Republic of the Philippines
CENTRAL BOARD OF ASSESSMENT APPEALS M a n i l a
PHILIPPINE PORTS AUTHORITY, Petitioner-Appellant,
CBAA CASE NO. M-21 -versus-
LOCAL BOARD OF ASSESSMENT APPEALS OF GENERAL SANTOS CITY,
CITY TREASURER and CITY ASSESSOR OF GENERAL SANTOS CITY,
Respondents-Appellees. x- – – – – – – – – – – – – – – – – – – – – – – – – – – – – x
D E C I S I O N
This is an appeal from the Resolution of the Appellee Local Board of
Assessment Appeals (LBAA) of General Santos City dated July 9, 2005. In
LBAA Case No. 02-05 and allegedly received by Petitioner-Appellant on August
10, 2005, denying the Petitioner-Appellant’s appeal. As a consequence,
Petitioner-Appellant filed a Memorandum of Appeal dated August 26, 2005 and
received by this Board on September 19, 2005.
The LBAA Resolution dated July 9, 2005 is hereinbelow reproduced, as
“For Resolution of the Board is the appeal of the Philippine Ports Authority on the Assessment made by the City City Treasurer (sic) of General Santos City against the properties of the Petitioner, PPA, located in Makar Wharf, General Santos City as specified in the Realty Tax Delinquencies dated 14 January 2005 on the ground that said assessment is erroneous, excessive, unjust and the assessor gravely abuse his discretion in making the assessment. Petitioner also raised questions of fact and law that requires answers.
“In the case of Philippine Ports Authority (PPA) Petitioners, versus the City of Iloilo G.R. No. 109791, the questions raised by the petitioner in their appeal had already been decided with finality.
“Furthermore, records show that tax payments were already made by petitioner prior to 1993. It was only in 1994 that these payments were suspended due to the above cited case which
was then pending. With the above-cited decision of the Supreme Court, which has become final and executory, there is no more legal impediment to collect the taxes due from the petitioner.
“Wherefore, finding the petition to be without merit, the same is hereby DENIED.
Petitioner-Appellant seeks to reverse and annul the above quoted
As shown on the records, the Appellee Local Board of Assessment
Appeals of General Santos City, Respondents-Appellees City Assessor and
City Treasurer, and the City Legal Officer of General Santos City received the
memorandum of appeal and the notice of appeal with the annexes thereto, by
personal service, on September 9, 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. Copies of the memorandum of appeal were sent
to the Office of the Solicitor General and the Legal Services Department,
Philippine Ports Authority (PPA), by registered mail, per Postal Service Registry
Receipt Number 240 and 241, respectively. This appeal there is deemed
submitted for decision.
Petitioner-Appellant is assailing the questioned Resolutions of the LBAA
of General Santos City on the following grounds, to wit:
1. The Local Board of Assessment Appeals gravely erred in holding that the question raised by the petitioner in its appeal has already been decided with finality citing the case of PPA vs. City of Iloilo, G.R. No. 109791.
2. The Local Board of Assessment Appeals gravely erred in not holding that the Republic of the Philippines is an indispensable party and should be joined as party-appellant.
3. The Local Board of Assessment Appeals gravely erred in not holding that the ports being properties of public domain are exempted from payment of real property tax except properties leased to taxable person. It erred in holding that just because PPA erroneously paid real property tax in 1993, it is already conclusive that all of the real properties administered by PPA are taxable.
On the first assignment of error, Petitioner-Appellant is of the position that
the case of PPA vs. City of Iloilo, G.R. No. 109791 cannot be made basis of the
LBAA in denying the petition of herein Petitioner-Appellant. A cursory reading of
the said decision shows that the issue in the said case only pertains to a
warehouse of the PPA in Iloilo City.
To give clearer analysis of the cited jurisprudence, we quote the core of
the decision as follows:
“xxx xxx xxx
“In any case, granting that petitioner’s present theory is allowed at this stage, we nevertheless find it untenable. Concededly, “ports constructed by the State” are properties of the public dominion, as Article 420 of the Civil Code enumerates these as properties “intended for public use.” It must be stressed however that what is being taxed in the present case is petitioner’s warehouse, which, although located within the port, is distinct from the port itself. In Light Rail Transit Authority v. Central Board of Assessment Appeals et al. (342 SCRA 692), petitioner therein similarly sought an exemption from real estate taxation on its passenger terminals, arguing that said properties are considered as part of the “public roads,” which are classified as property of public dominion in the Civil Code. We ruled therein that:
“The properties of petitioner are not exclusively considered as public roads being improvement placed upon the public road, and this (separable) nature of the structure in itself physically distinguishes it from a public road. Considering further that carriageways or passenger terminals are elevated structures which are not freely accessible to the public, vis-à-vis roads which are public improvements openly utilized by the public, the former are entirely different from the latter.”
Using the same reasoning, the warehouse in the case at bar may not be held as part of the port, considering its separable nature as an improvement upon the port, and the fact that it is not open for public use by everyone and freely accessible to the public. In the same way that we ruled in one case that the exemption of public property from taxation does not extend to improvements made thereon by homesteaders or occupants at their own expense, (National Development Co. v. Cebu City, 215 SCRA 382) we likewise uphold the taxability of the warehouse in the instant case, it being a mere improvement built on an alleged property of public dominion, assuming petitioner’s port to be so. Moreover, petitioner may not invoke the definition of “port” in its charter to expand the meaning of “ports constructed by the State” in the Civil code to include improvements built thereon. It must be noted that the charter itself limited the use of said definition only for interpretation of Presidential Decree (P.D.) No. 857, and not of other statutes such as the Civil Code. Given these parameters, therefore, petitioner’s move to present its new theory, even if allowed, would nonetheless prove to be futile.” (emphasis ours)
The Supreme Court decision speaks for itself. Following the principle of
stare decisis, the doctrine that, when the court has once laid down a principle of
law as applicable to a certain state of facts, it will adhere to that principle and
apply it to all future cases where the facts are substantially the same
(Government v. Jalandoni, 44 OG 1840, cited in the Philippine Law Dictionary,
Federico B. Moreno, 1988, p. 902).
On the second assignment of error, this Board is of the opinion that the
Republic of the Philippines is not an indispensable party to the suit because her
“interest in the controversy or subject matter is separable from the interest of
the other parties, so that it will not necessarily be directly or injuriously affected
by a decree which does complete justice between them.” (Arcelona v. Court of
Appeals, G.R. No. 102900, Oct. 2, 1997, 280 SCRA 40) “The responsibility of
impleading all the indispensable parties rests on the plaintiff.” (Ibid, p. 42, also
cited by Oscar M. Herrera, Remedial Law, Vol. I, 2000, p. 377)
Petitioner-Appellant maintains that the Republic of the Philippines, being
the owner or principal, is therefore an indispensable party in interest. It is the
Republic of the Philippines which will stand to loss its property in case the same
will be auctioned to pay the real property tax. We disagree. Presidential Decree
No. 857, promulgated on December 23, 1975, entitled “Providing for the
Reorganization of Port Administration 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, and we quote:
“Sec. 30. Transfer or 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 or 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)
On the other hand, Petitioner-Appellant posits that the Philippine Ports
Authority is only ad administrator of the said properties, quoting below:
“Article IV. Section 6, Corporate Powers and Duties:
x x x x x x x x x
“a. (vi) To exercise control of or administer any foreshore rights or leases which may be vested in the Authority from time to time.”
In the subsequent paragraphs, however, of the same Presidential Decree
No. 857, and contrary to Paragraph 2 of the statement of facts of the Petitioner-
Appellant’s memorandum of appeal that under Section 6 (b) vii of its charter,
Petitioner-Appellant is empowered to administer properties of any kind under its
jurisdiction as we quote, to wit:
“(b) The corporate powers of the Authority shall be as follows:
x x x x x x x x x
(vii) To acquire, purchase, own, lease, mortgage, sell or otherwise dispose of any land, port facility, wharf, quay, or property of any kind, whether movable or immovable.”
A statute must be construed as a whole. It should be read in its entirety.
All parts, provisions or sections of a statute or section, must be read,
considered or construed together, and each must be considered in the light of
all the others. (Elizabeth Arden Sales Corp. vs. Gees Blass Co., C.C.A. 161
A.L.R., 370; Abbs vs. Rodmond, 64, Idaho, 369) The reason for the rule is that
a statute is enacted as a whole and not in parts or sections. (People ex rel.
Abbe vs. Mash. 364 III. 224, cited in Statutory Construction by Ruperto G.
Martin, 6th edition, 1979, p. 102).
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.” (underlining ours)
Clearly, the above quoted Section 6 (b) vii, Section 10 (b)(1), and Section
30 of the charter (P.D. No. 857) of Petitioner-Appellant, give them the power to
exercise the rights of ownership over the properties in question. It also negates
the claims of Petitioner-Appellant that they are only the administrator of all
government ports and not the owner thereof.
On the third assignment of error, it is the considered opinion of this Board
that Petitioner-Appellant is the actual user of the land where the ports are
situated: ‘ports’, ‘piers facilities’, buildings, warehouses, offices and similar
structures at Makar Wharf, General Santos City, the subject matter of this
Even assuming that Petitioner-Appellant is only the administrator of the
properties of the State, Section 202 of R.A. 7160 requires the administrator,
either natural or juridical, of real property, including the improvements therein,
to file with the provincial, city or municipal assessor a sworn statement
declaring the true value of their property. Section 217 of R.A. 7160, reads:
“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. (underlining ours)
Presidential Decree No. 464 (1974) though, changed the basis of real
property taxation. “It adopted the policy of taxing real property on the basis of
“actual use”, even if the user is not the owner. The Supreme Court in the Case
of Nueva Ecija vs. Imperial Mining Co., Inc., L-59463, Nov. 19, 1982, ruled that
P.D. 464, “x x x, changed the basis of real property taxation. It adopted the
policy of taxing real property on the basis of actual use even if the user is not
the owner.” (underlining ours) (LRTA v. Board of Assessment Appeals of Manila
and City Assessor of Manila, CBAA Case No. L-06, July 6, 1995).
Section 199 (b) of R.A. 7160 defines ‘actual use’ as that referring “to the
purpose for which the property is principally or predominantly utilized by the
person in possession thereof.” The term “use” as defined in Corpus Juris
Secundum, Vol. 91, p. 511, 516, Americal 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” (CBAA Case No. L-32, January 29, 2004, National
Power Corporation vs. LBAA of La Union and Municipal Assessor of Bauang,
The Provincial Assessor of La Union). Did not petitioner-appellant profit from
their administration of the land where the ports are situated: ‘ports’, ‘pier
facilities’, buildings, warehouses, offices and similar structures at Makar Wharf,
General Santos City? Did not petitioner-appellant admit declaring and remitting
dividends to the National Government (Annexes “A”, “B” and “C” of the
memorandum of appeal)?
In CBAA Case No. L-06, July 6, 1995, Light Rail Transit Authority vs.
Board of Assessment Appeals of Manila and City Assessor of Manila, the term
‘public works for public service or use’ was succinctly defined:
“x x x x x x x x x
“The term public works for public service or use, must be viewed in the light of the ruling of the Supreme Court in the case of the City of Cebu vs. NAWASA, L-12892 April 30, 1960, as follows:
“The term “public works for public service” must be interpreted, following the principle of ejusdem generis, in the concept of the preceding words “provincial roads, city streets, municipal streets, the squares, fountains, public waters and promenades” – under Article 424 of the New Civil Code – which are used freely by all, without distinction. Hence, if the public work is not free public service. It is not within the purview of the first paragraph, but of the second paragraph of Article 424, and consequently, patrimonial in character. A municipal water system designed to supply water to the inhabitants for profit is a corporate function of the municipality.” (Mendoza vs. De Leon, 33 Phil. 508, citing Omaha Water Co., Fed. 1; Jodson vs. Borough of Winsted, 80 Conn. 834; 15 L.R.A. (N.S.), 91).
“x x x. The flaw in appellant’s contention that the system is a public works for public service is due to an apparent misapprehension that because the system serves the public is not necessarily for public service. The contention overlooks the fact that only those of the general public, who pay the required
rental or charge authorized and collected by the System, do make use of the water. In other words, the System serves all who pay the charges. It is open to the public (in this sense, it is public service), but upon the payment only of a certain rental x x x.” (underlining supplied)
Accordingly, Petitioner-Appellant was created to serve the needs of the
public, who pays the required fees, charges, and dues for the use of the port,
berth, and port facilities from which the Authority derives material gains. And,
considering the ‘separable’ nature of ‘ports’, ‘pier facilities’, buildings,
warehouses, offices and similar structures as an improvement or built upon the
property of public dominion, assuming they were to be so, and the fact that it is
not open for use by everyone and freely accessible to the public (Philippine
Ports Authority vs. City of Iloilo (First Division), G.R. No. 109791, July 14,
2003), it is in this concept that the Petitioner may not be considered to be
engaged in purely governmental or public service which does not qualify the
Petitioner-Appellant for tax exemptions.
Petitioner-Appellant claims exemption from the real property tax on the
ground of ownership by 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 administrator 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
In the same case of the Mactan Cebu International Airport Authority 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 exempted 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 the 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, as repealed or modified by Section 534 (f) of the R.A.
No. 7160, otherwise known as the Local Government Code of 1991, which took
effect on January 1, 1992, which we quote hereunder these sections, to wit:
“Sec. 193. Withdrawal of Tax Exemption Privilege – Unless otherwise provided in this Code, tax exemptions or incentives granted to, 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 and non-profit hospitals and educational institutions, are hereby withdrawn upon the effectivity of this Code.” (underlining ours)
x x x
“Sec. 234. Exemptions from Real Property Taxes –
x x x x x x x x x “(a) x x x x x x x x x
x x x x x x x x x “(e) x x x x x x 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.”
Moreover, the arguments are so explicit in Philippine Ports Authority vs.
City of Iloilo (First Division), G.R. No. 109791, July 14, 2003, where the
Supreme Court “reiterate that in taxing government-owned or controlled
corporations, the State ultimately suffers no loss. In National Power Corporation
v. Presiding Judge, RTC Br. XXV (190 SCRA 477), they elucidated:
“Actually, the State has no reason to decry the taxation of NAPOCOR’s properties, as and by way of real property taxes. Real property taxes, after all, form part and parcel of the financing apparatus of the Government in development and nation-building, particularly in the local government level.
x x x x x x x x x
“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.”
In the Iloilo case, the Supreme Court further said in this wise: “Nothing
can prevent Congress from decreeing that even instrumentalities or agencies of
the Government performing governmental functions maybe subject to tax.
Where it is done precisely to fulfill a constitutional mandate and national policy,
no one can doubt its wisdom,” citing the case of MCIAA v. Marcos, 261 SCRA
In CBAA Case No. M-15, “Petitioner-Appellant insists that the entire port
complex is a property of public domain in accordance with Article 420 of the
New Civil Code, which provides that those intended for public use, such as
roads, canals, rivers, torrents, ports and bridges constructed by the State,
banks shores, roadsteds, and others of similar character, are property of public
dominion. Even those properties of the State which are not for public use but
are intended for some public service or for the development of the national
wealth are also property of public dominion.”
The last paragraph of Section 234, R.A. 7160, does not, however,
distinguish real property in the hands of government-owned and controlled
corporation as to whether or not they are of public dominion or patrimonial in
nature. Public dominion or patrimonial in nature, all real property in the hands of
said government-owned and controlled corporations are subject to the payment
of real property tax upon the effectivity of R.A. 7160. Since the provisions of
Section 234 of R.A. 7160 are sufficiently clear, we find no justification to resort
to the Civil Code.
We believe, therefore, and so hold, that the subject real properties of
petitioner-appellant Philippine Ports Authority located at Makar Wharf, General
Santos City are liable for the payment of the real property tax subject however
to the limitations enunciated in Section 270 of R.A. No. 7160.
WHEREFORE, premises considered, the instant appeal is hereby
DISMISSED for lack of merit. Accordingly, the Resolution of the Local Board of
Assessment Appeals of General Santos City becomes final and executory.
Manila, Philippines, July 16, 2007.
(Signed) CESAR S. GUTIERREZ
ANGEL P. PALOMARES Member
(Signed) RAFAEL O. CORTES