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