G.R. No. L-50466.

May 31, 1982

CALTEX (PHILIPPINES) INC., Petitioner, v. CENTRAL BOARD OF ASSESSMENT

APPEALS and CITY ASSESSOR OF PASAY, Respondents.

FACTS:

The gasoline pumps, water pumps, and underground tanks are loaned by Caltex to gas
station operators under and appropriate lease agreement or receipt. It is stipulated in the lease
contract that the equipment will be returned to Caltex in good condition; and the lessor of the
land does not become the owner of the machines and equipment installed. The City Assessor
characterized the said items of gas station equipment and machinery as taxable realty which is
considered a real property within the meaning of sections 3(k) & (m) and 38 of the Real Property
Tax Code, Presidential Decree No. 464 and not under Articles 415 and 416 of the Civil Code.
Caltex invokes the rule that a machinery which is a movable in its nature only becomes
immobilized when placed by the owner of the property, and not placed by a tenant unless such
person acted as an agent of the owner.

ISSUE: WON, the machines and equipment installed in a gas station are considered a real
property subject to realty tax?

RULING:

Yes. The machines and equipment installed in a gas station are considered a real property
subject to realty tax.

The said equipment and machinery installed in a gas station owned by Caltex 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. That ruling is an interpretation of paragraph 5
of article 415 of the Civil Code regarding machinery that becomes real property by destination. 

Therefore, the machines and equipment installed in a gas station are considered a real
property subject to realty tax.