Capitol Wireless v. The Provincial Treasurer of Batangas

Summary

Capitol Wireless challenged real property tax assessments on its submarine cable systems, claiming the cables lie entirely in international waters beyond Philippine jurisdiction. The RTC and CA dismissed the case for failure to exhaust administrative remedies and pay taxes under protest as required by the Local Government Code. The Supreme Court affirmed, ruling that the case involved factual questions requiring administrative resolution regarding the extent of cable ownership and territorial location. The Court held that submarine communication cables qualify as taxable real property under Civil Code Article 415(5) as 'machinery' serving business needs, similar to electric transmission lines. Since portions of the cables necessarily lie within Philippine territorial and municipal waters, they fall within local taxing authority. Tax exemptions previously enjoyed under legislative franchises were expressly withdrawn by the Local Government Code. The decision establishes that telecommunications infrastructure can be subject to local real property taxation and reinforces the requirement to exhaust administrative remedies in tax assessment disputes involving factual determinations.