G.R. No. 19766. February 20, 1923

September 19, 1921, the plaintiff filed a complaint against the defendant
Ildefonso Coscolluela, as treasurer of the Province of Occidental Negros, in
which it alleges that it is a domestic corporation with its principal office in
the City of Manila. That the defendant is the treasurer of the Province of
Occidental Negros. “That plaintiff is and throughout the year 1920, was the
owner of a mill and plantation railroad consisting of embankments, ties, rails,
switches, tracks, and bridges used by plaintiff in connection with the
locomotive cars and other appropriate appliances and apparatus which said
plaintiff owns in the municipality of La Carlota, Occidental Negros, which said
railroad is constructed upon land belonging to third persons, from whom
plaintiff has obtained easements of way, and is used by it exclusively for the
transportation of sugar-cane from the surrounding plantations to the mill which
this plaintiff owns in said municipality; for the transportation of the products
of said mill to the wharf of the plaintiff, and for the transportation of
materials, supplies, and employees of plaintiff between its mill and said wharf,
in the furtherance of plaintiff’s business of milling sugar-cane and the
manufacture of sugar under contract with sugar planters upon whose land the said
railroad is constructed; and that said railroad is and at all times has been
used exclusively for private industrial, agricultural, and manufacturing
purposes as an integral part of plaintiff’s sugar milling plant, composed of its
said mill and the said railroad, and is situated in the Province of Occidental
Negros.” That in the year, 1920, the board of assessors of the province
appraised the said railroad for taxation purposes for the year 1921 at
P1,439,867.73 upon which a tax was levied of P12,598.86. That about July 30,
1921, the defendant demanded the payment of the tax from the plaintiff which it
paid to the defendant under duress and protest, and concurrent therewith
delivered to him a written protest, claiming that the property was exempt from
taxation by the terms of subsection (f), as amended, of section 344 of
the Administrative Code of 1917. That plaintiff has demanded the repayment of
the money which has been refused, for which it demands judgment with interest at
6 per cent from the date of the filing of the complaint, with costs.

For answer, the defendant admits all of the allegations of the complaint,
“with the exception of paragraph 3 in so far as it refers to the fact that
railroad tracks or rails are properties exempt from taxation.”

And as special defense alleges:

“That the rails or railroad tracks do not constitute the machinery itself,
nor fall within the meaning of the terms machineries, mechanical devices,
instruments, tools, utensils, accessories, and apparatus used for industrial,
agricultural, and manufacturing purposes in order that they could be included
within the exemption of subsection (f) of section 344 of the
Administrative Code, such as said subsection (f) was amended by Act No.
2749 of the Legislature.”

And that the amount claimed by the defendant is based upon the actual value
of the railroad tracks, bridges, and improvements, the real property of the
plaintiff, as it appears from the copy of the list of its property. Wherefore,
the defendant prays for judgment, with costs.

July 3, 1922, the plaintiff filed a motion for judgment on the pleadings, and
on August 24, 1922, the court rendered judgment in favor of the plaintiff as
prayed for in its complaint, from which the defendant appeals, claiming that the
lower court erred in holding that the railroad of the plaintiff constitutes
machinery as denned in subsection (f) of section 344 of the
Administrative Code of 1917, and in rendering judgment for the plaintiff.

JOHNS, J.:

Among other provisions for the exemption of property from taxation,
subsection (f) of section 344 of the Administrative Code of 1917
provides:

“Machinery, which term shall embrace machines, mechanical contrivances,
instruments, tools, implements, appliances, and apparatus used for industrial,
agricultural, or manufacturing purposes.”

It is conceded that a plant for the manufacture of sugar within itself comes
within the provisions of the Act, and is exempt from taxation, but it is
vigorously contended that a railroad used for the transportation of sugar-cane
to the mill and from the mill to the wharf is not machinery as thus defined.

In the Century Dictionary the word “machine” is defined as an engine,
contrivance, device, stratagem; an instrument of force; and in Great Britain it
includes a vehicle or conveyance, such as a coach, cab, gig, tricycle,
bicycle.

“Any organization by which power not mechanical is applied and made
effective; the whole complex system by which any organization or institution is
carried on.”

The word “mechanical” is defined “pertaining to or exhibiting constructive
power; of or pertaining to mechanism or machinery; also, dependent upon the use
of mechanism; of the nature or character of a machine or machinery; as,
mechanical inventions or contrivances; to do something by
mechanical means.”

The word “instrument” has a variety of meaning and is defined as “a tool,
instrument, means, furtherance, dress, apparel, document; construct, prepare,
furnish. Something that serves as a means to the effecting of an end; anything
that contributes to the production of an effect or the accomplishment of a
purpose; a means; an agency.

“Something used to produce a mechanical effect; a contrivance with which to
perform mechanical work of any kind; a tool, implement, utensil, or
machine.”

The word “implement” is defined “The act of fulfilling or performing: as, in
implement of a contract. Whatever may supply a want; especially, an
instrument, tool, or utensil; an instrumental appliance or means.”

The word “appliance” is denned, first, “the act of applying, putting to use,
or carrying into practice; second, something applied as a means to an end,
either independently or subordinately; that which is adapted to the
accomplishment of a purpose; an instrumental means, aid, or appurtenance: as,
the appliances of civilization, or of a trade; mechanical, chemical, or
medical appliances.”

“Material appliances have been lavishly used; arts, inventions, and
machines introduced from abroad, manufactures set up, communications opened,
roads made, canals dug, mines worked, harbours formed. (Buckle, Civilization,
I.)”

The word “apparatus” is defined “make ready, prepare; an equipment of things
provided and adapted as means to some end; especially, a collection,
combination, or set of machinery, tools, instruments, utensils, appliances, or
materials intended, adapted, and necessary for the accomplishment of some
purpose.”

“The whole military apparatus of the archduke was put in
motion.”

The Attorney-General cites Cooley on Taxation, p. 357, third edition, in
which it is said:

“It is also a very just rule that, when an exemption is found to exist, it
shall not be enlarged by construction. On the contrary, it ought to receive a
strict construction; for the reasonable presumption is that the state has
granted in express terms all it intended to grant at all, and that unless the
privilege is limited to the very terms of the statute the favor would be
extended beyond what was meant.”

That is sound law, but, here, the intent is apparent. The purpose of
exempting property “used for industrial, agricultural, or manufacturing
purposes” is to promote and encourage industries and to develop the resources of
the country. It is alleged in the complaint and legally admitted in the answer
that the railroad in question “is constructed upon land belonging to third
persons, from whom plaintiff has obtained easements of way, and is used by it
exclusively for the transportation of sugar-cane from the surrounding
plantations to the mill which this plaintiff owns, for the transportation of the
products of said mill to the wharf, and for the transportation of materials,
supplies, and employees of plaintiff between its mill and said wharf, in the
furtherance of plaintiff’s business of milling sugar-cane and the manufacture of
sugar under contract with sugar planters upon whose land the said railroad is
constructed,” and that at all times it has been used exclusively for private
industrial, agricultural, and manufacturing purposes as an integral part of
plaintiff’s sugar milling plant. Transportation to and from the plant is a very
important item in the manufacture of sugar. It will be noted that the railroad
is used exclusively for the delivery of cane to the mill and sugar to the wharf.
Under such conditions it is a private railroad as distinguished from a public
railroad within the meaning of the law. Legally speaking, it does not carry
freight or passengers, and it would not be contended that it is a public
utility, or that it comes under the control or jurisdiction of the public
utility commissioner. The sole purpose and intent of the railroad is to promote
the sugar industry and to lessen the cost of its production and increase its
price to the producer. To all intents and purposes the railroad is connected
with, and is a part of, the manufacturing plant itself. It is an appliance or
apparatus by which the cane is removed from the field to the plant and the sugar
from the plant to the wharf. In the final analysis, the railroad is used
exclusively “for industrial, agricultural, or manufacturing purposes” in the
production and manufacture of sugar. Otherwise, it would be a public utility and
subject to public control. Under the facts shown to impose a tax upon the
railroad would be pro tanto a tax upon the sugar industry itself, and
would violate the spirit and intent of the Act.

We hold with the trial court that so long as the railroad in question is
exclusively used in the manner shown to exist that it is exempt from
taxation.

The judgment of the lower court is affirmed, without costs to either party.
So ordered.

Araullo, C.J., Street, Malcolm, Avanceña, Villamor,
Ostrand, and Romualdez, JJ., concur.