MINDANAO BUS CO.

vs CITY ASSESSOR By: Zaf

GR No. L-17870 Topic: Article 415 (5)
Date: September 29, 1962

Facts
Mindanao Bus Co. is a public utility solely engaged in transporting passengers and cargoes by motor trucks and owned
a land where it maintains and operates a garage; a repair shop; blacksmith and carpentry shops.
Petitioners machineries are sitting on cement or wooden platforms.
Respondent City Assessor of Cagayan de Oro City assessed at P4,400 petitioners equipment in its repair or service
shop.
Petitioner appealed the assessment to the respondent Board of Tax Appeals on the ground that the same are not realty.
The Board of Tax Appeals of the City sustained the city assessor, so petitioner herein filed with the Court of Tax
Appeals a petition for the review of the assessment.

Issue/s:
Whether or not the machineries and equipments are considered immobilized and thus subject to a realty tax.

Ruling: NO.

So that movable equipments to be immobilized in contemplation of Article 415, must first be "essential and principal
elements" of an industry or works without which such industry or works would be "unable to function or carry on the
industrial purpose for which it was established." The tools and equipments in question in this instant case are, by their
nature, not essential and principle municipal elements of petitioner's business of transporting passengers and cargoes by
motor trucks. They are merely incidentals acquired as movables and used only for expediency to facilitate and/or
improve its service. Even without such tools and equipments, its business may be carried on. The transportation business
could be carried on without the repair or service shop if its rolling equipment is repaired or serviced in another shop
belonging to another.

Article 415 also requires that the industry or works be carried on in a building or on a piece of land. But in this case the equipments
are destined only to repair or service the transportation business, which is not carried on in a building or permanently on a piece
of land, as demanded by the law. Said equipment may not, therefore, be deemed as real property.

The Supreme Court decided held that said machineries and equipments are not subject to the assessment of real estate tax.

Doctrine: Notes

Movable equipment, to be immobilized in contemplation of Article 415 of the Civil

Code, must be the essential and principal elements of an industry or works which are
carried on in a building or on a piece of land. Thus, where the business is one of
transportation, which is carried on without a repair or service shop, and its rolling
equipment is repaired or serviced in a shop belonging to another, the tools and
equipment in its repair shop which appear movable are merely incidentals and may
not be considered immovable and, hence, not subject to assessment as real estate for
purposes of the real estate tax.