THE BOARD OF ASSESSMENT

APPEALS OF ZAMBOANGA
DEL SUR v. SAMAR MINING
COMPANY, INC. and
THE COURT OF TAX APPEAL.
G.R. No. L-28034. February 27, 1971

Prepared by: Mica Marie J. Valenzuela

FACTS
Samar Mining Co (Samar)

42 km
gravelpit SamicoRoad

Buug, Zamboanga del Sur

Pier in Pamintayan,
Zamboanga del Sur

Sincetheroadtraversedpublic lands,Samar filedmiscellaneous lease

applicationsfor right ofway with theBureauof Lands and the Bureau
of Forestry in 1958 and 1959, respectively. Temporary permits were
granted, and eventually the lease applications were granted on Oct. 7,
1965 but the lease contracts were neverexecuted.

FACTS
Samar Mining Co (Samar)

an assessment letter
from the Provincial
Assessor, charging
them P
1,117,900.00 as
real estate tax on
the taxable portion of
Samico Road.

BAA
onthe ground that the
roadwas notataxable
improvement
because it was
constructed
entirely on public land.

upheld the
assessment but
held it
unenforceable until
the lease contracts
were executed.

Upon second denial by the BAA, it

elevated its case to the Court of
Tax Appeals

CTA
the road was constructed on public lands such that it is an integral part
of the lands and not an independent improvement thereon, and that
upon the termination of the lease the national government will acquire
ownership of the road, Samar should be exempted from paying

ISSUE

Whether or not respondent Samar

should pay realty tax on the
assessed value of the road it
constructed on alienable or
disposable public lands that are
leased to it by the government.

-The roadis an improvement

and,therefore, taxable under Section
2 of the Assessment Law
(Commonwealth Act No. 470)
-That Bislig Bay does not apply
because the road in that case was
built on inalienable timberland.
Samico Road was built on alienable
landsof the public domain and is
therefore taxable

-Invalidity of the assessment upon the

ground that the road having been
constructed entirely on a public land
cannot be considered an improvement
subject to tax within the meaning of
section 2 of Commonwealth Act 470, and
invoking further the decision of this Court
in the case of Bislig Bay Lumber
Company, Inc. v. The Provincial
Government of Surigao.

SAMAR

BAA

ARGUMENTS

DOCTRINES

Sec. 2. Incidence of real property tax. Except in chartered cities,

the
re shall be levied, assessed, and collected, an annual, ad valorem tax on
real property including land, buildings, machinery, and other improveme
nts not hereinafter specifically exempted.

Bislig Bay Lumber Co., Inc. v. Provincial Government of Surigao, 100 Phil.
303 It is well settled that a real tax, being a burden upon the capital, s
hould be paid by the owner of the land and not by a usufructuary (Merc
ado v. Rizal, 67 Phil., 608; Article 597, new Civil Code). Appellee is but
a partial usufructuary of the road in question."

Municipality of Cotabato, Et. Al. v. Santos, Et Al., 105 Phil. 963, this Co
urt ruled that the lessee who introduced improvements consisting of dik
es, gates and guard-houses on swamp lands leased to him by the Bure
au of Fisheries, in converting the swamps into fishponds, is exempt from
payment of realty taxes on those improvements.

RULING

NO.

The road is indeed an improvement, but it is not taxable under Sec.

2 of the Assessment Law pursuant to the ruling in Bislig Bay case
which held that a private party who introduces improvements on
public land subject of a lease is only a partial usufructuary of the
road and therefore cannot be made to pay real estate tax: because
in such cases ownership ultimately remains with the government
and the improvements remain open to public use.
In Municipality of Cotabato et al. v. Santos, it was held that im
provements which form an integral part (such as dikes and gates)
of a publicly owned immovable (such as swampland converted int
o fishponds) are tax-exempted.

RULING

The argument is untenable. The road in issue in the Bislig Bay

case was exempted not because it was constructed on inalienabl
e public lands. What is emphasized in the lease is that the improv
ement is exempt from taxation because it is an integral part of th
e public land on which it is constructed and the improvement is t
he property of the government by right of accession. Under Secti
on 3(a) of the Assessment Law (Com. Act 470), all properties ow
ned by the government, without any distinction, are exempt fro
m taxation.

QUESTIONS
1.Is Samico Road an improvement on the land?
Answer: YES

2. Why is Samico Road not taxable?

Answer: It is not taxable under Sec. 2 of the Assessment Law pursuant t
o the ruling in Bislig Bay case which held that a private party who introd
uces improvements on public land subject of a lease is only a partial usuf
ructuary of the road and therefore cannot be made to pay real
estate tax: because in such cases ownership ultimately remains with the
government and the improvements remain open to public use.

QUESTIONS
3. Why is the Bislig case applicable although the
road in that case was built on inalienable tim
berland?

Answer: The road in issue in the Bislig Bay case was exempted not because it
was constructed on inalienable public lands. What is emphasized in the lease is th
at the improvement is exempt from taxation because it is an integral part of the p
ublic land on which it is constructed and the improvement is the property of the g
overnment by right of accession. Under Section 3(a) of the Assessment Law (Com.
Act 470), all properties owned by the government, without any distinction, are ex
empt from taxation.

4. Who should pay the Land Taxes?

Answer: Bislig Bay Lumber Co., Inc. v. Provincial Government of Surigao,
100 Phil. 303 It is well settled that a real tax, being a burden upon the
capital, should be paid by the owner of the land and not by a usufructua
ry (Mercado v. Rizal, 67 Phil., 608; Article 597, new Civil Code).