Republic of the Philippines

CENTRAL BOARD OF ASSESSMENT APPEALS 7th Floor, EDPC Building, BSP Complex Roxas Boulevard, Manila

PALAWAN ELECTRIC COOPERATIVE (PALECO), Represented by its General Manager, MR. PONCIANO D. PAYUYO,
Petitioner-Appellant,

– versus –

THE PROVINCIAL ASSESS OF PALAWAN,
Respondent-Appellee,

CBAA Case No. L-66-A

Re: LBAA Case No. 1-2005

– and –

THE LOCAL BOARD OF ASSESSMENT APPEALS OF THE PROVINCE OF PALAWAN,
Appellees. x – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – x

R E S O L U T I O N

This Board, on February 14, 2006, rendered a Decision in the above-

entitled case dismissing Petitioner-Appellant’s appeal and thereby affirming the

decision of the Local Board of Assessment Appeals of the Province of Palawan

dated September 30, 2005 in LBAA Case No. 1-2005.

Petitioner-Appellant, alleging that it received a copy of this Board’s

decision on July 3, 2006, filed with this Board on July 12, 2006 the instant

Motion for Reconsideration on the following ground:

“THIS HONORABLE BOARD SHOULD HAVE RESOLVED THE MATTER AS TO WHETHER OR NOT HEREIN PETITIONER-APPELLANT IS EXEMPTED IN THE PAYMENT OF REAL PROPERTY TAXES OVER THE TRANSMISSION AND DISTRIBUTION LINES, POSTS AND TRANSFORMERS LOCATED OR INSTALLED IN THE MUNICIPALITY OF BROOKE’S POINT.”

In its argument, Petitioner-Appellant states that:

“In declining PALECO to pay

to resolve the real property

issue of tax exemption of taxes assessed on the

transmission and distribution lines, posts and transformers, the Honorable Board reasoned out that the matter was not brought before the Local Board of Appeal (sic) of Palawan as the only issue’s (sic) agreed upon is (sic): (1) whether or not PALECO is

Reference: Book XII, pp. 241-249

a government-controlled corporation; and (2) whether or not PALECO’s real properties in question are special properties.”

With due respect, herein Appellant claimed tax exemption in so far as the distribution and transmission lines, posts and

transformers are concerned. As a expressly alleged and claimed of

matter of fact, tax exemption

PALECO over the

transmission and distribution lines, posts and transformers as appearing on paragraph 8 of the Appeal on assessment filed before the Local Board of Assessment Appeals of Palawan.

“Indeed PALECO is exempted to pay real property taxes over the transmission and distribution lines, posts and transformers which were classified by the Municipal Assessors of Palawan as real properties. This is so because under the law, distribution and transmission lines, posts and transformers are not real properties and are therefore not subject to real property taxation. (Board of Assessment Appeals, Q.C. vs. MERALCO 10 SCRA 68).

“Articles 415 of the Civil Code of the Philippines enumerates the properties which are classified as immovable or real properties. Distribution and transmission lines, posts and transformers, which are treated by the Municipal Assessor of Aborlan as real properties are not included in the enumerations under Art. 415 of the Civil Code of the Philippines. They are therefore not real properties, hence PALECO is exempted from the payment of real property taxes assessed on distribution and transmission lines, posts and transformers.

“In holding that distribution and transmission lines, posts are not real properties, the Honorable Supreme Court, in the said case of Board of Assessment Appeals, Q.C. vs. MERALCO, supra explained as follows, to wit:

‘a) they do not come under the paragraph 1 of Art. 415 because they are neither buildings or construction adhered to the soil;

‘b) they do not come under paragraph 3 because they are attached to an immovable in a fixed manner, that is, they can be separated without breaking the material or causing deterioration of the object to which they are attached;

‘c) they do not come under paragraph 5 because they are not machineries, receptacles or instruments, but even if they are, they are not intended for an industry to be carried on in the premises.’

“Nevertheless, granting for the sake of arguments that the matter of tax exemption of PALECO to pay real property taxes on taxes assessed on distribution and transmission lines, posts and transformers because they are not real properties in contemplation of law are not raised as issued (sic), it is most respectfully submitted that this issue should be resolved by this

Reference: Book XII, pp. 241-249

Honorable Board because consideration of said issue is necessary in arriving at a just decision of the case. Thus, it was held:

‘Court is clothed with ample opportunity to review matters even if they are not assigned as errors on appeal if it finds that their consideration is necessary in arriving at a decision of the case. (Nordic Asia Limited vs. CA 403 SCRA 390)’

“In like manner for purposes of protecting and promoting the substantive rights of the litigants, the observance or procedural rules may be (sic)

‘Although the Supreme Court has repeatedly ruled that litigants cannot raise or (sic) issue for the first time on appeal, as this could contravene the basic rules of fair play and justice, the observance of procedural rules may be relaxed, noting that technicalities are not ends in themselves but exist to protect and promote the substantive rights of litigants.’ (Sy vs. CA 330 SCRA 550)

‘The Supreme Court may brush aside procedural barriers and take cognizance of a petition where it raises an issue of paramount importance and constitutional significance. (Del Rosario vs. Montania 430 SCRA 109)

‘Technicality should not be allowed to stand in the way of equitably and completely resolving the rights and obligations of the parties. (Buenaobra vs. Lim King Guau 420 SCRA 359)’

Petitioner-Appellant states that, “in declining to resolve the issue of tax

exemption of PALECO to pay real property taxes assessed on the transmission

and distribution lines, posts and transformers, the Honorable Board reasoned

out that the matter was not brought before the Local Board of Assessment

Appeal (sic) of Palawan as the only issue’s (sic) agreed upon is (sic): (1)

whether or not PALECO is a government-controlled corporation; and (2)

whether or not PALECO’s real properties in question are special properties.”

This statement is not entirely correct. This Board did resolve the matter of

Petitioner-Appellant’s claim for exemption. It is precisely that resolution or

decision that is now the object of Petitioner-Appellant’s motion for

reconsideration.

Reference: Book XII, pp. 241-249

As stated in the Local Board’s decision appealed from, Petitioner-

Appellant, during the proceedings in the Local Board, agreed to limit the issues

to only two (2), which were: (1) Whether or not PALECO is a government-

controlled corporation, and (2) Whether or not PALECO’s real properties in

question are “special properties” as defined under Section 216 of RA 7160.

This matter was never questioned or disputed by Petitioner-Appellant before

now.

The Local Board had to resolve the two (2) issues mentioned in the next

preceding paragraph in order to determine whether or not PALECO’s

transmission and distribution lines, posts and transformers were exempted from

payment of the real property tax.

As the second assigned error in its appeal to this Board, Petitioner-

Appellant stated that “with due respect, the Local Board . . . erred in ruling

that the properties of the appellant do not fall within the special classes of

properties” and, under the third assigned error, the same appellant argued

that its “transmission and generation lines, electric posts and

transformers mentioned above and subjected by the Municipality of

Brooke’s Point to real property taxation are exclusively used by herein

Appellant in the generation and transmission of electric power when the

same are, under Section 234, par. c of the Local Government Code of

1991 exempted from real property taxation.”

Sections 216 and 234 of RA 7160, which were made the basis of

Petitioner-Appellant’s appeal, provide as follows:

“SEC. 216. Special Classes of 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 or-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.”

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

Reference: Book XII, pp. 241-249

“x x x”

“(c) All machineries and equipment that directly and exclusively used by local water

are actually, districts and

government-owned or –controlled corporations engaged in the supply and distribution of water and/or generation and transmission of electric power;

“x x x”

There is no question that both Sections 216 and 234, above-quoted, deal

in real properties. All the while, Petitioner-Appellant considered the properties

involved in this case as REAL properties. Up until now, that is. Now, under its

Motion for Reconsideration, Petitioner-Appellant states: that the subject

properties are NOT REAL, but PERSONAL properties because they are not

listed as immovable under Art. 415 of the New Civil Code, citing the case of

Board of Assessment Appeals, City Assessor and City Treasurer of Quezon

City vs. Meralco (10 SCRA 68, Jan. 31, 1964).

This new posture of Petitioner-Appellant’s is squarely opposite to, and

completely irreconcilable with, its previous position.

Petitioner-Appellant states that “Nevertheless, granting that the matter of

exemption of PALECO to pay real property taxes on taxes assessed on

distribution and transmission lines, posts and transformers because they are

not real properties in contemplation of law are (sic) not raised as issued (sic), it

is most respectfully submitted that this issue should be resolved by this

Honorable Board because consideration of said issue is necessary in arriving at

a just decision of the case.” In support of this argument, Petitioner-Appellant

cited the cased of Nordic Asia Limited vs. CA (403 SCRA 390), Sy vs. CA (330

SCRA 550), Del Rosarion vs. Montania (430 SCRA 109), and Buenaobra vs.

Lim King Guan (420 SCRA 359).

The cases cited by Petitioner-Appellant are not relevant to the present

case. In the Nordic case, the Supreme Court, citing Roman Catholic

Archbishop of Manila, et al. vs. Court of Appeals (198 SCRA 300 [1991]), said

Reference: Book XII, pp. 241-249

“Thus, the Court may consider an unassigned error closely related to an error

properly assigned or upon which the determination of the question properly

assigned is dependent, notwithstanding the failure to assign it as error.” In no

way is the exemption under Sec. 234(c) of RA 7160 related to non-applicability

of the realty tax on personal properties or those not considered immovable for

not being listed as such immovable properties under Art. 415 of the Civil Code.

Nor is the determination of exemption from payment of realty tax under Sec.

234(c) of RA 7160 depended upon the provisions of Art. 415 of the Civil Code.

The Del Rosario case involved in the concurrent original jurisdiction of

the Supreme Court and the Court of Appeals over a special civil action of

certiorari under Rule 65.

The facts and circumstances obtaining in the cases of Sy vs. CA and

Buenaobra vs. Lim King Guan have no bearing on this case.

Failing to get a favorable decision on its claim for exemption under the

provisions of Section 234(c) of RA 7160, Petitioner-Appellant now shifts to a

new and completely different ground, that is, Art. 415 of the New Civil Code.

This cannot be allowed as it would result in mockery of the tenets of fair

play (Rodolfo Suarez vs. Court of Appeal, G.R. No. 80199, June 6, 1990). In

Aguinaldo Industries Corporation vs. Commissioner of Internal Revenue and

the Court of Tax Appeals (L-29790, February 25, 1982, 112 SCRA 136 cited in

Corporation vs. Central Board of Assessment Appeals, et al., G.R. No. 100959,

June 29, 1992), the Supreme Court held:

“To allow a litigant to assume a different posture when he comes before the court and challenge the position he had accepted at the administrative level, would be to sanction a procedure whereby the court – which is supposed to review administrative determinations – would not review, but determine and decide for the first time, a question not raised in the administrative forum. This cannot be permitted, for the same reason that underlies the requirement of prior exhaustion of administrative remedies to give administrative authorities the prior opportunity to decide controversies within its competence, and in much the same way that, on the judicial level, issues not raised in the lower court cannot be raised for the first time on appeal.”

Reference: Book XII, pp. 241-249

WHEREFORE, premises considered, the instant Motion for

Reconsideration is hereby DISMISSED for lack of merit.

SO ORDERED.

Manila, Philippines, November 03, 2006.

(Signed) CESAR S. GUTIERREZ
Chairman

(Signed)
ANGEL P. PALOMARES Member

(Signed) RAFAEL O. CORTES
Member

Reference: Book XII, pp. 241-249