Ago vs CA

Facts: Pastor D. Ago bought sawmill machineries and equipments from respondent Grace Park
Engineer domineering, Inc., executing a chattel mortgage over said machineries and equipments to
secure the payment of balance of the price remaining unpaid of P32,000.00, which petitioner agreed
to pay on installment basis. Ago defaulted in his payment and Grace Park Engineering, Inc.
instituted extra-judicial foreclosure proceedings of the mortgage. To enjoin said foreclosure,
petitioner herein instituted Special Civil Case. The parties to the case arrived at a compromise
agreement and submitted the same in court in writing. Petitioner continued to default in his payments
as provided in the judgment by compromise, so Grace Park Engineering, Inc. filed with the lower
court a motion for execution. The writ of execution was acted upon and levied on the machineries.
Petitioner filed the petition for certiorari and prohibition with preliminary injunction with respondent
Court of Appeals, alleging that a copy of the aforementioned judgment given in open court was not
furnished to him and those equipments became real properties which are about to be sold has no
prior publication of the notice of sale in some newspaper of general circulation as required by the
Rules of Court.
CA ruled that compromise agreements are unappealable unless there is fraud and judgement
rendered on open court is sufficient compliance to notice.

Issue: 1 WON judgment on open court is sufficient notice

2 WON the public auction sale was legal and the machineries were movable or immovable.

Ruling: 1 The court of first instance being a court of record, in order that a judgment may be
considered as rendered, must not only be in writing, signed by the judge, but it must also be filed
with the clerk of court. The mere pronouncement of the judgment in open court with the
stenographer taking note thereof does not, therefore, constitute a rendition of the judgment.
2. Paraphrasing language of said decision we hold that by the installment of the sawmill machineries
in the building of the Gold Pacific Sawmill, Inc., for use in the sawing of logs carried on in said
building, the same became a necessary and permanent part of the building or real estate on which
the same was constructed, converting the said machineries and equipments into real estate within
the meaning of Article 415(5) above-quoted of the Civil Code of the Philippines.
Considering that the machineries and equipments in question valued at more than P15,000.00
appear to have been sold without the necessary advertisement of sale by publication in a
newspaper, as required in Sec. 16 of Rule 39 of the Rules of Court, the sale made by the sheriff
must be declared null and void.

Board of assessment appeals vs Meralco

Facts: Meralco's electric power is generated by its hydro-electric plant and is transmitted to the City
of Manila by means of electric transmission wires. These electric transmission wires which carry high
voltage current, are fastened to insulators attached on steel towers. The respondent Meralco has
constructed 40 of these steel towers within Quezon City, on land belonging to it.
City Assessor of Quezon City declared the aforesaid steel towers for real property tax. Respondent
paid P11,651.86 under protest, and filed a petition for review in the Court of Tax Appeals which
rendered a decision ordering the cancellation of the said tax declarations and the petitioner to refund
to the respondent the sum of P11,651.86.
Issue: WON the steel poles are real properties.
Ruling: The logical question posited is whether they constitute real properties, so that they can be
subject to a real property tax. The tax law does not provide for a definition of real property; but Article
415 of the Civil Code does, by stating the following are immovable property:
(1) Land, buildings, roads, and constructions of all kinds adhered to the soil;

(3) Everything attached to an immovable in a fixed manner, in such a way that it cannot be
separated therefrom without breaking the material or deterioration of the object;

(5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for an
industry or works which may be carried in a building or on a piece of land, and which tends directly
to meet the needs of the said industry or works;

The steel towers or supports in question, do not come within the objects mentioned in paragraph 1,
because they do not constitute buildings or constructions adhered to the soil. They are not
construction analogous to buildings nor adhering to the soil. As per description, given by the lower
court, they are removable and merely attached to a square metal frame by means of bolts, which
when unscrewed could easily be dismantled and moved from place to place. They can not be
included under paragraph 3, as they are not attached to an immovable in a fixed manner, and they
can be separated without breaking the material or causing deterioration upon the object to which
they are attached. Each of these steel towers or supports consists of steel bars or metal strips,
joined together by means of bolts, which can be disassembled by unscrewing the bolts and
reassembled by screwing the same. These steel towers or supports do not also fall under paragraph
5, for they are not machineries, receptacles, instruments or implements, and even if they were, they
are not intended for industry or works on the land. Petitioner is not engaged in an industry or works
in the land in which the steel supports or towers are constructed.

Makati Leasing and Finance corp vs wearever textile mills

Facts: In order to obtain financial accommodations from herein petitioner Makati Leasing and
Finance Corporation, the private respondent Wearever Textile Mills, Inc., discounted and assigned
several receivables with the former 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 private respondent's default, petitioner filed a petition for extrajudicial foreclosure of the
properties mortgage to it. The lower court issued a writ of seizure. The CA set aside the Orders of
the lower court and ordered the return of the drive motor seized by the sheriff pursuant to said
Orders, after ruling that the machinery in suit cannot be the subject of replevin, much less of a
chattel mortgage, because it is a real property pursuant to Article 415 of the new Civil Code, the
same being attached to the ground by means of bolts and the only way to remove it from
respondent's plant would be to drill out or destroy the concrete floor, the reason why all that the
sheriff could do to enforcee the writ was to take the main drive motor of said machinery.

Issue: WON the machinery is real or pernal property

Ruling:

Tumalad doctrine:

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.

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

As stated in Standard Oil Co. of New York v. Jaramillo, 44 Phil. 630, it is undeniable that the parties
to a contract may by agreement treat as personal property that which by nature would be real
property, as long as no interest of third parties would be prejudiced thereby.