Republic of the Philippines

CENTRAL BOARD OF ASSESSMENT APPEALS M a n i l a

NATIONAL POWER CORPORATION, Petitioner-Appellant,
CBAA CASE NO. M-23 -versus-

LOCAL BOARD OF ASSESSMENT APPEALS OF ILIGAN CITY,
Appellee,

-and-

CITY TREASURER OF ILIGAN, Respondent-Appellee.
x- – – – – – – – – – – – – – – – – – – – – – – – – – – x

D E C I S I O N

Before this Board is an appeal filed on July 9, 2004 by Petitioner-

Appellant, National Power Corporation (NPC for brevity) from the Iligan City

Local Board of Assessment Appeal’s (LBAA) Decision dated June 2, 2004. The

dispositive portion of the LBAA decision states:

“WHEREFORE, for lack of merit, the instant appeal is DENIED. The December 9, 2003 Decision of the City Treasurer of Iligan denying Appellant’s request for Tax Credit and modification of the Tax Assessment involving the real properties within the NMPC Power Plants 1 and 2, is hereby affirmed.”

ANTECEDENTS

The records of this case show that Petitioner-Appellant received the

LBAA Decision on June 9, 2004 denying the request for tax credit and

modification of the tax assessment. The LBAA records, however, were only

transmitted to this Board on February 7, 2006 through the Mindanao Field

Office.

Undaunted, Petitioner-Appellant elevated their case before this Board.

The Hearing Officer for Mindanao required the parties to submit, within

twenty (20) days from receipt of an Order dated March 31, 2006, their

respective memoranda together with documents and evidence to support their

positions. All the parties received a copy of the said order on April 6, 2006 as

shown at the dorsal portion of the Philippine Postal Corporation Registry Return

Cards. This Board received the memorandum of Petitioner-Appellant on May

15, 2006 after a motion for extension to file it on April 25, 2006.

In the appeal, Petitioner-Appellant admits NPC and Northern Mindanao

Power Corporation (NMPC) entered into a Build Operate and Transfer

Agreement (BOT) on June 29, 1992 for the construction of the 58 MW Bunker-

Fired Diesel Power Station (NMPC-1). Subsequently, NPC and NMPC entered

into another BOT agreement on November 19, 1992 for the construction of the

40 MW Bunker Fired Diesel Power Station (NMPC-2). The contracts stipulated

who would pay for realty taxes.

In fact, Petitioner-Appellant quoted Clause 2.03 common to both

contracts, which said:

“x x x NAPOCOR shall be responsible for the payment of all real estate taxes and assessments, rates and other charge in respect of the Site and the buildings and improvements thereon.”

According to Petitioner-Appellant, the City of Iligan sent all Notices of

Assessment of Real Property Tax for NMPC-1 and NMPC-2 power plants to

Northern Mindanao Power Corporation, who then forwarded such notices to

NPC for payment pursuant to the above stated Clause 2.03 of BOT contracts.

These contracts expired on August 1, 2003 and February 28, 2006

(Memorandum of Petitioner-Appellant, pp. 12, 13). As a result, the power plants

NMPC-1 and NMPC-2 were turned over to NPC, without payment of any

compensation, including all its rights, title and interest in and to the fixtures,

fittings, plant and equipment (including test equipment and special tools) and all

improvements comprising the power plants pursuant to Clause 14.01 thereof.

Both BOT contracts were entered under BOT Law (R.A. 6957), as

amended (pp. 3-6, Records). Section 2 (b) of R.A. 6957, as amended, is hereto

quoted for ready reference, to wit:

“(b) Build-Operate-Transfer – A contractual arrangement whereby the project proponent undertakes the construction, including financing of a given infrastructure facility, and the operation and maintenance thereof. The project proponent operates the facility over a fixed term during which it is allowed to charge facility users appropriate tolls, fees, rentals, and charges not exceeding those proposed in its bid or as negotiated and incorporated in the contract to enable the project proponent to recover its investments, and operating and maintenance expenses in the project.”

On November 10, 2003, NPC paid under protest the sum of FOURTEEN

MILLION ONE HUNDRED TWENTY FIVE THOUSAND THREE HUNDRED

SEVENTY FOUR PESOS AND 63/100 (P14,125,374.63) of real property taxes

of NMPC-1 and NMPC-2 for the second quarter of 2003 under Tax Declarations

02-009-00065 (office building), 02-009-00071 (Open Shed), and 02-009-00072

(Improvement); Tax Declarations 02-009-00067, 002-009-03531, 02-009-

00066, 02-009-00070, 02-009-00073, 02-033-00297, 02-009-03702

(machineries); and Tax Declarations 02-030-00385, 02-003-00923, 02-017-

01716 (equipment).

On November 11, 2003, NPC filed a letter of protest with the Iligan City

Treasurer contesting the assessment of NMPC-1 and NMPC-2 power plants.

Petitioner-Appellant argues the machineries and equipment are actually,

directly, and exclusively used by NPC for power generation and these should

have been exempted from real property taxes pursuant to Section 234 (c) of

R.A. 7160. They further sought re-assessments of the buildings and other

improvements of NMPC-1 and NMPC-2 arguing these were erroneously valued

at thirty-five (35%) and sixty (60%) percent level instead of only (10%) percent

as these are properties owned and used by a government-owned and

controlled corporation rendering essential public services in the generation and

transmission of electric power pursuant to Sections 216 and 218 of R.A. 7160.

On January 8, 2004, NPC received a letter from Iligan City Treasurer

dated December 9, 2003 denying the former’s protest on the ground that

NMPC-1 and NMPC-2 are not owned by NPC, they are owned by a private

entity, NMPC, so they are not exempted from real property tax under Section

234 (c) of R.A. 7160. The dispositive portion of which reads as follows:

“In view of the foregoing, the position that the assessment of ten (10%) of the market value of the properties in question and the claim of its exemption cannot be granted. Instead, the assessment of the properties sixty percent (60%) and thirty five (35%), respectively, as appeared in the Tax Declarations is retained. The machineries in question remain subject to real property taxes. Consequently, it is the resolution of our office, that your prayer requesting the application of the correct tax assessment and correct
tax rates, as well as the request that the excess payment of NPC in the real property tax for the 2nd

quarter of 2003 be applied as tax credits for NPC cannot be granted.”

Following denial of Petitioner-Appellant’s protest, the City Treasurer

forthwith sent a Statement of Account to NPC dated February 6, 2004 for real

property tax due on the machineries, buildings and improvements of NMPC

power plants for the 2nd, 3rd, and 4th quarters of 2003 and 1st quarter of 2004

amounting to P53,545,439.70, and Statement of Accounts dated February 10,

2004 for real property tax due on the lands of NMPC-1 and NMPC-2 for the 2nd,

3rd, and 4th quarters of 2003, and 1st quarter of 2004 in the amount of

P740,273.04 (pp. 28, 29 Records). Not satisfied, NPC filed an appeal to the

LBAA on March 1, 2004.

ASSIGNMENT OF ERRORS

Petitioner-Appellant assigned the following reversible errors of the Board

below:

1. The LBAA of Iligan City erred in ruling that the subject lands,

buildings and other improvements subject of the tax assessment are NOT

owned by NPC and thus do not fall under Section 216 and 218 (d) of the Local

Government Code.

2. The LBAA of Iligan City erred in ruling that the machineries and

equipment subject of the tax assessment are NOT actually, directly, and

exclusively used by NPC for generation and transmission of power.

On the merits, this Board resolve to discuss the two assignment of errors

simultaneously for both are closely inter-related and intertwined with each

other.

As can be gleaned from Section 216 of the Local Government Code, the

law requires two (2) conditions to be present before the 10% assessment level

for a special class of property can be applied. Only lands, buildings and other

improvements x x x owned and used x x x government-owned and controlled

corporations rendering essential public services in the x x x generation and

transmission of electric power are entitled to a lower assessment level.

Section 216 of R.A. 7160 which reads:

“Section 216. Special Classes of Real Property. All lands, buildings, and other improvements thereon actually, directly, and exclusively used for hospitals, cultural, or scientific purposes and those owned and used by local water districts, and government-owned and controlled corporations rendering essential public services in the supply and distribution of water and/or generation and transmission of electric power shall be classified as special.”

From the records, it is not difficult to establish the owner and the user of

the power plants. We have only to examine Clause 2.08 of the Build-Operate

and Transfer Agreement which states:

“From the date hereof until the Transfer Date, CONTRACTOR shall, directly or indirectly, own the Power Station and all the fixtures, fittings, machinery and equipment on the Site or used in connection with the Power Station which have been supplied by it or at its cost and it shall operate and manage the Power Station for the purpose of converting fuel of NAPOCOR into electricity.” (underscoring ours)

Upon the other hand, Clause 14 – Transfer of Ownership and Clause

14.01 said:

“On the Transfer Date, CONTRACTOR shall transfer to NAPOCOR, free from any lien or encumbrance created by CONTRACTOR and without the payment of any compensation, all its right, title and interest in and to the fixtures, fittings, plant and equipment (including test equipment and special tools) and all improvements comprising the Power Station.”

In addition to the above stated provisions, Clause 8 – Operation of the

Power Station and Clause 8.1 of the BOT agreement bolstered the fact that

NMPC uses both power plants which reads:

“CONTRACTOR shall, at its own cost, be responsible for the management, operation, maintenance and repair of the Power Station during the Co-operation Period and shall use its best endeavours to ensure that the Power Station is in good operating condition and capable of converting Fuel supplied by NAPOCOR into electricity in a safe and stable manner with the Operating Parameters.” (underscoring ours)

It is crystal clear that until there is actual transfer of ownership, and use,

NPC has no right, title and interest in the subject properties and equipment.

Hence, until and unless the ownership and use of the same is first transferred

and conveyed as mandated in Clause 14 and 14.01 of the BOT contracts,

under certain conditions, NPC cannot claim ownership and use of the subject

properties.

In similar cases of National Power Corporation vs. the Local Board of

Assessment Appeals (LBAA) of La Union, et. al., CBAA Case No. L-32,

January 29, 2004; Philippine Ports Authority vs. Local Board of Assessment

Appeals (LBAA) of General Santos City, et. al. October 27, 2005, this Board

defines the word “actual use” in reiterating Section 199 (b) of R.A. 7160 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 define in

Corpus Juris Secundum, Vol. 91, p. 511, 516, 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”. Thus, at

certain terms, who is in possession and who is, actually, using NMPC-1 and

NMPC-2, buildings, and the lands where the power plants, buildings and

improvements stand should be held liable for the payment of real property

taxes. (underscoring ours)

Further, borrowing by analogy the ruling of the Supreme Court in

Philippine Lung Center vs. Local Board of Assessment Appeals of Quezon City,

et. al. G.R. No. 144104, dated June 29, 2004, En Banc where the highest court

held that “under the 1973 and 1987 Constitutions and Rep. Act No. 7160 in

order to be entitled to the exemption, the petitioner is burdened to prove, by

clear and unequivocal proof, its real properties are ACTUALLY, DIRECTLY

and EXCLUSIVELY used for charitable purposes. “Exclusive” is defined as

possessed and enjoyed to the exclusion of others; debarred from participation

or enjoyment; and “exclusively” is defined, “in a manner to exclude; as enjoying

a privilege exclusively.” If real property is used for one or more commercial

purposes, it is not exclusively used for the exempted purposes but is subject to

taxation. The words “dominant use” or “principal use” cannot be substituted for

the words “used exclusively” without doing violence to the Constitutions and the

law. Solely is synonymous with exclusively.”

We further ruled in CBAA Case No. L-32 that “Bauang Private Power

Corporation (BPPC) which owns these machineries and such non-government-

owned or controlled entity which is actually, directly and exclusively using these

machineries should shoulder the burden of paying these taxes. It leaves no

doubt to anybody that BPPC is the owner and as such it uses these

machineries in the generation of electric power which sells to petitioner.”

In the case before us, prior to actual transfer of operation and ownership

to Petitioner-Appellant, NMPC owns, maintains, and operates subject

machineries that are subject to real estate taxation. It is inconsequential if the

electricity generated by said machineries is ‘exclusively’ sold to Petitioner-

Appellant. The latter pays the former Capacity and Energy Fees (Clause 11 of

the BOT Contract) as wholesaler of electricity, which are, in turn, sold to

‘distributors’. The income derived from the production of electricity accrues

directly in favor of NMPC, a private enterprise, as a result of the sale of

electricity to NPC. What determines the person 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 NMPC. When there is doubt, however, as to who

are the owner and the user of a real property that will be subject to realty

taxation, Section 217 of R.A. 7160 is quite clear which leaves no room for

construction:

“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)

Although NMPC is engaged in the generation of electric power within the

period of the BOT contracts, they can not enjoy exemption granted by law for its

machineries, buildings, and improvements including the lands where these

machineries and improvements are built. NMPC is not a government owned

and controlled corporation contemplated in Subparagraph c of Section 234 of

R.A. 7160 that will entitle them exemption from the payment of the real property

tax and assessment level of ten (10%).

In fact, NMPC has been established to be the ‘beneficial user’ of the

lands where the machineries, buildings, and improvements are erected even if

the ownership thereof pertains that of Petitioner-Appellant. “Even if we

assumed the position of Petitioner that the subject buildings were owned by the

Philippine Army even before the expiration of the lease contract over the lot, to

which position we certainly do not subscribe, Petitioner would still be subject to

the real property tax for being the ‘beneficial user’ of said building. In fact, we

stated that Petitioner was the beneficial user of the lot on which the subject

building is built x x x “. (Armed Forces and Police Savings and Loans

Associations, Inc. vs. Local Board of Assessment Appeals of the City of Butuan

and the City Assessor of Butuan, CBAA Case No. M-19, July 1, 2004)

In this case, it is explicit of BOT contracts as to who is going to be liable

for the payment of realty taxes such that Clause 2.03 thereof sad: “x x x

NAPOCOR shall be responsible for the payment of all real estate taxes and

assessments, rates and other charge in respect of the Site and the buildings

and improvements thereon”. But this stipulation 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 it. As to who is liable to pay the real

estate taxes is determined by law and not by agreement of the parties.

This despite Petitioner-Appellant’s BOT contracts with NMPC considering

that the Respondent-Appellee is neither privy nor a party thereof. Since the

BOT contracts are only between the NPC and NMPC, the same is only binding

between them. (Art. 1308, New Civil Code). They do not bind the local

government or Respondent-Appellee. Hence, NMPC, as the declared owner,

administrator, and possessor of the subject properties and equipment, NMPC is

liable to real property tax. They may thereafter collect from NPC based on

contracts. If and when NPC, for unknown reasons, fails to pay NMPC, the latter

may opt not to turn-over the ownership and possession of subject properties

and equipment.

Moreover, either transfer of “ownership” or “use” is clearly an evidentiary

matter. In quasi-judicial proceedings like those held in this Board, due process

requires that evidence must be substantial. Section 5 of Rule 133 of the

Revised Rules of Evidence and we quote:

“Section 5 Substantial Evidence. – In cases filed before administrative or quasi-judicial bodies, a fact may be deemed established if it is supported by substantial evidence, or that amount or relevant

evidence which a reasonable mind might accept as adequate to justify a conclusion.”

Petitioner-Appellant argues they already owned and used NMPC-1 and

NMPC-2 from August 1, 2003 and February 28, 2006. This is not only

evidentiary matter but also in the character of affirmative defense. Section 5 (b)

of Rule 6 of the 1997 Rules on Civil Procedure provides:

“An affirmative defense is an allegation of a new matter which, while hypothetically admitting the material allegations in the pleading of the claimnant, would nevertheless prevent or bar recovery by him.

The affirmative defences include fraud, limitations, release, payment, illegality,

statute of statute of

frauds, estoppel, bankruptcy, and

former recovery, any other matter

discharge in by way of

confession and avoidance.”

Conversely, the burden of persuasion rests upon the party who, as

determined by the pleadings or the nature of the case, asserts the affirmative of

an issue (CBAA Case No. L-16-95, Camarines Minerals, Inc. v. The Provincial

Board of Assessment Appeals of Camarines Norte and the Municipal Assessor

of Jose Panganiban, Camarines Norte). In the instant appeal, it is Petitioner-

Appellant who asserts the affirmative of an issue. It is Petitioner-Appellant,

therefore, who should have adduced evidence, valid and necessary to prove

they now owned and used NMPC-1 and NMPC-2 effective August 1, 2003 and

February 28, 2006 at the Board below.

“He who alleged a fact has the burden of proving it and a mere allegation

is not evidence.” (Rodriquez vs. Valencia, 81 Phil. 787 (1948); Legasca vs. de

Vera, 79 Phil. 376 (1947); Industrial Textile Manufacturing Co. of the Phils. Inc.

vs. LPJ Ent. Inc., Jan. 21, 1993, 217 SCRA 32). “Suffice it to say that an issue

which was neither alleged in the pleadings nor raised during the proceedings

below cannot be ventilated for the first time before this Court. It would be

offensive to the basic rule of fair play, justice and due process. Petitioner could

have very well apprised public respondent of the incident during the

proceedings before it. But, it failed to do so.” (C. Alcantara & Sons, Inc. vs.

NLRC, et. al., G.R. No. 73521, January 5, 1994, First Division)

Petitioner-Appellant has an obligation to establish disputed facts, the

burden of proof, by substantial evidence or other quality of proof, except as it

may be affected by presumptions in some jurisdictions. “The burden of proof

does not shift from one party to the other during the course of a trial; it remains

throughout upon the one who at the outset has asserted the affirmative of the

issue.” (Commercial Molasses Corp. vs. New York Tak Barge Corp., 314 US

104, 86 L Ed 89m 62 S Ct. 156, as quoted by Oscar M. Herrera, Remedial Law,

Volume VI, 1999, p. 4) (underscoring supplied)

Assuming, however, NMPC-1 and NMPC-2 became machineries and

equipment that are actually, directly and exclusively used by Petitioner-

Appellant NPC, a government-owned and controlled corporation engaged in

generation and/or transmission of electric power effective on certain dates, will

they qualify as exempt from payment of real property tax under Subparagraph

(c) of Section 234 of R.A. 7160 that reads:

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

“x x x 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.”

While Petitioner-Appellant may be exempt from real estate taxation under

Subparagraph (c) of Section 234 of R.A. 7160, such exemption is a personal

privilege (Manila Gas Corp. v. Collector, 71 Phil. 13). They, unfortunately, can

not assign or transfer its exemption privilege to NMPC without the consent of

the legislature. Clearly, tax exemption may pertain only to the properties of

Petitioner-Appellant subject to certain conditions.

Even if Petitioner-Appellant is exempt there is still necessity to comply

the provision of Section 206 of the same R.A. 7160 which reads:

“Sec. 206. Proof of Exemption of Real Property from Taxation. – Every person by or for whom real proprety 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 claims including corporate charters, title of ownership, articles

of incorporation, certifications and documents.

by-laws, mortgage

contracts, affidavits, deeds, and similar

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. (underscoring supplied)

The word “shall” means it is mandatory in character requiring every

person by whom or for whom real property is declared, but claims exemption

thereto should file with the provincial, city or municipal assessor sufficient

documentary evidence in support of such claims.

In our jurisdiction exemptions are never presumed, and the burden is on

the claimant to establish clearly his right to exemptions. 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 Company, 39 SCRA 70 (1971);

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

This Board in Philippine Ports Authority vs. Local Board of Assessment

Appeals (LBAA) of Davao City and the City Assessor of Davao City, CBAA

Case No. M-20, April 7, 2005 quoting Asiatic Petroleum Co. vs. Llanes (49 Phil

466, 474 (1926), cited in PLDT vs. City of Davao, G.R. No. 143867, we said:

“. . . Exemptions from taxation are highly disfavoured, 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 clearest grant of organic or statute 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 whether

the United States said that the surrender, claimed, must be shown by clear,

unambiguous language, which will admit of no reasonable construction consistent 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 Railway Company vs. Commonwealth of the 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 power.” In Farrington vs. Tennessee and Country 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.”

It is thus so apparent Petitioner-Appellant can not ipso facto enjoy exemption

from the payment of real property tax.

Petitioner-Appellant clearly does not own nor use the buildings and other

improvement from June 29, 1992 for the 58 MW Bunker-Fired Diesel Power

Station (NMPC-1) and from November 19, 1992 for the 40 MW Bunker-Fired

Diesel Power Station (NMPC-2) until such future dates conveyances thereof

could be proved to have taken place. But Petitioner-Appellant insists they now

owned NMPC-1 and NMPC-2 since August 1, 2003 and February 28, 2006

(Memorandum of Petitioner, pp. 12, 13), respectively, when allegedly the Build-

Operate and Transfer Agreements (BOT) expire. Regretfully, however,

Petitioner-Appellant failed to neither adduce nor offer substantial and

convincing evidence proving the fact of transfer of ownership and use thereof

after August 1, 2003 and February 28, 2006 from the CONTRACTOR, a private

enterprise.

Furthermore, “considering that the issues are factual in character, the

Central Board has to respect the findings of the Local Board inasmuch as it is in

a much better position to appreciate and evaluate the facts by reason of its

proximity to the properties involved and the facility with which it can conduct

ocular inspections, provided that the Local Board had not abused its discretion

by a disregard of some fact or circumstances which would support a finding to

the contrary.” (De la Cruz v. BAA & City Assessor of Manila, CBAA Case No.

17, June 6, 1975)

“Findings of fact of inferior tribunals are given great weight as long as

they are supported by substantial evidence on record, inasmuch as the Local

Board is better situated than the Central Board to appreciate and evaluate the

facts considering the former’s proximity to subject property and the facility with

which it can conduct ocular inspection.” (Nangit v. BAA & City Assessor of

Manila, CBAA Case No. 17-A, May 30, 1975)

Finally, this Board believes and so holds the real properties in question

inclusive of the lands where the buildings and machineries stand may not be

classified as “special”. These privileges are granted to government-owned and

controlled corporations rendering public services of generation and

transmission of electric power as provided for in Section 216 in relation to

Section 218 of R.A. 7160.

WHEREFORE, premises considered, the instant appeal is hereby

DISMISSED for lack of merit.

SO ORDERED.

Manila, Philippines, December 20, 2006.

(Signed) CESAR S. GUTIERREZ
Chairman

(Signed)
ANGEL P. PALOMARES Member

(Signed) RAFAEL O. CORTES
Member