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THE
Supreme Court declared Wednesday that power barges are
considered real property, thus, subject to real-estate
tax.
With
this ruling, the High Tribunal ordered Fels Energy,
Inc., an independent power producer, to pay the Batangas
provincial government the amount of P232.6 million in
real- property taxes for its diesel engine power barges
moored in Balayan Bay in Calaca, Batangas.
Associate Justice Romeo Callejo Sr. of the Court’s Third
Division said in the decision that under Article 415 of
the New Civil Code, “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, it
did throw out the petition for review filed by Fels
Energy and the National Power Corp., seeking to nullify
the resolutions of the Court of Appeals, the Local Board
of Assessment of Appeals (LBAA), and the Central Board
Assessment Appeals upholding the real-property tax
assessment on Fels Energy by the Batangas provincial
assessor.
It added
that the law therefore categorizes power barges “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 to
directly meet the needs of said industry or work.”
It cited
the Supreme Court of New York in its ruling in
Consolidated Edison Company of New York, Inc, et al. v.
The City of New York, that the barges on which were
mounted gas turbine power plants designated to generate
electrical power, the fuel oil barges which supplied
fuel oil to the power plant barges, and the accessory
equipment mounted on the barges, were all subject to
real-property taxation.
Courts
records showed that on January 18, 1993, Napocor entered
into a lease contract with Polar Energy Inc, over 3x30
MW diesel engine power barges docked at
Balayan Bay in Calaca,
Batangas. The contract dubbed as an Energy Conversion
Agreement, was for a period of five years. Subsequently,
Polar Energy assigned its rights under the agreement to
Fels Energy.
On
August 7, 1995, Fels Energy received an assessment of
real-property taxes on the power barges from Batangas
provincial assessor Lauro Andaya that also covered those
due for 1994, and together amounted to P56.2 million per
year.
Fels
Energy then referred the issue to the Napocor, reminding
it of its obligation under their agreement to pay all
real-estate taxes. It then gave the Napocor the full
power and authority to represent it in any conference
regarding the real-property assessment of the provincial
assessor.
Andaya
denied the motion for reconsideration of Napocor and
advised it to pay the assessment. This prompted Napocor
to file a petition with the local assessment board for
the setting aside of the assessment and the declaration
of the barges as nontaxable items.
The LBAA
denied Napocor’s petition, giving virtually the same
reasons that the Supreme Court gave later. The central
assessment board also junked the Napocor petition when
the power firm elevated the case. |
