CALTEX (PHILIPPINES) INC.

, petitioner,
vs.
CENTRAL BOARD OF ASSESSMENT APPEALS and CITY ASSESSOR OF
PASAY, respondents.
May 31, 1982 | J. Aquino

Digest Author: Jude Fanila

Topic: Classifications of property – Based on movability
Case Summary: Case involves a gas station owned and leased out by Caltex. Respondent, City Assessor
found that machines and equipment in the gas station were considered as real property and charged Caltex
with a realty tax.
On appeal, SC found that the machines and equipment were real property tax under the real property tax
code. Even if they were not considered as real property under the Civil Code, classification is irrelevant
for taxation.

Petitioners: CALTEX

Respondents: Central board of assessment appeals and City assessor of Pasay,

Doctrine - Equipment and machinery, as appurtenances to the gas station building or shed owned are fixtures
necessary to the operation of the gas station, for without them the gas station would be useless, and hence within the
meaning of the Assessment Law and the Real Property Tax Code - and therefore, taxable as real property. This is
different from real property under the civil code.

Facts
1. Machine and equipment – consisting of tanks, pumps, car hoists, washers, compressors, etc. in a
gasoline station situated on leased land.
a. Caltex owns land, leases land for gasoline station. Leases the machines and equipment to
the gas station operators.
2. City Assessor of Pasay – ruled that equipment was taxable realty – realty tax amounting to
P4,541 annually.
a. Machines and equipment were real property under the Real Property Tax Code, the
definitions of Real Property under the Civil Code do not apply for the purposes of
taxation.
b. Specifics of Gas station:
c. Gas station is a piece of lot where a building and shed are erected, where a water tank placed in a corner, 2
car hoists in the shed, and an air compressor on the wall.
d. Underground tank is 6 feet under and connected with a steel pipe to the gas pumps.
e. Footing of pump is a cement pad which is embedded in the pavement. 
f. All these form the entire gas station and are ATTACHED to the tenement, even the tank, because it is still
connected to the main gas station which is attached to the pavement.
3. City Board of Tax appeals – reversed the finding of the city assessor – machines and equipment
were movables, therefore not subject to tax.
4. June 3 1977 - Central Board of Assessment appeals (respondent) reversed City Board, affirmed
the City Assessor.
 a. Basis – machines and equipment were considered real property under Sec. 3(k) and 3(m)
and Sec. 38 of the Real Property Tax Code
i. Therefore, real property classification under Civil Code inapplicable.
5. May 2 1979 – current petition for certiorari – arguing that equipment personal property not
subject to tax.
Issues
1. W/N machines and equipment real property? – YES
a. Real Property Tax Code – Sec. 38 provides that machinery and other improvements
affixed or attached to real property are taxable unless specifically exempted. 1 The gas
station building, owned by Caltex is considered as real property. The machinery and
equipment, contributing to the industry of the gas station is therefore considered as
taxable real property under the real property tax code.
b. Davao Sawmill ruling inapplicable, as there the machinery classification as real property
being dependent on being placed by the owner was based off of the Civil Code for the
purposes of the execution of a judgment against the lessee. In the present case,
classification comes from Real Property Tax code for taxation purposes.
i. Improvements on land are commonly taxed as realty though they might be
considered as real property.
c. Meralco v. bd. Of Appeal similarly inapplicable, as there the steel towers were considered
as personalty because they were attached to square metal frames which could be moved
form place to place when unscrewed or dismantled; more importantly there was a specific
exemption from real tax by virtue of Par. 9 of the franchise. Here, no such exemption
exists.

Ruling
WHEREFORE, the questioned decision and resolution of the Central Board of Assessment Appeals are
affirmed. The petition for certiorari is dismissed for lack of merit. No costs. SO ORDERED..

1
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 (See sec. 3[f], Assessment Law).