Republic of the Philippines

CENTRAL BOARD OF ASSESSMENT APPEALS Manila

NATIONAL POWER CORPORATION, Petitioner-Appellant,

– versus –

LOCAL BOARD OF ASSESSMENT APPEALS

OF THE PROVINCE OF LA UNION, CBAA CASE NO. L-32 Appellee,

– and –

MUNICIPAL ASSESSOR OF BAUANG,

LA UNION AND PROVINCIAL ASSESSOR OF LA UNION,
Respondents-Appellees.

x – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – x

D E C I S I O N

Appealed before this Board is the Decision of the Local Board of

Assessment Appeals (LBAA) of the Province of La Union the dispositive portion

thereof reads:

“X x x, finding the PETITION TO DECLARE EXEMPT THE REVISED AND RETROACTIVE TO 1995 TAX DECLARATION NOS. 30025 to 30033 and 30037 ISSUED BY THE MUNICIPAL/PROVINCIAL ASSESSOR’S (sic) OF THE MUNICIPALITY OF BAUANG, PROVINCE OF LA UNION to be unmeritorious the same is hereby DENIED.”

The records of this case disclose that on January 11, 1993, National

Power Corporation, (NPC/NAPOCOR) and the first Private Power Corporation

(FPPC) entered into a contract under the Build Operate and Transfer (BOT)

Agreement, wherein the First Private Power Corporation, CONTRACTOR,

“shall cause the formation of a subsidiary or Philippine corporation to be called

as Bauang Private Power Corporation (hereinafter ‘BPPC’) for the purpose of

undertaking certain of the work in respect of the building and operating of the

Power Station and perform other undertakings specified in this Agreement.”

The contract was for the construction of 215 Megawatt Bauang Diesel Power

Plant, situated at Payocpoc Sur, Bauang, La Union, for the period commencing

Reference: Book IX, pp. 13-27

July 25, 1994 and ending on the transfer date thereof. Sec. 2.03 of the BOT

Agreement provides:

“NAPOCOR shall make available the site to CONTRACTOR for the purpose of building and operating the POWER STATION at no cost to CONTRACTOR for the period commencing on the Effective Date and ending on the Transfer Date and NAPOCOR shall be responsible for the payment of all real estate taxes and assessments, rates, and the buildings and improvement thereon.”

In 1995, Respondents-Appellees, Municipal Assessor of Bauang, La

Union issued Tax Declaration Nos. 2503 (sic) and 25022 to 25029, all declared

in the name of BPPC exempt from the payment of realty taxes. The Vice Mayor

of Bauang, La Union, who at the time was Acting Mayor, questioned the legality

of the exemption, in a letter for clarification on the taxability of subject

machineries and equipment addressed to the Provincial and Municipal

Assessors, on July 22, 1997.

The letter was indorsed by the assessors to the Regional Director,

Bureau of Local Government Finance (BLGF), Carmelita Reyes, who in her 6th

Indorsement to the BLGF on February 6, 1998 opined that BPPC is a private

corporation and not a government-owned or controlled corporation. BLGF

Deputy Executive Director and OIC Angelina M. Magsino, in its 7th Indorsement,

dated July 16, 1998 ruled that subject machineries and equipment of BPPC are

subject to Real Property Tax and for the assessor to take action.

With the ruling of the BLGF and in accordance with Art. 314 of the Rules

and Regulations Implementing the Local Government Code of 1991, the

Provincial/Municipal Assessor issued Revised Declaration Nos. 30026 to 30033

and 30037, canceling the earlier Tax Declarations of Real Property and issued

a Notice of Assessment to BPPC, assessing subject machineries and

equipment in the total sum of P288,252,848.00 for the period 1995 to 1998,

without interest of two percent (2%) per month on the unpaid amount.

BPPC formally notified NAPOCOR of said Notice of Assessment, thru its

Executive Vice President and Chief Operating Officer, Mr. Ernesto B.

Reference: Book IX, pp. 13-27

Pangtangco, in a letter dated August 18, 1998 addressed to Mr. Lino S. Cruz,

Vice President, NAPOCOR, Northern Luzon Regional Center.

On October 5, 1998, the National Power Corporation, as Petitioner,

appealed before the Local Board of Assessment Appeals (LBAA) of the

Province of La Union, in a Petition dated October 1, 1998, to declare the

revised Tax Declaration Nos. 30026 to 30033 and 30037 tax exempt under

Sec. 234 (c) of the Local Government Code of 1991 (RA 7160) as follows:

“Sec. 234. Exemptions from Real Property Tax. – The following are exempted from payment of the real property tax:

x x x x x x

“(c) All machineries and equipment that are actually, directly and exclusively used by local water districts and government-owned or-controlled corporations engaged in the supply and distribution of water and/or generation and transmission of electric power,”

Petitioner NAPOCOR claims that the machineries and equipment

covered by said tax declarations are actually, directly and exclusively used by it

and therefore, by said provision of law are exempt from payment of the real

property tax. Respondents Provincial Assessor of La Union, Municipal Assessor

of Bauang, La Union, Provincial Treasurer of La Union and Municipal Treasurer

of Bauang, La Union answered that such machineries and equipment are not

exempt under Sec. 234 (c) of the Local Government Code because they are

actually, directly and exclusively used by Bauang Private Power Corporation, a

non-government entity, in generating electric power which the petitioner buys to

be sold to the consuming public.

On November 19, 1999, Appellee Local Board granted Petitioner’s

MOTION TO WITHDRAW PETITION: that “Petitioner NAPOCOR, BPPC and

the Local Government Units of the Province of La Union conducted a series of

conferences/meetings purposely to arrive at a possible amicable settlement of

the case.”

The amicable settlement failed: the original petition for tax exemption was

reinstated and decided against Petitioner NAPOCOR, hence this Appeal.

Reference: Book IX, pp. 13-27

Finding that the contention of NAPOCOR is without merit, the Local

Board of Assessment Appeals of La Union declared:

“The exemption as provided for by the x x x law is true only in cases where the government-owned or controlled corporation NAPOCOR owns and/or actually uses such machineries. In this case, NAPOCOR does not own and does not even actually and directly use the machineries. It is the BPPC, a non-government entity, that owns, maintains and operates the said machineries that are subject to real estate taxation, and the electricity generated by said machineries is sold by it to the NAPOCOR. The income derived from the production of electricity accrues directly in favor of BPPC as a result of the sale of electricity to the NAPOCOR. What determines the persons or entity that is liable to pay real estate taxes is the ownership and use of the property subject of taxation, and in this case, such entity is the BPPC.

“The liability as to who is going to pay real estate taxes is determined by law and not by agreement of the parties. Hence, the build-operate-and transfer (BOT) contract wherein it was stipulated that ‘NAPOCOR shall be responsible for the payment of all real estate taxes and assessment, rates, and other charges in respect of the site and the buildings and improvements thereon’ is only an arrangement between the parties and cannot be the basis in the determination as from whom the government shall collect the taxes due to it.

“It is clear x x x that it is the BPPC that should be assessed for the payment of real estate taxes on the machineries subject matter of this case.”

Petitioner-Appellant, National Power Corporation (NAPOCOR) assigned

the following errors:

“A. THE HONORABLE LBAA OF LA UNION HAD ERRED IN ITS DECISION RENDERING THAT THE MACHINERIES AND EQUIPMENT BEING ACTUALLY, DIRECTLY AND EXCLUSIVELY USED BY PETITIONER NAPOCOR LIABLE TO REALTY ESTATE TAXES CONTRARY TO THE CARDINAL RULES AND PRINCIPLES OF ASSESSMENT.

“B. THE DECISION OF THE HONORABLE LBAA IS CONTRARY TO LAW AND THE FACTS OF THE CASE.”

NAPOCOR contends that “although the machineries and equipment put

up by BPPC under the BOT Contract Scheme would remain in its name during

the cooperation period of fifteen (15) years, these machineries and equipment

would be actually, directly and exclusively used by herein petitioner-appellant

NAPOCOR which provides the fuel being used.

Petitioner-Appellant cites the case of ALLAREDE vs. COA, 218 SCRA

227 thus:

“It is an elementary principle of statutory construction that where the words and phrases of a statute are not obscure and

Reference: Book IX, pp. 13-27

ambiguous, the meaning and intention of the legislature should be determined from the language employed and were there is no ambiguity in the words, there is no room for construction.”

Petitioner-Appellant also cites the Supreme Court’s ruling in the case of

JMM Promotion and Management, Inc. vs. National Labor Relations

Commission, 288 SCRA 1298 as follows:

“’It (sic) interpreting a statute, care should be taken that every part be given effect and construction that would render a provision inoperative should be avoided and inconsistent provisions should be reconciled whenever possible as part of harmonious whole.’”

Further, Petitioner-Appellant states:

“Granting, arguendo, that the said machineries and equipment subject of this appeal are liable to real property taxes, the assessment level applicable under the circumstances should be ten (10%) percent as expressly provided under Sec. 218(d) of the Local Government Code in relation to Article 309 of the Rules and Regulations implementing it. Section of (sic) 218(d) of RA 7160 is hereunder quoted to wit:

“’Sec. 218. Assessment Levels. – The assessment levels to be applied to the fair market value of the real property to determine its assessed value shall be fixed by ordinances of the Sangguniang Panlalawigan, Sangguniang Panlungsod of Sangguniang Bayan of a municipality within the Metro Manila Area at the rates not exceeding the following:

a. x x x

b. x x x

c. x x x

d. on special classes: the assessment levels for all lands, buildings, machineries and other improvements:

ACTUAL USE ASSESSMENT LEVEL

X X X

X X X

X X X

Government-owned and Controlled Corporations
Engaged in the supply and 10% Distribution of water and/or
Generation and transmission of electric power

Respondents-Appellees’ Memorandum has the following undisputed

facts:

“1. It is the BPPC who is actually in possession and in actual use of subject properties;

“2. BPPC manufacture electric current with the use of the subject properties that are in its possession;

Reference: Book IX, pp. 13-27

“3. After manufacturing/converting electric current it sells the same to NPC;

“4. That it is BPPC which profits from the sale of NPC of the electric current that it manufactures.”

Respondents-Appellees submit that the term use defined in Corpus Juris

Segundun, Vo. 91, p. 511, 516m American Law Book Co., Brooklyn, New York,

1955, is the employment of a thing for the accomplishment of a particular

purpose; to operate; to profit; In this sense a ‘use’ is where a man has

anything to use to another, upon confidence that the other shall take the

profits; he who has the profits has the ‘use’”.

This Board first heard this case on March 7, 2003. Attorneys Gerardo

Viloria and Pedro Ofiana, Jr., both Members of the Provincial Board of La

Union, and Atty. Mauro C. Cabading, Jr., Provincial Legal Officer of La Union,

appeared for Respondents-Appellees. There were no appearances from

Petitioner-Appellant nor from Appellee Local Board.

On May 25, 2003, Bauang Private Power Corporation (BPPC) filed a

Motion for Intervention declaring that it has a “direct legal interest in the

outcome of the matter in litigation”, on the following grounds:

“A.

THE LBAA ERRED IN FINDING THAT THE MACHINERY AND EQUIPMENT SUBJECT OF THE ASSESSMENT ARE NOT ‘ACTUALLY AND DIRECTLY USED’ BY PETITIONER NAPOCOR.

“B.

THE LBAA ERRED IN RULING THAT THE MACHINERY AND EQUIPMENT SUBJECT OF THE ASSESSMENT ARE NOT COVERED BY THE EXEMPTION FROM LOCAL TAXES UNDER SECTION 234(C) OF R.A. 7160.

“C.

ASSUMING ARGUENDO THAT THE SUBJECT PROPERTY IS TAXABLE, THE LBAA ERRED IN RULING THAT THEY ARE SUBJECT TO REAL ESTATE TAXES AT THE ORDINARY RATES INSTEAD OF THE MAXIMUM AMOUNT OF TEN PERCENT (10%) UNDER SECTION 218 OF THE LOCAL GOVERNMENT CODE.”

Appellant-In-Intervention maintains that NAPOCOR is the beneficial

owner and user of the site, the buildings, machineries and equipment installed

therein. BPPC operates Subject Properties but is subject to the direct control

and supervision of NAPOCOR insofar as the manner by which electric power is

Reference: Book IX, pp. 13-27

produced as well as the amount thereof produced. During the lifetime of the

BOT Contract, the project proponent operates the facility and is entitled to a

‘reasonable rate of return’ on its investment. At the end of the contract, the

project proponent transfers the facility it has previously built and operated to the

government agency concerned. While BPPC is declared owner of the subject

property, all electricity produced in the Power Station is sold exclusively to

NAPOCOR pursuant to the terms of the BOT Agreement. BPPC does not

distribute or transmit the electricity it produces from the Power Station to

the general public. Section 234(c), R.A. 7160, requires only that the

equipment be used by the government owned or controlled corporation,

to produce, generate and transmit electricity to its consuments.

This case was next heard at the Provincial Capitol of La Union on June

18, 2003, following an Ocular Inspection of subject site on June 17, 2003.

Petitioner-Appellant NAPOCOR, maintained that the machineries are tax

exempt as they are actually, directly and exclusively used for the benefit of

Petitioner-Appellant in the generation and transmission of electricity, although

the same were declared in the name of BPPC. Petitioner-Appellant cited

paragraph 2.03 of the BOT Contract and Section 234(c) of the Local

Government Code, claiming that the previous assessment is correct and the

subsequent reassessment of the machineries, declaring them as liable to real

estate tax is violative of the cardinal rules of assessment as stated in Section

217 (b) of the Local Government Code which states that ‘Real Property shall be

classified for assessment purposes on the basis of its actual use’. On the basis

of the definition of “Actual Use” under Sec. 199 (b) of the Local Government

Code viz: “refers to the purpose for which the property is principally or

predominantly utilized by the person in possession thereof”, and with Sec. 234

thereof, supra, Petitioner-Appellant concludes that “Petitioner-Appellant NPC

being the actual, direct and exclusive user and beneficiary of the machineries

Reference: Book IX, pp. 13-27

subject of this instant case in the generation and transmission of electricity is

exempt from realty estate taxes being imposed by the Respondents”.

Respondents-Appellees raised the requirement under Section 7 of the

Rules of Procedure Before the Local Boards of Assessment Appeals for the

payment or filing of a bond on the assessment – that from 1995 up to the

present BPPC has not paid a single centavo thereto. Petitioner-Appellant does

not dispute the rule that an Appeal does not suspend the collection of the

corresponding realty taxes on the property subject of the Appeal. The Court of

Appeals (CA) however, has issued an Injunction in CA-G.R. SP No. 66937

entitled THE SANGGUNIANG PANLALAWIGAN OF LA UNION & THE

PROVINCIAL TREASURER OF LA UNIION, Petitioner, versus HONORABLE

PRESIDING JUDGE ROSEMARY MOLINA ALIM (RTC, Br. 33 Bauang, La

Union), BAUANG PRIVATE POWER CORP. (BPPC) & THE NATIONAL

POWER CORP. (NAPOCOR) Respondents:

The Sangguniang Panlalawigan of La Union & the Provincial Treasure of

La Union, in a Petition for Certiorari under Rule 65 of the rule of Civil

Procedure, challenged the Order of the Regional Trial Court (RTC) OF Bauang,

La Union Branch 33, dated December 11, 2000, issued in SPC. CV. CASE NO.

52-BC entitled “Bauang Private Power Corp., petitioner, versus The

Sangguniang Panlalawigan of the Province of La Union and the Office of the

Provincial Treasurer of the Province of La Union, respondents”, granting the

application for the issuance of a writ of preliminary injunction by petitioner

BPPC and intervenor NAPOCOR. “Also assailed is the Order denying

petitioners’ motion for reconsideration.”

Petitioner NAPOCOR and intervenor BPPC applied for the issuance of a

writ of preliminary injunction before the RTC, Branch 33 of La Union because

on November 16, 2000 the Provincial Treasurer of La Union issued a warrant of

levy to collect the assessed unpaid realty property taxes on the machinery and

equipment amounting to P228,582,848.00. A Temporary Restraining Order was

Reference: Book IX, pp. 13-27

issued thereto on November 20, 2000 which was subsequently extended for

another seventeen (17) days, before the preliminary injunction on December

11, 2000, requiring petitioner BPPC and intervenor NAPOCOR to “post a bond

in the amount of P170,607,909.30, equivalent to thirty (30%) per cent of the

amount sought to be collected by the respondents as indicated in the warrant of

levy”.

As the Court of Appeals however, DISMISSED the Petition for Certiorari,

for lack of merit, of the Sangguniang Panlalawigan of La Union & the Provincial

Treasurer of La Union, it made the following observations:

“X x x, the petitioner’s argument that it is not the NAPOCOR which actually owns the machines and equipment, and that said machineries and equipment are in the control of BPPC, which is not a government-owned and controlled corporation, is of no moment. Under the BOT Agreement, the power generated by BPPC is directly, actually and exclusively used by the NAPOCOR. The Power plant, and its site, buildings, machineries and equipment are utilized solely for the benefit and purposes of NAPOCOR.”

Anent the above-observation of the Court of Appeals, the matter of who

is the actual, direct and exclusive user of the machineries and equipment

thereof has nothing to do with its determination of whether or not the Lower

Court has committed a grave abuse of discretion, which is the subject of its

Decision. Hence, the Decision of the Court of Appeals on said Petition for

Certiorari is foreign, not relevant and therefore, will not affect the present case.

ISSUES RAISED BY RESPONDENTS-APPELLEES

On CBAA’s Jurisdiction

Respondents-Appellees questioned the jurisdiction/authority of the CBAA

to hear and decide the Appealed local board decision denying the petition to

declare exempt from real property tax, the subject machineries and equipment

of BPPC, pursuant to Sec. 1, Rule 3, Rules of Procedure before the CBAA,

thus:

“Sec. 1. Appellate jurisdiction. – The Central Board shall have exclusive jurisdiction to hear and decide all appeals from the decisions, orders and resolutions of the Local Board of Assessment Appeals involving contested assessments of real properties, claims for tax refund and/or tax credits and over payment of taxes.”

Reference: Book IX, pp. 13-27

“The LBAA Decision of Oct. 26, 2001 does not involve contested

assessment or claims for refund or tax credits or overpayment of taxes.”

Sec. 1, Rule 3, Rules of Procedure before the CBAA (supra), is about

exclusive jurisdiction – jurisdiction vested only in the CBAA. What about like or

concurrent jurisdiction not exclusive to the CBAA – jurisdiction shared by other

fora and inclusive only to the jurisdiction of the CBAA, can not the CBAA

exercise jurisdiction thereto? In the long line of exemption cases appealed

before the CBAA, the CBAA has always taken cognizance and jurisdiction over

them. There is no reason why the CBAA cannot exercise jurisdiction over the

present case.

Subject machineries and equipment have been assessed. By filing this

Appeal, is not Petitioner-Appellant contesting said assessment, claiming

exemption?

Respondents-Appellees further raised the issues of prescription before

the Local Board of Assessment Appeals, invoking the legal personality/interest

of NAPOCOR, before the Bureau of Local Government Finance and before the

Central Board of Assessment Appeals.

On Prescriptions

Respondents-Appellees advanced the following:

NAPOCOR is an interloper, an intruder. The Petition for Exemption was

filed by NAPOCOR, not with the Assessor as provided in Sec. 206 but by a

Petition to declare said properties tax exempt with the LBAA. The caption says

in Re or In the Matter of. There is no respondent. An appeal under Sec. 226 of

the Local Government Code must have an Appellant and an Appellee.

NNAPOCOR cannot be vested with the right to appeal since NAPOCOR has

not yet acquired any right, title or interest on the property. BPPC should have

filed the appeal before the LBAA within sixty (60) days from receipt of the notice

of assessment. For failure thereof, the assessment should have become final

and executory.

Reference: Book IX, pp. 13-27

Assuming that NAPOCOR has the legal personality/interest to file the

petition for tax exemption with the LBAA under Sec. 206 of the LGC, and the

same was considered an appeal pursuant to Sec. 226 thereof, NAPOCOR filed

the appeal on October 5, 1998, two days after the expiry date of the period to

appeal.

The ruling of the BLGF dated July 16, 1998 and reiterated on March 16,

1999 was not appealed to the Secretary of Finance that has supervision and

control of the BLGF. Hence said ruling, holding subject properties liable for real

property tax have become final and executory.

The appeal before the CBAA was filed out of time: Petitioner-Appellant

received LBAA’s adverse Decision on December 12, 2001, NPC filed its

Appeal, evidenced by the receipt-stamp on the face of the appeal, only on

January 22, 2002 or eleven (11) days after the expiry date of appeal which is

thirty (30) days from receipt thereof.

CBAA’s FINDINGS

The above-issues i.e., prescription before the LBAA, the legal

personality/interest of NAPOCOR and prescription before the BLGF should

have been raised before the Board below.

Be that as it may, NAPOCOR’s claim that it is the actual, direct and

exclusive user of subject machineries is enough legal personality/interest for it

to appeal: if found taxable, NAPOCOR will be required to pay the realty tax in

accordance with the BOT contract.

In the Appeal before the LBAA, NAPOCOR described itself as the

Petitioner. While no Respondents are mentioned in the appeal, clearly and

definitely they are the assessors who assessed said property: the Municipal

Assessor of Bauang, La Union and the Provincial Assessor of La Union.

Before the Local Board of Assessment Appeals, consideration is given to

the substance of the appeal, the form may not be material – it can eventually be

made to conform to the prescribed one: “for this purpose, the Secretary of the

Reference: Book IX, pp. 13-27

Local Board may assist the petitioner in the filing of the appeal for purposes of

substantial compliance with the x x x requirements.” (See par. 2, Sec. 5 RULE

V, RULES OF PROCEDURE BEFORE THE LOCAL BOARDS OF

ASSESSMENT APPEAL). NAPOCOR’s appeal before the LBAA of La Union

therefore is substantially complied with. BPPC received the Notice of

Assessment on August 14, 1998. It filed its appeal before the LBAA of La Union

on October 5, 1998 and was well within the sixty-day reglementary period to

appeal.

The Bureau of Local Government Finance rendered an Opinion on the

matter, not a ruling as such is vested in the Boards of Assessment Appeals.

Such Opinion cannot prevail over the conduct and proceeding of an appeal

before this Board.

The appeal of NAPOCOR before this Board was not filed on January 22,

2002 but was received by this Board on that date: the appeal was sent by mail,

which filing is reckoned from the date of mailing thereof. The appeal was

registered-postmarked January 11, 2002 or exactly thirty (30) days from receipt

by NAPOCOR of LBAA’s adverse decision on December 12, 2001.

The ultimate issue in this case is: Whether or not the machineries and

equipment of Bauang Private Power Corporation are subject to the real

property tax. Determinative thereof is the actual, direct and exclusive user of

said machineries and equipment: if the actual, direct and exclusive user is

NAPOCOR, subject machineries and equipment are not taxable under Sec. 234

(c) of R.A. 7160, otherwise, if the actual, direct and exclusive user thereof is

BPPC, it is taxable. Exemption from taxation, which was rightly elucidated by

Respondents-Appellees, may be granted only by a provision of the Constitution,

by statutes, by treaties and by franchises, and BPPC has no such grant. The

BOT contract, as claimed, binds only the contracting parties and cannot vest

exemption on a taxable person, and BPPC is a taxable juridical person.

Reference: Book IX, pp. 13-27

As can be gleaned, the following are the requisites for exemption under

Sec. 234(c), R.A. 7160 (supra).

1. (All) machineries and equipment;

2. (That are) actually, directly and exclusively used by water districts and government-owned or-controlled corporations;

3. Engaged in the supply and distribution of water and/or generation and transmission of electric power.

Sec. 234(c), R.A. 7160 (supra), is clear and unambiguous: “there is no

room for construction.” (See Aparri vs. Court of Appeals, 127 SCRA 241.) In the

case of Luzon Surety Co., Inc. vs. De Garcia (30 SCRA 112), the Supreme

Court declared:

“no process of interpretation or construction need to be resorted where a provision of law peremptorily calls for application. Where a requirement is made in explicit and unambiguous terms, no discretion is left to the judiciary. In must see to it that its mandate is obeyed.”

“Actual Use”, according to Sec. 199(b) of R.A. 7160, “refers to the

purpose for which the property is principally or predominantly utilized by the

person in possession thereof.” In Velez vs. Locsin, 55 SCRA 152: “The word

‘use’ means to employ for the attainment of some purpose or end.” In the

“Operation of the Power Station” (Clause 8.01 of the BOT Agreement).

“CONTRACTOR shall, at its own cost; be responsible for the management,

operation, maintenance and repair of the Power Station during the Co-operation

period x x x”. Said Co-operation period is fifteen (15) years, after which the

Power Station will be turned over or transferred to NAPOCOR. Does this not

determine when NAPOCOR should take over the actual, direct and exclusive

use of the Power Station? That is fifteen (15) years therefrom?

It has been established that BPPC manufactures or generates the power

which is sold to NAPOCOR and NAPOCOR, distributes said power to the

consumers. In other words the relationship between BPPC and NAPOCOR is

one of manufacturer or seller and exclusive distributor or buyer. The general

perception is that the exclusive distributor or buyer of goods has nothing to do

Reference: Book IX, pp. 13-27

with the manufacturing thereof but as exclusive distributor of the latter has the

right to acquire all the goods to be sold to the exclusion of all others.

In terms of the definitions under Sec. 199(b) and that offered by

Respondents-Appellee supra, the machineries and equipment is principally or

predominantly utilized by BPPC. In terms of the Velez vs. Locsin case supra,

BPPC employs the machineries and equipment to attain its purpose of

generating power to be sold to NAPOCOR and collect payment therefrom to

compensate for its investment. The BOT Agreement is not a contract for

nothing.

The following definitions are given by Black’s Law Dictionary, Third

Edition:

“Actually is opposed to seemingly, pretendedly, or feignedly, as actually engaged in farming means really, truly in fact.”

“Directly. In a direct way without anything intervening; not by secondary, but by direct means.”

Exclusively. Apart from all others; without admission of others to participation; in a manner to exclude.”

Indeed BPPC does not use said machineries and equipment pretendedly

or feignedly but truly and factually hence, “actually”. BPPC uses them without

anything intervening hence, directly. BPPC uses the same machineries and

equipment apart from all others hence, exclusively. This is the fact – against the

fact there is no argument. This same fact will also deny NAPOCOR’s claim to a

ten (10%) percent assessment level provided for under Sec. 218 of R.A. 7160

(supra) as the requirement thereto is simply the same as that in the realty tax

exemption. The BPPC is a private entity, not a Government Owned or

Controlled Corporation (GOCC), hence, not entitled to a 10% assessment level.

Having thus proceeded with the case on the merit, having passed upon

Prescription and the other issues raised in this case and having found that the

actual, direct and exclusive user of subject machineries in Bauang Private

Reference: Book IX, pp. 13-27

Power Corporation, the assessment made by the Provincial Assessor of La

Union and the Municipal Assessor of Bauanb, La Union is hereby upheld.

WHEREFORE, premises considered, the appeal is hereby dismissed for

lack of merit. Accordingly, the Decision of the Local Board of Assessment

Appeals of the Province of La Union becomes final and executory.

SO ORDERED.

Manila, Philippines, January 29, 2004.

(Signed) CESAR S. GUTIERREZ
Chairman

(Signed)

ANGEL P. PALOMARES VACANT Member Member

Reference: Book IX, pp. 13-27