[G.R. No. L-9023. November 13, 1956.

]
BISLIG BAY LUMBER COMPANY. INC., Plaintiff-Appellee, vs. THE PROVINCIAL
GOVERNMENT OF SURIGAO, Defendant-Appellant.

DECISION
BAUTISTA ANGELO, J.:
Bislig Bay Lumber Co., Inc. is a timber concessionaire of a portion of public forest located in the
provinces of Agusan and Surigao. With a view to developing and exploiting its concession, the
company constructed at its expense a road from the barrio Mangagoy into the area of the
concession in Surigao, with a length of approximately 5.3 kilometers, a portion of which, or
about 580 linear meters, is on a private property of the company. The expenses incurred by the
company in the construction of said road amounted to P113,370, upon which the provincial
assessor of Surigao assessed a tax in the amount of P669.33.
Of this amount, the sum of P595.92 corresponds to the road constructed within the area of the
concession. This was paid under protest. Later, the company filed an action for its refund in the
Court of First Instance of Manila alleging that the road is not subject to tax. Defendant filed a
motion to dismiss on two grounds (1) that the venue is improperly laid, and (2) that the
complaint states no cause of action; but this motion was denied. Thereafter, Defendant filed its
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answer invoking the same defenses it set up in its motions to dismiss. In the meantime, Congress
approved Republic Act No. 1125 creating the Court of Tax Appeals, whereupon Plaintiff moved
that the case be forwarded to the latter court as required by said Act. This motion however, was
denied and, after due trial, the court rendered decision ordering Defendant to refund to Plaintiff
the amount claimed in the complaint. This is an appeal from said decision.
The first error assigned refers to the jurisdiction of the lower court. It is contended that since the
present case involves an assessment of land tax the determination of which comes under the
exclusive jurisdiction of the Court of Tax Appeals under Republic Act No. 1125, the lower court
erred in assuming jurisdiction over the case.
It is true that under section 22 of said Act the only cases that are required to be certified and
remanded to the Court of Tax Appeals which upon its approval are pending determination before
a court of first instance are apparently confined to those involving disputed assessment of
internal revenue taxes or custom duties, and the present case admittedly refers to an assessment
of land tax, but it does not mean that because of that apparent omission or oversight the instant
case should not be remanded to the Court of Tax Appeals, for in interpreting the context of the
section above adverted to we should not ignore section 7 of the same act which defines the extent
and scope of the jurisdiction of said court. As we have held in a recent case, “section 22 of
Republic Act No. 1125 should be interpreted in such a manner as to make it harmonize with
section 7 of the same Act and that the primordial purpose behind the approval of said Act by
Congress is to give to the Court of Tax Appeals exclusive appellate jurisdiction ‘over all tax,
customs, and real estate assessment cases through out the Philippines and to hear and decide
them as soon as possible’“ (Ollada vs. The Court of Tax Appeals, 99 Phil., 604). Considering
this interpretation of the law, it logically follows that the lower court did not act properly in
denying the motion to remand the instant case to the Court of Tax Appeals.
Considering, however, that it would be more expeditious to decide this case now than to remand
it to the Court of Tax Appeals because, even if this course is taken, it may ultimately be appealed
to this court, we will now proceed to discuss the case on the merits.
The Tax in question has been assessed under section 2 of Commonwealth Act No. 470 which
provides:chanroblesvirtuallawlibrary

“SEC. 2. Incidence of real property tax. — Except in chartered cities, there shall be levied,
assessed, and collected, an annual ad- valorem tax on real property, including land, buildings,
machinery, and other improvements not hereinafter specifically exempted.”
Note that said section authorizes the levy of real tax not only on lands, buildings, or machinery
that may be erected thereon, but also on any other improvements, and considering the road
constructed by Appellee on the timber concession granted to it as an improvement, Appellant
assessed the tax now in dispute upon the authority of the above provision of the law.
It is the theory of Appellant that, inasmuch as the road was constructed by Appellee for its own
use and benefit it is subject to real tax even if it was constructed on a public land. On the other
hand, it is the theory of Appellee that said road is exempt from real tax because (1) the road
belongs to the national government by right of accession, (2) the road cannot be removed or
separated from the land on which it is constructed and so it is part and parcel of the public land,
and (3), according to the evidence, the road was built not only for the use and benefit of Appellee
but also of the public in general.
We are inclined to uphold the theory of Appellee. In the first place, it cannot be disputed that the
ownership of the road that was constructed by Appellee belongs to the government by right
accession not only because it is inherently incorporated or attached to the timber land leased to
Appellee but also because upon the expiration of the concession, said road would ultimately pass
to the national government (Articles 440 and 445, new Civil Code; Tabotabo vs. Molero, 22
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Phil., 418). In the second place, while the road was constructed by Appellee primarily for its use
and benefit, the privilege is not exclusive, for, under the lease contract entered into by the
Appellee and the government and by public in by the general. Thus, under said lease contract,
Appellee cannot prevent the use of portions, of the concession for homesteading purposes (clause
12). It is also in duty bound to allow the free use of forest products within the concession for the
personal use of individuals residing in or within the vicinity of the land (clause 13). The
government has reserved the right to set aside communal forest for the use of the inhabitants of
the region, and to set forest reserves for public uses (clause 14). It can also grant licenses
covering any portion of the territory for the cutting and extraction of timber to be used in public
works, for mining purposes, or for the construction of railway lines (clause 15). And, if it so
desires, it can provide for logging railroad, cable ways timber chute os slide, telephone lines,
pumping stations log landings, and other rights of way for the use of forest licensees,
concessionaires, permittees, or other lessees (clause 26). In other words, the government has
practically reserved the rights to use the road to promote its varied activities. Since, as above
shown, the road in question cannot be considered as an improvement which belongs to Appellee,
although in part is for its benefit, it is clear that the same cannot be the subject of assessment
within the meaning of section 2 of Commonwealth Act No. 470.
We are not oblivious of the fact that the present assessment was made by Appellant on the
strength of an opinion rendered by the Secretary of Justice, but we find that the same is
predicated on authorities which are not in point, for they refer to improvements that belong to the
lessee although constructed on lands belonging to the government. 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
usufructuary (Mercado vs. Rizal, 67 Phil., 608; Article 597, new Civil Code). Appellee is but a
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partial usufructuary of the road in question.

Wherefore, the decision appealed from is affirmed, without costs.
Paras, C.J., Padilla, Montemayor, Labrador, Reyes, J. B. L., Endencia and Felix. JJ.,
concur.

VELASCO vs. CUSI, JR. and THE CITY OF DAVAO

G.R. No. L-33507

July 20, 1981

FACTS: Petitioner filed in the CFI of Davao an action against Davao City to quiet title to her
Lot 77-B-2, a portion of which she claims to having been occupied illegally as part of Bolton
Street, Davao City.

On a motion to dismiss filed by the defendant, on the ground that the complaint states no cause
of action, the Court, presided over by respondent Judge Cusi Jr., dismissed the case. The
allegations in the complaint that the Bolton Street encroached on the lot of the plaintiff and that
the defendant had continuously occupied the portion so encroached upon do not, contrary to the
conclusion of the plaintiff found in the complaint, cast ‘ . . a cloud of doubt on the title of the
plaintiff over said portion which would justify this action.

Hence, this petition for certiorari seeking a review of the Order of dismissal

ISSUE: WON Boston st. is an easement and a legal encumbrance on petitioner’s lot.

HELD: WHEREFORE, no reversible error having been found in the Order complained of, the
same is hereby AFFIRMED, and the instant petition, dismissed

YES

Section 39 of Act 496:

Every person receiving a certificate of title in pursuance of a decree or registration, and every
subsequent purchasers of registered land who takes a certificate of title for value in good faith
shall hold the same free of all encumbrances, except those noted on said certificate, and any of
the following encumbrances which may be subsisting namely:

xxx xxx xxx

Third. Any public highway, way, private way, … or any government irrigation

XX

It appears on the face of the complaint that Bolton Street has been where it is from time
immemorial. Bolton Street constituted an easement of public highway on subject Lot No. 77,
from which petitioner’s lot was taken, when the said bigger lot was original registered. It
remained as such legal encumbrance, as effectively as if it had been duly noted , or
notwithstanding the lack of an annotation, on the certificate of title, by virtue of the clear and
express provision of Section 39 of Act 496, it being admitted that at the time of the registration
of Lot 77, the public highway was already in existence or subsisting

NOTES:

Bolton Street cannot be a discontinuous easement as she claims it to be, which may not be
acquired by prescription. Nonetheless, whether the mode of acquisition of the easement that
Bolton Street is, would be only by virtue of title, as petitioner contends, this is not material or of
any consequence. The action is to quiet title and damages; but the complaint does not allege any
cloud or doubt on the title