Enrique Lopez, petitioner, vs.
Vicente Orosa, Jr, respondent Whether a materialman's lien for the value of the materials used in the
GR No. L-10817-18, Feb. 28, 1958
Facts:
1. Enrique Lopez is a resident of Balayan, Batangas, doing business
under the trade name of Lopez-Castelo Sawmill. Vicente Orosa, Jr.,
also a resident of the same province, dropped at Lopez' house and
invited him to make an investment in the theatre business. It was
intimated that Orosa, his family and close friends were organizing a
corporation to be known as Plaza Theatre, Inc., that would engage
in such venture.
2. Lopez expressed his unwillingness to invest on the same, Lopez
agreed to supply the lumber necessary for the construction of the
proposed theatre.
3. The Plaza Theatre was erected on a piece of land with an area of
679.17 square meters formerly owned by Vicente Orosa, Jr., and
was acquired by the corporation on September 25, 1946, for P6,000.
As Lopez was pressing Orosa for payment of the remaining unpaid
obligation, the latter and Belarmino Rustia, the president of the
corporation, promised to obtain a bank loan by mortgaging the
properties of the Plaza Theatre, Inc., out of which said amount of
P41,771.35 would be satisfied, to which assurance Lopez had to
accede. Unknown to him, however, as early as November, 1946, the
corporation already got a loan for P30,000 from the Philippine
National Bank with the Luzon Surety Company as surety, and the
corporation in turn executed a mortgage on the land and building in
favor of said company as counter-security.
4. As the obligation still remained unsettled, Lopez filed on November
12, 1947, a complaint with the Court of First Instance of Batangas
(against Vicente Orosa Jr. and Plaza Theatre, Inc., praying that
defendants be sentenced to pay him jointly and severally the sum of
P41,771.35 with legal interest from the filing of the action; that in case
defendants fail to pay the same, that the building and the land owned
by the corporation be sold at public auction and the proceeds thereof
be applied to said indebtedness.
5. Defendants argued that the materials were delivered to him as a
promoter and later treasurer of the corporation, because he had
purchased and received the same on his personal account; that the
land on which the movie house was constructed was not charged
with a lien to secure the payment of the aforementioned unpaid
obligation; and that the 420 shares of stock of the Plaza Theatre, Inc.
was not assigned to plaintiff as collaterals but as direct security for
the payment of his indebtedness.
Issue:
construction of a building attaches to said structure alone and does not extend
to the land on which the building is adhered to - YES
Held:
Considering the conclusion thus arrived at, i.e., that the materialman's lien
could be charged only to the building for which the credit was made or which
received the benefit of refection, the lower court was right in holding that the
interest of the mortgagee over the land is superior and cannot be made
subject to the said materialman's lien.
Wherefore, and on the strength of the foregoing considerations, the decision
appealed from is hereby affirmed, with costs against appellant. It is so
ordered.
1. Appellant's contention that the lien executed in favor of the furnisher
of the materials used for the construction, repair or refection of a
building is also extended to land on which the construction was made
is without merit, because while it is true that generally, real estate
connotes the land and the building constructed thereon, it is obvious
that the inclusion of the building, separate and distinct from the land,
in the enumeration of what constitute real properties.
2. A building is an immovable property irrespective of whether or not
said structure and the land on which it is adhered to belong to the
same owner.
3. Materialman's lien attaches merely to the immovable property for the
construction or repair of which the obligation was incurred and in the
case at bar, the lien in favor of appellant for the unpaid value of the
lumber used in the construction of the building attaches only to said
structure and to no other property of the obligor. Thus, the interest of
the mortgagee over the land is superior to and cannot be made
subject to the said materialman's lien.
G.R. Nos. L-10837-38 May 30, 1958
ASSOCIATED INSURANCE and SURETY COMPANY, INC. v. ISABEL IYA,
ADRIANO VALINO and LUCIA VALINO
ISABEL IYA v. ADRIANO VALINO, LUCIA VALINO and ASSOCIATED
INSURANCE and SURETY COMPANY. INC.
Facts: Adriano & Lucia Valino, husband and wife, owners & possessors of a
house in Grace Park Subd, Caloocan, Rizal, purchased on installment basis
from Philippine Realty Corporation. To enable her to purchase on credit price
from the NARIC, Lucia filed an AISCO bond of P11,000 & as counter-
guaranty, Spouses Valino executed an alleged chattel mortgage on the house
in favor of AISCO. At the time, the parcel of land on which the house is erected
was still registered in the name of the PRC. The Valinos were able to secure
a certificate of title in their name but to secure payment of an indebtedness of
P12,000, executed a real estate mortgage over the lot and the house in favor
of Isabel Iya. Since Lucia failed to satisfy her obligation to the NARIC, AISCO
was compelled to pay the same & it demanded reimbursement from the
Valinos, as the latter failed to do so, the company foreclosed the chattel
mortgage over the house. A public sale was conducted by the Provincial
Sheriff of Rizal & the property was awarded to AISCO for P8,000 (highest bid).
AISCO learned of the existence of the real estate mortgage over the lot & its
improvements so it instituted a Civil Case in CFI Manila, prayed for the
exclusion of the residential house from the real estate mortgage in favor of
Iya. Iya answered that in view of the real estate mortgage executed by the
Valinos, she acquired a real right over the lot & house, and the auction sale
was null and void. The Valinos prayed for its dismissal. AISCO insisted on its
right over the building, as the lot did not belong to the Valinos at the time the
chattel mortgage was executed, the house might be considered only as a
personal property. It prayed that said building be excluded from the real estate
mortgage.
CFI ruled that the the chattel mortgage in favor of the AISCO was preferred &
superior over the real estate mortgage subsequently executed in favor of Iya
as the Valinos were not yet the registered owner of the land at the time the
first encumbrance was made, the building then was still a personality & a
chattel mortgage over the same was proper. However, as the mortgagors
were already the owner of the land at the time the contract with Iya was
entered into, the building was transformed into a real property and the real
estate mortgage was likewise proper.
CFI: decided in favor of AISCO
SC: decided in favor of Iya
Issue: Is the building, in this case, an immovable property? - YES.
Held: A building is an immovable property irrespective of whether or not said
structure and the land on which it is adhered to belong to the same owner
(Lopez v. Orosa). A building cannot be divested of its character of a realty by
the fact that the land on which it is constructed belongs to another. As personal
properties could only be the subject of a chattel mortgage and as the structure
in question is not one, the execution of the chattel mortgage covering said
building is clearly invalid and a nullity. While it is true that said document was
registered in the Chattel Mortgage Register of Rizal, this act produced no
effect. Where the interest conveyed is in the nature of a real property, the
registration of the document in the registry of chattels is merely a futile act.
Nor is there merit in the contention of AISCO that it has acquired ownership
over the property in question by reason of the sale conducted by the Provincial
Sheriff of Rizal. Iya's right to foreclose not only the land but also the building
erected thereon is hereby recognized.
Antonio Bicerra, Domingo Bicerra, Bernardo Bicerra, Cayetano Bicerra,
Linda Bicerra, Pio Bicerra and Eufricina Bicerra vs. Tomasa Teneza and
Benjamin Barbosa
G.R. No. L-16218. November 29, 1962
Facts:
The Bicerra’s were the owners of the house, worth P200.00, built on a lot
owned by them and situated in the said municipality of Lagangilang; that
sometime in January 1957 appellees forcibly demolished the house, claiming
to be the owners thereof; that the materials of the house, after it was
dismantled, were placed in the custody of the barrio lieutenant of the place;
and that as a result of appellees' refusal to restore the house or to deliver the
materials to appellants the latter have suffered actual damages in the amount
of P200.00, plus moral and consequential damages in the amount of P600.00.
The relief prayed for is that "the plaintiffs be declared the owners of the house
in question and/or the materials that resulted in (sic) its dismantling; (and) that
the defendants be ordered to pay the sum of P200.00, plus P600.00 as
damages, and the costs.”
Issue:
WON the house having ceased to exist is a real property?
Held:
A house is classified as immovable property by reason of its adherence to the
soil on which it is built (Art. 415, par. 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 immovable likewise
ceases.
Temporal
CASE TITLE:
LEUNG YEE, plaintiff-appellant, vs. FRANK L. STRONG MACHINERY
COMPANY and J. G. WILLIAMSON, defendants-appellees.
G.R. NUMBER & DATE: G.R. No. L-11658; February 15, 1918
PONENTE: CARSON, J.:
PETITIONERS: LEUNG YEE
RESPONDENTS: FRANK L. STRONG MACHINERY COMPANY and J. G.
WILLIAMSON
NATURE OF CASE: ???? (Sorry guys ang hirap igets ng case na to
HAHAHAH)
DOCTRINE/PRINCIPLE:
FACTS:
 In 1913, Compania Agricola Filipina (CAF) was indebted to two
personalities: Leung Yee and Frank L. Strong Machinery Co. CAF
purchased some rice cleaning machines from Strong Machinery.
CAF installed the machines in a building.
 As security for the purchase price, CAF executed a chattel
mortgage on the rice cleaning machines including the
building where the machines were installed. CAF failed to
pay Strong Machinery, hence the latter foreclosed the
mortgage – the same was registered in the chattel
mortgage registry.
 CAF also sold the land (where the building was standing) to Strong
Machinery. Strong Machinery took possession of the building and
the land.
 On the other hand, Yee, another creditor of CAF who engaged in the
construction of the building, being the highest bidder in an auction
conducted by the sheriff, purchased the same building where the
machines were installed.
 Apparently CAF also executed a chattel mortgage in favor
Yee. Yee registered the sale in the registry of land. Yee was
however aware that prior to his buying, the property has
been sold in favor of Strong Machinery – evidence is the
chattel mortgage already registered by Strong Machinery
(constructive notice).
SUMMARY:
 First mortgage: Compania Agricola Filipina bought rice-
cleaning 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.
 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 company’s ownership of the
building.
 Second mortgage: on or about the date to which the chat
telmortgage was excecuted, Compania executed a real est
atemortgage over the building in favor of Leung Yee, disti
nct 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.
 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 Yee’s certificate.
ISSUE: WON the property’s nature changed because of its registration in the
Chattel Mortgage Registry?
(And who has the better right to the property?)
FALLO: We conclude that upon the grounds herein set forth the disposing
part of the decision and judgment entered in the court below should be
affirmed with costs of this instance against the appellant. So ordered.
HELD:
 The SC noted that the Chattel Mortgage Law expressly contemplates
provisions for chattel mortgages which only deal with personal
properties. The fact that the parties dealt the building as if it’s a
personal property does not change the nature of the thing. It is still a
real property. Its inscription in the Chattel Mortgage registry does not
modify its inscription the registry of real property.
 The building in which the machinery was installed was real
property, and the mare fact that the parties seem to have
dealt with it separate and apart from the land on which it
stood in no wise changed the 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
the registry of the
sale of the mortgaged property, had any effect whate
ver so far as the building is concerned.
 The SC ruled that Strong Machinery has a better right to the
contested property. Yee cannot be regarded as a buyer in good faith
as he was already aware of the fact that there was a prior sale of the
same property to Strong Machinery.
  Art. 1473 of the New Civil Code provides the following rules
on determining ownership of property which has been sold
to different vendees:
 If Personal Property – grant ownership to person
who 1st possessed it in good faith
 If Real Property – grant ownership to person
who 1st recorded it in the Registry
 If no entry – grant to person who 1st possessed in
good faith
 If no proof of possession – grant to person
who presents oldest title
 Since Leung Yee purchased the property despite
knowledge of the previous purchase of the same by Strong
Machinery Co., it follows that Leung Yee was not a
purchaser in good faith.
 “One who purchases real estate with knowledge of a defect
or lack of title in his vendor cannot claim that he has
acquired title thereto in good faith as against the true owner
of the land or of an interest therein. The same rule must be
applied to one who has knowledge of facts which should
have put him upon such inquiry and investigation as might
be necessary to acquaint him with the defects in the title of
his vendor.”
Notes:
 Chattel Mortgage refers to the mortgage of Personal
Property executed in the manner and form prescribed in the
statute.
 Good Faith, or the want of it, is a “state or condition of mind
which can only be judged of by actual or fancied tokens or
signs.” (Wilder vs. Gilman, 55Vt., 504, 505; Cf. Cardenas Lumber
Co. vs. Shadel, 52 La. Ann., 2094-2098; Pinkerton Bros. Co. vs.
Bromley, 119Mich., 8, 10, 17.)
 Honesty Of Intention is the honest lawful intent constituting
good faith. It implies a freedom from knowledge and
circumstances which ought to put a person on inquiry.
The Standard Oil Company of New York, petitioner vs. Joaquin
Jaramillo, respondent
GR No. 20329, March 16, 1923
Facts:
1. Gervasia de la Rosa, Vda. de Vera, was the lessee of a parcel of
land situated in the City of Manila and owner of the house of strong
materials built thereon, upon which date she executed a document
in the form of a chattel mortgage, purporting to convey to the
petitioner by way of mortgage both the leasehold interest in said lot
and the building which stands.
2. The petitioner caused the same to be presented to the respondent,
Joaquin Jaramillo, as register of deeds of the City of Manila, for the
purpose of having the same recorded in the book of record of chattel
mortgages. Upon examination of the instrument, the respondent was
of the opinion that it was not chattel mortgage, for the reason that the
interest therein mortgaged did not appear to be personal property,
within the meaning of the Chattel Mortgage Law, and registration was
refused on this ground only.
Issue:
Whether or not the register of deeds can refuse the recording of a chattel
mortgages. - NO
Held:
In the light of what has been said it becomes unnecessary for us to pass upon
the point whether the interest conveyed in the instrument now in question are
real or personal; and we declare it to be the duty of the register of deeds to
accept the estimate placed upon the document by the petitioner and to register
it, upon payment of the proper fee.
The demurrer is overruled; and unless within the period of five days from the
date of the notification hereof, the respondent shall interpose a sufficient
answer to the petition, the writ of mandamus will be issued, as prayed, but
without costs. So ordered.
1. The efficacy of the act of recording a chattel mortgage consists in the
fact that registration operates as constructive notice of the existence
of the contract, and the legal effects of the instrument must be
discovered in the document 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 species of
constructive notice.
2. The duties of a register of deeds in respect to the registration of
chattel mortgages are purely of a ministerial character, and he is
clothed with no judicial or quasi-judicial power to determine the
nature of the property, whether real or personal, which is the subject
of the mortgage. Generally speaking, he should accept the
qualification of the property adapted by the person who presents the
instrument for registration and should place the instrument on record,
upon payment of the proper fee, leaving the effects of registration to
be determined by the court if such question should arise for legal
determination.

G.R. No. L-55729 March 28, 1983
ANTONIO PUNSALAN, JR. v. REMEDIOS VDA. DE LACSAMANA and
THE HONORABLE JUDGE RODOLFO A. ORTIZ
Facts: Punsalan was the former registered owner of a parcel of land in
Bamban, Tarlac. He mortgaged said land to PNB for P10,000 but for failure to
pay, the property was foreclosed in 1970. PNB was the highest bidder in said
foreclosure proceedings. However, the bank secured title only in 1977. In
1974, while the property was still in the alleged possession of Punsalan, he
constructed a warehouse on said property, then leased the warehouse to
Hermogenes Sibal for a period of 10 years starting in 1975. In 1978, a Deed
of Sale was executed between PNB and Lacsamana over the property, which
includes the building and improvement. Lacsamana secured title over the
property in her name & separate tax declarations for the land and building. In
1979, Punsalan filed for "Annulment of Deed of Sale with Damages" against
PNB and Lacsamana before CFI Rizal QC, impugning the validity of the sale
of the building for PNB sold the building to Lacsamana when it was not owned
by PNB but rather Punsalan, and that the Certificate of Sale executed by the
sheriff in PNB’s favor only limited the sale to the land, hence, by selling the
building which never became the property of Lacsamana, they have violated
the principle against 'pactum commisorium'. Lacsamana invoked “accessory
follows the principal.” PNB filed a Motion to Dismiss since the venue was
improperly laid considering that the building was real property under Art. 415,
thus, Section 2(a) of Rule 4 should apply. CFI granted PNB’s Motion to
Dismiss because the warehouse in Tarlac is an immovable property pursuant
to Art. 415, as such, Punsalan’s action is a real action affecting title to real
property which, under Section 2, Rule 4 of the New Rules of Court, must be
tried in the province where the property or any part thereof lies. Punsalan then
filed a Motion to Set Case for Pre-trial, which CFI denied.
CFI: granted PNB’s Motion to Dismiss; denied Motion to Set Case for Pre-trial
SC: petition denied; affirmed CFI’s denial of Motion to Set Case for Pre-trial
Issue: Is the warehouse an immovable property? - YES.
Held: A building treated separately from the land on which it 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. While it is true that Punsalan
does not directly seek the recovery of title or possession of the property in
question, his action for annulment of sale and his claim for damages are
closely intertwined with the issue of ownership of the building which, under the
law, is considered immovable property, the recovery of which is petitioner's
primary objective. The prevalent doctrine is that an action for the annulment
or rescission of a sale of real property does not operate to efface the
fundamental and prime objective and nature of the case, which is to recover
said real property. It is a real action. CFI did not err in dismissing the case on
the ground of improper venue, considering the property and warehouse were
situated in Tarlac and the complaint was filed in Rizal, Quezon City.
Notes: PNB is an indispensable party as the validity of the Amended Contract
of Sale between the former and respondent Lacsamana is in issue. It would,
indeed, be futile to proceed with the case against respondent Lacsamana
alone.
Prudential Bank vs. Hon. Domingo D. Panis, Presiding Judge of Branch
III, CFI of Zambales and Olongapo City; Fernando Magcale and Teodula
Baluyut-Magcale
G.R. No. L-50008. August 31, 1987.
Facts:
 Spouses Fernando A. Magcale and Teodula Baluyut-Magcale secured a
loan in the sum of P70,000.00 from Prudential Bank; to secure the
payment of this loan, plaintiffs executed in favor of defendant a deed of
Real Estate Mortgage(REM) on a 2-storey, semi-concrete, residential
building with warehouse spaces.
 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.
 The spouses also secured an additional loan from the same bank in the
sum of P20,000.00; to secure payment of this another REM was executed
over the same properties.
 The Secretary of Agriculture issued 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 extra
judicially foreclosed and sold in a public auction despite request from the
plaintiffs to desist from the auction sale.
 The respondent court held that the REM was null and void.
Issue:
WOM a valid real estate mortgage can be constituted on the building erected
on the land belonging to another?
Held: YES
The inclusion of 'building' separate and distinct from the land, in said
provision of law can only mean that a building is by itself an immovable
property.
 Thus, while it is true that a mortgage of land necessarily includes, in
the absence of stipulation of the improvements thereon, buildings, still a
building by itself may be mortgaged apart from the land on which it has been
built. Such a mortgage would be still a real estate mortgage for the building
would still be considered immovable property even if dealt with separately and
apart from the land.
The original mortgage was executed before the issuance of the final
patent and before the government was divested of its title to the land, an event
which takes effect only on the issuance of the sales patent and its subsequent
registration in the Office of the Register of Deeds. Under the foregoing
considerations, it is evident that the mortgage executed by private respondent
on his own building which was erected on the land belonging to the
government is to all intents and purposes a valid mortgage.
As regards the second mortgage executed over the same properties
for the additional loan, it is evident that such mortgage executed after the
issuance of the sales patent and of the Original Certificate of Title, falls
squarely under the prohibitions stated in Sections 121, 122 and 124 of the
Public Land Act and Section 2 of Republic Act 730, and is therefore null and
void.
Temporal
CASE TITLE:
CONRADO P. NAVARRO, plaintiff-appellee, vs. RUFINO G. PINEDA,
RAMONA REYES, ET AL., defendants-appellants.
G.R. NUMBER & DATE: G.R. No. L-18456; November 30, 1963
PONENTE: PAREDES, J.:
PETITIONERS: CONRADO P. NAVARRO
RESPONDENTS: RUFINO G. PINEDA, RAMONA REYES, ET AL.,
FACTS:
 Rufino Pineda and his mother, Juana Gonzales borrowed from the
plaintiff the sum of P2,500.00 payable after 6 mos.
 To secure the indebtedness, Rufino executed a document
captioned “Deed of Real Estate and Chattel Mortgages”
whereby:
 Juana Gonzales, by way of REAL ESTATE
MORTGAGE hypothecated a parcel of land
belonging to her
 Rufino Pineda, by way of CHATTEL MORTGAGE,
mortgaged his two-storey residential house
erected on a lot belonging to Atty Vicente Castro,
and one motor truck (registered in his name)
 When the mortgage debt became due and payable, Rufino
and Juana failed to pay. They were even given 2 extensions
to settle but still to no avail.
 In due course, Conrado Navarro filed a complaint for foreclosure of
the mortgage and for damages.
 While the case is being heard, the parties submitted a Stipulation of
Facts, wherein the defendants admitted the indebtedness, the
authenticity and due execution of the Real Estate and Chattel
Mortgages.
 The trial court ruled and ordered the defendants to pay the amount
they owe plus 12% compounded interest per annum to Navarro, 90
days from the receipt of the order.
ISSUE: WON the residential house subject of the mortgage may be
considered a Chattel and still remain valid?
FALLO: CONFORMABLY WITH ALL THE FOREGOING, the decision
appealed from, should be, as it is hereby affirmed, with costs against
appellants.
HELD:
 Where a house stands on a rented land belonging to another
person, it may be the subject matter of a chattel mortgage as
personal property if so stipulated in the document of mortgage, and
in an action by the mortgagee for the foreclosure, the validity of the
chattel mortgage cannot be assailed
by one of the parties to the contract of mortgage.
 Furthermore, although in some instances, a house of mixed
materials has been considered as a chattel between the
parties and that the validity of the contract between them,
has been recognized, it has been a constant criterion that
with respect to 3rd persons who are not
parties to the contract, and specially in execution
proceedings, the house is considered as immovable
property.
 The stipulation of the parties still govern.
 The SC agrees with the Trial Court in declaring the deed of Chattel
Mortgage valid solely on the ground that the house mortgage was
erected on the land which belonged to a 3rd party; but also on the
doctrine of estoppel – “the parties have so expressly agreed” in the
mortgage to consider the house as chattel for its smallness and
mixed materials of sawali and wood.
  It is undeniable that the parties to a contract may by
agreement TREAT AS PERSONAL PROPERTY THAT
WHICH BY NATURE WOULD BE REAL PROPERTY
 There cannot be a question that a building of mixed
materials may be the subject of a chattel mortgage – in
which case, it is as considered as between the parties as
PERSONAL PROPERTY.
 The matter depends on the circumstances and the INTENTION of
the parties.
 This view however, is good only insofar as the contracting
parties are concerned.
Gavino Tumalad, plaintiffs vs. Alberta Vicencio, defendants-appellants
GR No. L-30173, Sept. 30, 1971
Facts:
1. Defendants-appellants executed a chattel mortgage in favor of
plaintiffs-appellees over their house of strong materials located at
No. 550 Int. 3, Quezon Boulevard, Quiapo, Manila, over Lot No. 6-B
and 7-B, Block No. 2554, which were being rented from Madrigal &
Company, Inc.
2. When defendants-appellants defaulted in paying, the mortgage was
extrajudicially foreclosed, and on 27 March 1956, the house was sold
at public auction pursuant to the said contract. As highest bidder,
plaintiffs-appellees were issued the corresponding certificate of sale.
Thereafter, on 18 April 1956, plaintiffs-appellees 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-appellants to pay rent of
P200.00 monthly from 27 March 1956 up to the time the possession
is surrendered.
3. Defendants-appellants, 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; but they waived
the right to introduce evidence, oral or documentary. Instead, they
relied on their memoranda in support of their motion to dismiss,
predicated mainly on the grounds that: (a) the municipal court did not
have jurisdiction to try and decide the case because (1) the issue
involved is ownership, and (2) there was no allegation of prior
possession; and (b) failure to prove prior demand pursuant to Section
2, Rule 72, of the Rules of Courts.
4. During the pendency of the appeal to the Court of First Instance,
defendants-appellants failed to deposit the rent for November, 1956
within the first 10 days of December, 1956 as ordered in the decision
of the municipal court. As a result, the court granted plaintiffs-
appellees' motion for execution, and it was actually issued on 24
January 1957.
5. It is claimed in the alternative by defendants-appellants that even if
there was no fraud, deceit or trickery, the chattel mortgage was still
null and void ab initio because only personal properties can be
subject of a chattel mortgage.
Issue:
Whether or not only personal properties can be subject of a chattel mortgage?
Held:
FOR THE FOREGOING REASONS, the decision appealed from is reversed
and another one entered, dismissing the complaint. With costs against
plaintiffs-appellees.
1. In the case of Manarang and Manarang vs. Ofilada (99 Phil. 109),
this Court stated that "it is undeniable that the parties to a contract
may by agreement treat as personal property that which by nature
would be real property," citing Standard Oil Company of New York
vs. Jaramillo (44 Phil. 632).
2. In the contract now before Us, the house on rented land is not only
expressly designated as Chattel Mortgage; it specifically provides
that "the mortgagor. . . voluntarily CEDES, SELLS and TRANSFERS
by way of Chattel Mortgage the property together with its leasehold
rights over the lot on which it is constructed and participation . . ."
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. Moreover, the subject
house stood on a rented lot to which defendants-appellants 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
personality.
G.R. No. L-58469 May 16, 1983
MAKATI LEASING and FINANCE CORPORATION v. WEAREVER
TEXTILE MILLS, INC., and HONORABLE COURT OF APPEALS
Facts: Wearever discounted and assigned several receivables with Makati
Leasing under a Receivable Purchase Agreement. 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 Wearever’s default, Makati Leasing
filed a petition for extrajudicial foreclosure of the properties mortgage to it.
However, the Deputy Sheriff was not able to effect the seizure of the
aforedescribed machinery. Makati Leasing then filed a complaint for judicial
foreclosure with CFI, Rizal. Acting on Makati Leasing’s application for replevin,
CFI issued a writ of seizure. The sheriff enforcing the seizure order, removed
the main drive motor of the subject machinery. CA set aside CFI’s Orders and
ordered the return of the drive motor seized, 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 Art. 415, 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 enforce the writ was to take the main drive motor of said
machinery.
CFI: issued Writ of Seizure
CA: set aside CFI Orders
SC: reversed CA Decision; reinstated CFI Decision
Issue: Is the machinery real property? - NO.
Held: In Tumalad v. Vicencio, “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. The doctrine of estoppel therefore applies to the herein
defendants-appellants, having treated the subject house as personality.”
If a house, like in 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 Makati Leasing’s assertion on the applicability of the Tumalad
doctrine, CA 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. The characterization of the subject machinery as chattel by Wearever is
indicative of intention and impresses upon the property the character
determined by the parties. 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
(Standard Oil Co. of New York v. Jaramillo). Wearever could not now be
allowed to impugn the efficacy of the chattel mortgage after it has benefited
therefrom. Tumalad case bears more nearly perfect parity with the instant
case, thus controlling. The machinery is personal/ movable property.
Serg’s Products, Inc., and Sergio T. Goquiolay vs. PCI Leasing and
Finance, Inc.
GR. No. 137705. August 22, 2000
Facts:
On February 13, 1998, respondent PCI Leasing and Finance Inc. filed with the
RTC of Quezon City a complaint for sum of money, with an application for a
writ of replevin. On March 6, 1998, 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 payment of the necessary expenses. The
sheriff proceeded to petitioner's factory and seized one machinery. On March
25, 1998, petitioner filed a motion for special protective order invoking the
power of the court to control the conduct of its officers and amend and control
its processes, praying for a directive for the sheriff to defer enforcement of the
writ of replevin. The motion was opposed by PCI on the ground that the
properties were personal and therefore still subject to seizure and writ of
replevin. In their reply, petitioners asserted that the properties were
immovable. They further stated that PCI was estopped from treating these
machineries as personal because the contracts were totally sham and farcical.
On April 7, 1998, petitioners went to the Court of Appeals via an original action
for certiorari. The Court of Appeals ruled that the subject machines were
personal property as provided by the agreement of the parties. Hence, this
petition.
Issue:
WON the machineries purchase and imported by SERG’s became real
property by virtue of immobilization?
Held: YES
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.
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.
Manuel Manarang, petitioners-appellants, vs. Maracio Ofilada,
respondents-appellees
GR No. L-8133, May 18, 1956
Facts:
1. Petitioner Lucia D. Manarang obtained a loan of P200 from Ernesto
Esteban, and to secure its payment she executed a chattel mortgage
over a house of mixed materials erected on a lot on Alvarado Street,
Manila. As Manarang did not pay the loan as agreed upon, Esteban
brought an action against her in the municipal court of Manila for its
recovery, alleging that the loan was secured by a chattel mortgage
on her property. Judgment having been entered in plaintiff's favor,
execution was issued against the same property mortgaged.
2. Before the property could be sold Manarang offered to pay the sum
of P277, which represented the amount of the judgment of P250, the
interest thereon, the costs, and the sheriff's fees, but the sheriff
refused the tender unless the additional amount of P260
representing the publication of the notice of sale in two newspapers
be paid also. So defendants therein brought this suit to compel the
sheriff to accept the amount of P277 as full payment of the judgment
and to annul the published notice of sale.
3. On the basis of the above facts counsel for Manarang contended in
the court below that the house in question should be considered as
personal property and the publication of the notice of its sale at public
auction in execution considered unnecessary.
Issue:
Does the fact that the parties entering into a contract regarding a house gave
said property the consideration of personal property in their contract, bind the
sheriff in advertising the property's sale at public auction as personal
property?
Held:
We, therefore, declare that the house of mixed materials levied upon on
execution, although subject of a contract of chattel mortgage between the
owner and a third person, is real property within the purview of Rule 39,
section 16, of the Rules of Court as it has become a permanent fixture on the
land, which is real property.
The judgment appealed from is hereby affirmed, with costs. So ordered.
The mere fact that a house was the subject of a chattel mortgage and was
considered as personal property by the parties does not make said house
personal property for purposes of the notice to be given for its sale at public
auction. It is real property within the purview of Rule 39, section 16, of the
Rules of Court as it has become a permanent fixture on the land, which is real
property.
Temporal
CASE TITLE:
SANTOS EVANGELISTA, petitioner, vs. ALTO SURETY & INSURANCE
CO., INC., respondent.
G.R. NUMBER & DATE: G.R. No. L-11139; April 23, 1958
PONENTE: CONCEPCION, J.:
PETITIONERS: SANTOS EVANGELISTA
RESPONDENTS: ALTO SURETY & INSURANCE CO., INC
NATURE OF CASE: Appeal by Certiorari
DOCTRINE/PRINCIPLE:
FACTS:
 In 1949, Santos Evangelista instituted Civil Case No. 8235 of the CFI
Manila (Santos Evangelista vs. Ricardo Rivera) for a sum of money.
 On the same date, he obtained a writ of attachment, which
was 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.
 In due course, judgment was rendered in favor of Evangelista, who
bought the house at public auction held in compliance with the writ
of execution issued in said case on 8 October 1951.
 The corresponding definite deed of sale was issued to him on 22
October 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 10 May 1952, a definite deed of sale of the same
house had been issued to Alto Surety, as the highest bidder at an
auction sale held, on 29 September 1950, in compliance with a writ
of execution issued in Civil Case 6268 of the same court (Alto Surety
& Insurance vs. Maximo Quiambao, Rosario Guevara and Ricardo
Rivera)" in which judgment for the sum of money, had been rendered
in favor of Alto Surety.
 Hence, on 13 June 1953, Evangelista instituted an action against
Alto Surety and Ricardo Rivera, for the purpose of establishing his
title over said house, and 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, P40.00 a month
from October 1952, until said delivery.
 The decision was however reversed by the Court of Appeals, which
absolved Alto Surety from the complaint on account 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 Alto Surety,
Evangelista did not acquire thereby a preferential lien, the
attachment having been levied as if the house in question were
immovable property.
ISSUE: Whether or not a house constructed by the lessee of the land on which
it is built, should be dealt with, for purpose of attachment, as immovable
property?
FALLO: Wherefore, the decision of the Court of Appeals is hereby reversed,
and another one shall be entered affirming that of the Court of First Instance
of Manila, with the costs of this instance against respondent, the Alto Surety
and Insurance Co., Inc. It is so ordered.
HELD:
 The court ruled that the house is not personal property, much less
a debt, credit or other personal property not capable of manual
delivery, but immovable property.
 As held in Laddera vs. Hodges (48 OG 5374), "a true building is
immovable or real property, whether it is erected by the owner of the
land or by a usufructuary or lessee.”
 The opinion that the house of Rivera should have been attached, as
"personal property capable of manual delivery, by taking and safely
keeping in his custody", for it declared that "Evangelista could not
have validly purchased Ricardo Rivera's house from the sheriff as
the latter was not in possession thereof at the time he sold it at a
public auction” is untenable.
 Parties to a deed of chattel mortgage may agree to consider a house
as personal property for purposes of said contract.
 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.
 The rules on execution do not allow, and should not be
interpreted as to allow, the special consideration that
parties to a contract may have desired to impart to real
estate as personal property, when they are not ordinarily so.
 Sales on execution affect the public and third persons. The
regulation governing sales on execution is for public
officials to follow.
 The form of proceedings prescribed for each kind of
property is suited to its character, not to the character,
which the parties have given to it or desire to give it. The
regulations were never intended to suit the consideration
that parties, may have privately given to the property levied
upon
G.R. No. L-40411 August 7, 1935
DAVAO SAWMILL CO. v. APRONIANO G. CASTILLO DAVAO LIGHT &
POWER CO., INC.
Facts: Davao SawMill is the holder of a lumber concession from the
Government. It has operated a sawmill in Davao but the land upon which the
business was conducted belonged to another person. On the land, Davao
SawMill erected a building which housed the machinery used by it. In the
contract of lease between the Davao SawMill and the owner of the land
includes: “That on the expiration of the period agreed upon, all the
improvements and buildings introduced and erected by the party of the second
part shall pass to the exclusive ownership of the party of the first part without
any obligation on its part to pay any amount for said improvements and
buildings.” In another action, wherein the Davao Light & Power was the
plaintiff and the Davao SawMill was the defendant, a judgment was rendered
in favor of the Davao Light & Power in that action; a writ of execution issued
thereon, and the properties now in question were levied upon as personalty
by the sheriff. No third party claim was filed for such properties at the time of
the sales thereof. Davao Light & Power having consummated the sale,
proceeded to take possession of the machinery and other properties. It should
further be explained that the Davao SawMill has, on a number of occasions,
treated the machinery as personal property by executing chattel mortgages in
favor of third persons.
TC: properties were personal in nature; decision against Davao SawMill
SC: TC decision affirmed
Issue: Is the machinery real property? - NO.
Held: The characterization of the property as chattels by Davao SawMill is
indicative of intention and impresses upon the property the character
determined by the parties thus, the decision of this court in Standard Oil Co.
of New York vs. Jaramillo, whether obiter dicta or not, furnishes the key to
such a situation. It is machinery which is involved; moreover, machinery not
intended by the owner of any building or land for use in connection therewith,
but intended by a lessee for use in a building erected on the land by the latter
to be returned to the lessee on the expiration or abandonment of the lease.
A similar question arose in Puerto Rico, and on appeal being taken to the
United States Supreme Court, it was held 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. "Machinery, vessels, instruments or implements intended
by the owner of the tenements for the industrial or works that they may carry
on in any building or upon any land and which tend directly to meet the needs
of the said industry or works." Machinery which is movable in its nature only
becomes immobilized when placed in a plant by the owner of the property or
plant. Such result would not be accomplished, therefore, by the placing of
machinery in a plant by a tenant or a usufructuary or any person having only
a temporary right. One only having a temporary right to the possession or
enjoyment of property is not presumed by the law to have applied movable
property belonging to him so as to deprive him of it by causing it by an act of
immobilization to become the property of another. Machinery did not lose its
character of movable property and become immovable by destination.
Machinery so put in should become a part of the plant belonging to the owner
without compensation to the lessee. Under such conditions the tenant in
putting in the machinery was acting but as the agent of the owner in
compliance with the obligations resting upon him, and the immobilization of
the machinery a permanent destination to the machinery.
Ruby L. Tsai vs. Hon. Court of Appeals, Ever Textile Mills, Inc. and
Mamerto R. Villaluz
G.R. No. 120098. October 2, 2001
Philippine Bank of Communications vs. Hon. Court of Appeals, Ever
Textile Mills, Inc. and Mamerto R. Villaluz
G.R. No. 120109. October 2, 2001
Facts:
Respondent Ever Textile Mills, Inc. (Evertex) obtained two loans from
petitioner Philippine Bank of Communications (PBCom). As security for the rst
loan, Evertex executed a deed of Real and Chattel Mortgage over the lot
where its factory stands, and the chattels located therein as enumerated in a
schedule attached to the mortgage contract. The second loan was secured by
a chattel mortgage over personal properties enumerated in a list attached
thereto. Due to business reverses, Evertex led insolvency proceeding, where
it was declared insolvent by the then Court of First Instance. All its assets were
taken into the custody of the insolvency court, including the collateral, real and
personal, securing the two mortgages. Upon Evertex's failure to meet its
obligation to PBCom, the latter commenced extrajudicial foreclosure
proceedings. PBCom was the highest bidder on the two public auctions held.
PBCom consolidated its ownership over the lot and all the properties in it. It
leased the entire factory premises to petitioner Ruby L. Tsai, and
subsequently sold it to her, including the contested machineries. Evertex led
a complaint for annulment of sale, reconveyance, and damages with the
Regional Trial Court against PBCom, alleging that the extrajudicial foreclosure
of subject mortgage was in violation of the Insolvency Law. Evertex claimed
that PBCom, without any legal or factual basis, appropriated the contested
properties, which were not included in the real and chattel mortgage and
neither were those properties included in the notice of sheriff's sale. The RTC
agreed with Evertex and ruled that the lease and sale of said personal
properties were irregular and illegal. Dissatis ed, both PBCom and Tsai
appealed to the Court of Appeals. The CA af rmed the judgment appealed
from and denied the motion for reconsideration. PBCom and Tsai led their
separate petitions for review with the Supreme Court. HITEaS
Issue:
WON the inclusion of the question properties in the foreclosed properties is
proper?
Held: YES
Petitioners contend that the nature of the disputed machineries, i.e., that they
were heavy, bolted or cemented on the real property mortgaged by EVERTEX
to PBCom, make them ipso facto immovable under Article 415 (3) and (5) of
the New Civil Code. This assertion, however, does not settle the issue. Mere
nuts and bolts do not foreclose the controversy. We have to look at the parties'
intent.
While it is true that the controverted properties appear to be immobile, a
perusal of the contract of Real and Chattel Mortgage executed by the parties
herein gives us a contrary indication. In the case at bar, both the trial and the
appellate courts reached the same finding that the true intention of PBCOM
and the owner, EVERTEX, is to treat machinery and equipment as chattels.
Temporal
CASE TITLE:
MINDANAO BUS COMPANY, petitioner, vs. THE CITY ASSESSOR &
TREASURER and the BOARD OF TAX APPEALS of Cagayan de Oro
City,respondents.
G.R. NUMBER & DATE: G.R. No. L-17870; September 29, 1962
PONENTE: LABRADOR, J.:
PETITIONERS: MINDANAO BUS COMPANY
RESPONDENTS: THE CITY ASSESSOR & TREASURER and the BOARD
OF TAX APPEALS of Cagayan de Oro City
NATURE OF CASE: Petition for the review of the decision of the Court of Tax
Appeals
DOCTRINE/PRINCIPLE:
FACTS:
 Petitioner is a public utility solely engaged in transporting passengers
and cargoes by motor trucks. It owns a land where it maintains and
operates a garage for its TPU motor trucks; a repair shop; blacksmith
and carpentry shops, and with machineries 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.
 The machineries have never been or were never used as industrial
equipment 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.
 Respondent City Assessor of Cagayan de Oro City assessed at
P4,400 petitioner’s above-mentioned equipment.
 Petitioner appealed the assessment to the respondent 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
petitioner herein filed with the Court of Tax Appeals a petition for the
review of the assessment
 The CTA held the petitioner liable to the payment of the realty tax on
its maintenance and repair equipment mentioned above.
ISSUE: WON the machineries and equipment are considered immobilized
and thus subject to a realty tax? NO
FALLO: WHEREFORE, the decision subject of the petition for review is
hereby set aside and the equipment in question declared not subject to
assessment as real estate for the purposes of the real estate tax. Without
costs.
HELD:
 Movable equipment 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 equipment are not essential and principle
municipal 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. The transportation business could be carried on
without the repair or service shop if its rolling equipment is
repaired or serviced in another shop belonging to another.
 Aside from the element of essentiality the Art.415 (5) also requires
that the industry or works be carried on in a building or on a piece of
land.
 A sawmill would also be installed in a building on land more
or less permanently, and the sawing is conducted in the
land/building.
 However, in the instant case, the equipment 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 law. The
equipment 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.
 As such, the equipment in question are not deemed real
property because the transportation business is not carried
on in a building or permanently on a piece of land, as
demanded by law.
 The transportation business could be carried on without the
repair or service shop, if its rolling equipment is repaired or
serviced in another shop belonging to another.
G.R. No. L-50466 May 31, 1982
CALTEX (PHILIPPINES) INC. v. 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 in its gas stations located on leased land. The said machines and
equipment are loaned by Caltex to gas station operators under an appropriate
lease agreement or receipt, where operators, upon demand, shall return to
Caltex the machines and equipment. The lessor of the land, where the gas
station is located, does not become the owner of the machines and equipment
installed therein. Caltex retains the ownership thereof during the term of the
lease. The city assessor of Pasay City characterized the said items of gas
station equipment and machinery as taxable realty (P4,541.10 annually). The
city board of tax appeals ruled that they are personalty. The Board ruled that
the said machines and equipment are real property within the meaning of the
Real Property Tax Code, PD464, and that Arts. 415 & 416 are not applicable
to this case. Caltex filed this certiorari petition, praying for Board's decision to
be set aside and for a declaration that the said machines and equipment are
personal property not subject to realty tax.
CBAA: impose realty tax on Caltex’s gas station and equipment
SC: affirmed CBAA’s decision; dismissed petition for certiorari

Issue: Are the machines and equipment real property? - YES.

Held: This issue has to be resolved primarily under the provisions of the
Assessment Law and the Real Property Tax Code, that “realty tax is due on
real property, including land, buildings, machinery, and other improvements.”
The Real Property Tax Code defines “Improvements” as a valuable addition
made to property while “Machinery” are installations and appurtenant service
facilities essential to its manufacturing, industrial or agricultural purposes.
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 (Davao Saw Mill Co. vs. Castillo) but that ruling is an interpretation of
par. 5 of Art. 415 regarding machinery that becomes real property by
destination. In the Davao SawMill case, the question was whether the
machinery mounted on foundations of cement and installed by the lessee on
leased land should be regarded as real property for purposes of execution of
a judgment against the lessee. The sheriff treated the machinery as personal
property, which was sustained by the Court. (Compare with Machinery &
Engineering Supplies, Inc. vs. CA, where in a replevin case machinery was
treated as realty).
Here, the question is whether the gas station equipment and machinery
permanently affixed by Caltex to its gas station and pavement (which are
indubitably taxable realty) should be subject to the realty tax. This question is
different from the issue raised in the Davao SawMill case.
Improvements on land are commonly taxed as realty even though for some
purposes they might be considered personalty. The Central Board of
Assessment Appeals did not commit a grave abuse of discretion in upholding
the city assessor's is imposition of the realty tax on Caltex's gas station and
equipment.