CALTEX v.

CBAA
Aquino, J.
Pasay City
1982
FACTS:
-realty tax was imposed on M&E installed by Caltex in its gas stations on leased
land
-M&E composed of: underground tanks, elevated tank, water tanks, pumps, cat
washer, hoists, air compressor and tireflator
-Relevant parts from city assessors description:
-ALL of th M&E are used in pursuance of the gasoline service station
-Properties are ATTACHED and affixed to the tenement (pavement) and to
the improvement (holding properties in question)
-Underground tank attached to shed by steel pipe to pump, also connected
by pipe to pavement along with water tank, then to electric motor (which is placed
under shed)
-Therefore, building AND said M&E form the service station, not bldg. only
-M&E are loaned by Caltex to gas station operators, to be returned to Caltex upon
demand (or end of lease contract); Caltex RETAINS ownership during the lease
-city assessor of Pasay City: realty tax = P4,541.10 annually
-City Board of Tax Appeals: personalty
-City assessor appealed to CBAA (composed of Sec of Fin Cesar Virata, Acting Sec
of Justice Catalino Macaraig Hr, and Sec of LG and CommDev Jose Rono)
-CBAA: M&E are RP within the meaning of sections 3(k) and (m) and 38 of RPTC,
PD 464; definitions of RP and PP in A415 and 416 NOT APPLICABLE
-Caltex invokes ruling in Davao Saw Mill v. Castillo: machinery movable by nature
becomes immobilized ONLY when placed in plant by owner of property or plant and
not when placed by tenant (temporary right)
ISSUE: Whether pieces of gas station M&E are subject to realty tax. YES
RULE:
Sec 2 of Assessment Law. Realty tax is due on RP including land, bldgs., machinery
and other improvements not specifically exempted in sec 3 thereof
RPTC Sec 38. There shall be levied, assessed, and collected in all provinces, cities,
and municipalities, an annual ad valorem tax on RP such as land, bldgs., machinery

and other improvements affixed or attached to RP not hereinafter specifically

exempted
RPTC Sec 3 (k) Improvements. Valuable addition made to property or an
amelioration in its condition, amtg to more than mere repairs of 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. Machines, mechanical contrivances, instruments, appliances and
apparatus attached to the real estate. Includes physical facilities available for
production, as well as installations and appurtenant service faciltiies, together with
all other equipmentdesigned for or essential to its manufacturing, industrial or
agricultural purposes
HELD:
-M&E as appurtenances to gas station or bldg. (which is already subject to realty
tax) and which fixtures are necessary to the operation of gas station and w/c have
been attached or affixed permanently to the gas station site or embedded therein
TAXABLE IMPROVEMENTS and MACHINERY within the meaning of the Assessment
Law and the RPTC
-regarding ruling in Davao Saw Mill: it was an interpretation of A415 par 5 CC
regarding machinery that becomes RP by destination. It was for purposes of
execution of a judgment against the lessee. The issue in this case is different.
-Standard Oil Co. of NY v. Jaramillo: improvements on land are commonly taxed as
realty even though for some purposes they might be considered PP. For purposes of
taxation things generally considered as PP may be considered as RP.
- compared to BOAA v. MERALCO: steel towers (considered as poles) were
considered as PP because they were attached to square metal frames by means of
bolts and could be moved from place to place when unscrewed and dismantled