Cotabato Electric Cooperative v. Municipal Assessor/Treasurer of Makilala

[CBAA CASE NO. M-24. October 2, 2007.] COTABATO ELECTRIC COOPERATIVE, REP. BY: ALEJANDRO COLLADOS OIC General Manager , petitioner-appellant , vs. LOCAL BOARD OF ASSESSMENT APPEALS, COTABATO PROVINCE , appellee , MUNICIPAL ASSESSOR/TREASURER OF MAKILALA, MAGPET, PRESIDENT ROXAS, ALL OF THE PROVINCE OF COTABATO , respondents-appellees . DECISION Before this Board is an appeal of the Resolution of the Local Board of Assessment Appeals (LBAA), Cotabato Province, dated July 4, 2007. The dispositive portion is quoted below: "x x x on the validity of the assessment of the steel towers, electric poles, transmission lines and transformers as being taxable for real property taxation it is necessary for the petitioner COTELCO to pay the taxes under protest under Section 252 of RA 7160 before this petition to prosper. Moreover, COTELCO should have filed this petition within the reglementary period within which to perfect this petition under Section 226 of RA 7160. The fact, that COTELCO failed to comply with all these requirements, this petition is considered dismissed." Undaunted, Petitioner-Appellant Cotabato Electric Cooperative (COTELCO) elevated their case before Us on July 18, 2007 alleging they received the notice of the Resolution and the Resolution of the Local Board itself dated July 6, 2007. As shown in the records, both the LBAA of Cotabato Province and the Respondents-Appellees received the appellant's brief, by personal service, on June 20, 2007. Despite such receipt, Respondents-Appellees failed to file their answer or comment within ten (10) days from receipt of the appeal per Section 4, Rule IV of the Rules of Procedure before the Central Board of Assessment Appeals. Thus, this appeal is deemed submitted for decision. ANTECEDENTS It is undisputed that Petitioner-Appellant was created under P.D. No. 269 with its business address at Manubu-an, Matalam, Cotabato. It is providing electric services throughout the Province of Cotabato. In the course of its operation it has installed steel towers, electric posts, transformers, and transmission lines to enable it to provide electric services to all its customers. While, Respondents-Appellees are local government agencies, namely: Municipal Assessors and Treasurers of Magpet, Makilala and President Roxas, all of the Province of Cotabato. They are tasked to make realty tax assessments and to collect them. In charging Petitioner-Appellant with real property tax, Respondents-Appellees argued, THUS: ISHCcT "Poles can be regarded as realty because they are attached to the land while Transformers and Transmission Lines are connected to machinery and other devices for conveying electric current, therefore, appurtenance or accessories of the machinery. Although removable, these auxiliary facilities or accessories are essentially being used to meet the needs of their business and it is really very necessary to the operation for without them their business would be useless." (First Paragraph, Annex "B-1" of Appellant's Brief) Accordingly, effective on May 25, 2006, the assessor of the Municipality of Makilala assessed COTELCO of P3,040,520.70 real property tax in accordance with Section 204 of RA 7160. Similarly, each of the Municipalities of Magpet and President Roxas assessed Petitioner-Appellant of P1,532,626.30. Petitioner-Appellant disagrees with these assessments. They maintain that electric posts, steel towers, transmission lines and transformers are personal properties and are not subject to real property taxation. They are relying on Article 415 of the New Civil Code as realty is nowhere defined in the assessment and real property tax laws. They argue applicable to their situation is the case of the Board of Assessment Appeal, City Assessor and City Treasurer of Quezon City vs. Meralco , G.R. No. L-15334, January 31, 1964. Petitioner-Appellant assigns two errors of the Local Board: 1. "That the Local Board of Assessment Appeals erred in saying that steel towers/electric posts/transmission lines/transformers are taxable under CA No. 420 (sic) and P.D. 464 and the Local Government Code despite the clear and categorical declaration by the Supreme Court in the case of Board of Assessment Appeals, City Assessor and City Treasurer of Quezon City vs. Meralco , G.R. No. L-15334, July 31, 1964. That the same are not real properties; hence, not taxable. 2. "The Local Board Assessment Appeals erred in saying that the appeal is dismissible by failure of the Petitioner-Appellant to comply Section 252 and 226 of RA 7160." In fine, the issues involved in the instant appeal are: Whether the appeal to the LBAA conforms to the requirements of Section 226 of R.A. 7160 and Article 317 of the Implementing Rules and Regulations of the same Act. Whether Petitioner-Appellant should first pay the real property tax, under protest, to perfect an appeal before the LBAA. Whether steel towers, electric poles, transmission lines and transformers are real properties or personal properties classified as realty for taxation purposes. On the first issue, it is considered policy of this Board to afford litigants amplest opportunity to enable them to have their case justly determined, free from the constraints of technicalities per Section 229 (b) of R.A. 7160. In Metro Rail Transport Corporation v. Court of Tax Appeals, et al. , G.R. #166273, First Division, September 21, 2005, the Supreme Court held, to wit: "Since rules of procedures are mere tools designed to facilitate the attainment of justice, it is well recognized that this Court is empowered to suspend its operation, or except a particular case from its operation, when the rigid, application thereof tends to frustrate rather than promote the ends of justice. Off-cited is the rule that it is a far better and more prudent course of action for a court to excuse a technical lapse and afford the parties a review of the case on the merits to attain the ends of justice rather than dispose of the case on technicality and cause a grave injustice to the parties, giving a false impression of speedy disposal of cases while actually resulting in more delay, if not a miscarriage of justice." In this case, we understand the enthusiasm of Respondents-Appellees in their effort to collect realty tax from Petitioner-Appellant. Yet, although taxes are the lifeblood of the nation, due process dictates that collection of taxes should be made strictly in accordance with law, since any arbitrariness will negate the very reason for the government itself ( Mercy Community Hospital, Inc. vs. LBAA of Iligan City and the City Assessor of Iligan , CBAA Case No. M-22, February 2, 2006). To make an assessment valid it demands procedural due process, with in turn, need 'the minimal requirements of notice x x x especially if the deprivation of significant x x x or property interest may occur' (Black's Law Dictionary, 3rd Pocket Edition, 1996). The notice of assessment is intended as security against arbitrary, oppressive, unjust imposition and deprivation and spoliation of property without the due process of law. If the taxpayer is not appropriately notified of the assessment, the taxpayer can therefore be delinquent and his property subjected to distraint and levy. Ultimately, the delinquent property can be sold to the public by the government. Regrettably, however, the records do not show transmission by Respondents-Appellees of a written notice of assessment and receipt thereof by Petitioner-Appellant. CAacTH A written notice of assessment and the period for appeals to the local Boards is provided for in Section 226 of R.A. 7160, thus: "Section 226. Local Board of Assessment Appeals. Any owner or person having legal interest in the property who is not satisfied with the action of the provincial, city or municipal assessor in the assessment of his property may, within sixty (60) days from the date of receipt of the written notice of assessment , appeal to the Board of Assessment Appeals of the province or city by filing a petition under oath in the form prescribed for the purpose, together with copies of the tax declarations and such affidavits or documents submitted in support of the appeal." (underscoring ours) Indeed, to send a notice to the owner or lawful possessor of real property of its new or revise values is the final act of an assessor, thereafter he no longer has any jurisdiction to entertain any request for a review or readjustment. The appropriate forum where the aggrieved party may bring his appeal is the Local Board of Assessment Appeals, as provided for by law ( Antonio P. Callanta, et al. vs. Office of the Ombudsman and City Government of Cebu , G.R. Nos. 115253-74, January 30, 1998, En Banc ). If the taxpayer received a notice of assessment, they are not, under Section 30 (now Section 226 of R.A. 7160) of the Code, precluded from receipt of such assessment, from filing with the city or provincial assessor his objection thereto or from taking such other steps as he may deem appropriate to minimize the assessment such as a request for reclassification, as the case may be. These are addressed, however, to the sound discretion of the city assessor and do not have the effect of suspending the prescriptive period. Likewise, there is nothing in the same provision which prohibits the city assessor from entertaining the objection or requests of the taxpayer, but the taxpayer has to assume the risk that pending resolution of his objections or requests, the period for appeal could prescribe. If this were not so, the assessment of the city or provincial assessor could be subjected to intermittent objections or requests for reconsideration resulting in an indefinite suspension of the running of the period for the appeal. ( United Resources Development Corporation v. BAA of Manila and City Assessor of Manila , CBAA Case No. 121) In CBAA Case No. V-10, Provincial Assessor of Leyte and Municipal Assessor of Isabel, Leyte v. LBAA of the Province of Leyte and National Development Company , May 29, 1998, we maintained to determine first when, if at all, a written notice of the questioned assessment was sent to Petitioner-Appellant as required by Section 223 of R.A. 7160. Section 223 of R.A. 7160 states that the provincial, city or municipal assessor shall send the written notice of assessment, thus: "Section 223. Notification of New or Revised Assessment. When real property is assessed for the first time or when an existing assessment is increased or decreased, the provincial, city or municipal assessor shall within thirty (30) days give written notice of such new or revised assessment to the person in whose name the property is declared. The notice may be delivered personally or by registered mail or through the assistance of the punong barangay to the last known address of the person to be served." Noteworthy is the word "shall" of the statute, which connotes a mandatory character for the provincial, city or municipal assessor to send to the person liable for the payment of real property tax a 'written notice of assessment.' In the same CBAA Case No. V-10, quoting Filipinas Synthetic Fiber Corp. v. BAA and Provincial Assessor of Batangas , CBAA Case No. 123, also cited in Letecia B. Agawin v. BAA and City Assessor of Manila , CBAA Case No. 192) viz. even "the real property tax order of payment (RPTOP) or the collection letter or the billing from the office of the provincial or municipal treasurer is NOT the notice of assessment which is required to be sent under Section 223 of R.A. 7160 (or under Section 27 of P.D. No. 464) and the implementing regulations promulgated thereunder." The function of the Notice of Assessment is to establish the starting point of the prescriptive period within which a taxpayer may appeal to the Local Board, that is, sixty (60) days from date of his receipt of the Notice of Assessment as provided for under Section 226 of RA 7160. And, when real property is assessed for the first time or when an existing assessment is increased or decreased, the provincial, city or municipal assessor shall within thirty (30) days give written notice of such new or revised assessment to the person in whose name the property is declared under Section 223 of RA 7160. Under these circumstances, the assessors are not only authorized, but also mandated, by law to issue such written notices of assessments, notwithstanding the validity or invalidity of the assessment concerned ( Cambayas Mining Corporation, et al. vs. The Provincial Assessor of Eastern Samar and the LBAA of the Province of Eastern Samar , CBAA Case No. V-23, November 22, 2005). The rule is that statutory provisions for notice and hearing must be regarded under the rules of construction as mandatory; that compliance with them in all essential particulars should be held as condition precedent to any further proceedings; and that "it is not enough to sustain a tax under such circumstance that the officers have acted with just intent, or even that the assessment is relatively fair, the conclusive answer to any suggestion of the kind . . . (being) that the party has been denied his lawful right to meet such claim at the proper time" (Cooley, Taxation, Vol. 3, Fourth Ed., pp. 2264-2265; Filipinas Synthetic Fiber Corp. vs. BAA and Provincial Assessor of Batangas , supra ). IAETDc "In the majority of jurisdiction, statutes requiring the assessor to notify the taxpayers has been held to be mandatory so that an assessor cannot make a valid assessment unless he has given prior notice" ( Viuda y Hijos de Pedro Roxas v. Rafferty , 31 Phil. 957). Moreover, to make an assessment valid, therefore, the provincial, city or municipal assessor shall send the requisite notice of assessment together with the owner's copy of the tax declaration. It may be delivered to him personally or to the occupant in possession of the property, or by mail to the last known address of the owner or thru the assistance of the punong barangay. If personally delivered to the owner or person in possession of the property, the person serving the notice shall secure the name and signature of the owner or occupant on the duplicate copy of the notice, with a notation of the date when notice was served and identification, whether recipient is the owner or occupant of the property. If assistance of the punong barangay is secured, he should be requested to place his signature on the duplicate copy of the notice. If the notice of assessment is coursed into the mail, the notice of assessment and owner's copy of the tax declaration shall be registered with return card. For obvious reasons, the duplicate copies of the notice of assessments signed by owners or occupants of property and the return registry returned cards shall be filed in the office of the provincial, city or municipal assessor. These are important in ascertaining whether appeals filed by owners of real property are filed within the reglementary period of sixty days from receipt of such notices. Indeed, the notice of assessment and owner's copy of the tax declaration shall be delivered or mailed to property owners within thirty days from entry of tax declarations covering the assessment of property in the records of assessment. (Cipriano P. Cabaluna, Jr., Real Property Taxation, 1992 Edition, pp. 129, 130). In this appeal, there is no showing in the records, regretfully, that Respondents-Appellees sent it to the Petitioner-Appellant, nor the former did offer controverting proof that Petitioner-Appellant received such notice. Instead, Respondents-Appellees', in their answer dated July 19, 2006, argued that the appeal was filed beyond the statute of limitations without evidentiary substantiation. These allegations are in the character of an affirmative defense. In Section 5 (b) of Rule 6 of the 1997 Rules on Civil Procedure: "An affirmative defense is an allegation of a new matter which, while hypothetically admitting the material allegations in the pleading of the claimant, would nevertheless prevent or bar recovery by him. The affirmative defenses include fraud, statute of limitations , release, payment, illegality, statute of frauds, estoppel, former recovery, discharge in bankruptcy, and any other matter by way of confession and avoidance." (underscoring ours) Conversely, the burden of persuasion rests upon the party who, as determined by the pleadings or the nature of the case, asserts the affirmative of an issue (CBAA Case No. L-16-95, Camarines Minerals, Inc. v. The Provincial Board of Assessment Appeals of Camarines Norte and the Municipal Assessor of Jose Panganiban, Camarines Norte ). In the instant appeal, it is the Respondents-Appellees who assert an affirmative defense. It is the Respondents-Appellees, therefore, who should have adduced evidence, valid and necessary to prove they sent a written notice of assessment upon new, or revise assessment of the properties of Petitioner-Appellant, but "all assessments or reassessments made after the first day of January of any year shall take effect on the first day of January of the succeeding year. Provided, however, that the reassessment of real property due to x x x, or to a major change in its actual use, x x x, shall be made within ninety (90) days from the date any such cause or causes occurred, and shall take effect at the beginning of the quarter next following the reassessment" per Section 221 of R.A. 7160. So, in the absence of a valid notice to the Petitioner-Appellant there could have been no valid appraisal and assessment of subject property hence, the prescriptive period for appeal to the Local Board provided in Section 226 of R.A. 7160 is inapplicable. Thus, considering that the municipal assessors, apparently, failed to serve the written notice of assessment as required by law, this Board believes and so holds that the 60-day period to make an appeal to the LBAA provided for under Section 226 of R.A. 7160 could not have run against the Petitioner-Appellant. On the second issue, we rule for the Petitioner-Appellant. "In Spouses Ramon A. Gonzales and Lilia Yusay vs. Province of Iloilo (38 SCRA 209-227, March 31, 1971), the Supreme Court rejected the contention that the property owner should first pay the questionable realty tax before lodging an appeal, thus: ". . . The Court has therefore adopted the simple test that where an assessment is disputed for whatever ground or reason, be it that the assessment is unjust, erroneous or improper, illegal or void or excessive or unreasonable, that action challenging the assessment, after first exhausting the administrative remedy of appeal to the assessment board, and regardless of whether the corresponding realty tax had been paid and a refund sought , pertains to the exclusive and special jurisdiction of the tax court to the exclusion of the courts of first instance. Thus, in the recently decided case of Board of Assessment Appeals of Zamboanga del Sur vs. Samar Mining Co., and Court of Appeals , L-28034, February 27, 1971, (The dictum in this case citing Cabanatuan's ruling that the court's jurisdiction is confined to the 'reasonableness or legality' of the disputed assessment is of course modified and clarified by the present decision), the Court upheld the jurisdiction of the tax court to rule upon the legality and validity of the disputed real estate assessment, rejecting the contention therein that the property owner should first pay the questioned realty tax before lodging an appeal from the assessment appeals board's adverse decision to the tax court . . ." (Emphasis supplied) DcHSEa "The aforequoted case was governed by Republic Act No. 1125, Section 11 which "does not require that before an appeal from the decision of the Board of Assessment Appeals can be brought to the Court of Tax Appeals it must be first shown that the party disputing the assessment had paid under protest the realty tax being assessed." ( Board of Assessment Appeals of Zamboanga del Sur vs. Samar Mining Co., Inc. , supra ) xxx xxx xxx Currently, Section 9 of RA 9282, which took effect on April 23, 2004, An Act Expanding the Jurisdiction of the Court of Tax Appeals (CTA), x x x Amending for the Purpose Certain Sections of Republic Act No. 1125, as amended, otherwise known as the Law Creating the Court of Tax Appeals, and for Other Purposes provides, to wit: xxx xxx xxx "No appeal taken to the CTA from the decision of the Commissioner of Internal Revenue or the Commissioner of Customs or the Regional Trial Court, provincial, city or municipal treasurer or the Secretary of Finance, the Secretary of Trade and Industry and Secretary of Agriculture, as the case may be shall suspend the payment, levy, distraint, and/or sale of any property of the taxpayer for the satisfaction of his tax liability is provided by existing law. Provided, however, That when in the opinion of the Court the collection by the aforementioned government agencies may jeopardize the interest of the Government and/or the taxpayer the Court any stage of the proceeding may suspend the said collection and require the taxpayer either to deposit the amount claimed or to file a surety bond for not more than double the amount with the Court." (Emphasis supplied) xxx xxx xxx So that whether an appellant should first pay the real property tax, under protest, to perfect an appeal before the Local Board it is important to note that, before Presidential Decree No. 464, otherwise known as the Real Property Tax Code, which was promulgated on May 20, 1974 and took effect on June 1, 1974, there was Commonwealth Act No. 470, otherwise known as the Assessment Law which was promulgated by the National Assembly on June 16, 1939, followed by Presidential Decree No. 76 which was promulgated on December 6, 1972. Presidential Decree No. 464, was, of course, expressly repealed by Republic Act No. 7160, otherwise known as the Local Government Code of 1991 which took effect on January 1, 1992. Section 54 of the Assessment Law, CA 470, partly reads as follows: "Sec. 54. Restriction upon Power of Court to Impeach Tax. No court shall entertain any suit assailing the validity of a tax assessed under this Act until the taxpayer shall have paid, under protest, the taxes assessed against him, nor shall any court declare any tax invalid by reason of . . ." "No. 7, Par. 3, of Presidential Decree No. 76 provides, thus: "The appeal, referring to appeals to the Provincial or City Board of Assessment Appeals and to the Central Board of Assessment Appeals, however, shall not suspend the collection of the corresponding realty taxes as assessed by the provincial or city assessor, without prejudice to subsequent adjustment depending upon the final outcome of the appeal." The above provisions of PD 76 are similar in substance to those of Section 37 of PD 464 which, in turn, was reproduced in Section 231 of RA 7160, which reads as follows: "Sec. 231. Effect of Appeal on the Payment of Real Property Tax. Appeal on assessment of real property made under the provisions of this Code shall, in no case, suspend the collection of the corresponding realty taxes on the property involved as assessed by the provincial or city assessor, without prejudice to subsequent adjustment depending upon the final outcome of the appeal." "Note that Section 54 of CA 470, the earliest of the laws cited above, expressly and specifically prohibits any court from entertaining any suit assailing the validity of a tax assessed under said Act until the taxpayer shall have paid, under protest, the taxes assessed against him . Upon the other hand, the provisions of No. 7, Par. 3 of PD 76, Section 37 of PD 464, and Section 231 of RA 7160 merely declare that filing of an appeal "shall, in no case, suspend the collection of the corresponding realty taxes on the property involved as assessed by the provincial or city assessor," meaning that the appeal has no effect, whatsoever, on the collection of the tax involved ( Cambayas Mining Corporation, et al. vs. The Provincial Assessor of Eastern Samar and The LBAA of the Province of Eastern Samar , supra ). (Emphasis supplied) "The phrase, shall, in no case, suspend the collection of the realty taxes" explains the "effect of appeal on the payment of real property tax," the latter being the caption of Section 231 of RA 7160. It simply means that an appeal has "no effect" on the process of collecting the corresponding realty taxes. The treasurer concerned shall proceed with the collection of the taxes involved through the remedies provided for under Sections 256, 265 and 266 of RA 7160, without even taking cognizance or notice of an appeal being filed since, the pending appeal cannot be used as a defense by the taxpayer-appellant against such collection (Cambayas Mining Corporation, et al. vs. The Provincial Assessor of Eastern Samar and The LBAA of the Province of Eastern Samar, supra) . (Emphasis supplied) "If the legislature wanted the corresponding taxes to be paid before the appeal may be entertained and heard, it could have easily provided so in clear and unambiguous language as the National Assembly did under Section 54 of Commonwealth Act No. 470. Compelling a taxpayer to pay the realty tax involved before its appeal may be entertained and heard is just not one of the remedies afforded the government under the Local Government Code of 1991" (Cambayas Mining Corporation, et al. vs. The Provincial Assessor of Eastern Samar and The LBAA of the Province of Eastern Samar, supra) . SCaITA Thus this Board is of the opinion and so holds that the Local Board of Assessment Appeals of Cotabato Province erred in dismissing the appeal for lack of prior payment of realty taxes on the questioned assessments. On the third and final issue, Petitioner-Appellant relying mainly on the Board of Assessment Appeals, City Assessor and City Treasurer of Quezon City vs. Manila Electric Company , G.R. No. L-15334 (January 31, 1964) and Article 415 of the Civil Code, argues that 'steel towers, electric posts, transmission lines, and transformers' are PERSONAL PROPERTIES' that are not subject to realty tax. We do not agree. The instant appeal is similar to the factual scenario of Palawan Electric Cooperative (PALECO) vs. LBAA of the Province of Palawan and the Provincial Assessor of Palawan and the Municipal Assessor of Brooke's Point, Palawan , CBAA Case No. L-75, June 28, 2007, where we, in part, ruled, quoted the said Supreme Court pronouncement, THUS: "Granting for the purpose of argument that the steel supports or towers in question are not embraced within the term poles, the logical question posited is whether they constitute real properties, so that they can be subject to a real property tax. The tax law does not provide for a definition of real property; but Article 415 of the Civil Code does, by stating the following are immovable property: (1) Lands, buildings, roads and construction 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 on in a building or on a piece of land, and which tend directly to meet the needs of the said industry or works; xxx xxx xxx "The steel towers or supports in question do not come within the object mentioned in paragraph 1, because they do not constitute buildings or construction adhered to the soil. They are not constructions 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. They cannot 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 those 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. These steel towers or supports do not also fall under paragraph 5, for they are not machineries or 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 on the land in which the steel supports or towers are constructed. "When the Supreme Court promulgated its decision in the above-entitled case (L-15334), there was as yet no Rep. Act No. 7160, otherwise known as the Local Government Code of 1991, which took effect on January 1, 1992. Also, this Board had the opportunity to rule on similar issues involving the same company in the case of Manila Electric Company (MERALCO) vs. Board of Assessment Appeals of Lucena City, City Assessor and City Treasurer of Lucena City (CBAA Case No. L-20-98, May 3, 2001). In this case, MERALCO said that the Local Board of Lucena City erred "IN NOT HOLDING THAT POLES, WIRES, INSULATORS, TRANSFORMERS AND ELECTRIC METERS ARE PERSONAL PROPERTIES, HENCE, NOT SUBJECT TO REAL PROPERTY TAX, AS EARLIER DECIDED BY THE LOCAL BOARD OF ASSESSMENT APPEALS OF LUCENA CITY IN LBAA CASE NO. 89-2 AND AFFIRMED BY THE CENTRAL BOARD OF ASSESSMENT APPEALS IN CBAA CASE NO. 248." Indeed, this Board ruled in MERALCO's favor in connection with this very same issue on April 10, 1991 where we ruled that 'wires, insulators, transformers and electric meters which are mounted on poles and can be separated from the poles and moved from place to place without breaking the material or causing deterioration of the object, are deemed movable or personal property.' The same position of MERALCO would have been tenable and that decision may have stood firm prior to the enactment of R.A. 7160 but not anymore in this jurisdiction. The Code provides and now sets a more stringent yet broadened concept of machinery, thus: aTHCSE 'Section 199(o) "Machinery" embraces machines, equipment, mechanical contrivances, instruments, appliances or apparatus which may or may not be attached, permanently or temporarily , to the real property. It includes the physical facilities for production, the installations and appurtenant service facilities, those which are mobile, self-powered or self-propelled, and those not permanently attached to the real property which are actually, directly, and exclusively used to meet the needs of the particular industry, business or activity and which by their very nature and purpose are designed for, or necessary to its manufacturing, mining, logging, commercial, industrial or agricultural purposes.' (Emphasis supplied) "The pivotal point where the difference lies between the former and the current case is that by the very wordings of aforesaid provision, the ground being anchored upon by MERALCO concerning the properties in question being personal in nature does not hold anymore for the sole reason that these come now within the purview and new concept of Machineries. The new law has treated these in an unequivocal manner as machineries in the sense that they are instruments, mechanical contrivances or apparatus though not attached permanently to the real properties of petitioner-appellant are actually, directly and exclusively used to meet their business of distributing electricity." Article 415 of the Civil Code the term "immovable" property is followed by a listing of what are included in the term; and the term "machinery," as used in Article 415, is defined in Paragraph (5). In the same way that Section 199 (o) of the Local Government Code defines machineries that are subject to real property taxation, thus we do not see the need of resorting to the Civil Code provisions in determining whether steel towers, electric posts, transmission lines, and transformers are real property for assessment purposes. As the Civil Code is a general law and Section 199 of RA 7160 is a special law that delves on realty taxation. By the settled rules of statutory construction it is the latter that prevails. Incidentally, the above-cited decision of the CBAA was affirmed by the Court of Appeals, in Manila Electric Company vs. The City Assessor and City Treasurer of Lucena City (CA-G.R. SP No. 67027, May 13, 2004). At the outset, it is clear from the descriptions of 'steel towers, electric posts, transmission lines, and transformers' that we have no doubt that they are necessary and integral part of distributing electricity, without which the other appurtenances and generators would be useless for the purpose they are intended by COTELCO. Otherwise it would be absurd to have spent so much investment for their construction. Thus, these items constitute one, whole composite property. These are, in the alternative, an 'improvement' in contemplation of Section 199 (m) of RA 7160 subject to realty taxation. THUS: 'Section 199 (m) "Improvement" is a valuable addition made to a property or an amelioration in its condition, amounting to more than a mere repair or replacement of parts involving capital expenditures and labor, which is intended to enhance its value, beauty or utility or to adapt it for new or further purposes.' "In the instant case, applying the above-stated principle of law, x x x the wires, insulators, transformers and electric meters mounted on the poles of the petitioner may nevertheless be considered as improvements on the land, enhancing its utility and rendering it useful in distributing electricity. The said properties are actually, directly and exclusively used to meet the needs of the petitioner in the distribution of electricity" ( Manila Electric Company vs. The City Assessor and City Treasurer of Lucena City (CA-G.R. SP No. 67027, May 13, 2004, quoted in Palawan Electric Cooperative (PALECO) vs. LBAA of the Province of Palawan and the Provincial Assessor of Palawan and the Municipal Assessor of Brooke's Point , Palawan , supra) . "In addition, 'improvements on land are commonly taxed as realty even though for some purposes they might be considered personalty. It is a familiar phenomenon to see things classed as real property for purposes of taxation which on general principle might be construed personal property.' ( Caltex (Phil.), Inc. vs. Central Board of Assessment Appeals , 114 SCRA 296, 301-302)" Since the provisions of Section 199 of R.A. 7160 are sufficiently clear, we find no further justification to resort to the Civil Code. We believe, therefore, and so hold, that the subject real properties of Petitioner-Appellant Cotabato Electric Cooperative are liable to the payment of the real property tax subject however to the limitations enunciated in Sections 222 and 270 of the same act. WHEREFORE, premises considered, the instant appeal is hereby DENIED for lack of merit. SO ORDERED. cAaDHT Manila, Philippines, October 2, 2007. (SGD.) CESAR S. GUTIERREZ Chairman (SGD.) ANGEL P. PALOMARES Member (SGD.) RAFAEL O. CORTES Member