JEFFREY E.

DY
JD 2-0

Answers to questions letter C. Machines: Deadline January 3, 2017 noon.

01. In the case of Mindanao Bus Company vs. City Assessor, how was the repair
shop machines treated? Why?
Answer:
In the case of Mindanao Bus Company vs. City Assessor, the Supreme
Court ruled that the repair shop machines are not considered
immobilized. The same are merely, by their nature, incidental, not
essential and principal to the business of the petitioner. The
transportation business could be carried on without repair or service
shops of its rolling equipment as they can be repaired or services in
another shop belonging to another.

Under Article 415 (5) of the Civil Code of the Philippines, machinery,
receptacles, instruments or implements intended by the owner of the
tenement for an industry or works which may be carried on in a building
or on a piece of land, and which tend directly to meet the needs of the
said industry or works are considered immovable property.

In the case at bar, the equipments in question 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.
Hence, the said equipment may not, be deemed real property.

02. In the case of Davao Saw Mill Co., vs. Castillo, how were the machines
treated? Why?
Answer:
In the case of Davao Saw Mill Co. vs. Castillo, it was held that the
machines are personal property because it was not placed on the land
by the owner of the land.

Machinery is naturally movable. However, machinery may be

immobilized by destination or purpose if the machinery is placed in a
plant by the owner of the property or plant. Immobilization cannot be
made by a tenant, a usufructuary, or any person having only a
temporary right. Except if the tenant, usufructuary, or temporary
possessor acted as agent of the owner of the premises; or he intended
to permanently give away the property in favor of the owner.
03. Compare the differences and similarities between the cases of Manila
Electric Co. vs. Central Board of Assessment Appeals FROM Caltex
Philippines, Inc., v. Board of Assessment Appeals.
Answer:
The difference between the two cases is that in the case of the Manila
Electric Co. vs. Central Board of Assessment Appeals, the two storage
tanks are not embedded in the land. While in the case of Caltex
Philippines, Inc. v. Board of Assessment Appeals, the machines and
equipment consists 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 two cases are the same as both cases involve businesses located
on a leased land. They are also the same with respect to the ruling of
the Supreme Court. In the case of the Manila Electric Co. vs. Central
Board of Assessment Appeals, the Supreme Court held that while the
two storage tanks are not embedded in the land, they may,
nevertheless, be considered as improvements on the land, enhancing
its utility and rendering it useful to the oil industry. The two tanks have
been installed with some degree of permanence as receptacles for the
considerable quantities of oil needed by Meralco for its operations,
hence subject to the Assessment Law and the Real Property Tax. On
the other hand, in the case of Caltex Philippines, Inc. v. Board of
Assessment Appeals, the Supreme Court held that the said equipment
and machinery, as appurtenances to the gas station building or shed
owned by Caltex and which fixtures are necessary to the operation of
the gas station, 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, hence
subject to the Assessment Law and the Real Property Tax Code.