Standard

Oil Co. of New York v. Jaramillo

44 SCRA 630

DOCTRINE: The duties of a register of deeds in respect to the registration of chattel mortgage are of a purely ministerial character; and no provision of law can be cited which
confers upon him any judicial or quasi-judicial power to determine the nature of any document of which registration is sought as a chattel mortgage.

FACTS:
Gervasia de la Rosa, Vda. de Vera, was the lessee of a parcel of land situated in Manila and owner of the house built thereon. She executed a chattel mortgage in favor of Standard
Oil Co. to convey both the leasehold interest in said lot and the building. After the document had been duly acknowledge and delivered, petitioner presented it to the respondent,
Joaquin Jaramillo, as ROD of Manila, to be recorded in the book of record of chattel mortgages. Upon examination of the instrument, Jaramillo was of the opinion that it was not a
chattel mortgage as the interest mortgaged did not appear to be personal property, within the meaning of the Chattel Mortgage Law, and registration was refused on this ground
only. So, petitioner sought for a peremptory mandamus to compel the respondent to record the said document in the register. Jaramillo interposed a demurrer before the SC.

ISSUE:
W/N the ROD can refuse the registration of a Chattel Mortgage? NO

HELD:
It is his duty to accept the proper fee and place the instrument on record. The duties of a register of deeds in respect to the registration of chattel mortgage are of a purely
ministerial character; and no provision of law can be cited which confers upon him any judicial or quasi-judicial power to determine the nature of any document of which
registration is sought as a chattel mortgage.

The original provisions touching this matter are contained in section 15 of the Chattel Mortgage Law (Act No. 1508), as amended by Act No. 2496; but these have been transferred
to section 198 of the Administrative Code. There is nothing in any of these provisions conferring upon the register of deeds any authority whatever in respect to the
"qualification‖, of chattel mortgage. His duties in respect to such instruments are ministerial only. The efficacy of the act of recording a chattel mortgage consists in the fact that it
operates as constructive notice of the existence of


the contract, and the legal effects of the contract must be discovered in the instrument itself in relation with the fact of notice. Registration adds nothing to the instrument,
considered as a source of title, and affects nobody's rights except as a specifies of notice.

Articles 334 and 335 of the Civil Code supply no absolute criterion for discriminating between real property and personal property for purpose of the application of the Chattel
Mortgage Law. Those articles state rules which, considered as a general doctrine, are law in this jurisdiction; but it must not be forgotten that under given conditions property
may have character different from that imputed to it in said articles. It is undeniable that the parties to a contract may by agreement treat as personal property that which by
nature would be real property; and it is a familiar phenomenon to see things classed as real property for purposes of taxation which on general principle might be considered
personal property.

Davao Sawmill Co. v. Castillo
G.R. No. 40411,

DOCTRINE: Generally, machinery becomes immobilized when placed by the owner of the plant or property. This rule does not apply should the machinery be placed by any other
person such as a tenant or usufructuary.

FACTS:
• The petitioner company operates a sawmill in barrio Tigatu, Davao.
 • Said facility contained both movable and immovable property (machines and other such implements).
• However, the land on which it is situated belongs to another person.
• The parties executed a lease contract providing that upon the expiration or termination of such lease, the following shall happen:
o The ownership of all structures and improvements introduced by the petitioner company shall be transferred to the respondents without any cost or obligation
to pay.
o The machines and their accessories shall not be included in said transfer.
• It was noted by the court that in a previous case between the two parties, judgment was rendered against the petitioner company upon which a writ of execution was
brought against its machines (as personalty) in favor of Castilllo, et al.
• Additionally, the records of the current case reflected that the petitioner company had treated its machinery as personal property by executing chattel mortgages on
them in favor of third persons.
• Petitioner company contends that its machines are immovable under the first and fifth paragraphs of Article 334 (now Article 415) of the Civil Code.

ISSUE:
W/N the machines of the petitioner company are movable or immovable property.

HELD:
The machines are movable.

The court observed that the petitioner company failed to register its protest at the time its machines were sold. Generally, this inaction would be inconclusive but it is indicative of
the intention impressed upon the property in question.

This is so because while machines are generally movable property, they may nevertheless be
―immobilized‖ by destination or purpose subject to several conditions.

This conclusion finds its ground under the fifth paragraph of Article 415. Here, machinery becomes immobilized when placed by the owner of the plant or property. This rule does
not apply should the machinery be placed by any other person such as a tenant or usufructuary.

Applying the rule to the case on hand, the machinery was placed by the petitioner company who was merely a lessee. As such, the equipment was never immobilized in the first
place.
Berkenkotter v. Cu Unjieng
61 phil 663

Facts:
On 26 April 1926, the Mabalacat Sugar Company obtained from Cu Unjieng e Hijos, a loan secured by a first mortgage constituted on 2 parcels of land "with all its buildings,
improvements, sugarcane mill, steel railway, telephone line, apparatus, utensils and whatever forms part or is a necessary complement of said sugar-cane mill, steel railway,
telephone line, now existing or that may in the future exist in said lots.”

On 5 October 1926, the Mabalacat Sugar Company decided to increase the capacity of its sugar central by buying additional machinery and equipment, so that instead of milling
150 tons daily, it could produce 250. Green proposed to the Berkenkotter, to advance the necessary amount for the purchase of said machinery and equipment, promising to
reimburse him as soon as he could obtain an additional loan from the mortgagees, Cu Unjieng e Hijos, and that in case Green shouldfail to obtain an additional loan from Cu
Unjieng e Hijos, said machinery and equipment would become security therefore, said Green binding himself not to mortgage nor encumber them to anybody until Berkenkotter
be fully reimbursed for the corporation's indebtedness to him.

Having agreed to said proposition made in a letter dated 5 October 1926, Berkenkotter, on 9 October 1926, delivered the sum of P1,710 to Green, the total amount supplied by
him to Green having been P25,750. Furthermore, Berkenkotter had a credit of P22,000 against said corporationfor unpaid salary. With the loan of P25,750 and said credit of
P22,000, the Mabalacat Sugar Co., Inc., purchased the additional machinery and equipment. On 10 June 1927, Green applied to Cu Unjieng e Hijos for an additional loan of
P75,000 offeringas security the additional machinery and equipment acquired by said Green and installed in the sugar central after the execution of the original mortgage deed,
on 27 April 1927, together with whatever additional equipment acquired with said loan. Green failed to obtain said loan. Hence, above mentioned mortgage was in effect.

Issue: Are the additional machines also considered mortgaged?

Held:
Article 1877 of the Civil Code provides that mortgage includes all natural accessions, improvements, growing fruits, and rents not collected when the obligation falls due, and the
amount of any indemnities paid or due the owner by the insurers of the mortgaged property or byvirtue of the exercise of the power of eminent domain, with the declarations,
amplifications, and limitations established by law, whether the state continues in the possession of the person who mortgaged it or whether it passes into the hands of a third
person. It is a rule, that in a mortgage of real estate, the improvements on the same are included; therefore, all objects permanently attached to a mortgaged building or land,
although they may have been placed there after the mortgage was constituted, are also included.
(Yes. The installation of a machinery and equipment in a mortgaged sugar central, in lieu of another of less capacity, for the purpose of carrying out the industrial functions of the
latter and increasing production, constitutes a permanent improvement on said sugar central and subjects said machinery and equipment to the mortgage
constituted thereon.)
Mindanao Bus Co. v. City Assessor and Treasurer
G.R. No. L-17870

DOCTRINE: 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
immovables, and, hence, not subject to assessment as real estate for purposes of the real estate tax.

FACTS:
Petitioner is a public utility solely engaged in transporting passengers and cargoes by motor trucks, over its authorized lines in the Island of Mindanao, collecting rates approved
by the Public Service Commission.

The petitioner is the owner of the land where it maintains and operates a garage for its TPU motor trucks; a repair shop; blacksmith and carpentry shops, and with these
machineries which are placed therein, its TPU trucks are made; body constructed; and same are repaired in a condition to be serviceable in the TPU land transportation business it
operates.

These machineries have never been or were never used as industrial equipments to produce finished products for sale, nor to repair machineries, parts and the like offered to the
general public indiscriminately for business or commercial purposes for which petitioner has never engaged in. The City Assessor of CDO then assessed a P4,400 realty tax on said
machineries and repair equipment. This was then appealed to the Court of Tax Appeals (CTA) who sustained the respondent city assessor's ruling.

ISSUE:
Whether or not the machineries and the equipments are considered immobilized and thus subject to a realty tax. -- NO

HELD:
The Supreme Court held a decision for the petition for review to be set aside and the equipments in question declared not subject to assessment as real estate for the purposes of
the real estate tax.

The law that governs the determination of the question at issue is as follows:

Art. 415. The following are immovable property:
x x x x x x x x x
(5) 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; (Civil Code of the Phil.)

Aside from the element of essentiality the above-quoted provision also requires that the industry or works be carried on in a building or on a piece of land. Thus in the case of
Berkenkotter vs. Cu Unjieng, supra, the "machinery, liquid containers, and instruments or implements" are found in a building constructed on the land. A sawmill would also be
installed in a building on land more or less permanently, and the sawing is conducted in the land or building.

But 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. Said equipments may not, therefore, be deemed real property.

Resuming what we have set forth above, we hold that the equipments in question are not absolutely essential to the petitioner's transportation business, and petitioner's
business is not carried on in a building, tenement or on a specified land, so said equipment may not be considered real estate within the meaning of Article 415 (c) of the Civil
Code.

Said equipments are not considered immobilized as they are merely 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
Makati Leasing and Financial Corporation v. Wearever Textile Mills, Inc.
G.R. No. L-58469

DOCTRINE: If a house of strong materials, like what was involved in the above Tumalad case, may be considered as personal property for purposes of executing a chattel mortgage
thereon as long as the parties to the contract so agree and no innocent third party will be prejudiced thereby, there is absolutely no reason why a machinery, which is movable in
its nature and becomes immobilized only by destination or purpose, may not be likewise treated as such. This is really because one who has so agreed is estopped from denying
the existence of the chattel mortgage.

FACTS:
The private respondent Wearever Textile Mills, Inc., discounted and assigned several receivables with the former under a Receivable Purchase Agreement in order to obtain
financial accommodations from herein petitioner Makati Leasing and Finance Corporation. To secure the collection of the receivables assigned, private respondent executed a
Chattel Mortgage over certain raw materials inventory as well as a machinery described as an Artos Aero Dryer Stentering Range.

Upon default, petitioner filed a petition for extrajudicial foreclosure of the properties mortgage to it. The Deputy Sheriff assigned to implement the foreclosure failed to gain entry
into private respondent's premises and was not able to effect the seizure of the aforedescribed machinery. Petitioner thereafter filed a complaint for judicial foreclosure with the
Court of First Instance of Rizal.

Acting on petitioner's application for replevin, the lower court issued a writ of seizure, the enforcement of which was however subsequently restrained upon private respondent's
filing of a motion for reconsideration. After several incidents, the lower court finally issued an order lifting the restraining order for the enforcement of the writ of seizure and an
order to break open the premises of private respondent to enforce said writ. The lower court reaffirmed its stand upon private respondent's filing of a further motion for
reconsideration.

The Court of Appeals, in certiorari and prohibition proceedings subsequently filed by herein private respondent, set aside the Orders of the lower court and ordered the return of
the drive motor seized by the sheriff pursuant to said Orders, after ruling that the machinery in suit cannot be the subject of replevin, much less of a chattel mortgage, because it
is a real property pursuant to Article 415 of the new Civil Code, the same being attached to the ground by means of bolts and the only way to remove it from respondent's plant
would be to drill out or destroy the concrete floor, the reason why all that the sheriff could do to enfore the writ was to take the main drive motor of said machinery. The
appellate court rejected petitioner's argument that private respondent is estopped from claiming that the machine is real property by constituting a chattel mortgage thereon.

ISSUE:
Whether or not the property in suit is real property – NO. It is a personal property

HELD:
Examining the records of the instant case, We find no logical justification to exclude the rule out, as the appellate court did, the present case from the application of the
abovequoted pronouncement. If a house of strong materials, like what was involved in the above Tumalad case, may be considered as personal property for purposes of executing
a chattel mortgage thereon as long as the parties to the contract so agree and no innocent third party will be prejudiced thereby, there is absolutely no reason why a machinery,
which is movable in its nature and becomes immobilized only by destination or purpose, may not be likewise treated as such. This is really because one who has so agreed is
estopped from denying the existence of the chattel mortgage.

In rejecting petitioner's assertion on the applicability of the Tumalad doctrine, the Court of Appeals lays stress on the fact that the house involved therein was built on a land that
did not belong to the owner of such house. But the law makes no distinction with respect to the ownership of the land on which the house is built and We should not lay down
distinctions not contemplated by law.

It must be pointed out that the characterization of the subject machinery as chattel by the private respondent is indicative of intention and impresses upon the property the
character determined by the parties. As stated in Standard Oil Co. of New York v. Jaramillo, 44 Phil. 630, it is undeniable that the parties to a contract may by agreement treat as
personal property that which by nature would be real property, as long as no interest of third parties would be prejudiced thereby.
Bicerra v. Teneza
G.R. No. L-16218, 6 SCRA 648

DOCTRINE: A house is classified as immovable property by reason of its adherence to the soil on which it is built (Article 415, paragraph 1, Civil Code). This classification holds true
regardless of the fact that the house may be situated on land belonging to a different owner. But once the house is demolished it ceases to exist, hence its character as an
immovable likewise ceases.

FACTS:
The Bicerras are supposedly the owners of the house (PhP 20,000) built on a lot owned by them in Lagangilang, Abra which the Tenezas forcibly demolished in January 1957,
claiming to be the owners thereof. The materials of the house were placed in the custody of the barrio lieutenant. The Bicerras filed a complaint claiming actual damages of P200,
moral and consequential damages amounting to P600, and the costs. The CFI Abra dismissed the complaint claiming that the action was within the exclusive (original) jurisdiction
of the Justice of the Peace Court of Lagangilang, Abra.

The Supreme Court affirmed the order appealed. Having been admitted in forma pauperis, no costs were adjudged.

ISSUE:
WON the house is immovable property even if it is on the land of another

HELD:
House is immovable property even if situated on land belonging to a different owner;

Exception, when demolished.
Serg’s Products and Goquiola v. PCI Leasing and Finance
338 SCRA 499

DOCTRINE: After agreeing to a contract stipulating that a real or immovable property be considered as personal or movable, a party is estopped from subsequently claiming
otherwise. Hence, such property is a proper subject of a writ of replevin obtained by the other contracting party.

FACTS:
PCI Leasing and Finance, Inc. filed a complaint with the RTC for a sum of money with an application for a writ of replevin. Upon an ex-parte application of PCI Leasing, respondent
judge issued a writ of replevin directing its sheriff to seize and deliver the machineries and equipment to PCI Leasing after 5 days and upon the payment of the necessary
expenses.

Serg‘s filed a motion for special protective order. This motion was opposed by PCI Leasing on the ground that the properties [were] still personal and therefore still subject to
seizure and a writ of replevin.

In their Reply, petitioners asserted that the properties sought to be seized were immovable as defined in Article 415 of the Civil Code, the parties‘ agreement to the contrary
notwithstanding. They argued that to give effect to the agreement would be prejudicial to innocent third parties. They further stated that PCI Leasing was estopped from treating
these machineries as personal because the contracts in which the alleged agreement were embodied were totally sham and farcical.

Citing the Agreement of the parties, the appellate court held that the subject machines were personal property, and that they had only been leased, not owned, by petitioners. It
also ruled that the ―words of the contract are clear and leave no doubt upon the true intention of the contracting parties.

ISSUE:
Whether or not the machineries purchased and imported by SERG ‘S became real property by virtue of immobilization.

HELD:
The machineries herein are real properties but are considered personal by the parties‘agreement.

The Court will resolve whether the said machines are personal, not immovable, property which may be a proper subject of a writ of replevin. Rule 60 of the Rules of Court
provides that writs of replevin are issued for the recovery of personal property only. Section 3 thereof reads:

SEC. 3. Order. -- Upon the filing of such affidavit and approval of the bond, the court shall issue an order and the corresponding writ of replevin describing the personal property
alleged to be wrongfully detained and requiring the sheriff forthwith to take such property into his custody.

On the other hand, Article 415 of the Civil Code enumerates immovable or real property as follows:

ART. 415. The following are immovable property:
(5) 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;

In the present case, the machines that were the subjects of the Writ of Seizure were placed by petitioners in the factory built on their own land. Indisputably, they were essential
and principal elements of their chocolate-making industry. Hence, although each of them was movable or personal property on its own, all of them have become ―immobilized
by destination because they are essential and principal elements in the industry.

In that sense, petitioners are correct in arguing that the said machines are real, not personal, property pursuant to Article 415 (5) of the Civil Code.

Be that as it may, we disagree with the submission of the petitioners that the said machines are not proper subjects of the Writ of Seizure.

The Court has held that contracting parties may validly stipulate that a real property be considered as personal. After agreeing to such stipulation, they are consequently estopped
from claiming otherwise. Under the principle of estoppel, a party to a contract is ordinarily precluded from denying the truth of any material fact found therein.

Hence, in Tumalad v. Vicencio, the Court upheld the intention of the parties to treat a house as a personal property because it had been made the subject of a chattel mortgage.

It should be stressed, however, that our holding -- that the machines should be deemed personal property pursuant to the Lease Agreement – is good only insofar as the
contracting parties are concerned. Hence, while the parties are bound by the Agreement, third persons acting in good faith are not affected by its stipulation characterizing the
subject machinery as personal. In any event, there is no showing that any specific third party would be adversely affected.
Tumalad v. Vicencio
41 SCRA 143

DOCTRINE: The view that parties to a deed of chattel mortgage may agree to consider a house as personal property for the purposes of said contract, "is good only insofar as the
contracting parties are concerned. It is based, partly, upon the principle of estoppel.

FACTS:
On 1 September 1955 defendants executed a chattel mortgage in favor of plaintiffs over their house located at Quiapo, Manila, which were being rented from Madrigal &
Company, Inc. The mortgage was registered in the Registry of Deeds of Manila on 2 September 1955. The mortgage was executed to guarantee a loan of P4,800.00 received from
plaintiffs. It was also agreed that default in the payment of any of the amortizations, would cause the remaining unpaid balance to become immediately due and Payable and the
Chattel Mortgage will be enforceable in accordance with the provisions of Special Act No. 3135, and for this purpose, the Sheriff of the City of Manila or any of his deputies is
hereby empowered and authorized to sell all the Mortgagor's property after the necessary publication in order to settle the financial debts of P4,800.00, plus 12% yearly interest,
and attorney's fees.

When defendants defaulted in paying, the mortgage was extrajudicially foreclosed, and the house was sold at public auction pursuant to the said contract. As highest bidder,
plaintiffs were issued the corresponding certificate of sale. Thereafter, plaintiffs commenced Civil Case No. 43073 in the municipal court of Manila, praying, among other things,
that the house be vacated and its possession surrendered to them, and for defendants to pay rent of P200.00 monthly from 27 March 1956 up to the time the possession is
surrendered. MTC granted petition.

Defendants, in their answers in both the municipal court and court a quo impugned the legality of the chattel mortgage, claiming that they are still the owners of the house.
During the pendency of the appeal to the Court of First Instance, defendants failed to deposit the rent as ordered in the decision of the municipal court. As a result, the court
granted plaintiffs motion for execution. However, the judgment regarding the surrender of possession to plaintiffs could not be executed because the subject house had been
already demolished pursuant to the order of
the court in a separate civil case for ejectment against the present defendants for non-payment of rentals on the land on which the house was constructed.

ISSUE:
W/N the house may be a subject of a Chattel Mortgage. – YES, it may be the subject of a chattel mortgage.

HELD:
Defendants predicate their theory of nullity of the chattel mortgage on the ground that the subject matter of the mortgage is a house of strong materials, and, being an
immovable, it can only be the subject of a real estate mortgage and not a chattel mortgage.

The rule about the status of buildings as immovable property is that it is obvious that the inclusion of the building, separate and distinct from the land, in the enumeration of what
may constitute real properties could only mean one thing — that a building is by itself an immovable property irrespective of whether or not said structure and the land on which
it is adhered to belong to the same owner.

It is undeniable that the parties to a contract may by agreement treat as personal property that which by nature would be real property. The view that parties to a deed of chattel
mortgage may agree to consider a house as personal property for the purposes of said contract, "is good only insofar as the contracting parties are concerned. It is based, partly,
upon the principle of estoppel.

In a case, a mortgaged house built on a rented land was held to be a personal property, not only because the deed of mortgage considered it as such, but also because it did not
form part of the land for it is now settled that an object placed on land by one who had only a temporary right to the same, such as the lessee or usufructuary, does not become
immobilized by attachment. Hence, if a house belonging to a person stands on a rented land belonging to another person, it may be mortgaged as a personal property as so
stipulated in the document of mortgage. It should be noted, however that the principle is predicated on statements by the owner declaring his house to be a chattel, a conduct
that may conceivably estop him from subsequently claiming otherwise.

Although there is no specific statement referring to the subject house as personal property, yet by ceding, selling or transferring a property by way of chattel mortgage defendants
could only have meant to convey the house as chattel, or at least, intended to treat the same as such, so that they should not now be allowed to make an inconsistent stand by
claiming otherwise.

Moreover, the subject house stood on a rented lot to which defendants merely had a temporary right as lessee, and although this can not in itself alone determine the status of
the property, it does so when combined with other factors to sustain the interpretation that the parties, particularly the mortgagors, intended to treat the house as personalty.
Finally, because it is the defendants themselves, as debtors-mortgagors, who are attacking the validity of the chattel mortgage in this case, the doctrine of estoppel therefore
applies to the defendants, having treated the subject house as personalty.
Tsai v. CA
G.R. No. 120098

DOCTRINE: Even if the properties are immovable by nature, nothing detracts the parties from treating them as chattels to secure an obligation under the principle of estoppel.

FACTS:
• EVERTEX secured a loan from PBC, guaranteed by real estate and chattel mortgage over a parcel of land where the factory stands, and the chattels located therein, as
included in a schedule attached to the mortgage contract. another loan was obtained secured by a chattel mortgage over properties with similar descriptions listed in the
first schedule.
• During the date of execution of the second mortgage. EVERTEX purchased machineries and equipment.
• Due to business reverses, EVERTEX filed for insolvency proceedings. It failed to pay its obligation and thus, PBC initiated extrajudicial foreclosure of the mortgages.
• PBC was the highest bidder in the public auctions, making it the owner of the properties. It then leased the factory premises to Tsai.
• Afterwards, EVERTEX sought the annulment of the sale and conveyance of the properties to PBC as it was allegedly a violation of the insolvency law.
• The RTC held that the lease and sale were irregular as it involved properties not included in the schedule of the mortgage contract.

ISSUE:
Whether or not the (immovable) properties in question can be entered into a chattel mortgage. -- YES

HELD:
An immovable may be considered a personal property if there is a stipulation as when it is used as security in the payment of an obligation where a chattel mortgage is executed
over it, as in the case at bar. While it is true that the controverted properties appear to be immobile, a perusal of the contract of real estate mortgage and chattel mortgage by the
parties gives a contrary indication. Both the trial and appellate courts show that the intention was to treat the machineries as movables or personal property.

Assuming that the properties were considered immovables, nothing detracts the parties from treating it as chattels to secure an obligation under the principle of estoppel.
Board of Assessment Appeals v. MERALCO
10 SCRA 68

DOCTRINE: The steel towers or poles of MERALCO are not real properties because 1) they are not adhered to the soil, 2) they are not attached to an immovable property and can
be dismantled without breaking or deteriorating the material and 3) they are not machineries nor instruments or implements intended for the industry or works on the land

FACTS:
Generated by its hydroelectric plant, MERALCO ‘s electric power is transmitted from Laguna to

Manila through electric transmission wires. These electric transmission wires which carry high voltage current, are fastened to insulators attached on steel towers. MERALCO has
constructed 40 of these steel towers within Quezon City, on land belonging to it.

Three steel towers were the subject of this dispute. When inspected, the findings disclose that there was no concrete foundation but there was adobe stone underneath. Further,
it could not be ascertained whether said adobe stone was purposely or not.

From this, the City Assessor of Quezon City declared the steel towers subject to real property tax. MERALCO, however, protested the assessment saying that the steel towers are
considered poles and according to their franchise, it is exempt from taxation

ISSUE:
Whether or not the steel towers or poles of the MERALCO are considered real properties, hence subject to real property tax?

HELD:
The Supreme Court held in the negative. The Court said that the steel towers are personal properties. The Court based their ruling on the enumeration of immovable properties in
Art. 415 of the Civil Code.

First, the steel towers do not come within the objects mentioned in par. 1, because they do not constitute buildings or constructions adhered to the soil. Moreover, they are not
construction analogous to buildings nor adhering to the soil because as per description, they are removable and merely attached to a square metal frame by means of bolts, which
when unscrewed could easily be dismantled and moved from place to place.

Second, they can not be included under paragraph 3 since they are not attached to an immovable in a fixed manner; they can be separated without breaking the material or
causing deterioration upon the object to which they are attached. In fact, each of these steel towers or supports consists of steel bars joined together by means of bolts, which
can be disassembled by unscrewing the bolts and reassembled by screwing the same.

Lastly, they do not fall under paragraph 5, as they are not machineries, receptacles, instruments or implements. SC said that even if they were machineries, receptacles,
instruments or implements, they are not intended for industry or works on the land. MERALCO is not engaged in an industry or works in the land in which the steel supports or
towers are constructed.
Benguet Corp. vs CBAA
218 SCRA 271

Facts:
In 1985, the Provincial Assessor of Zambales assessed the petitioner's tailings dam as taxable improvements.

Petitioner contended that the dam cannot be subjected to realty tax as a separate and independent property because it does not constitute an "assessable improvement" on the
mine because it is an integral part of the mine.

To support its contention, petitioner cited the following cases:
(1) Municipality of Cotabato v. Santos
dikes and gates constructed in connection with a fishpond operation as integral parts of the fishpond.
(2) Bislig Bay Lumber Co. v. Provincial
Government of Surigao the realty tax was not imposed on a road constructed by the timber concessionaire because the government had the right to use the road to promote its
varied activities.
(3) Kendrick v. Twin Lakes Reservoir Co. (American Case)
A reservoir dam went with and formed part of the reservoir
(4) Ontario Silver Mining Co. v. Hixon (Canada)
Involved drain tunnels constructed when mining operations were expanded... it was held that "whatever value they have is connected with and in fact is an integral part of the
mine itself."

On the other hand, Solicitor General's argues that the dam is an assessable improvement because it enhances the value and utility of the mine.

Issue:
Whether or not the tailings dam in question is an "improvement" upon the land within the meaning of the Real Property Tax Code.

Held:
Yes. The court ruled that the subject dam falls within the definition of an "improvement" because it is permanent in character and it enhances both the value and utility of
petitioner's mine. The immovable nature of the dam defines its character as real property under Article 415 of the Civil Code and thus makes it taxable under Section 38 of the
Real Property Tax Code.
Sibal v. Valdez
G.R. No. L-27532

DOCTRINE: For the purpose of attachment and execution, and for the purposes of the Chattel Mortgage Law, "ungathered products" have the nature of personal property.
(batasnatin)

FACTS:
As a first cause of action the plaintiff alleged that the defendant Vitaliano Mamawal, deputy sheriff of the Province of Tarlac, by virtue of a writ of execution issued by the Court of
First Instance of Pampanga, attached and sold to the defendant Emiliano J. Valdez the sugar cane planted by the plaintiff and his tenants on seven parcels of land. That within one
year from the date of the attachment and sale the plaintiff offered to redeem said sugar cane and tendered to the defendant Valdez the amount sufficient to cover the price paid
by the latter, the interest thereon and any assessments or taxes which he may have paid thereon after the purchase, and the interest corresponding thereto and that Valdez
refused to accept the money and to return the sugar cane to the plaintiff.

One of the defenses of the defendant Emiliano J. Valdez is that the sugar cane in question had the nature of personal property and was not, therefore, subject to redemption. The
trial court hold that the sugar cane in question was personal property and, as such, was not subject to redemption.

ISSUE:
Whether the sugar cane in question is personal or real property under civil code? Under chattel mortgage law?

HELD:
The court ruled that It is contended that sugar cane comes under the classification of real property as "ungathered products" in paragraph 2 of article 334 of the Civil Code. Said
paragraph 2 of article 334 enumerates as real property the following: Trees, plants, and ungathered products, while they are annexed to the land or form an integral part of any
immovable property."

We may, therefore, conclude that paragraph 2 of article 334 of the Civil Code has been modified by section 450 of the Code of Civil Procedure and by Act No. 1508, in the sense
that, for the purpose of attachment and execution, and for the purposes of the Chattel Mortgage Law, "ungathered products" have the nature of personal property. The lower
court, therefore, committed no error in holding that the sugar cane in question was personal property and, as such, was not subject to redemption.
Punsalan, Jr. v. Vda. De Lacsamana
121 SCRA 331

DOCTRINE: Buildings are always immovable under the Civil Code. Separate treatment by the parties of building from the land in which it stood does not change the immovable
character of the building.

FACTS:
Punsalan was the owner of a piece of land, which he mortgaged in favor of PNB. Due to his failure to pay, the mortgage was foreclosed and the land was sold in a public auction to
which PNB was the highest bidder.

On a relevant date, while Punsalan was still the possessor of the land, it secured a permit for the construction of a warehouse.

A deed of sale was executed between PNB and Punsalan. This contract was amended to include the warehouse and the improvement thereon. By virtue of these instruments,
respondent Lacsamana secured title over the property in her name.

Petitioner then sought for the annulment of the deed of sale. Among his allegations was that the bank did not own the building and thus, it should not be included in the said
deed.

Petitioner‘s complaint was dismissed for improper venue. The trial court held that the action being filed in actuality by petitioner is a real action involving his right over a real
property.

ISSUE:
Whether or not the warehouse is an immovable and must be tried in the province where the property lies.

HELD:
Warehouse claimed to be owned by petitioner is an immovable or real property. Buildings are always immovable under the Civil Code. A building treated separately from the land
on which it is stood is immovable property and the mere fact that the parties to a contract seem to have dealt with it separate and apart from the land on which it stood did not
change its character as immovable property.
Fels Energy, Inc. v. Province of Batangas, et al.
G.R. No. 168557

DOCTRINE: Article 415 (9) of the New Civil Code provides that ―docks and structures which, though floating, are intended by their nature and object to remain at a fixed place on
a river, lake, or coast‖ are considered immovable property. Thus, power barges are categorized as immovable property by destination, being in the nature of machinery and other
implements intended by the owner for an industry or work which may be carried on in a building or on a piece of land and which tend directly to meet the needs of said industry
or work.

FACTS:
On January 18, 1993, National Power Corporation (NPC) entered into a lease contract with Polar Energy, Inc. over 3×30 MW diesel engine power barges moored at Balayan Bay in
Calaca, Batangas. The contract, denominated as an Energy Conversion Agreement, was for a period of five years. Article 10 states that NPC shall be responsible for the payment of
taxes. (other than

(i) taxes imposed or calculated on the basis of the net income of POLAR and Personal Income Taxes of its employees and (ii) construction permit fees, environmental permit fees
and other similar fees and charges. Polar Energy then assigned its rights under the Agreement to Fels despite NPC‘s initial opposition.

FELS received an assessment of real property taxes on the power barges from Provincial Assessor Lauro C. Andaya of Batangas City. FELS referred the matter to NPC, reminding it
of its obligation under the Agreement to pay all real estate taxes. It then gave NPC the full power and authority to represent it in any conference regarding the real property
assessment of the Provincial Assessor. NPC filed a petition with the Local Board Assessment Appeals (LBAA). The LBAA ordered Fels to pay the real estate taxes. The LBAA ruled
that the power plant facilities, while they may be classified as movable or personal property, are nevertheless considered real property for taxation purposes because they are
installed at a specific location with a character of permanency. The LBAA also pointed out that the owner of the barges–FELS, a private corporation–is the one being taxed, not
NPC. A mere agreement making NPC responsible for the payment of all real estate taxes and assessments will not justify the exemption of FELS; such a privilege can only be
granted to NPC and cannot be extended to FELS. Finally, the LBAA also ruled that the petition was filed out of time.

Fels appealed to the Central Board Assessment Appeals (CBAA). The CBAA reversed and ruled that the power barges belong to NPC; since they are actually, directly and exclusively
used by it, the power barges are covered by the exemptions under Section 234(c) of R.A. No. 7160. As to the other jurisdictional issue, the CBAA ruled that prescription did not
preclude the NPC from pursuing its claim for tax exemption in accordance with Section 206 of R.A. No. 7160. Upon MR, the CBAA reversed itself.

ISSUE:
Whether or not barges are considered as real property, thus can be subject to real property tax -- YES

HELD:
The CBAA and LBAA power barges are real property and are thus subject to real property tax.

In Consolidated Edison Company of New York, Inc., et al. v. The City of New York, et al., a power company brought an action to review property tax assessment. On the city‘s
motion to dismiss, the Supreme Court of New York held that the barges on which were mounted gas turbine power plants designated to generate electrical power, the fuel oil
barges which supplied fuel oil to the power plant barges, and the accessory equipment mounted on the barges were subject to real property taxation.

Moreover, Article 415 (9) of the New Civil Code provides that ―docks and structures which, though floating, are intended by their nature and object to remain at a fixed place on
a river, lake, or coast‖ are considered immovable property. Thus, power barges are categorized as immovable property by destination, being in the nature of machinery and other
implements intended by the owner for an industry or work which may be carried on in a building or on a piece of land and which tend directly to meet the needs of said industry
or work.
Prov. Assessor of Agusan del Sur vs. Filipinas Palm Oil Plantation
G.R. 183416

FACTS:
The exemption from real property taxes given to cooperatives applies regardless of whether or not the land owned is leased. This exemption benefits the cooperative's lessee.
The characterization of machinery as real property is governed by the Local Government Code and not the Civil Code.

(Filipinas) is a private organization engaged in palm oil plantation with a total land area of more than 7,000 hectares of National Development Company (NDC) lands in Agusan del
Sur. Harvested fruits from oil palm trees are converted into oil through Filipinas' milling plant in the middle of the plantation area. Within the plantation, there are also three (3)
plantation roads and a number of residential homes constructed by Filipinas for its employees.

NDC lands were transferred to Comprehensive Agrarian Reform Law beneficiaries who formed themselves as the merged NDC-Guthrie Plantations, Inc. - NDC-Guthrie Estates, Inc.
(NGPI-NGEI) Cooperatives.10 Filipinas entered into a lease contract agreement with NGPI-NGEI.

(Provincial Assessor) assessed Filipinas' properties found within the plantation area

ISSUE:
Whether Filipinas Palm Oil Plantation Inc. roads equipment and mini haulers are movable properties and have not been immobilized by destination for real property taxation.

RULING:
The roads that respondent constructed within the leased area should not be assessed with real property taxes.

The roads that respondent constructed became permanent improvements on the land owned by the NGPI-NGEI by right of accession under the Civil Code, thus:

Article 440. The ownership of property gives the right by accession to everything which is produced thereby, or which is incorporated or attached thereto, either naturally or
artificially.
Article445. Whatever is built, planted or sown on the land of another and the improvements or repairs made thereon, belong to the owner of the land[.]

Despite the land being leased by respondent when the roads were constructed, the ownership of the improvement still belongs to NGPI-NGEI. As provided under Article 440 and
445 of the Civil Code, the land is owned by the cooperatives at the time respondent built the roads. Hence, whatever is incorporated in the land, either naturally or artificially,
belongs to the
NGPI-NGEI as the landowner.

Although the roads were primarily built for respondent's benefit, the roads were also being used by the members of NGPI and the public.80 Furthermore, the roads inured to the
benefit of NGPI-NGEI as owners of the land not only by right of accession but through the express provision in the lease agreement:

2b. The road equipment and mini haulers shall be considered as real property, subject to real property tax.

Respondent is engaged in palm oil plantation. Thus, it harvests fruits from palm trees for oil conversion through its milling plant. By the nature of respondent's business,
transportation is indispensable for its operations

Section 199(o) of the Local Government Code defines "machinery" as real property subject to real property tax, (road equipment and mini haulers are classified as machinery)

(o) "Machinery" embraces machines, equipment, mechanical contrivances, instruments, appliances or apparatus which may or may not be attached, permanently or temporarily,
to the real property. It includes the physical facilities for production, the installations and appurtenant service facilities, those which are mobile, self-powered or self- propelled,
and those not permanently attached to the real property which are actually, directly, and exclusively used to meet the needs of the particular industry, business or activity and
which by their very nature and purpose are designed for, or necessary to its manufacturing, mining, logging, commercial, industrial or agricultural purposes

Article 415(5) of the New Civil Code defines "machinery" as that which constitutes an immovable property:

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[.]

The properties under Article 415, paragraph (5) of the Civil Code are immovables by destination, or "those which are essentially movables, but by the purpose for which they have
been placed in an immovable, partake of the of the latter because of the added utility derived therefrom." These properties, including machinery, become immobilized If the
following requisites concur (a) they are placed in the tenement by the owner of such tenement; (b) they are destined for use in the industry or work in the tenement; and (c) they
tend to directly meet the needs of said industry or works. The first two requisites are not found anywhere in the Local Government Code.

As between the Civil Code, a general law governing property and property relations, and the Local Government Code, a special law granting local government units the power to
impose real property tax, then the latter shall prevail
Therefore, for determining whether machinery is real property subject to real property tax, the ·definition and requirements under the Local Government Code are controlling.

Petitioner is correct in claiming that the phrase pertaining to physical facilities for production is comprehensive enough to include the road equipment and mini haulers as
actually, directly, and exclusively used by respondent to meet the needs of its operations in palm oil production. Moreover, "mini-haulers are farm tractors pulling attached
trailers used in the hauling of seedlings during planting season and in transferring fresh palm fruits from the farm [or] field to the processing plant within the plantation area."
The indispensability of the road equipment and mini haulers in transportation makes it actually, directly, and exclusively used in the operation of respondent's business.