Author: Coco Navarro

CALTEX PHILS. INC V BOARD OF ASSESSMENT

APPEALS (1982)
Petition: Certioriari
Petitioner: Caltex Phils. Inc
Respondent: Board of Assessment Appeals & City Assessor of Pasay
Ponencia: Aquino

DOCTRINE: Land, buildings, machinery and other improvements
affixed/attached to real property (not specifically exempted) are considered
immovable (and are subject to realty tax).

FACTS:
1. Caltex Inc. installed a variety of machinery and equipment (like
underground tanks, water tanks, gasoline pumps, etc) in its gas
stations on leased land. These machines are also loaned to gas
operators and Caltex retains ownership.
2. Upon assessment, the City Assessor of Pasay described the
equipment as attached and affixed to the tenement and
characterized them as taxable realty which amounts to P 4,541.10
annually.
3. The city board of tax appeals ruled that they are personalty (movable
property).
4. The assessor appealed to the Board of Assessment Appeals which
ruled that the items are real property based on the Real Property Tax
Code and not Arts 415-416 of the Civil Code.

ISSUE: Whether or not the machinery and equipment are real/immovable
property (and subject to realty tax)

PROVISION:
Assessment Law:
Sec 2. realty tax is due "on real property, including land, buildings,
machinery, and other improvements" not specifically exempted in section 3

Sec.3
k) Improvements is a valuable addition made to property or an
amelioration in its condition, amounting to more than mere repairs or
replacement of waste, costing labor or capital and intended to enhance its
value, beauty or utility or to adapt it for new or further purposes.

m) Machinery shall embrace machines, mechanical contrivances,
instruments, appliances and apparatus attached to the real estate. It includes
the physical facilities available for production, as well as the installations and
appurtenant service facilities, together with all other equipment designed for
or essential to its manufacturing, industrial or agricultural purposes.

Real Property Tax Code
SEC. 38. Incidence of Real Property Tax. There shall be levied, assessed
and collected in all provinces, cities and municipalities an annual ad valorem
tax on real property, such as land, buildings, machinery and other
improvements affixed or attached to real property not hereinafter specifically
exempted.

RULING + RATIO:
YES. The equipment are permanently attached fixtures necessary to
operate the gas station and are therefore taxable improvements/machinery
within the Meaning of the Assessment Law and Real Property Code.
NOTE: Though it was not discussed in the ponencia, I think it is relevant to
our lesson if discussed under Art. 415 Section 5 on Immovable Property. It is
obviously intended for an industry and directly meets its needs.