the
improvement still belongs to NGPI-NGEI. As provided under Article 440 and 445 of the Civil Code, the
land is owned by the cooperatives at the time respondent built the roads. Hence, whatever is
incorporated in the land, either naturally or artificially, belongs to the NGPI-NGEI as the landowner.

Although the roads were primarily built for respondent's benefit, the roads were also being used by the
members of NGPI and the public.[80] Furthermore, the roads inured to the benefit of NGPI-NGEI as
owners of the land not only by right of accession but through the express provision in the lease
agreement:
 On March 7, 1990 NGPI Multi-Purpose Cooperative, Inc., as
Lessor, and NDC-Guthrie Plantations, Inc., as Lessee,
entered into a "Lease Agreement" . . . covering the
agricultural lands transferred by NDC to the DAR, which
lands the DAR ultimately distributed undivided to
qualified workers-beneficiaries. . . .
. . . .

Clause No. 6.3 of the same lease agreement provides that

"All taxes due on the improvements on the Leased Property
except those improvements on the Area that the LESSOR
shall have utilized under Clause 1.2 hereof, shall be for
the account of the LESSEE."

Clause No. 9.4 of the same lease agreement provides that

". . . All fixed and permanent improvements, such as
roads and palm trees introduced on the Leased Property,
shall automatically accrue to the LESSOR upon termination
of this Lease Agreement without need of reimbursement."

All the above-cited stipulations in the lease agreement

between NGPI Multi-Purpose Cooperative and NDC-Guthrie
Plantations, Inc. were reconfirmed and reaffirmed in the
Addendum to Lease Agreement entered into by and between
NGPI Multi-Purpose Cooperative and Filipinas Palmoil
Plantations, Inc. on January 30, 1998. . . . The main
subject of the said Addendum was the extension of the
term of the lease agreement up to December 31, 2032,
along with economic benefits to the lessor other than
rentals.

There is no dispute that the roads are on the land owned

by NGPI Multi-Purpose Cooperative which leased the same
to Petitioner-Appellee. These roads belong to the Multi-
Purpose Cooperative, not only by right of accession but
also by express provisions of the Contract of Lease[.][81]
Respondent claims that under its lease agreement with NGPI-NGEI, it pays an Annual Fixed Rental,
which includes the payment of taxes.[82] If NGPI-NGEI were liable to the local government for real
property tax on the land, the tax should be taken from the Annual Fixed Rental:

"2.1. In consideration of this Lease Agreement, the

LESSEE shall pay the LESSOR the following annual rentals:
"1) An annual fixed rental, in the following
amount — "SIX HUNDRED THIRTY FIVE PESOS"
(P635.00) PER HECTARE PER ANNUM which would
cover the following:

"(1) All Taxes on the Land

"(2) Administration Charges
"(3) Amortization charges
 "It is understood that, if the annual fixed
rental of "SIX HUNDRED THIRTY FIVE PESOS" (p
635.00) is insufficient to pay any increase
on the land taxes, the Lessee shall pay the
difference, provided such increase does not
exceed ten percent (10%) of the immediately
preceding tax imposed on the land; provided
further, that any increase beyond these
percentage shall be borne equally by the
LESSOR and LESSEE.

"The foregoing notwithstanding, it is

understood and agreed that at all times,
liability for realty taxes on the Leased
Property Primarily and principally lies with
the LESSOR and any reference herein to
payment by LESSEE of said taxes is only for
purposes of earmarking the proceeds of the
rentals herein agreed upon."
Clause No. 6.3 of the same lease agreement provides that
"All taxes due on the improvements on the Leased Property
except those improvements on the Area that the LESSOR
shall have utilized under Clause 1.2 hereof, shall be for
the account of the LESSEE."[83] (Emphasis supplied)
Therefore, NGPI-NGEI, as owner of the roads that permanently became part of the land being leased by
respondent, shall be liable for real property taxes, if any. However, by express provision of the Local
Government Code, NGPI-NGEI is exempted from payment of real property tax.[84]

II

The road equipment and mini haulers shall be considered as real property, subject to real property tax.

Section 199(o) of the Local Government Code defines "machinery" as real property subject to real
property tax,[85] thus:

SECTION 199. Definition of Terms. — When used in this

Title, the term:
. . . .

(o) "Machinery" embraces machines, equipment,

mechanical contrivances, instruments,
appliances or apparatus which may or may not
be attached, permanently or temporarily, to
the real property. It includes the physical
facilities for production, the installations
and appurtenant service facilities, those
which are mobile, self-powered or self-
propelled, and those not permanently attached
to the real property which are actually,
directly, and exclusively used to meet the
needs of the particular industry, business or
activity and which by their very nature and
 purpose are designed for, or necessary to its
manufacturing, mining, logging, commercial,
industrial or agricultural purposes[.]
Article 415(5) of the New Civil Code defines "machinery" as that which constitutes an immovable
property:

Article 415. The following are immovable property:

. . . .
(5) Machinery, receptacles, instruments or implements
intended by the owner of the tenement for an industry or
works which may be carried on in a building or on a piece
of land, and which tend directly to meet the needs of the
said industry or works[.] (Emphasis supplied)
Petitioner contends that the second sentence of Section 199(o) includes the road equipment and mini
haulers since these are directly and exclusively used by respondent to meet the needs of its operations.
[86]
 It further claims that Article 415(5) of the New Civil Code should not control the Local Government
Code, a subsequent legislation.[87]

On the other hand, respondent claims that the road equipment and mini haulers are movables by
nature. It asserts that although there may be a difference between the meaning of "machinery" under
the Local Government Code arid that of immovable property under Article 415(5) of the Civil Code, "the
controlling interpretation of Section 199(o) of [the Local Government Code] is the interpretation of Article
415(5) of the Civil Code."[88]

In Manila Electric Company v. City Assessor,[89] a similar issue of which definition of "machinery" prevails
to warrant the assessment of real property tax on it was raised.

Manila Electric Company (MERALCO) insisted on harmonizing the provisions of the Civil Code and the
Local Government Code and asserted that "machinery" contemplated under Section 199(o) of the Local
Government must still be within the contemplation of immovable property under Article 415 of the Civil
Code.[90] However, this Court ruled that harmonizing such laws "would necessarily mean imposing
additional requirements for classifying machinery as real property for real property tax purposes not
provided for, or even in direct conflict with, the provisions of the Local Government Code."[91] Thus:

While the Local Government Code still does not provide

for a specific definition of "real property," Sections
199(o) and 232 of the said Code, respectively, gives an
extensive definition of what constitutes "machinery" and
unequivocally subjects such machinery to real property
tax. The Court reiterates that the machinery subject to
real property tax under the Local Government Code "may or
may not be attached, permanently or temporarily to the
real property"; and the physical facilities for
production, installations, and appurtenant service
facilities, those which are mobile, self-powered or self-
propelled, or are not permanently attached must (a) be
actually, directly, and exclusively used to meet the
needs of the particular industry, business, or activity;
and (b) by their very nature and purpose, be designed
for, or necessary for manufacturing, mining, logging,
commercial, industrial, or agricultural purposes.
. . . .

Article 415, paragraph (5) of the Civil Code considers as

immovables or real properties "[m]achinery, receptacles,
 instruments or implements intended by the owner of the
tenement for an industry or works which may be carried on
in a building or on a piece of land, and which tend
directly to meet the needs of the said industry or
works." The Civil Code, however, does not define
"machinery."

The properties under Article 415, paragraph (5) of the

Civil Code are immovables by destination, or "those which
are essentially movables, but by the purpose for which
they have been placed in an immovable, partake of the
nature of the latter because of the added utility derived
therefrom." These properties, including machinery,
become immobilized if the following requisites concur:
(a) they are placed in the tenement by the owner of such
tenement; (b) they are destined for use in the industry
or work in the tenement; and (c) they tend to directly
meet the needs of said industry or works. The first two
requisites are not found anywhere in the Local Government
Code.[92] (Emphasis supplied, citations omitted)
Section 199(o) of the Local Government prevails over Article 415(5) of the Civil Code. In Manila Electric
Company:

As between the Civil Code, a general law governing

property and property relations, and the Local Government
Code, a special law granting local government units the
power to impose real property tax, then the latter shall
prevail. As the Court pronounced in Disomangcop v. The
Secretary of the Department of Public Works and Highways
Simeon A. Datumanong:
It is a finely-imbedded principle in
statutory construction that a special
provision or law prevails over a general
one. Lex specialis derogant generali. As
this Court expressed in the case of Leveriza
v. Intermediate Appellate Court, "another
basic principle of statutory construction
mandates that general legislation must give
way to special legislation on the same
subject, and generally be so interpreted as
to embrace only cases in which the special
provisions are not applicable, that specific
statute prevails over a general statute and
that where two statutes are of equal
theoretical application to a particular case,
the one designed therefor specially should
prevail."

The Court also very clearly explicated in Vinzons-Chato

v. Fortune Tobacco Corporation that:
 A general law and a special law on the same
subject are statutes in pari materia  and
should, accordingly, be read together and
harmonized, if possible, with a view to
giving effect to both. The rule is that where
there are two acts, one of which is special
and particular and the other general which,
if standing alone, would include the same
matter and thus conflict with the special
act, the special law must prevail since it
evinces the legislative intent more clearly
than that of a general statute and must not
be taken as intended to affect the more
particular and specific provisions of the
earlier act, unless it is absolutely
necessary so to construe it in order to give
its words any meaning at all.

The circumstance that the special law is

passed before or after the general act does
not change the principle. Where the special
law is later, it will be regarded as an
exception to, or a qualification of, the
prior general act; and where the general act
is later, the special statute will be
construed as remaining an exception to its
terms, unless repealed expressly or by
necessary implication.
Furthermore, in Caltex (Philippines), Inc. v. Central
Board of Assessment Appeals, the Court acknowledged that
"[i]t is a familiar phenomenon to see things classed as
real property for purposes of taxation which on general
principle might be considered personal property[.]"

Therefore, for determining whether machinery is real

property subject to real property tax, the definition and
requirements under the Local Government Code are
controlling.[93] (Emphasis supplied, citations omitted)
Respondent is engaged in palm oil plantation.[94] Thus, it harvests fruits from palm trees for oil
conversion through its milling plant.[95] By the nature of respondent's business, transportation is
indispensable for its operations.

Under the definition provided in Section 199(o) of the Local Government Code, the road equipment and
the mini haulers are classified as machinery, thus:

SECTION 199. Definition of Terms. — When used in this

Title, the terra:
. . . .

(o) "Machinery" . . . includes the physical

facilities for production, the installations
 and appurtenant service facilities, those
which are mobile, self-powered or self-
propelled, and those not permanently attached
to the real property which are actually,
directly, and exclusively used to meet the
needs of the particular industry, business or
activity  and which by their very nature and
purpose are designed for, or necessary to its
manufacturing, mining, logging, commercial,
industrial or agricultural purposes [.]
(Emphasis supplied)
Petitioner is correct in claiming that the phrase pertaining to physical facilities for production is
comprehensive enough to include the road equipment and mini haulers as actually, directly, and
exclusively used by respondent to meet the needs of its operations in palm oil production.[96] Moreover,
"mini-haulers are farm tractors pulling attached trailers used in the hauling of seedlings during planting
season and in transferring fresh palm fruits from the farm [or] field to the processing plant within the
plantation area."[97] The indispensability of the road equipment and mini haulers in transportation makes
it actually, directly, and exclusively used in the operation of respondent's business.

In its Comment, respondent claims that the equipment is no longer vital to its operation because it is
currently employing equipment outside the company to do the task.[98] However, respondent never
raised this contention before the lower courts. Hence, this is a factual issue of which this Court cannot
take cognizance. This Court is not a trier of facts.[99] Only questions of law are entertained in a petition
for review assailing a Court of Appeals decision.[100]

WHEREFORE, the Petition is PARTLY GRANTED. The Decision of the Court of Appeals dated
September 26, 2007 and the Resolution dated May 26, 2008 in CA-G.R. SP No. 74060 are AFFIRMED
with MODIFICATION, in that the road equipment and the mini haulers should be assessed with real
property taxes.

JUDICIAL ADMItion AND KNOLEDGE

PAROL AND FRAUD
TO BE COMPELLED A WITNESS
BILLS OF RIGHT- RIGHT TO REMAIN SILENT AND TO COUNSEL
DISTINCTION BET MARITAL COMM VS DISQUAL
CONFESSION VS ADMISSION