BENGUET CORPORATION VS.

CENTRAL BOARD OF ASSESSMENT APPEALS (CBAA)

GR NO. 106041 January 29, 1993
FACTS:
The realty tax assessment involved in this case amounts to Php 11, 319,304.00. It has been
imposed on the petitioner's tailings dam and the land thereunder over its protest.
The controversy arose in 1985 when the Provincial Assessor of Zambales assessed the said properties as
taxable improvements. The assessment was appealed to the Board of Assessments Appeals of the
Province of Zambales. The appeal was dismissed.
The petitioner seasonably elevated the matter to the CBAA which reversed the dismissal of the appeal
but, on the merits, agreed that "The tailings dam and the lands submerged thereunder were subject to
realty tax.

ISSUE:
Whether the tailings dam is subject to realty tax because it is an improvement upon the land.

RULING:
Yes. The Real Property Tax Code does not carry a definition of "real property" and simply says
that the realty tax is imposed on "real property, such as lands, buildings, machinery and other
improvements affixed or attached to real property." In the absence of such a definition, we apply Article
415 of the Civil Code, the pertinent portions: Par (1) and (3).
Sec. 2 of C.A. No. 470, otherwise known as the Assessment Law, provides that the realty tax is
due "on the real property, including land, buildings, machinery and other improvements" not specifically
exempted in Sec. 3 thereof. A reading of that section shows that the tailings dam of the petitioner does
not fall under any of the classes exempt real properties therein enumerated.
Is the tailings dam an improvement on the mine?
Under Section 3 of the Real Property Tax Code:
Improvement - is a valuable addition made to property or an amelioration in its condition,
amounting to more than mere repairs or replacement of waste, costing labor or capital and intended to
enhance its value, beauty or utility or to adopt it for new or future purposes.
The term has also been interpreted as "artificial alterations of the physical condition of the
ground that are reasonably permanent in character.
A structure constitutes an improvement so as to partake of the status of realty would depend
upon the degree of permanence intended in its construction and use. The expression "permanent" as
applied to an improvement does not imply that the improvement must be used perpetually but only
until the purpose to which the principal realty is devoted has been accomplished. It is sufficient that the
improvement is intended to remain as long as the land to which it is annexed is still used for the said
purpose.
The court is convinced that the subject dam falls within the definition of an "improvement"
because it is permanent in character and it enhances the value and utility of petitioner's mine.
Moreover, the immovable nature of the dam defines its character as real property under Article 415 of
the Civil Code and thus makes it taxable under Section 38 of the Real Property Tax Code.

Caltex v. Central Board of Assesment

Caltex (Philippines) Inc., vs. Central Board of Assessment Appeals and City Assessor of Pasay

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 consist 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 tire flators. The city assessor of Pasay City
characterized the said items of gas station equipment and machinery as taxable realty. The realty tax on
said equipment amounts to P4,541.10 annually (p. 52, Rollo). The city board of tax appeals ruled that
they are personality. The assessor appealed to the Central Board of Assessment Appeals. The Board,
which was in its decision of June 3, 1977 that the said machines and equipment are real property under
the Real Property Tax Code, Presidential Decree No. 464, which took effect on June 1, 1974. The decision
was reiterated by the Board in its resolution of January 12, 1978, denying Caltex's motion for
reconsideration, a copy of which was received by its lawyer on April 2, 1979.On May 2, 1979 Caltex filed
this certiorari petition wherein it prayed for the setting aside of the Board's decision and for a
declaration that t he said machines and equipment are personal property not subject to realty tax. We
hold that the said equipment and machinery, as appurtenances to the gas station building or shed
owned by Caltex (as to which it is subject to realty tax) and which fixtures are necessary to the operation
of the gas station, for without them the gas station would be useless, and which have been attached or
affixed permanently to the gas station site or embedded therein, are taxable improvements and
machinery within the meaning of the Assessment Law and the Real Property Tax Code. Caltex invokes
the rule that machinery which is movable in its nature only becomes immobilized when placed in a plant
by the owner of the property or plant but not when so placed by a tenant, a usufructuary, or any person
having only a temporary right, unless such person acted as the agent of the owner (Davao Saw Mill Co.
vs. Castillo, 61 Phil 709).
Issue:
Whether the pieces of gas station equipment and machinery already enumerated are subject to
realty tax
Held:
Yes. This issue has to be resolved primarily under the provisions of the Assessment Law and the
Real Property Tax Code. Under, Sec. 38 of the said law: “Machinery shall embrace machines, mechanical
contrivances, instruments, appliances and apparatus attached to the real estate. It includes the physical
facilities available for production, as well as the installations and appurtenant service facilities, together
with all other equipment designed for or essential to its manufacturing, industrial or agricultural
purposes.” The equipment and machinery, are considered as appurtenances to the gas station building
or shed owned by Caltex (as to which it is subject to realty tax) and which fixtures are necessary to the
operation of the gas station, for without them the gas station would be useless, and which have been
attached or affixed permanently to the gas station site or embedded therein, are taxable improvements
and machinery within the meaning of the Assessment Law and the Real Property Tax Code.
Improvements on land are commonly taxed as realty even though for some purposes they might be
considered personality. "It is a familiar phenomenon to see things classed as real property for purposes
of taxation which on general principle might be considered personal property.

J.G. Summit Holdings, Inc. vs. Court of Appeals, 450 SCRA 169
G.R. No. 124293, November 20, 2000

FACTS:
The National Investment and Development Corporation (NIDC), a government corporation, entered into
a Joint Venture Agreement (JVA) with Kawasaki Heavy Industries, Ltd. for the construction, operation
and management of the Subic National Shipyard, Inc., later became the Philippine Shipyard and
Engineering Corporation (PHILSECO). Under the JVA, NIDC and Kawasaki would maintain a shareholding
proportion of 60%-40% and that the parties have the right of first refusal in case of a sale.
Through a series of transfers, NIDC’s rights, title and interest in PHILSECO eventually went to the
National Government. In the interest of national economy, it was decided that PHILSECO should be
privatized by selling 87.67% of its total outstanding capital stock to private entities. After negotiations, it
was agreed that Kawasaki’s right of first refusal under the JVA be “exchanged” for the right to top by five
percent the highest bid for said shares. Kawasaki that Philyards Holdings, Inc. (PHI), in which it was a
stockholder, would exercise this right in its stead.
During bidding, Kawasaki/PHI Consortium is the losing bidder. Even so, because of the right to top by 5%
percent the highest bid, it was able to top JG Summit’s bid. JG Summit protested, contending that
PHILSECO, as a shipyard is a public utility and, hence, must observe the 60%-40% Filipino-foreign
capitalization. By buying 87.67% of PHILSECO’s capital stock at bidding, Kawasaki/PHI in effect now owns
more than 40% of the stock.
ISSUE:
o Whether or not PHILSECO is a public utility
o Whether or not Kawasaki/PHI can purchase beyond 40% of PHILSECO’s stocks

HELD:
In arguing that PHILSECO, as a shipyard, was a public utility, JG Summit relied on sec. 13, CA No. 146. On
the other hand, Kawasaki/PHI argued that PD No. 666 explicitly stated that a “shipyard” was not a
“public utility.” But the SC stated that sec. 1 of PD No. 666 was expressly repealed by sec. 20, BP Blg. 391
and when BP Blg. 391 was subsequently repealed by EO 226, the latter law did not revive sec. 1 of PD
No. 666. Therefore, the law that states that a shipyard is a public utility still stands.
A shipyard such as PHILSECO being a public utility as provided by law is therefore required to comply
with the 60%-40% capitalization under the Constitution. Likewise, the JVA between NIDC and Kawasaki
manifests an intention of the parties to abide by this constitutional mandate. Thus, under the JVA,
should the NIDC opt to sell its shares of stock to a third party, Kawasaki could only exercise its right of
first refusal to the extent that its total shares of stock would not exceed 40% of the entire shares of
stock. The NIDC, on the other hand, may purchase even beyond 60% of the total shares. As a
government corporation and necessarily a 100% Filipino-owned corporation, there is nothing to prevent
its purchase of stocks even beyond 60% of the capitalization as the Constitution clearly limits only
foreign capitalization.
Kawasaki was bound by its contractual obligation under the JVA that limits its right of first refusal to 40%
of the total capitalization of PHILSECO. Thus, Kawasaki cannot purchase beyond 40% of the
capitalization of the joint venture on account of both constitutional and contractual proscriptions.

Laurel vs. Abrogar, 576 SCRA 41

FACTS:
1. PLDT sued Laurel, for violation of Art 308 RPC (theft), allegedly using international long-distance
calls belonging to PLDT, without its knowledge and consent
2. Laurel filed motion to quash information, contending “international calls are not personal
property”
3. PLDT: “calls & right to conduct business, both capable of appropriation, thus personal property
ISSUE:
WON the international calls as well as the business of providing telecommunication or
telephone service are personal properties capable of appropriation and can be objects of theft.
HELD:
Case remanded to trial court. Crime is properly designated as theft. Prosecution directed to
amend information, to clearly state the property subject of the theft are services & business of PLDT.
Intl long distance calls are not personal properties.
- PLDT could not have acquired ownership over such calls, merely encodes, enhances, decodes,
and transmits said calls.
- could not validly claim that such call were taken without its consent.
- Use of the facilities w/o PLDT consent is the unlawful taking of the telephone services and
business
- Only requirement for a personal property to be the object of theft under the RPC is that it be
capable of appropriation.
- The word “take” in the RPC maybe committed through the use of the offender’s own hands as
well as any mechanical device.
- Business of providing telecommunication or telephone services is likewise personal property.
Business is not enumerated as real property in Art 415.
Thus, it is personal property.

Villarico v. Sarmiento,
442 SCRA 110, 115 2004
FACTS:
Spouses Villarico sought for the confirmation of title over a parcel of land to which they allege
that they absolutely own the land. This was opposed to by a person who posed himself also to be the
rightful owner of the land, as well as by the Director of Forestry who said that the subject land is part of
forest land and may not be appropriated. Trial and appellate court dismissed application of
petitioners.

ISSUE:
Whether or not the plaintiff-appellant has acquired a right of way over the land of the
government which is between his property and the Ninoy Aquino avenue.

RULING:
There has been no showing that a declassification has been made of the land in question
as disposable or alienable. And the record indeed disclosed that applicants have not introduced
any evidence which would have led the court a quo to rule otherwise.
Forest lands cannot be owned by private persons. Possession thereof, no matter how long
doesn’t ripen to a registrable title. The adverse possession which may be the basis of a grant or title
or confirmation of an imperfect title refers only to alienable or disposable portions of the public domain.

Laurel vs. Garcia, 187 SCRA 797

Facts:
The subject property in this case is one of the 4 properties in Japan acquired by the Philippine
government under the Reparations Agreement entered into with Japan, the Roppongi property. The said
property was acquired from the Japanese government through Reparations Contract No. 300. It consists
of the land and building for the Chancery of the Philippine Embassy. As intended, it became the site of
the Philippine Embassy until the latter was transferred to Nampeidai when the Roppongi building
needed major repairs. President Aquino created a committee to study the disposition/utilization of
Philippine government properties in Tokyo and Kobe, Japan. The President issued EO 296 entitling non-
Filipino citizens or entities to avail of separations' capital goods and services in the event of sale, lease or
disposition.

Issues:
Whether or not the Chief Executive, her officers and agents, have the authority and jurisdiction,
to sell the Roppongi property.

Ruling:
It is not for the President to convey valuable real property of the government on his or her own
sole will. Any such conveyance must be authorized and approved by a law enacted by the Congress. It
requires executive and legislative concurrence. It is indeed true that the Roppongi property is valuable
not so much because of the inflated prices fetched by real property in Tokyo but more so because of its
symbolic value to all Filipinos, veterans and civilians alike. Whether or not the Roppongi and related
properties will eventually be sold is a policy determination where both the President and Congress must
concur. Considering the properties' importance and value, the laws on conversion and disposition of
property of public dominion must be faithfully followed.

CITY OF LAPU-LAPU v. PHILIPPINE ECONOMIC ZONE AUTHORITY,

GR No. 184203, 2014-11-26

Facts:
The Philippine Economic Zone Authority is exempt from payment of real property taxes. These
are consolidated... the City of Lapu-Lapu (the City)... appealed the Regional Trial Court's decision finding
the PEZA exempt from payment of real property taxes. the Province of Bataan (the Province)... assails
the Court of Appeals' decision... granting the PEZA's petition for certiorari. The Court of Appeals... ruled
that the Regional Trial Court,... gravely abused its discretion in finding the PEZA liable for real property
taxes to the Province of Bataan.

President Ferdinand E. Marcos issued Presidential Decree No. 66 in 1972... the Export Processing
Zone Authority (EPZA) was created to operate, administer, and manage the export processing zones
established in the Port of Mariveles, Bataan... and such other export processing zones that may be
created by... virtue of the decree.
EPZA was declared exempt from all taxes that... may be due to the Republic of the Philippines,
its provinces, cities, municipalities, and other government agencies and instrumentalities.
Specifically, Section 21 of Presidential Decree No. 66 declared the EPZA exempt from payment
of real... property taxes
From all income taxes, franchise taxes, realty taxes and all other kinds of taxes and licenses to
be paid to the National Government, its provinces, cities, municipalities and other government agencies
and instrumentalities... the PEZA was created by virtue of Republic Act No. 7916 or "the Special
Economic Zone Act of 1995"
The PEZA was granted the power... to register, regulate, and supervise the enterprises located in
the economic zones.
By virtue of the law, the export processing zone in Mariveles, Bataan became the Bataan
Economic Zone... and the Mactan Export Processing Zone the Mactan Economic Zone.
President Fidel V. Ramos issued Executive Order No. 282, directing the PEZA to assume and
exercise all of the EPZA's powers, functions, and responsibilities "as provided in Presidential Decree No.
66

Facts of G.R. No. 184203

City of Lapu-Lapu, through the Office of the Treasurer, demanded from the PEZA... real property
taxes for the period from 1992 to 1998 on the PEZA's properties located in the Mactan Economic Zone.
It cited Sections 193 and 234 of the Local Government Code of 1991 that withdrew the real
property tax exemptions previously granted to or presently enjoyed by all persons.
PEZA filed a petition for declaratory relief... praying that the trial court declare it exempt from
payment of real property taxes.
According to the trial court, the PEZA remained tax-exempt regardless of Section 24 of the
Special Economic Zone Act of 1995.
The PEZA, therefore, is not liable for real property taxes on the land it owns.
Characterizing the PEZA as an agency of the National Government, the trial court ruled that the
City had no authority to tax the PEZA. The City then appealed

Issues:
whether... the PEZA is exempt from payment of real property taxes.

Ruling:

The PEZA is exempt from payment... of real property taxes.

Under Section 133(o), local government units have no power to levy taxes of any kind on the
national government, its agencies and instrumentalities and local government units:... the PEZA is an
instrumentality of the national government. It is not integrated within the department framework but is
an agency attached to the Department of Trade and Industry.
Attachment, which enjoys "a larger measure of independence"
As an instrumentality of the national government, the PEZA is vested with special functions or
jurisdiction by law. Congress created the PEZA to operate, administer, manage and develop special
economic zones in the Philippines.
Being an instrumentality of the national government, the PEZA cannot be taxed by local
government units.
Although a body corporate vested with some corporate powers,... the PEZA is not a
government-owned or controlled corporation taxable for real property taxes.
 To be considered a government-owned or controlled corporation, the entity must have been
organized as a stock or non-stock corporation.

Government instrumentalities, on the other hand, are also created by law but partake of
sovereign functions. When a government entity performs sovereign functions, it need not meet the test
of economic viability
The law created the PEZA's charter. Under the Special Economic Zone Act of 1995, the PEZA was
established primarily to perform the governmental function of operating, administering, managing, and
developing special economic zones to attract investments and provide opportunities... for preferential
use of Filipino labor.
Under its charter, the PEZA was created a body corporate endowed with some corporate
powers. However, it was not organized as a... stock... or non-stock... corporation. Nothing in the PEZA's
charter provides that the
PEZA's capital is divided into shares.[272] The PEZA also has no members who shall share in the
PEZA's profits.
The PEZA does not compete with other economic zone authorities in the country. The
government may even subsidize the PEZA's operations. Under Section 47 of the Special Economic Zone
Act of 1995, "any sum necessary to augment [the PEZA's] capital outlay shall be... included in the
General Appropriations Act to be treated as an equity of the national government."
The PEZA, therefore, need not be economically viable. It is not a government-owned or
controlled corporation liable for real property taxes.
The PEZA assumed the non-profit character, including the tax-exempt status, of the EPZA
The PEZA's predecessor, the EPZA, was declared non-profit in character with all its revenues
devoted for its development, improvement, and maintenance. Consistent with this non-profit
character, the EPZA was explicitly declared exempt from real property taxes under its... charter.
Nevertheless, we rule that the PEZA is exempt from real property taxes by virtue of its charter.
The PEZA assumed the real property exemption of the EPZA under Presidential Decree No. 66.

Principles:
Real property taxes are annual taxes levied on real property such as lands, buildings, machinery,
and other improvements not otherwise specifically exempted under the Local Government Code.
Real property taxes are ad valorem, with the... amount charged based on a fixed proportion of
the value of the property.
Under the law, provinces, cities, and municipalities within the Metropolitan Manila Area have
the power to levy real property taxes within their respective... territories.
The person liable for real property taxes is the "taxable person who had actual or beneficial use
and possession [of the real property for the taxable period,] whether or not [the person owned the
property for the period he or she is being taxed]."