GR 33821; (October, 1931) (Digest)
G.R. No. 33821 ; October 15, 1931
KOLAMBUGAN LUMBER & DEVELOPMENT COMPANY, plaintiff-appellant, vs. MANUEL YIA, Treasurer of the Province of Lanao, defendant-appellee.
FACTS
The plaintiff, Kolambugan Lumber & Development Co., paid under protest certain taxes levied by the defendant provincial treasurer on properties classified as real property under section 60 of the Administrative Code of the Department of Mindanao and Sulu. The taxed properties included a machine shop and locomotive shed, two dry kilns, two export lumber drying sheds, one mill building, and one wharf—all part of the plaintiff’s sawmill plant. The plaintiff sought a refund, arguing these items constituted “machinery” (which was exempt from taxation as real property) rather than taxable real property. The trial court absolved the defendant, prompting this appeal.
ISSUE
Whether the properties in question (machine shop, dry kilns, drying sheds, mill building, and wharf) constitute taxable real property or exempt “machinery” under section 60 of the Administrative Code of the Department of Mindanao and Sulu.
RULING
The Supreme Court affirmed the trial court’s judgment, holding that the properties were properly taxed as real property. The Court interpreted “machinery” under the Administrative Code in a narrower sense, limited to artificial contrivances for applying power and producing motion, such as machines, tools, and appliances used directly for industrial purposes. The taxed items—buildings, sheds, kilns, and a wharf—are structures that provide a base or enclosure for machinery but are not themselves machinery. Their use in connection with or necessity to the sawmill operation does not convert them into exempt machinery. Thus, they fall within the definition of real property (“lands, buildings and constructions or other improvements upon land”) and are subject to taxation.
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