Asiatec vs. A. Llanes

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ASIATIC PETROLEUM CO. (P.I.), LTD., plaintiff-appellee, vs.A. LLANES, provincial treasurer of Cebu, defendant-appellant      G.R. No. L-25386  October 20, 1926



FACTS:
           
            Asiatec Petroleum appealed at the Supreme Court against Llanes for the purpose of recovering  the sum of P3,523.02 from the Provincial Treasurers of Cebu. Way back  August 22, 1919 plaintiff and the defendants made a contract of lease of the Shell Island. The said island owned by Asiatec Petroleum Co. whereby Government leased to said company for the term of fifty years a piece of land, having an area of one and one-half hectares, situated adjacent to the Island of Mactam, municipality of Opon, Province of Cebu. The plaintiff made some improvements At the time of the making of the lease, the land referred to was accustomed to be covered by water at high tide; but it was needed by the lessee as a site for tanks to be used in the storage of petroleum. In order to reclaim the site and protect the improvements thereon from the sea, it was necessary for the company to build a concrete and cement foundation, protected by retaining walls of the same material. Under section 344 of the Administrative Code especially exempts from local taxation property owned by the United States of America or by the Government of the Philippine Islands. On the other hand Act No. 2874; and in section 113 of this Act there is a general provision that all the lands granted by virtue of said Act, except homesteads, shall be subject to the ordinary taxes which shall be paid by the grantee even though the title remains in the Government.

ISSUE:

            Whether or not  the law Act No. 2874 section 113  which provides all the lands granted by virtue of said Act, except homesteads, shall be subject to the ordinary taxes which shall be paid by the grantee even though the title remains in the Government. be given a retroactive effect.
           

Ruling:
Street, J.:
Court decide that the Lessee is not taxable in respect to the land which is the subject of the lease, it is subject to taxation with respect to the improvements. The appealed judgment must therefore be modified by reducing the recovery to the amount paid upon the land, namely, P2,270.88; and this refund must, under section 1579 of the Administrative Code, be made without interest.
It being understood that the recovery is limited to the amount last above stated, without interest, the same is affirmed, without costs.

AVANCEÑA, C. J.
Act No. 1654 which, in making inapplicable, in leases of reclaimed seashore land, the exemption in favor of the Government from taxation, has made reference not only to, the land but also to the improvements thereon. If these improvements made by the lessee were to be considered the property of the lessee during the lease, the law would not have referred to them inasmuch seven without this reference said improvements would be subject to taxation. It is my opinion that the Government, being the owner of the land on which the improvements were made, upon which taxes are sought to be levied, and as these improvements have been by the plaintiff, as lessee, without the right to remove them, they must be held to be Government property and are also exempt from taxation.


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