Republic of the Philippines


CBAA CASE NO. M-21 -versus-



Respondents-Appellees. x- – – – – – – – – – – – – – – – – – – – – – – – – – – – – x


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.