FELS ENERGY, INC.
, Petitioner, vs THE by the CBAA upon reconsideration and affirmed by
PROVINCE OF BATANGAS and THE OFFICE OF
THE PROVINCIAL ASSESSOR OF BATANGAS,
Respondents.
G.R. No. 168557, February 16, 2007
CALLEJO, SR., J.:
FACTS:
Two consolidated cases were filed by FELS
Energy, Inc. (FELS) and National Power Corporation
(NPC), respectively.
NPC entered into a lease contract with Polar
Energy, Inc. over diesel engine power barges
moored at Batangas. The contract, denominated as
an Energy Conversion Agreement, was for a period
of five years wherein, NPC shall be responsible for
the payment of:
(a) all taxes, import duties, fees, charges and other
levies imposed by the National Government
(b) all real estate taxes and assessments, rates and
other charges in respect of the Power Barges
Subsequently, Polar Energy, Inc. assigned
its rights under the Agreement to FELS. Thereafter,
FELS received an assessment of real property taxes
on the power barges. The assessed tax, which
likewise covered those due for 1994, amounted to
P56,184,088.40 per annum. FELS referred the
matter to NPC, reminding it of its obligation under the
Agreement to pay all real estate taxes. It then gave
NPC the full power and authority to represent it in
any conference regarding the real property
assessment of the Provincial Assessor.
NPC sought reconsideration of the Provincial
Assessor’s decision to assess real property taxes on
the power barges. However, the motion was denied.
The Local Board of Assessment Appeals (LBAA)
ruled that the power plant facilities, while they may
be classified as movable or personal property, are
nevertheless considered real property for taxation
purposes because they are installed at a specific
location with a character of permanency.
FELS appealed the LBAA’s ruling to the
Central Board of Assessment Appeals (CBAA). The
CBAA rendered a Decision finding the power barges
exempt from real property tax. It was later reversed
PROPERTY
the CA.
ISSUE:
Whether or not power barges, which are
floating and movable, are personal properties and
therefore, not subject to real property tax.
RULING:
No. Article 415 (9) of the New Civil Code
provides that "[d]ocks 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.
The findings of the LBAA and CBAA that the
owner of the taxable properties is petitioner FELS is
the entity being taxed by the local government. As
stipulated under 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,
…the law states that the machinery must be actually,
directly and exclusively used by the government
owned or controlled corporation;
The agreement POLAR undertakes that until
the end of the Lease Period, it will operate the Power
Barges to convert such Fuel into electricity.
Therefore, FELS shall be liable for the realty taxes
and not the NPC who is not actually, directly and
exclusively using the same. It is a basic rule that
obligations arising from a contract have the force of
law between the parties
Petitions are DENIED.
1
CHINA BANKING CORPORATION, petitioner, vs.
HON. COURT OF APPEALS, PAULINO ROXAS
CHUA and KIANG MING CHU CHUA,
respondents.
G.R. No. 129644. March 7, 2000
YNARES-SANTIAGO, J.:
Facts:
In connection with a civil case filed by
Metropolitan Bank against Alfonso Roxas Chua, a
notice of levy affecting the residential land of Alfonso
and his wife was issued. Meanwhile, in 1985, the trial
court rendered another decision in favor of China
Banking Corporation against Alfonso in a collection
case. A certificate of sale covering ½ of the
undivided portion of the property was executed in
favor of Metro Bank. In 1988, Alfonso executed
“Assignment of Right to Redeem” to his son Paulino
who redeemed the said property on the same day.
On the other hand, another levy on execution in
favor of China Bank was issued on the same
property. Thereafter, a certificate of sale on
execution was issued to China Bank in 1992.
Paulino instituted a civil case arguing that he has a
better right over the title of China Bank, the property
having been redeemed by him in 1988 while China
Bank acquired its right in 1991. The trial court ruled
that the assignment was made for a valuable
consideration and was executed two years before
China Bank levied the conjugal share of Chua. China
Bank argued that the assignment of right of
redemption made by Alfonso to Paulino was done in
fraud of creditors and may be rescinded under
Article 1387, NCC.
ISSUE:
Whether or not the assignment by Alfonso to
Paulino of the right of redemption done to defraud his
creditors and may be rescinded under Art. 1387, NCC
RULING:
YES. The assignment was done in fraud of
creditors. China Bank is, therefore entitled to rescind
the same. Under Article 1381(3) of the Civil Code,
contracts which are undertaken in fraud of creditors
when the latter cannot in any manner collect the
claims due them are rescissible. The existence of
fraud with intent to defraud creditor may either be
presumed in accordance with Article 1387, NCC or
duly proved in accordance with the ordinary rules of
evidence. Hence, the law presumes that there is
fraud of creditors when:
PROPERTY
a) There is alienation of property by gratuitous title
by the debtor who has not reserved sufficient
property to pay his debts contracted before such
alienation; or
b) There is alienation of property by onerous title
made by a debtor against whom some judgment has
been rendered in any instance or some writ of
attachment has been issued. The decision or
attachment need not refer to the property alienated
and need not have been obtained by the party
seeking rescission.
Inasmuch as the judgment of the trial court in
favor of China Bank against Alfonso was rendered
as early as 1985, there is a presumption that the
1988 sale of his property, in this case the right of
redemption, is fraudulent under Article 1387 of the
Civil Code. The fact that private respondent Paulino
redeemed the property and caused its annotation on
the TCT more than two years ahead of petitioner
China Bank is of no moment. The Court of Appeals
maintained that although the transfer was made
between father and son, the conveyance was not
fraudulent since Paulino has indeed paid the
redemption fee of P1,463,375.39 to Metrobank and
the sum of P100,000 to his father. In determining
whether or not a certain conveyance is fraudulent,
the question in every case is whether the
conveyance was a bona fide transaction or a trick
and contrivance to defeat creditors or whether it
conserves to the creditor to the debtor or a special
right. It is not sufficient that it is founded on good
considerations or is made with bona fide intent. It
must have both elements. If defective in either of
these, although good between the parties, it is
voidable as to creditors. The mere fact that the
conveyance was founded on valuable consideration
does not necessarily negate the presumption of
fraud under Art. 1387, NCC. There has to be a
valuable consideration and the transaction must
have been made bona fide. In the case at bar, the
presumption that the conveyance is fraudulent has
not been overcome. At the time a judgment was
rendered in favor of China Bank against Alfonso,
Paulino was still living with his parents in the subject
property. Paulino himself admitted that he knew his
father was heavily indebted and could not afford to
pay his debts. The transfer was undoubtedly made
between father and son at the time when the father
was insolvent and had no other property to pay his
creditors.
2
Salvador H. Laurel, petitioner, vs. Ramon Garcia,
as head of the Asset Privatization Trust, Raul
Manglapus, as Secretary of Foreign Affairs, and
Catalino Macaraig, as Executive Secretary,
respondents.
G.R. No. 92013 July 25, 1990
Facts:
These two (2) petitions for prohibition seek to
enjoin respondents from proceeding with the bidding
for the sale of the 3,179 square meters of land at 306
Roppongi, 5-Chrome Minato-ku Tokyo, Japan. The
latter case also, prays for a writ of mandamus to fully
disclose to the public the basis of their decision to
push through with the sale of the Roppongi property.
The subject property in this case is one of the
4 properties in Japan acquired by the Philippine
government under the Reparations Agreement
entered into with Japan, the Roppongi property.
The said property was acquired from the
Japanese government through Reparations
Contract No. 300. It consists of the land and building
for the Chancery of the Philippine Embassy. As
intended, it became the site of the Philippine
Embassy until the latter was transferred to
Nampeidai when the Roppongi building needed
major repairs.
properties will eventually be sold is a policy
determination where both the President and
Congress must concur. Considering the properties'
importance and value, the laws on conversion and
disposition of property of public dominion must be
faithfully followed.
The Roppongi property was acquired
together with the other properties through reparation
agreements. They were assigned to the
government sector and that the Roppongi property
was specifically designated under the agreement to
house the Philippine embassy.
It is of public dominion unless it is
convincingly shown that the property has become
patrimonial. The respondents have failed to do so.
As property of public dominion, the Roppongi
lot is outside the commerce of man. It cannot be
alienated. Its ownership is a special collective
ownership for general use and payment, in
application to the satisfaction of collective needs,
and resides in the social group. The purpose is not
to serve the State as the juridical person but the
citizens; it is intended for the common and public
welfare and cannot be the object of appropriation.

President Aquino created a committee to

study the disposition/utilization of Philippine
government properties in Tokyo and Kobe, Japan.
The President issued EO 296 entitling non-Filipino
citizens or entities to avail of separations' capital
goods and services in the event of sale, lease or
disposition.

Issues:
Whether or not the Chief Executive, her
officers and agents, have the authority and
jurisdiction, to sell the Roppongi property.

Held:
It is not for the President to convey valuable
real property of the government on his or her own
sole will. Any such conveyance must be authorized
and approved by a law enacted by the Congress. It
requires executive and legislative concurrence. It is
indeed true that the Roppongi property is valuable
not so much because of the inflated prices fetched
by real property in Tokyo but more so because of its
symbolic value to all Filipinos, veterans and civilians
alike. Whether or not the Roppongi and related

PROPERTY 3
 Benjamin Rabuco, et. al., petitioners, vs
Hon. Antonio J. Villegas substituted by Hon.
Ramon Bagatsing as City Mayor of Manila
G.R. No. L-24916 February 28, 1974
Teehankee, J.:
and the government program of land for the landless
and that they were not intended to expropriate the
property involved but merely to confirm its character
as communal land of the State and to make it
available for disposition by the National
Government.

FACTS: The subdivision of the land and conveyance

of the resulting subdivision lots to the occupants by
The constitutionality of Republic Act No. Congressional authorization in violation of Section 1,
3120 was assailed by the city officials of the City of subsection (2), Article III of the Constitution, but
Manila contending that the conversion of the lots in simply as a manifestation of its right and power to
Malate area into disposable and alienable lands of deal with the state property.
the state and placing its administration and disposal
to the Land Tenure Administration (LTA) to be
subdivided into small lots not exceeding 120 square
meters per lot for sale on installment basis to the
tenants and selling it to bona fide occupants thereof
in installments constitutes a deprivation of the City of
Manila of its property by providing for its sale without
the payment of just compensation and expressly
prohibited ejectment and demolition of petitioners’
home under Section 2 of the Act.

Respondent contends that the Act is invalid

and unconstitutional for it constitutes deprivation of
property without due process of law and without just
compensation.

ISSUE:

Whether or not the properties in dispute may

be disposed without paying just compensation or RA
No. 3120 is constitutional

HELD:

Yes. The court held that the assailed RA

3120 is constitutional. The lots in question are
owned by the City of Manila in its public and
governmental capacity and are therefore public
property over which Congress has absolute control
as distinguished from patrimonial property owned by
it which cannot be deprived from the City without just
compensation and without due process.

It is established doctrine that the act of

classifying State property calls for the exercise of
wide discretionary legislative power, which will not
be interfered by the courts.

The Acts in question were intended to

implement the social justice policy of the Constitution

PROPERTY 4
LEVY D. MACASIANO, Brigadier General/PNP
Superintendent, Metropolitan Traffic Command,
petitioner, vs. HONORABLE ROBERTO C. DIOKNO,
Presiding Judge, Branch 62, Regional Trial Court of
Makati, Metro Manila, MUNICIPALITY OF
PARAÑAQUE, METRO MANILA, PALANYAG
KILUSANG BAYAN FOR SERVICE, respondents.
G.R. No. 97764. August 10, 1992
Medialdea, J.:
FACTS:
On 13 June 1990, the Municipality of
Paranaque passed Ordinance 86, s. 1990 which
authorized the closure of J. Gabrielle, G.G. Cruz,
Bayanihan, Lt. Garcia Extension and Opena Streets
located atBaclaran, Parañaque, Metro Manila and
the establishment of a flea market thereon. The said
ordinance was approved by the municipal council
pursuant to MCC Ordinance 2, s. 1979, authorizing
and regulating the use of certain city and/or
municipal streets, roads and open spaces within
Metropolitan Manila as sites for flea market and/or
vending areas, under certain terms and conditions.
On 20 July 1990, the Metropolitan Manila Authority
approved Ordinance 86, s. 1990 of the municipal
council subject to conditions. On 20 June 1990, the
municipal council issued a resolution authorizing the
Parañaque Mayor to enter into contract with any
service cooperative for the establishment, operation,
maintenance and management of flea markets
and/or vending areas. On 8 August 1990, the
municipality and Palanyag, a service cooperative,
entered into an agreement whereby the latter shall
operate, maintain and manage the flea market with
the obligation to remit dues to the treasury of the
municipal government of Parañaque. Consequently,
market stalls were put up by Palanyag on the said
streets. On 13 September 1990 Brig. Gen.
Macasiano, PNP Superintendent of the Metropolitan
Traffic Command, ordered the destruction and
confiscation of stalls along G.G. Cruz and J.
Gabrielle St. in Baclaran. These stalls were later
returned to Palanyag. On 16 October 1990,
Macasiano wrote a letter to Palanyag giving the
latter 10 days to discontinue the flea market;
otherwise, the market stalls shall be dismantled.
On 23 October 1990, the municipality and
Palanyag filed with the trial court a joint petition for
prohibition and mandamus with damages and prayer
for preliminary injunction. On 17 December 1990,
the trial court issued an order upholding the validity
PROPERTY
of Ordinance 86 s. 1990 of the Municipality of
Parañaque and enjoining Macasiano from enforcing
his letter-order against Palanyag. Hence, a petition
for certiorari under Rule 65 was filed by Macasiano
through the Office of the Solicitor General (OSG).
ISSUES:
Whether or not an ordinance/resolution
issued by the municipal council of Parañaque
authorizing the lease and use of public
streets/thoroughfares as sites for the flea market is
valid.
HELD:
No. The property of provinces, cities and
municipalities is divided into property for public use
and patrimonial property (Art. 423, Civil Code). As to
property for public use, Article 424 of Civil Code
provides that "property for public use, in the
provinces, cities and municipalities, consists of the
provincial roads, city streets, the squares, fountains,
public waters, promenades, and public works for
public service paid for by said provinces, cities or
municipalities. All other property possessed by any
of them is patrimonial and shall be governed by this
Code, without prejudice to the provisions of special
laws."
In the present case, thus, J. Gabrielle G.G.
Cruz, Bayanihan, Lt. Gacia Extension and Opena
streets are local roads used for public service and
are therefore considered public properties of the
municipality. Properties of the local government
which are devoted to public service are deemed
public and are under the absolute control of
Congress. Hence, local government have no
authority whatsoever to control or regulate the use
of public properties unless specific authority is
vested upon them by Congress.
5