G.R. No.

168557 Case Digest

G.R. No. 168557, February 16, 2007
FELS Energy, Inc.
vs Province of Batangas and the Office of the Provincial Assessor
of Batangas
Ponente: Callejo, Sr.
Facts:
January 1993, NPC entered into a lease contract with Polar Energy
over MW diesel engine power barges in Batangas for a period of 5
years. Subsequently, Polar assigned its rights under the agreement
to FELS. NPC initially opposed.
August 1995, FELS received an assessment of real property taxes on
the barges. FELS referred the matter to NPC reminding it of its
obligation under the agreement to pay the real estate taxes. NPC
sought for reconsideration of the decision but the motion was
denied.
NPC filed a petition to the Local Board Assessment Appeals. The
provincial Assessor averred that the barges were real property for
the purpose of taxation. LBAA still denied the petition filed by
NPC and ordered FELS to pay the taxes.
LBAA Ruling: power plant facilities are considered real property
because they are installed at a specific location with a character
of permanency. The owner of the barges-FELS is a private
corporation-is the one being taxed, not NPC. The agreement will not
justify the exemption of FELS.
FELS then appealed to Central BAA. CBAA rendered s decision finding
the power barges exempt from real property tax.
CBAA Ruling: the power barges belong to NPC since they are actually
used by it. FELS appealed before the CA but was denied as well.
Held:
YES. The CBAA and LBAA power barges are real property and are thus
subject to real property tax. This is also the inevitable
conclusion, considering that G.R. No. 165113 was dismissed for
failure to sufficiently show any reversible error. Tax assessments
by tax examiners are presumed correct and made in good faith, with
the taxpayer having the burden of proving otherwise. Besides,
factual findings of administrative bodies, which have acquired
expertise in their field, are generally binding and conclusive upon
the Court; we will not assume to interfere with the sensible
exercise of the judgment of men especially trained in appraising
property. Where the judicial mind is left in doubt, it is a sound

policy to leave the assessment undisturbed. We find no reason to

depart from this rule in this case.
Moreover, Article 415 (9) of the New Civil Code provides that
docks and structures which, though floating, are intended by their
nature and object to remain at a fixed place on a river, lake, or
coast are considered immovable property. Thus, power barges are
categorized as immovable property by destination, being in the
nature of machinery and other implements intended by the owner for
an industry or work which may be carried on in a building or on a
piece of land and which tend directly to meet the needs of said
industry or work.
Petitioners maintain nevertheless that the power barges are exempt
from real estate tax under Section 234 (c) of R.A. No. 7160 because
they are actually, directly and exclusively used by petitioner NPC,
a government- owned and controlled corporation engaged in the
supply, generation, and transmission of electric power.
We affirm the findings of the LBAA and CBAA that the owner of the
taxable properties is petitioner FELS, which in fine, is the entity
being taxed by the local government. As stipulated under Section
2.11, Article 2 of the Agreement:
OWNERSHIP OF POWER BARGES. POLAR shall own the Power Barges and
all the fixtures, fittings, machinery and equipment on the Site
used in connection with the Power Barges which have been supplied
by it at its own cost. POLAR shall operate, manage and maintain the
Power Barges for the purpose of converting Fuel of NAPOCOR into
electricity.
It follows then that FELS cannot escape liability from the payment
of realty taxes by invoking its exemption in Section 234 (c) of
R.A. No. 7160. Indeed, the law states that the machinery must be
actually, directly and exclusively used by the government owned or
controlled corporation; nevertheless, petitioner FELS still cannot
find solace.

Davao Sawmill v. Castillo

DAVAO SAW MILL vs. APRONIANO G. CASTILLO and DAVAO LIGHT & POWER CO., INC. G.R. No. L40411 August 7, 1935
Facts:
Davao Saw Mill Co., Inc., is the holder of a lumber concession from the Government of the Philippine
Islands. However, the land upon which the business was conducted belonged to another person. On the
land the sawmill company erected a building which housed the machinery used by it. Some of the
implements thus used were clearly personal property, the conflict concerning machines which were
placed and mounted on foundations of cement. In the contract of lease between the sawmill company and
the owner of the land there appeared the following provision: That on the expiration of the period agreed

upon, all the improvements and buildings introduced and erected by the party of the second part shall
pass to the exclusive ownership of the lessor without any obligation on its part to pay any amount for said
improvements and buildings; which do not include the machineries and accessories in the improvements.
In another action wherein the Davao Light & Power Co., Inc., was the plaintiff and the Davao, Saw, Mill
Co., Inc., was the defendant, a judgment was rendered in favor of the plaintiff in that action against the
defendant; a writ of execution issued thereon, and the properties now in question were levied upon as
personalty by the sheriff. No third party claim was filed for such properties at the time of the sales thereof
as is borne out by the record made by the plaintiff herein
It must be noted also that on number of occasion, Davao Sawmill treated the machinery as personal
property by executing chattel mortgages in favor of third persons. One of such is the appellee by
assignment from the original mortgages.
The lower court rendered decision in favor of the defendants herein. Hence, this instant appeal.
Issue:
whether or not the machineries and equipments were personal in nature.
Ruling/ Rationale:
Yes. The Supreme Court affirmed the decision of the lower court.
Machinery which is movable in its nature only becomes immobilized when placed in a plant by the owner
of the property or plant, but not when so placed by a tenant, a usufructuary, or any person having only a
temporary right, unless such person acted as the agent of the owner.

Board of Assessment Appeals QC

v MERALCO
Posted on June 22, 2013

Board of Assessment Appeals, Q.C. vs Meralco

10 SCRA 68
GR No. L-15334
January 31, 1964
FACTS
On November 15, 1955, the QC City Assessor declared the MERALCO's steel
towers subject to real property tax. After the denial of MERALCO's petition to
cancel these declarations, an appeal was taken to the QC Board of Assessment
Appeals, which required respondent to pay P11,651.86 as real property tax on
the said steel towers for the years 1952 to 1956.

MERALCO paid the amount under protest, and filed a petition for review in the
Court of Tax Appeals (CTA) which rendered a decision ordering the cancellation
of the said tax declarations and the refunding to MERALCO by the QC City
Treasurer of P11,651.86.
ISSUE
Are the steel towers or poles of the MERALCO considered real or personal
properties?
HELD
Pole long, comparatively slender, usually cylindrical piece of wood, timber,
object of metal or the like; an upright standard to the top of which something is
affixed or by which something is supported.
MERALCO's steel supports consists of a framework of 4 steel bars/strips which
are bound by steel cross-arms atop of which are cross-arms supporting 5 highvoltage transmission wires, and their sole function is to support/carry such
wires. The exemption granted to poles as quoted from Part II, Par.9 of
respondent's franchise is determined by the use to which such poles are
dedicated.
It is evident that the word poles, as used in Act No. 484 and incorporated in
the petitioner's franchise, should not be given a restrictive and narrow
interpretation, as to defeat the very object for which the franchise was granted.
The poles should be taken and understood as part of MERALCO's electric power
system for the conveyance of electric current to its consumers.
Art. 415 of the NCC classifies the following as immovable property:
(1) Lands, buildings, roads and constructions of all kinds adhered to the
soil;
xxx
(3) Everything attached to an immovable in a fixed manner, in such a way
that it cannot be separated therefrom without breaking the material or
deterioration of the object;

xxx
(5) Machinery, receptacles, instruments or implements intended by the
owner pf the tenement for an industry ot works which may be carried on in
a building or on a piece of land, and which tend directly to meet the needs
of the said industry or works;
Following these classifications, MERALCO's steel towers should be considered
personal property. It should be noted that the steel towers:
(a) are neither buildings or constructions adhered to the soil;
(b) are not attached to an immovable in a fixed manner they can be
separated without breaking the material or deterioration of the object;
are not machineries, receptacles or instruments, and even if they are,
they are not intended for an industry to be carried on in the premises.

RP v. Lat Vda de Castillo, et. al.

Chester Cabalza recommends his visitors to please read the original & full text of the case cited. Xie xie!
G.R. No. L-69002 June 30, 1988
REPUBLIC OF THE PHILIPPINES, petitioner,
vs.
AMANDA LAT VDA. DE CASTILLO, FLORENCIO T. CASTILLO, SOLEDAD LOTA CASTILLO, CARLOS L.
CASTILLO, NIEVES KATIGBAK CASTILLO, MARIANO L. CASTILLO, HIPOLITA DYTIAPCO CASTILLO, AIDA
CASTILLO HERRERA, HERMITO HERRERA, JOSE L. CASTILLO, LILIA MACEDA CASTILLO, TERESITA L.
CASTILLO, REGISTER OF DEEDS OF BATANGAS and THE INTERMEDIATE APPELLATE COURT,
respondents.
EN BANC
This is a petition for review on certiorari of the April 26, 1984 Decision of the then Intermediate Appellate Court
reversing the February 6, 1976 Decision of the then Court of First Instance of Batangas.
Facts:
In 1951, the late Modesto Castillo applied for the registration of two parcels of land, Lots 1 and 2, located in
Banadero, Tanauan, Batangas, as the true and absolute owner of the land with the improvements thereon, which was
issued to him by the Register of Deeds of Batangas. He was married to Amanda Lat.
By virtue of an instrument dated in March 1960, the two parcels of land with Original Certificate of Title (OCT) were
consolidated and divided into Lots 1 to 9 which was covered by Transfer Certificate of Title (TCT). After the death of

Modesto Castillo on August 31, 1960, Amanda Lat Vda. de Castillo, et al., executed a deed of partition and
assumption of mortgage in favor of Florencio L. Castillo, et al., as a result of which Original Certificate of Title was
cancelled, and in lieu thereof, new transfer certificates of title (TCT) were issued to the following appellantsdefendants.
The Republic of the Philippines filed Civil Case No. 2044 with the lower court for the annulment of the certificates of
title issued to defendants Amanda Lat Vda. de Castillo, et al., as heirs/successors of Modesto Castillo, and for the
reversion of the lands covered thereby (Lots 1 and 2, Psu-119166) to the State.
It was alleged that said lands had always formed part of the Taal Lake and being of public ownership, it could not be
the subject of registration as private property.
They alleged in their answer that the Government's action was already barred by the decision of the registration
court; that the action has prescribed; and that the government was estopped from questioning the ownership and
possession of appellants.
The then Court of First Instance of Batangas, Branch VI, decided that the Register of Deeds of Batangas to order the
cancellation of the OCT in the name of Modesto Castillo and the subsequent TCT issued over the property in the
names of the defendants. Lots Nos. 1 and 2 of Plan Psu-19166 are hereby declared public lands belonging to the
state. Without pronouncement as to costs.
Defendants appealed their case. The Court of Appeals, in a decision promulgated on April 26,1984, reversed and set
aside the appealed decision, and dismissed the complaint.
Issue:
The sole issue raised in this case is whether or not the decision of the Land Registration Court involving shore lands
constitutes res adjudicata.
Held:
There is no question that one of the requisites of res judicata is that the court rendering the final judgment must have
jurisdiction over the subject matter (Ramos v. Pablo, 146 SCRA 24 [1986]; that shores are properties of the public
domain intended for public use (Article 420, Civil Code) and, therefore, not registrable.
Thus, it has long been settled that portions of the foreshore or of the territorial waters and beaches cannot be
registered. Their inclusion in a certificate of title does not convert the same into properties of private ownership or
confer title upon the registrant (Republic v. Ayala y Cia, 14 SCRA, 259 [1965], citing the cases of Dizon, et al. v.
Bayona, et al., 98 Phil. 943; and Dizon, et al. v. Rodriguez, et al., 13 SCRA 704).
But an important bone of contention is the nature of the lands involved in this case.
Petitioner contends "that "Lots 1 and 2, PSU-119166 had always formed part of the Taal Lake, washed and inundated
by the waters thereof. Consequently, the same were not subject to registration, being outside the commerce of men;
and that since the lots in litigation are of public domain (Art. 502), par. 4 Civil Code) the registration court (of 1951) did
not have jurisdiction to adjudicate said lands as private property, hence, res judicata does not apply. (Rollo, pp. 3738).
The Government presented both oral and documentary evidence.
Lakeshore land or lands adjacent to the lake, like the lands in question must be differentiated from foreshore land or
that part of the land adjacent to the sea which is alternately covered and left dry by the ordinary flow of the tides

(Castillo, Law on Natural Resources, Fifth Edition, 1954, p. 67).

Such distinction draws importance from the fact that accretions on the bank of a lake, like Laguna de Bay, belong to
the owners of the estate to which they have been added (Gov't. v. Colegio de San Jose, 53 Phil. 423) while accretion
on a sea bank still belongs to the public domain, and is not available for private ownership until formally declared by
the government to be no longer needed for public use (Ignacio v. Director of Lands, 108 Phil. 335 [1960]).
But said distinction will not help private respondents because there is no accretion shown to exist in the case at bar.
On the contrary, it was established that the occupants of the lots who were engaged in duck raising filled up the area
with shells and sand to make it habitable.
The defense of long possession is likewise not available in this case because, as already ruled by this Court, mere
possession of land does not by itself automatically divest the land of its public character (Cuevas v. Pineda, 143
SCRA 674 [1968]).
PREMISES CONSIDERED, the April 26,1984 Decision of the then Intermediate Appellate Court is hereby SET
ASIDE and REVERSED and the February 6,1976 Decision of the then Court of First Instance of Batangas is hereby
AFFIRMED and REINSTATED. SO ORDERED.