7 Z Visayan Electric Company, Inc. vs. = Gcalcas Case No, et al.

DECISION

C. I .A. CASE NO. 1459 ... 2 - ' ) ' This Tax Declarati6n No . 16567 was subsequently su- perseded and cancelled by Tax D ec l~ ra t ion No . 0- 1495. The electric and power installations , as valued by t he City Assessor , are as follows : 87 posts , concrete 288

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II

68 iron pi pe s 50 iron pipes 47 posts , wooden 148

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94 posts , wooden 55 transfor mers 8 11 x8"x25 ' 8 11 x8 11 x30' 4"x0 x20' 4 11 x0 x25 ' 8" x.0 x25 1 8"x.0 x30' 8 11 x.0 x25' 29 , 762 meters- wire primary 119, 048 11 11 secondary Accessories - insulators, knobs ,

VALUE

P7 , 003 . 50 26 , 208 . 00 5, 712 . 00 4 , 550. 00 2, 466 . 00 9 , 324. 00 7,567 .00 38 , 500 . 00 3,720. 00 11, 904. 80 brackets , etc ., - ------------- 3, 500. 00

TGTAL

Pl20, 460. 00 On April 17, 1961 , petitioner wr ote the City Assessor of Dumaguete inf orming the la tter t hat , as per opinion of its lawyers , t he properti es in question are personal properties , and therefore not subject to real estate taxes .

At the same time it returned Tax Declaration No . 16567 , with a request that it be can- celled (par. V, ~eti tion) .

On May 8 , 1961 , the City Attorney of Dumaguete , upon request of the City A-s·se--ssor, rendered an opi- nion that pursua nt to the1 provi sions of Art. 14, of Act 2791 , the assessment on the propertie s in ques- tion is i n order (par. VII, etition) .

Accordingly , the City Assessor of Dumaguete , in a written i ndorse- ment , i..nformed the petitioner that in view of said l egal opinion , Tax Declaration No. 16567 stands . (par . VIII, Petition; par. VIII , Answer . )

DECISION

C. I .A. CASE NO 1459 The petitioner, therefore , appealed to the Board of Assessment Appeals of the City of Dumaguete , which in a resolution dated July 11, 1963, affirmed the assessment of the City Assessor. (Appendix "A" , Petition) .

Pursuant to the above-mentioned resolution of the respondent , the City Trea surer of Dumaguete de- manded f rom the petitioner the payment of the sum of P5 , 709 . 79 as real property ta x, inclusive of pena lties~ par . XII , Answer ).

Dissatisfied with said decision of respondent, petitioner, on August 2, 1963, filed the present petition for review.

The only issue raised is whether or not the properties of t he pet:tioner above descrioed are subject to real estate tax .

Petitioner contends that the electric posts , transformers , wires , insulators , knobs, brackets , and other accessories used in the operation and main- •.

tenance of its electric light, ·neat, and power system are personal properties and, therefore , not subject to real estate tax .

Cited in suppor t of this con- tention are our decisions in the Philippine Long Dis - tanc e Telephone v. Board of Tax Appeals of Bacolod City , C. I.A. Case No. 300, June 29 , 1957 , and Manila Electric Company v. Board of Assessment Appeals of Quezon City et al., CIA Case No . 358 , December 29 , 1953.

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DECISION

C. I.A . CASE NO . 1459 - 4 - Contrarywise, respondent claims that although the properties in question are by their nature per- sonal properties , nevertheless, by destination tpey are real prop erties falling under par. ~ ' Art . 415 of the New Civil Code .

Respondent further argues that, even granting that petitioner is not engaged in an industry , nevertheless , it must necessarily be engaged in some kind of works, as to fall under

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par. 5, of Art . 415 of the same Code. Petitioner 's contention is well taken. In the case of the Philippine Long Distance Telephone Com- pany v. the Board of Tax ppeals of Bacolod City, suora, this Court held :

"The central of fice equipments and outside installations of petitioner such as its poles , conduit , terminals , cables , radio equi pments and manholes cannot be considered as constructions so as to make them fall within the purview of paragraph 1, Article 415 of the New Civil Code .

Constructi ons generally refer to big improvements which have to undergo the process of building, construction and erection or ex- tensive repairs and alterations (Webster ' s New International Dictionary , 2nd Edition; pp . 498-500, Vol. SA Words and Phrases). The setting up of petitioner ' s central office equip ~ ments inside a rented building , the digging of manholes and putting up of telephone poles are not acts of construction, building or erection as the terms are commonly and generally usedo 11Neither could we classify petitioner ' s properties as immovables under paragraph 3 of the same article ~f the New Civil Code . The attach- ment of movable to immovable property in order that the former could be classified under the category of the latter by attachment or incor- poration must be 'in a fixed manner, in such a way that it cannot be separated therefrom with- out breakinq the material or deterioration of the object. 1 (par. 3, Article 415, New Civil /

DECISION

C.I .A. CASE NO 1459 - 5 - Code) . x x x

X

X

X

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X

"It is of common knowledge that the poles, conduit , wires , equipments and other appliances of the petitioner compa ny as is the case with the ~eralco are moved or replaced now and then for the convenience of their cus- tomers and the public.

Old wooden , creosoted and truscon poles, wires and other installa - tions are often replaced with new ones with the use of special equipments and devices without the least impairment of the real prop- erty to which they are fixed . " Paragraph 5, rticle 415 of the New Civil Code is just as inapplicable to peti- tioner ' s properties for the purpose of classi- f ying them as i mmovables for realty tax purposes as the other t wo paragraphs quoted above .

In order that machinery , receptacles , instruments or i mplements attached to a piece of land or bullding may be considered as i mmovables under said paragraph 5, they must be attached thereto b the owner of the t enement Davao Saw ;:;ill Co. vs . Castillo 61 2hil., 708 ) and must be intended for his industry or trade (Ber kenkotter vs . Cu Unjieng 61 Phil., 663 ).

As admitted by both parties , t he equipments , poles and other apparatus of petitioner now in question are installed on public and private property as the peti- tioner herein has no land or building of its own in Bacolod City.

One who is engaged in the operation and maintenance of a telephone system by virtue of a franchise cannot be said to be engaged in an industry or trade . A telephone compa ny is a common carrier in the same sense as a telegraph company, and i t has certain well-defined obligations of public character.

It is a public quasi corporation. (Swayze v . City of ~onroe 40 So . 926 , 928 , 116 La 643 ; Hockett vs . State 5 N. E. 178 , 185, 105 Ind . 250, 55 Am. Rep. 201 . ) "Considering the nature of petitioner ' s properties ; the use f or which they are intended and their temporary attachment to public and private tenement not belonging to petitioner;

DECISION

C. I .A. CASE NO. 1459

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6 - the intenti6n of the Leoislature when it granted the f ranchise u~d er Act 3436 in conside ring t hem as mova bles subject to relocation or removal ; t he intention of oetitioner and t he le ssors of the land and building on which t hey are installed in co nsidering them as such; and , the possi- bility of their separation from the building or lands on wh ich they are installed with- out brea king them or wi.thout impairing the r eal property to which they are fixed , the more appr opriate provision of law applicable in their classification is pa~agraph 4 , Article 416 of the New Civil ~ode ~hich reads as follows :

' The following things are deemed to be personal property :

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X

X

X

(4) In general , all t hings which can be transported from place to place without impairment of the real property to which they are fixed .' "Being personal or movable properties , the Treasurer of Ba colod City and the respondent Board of Tax Appeals of said City erred , therefore , in classifying petitioner ' s properties as im- movables and i n assessing and collecting real estate taxes thereon for the years 1953 , 1954 and 1955 ...

The Supreme Court , in the case of Board of Assess- ment Appeals , et al. v . Manila Electric Co., G. R. No. L- 15334, January 31 , 1964 (affirming CTA Case No . 358 , December 29 , 1958), held :

"The steel towers or supports in question , do not come within the objects mentioned in para graph 1, because they do not constitute buildings or constructions adhe red to the soil . They are not constructions analogous to build- i ngs nor adhering to the soil . As per des- cription, given by the lower court , they are remova ble and merely attached to a square metal frame by means of bolts , which when unscrewed could ea sily be dismantled and moved f r om

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DECISION

C. I.A. CASE NO. 1459 - 7 - plac e to place .

They cannot be included unde r para graph 3, as t hey are not at- tached to an i mmova ble in a f ixed manner , and t hey can be separated wi thout breaki ng t he materi al or causing deterioration upon t he obj ect t o which t hey are attached. Each of these stee l t owers or supports con- s i sts of steel bars or meta l strips , joined together by means of bolts , which can be di sassembl ed by unscrewing t he bolts and r eassembled by screwing the same . The se steel towers or suopor ts do not fall under Paragraph 5 . for they are not ma- chine ~ i e s or ~e ceptacl e s . in s t~uments or implements and even if they were , they are not intended for industry or works on the land .

Petitioner is not engaged in an industr or works on the land in which the stee suppor s or towers are constructed under- lining s ~pp li e d) .

We find no urgent reason t o depar t from the above- quot ed decis ions .

WH~ REFORE , t he decision of t he respondent con- tai ned in its resoluti on dated July 11 , 1963 (Appendix "Au) is her eby r eversed and set aside , without pro- nouncement as to costs .

INE CONCUR:

RONAN M. UMALI

Associate Judge

MARIANO ;,J BLE

Presiding Judge