CTA Case No. 1439 (Decision)

aJD"''I!ILlC 01' THE PHIL!PPIN ,IJ COURT OF TAX APP~ .Nll...l �: VISAYAN ELECTRIC COMPAl\TY , INC ., C. I . A. Pe titioner , CASE NO . 1439 - versus - THE BOAHD OF ASSESS r~ENT APFEALS OF THE CITY OF DU?.tAGUE TE , Responde nt. X- - - ~- - ~ - - - - - ~ - - X DEC I S I 0 N This is an appeal from a decision of the Board of Assessment Appeals of the City of Dumaguete dated July 11 , 1963 , (App endi x 11 A11 - Petition) affirming the real estate ta x assessment of the City Assessor on certain electr ic and power installations of the peti - tioner in the sum of Pl20 , 460 . 00 . The petitioner is the successo r- in - interest of the Visayan Electric Ca ., S. A. which in turn was a successor to 11 La Electrica 11 , the original grantee of a legislative franchise (Act No . 2781) for the opera - tion and maintenance of an electric lig ht , heat and power system in the City of Dumaguete (par . I , peti- tion ; par . I , f\nswer ; Exhibit 1 11 11 , pp . 59 - 63 CTA , Re - cords) . On Marc h 29 , 1961 , the City Assessor of Dumaguete issued Tax Declaration No . 16567 (New) in the name of the petitioner, assessing for taxation purposes under the provisions of Art . 14 , of Act 2791 , electric and power installations of the petitioner (Exhibit A) G

') ' 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. Th e electric a nd power installations , as valued by t he City Assessor , are as follows : VALUE 87 posts , concrete 8 11 x8" x25 ' P7 , 003 . 50 288 II 8 11 x8 11 x30 ' 26 , 208 . 00 II 68 iron pi pe s 4"x0 x20 ' 5 , 712 . 00 50 iron pipes 4 11 x0 x25 ' 4 , 550. 00 47 posts , wooden 8" x.0 x25 1 2, 466 . 00 148 II 9 , 324. 00 II 8"x.0 x30 ' 94 po s ts , wooden 8 11 x.0 x25' 7,567 .00 55 trans fo r mers 38 , 500 . 00 29 , 762 mete rs - wire primary 3,720. 00 119 , 048 11 11 seconda ry 11 , 904 . 80 Accessories - insu la tors, kn obs , brackets , etc ., - -- ----------- 3 , 500 . 00 TGTAL Pl20, 460. 00 On April 17 , 1961 , petitioner wr ote the City Assessor of Duma guete inf orming the la t ter t ha t , as per opinion of its lawyers , t he propert i es in que stion are personal prope rties , and th erefore not subject to real es tate taxes . At the same time it ret urned Ta x Declaration No . 16567 , with a request that it be can- celled (par . V, ~eti tion) . On May 8 , 1961 , the City Attorn ey of Dumaguete , upo n request of the City A-s�se--ssor, rendered a n opi - nion that pursua nt to the1 provi sio ns of Art. 14 , of Act 2791 , the assess men t on the prope rtie s in ques - tion is i n order (par. VII, etition) . Accordingly , the City Assessor of Dumaguete , in a writt en i nd orse - ment , i..nformed the petiti oner that in vi ew of said l egal opinion , Tax De claration 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 assess me nt of the City Assessor. (Appendix "A" , Petition) . Pursuant to th e above - ment ion ed resolution of the respondent , the City Trea sure r of Dumaguete de- manded f rom the pe titioner 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 issu e raised is whether or not the properties of t he pet:t ioner above des crioed are subject to real estate tax . Petitioner contends that the electric posts , transforme rs , wires , insulators , knob s, brac ke ts , and other accessories used in the operation and main- �. tenance of its electric light, �neat, and power system are personal properties and, the refore , 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 Ma nila Electric Company v. Boa rd of Assessment Ap peals of Quezon City et al., CIA Case No . 358 , De cember 29 , 1953 . \ '

DECISION C. I.A . CASE NO . 1459 / -4- Contrarywise, respondent claims that although the prop erties 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 work s, as to fall under I 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 paragra ph 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). Th e 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 11 Neither could we classify petitioner ' s properties as immovables under paragraph 3 of the same article ~f the Ne w Civil Code . Th e 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 suc h a way that it cannot be separated therefro m with- out breakinq the material or deterioration of the object. 1 (par. 3, Articl e 415, New Civil

DECISION C.I . A. CASE NO 1459 - 5- Code) . x x x X X X X X "It is of common knowledge that the poles, conduit , wires , equipments and other app liances of the petition er compa ny as is the case with the ~eralco are moved or replaced now a nd then for the convenience of th eir cus - tome rs and the public. Old wooden , creosoted a nd truscon poles, wires and other installa - tio ns are often re pl aced 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 . " Para graph 5 , rticle 415 of the New Civil Code is just as inapp licable to pet i- tioner ' s properties for the purpose of classi- f ying th em as i mmova bles for realty tax purposes as th e other t wo para graphs quoted above . In order that machinery , receptacles , instruments or i mplemen ts attached to a piece of land or bullding may be considered as i mmovables under said paragra ph 5, they must be attached the re to b the owner of the t enement Davao Saw ;:;i ll Co. vs . Cas tillo 61 2hil ., 708 ) and must be inte nded for his industry or trade (Be r kenkotter vs . Cu Unjieng 61 Phil ., 663 ). As admitted by both pa rties , t he equipments , poles and other apparatus of petitioner now in question are installed on public and priv ate property as the peti- tion er herein has no land or building of its own in Bacolod City . One who is e ngaged in the operation and maintenance of a telephone system by virtue of a franchise cannot be said to be enga ged in an industry or trade . A telephone compa ny is a co mmon carrier in the same se ns e as a telegra ph 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 ; Hock ett 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 a nd thei r te mpo rary a ttachment to public and private tene ment not belonging to petitioner ;

DECISION C. I . A. CASE NO . 1459 J 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 subje ct to relocation or removal ; t he intention of oet itioner and t he le ssors of the land and building on which t he y a re installed in co nsiderin g th em as such ; and , th e 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 pro pe rty to wh ich they are fixed , the more ap pr op riate provision of law a pp licable in their classificatio n is pa~agraph 4 , Article 416 of the New Civil ~ode ~hich reads as follows : ' Th e follo win g things are deemed to be personal property : X X X X (4) In general , all t hings wh ich can be transported from place to place without impairment of the real property to which they are fixed .' " Being personal or movabl e properties , the Treasurer of Ba c olod City and the respondent Board of Tax Appeals of said City erred , therefore , in classifyin g petitioner ' s properties as im- movables and i n assessing and coll e cting real estate taxes thereon for the years 1953 , 1954 and 1955 ... The Supreme Court , in the case of Bo ard 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 th e objects mentioned in pa ra gra ph 1 , because they do not constitute buildings or constructions adhe red to the soil . They are not constructions analo gous to build - i ng s nor adhering to the soil . As per des - cri ption, given by the lower court , they are remova ble and mere ly attached to a square metal frame by means of bolts , which when unscrewed could ea sily be d ismantled and moved f r om II

DECISION C. I.A . CASE NO . 1459 - 7- plac e to place . They ca nnot be includ ed unde r para gra ph 3 , as t he y a re not at - tac hed to an i mmova ble in a f ixed ma nner , and t hey can be separat ed wi thout break i ng t he materi al or causing det erioration upon t he obj e ct t o wh ich t he y are attac hed . Eac h of th e se stee l t owers or supports con - s i sts of steel bars or me ta l strip s , joined to gether by mean s of bolts , wh ich can be di s asse mbl ed by unscrewing t he bolts and r eassemb led by screwing the same . The se steel towers or suop or ts do not fall under Paragra ph 5 . for the y are not ma - chine ~ i e s or ~ e ceptacl e s . in s t~uments or impleme nts 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 th e land in which the stee suppor s or towers are constructed under - li ning s ~pp li e d) . We find no urge nt reason t o depa r t fr om th e above - quot ed deci s ions . WH~REFORE , t he d ecision of t he respond ent con - tai ned in its resolut i on dat ed July 11 , 1963 (Appe nd ix "Au) is her eby r eversed and set aside , without pro- nouncement as to costs . SO ORDERED . Iv.' ani1a, March 13 , 1964 . MARIANO ;,J BLE Presidi ng Judg e INE CONCUR : RONAN M. UMALI Ass ociate Judge