Case Summary (G.R. No. 168557)
Administrative Proceedings
NPC filed a motion for reconsideration before the Provincial Assessor (denied September 22, 1995) then appealed to the LBAA (denied August 26, 1996) on grounds that power barges are non-taxable. The LBAA held the barges were real property for tax purposes and that FELS, not NPC, was the assessed owner, dismissing the appeal as filed out of time. FELS escalated to the CBAA, secured an order lifting distraint, and obtained a favorable decision (April 6, 2000) exempting the barges. On motion for reconsideration the CBAA reversed itself (July 31, 2001), affirmed the LBAA, and dismissed FELS’s and NPC’s appeals.
Court of Appeals Decisions
FELS and NPC separately petitioned the Court of Appeals. In CA-G.R. SP No. 67490 (FELS) and CA-G.R. SP No. 67491 (NPC), both petitions were dismissed as prescribed: the courts held that only an appeal to the LBAA filed within 60 days of receipt of the assessment notice is available, and that motions for reconsideration before the assessor do not toll or supplant that appeal.
Issues Before the Supreme Court
FELS raised five issues: classification of barges as personal property; exemption under § 234(c) LGC; NPC’s tax-payment obligation; barge depreciation; imprescriptibility of the right to question a void assessment. NPC asserted errors in finding its LBAA appeal time-barred, in classifying barges as taxable real property, and in the assessment’s procedural correctness.
Prescription Ruling
Under § 226 LGC a taxpayer must appeal the assessor’s last action (notice of assessment) to the LBAA within 60 days. Motions for reconsideration to the assessor are not authorized and do not interrupt prescription. Reliance on Callanta v. Office of the Ombudsman affirmed that allowing reconsideration before assessors invites corruption and undermines the fixed 60-day appeal period. Consequently, all appeals were filed out of time, rendering the assessments final and demandable.
Res Judicata and Forum Shopping
The Court held that NPC’s earlier petition (G.R. No. 165113) to review the CA’s denial of FELS’s appeal conclusively bound FELS under privity of interest. The subsequent filings (G.R. Nos. 168557 & 170628) thus constituted forum shopping, as they arose from the same facts, involved substantially identical parties and reliefs, and sought a different outcome after an adverse decision. Both doctrines barred further review.
Taxability of Power Barges
Absent procedural defects, the barges were properly classified as real property. Administrative findings carry a presumption of good faith and correctness; judicial review defers to specialized appraisal expertise. Analogous U.S. and Civil Code precedents treat floating structures with permanent mooring and industrial function as immovable by destination.
Exemption Under Section 234(c) LGC
Exemptions from real property tax are strictly construed. Section 234(c) covers machinery “actually, directly and exclusively used” by water dis
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Facts of the Case
- In January 1993, NPC entered into a five-year Energy Conversion Agreement with Polar Energy, Inc. for 3×30 MW diesel power barges moored at Balayan Bay, Calaca, Batangas.
- Article 10.1 of the Agreement made NPC responsible for payment of all real estate taxes and assessments on the power barges.
- Polar assigned its rights under the Agreement to FELS Energy, Inc. (FELS); NPC initially objected to the assignment.
Tax Assessment and Initial Protest
- On August 7, 1995, Provincial Assessor Andaya assessed FELS real property tax of ₱56,184,088.40 annually (including 1994 arrears).
- FELS referred the assessment to NPC, relying on NPC’s obligation under the Agreement, and authorized NPC to represent it in all proceedings.
- NPC filed a reconsideration motion on September 7, 1995, which was denied on September 22, 1995.
Local Board Proceedings (LBAA)
- NPC filed a petition with the LBAA seeking to declare barges non-taxable or to correct the assessment.
- Provincial Assessor maintained that the barges were real property under Section 199(c) of R.A. No. 7160.
- NPC presented a DOF opinion (May 20, 1996) stating power barges are not subject to real property tax.
- On August 26, 1996, the LBAA denied the petition as filed out of time and ruled the barges taxable due to their permanency at a fixed location; FELS was ordered to pay.
Central Board Proceedings (CBAA)
- FELS appealed LBAA ruling to the CBAA; in November 1996 the Provincial Treasurer issued a distraint warrant over the barges.
- CBAA lifted the levy and distraint (November 15, 1996) to preserve the efficacy of its forthcoming decision.
- NPC intervened in August 1998; both petitioners posted bonds covering assessed taxes.
- On April 6, 2000, CBAA reversed LBAA, declaring barges exempt under Section 234(c) R.A. 7160 as “actually, directly and exclusively used” by NPC.
- On July 31, 2001, CBAA reversed itself, dismissed FELS’s petition and NPC intervention, and reinstated the LBAA assessment.
- Motions for reconsideration by FELS and NPC were denied on October 19, 2001.