CALTEX (PHILIPPINES) INC.

, PETITIONER,

VS.

CENTRAL BOARD OF ASSESSMENT APPEALS AND CITY ASSESSOR OF

PASAY, RESPONDENTS.

G.R. No. 50466, May 31, 1982

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 consist 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.
The said machines and equipment are loaned by Caltex to gas station operators under
an appropriate lease agreement with stipulation that the operators, upon demand, shall
return to Caltex the said machines and equipment in good condition as when received.
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 as taxable realty.
However, the city board of tax appeals ruled that they are personalty. The assessor
appealed to the Central Board of Assessment Appeals which it ruled that said
equipments are taxable as realty. Hence, this petition.

Issue:
Whether the gas station equipment and machinery permanently affixed by Caltex to its
gas station and pavement should be subject to the realty tax?

Held:
Yes.
Said equipment and machinery, as appurtenances to the gas station building owned by
Caltex 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 invocation of the rule 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 is out of place in this case. That
ruling in the Davao Saw Mill case in which the machinery mounted on foundations of
cement and installed by the lessee on leased land was treated as personal property
cannot apply in this case because the question in the present case is different from the
issue raised in the Davao Saw Mill case.
Thus, the Central Board of Assessment Appeals did not commit a grave abuse of
discretion in upholding the city assessor's imposition of the realty tax on Caltex's gas
station and equipment.