CALTEX PHILIPPINES INC. v.
CENTRAL BOARD OF ASSESSMENT APPEALS
(G.R. NO. L-50466 MAY 31, 1982)
PONENTE: AQUINO, J.
FACTS:
This case is about the realty tax on machinery and equipment installed by Caltex (Philippines)
Inc. in its gas stations located on leased land.
The machines and equipment consists of underground tanks, elevated tank, elevated water
tanks, water tanks, gasoline pumps, computing pumps, water pumps, car washer, car hoists, truck hoists,
air compressors and tireflators.
Said machines and equipment are loaned by Caltex to gas station operators under an appropriate
lease agreement or receipt. It is stipulated in the lease contract that the operators, upon demand, shall
return to Caltex the machines and equipment in good condition as when received, ordinary wear and tear
excepted. The lessor of the land, where the gas station is located, does not become the owner of the
machines and equipment installed therein. Caltex retains the ownership thereof during the term of the
lease.
The city assessor of Pasay City characterized the said items of gas station equipment and
machinery as taxable realty. The city board of tax appeals ruled that they are personalty. The assessor
appealed to the Central Board of Assessment Appeals which ruled that the said machines and equipment
are real property under the Real Property Tax Code, Presidential Decree No. 464, and the decision was
reiterated by the Board in its resolution denying Caltex's motion for reconsideration.
Caltex filed this certiorari petition wherein it prayed for the setting aside of the Board's decision
and for a declaration that the said machines and equipment are personal property not subject to realty
tax.
ISSUE:
Whether or not the pieces of gas station equipment and machinery already enumerated are
subject to realty tax.
RULING:
YES. The pieces of gas station equipment and machinery are subject to realty tax.
The said equipment and machinery, as appurtenances to the gas station building or shed owned
by Caltex (as to which it is subject to realty tax) and which fixtures are necessary to the operation of the
gas station, for without them the gas station would be useless, and which have been attached or affixed
permanently to the gas station site or embedded therein, are taxable improvements and machinery within
the meaning of the Assessment Law and the Real Property Tax Code.
Caltex invokes the rule in the case of Davao Sawmill Co. v. Castillo that machinery which is
movable in its nature only becomes immobilized when placed in a plant by the owner of the property or
plant but not when so placed by a tenant, a usufructuary, or any person having only a temporary right,
unless such person acted as the agent of the owner. However, the Supreme Court ruled that the issue
being raised in the case of the Davao Sawmill Case is different from the issue being raised in this instant
case.
Under the Realty Tax Code, improvements on land are commonly taxed as realty even though for
some purposes they might be considered personalty. On the other hand, “machinery” embraces
“machines, mechanical contrivances, instruments, appliances and apparatus attached to the real estate.”
In addition it is settled in the case of Standard Oil Co. of New York v. Jaramillo, that it is a familiar
phenomenon to see things classed as real property for purposes of taxation which on general principle
might be considered personal property.
This case is also easily distinguishable from Board of Assessment Appeals vs. Manila Electric
Co., 119 Phil. 328, where Meralco's steel towers were considered poles within the meaning of paragraph
9 of its franchise which exempts its poles from taxation. The steel towers were considered personalty
because they were attached to square metal frames by means of bolts and could be moved from place to
place when unscrewed and dismantled. Nor are Caltex's gas station equipment and machinery the same
as tools and equipment in the repair shop of a bus company which were held to be personal property not
subject to realty tax (Mindanao Bus Co. vs. City Assessor, 116 Phil. 501).
