BOARD OF ASSESSMENT APPEALS, CITY ASSESSOR and CITY TREASURER OF QUEZON CITY vs. MANILA ELECTRIC COMPANY G.R.

No. L-15334 31 January 1964 CASE SUMMARY By virtue of Act No. 484, in 1902, the Municipal Board, having been authorized by the Philippine Commission, granted a franchise to construct, maintain and operate an electric street railway and electric light, heat and power system in the City of Manila. Said franchise was awarded to Charles M. Swift having the most favorable bid. Herein respondent Manila Electric Company (Meralco for short), became transferee and owner of the franchise. Meralco transmit electricity from its hydro-electric plant in Laguna to Manila through transmission wires which carry high voltage current. These transmission wires were fastened to insulators attached on steel towers constructed by Meralco at intervals from Laguna to Manila. Respondent Meralco has constructed forty (40) steel towers within Quezon City, on land belonging to it. In 1955, the City Assessor of Quezon City, herein referred to as petitioner, declared said steel towers for real property tax. Meralco filed a petition to cancel declaration but was denied by the petitioner. Thus, an appeal was taken by Meralco to the Board of Assessment. The latter required Meralco to pay for real property taxes on the said steel towers for the years 1952 to 1956. Meralco paid for real property taxes, however, filed a petition for review in the Court of Tax Appeals (CTA for brevity). CTA rendered a decision ordering the cancellation of said tax declarations and the City Treasurer of Quezon City to refund the respondent for the amount paid on said taxes. A motion for reconsideration was filed by the City Treasurer but was denied. So, this instant petition for review was filed to the Supreme Court. Issues of the Case

Whether the steel towers or poles of the Meralco considered real so that they could be subjected to real property taxes.

Applicable Provisions of the Law Article 415 of the Civil Code does, by stating the following are immovable property: (1) Land, buildings, roads, and constructions of all kinds adhered to the soil; xxx xxx xxx

(3) Everything attached to an immovable in a fixed manner, in such a way that it cannot be separated therefrom without breaking the material or deterioration of the object; xxx xxx xxx

(5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for an industry or works which may be carried in a building or on a piece of land, and which tends directly to meet the needs of the said industry or works; xxx xxx xxx

Ruling of the Court The decision appealed from was affirmed by the Supreme Court, with costs against the petitioners. The Supreme Court upheld the previous ruling of the CTA that said steel towers are personal properties and cannot be subjected for real property taxes, and as a consequence, and that the reimbursement for the payment made by Meralco is proper. In finding that said steel towers are personal properties the Supreme Court ruled:
1. that they do not come within the objects mentioned in paragraph 1, because they do not constitute buildings or constructions adhered to the soil. They are not construction

analogous to buildings nor adhering to the soil. As per description, given by the lower court, they are removable and merely attached to a square metal frame by means of bolts, which when unscrewed could easily be dismantled and moved from place to place; 2. that they can not be included under paragraph 3, as they are not attached to an immovable in a fixed manner, and they can be separated without breaking the material or causing deterioration upon the object to which they are attached. Each of these steel towers or supports consists of steel bars or metal strips, joined together by means of bolts, which can be disassembled by unscrewing the bolts and reassembled by screwing the same; and

3. that they do not also fall under paragraph 5, for they are not machineries, receptacles, instruments or implements, and even if they were, they are not intended for industry or works on the land. Petitioner is not engaged in an industry or works in the land in which the steel supports or towers are constructed. Opinion These steel towers are personal properties. Applying the tests in determining the nature of property as to whether it is personal, the steel towers are indeed, personal properties. Though test by description, they can be carried from place to place or could be easily removed without injuring the property to which these were attached. By test of exclusion, these are not included in the enumerations made in Article 415 of the New Civil Code. Also, its purpose fell short as to mean constructions adhered to the soil, or those receptacles intended for use on the tenement or the land. Industry does not operate on said land where these steel towers were placed or constructed.