Bicerra [G.R. No.

En Banc,

v. L-16218. November Makalintal (J):

29, 10

Teneza 1962.] concur.

immovable

likewise

ceases.

FACTS: The Bicerras are supposedly the owners of the house worth P200, 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. ISSUE: W/N the W/N the action involves title to real propety. dismissal of the complaint was proper.

2. Recovery of damages not exceeding P2,000 and involving no real property belong to the Justice of the Peace Court The complaint is for recovery of damages, the only positive relief prayed for. Further, a declaration of being the owners of the dismantled house and/or of the materials in no wise constitutes the relief itself which if granted by final judgment could be enforceable by execution, but is only incidental to the real cause of action to recover damages. As this is a case for recovery of damages where the demand does not exceed PhP 2,000 and that there is no real property litigated as the house has ceased to exist, the case is within the jurisdiction of the Justice of the Peace Court (as per Section 88, RA 296 as amended) and not the CFI (Section 44, id.) Caltex (Philippines) Inc., vs. Central Board of Assessment Appeals and City Assessor of Pasay Facts: This case is about the realty tax on machinery and equipment installed by Caltex (Philippines) Inc. in its gas stations located on leased land. 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 city assessor of Pasay City characterized the said items of gas station equipment and machinery as taxable realty. The realty tax on said equipment amounts to P4,541.10 annually (p. 52, Rollo). The city board of tax appeals ruled that they are personalty. The assessor appealed to the Central Board of

HELD: The Supreme Court affirmed the order appealed. Having been admitted in forma pauperis, no costs were adjudged. 1. House is immovable property even if situated on land belonging to a different owner; Exception, when demolished 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, as in this case, it ceases to exist as such and hence its character as an

Assessment Appeals. The Board, which was in its decision of June 3, 1977 that the said machines and equipment are real property under the Real Property Tax Code, Presidential Decree No. 464, which took effect on June 1, 1974. The decision was reiterated by the Board in its resolution of January 12, 1978, denying Caltex's motion for reconsideration, a copy of which was received by its lawyer on April 2, 1979.On May 2, 1979 Caltex filed this certiorari petition wherein it prayed for the setting aside of the Board's decision and for a declaration that t he said machines and equipment are personal property not subject to realty tax. We hold that the said equipment and machinery, as appurtenances to the gas station building or shed owned by Caltex (as to which it is subject to realty tax) and 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. Caltex invokes the rule that machinery which is movable in its nature only becomes immobilized when placed in a plant by the owner of the property or plant but not when so placed by a tenant, a usufructuary, or any person having only a temporary right, unless such person acted as the agent of the owner (Davao Saw Mill Co. vs. Castillo, 61 Phil 709). Issue: Whether the pieces of gas station equipment and machinery already enumerated are subject to realty tax Held:

Yes. This issue has to be resolved primarily under the provisions of the Assessment Law and the Real Property Tax Code. Under, Sec. 38 of the said law: 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. The equipment and machinery, are considered as appurtenances to the gas station building or shed owned by Caltex (as to which it is subject to realty tax) and 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. Improvements on land are commonly taxed as realty even though for some purposes they might be considered personalty. "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 SAW MILL CO. VS. CASTILLO G.R. No. L-40411 August 7, 1935 MALCOLM, J.: FACTS: Petitioner is the holder of a lumber concession. It operated a sawmill on a land, which it doesnt own. Part of the lease

agreement was a stipulation in which after the lease agreement, all buildings and improvements would pass to the ownership of the lessor, which would not include machineries and accessories. In connection to this, petitioner had in its sawmill machineries and other equipment wherein some were bolted in foundations of cement. Issue: Whether or not the trial judge erred in finding that the subject properties are personal in nature. HELD: The machinery must be classified as personal property. The lessee placed the machinery in the building erected on land belonging to another, with the understanding that the machinery was not included in the improvements which would pass to the lessor on the expiration of the lease agreement. The lessee also treated the machinery as personal property in executing chattel mortgages in favor of third persons. The machinery was levied upon by the sheriff as personalty pursuant to a writ of execution obtained without any protest being registered. Furthermore, machinery only becomes immobilized when placed in a plant by the owner of the property or plant, but not when so placed by a tenant, usufructuary, or any person having temporary right, unless such person acted as the agent of the owner. EVANGELISTA vs. ALTO SURETY & INSURANCE CO., INC. G.R. No. L-11139 April 23, 1958

FACTS: On June 4, 1949, petitioner herein, Santos Evangelista, instituted Civil Case No. 8235 of the Court of First, Instance of Manila for a sum of money. On the same date, he obtained a writ of attachment, which levied upon a house, built by Rivera on a land situated in Manila and leased to him, by filing copy of said writ and the corresponding notice of attachment with the Office of the Register of Deeds of Manila, on June 8, 1949. In due course, judgment was rendered in favor of Evangelista, who, on October 8, 1951, bought the house at public auction held in compliance with the writ of execution issued in said case. The corresponding definite deed of sale was issued to him on October 22, 1952, upon expiration of the period of redemption. When Evangelista sought to take possession of the house, Rivera refused to surrender it, upon the ground that he had leased the property from the Alto Surety & Insurance Co., Inc. and that the latter is now the true owner of said property. It appears that on May 10, 1952, a definite deed of sale of the same house had been issued to respondent, as the highest bidder at an auction sale held, on September 29, 1950, in compliance with a writ of execution issued in Civil Case No. 6268 of the same court for the sum of money, had been rendered in favor respondent herein, as plaintiff therein. Hence, on June 13, 1953, Evangelista instituted the present action against respondent and Ricardo Rivera, for the purpose of establishing his (Evangelista) title over said house, securing possession thereof, apart from recovering damages. After due trial, the CFI Manila rendered judgment for Evangelista, sentencing Rivera and Alto Surety to deliver the house in question to Evangelista and to pay him, jointly and severally, P40 a month from Oct. 1952 until said delivery, plus

costs. On appeal taken by respondent, this decision was reversed by the Court of Appeals, which absolved said respondent from the complaint, upon the ground that, although the writ of attachment in favor of Evangelista had been filed with the Register of Deeds of Manila prior to the sale in favor of respondent, Evangelista did not acquire thereby a preferential lien, the attachment having been levied as if the house in question were immovable property, although in the opinion of the Court of Appeals, it is "ostensibly a personal property. ISSUE: W/N a house constructed by the lessee of the land on which it is built, should be dealt with, for the purpose of attachment, as immovable property. HELD: The said house is not personal property, much less a debt, credit or other personal property not capable of manual delivery, but immovable property. As explicitly held, in Laddera vs. Hodges (48 Off. Gaz., 5374), "a true building (not merely superimposed on the soil) is immovable or real property, whether it is erected by the owner of the land or by usufructuary or lessee. This is the doctrine of our Supreme Court in Leung Yee vs. Strong Machinery Company, 37 Phil., 644. It is true that the parties to a deed of chattel mortgage may agree to consider a house as personal property for purposes of said

contract (Luna vs. Encarnacion, * 48 Off. Gaz., 2664; Standard Oil Co. of New York vs. Jaramillo, 44 Phil., 630; De Jesus vs. Juan Dee Co., Inc., 72 Phil., 464). However, this view is good only insofar as the contracting parties are concerned. It is based, partly, upon the principle of estoppel. Neither this principle, nor said view, is applicable to strangers to said contract. Much less is it in point where there has been no contract whatsoever, with respect to the status of the house involved, as in the case at bar. FEL'S ENERGY, INC. vs. Province of Batangas, et.al [G.R. No. 68557, Feb. 16, 2007] FACTS: On January 18, 1993, NPC entered into a lease contract with Polar Energy, Inc. over 3x30 MW diesel engine power barges moored at Balayan Bay in Calaca, Batangas. The contract, denominated as an Energy Conversion Agreement (Agreement), was for a period of five years. Article 10 reads: RESPONSIBILITY. NAPOCOR shall be responsible for the payment of (a) all taxes, import duties, fees, charges and other levies imposed by the National Government of the Republic of the Philippines or any agency or instrumentality thereof to which POLAR may be or become subject to or in relation to the performance of their obligations under this agreement (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) and (b) all real

estate taxes and assessments, rates and other charges in respect of the Power Barges. Subsequently, Polar Energy, Inc. assigned its rights under the Agreement to FELS. The NPC initially opposed the assignment of rights, citing paragraph 17.2 of Article 17 of the Agreement. On August 7, 1995, FELS received an assessment of real property taxes on the power barges from Provincial Assessor Lauro C. Andaya of Batangas City. The assessed tax, which likewise covered those due for 1994, amounted to P56,184,088.40 per annum. 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. In a letter dated September 7, 1995, NPC sought reconsideration of the Provincial Assessors decision to assess real property taxes on the power barges. However, the motion was denied on September 22, 1995, and the Provincial Assessor advised NPC to pay the assessment. This prompted NPC to file a petition with the Local Board of Assessment Appeals (LBAA) for the setting aside of the assessment and the declaration of the barges as non-taxable items; it also prayed that should LBAA find the barges to be taxable, the Provincial Assessor be directed to make the necessary corrections.

In its Answer to the petition, the Provincial Assessor averred that the barges were real property for purposes of taxation under Section 199(c) of Republic Act (R.A.) No. 7160. Before the case was decided by the LBAA, NPC filed a Manifestation, informing the LBAA that the Department of Finance (DOF) had rendered an opinion dated May 20, 1996, where it is clearly stated that power barges are not real property subject to real property assessment. On August 26, 1996, the LBAA rendered a Resolution denying the petition. The fallo reads: WHEREFORE, the Petition is DENIED. FELS is hereby ordered to pay the real estate tax in the amount of P56,184,088.40, for the year 1994. ISSUE: Whether or not FELS can be considered a taxable entity. HELD: Time and again, the Supreme Court has stated that taxation is the rule and exemption is the exception. The law does not look with favor on tax exemptions and the entity that would seek to be thus privileged must justify it by words too plain to be mistaken and too categorical to be misinterpreted. Thus, applying the rule of strict construction of laws granting tax exemptions, and the rule that doubts should be resolved in favor of provincial corporations, we hold that FELS is considered a taxable entity.

The mere undertaking of petitioner NPC under Section 10.1 of the Agreement, that it shall be responsible for the payment of all real estate taxes and assessments, does not justify the exemption. The privilege granted to petitioner NPC cannot be extended to FELS. The covenant is between FELS and NPC and does not bind a third person not privy thereto, in this case, the Province of Batangas. It must be pointed out that the protracted and circuitous litigation has seriously resulted in the local governments deprivation of revenues. The power to tax is an incident of sovereignty and is unlimited in its magnitude, acknowledging in its very nature no perimeter so that security against its abuse is to be found only in the responsibility of the legislature which imposes the tax on the constituency who are to pay for it. The right of local government units to collect taxes due must always be upheld to avoid severe tax erosion. This consideration is consistent with the State policy to guarantee the autonomy of local governments and the objective of the Local Government Code that they enjoy genuine and meaningful local autonomy to empower them to achieve their fullest development as selfreliant communities and make them effective partners in the attainment of national goals. In conclusion, we reiterate that the power to tax is the most potent instrument to raise the needed revenues to finance and support myriad activities of the local government units for the delivery of basic services essential to the promotion of the general welfare and the enhancement of peace, progress, and prosperity of the people.

Involuntary insolvency of Paul Strochecker v. Ramirez [G.R. No. 18700. September 26, 1922.] First Division, Romualdez (J): 7 concur Facts: Half-interest in the business (Antigua Botica Ramirez) was mortgaged with Fidelity & Surety Co. on 10 March 1919, and registered in due time in the registry of property, while another mortgage was made with Ildefonso Ramirez on 22 September 1919 and registered also in the registry. Raised in the lower court, the trial court declared the mortgage of Fidelity & Surety Co. entitled to preference over that of Ildefonso Ramirez and another mortgage by Concepcion Ayala. Ayala did not appeal, but Ramirez did. The Supreme Court affirmed the judgment appealed from with costs against the appellant. 1. Interest in business may be subject of mortgage With regard to the nature of the property mortgaged which is one-half interest in the business, such interest is a personal property capable of appropriation and not included in the enumeration of real properties in articles 335 of the Civil Code, and may be the subject of mortgage. All personal property may be mortgaged. (Sec. 7, Act 1508.) 2. Description of mortgage property sufficient The description contained in the document is sufficient. The law (sec. 7, Act 1508) requires only a description of the mortgaged property shall be such as to enable the parties to the mortgage, or any other person, after reasonable inquiry and investigation, to identify the same. In the case at bar, his half interest in the drug business known as Antigua Botica Ramirez, located at Calle Real Nos. 123 and 125, District of Intramuros, Manila Philippine Islands" is sufficient.

3. Article 1922 (1-3) of the Civil Code applicable only to mortgage property in possession Numbers 1, 2, and 3 of the article 1922 of the Civil Code are not applicable as neither the debtor, nor himself, is in possession of the property mortgaged, which is, and since the registration of the mortgage has been, legally in possession of the surety company (Sec. 4, Act. 1508; Meyers vs. Thein, 15 Phil., 303) 4. Stipulation about personal property not a mortgage upon property In no way can the mortgage executed be given effect as of the date of the sale of the store in question; as there was a mere stipulation about personal security during said date, but not a mortgage upon property, and much less upon the property in question. SALVADOR H. LAUREL vs. RAMON GARCIA [G. R. No. 92013, July 25, 1990] FACTS: This is a petition for prohibition seeking to enjoin respondents, their representatives and agents from proceeding with the bidding for the sale of the 3,179 square meters of land at 306 Roppongi; 5-chome Minato-ku Tokyo, Japan scheduled on February 21, 1990. The subject property in this case is one of the four (4) properties in Japan acquired by the Philippine government under the Reparations Agreement entered into with Japan on 9 May 1956. The properties and the capital goods and services procured from the Japanese government for national development projects are part of the indemnification to the Filipino people for their losses in life and property and their suffering during World War II.

ISSUES: 1. Whether or not the Roppongi property and others of its kind can be alienated by the Philippine government. 2. Whether or not the Chief Executive, her officers and agents have the authority, and jurisdiction to sell the Roppongi property. RULING: The Court ruled in the negative. The nature of the Roppongi lot as property for public service is expressly spelled out. It is dictated by the terms of the Reparations Agreement and the corresponding contract of procurement which bind both the Philippine government and the Japanese government. There can be no doubt that it is of public dominion and is outside the commerce of man. And the property continues to be part of the public domain, not available for private appropriation or ownership until there is a formal declaration on the part of the government to withdraw it from being such (Ignacio vs. Director of Lands, 108 Phil 335). It is not for the President to convey valuable real property of the government on his or her own sole will. Any such conveyances must be authorized and approved by a law enacted by the Congress. It requires executive and legislative concurrence. Petition is granted. LAUREL vs. ABROGAR Facts:

On or about September 10-19, 1999, or prior thereto in Makati City, the accused, conspiring and confederating together and all of them mutually helping and aiding one another, with intent to gain and without the knowledge and consent of the Philippine Long Distance Telephone (PLDT), did then and there willfully, unlawfully and feloniously take, steal and use the international long distance calls belonging to PLDT by conducting International Simple Resale (ISR), which is a method of routing and completing international long distance calls using lines, cables, antenae, and/or air wave frequency which connect directly to the local or domestic exchange facilities of the country where the call is destined, effectively stealing this business from PLDT while using its facilities in the estimated amount of P20,370,651.92 to the damage and prejudice of PLDT, in the said amount. Issue: Whether international long distance calls and the business of providing telecommunication or telephone services are considered as personal properties subjected to theft. Held: In the instant case, the act of conducting ISR operations by illegally connecting various equipment or apparatus to private respondent PLDTs telephone system, through which petitioner is able to resell or re-route international long distance calls using respondent PLDTs facilities constitutes all three acts of subtraction mentioned above.

ACCORDINGLY, the motion for reconsideration is GRANTED. The assailed Decision is RECONSIDERED and SET ASIDE. The Decision of the Court of Appeals affirming the Order issued by Judge Zeus C. Abrogar of the Regional Trial Court of Makati City, which denied the Motion to Quash (With Motion to Defer Arraignment) for theft, is AFFIRMED. The case is remanded to the trial court and the Public Prosecutor of Makati City is hereby DIRECTED to amend the Amended Information to show that the property subject of the theft were services and business of the private offended party. LEUNG YEE vs. F.L STRONG MACHINERY CO. AND WILLIAM SON [37 SCRA 644] FACTS: 1. First mortgage: Compania Agricola Filipina bought ricecleaning machinery from the machinery company and this was secured by a chattel mortgage on the machinery and the building to which it was installed. Upon failure to pay, the chattel mortgage was foreclosed, the building and machinery sold in public auction and bought by the machinery company. 2. Days after, the Compania Agricola Filipina executed a deed of sale over the land to which the building stood in favor of the machinery company. This was done to cure any defects that may arise in the machinery companys ownership of the building.

3. Second mortgage: on or about the date to which the chattel mortgage was executed, Compania executed a real estate mortgage over the building in favor of Leung Yee, distinct and separate from the land. This is to secure payment for its indebtedness for the construction of the building. Upon failure to pay, the mortgage was foreclosed. 4. The machinery company then filed a case, demanding that it be declared the rightful owner of the building. The trial court held that it was the machinery company which was the rightful owner as it had its title before the building was registered prior to the date of registry of Leung Yees certificate. HELD: Building separate from land does not affect character as real property; Registry of chattel mortgage does not affect character of the building and the machineries installed therein. The Chattel Mortgage Law contemplates and makes provision for mortgages of personal property; and the sole purpose and object of the chattel mortgage registry is to provide for the registry of "Chattel mortgages," mortgages of personal property executed in the manner and form prescribed in the statute. The building of strong materials in which the machinery was installed was real property, and the mere fact that the parties seem to have dealt with it separate and apart from the land on which it stood in no wise changed its character as real property. It follows that neither the original registry in the chattel mortgage registry of the instrument purporting to be a chattel mortgage of the building and the machinery installed therein, nor the annotation

in that registry of the sale of the mortgaged property, had any effect whatever so far as the building was concerned. Makati Leasing v. Wearever Textiles [G.R. No. L-58469. May 16, 1983.] Second Division, de Castro (J): 5 concur, 1 concur in result Facts: To obtain financial accommodations from Makati Leasing and Finance Corporation, Wearever Textile Mills, discounted and assigned several receivables with the former under a Receivable Purchase Agreement. To secure the collection of the receivables assigned, Wearever Textile executed a Chattel Mortgage over certain raw materials inventory as well as a machinery described as an Artos Aero Dryer Stentering Range. Upon Wearever's default, Makati Leasing filed a petition for extrajudicial foreclosure of the properties mortgage to it. However, the Deputy Sheriff assigned to implement the foreclosure failed to gain entry into Wearever's premises and was not able to effect the seizure of the machinery. Makati Leasing thereafter filed a complaint for judicial foreclosure with the CFI Rizal (Branch VI, Civil Case 36040). Acting on petitioner's application for replevin, the lower court issued a writ of seizure, the enforcement of which was restrained upon Wearever's filing of a motion for reconsideration. The lower court finally issued on 11 February 1981, an order lifting the restraining order for the enforcement of the writ of seizure and an order to break open the premises of Wearever to enforce said writ. The lower court reaffirmed its stand upon Wearever's filing of a further motion for reconsideration. On 13 July 1981, the sheriff enforcing the seizure order, repaired to the premises of Wearever and removed the main drive motor of the subject machinery.

On 27 August 1981, the Court of Appeals, in certiorari and prohibition proceedings filed by Wearever, 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 appellate court also rejected the argument that Wearever is estopped from claiming that the machine is real property by constituting a chattel mortgage thereon. A motion for reconsideration was filed by Makati Leasing, which was later denied. Makati Leasing brought the case to the Supreme Court by review by writ of certiorari. The Supreme Court reversed and set aside the decision and resolution of the Court of Appeals, and reinstated the orders of the lower court, with costs against Wearever Textiles. 1. Case not moot and academic with the return of the seized motor When the subject motor drive was returned, it was made unequivocably clear that said action was without prejudice to a motion for reconsideration of the Court of Appeals decision, as shown by the receipt duly signed by Wearever's representative. Considering that Makati Leasing has reserved its right to question the propriety of the CA' decision, the contention of Wearever that the petition has been mooted by such return may not be sustained. 2. Similar case; Estoppel applies to parties as having treated the house as personalty 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-appellants

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. Unlike in the Iya cases, Lopez vs. Orosa, Jr. & Plaza Theatre, Inc. & Leung Yee vs. F.L. Strong Machinery & Williamson, wherein third persons assailed the validity of the chattel mortgage, it is the defendants-appellants themselves, as debtors mortgagors, who are attacking the validity of the chattel mortgage in this case. The doctrine of estoppel therefore applies to the herein defendants appellants, having treated the subject house as personalty" (Tumalad v. Vicencio). One who has so agreed is estopped from denying the existence of the chattel mortgage. 3. Pronouncement on estoppel involving chattel mortgage applies to machinery There is no logical justification to exclude the rule out the present case from the application of the pronouncement in Tumalad v. Vicencio. If a house of strong materials 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. 4. Chattel mortgage treating real property as personal property valid, as long as third parties are not prejudiced The characterization of the subject machinery as chattel is indicative of intention and impresses upon the property the character determined by the parties. As stated in Standard Oil v. Jaramillo, , 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. 5. Equity prevents respondent to impugn the efficacy of the chattel mortgage Equity dictates that one should not benefit at the expense of another. Weareverf could not be allowed to impugn the efficacy of the chattel mortgage after it has benefited therefrom. 6. Machinery and Engineering Supplies v. CA not applicable; Tumalad case more in parity with case The case of Machinery and Engineering Supplies, Inc. v. CA, 96 Phil. 70, heavily relied upon by the Court of Appeals, is not applicable to the present case as the nature of the machinery and equipment involved therein as real properties never having been disputed nor in issue, and they were not the subject of a Chattel Mortgage. Undoubtedly, the Tumalad case bears more nearly perfect parity with the present case to be the more controlling jurisprudential authority. Manila Electric Co. v. Central Board of Assessment Appeals 114 SCRA 273 Facts: This case is about the imposition of the realty tax on two oil storage tanksinstalled in 1969 by Manila Electric Company on a lot in San Pascual, Batangas which it leased in 1968 from Caltex (Phil.), Inc. The tanks are within the Caltex refinery compound. According to Meralco, the storage tanksare made of steel plates welded and assembled on the spot. Their bottoms rest on a foundation consisting of compacted earth as the outermost layer, a sand pad as the intermediate layer and a two-inch thick bituminous asphalt stratum as the top layer. The bottom of each tank is in contact with the asphalt layer, The steel sides of the tank are directly supported underneath by a circular wall made

of concrete, eighteen inches thick, to prevent the tank from sliding. Hence, according to Meralco, the tank is not attached to its foundation. It is not anchored or welded to the concrete circular wall. Its bottom plate is not attached to any part of the foundation by bolts, screws or similar devices. The tank merely sits on its foundation. Each empty tank can be floated by flooding its dike-inclosed location with water four feet deep. TheBoard concludes that while the tanks rest or sit on their foundation, the foundation itself and the walls, dikes and steps, which are integral parts ofthe tanks, are affixed to the land while the pipelines are attached to the tanks. In 1970, the municipal treasurer of Bauan, Batangas, on the basis of an assessment made by the provincial assessor, required Meralco to pay realty taxes on the two tanks. On March 15, 1978, Meralco filed this special civil action of certiorari to annul the Boards decision and resolution. Issue: Whether or not the tanks together with the foundation, dikes, steps, pipelines and other appurtenances constitute taxable improvements. Held: We hold 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. It is undeniable that 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. Oil storage tanks were held to be taxable realty in Standard Oil Co. of New Jersey vs. Atlantic City, 15 Atl. 2nd 271. For purposes of taxation, the term real property may include things which should generally be regarded as personal

property(84 C.J.S. 171, Note 8). 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 (Standard Oil Co. of New York vs. Jaramillo, 44 Phil. 630, 633). The case of Board of Assessment Appeals vs. Manila Electric Company, 119 Phil. 328, wherein Meralcos steel towers were held not to be subject to realty tax, is not in point because in that case the steel towers were regarded as poles and under its franchise Meralcos poles are exempt from taxation. Moreover, the steel towers were not attached to any land or building. They were removable from their metal frames. Nor is there any parallelism between this case and Mindanao Bus Co. vs. City Assessor, 116 Phil. 501, where the tools and equipment in the repair, carpentry and blacksmith shops of a transportation company were held not subject to realty tax because they were personal property. Petition is dismissed. MINDANAO BUS CO. vs. CITY ASSESSOR FACTS: Mindanao Bus Company is a public utility engaged in transporting passengers and cargoes by motor trucks in Mindanao but has its main offices in Cagayan de Oro. The company is also owner to the land where it maintains and operates a garage, a repair shop, blacksmith and carpentry shops; the machineries are place on wooden and cement platforms. The City Assessor of Cagayan de Oro City assessed at P4,400 said maintenance and repair equipment. The company appealed

the assessment to the 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 the company filed with the Court of Tax Appeals a petition for the review of the assessment. The CTA held that the Company was liable to the payment of the realty tax on its maintenance and repair equipment. Hence, the company filed a petition for review with the Supreme Court. ISSUE: Whether or not the machineries assessed by the respondent are real properties? HELD: Paragraph 5 of Article 415 of the New Civil which provides 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 immovable properties. Movable equipments to be immobilized in contemplation of the law 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 principal 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 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. PRUDENTIAL 153 BANK SCRA V. PANIS 390

HELD: A real estate mortgage can be constituted on the building erected on the land belonging to another. The inclusion of building distinct and separate from the land in the Civil Code can only mean that the building itself is an immovable property. While it is true that a mortgage of land necessarily includes in the absence of stipulation of the improvements thereon, buildings, still a building in itself may be mortgaged by itself apart from the land on which it is built. Such a mortgage would still be considered as a REM for the building would still be considered as immovable property even if dealt with separately and apart from the land. The original mortgage on the building and right to occupancy of the land was executed before the issuance of the sales patent and before the government was divested of title to the land. Under the foregoing, it is evident that the mortgage executed by private respondent on his own building was a valid mortgage. As to the second mortgage, it was done after the sales patent was issued and thus prohibits pertinent provisions of the Public Land Act. PUNSALAN, G.R. No. JR. V. VDA. DE L-55729 March LACSAMANA 28, 1983

FACTS: Spouses Magcale secured a loan from Prudential Bank. To secure payment, they executed a real estate mortgage over a residential building. The mortgage included also the right to occupy the lot and the information about the sales patent applied for by the spouses for the lot to which the building stood. After securing the first loan, the spouses secured another from the same bank. To secure payment, another real estate mortgage was executed over the same properties. The Secretary of Agriculture then issued a Miscellaneous Sales Patent over the land which was later on mortgaged to the bank. The spouses then failed to pay for the loan and the REM was extrajudicially foreclosed and sold in public auction despite opposition from the spouses. The respondent court held that the REM was null and void. ISSUE: Whether or not a valid RE mortgage can be constituted on the building erected on the belonging to another.

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. Petitioners 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: W/N the trial court erred in dismissing the case on the ground of improper venue. W/N 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 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 in no wise changed its character as immovable property. Serg's v. PCI Leasing Sergs Products, Inc. vs. PCI Leasing G.R. No. 137705. August 22, 2000 FACTS: PCI Leasing and Finance filed a complaint for sum of money, with an application for a writ of replevin. 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. The sheriff proceeded to petitioner's factory, seized one machinery, with word that he would return for other machineries. Petitioner (Sergs Products) filed a motion for special protective order to defer enforcement of the writ of replevin. PCI Leasing opposed the motion on the ground that the properties were still personal and therefore can still be subjected to seizure and writ of replevin. Petitioner asserted that properties sought to be seized were immovable as defined in Article 415 of the Civil Code.

Sheriff was still able to take possession of two more machineries In its decision on the original action for certiorari filed by the Petitioner, the appellate court, Citing the Agreement of the parties, held that the subject machines were personal property, and that they had only been leased, not owned, by petitioners; and 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 became real property by virtue of immobilization. Ruling: Petitioners contend that the subject machines used in their factory were not proper subjects of the Writ issued by the RTC, because they were in fact real property. Writ of Replevin: Rule 60 of the Rules of Court provides that writs of replevin are issued for the recovery of personal property only. Article 415 (5) of the Civil Code provides that 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.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. However, 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. Section 12.1 of the Agreement between the parties provides The PROPERTY is, and shall at all times be and remain, personal property notwithstanding that the PROPERTY or any part thereof may now be, or hereafter become, in any manner affixed or attached to or embedded in, or permanently resting upon, real property or any building thereon, or attached in any manner to what is permanent. The machines are personal property and they are proper subjects of the Writ of Replevin TSAI V. COURT OF APPEALS 336 SCRA 324 FACTS: EVERTEX secured a loan from PBC, guaranteed by a 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. HELD: While it is true that the controverted properties appear to be immobile, a perusal of the contract of REM and CM executed by the parties gives a contrary indication. In the case at bar, 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. US vs Carlos 21 Phil 553 Facts:

Ignacio Carlos has been a consumer of electricity furnished by the Manila Electric Railroad and Light Company for a building containing the residence of the accused and 3 other residences. Representatives of the company believing that more light is consumed than what is shown in the meter installed an additional meter on the pole outside Carlos house to compare the actual consumption and found out that the latter used a jumper. Further, a jumper was found in a drawer of a small cabinet in the room of the defendants house were the meter was installed. In the absence of any explanation for Carlos possession of said device, the presumption raised was that Carlos was the owner of the device whose only use was to deflect the current from the meter. Thus he was charged with the crime of theft amounting to 2,273KW of electric power worth 909.20 pesos. Issue: Whether or not the court erred in declaring that the electrical energy may be stolen. Held: It is true that electricity is no longer, as formerly, regarded by electricians as a fluid, but its manifestation and effects, like those of gas, may be seen and felt. The true test of what is a proper subject of larceny seems to be not whether the subject is corporeal, but whether it is capable of appropriation by another than the owner.

The court ruled that electricity, the same as gas, is a valuable article of merchandise, bought and sold like other personal property and is capable of appropriation by another. It is also susceptible of being severed from a mass or larger quantity, and of being transported from place to place. So no error was committed by the trial court in holding that electricity is a subject of larceny.

Villanueva vs Castaneda There is in the vicinity of the public market of San Fernando, Pampanga, along Mercado Street, a strip of land measuring 12 by 77 meters on which stands a conglomeration of vendors stalls together forming what is commonly known as a talipapa. This is the subject of the herein petition. The petitioners claim they have a right to remain in and conduct business in this area by virtue of a previous authorization granted to them by the municipal government. The respondents deny this and justify the demolition of their stalls as illegal constructions on public property. At the petitioners behest, we have issued a temporary restraining order to preserve the status quo between the parties pending our decision. This dispute goes back to November 7, 1961, when the municipal council of San Fernando adopted Resolution No. 218 authorizing some 24 members of the Fernandino United Merchants and Traders Association to construct permanent stalls and sell in the above-mentioned place. The action was protested on November 10, 1961, in Civil Case No. 2040, where the Court of First Instance of Pampanga, Branch 2, issued a writ of

preliminary injunction that prevented the defendants from constructing the said stalls until final resolution of the controversy. On January 18, 1964, while this case was pending, the municipal council of San Fernando adopted Resolution No. 29, which declared the subject area as the parking place and as the public plaza of the municipality, thereby impliedly revoking Resolution No. 218, series of 1961. Four years later, on November 2, 1968, Judge Andres C. Aguilar decided the aforesaid case and held that the land occupied by the petitioners, being public in nature, was beyond the commerce of man and therefore could not be the subject of private occupancy. The writ of preliminary injunction was made permanent. Issue: WON petitioners have the right to occupy the subject land. HELD Even assuming a valid lease of the property in dispute, the resolution could have effectively terminated the agreement for it is settled that the police power cannot be surrendered or bargained away through the medium of a contract. In fact, every contract affecting the public interest suffers a congenital infirmity in that it contains an implied reservation of the police power as a postulate of the existing legal order. This power can be activated at any time to change the provisions of the contract, or even abrogate it entirely, for the promotion or protection of the general welfare. Such an act will not militate against the impairment clause, which is subject to and limited by the paramount police power. We hold that the respondent judge did not commit grave abuse of discretion in denying the petition for prohibition. On the contrary, he acted correctly in sustaining the right and

responsibility of the mayor to evict the petitioners from the disputed area and clear it of all the structures illegally constructed therein.