Republic of the Philippines


CBAA CASE NO. M-20 -versus-



x- – – – – – – – – – – – – – – – – – – – – – – – – – – x


This is an appeal from the Order issued by the Appellee Local Board of

Assessment Appeals of Davao City on January 25, 2005, dismissing the

Petitioner-Appellant’s Appeal on Assessment filed on August 2, 2004 with the

Office of the City Treasurer of Davao City, which was received by Petitioner-

Appellant on February 1, 2005. Hence, this appeal to this Board on March 3,


As shown on the records, both Appellee Local Board of Assessment

Appeals of Davao City, and Respondent-Appellee City Assessor of Davao City

received the notice of appeal and the memorandum of appeal, by personal

service, on March 3, 2005. Despite such receipt, they failed to file their answer

or comment within ten (10) days from and after receipt of the appeal per

Section 4, Rule IV of the Rules of Procedure Before the Central Board of

Assessment Appeals. Thus, this appeal is deemed submitted for decision.

Petitioner-Appellant raised the following errors:

1. The Local Board of Assessment Appeals gravely erred in holding

that Petitioner-Appellant’s appeal on assessment was filed out of time.

2. The Local Board of Assessment Appeals gravely erred in holding

that it has no jurisdiction over the issue of tax exemption being purely legal


3. The Local Board of Assessment Appeals gravely erred in not

considering the Petitioner-Appellant’s appeal, position paper, opposition to the

motion to dismiss and manifestation and motion to implead the Republic of the

Philippines as party respondent-appellant and in not finding in favor of


On the first assessment of error, Petitioner-Appellant “admitted to have

received the tax assessment” from the City Assessor of Davao City dated June

15, 2004 on June 17, 2004 (case record “2”), not July 17, 2004, as alleged in

Paragraph 3 of the Statement of Facts of the Memorandum of Appeal.

Petitioner had until August 16, 2004, therefore, to file her ‘petition under oath’

as required in Section 5 of Rule V of the Rules of Procedure Before the Local

Board of Assessment Appeals, and Section 226 of R.A. 7160, to wit:

“Section 226. Local Board of Assessment Appeals. – Any owner or person having legal interest in the property who is not satisfied with the action of the provincial, city or municipal assessor in the assessment of his property may, within sixty (60) days from the date of receipt of the written notice of

assessment, appeal to the Board Appeals of the province or city by

of Assessment filing a petition

under Oath in the form prescribed for the purpose, together with copies of the tax declarations and such affidavits or documents submitted in support of the appeal.”

Petitioner-Appellant filed, through registered mail, her appeal on

assessment of the City Assessor of Davao City on August 2, 2004 with the City

Treasurer of Davao City. The Office of the City Treasurer received the appeal

on assessment on August 11, 2004 as shown in the Postal Corporation

Registry Return Receipt marked as Annex “E” attached to the Memorandum of

Appeal, which then forwarded the ‘appeal on assessment’ instead of ‘petition

under oath’ as required by the Rules, to the Chairman of the Local Board of

Assessment Appeals (LBAA). LBAA received the ‘appeal on assessment’ on

September 6, 2004.

This is a sub-issue of whether the filing of the ‘appeal on assessment’

with the City Treasurer is, or the least it can be deemed compliance to appeal

as required by Section 226 of R.A. 7160, on one hand, and Section 227 or R.A.

7160, on the other hand, the latter enumerates who are the Board of

Assessment Appeals of the province, or city, otherwise known as the LBAA, as

we quote hereunder:

“Section 227. Organization, Powers, Duties and Functions of the Local Board of Assessment Appeals. – (a) The Board of Assessment Appeals of the province or city shall be composed of the Registrar of Deeds, as Chairman, the provincial or city prosecutor and the provincial or city engineer as members, who shall serve as such in an ex-officio capacity without additional compensation. x x x”

The City Treasurer, therefore, is not among the members of the LBAA, or

the City Treasurer, the LBAA. Thus, the appeal on assessment filed with the

City Treasurer is considered not filed. LBAA receipt of the appeal on

assessment on September 6, 2004 was, clearly, filed out of time. For failure to

appeal on time, appellant lost her right to appeal on the principle of ignorantia

legis nonimen excusat (Arellano vs. City Assessor of Quezon City, CBAA Case

No. 2, July 12, 1974).

We agree with Petitioner-Appellant that rules of procedures should be

liberally construed to the end that substantial justice may be serve. In fact,

Section 229 (b) of R.A. 7160 states that the proceedings of the LBAA “shall be

conducted solely for the purpose of ascertaining the facts without necessarily

adhering to technical rules applicable in judicial proceedings.” And in CBAA

Case No. 154, Atlas Consolidated Mining and Development Corporation vs.

Board of Assessment Appeals of Masbate, et al., it was rule that “the

requirement on formalities and procedure should be liberally interpreted to give

substance and meaning to the law and not to frustrate the rights of the

individuals” (Asperac vs. Intchon, 16 SCRA 921 (1966); Manila Railroad vs.

Attorney General, 20 Phil. 523 (1971), and that “failure to file a notice of appeal

under oath is not a ground for dismissal of an appeal”, such deficiency being

curative in nature. Furthermore, “absence of the oath is a formal and not a

jurisdictional defect” (Valino vs. Muñoz, 35 SCRA 700 (1967) and the “oath may

just be ordered to be accomplished” (Oshita vs. Republic, 19 SCRA 700 (1967);

Jesus E. Sanchez vs. Provincial Assessor of Batangas, CBAA Case No. 252,

August 12, 1991).

In contrast, however, this Board had always been consistent in its ruling

that tardiness in filing an appeal is fatal to the appellant’s case (Bataan Pulp &

Paper Mills, Inc. vs. Provincial Assessor of Bataan, CBAA Case No. 20,

December 23, 1974; A.A. Munda Overseas Trading, Inc. vs. City Assessor of

General Santos City, CBAA Case No. 3, September 4, 1975; City Assessor of

Quezon City vs. Rodolfo Lejano, CBAA Case No. 44, June 27, 1975; City

Assessor of Baguio vs. Benguet Consolidated, Inc., CBAA Case No. 45,

October 17, 1975; Consorcia Prisno vs. City Assessor of Tacloban City, CBAA

Case No. V-20, May 25, 2004).

The LBAA of Davao City did not have jurisdiction over the appeal of

Petitioner-Appellant because said appeal was filed beyond the 60-day period

prescribed under Section 226 of R.A. 7160. Settled is the principle that the

requirements regarding the perfection of appeals within the reglementary period

is not only mandatory but jurisdictional (Roman Catholic Bishop vs. Director of

Lands, 34 Phil. 623 (1916); Provincial Assessor of Bulacan vs. Luzon Cement,

et al., CBAA Case No. 16). Failure to perfect an appeal from a judgment or

decision within the period allowed by law bars the appeal and renders the

judgment or decision final and executory (City Assessor of Tagaytay vs. Chua,

CBAA Case No. 54, April 19, 1976; City Assessor of Tagaytay vs. Pedro R.

Rances, CBAA Case No. 57, April 19, 1976).

The rules on perfection of appeals are made to impose order. Without

rules, people would live in a state of chaos: turmoil, upheaval, confusion,

tumult, uproar, bedlam.

On the second and third assignment of errors, this Board, opted to

discuss them simultaneously as they are closely intertwined.

The issue of LBAA jurisdiction is now moot and academic, but we agree

with Petitioner-Appellant to the extent that LBAA has jurisdiction over the issue

of tax exemption being both question of fact and of law. Section 229 of R.A.

7160 empowers and obligates all Local Boards of Assessment Appeals to

decide appeals appropriately brought before said boards. Consequently, in

order to decide every appeal before them, the local boards are also clothed with

the power to interpret any and all laws affecting said appeals (Filipino

Telephone Co., Inc. vs. City Assessor and City Treasurer of General Santos

City and Local Board of Assessment Appeals of General Santos City, CBAA

Case No. M-17, July 29, 2003).

Technically, however, due to Petitioner-Appellant’s failure to file its

appeal with the Local Board on time, there would be no need to discuss the

grounds advanced by Petitioner-Appellant in the instant appeal. Nevertheless,

we believe that it is prudent to discuss the second assignment of error in the

light of the provisions of Section 206 of R.A. 7160 which is quoted as follows:

“Sec. 206. Proof of Exemption of Real Property from Taxation – Every person by or for whom real property is declared who shall claim tax exemption for such property under this Title shall file with the provincial, city or municipal assessor within thirty (30) days from the date of the declaration of real property sufficient documentary evidence in support of such claim including corporate charters, title of ownership, articles of incorporation, by-laws, contracts, affidavits, certifications and mortgage deeds, and similar documents.

“If the required evidence is not submitted within the period herein prescribed, the property shall be listed as taxable in the assessment roll. However, if the property shall be proven to be tax exempt, the same

shall be dropped from the assessment roll.” (underlining ours)

Failure to file its appeal with the Local Board on time notwithstanding,

Petitioner-Appellant may still present evidence of tax exemption with respect to

future taxes.

Petitioner-Appellant has the burden of proving exemption of real property

tax. It is incumbent upon the claimant to prove it is supported by law in

unequivocal terms. The tax exemption must be expressed in the statute in clear

language that leaves no doubt of the intention of the legislature to grant such

exemption. And, even if it is granted, the exemption must be interpreted in

strictissimi juris against the taxpayer and liberally in favor of the taxing authority

(Commissioner of Internal Revenue v. Court of Appeals, 298 SCRA 83 (1988);

Commissioner of Customs v. Philippine Acetylene Company, 39 SCRA 70

(1971); Commissioner of Internal Revenue v. Guerrero, 21 SCRA 180 (1967).

In Asiatic Petroleum Co. vs. Llanes (49 Phil. 466, 474 (1926), cited in

PLDT vs. City of Davao, G.R. No. 143867, the Supreme Court held:

“. . . Exemptions, from taxation are highly disfavored, so much so that they may almost be said to be odious to the law. He who claims an exemption must be able to point to some positive provision of law creating the right. . . As was said by the Supreme Court of Tennessee in Memphis vs. U. & P Bank (91, Tenn., 456, 550), “The right of taxation is inherent in the State. It is a prerogative essential to the perpetuity of the government; and he who claims an exemption from the common burden must justify his claim by the clearer grant of organic or statute of law.” Other utterances equally or more emphatic come readily to hand from the highest authority. In Ohio Life Ins. And Trust Co. vs. Debolt (16 Howard, 416), it was said by Chief Justice Taney, that the right of taxation will not be held to have been surrendered, “unless the intention to surrender it is manifested by words too plain to be mistaken.” In the case of Delaware Railroad Tax (18 Wallace, 206, 226), the Supreme Court of the Unites States said that the surrender, when claimed, must be shown by clear, unambiguous

language which will construction consistent

admit of no reasonable with the reservation of the

power. If a doubt arises as to the intent of the legislature, that doubt must be solved in favor of the State. In Erie Railways Company vs. Commonwealth

of Pennsylvania (21 Wallace, 492, 499), Mr. Justice Hunt, speaking of exemptions, observed that a State cannot strip itself of the most essential power of taxation by doubtful words. “It cannot, by ambiguous language, be deprived of this highest attribute of sovereignty.” In Tennessee vs. Whitworth (117 U.S., 129, 136), it was said: “In all cases of this kind the question is as to the intent of the legislature, the presumption always being against any surrender of the taxing poer.” In Farrington vs. Tennessee and County of Shelby (95 U.S., 679, 686), Mr. Justice Swayne said: “. . . When exemption is claimed, it must be shown indubitably to exist. At the outset, every presumption is against it. A well-founded doubt is fatal to the claim. It is only when the terms of the concession are too explicit to admit fairly of any other construction that the proposition can be supported.”

Petitioner-Appellant argues that it appealed the action of the City

Assessor in its assessment “for being excessive, erroneous and/or unjust for

the following reasons:

“a) PPA is a government-owned and controlled corporation duly organized and existing under and by virtue of Presidential Decree No. 857, as amended, otherwise known as the Revised Charter of the PPA. All properties held under its administration of all ports under its supervision and control is governmental in nature. The assessment should not include the following properties:

b) Ports and lands where the ports are situated are properties of the public dominion.

c) Pier facilities, and the horizontal and vertical structures thereat are necessary components o the ports.

d) Buildings, warehouses, offices and similar structure the beneficial use of which is exclusively enjoyed and/or used by the Government. (underlining ours)

We disagree. Presidential Decree No. 857, promulgated on December

23, 1975, entitled “Providing for the Reorganization of Port Administrative and

Operation Functions in the Philippines, Revising Presidential Decree No. 505

dated July 11, 1974, Creating the Philippine Port Authority, by Substitution, and

for Other Purposes”, otherwise known as the Revised Charter of the Philippine

Ports Authority, Section 30 thereof provides, as we quote:

“Sec. 30. Transfer of Existing and Completed Physical Facilities. – In accordance with the transitory provisions of this Decree, there shall be transferred to the Authority all existing and completed public port facilities, quays, wharves, docks, lands, buildings and other property, movable or immovable, belonging to those ports declared as Port Districts for purposes of this Decree.” (underlining ours)

And, in Section 10 (b) (1) of the same decree, to wit:

b) The initial paid in capital shall consist of:

“1) The value of assets (including port facilities, quays, wharves, and equipment and such other properties, movable and immovable as may be contributed by the Government or transferred by the Government or any of its agencies as valued at the date of such contribution or transfer and after deducting or taking into account the loans and other liabilities of the Authority at the time of takeover of the assets and other properties.” (underlining ours)

In Mactan Cebu International Airport Authority vs. Marcos, 261 SCRA

691, 692 (September 11, 1996), the Supreme Court held that these sections

involve “transfer” of the “lands,” among other things, to the petitioner and not

just the transfer of the beneficial use thereof, with the ownership being retained

by the Republic of the Philippines. “This “transfer” is actually an absolute

conveyance of the ownership thereof because the petitioner’s authorized capital

stock consists of, inter alia, “the value of such real estate owned and/or

administered by the airports.”

Petitioner-Appellant claims for “exemption (of real property tax) on

grounds of ownership of the Republic of the Philippines. The properties being

assessed are government properties, wholly owned by the Republic of the

Philippines and PPA is merely the administrative thereof.” (The basis of such

claim is Section 234 (a) of R.A. 7160, to wit:

“Sec. 234. Exemption 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 had been granted, for consideration or otherwise, to a taxable person;

x x x x x x

The source of this exemption is Section 40 (a) of Presidential Decree No.

464, otherwise known as The Real Property Tax Code, as follows:

“Sec. 40. Exemption from Real Property Tax. – The following shall be as follows:

“(a) Real property owned by the Republic of the Philippines or any of its political subdivisions and any government-owned or controlled corporation so exempt by its charter: Provided, however, That this exemption shall not apply to real property of the above-mentioned entities the beneficial use of which has been granted, for consideration or otherwise, to a taxable person.” (underscoring ours)

In the same case of the Mactan Cebu International Airport vs. Marcos,

261 SCRA 689, 691 (September 11, 1996), the Supreme Court said: “Note that

as reproduced in Section 234 (a), the phrase “and any government-owned or

controlled corporation so exempt by its charter” was excluded. The justification

for this restricted exemption in Section 234 (a) seems obvious: to limit further

tax exemption privileges, especially in light of the general provision on

withdrawal of tax exemption privileges in Section 193 and the special provision

on withdrawal of exemption from payment of real property taxes in the last

paragraph of Section 234. These policy considerations are consistent with the

State policy to ensure autonomy to local governments and the objective of the

Local Government Code that they enjoy genuine and meaningful local

autonomy to enable them to attain their fullest development as self-reliant

communities and make them effective partners in the attainment of national

goals. The power to tax is the most effective instrument to raise needed

revenues to finance and support myriad activities of local government units for

the delivery of basic services essential to the promotion of the general welfare

and the enhancement of peace, progress, and prosperity of the people. It may

also be relevant to recall that the original reasons for the withdrawal of tax

exemption privilege granted to government-owned and controlled corporations

and all other units of government were that such privilege resulted in serious

tax base erosion and distortions in the tax treatment of similarly situated

enterprise, and there was a need for these entities to share in the requirements

of development, fiscal or otherwise, by paying the taxes and other charges due

from them.” (emphasis ours)

Petitioner-Appellant’s statutory basis for exemption of real property tax

should have been Section 25 of Presidential Decree No. 857, namely:

“Sec. 25. Exemption from Realty Taxes. – The authority shall be exempt from the payment of real property taxes imposed by the Republic of the Philippines, its agencies, instrumentalities or political subdivisions; Provided, That no tax exemptions shall be extended to any subsidiaries of the Authority that may be organized; Provided, finally, That investments in fixed assets shall be deductible for income tax purposes.”

Petitioner-Appellant’s enjoyment of real property tax exemption provided

for by Presidential Decree No. 857, however, has been withdrawn by virtue of

Sections 193 and 234, and repealed or modified by Section 534 (f) of the R.A.

#7160, otherwise known as the Local Government Code of 1991, which took

effect on January 1, 1992, which we quoted hereunder these sections, to wit:

“Sec. 193. Withdrawal of Tax Exemption Privilege –

Unless otherwise provided in this exemptions or incentives granted to,

Code, tax or presently

enjoyed by all persons whether natural or juridical, including government-owned or controlled corporations, except local water districts, cooperatives duly registered under R.A. No. 6938, non-stock an non-profit hospitals and educational institutions, are hereby withdrawn upon the effectivity of this Code. (underlining ours)

“Sec. 234. Exemptions from Real Property Taxes – x x x
(a) x x x

x x x

(e) x x x

Except as provided herein, any exemption from payment of real property tax previously granted to, or presently enjoyed by all persons, whether natural or juridical, including government-owned or controlled corporations are hereby withdrawn upon the effectivity of this Code. (underlining ours)

“Sec. 534 (f) – All general and special laws, acts, city charters, decrees, executive orders, proclamations and administrative regulations, or part or parts thereof which are inconsistent with any of the provisions of this Code are hereby repealed or modified accordingly.”

We believe, therefore, and so hold, that the subject real properties of

petitioner-appellant Philippine Ports Authority located in Davao City are liable of

the real property tax.

WHEREFORE, premises considered, the instant appeal is hereby

DENIED for lack of merit.


Manila, Philippines, April 7, 2005.