Property Digest | Mortgage Law | Foreclosure

PROPERTY DIGEST: LUNA V.

ENCARNACION June 30, 1952 FACTS: A chattel mortgage was executed by petitioner Jose Luna covering his house with mixed materials to respondent Trinidad Reyes to secure payment for a promissory note. Luna failed to pay the promissory note and as such, Trinidad requested the sheriff to sell the property through an extra judicial foreclosure to satisfy the obligation. Luna contends that the foreclosure is invalid because the property is under chattel mortgage and as such, it is not covered by RA3135 that only speaks of real estate mortgage. ISSUE: WON the mortgaged property can be covered by chattel mortgage even though it is a real property. HELD: Even though the property is a real property, it may be covered by a chattel mortgage for as long as it was agreed upon by the parties. Hence, the foreclosure is invalid because it is only applicable for real properties. The remedy of the respondent is to file an action for recovery of possession and not a writ of possession. LEUNG YEE V. STRONG MACHINERY COMPANY FACTS: FACTS: 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. On or about the date to which the chattel mortgage was excecuted, Compania executed a real estate mortgage over the building in favor of Leung Yee, distinct and separate from the land. HELD: The building 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 the character as real property. The ruling should be in favor of the machine company because the plaintiff is not a buyer in good faith and the former is first in possession of the property. (1544) SIBAL V. VALDEZ August 4, 1927 FACTS: On 14 December 1924, action was commenced in the CFI of the Province of Tarlac. The plaintiff alleged that the deputy sheriff of Tarlac Province attached and sold to Valdez the sugar cane planted by the plaintiff and his tenants on 7 parcels of land, and that within 1 year from the date of the attachment and sale the plaintiff ordered to redeem said sugar cane and tendered to Valdez the amount sufficient to cover the price paid by the latter, with taxes and interests, and that Valdez refused to accept the money and return the sugar cane to the plaintiff. After hearing and on 28 April 1926, the judge (Lukban) rendered judgment in favor of the defendant holding that the sugar cane in question was personal property and, as such, was not subject to redemption; among others. HELD: For the purpose of attachment and execution, and for the purposes of the Chattel Mortgage Law, “ungathered products” have the nature of personal property. The lower court, therefore, committed no error in holding that the sugar cane in question was personal property and, as such, was not subject to redemption.

Grace Park Engineering. as a loan. converted the said machinery and equipment into real estate by reason of their purpose. Civil Code). in lieu of another of less capacity.400 said maintenance and repair equipment. the Mabalacat Sugar Company obtained from Cu Unjieng e Hijos. telephone line. the same became a necessary and permanent part of the building or real estate on which the same was constructed. apparatus. instituted extrajudicial foreclosure proceedings of the mortgage. ISSUE: WON the machineries of the bus company can be considered as a real property for purposes of taxation. Inc. tenement or on a specified land. and (3) that the sale of the machinery and equipment in question by the purchaser who was supplied the purchase money. Inc. does not vest the creditor with ownership of said machinery and equipment but simply with the right of redemption. it could produce 250. The company appealed the assessment to the Board of Tax Appeals on the ground that the same are not realty. constitutes a permanent improvement on said sugar central and subjects said machinery and equipment to the mortgage constituted thereon (article 1877. AGO V. levied upon and ordered the sale of the sawmill machineries and equipments in question.. converting the said machineries and equipments into real estate within the meaning of Article 415(5) of the Civil Code of the Philippines. where the Court held that the installation of the machinery and equipment in the central of the Mabalacat Sugar Company for use in connection with the industry carried by that company. 415(5) of the Civil Code. In the present case. after the incorporation thereof with the mortgaged sugar central. telephone line. and to refrain from mortgaging or otherwise encumbering them does not alter the permanent character of the incorporation of said machinery and equipment with the central. the machineries are place therein on wooden and cement platforms. steel railway. the Mabalacat Sugar Company decided to increase the capacity of its sugar central by buying additional machinery and equipment. utensils and whatever forms part or is a necessary complement of said sugar-cane mill. to the person who supplied the money. The City Assessor of Cagayan de Oro City assessed at P4. HELD: By reason of installment in a building. HELD: For the foregoing considerations. COURT OF APPEALS October 31. improvements. acting upon the writ of execution. 1935 FACTS: On 26 April 1926. The company is also owner to the land where it maintains and operates a garafe.00.. CITY ASSESSOR September 29. having its main offices in Cagayan de Oro. we are of the opinion and so hold: (1) That the installation of a machinery and equipment in a mortgaged sugar central. (2) that the fact that the purchaser of the new machinery and equipment has bound himself to the person supplying him the purchase money to hold them as security for the payment of the latter's credit. blacksmith and carpentry shops. The Provincial Sheriff of Surigao. a repair shop. . CU UNJIENG July 31. executing a chattel mortgage over said machineries and equipments to secure the payment of a balance of the price remaining unpaid of P32. for the purpose of carrying out the industrial functions of the latter and increasing production. Ago defaulted in his payments and so.000. the said sawmill machineries and equipments became real estate properties in accordance with the provision of Art. in 1958. so said equipment may not be considered real estate within the meaning of Article 415 (c) of the Civil Code. now existing or that may in the future exist in said lots. Cu Unjieng e Hijos.MINDANAO BUS V. Inc. a loan secured by a first mortgage constituted on 2 parcels of land "with all its buildings. HELD: The equipments in question are not absolutely essential to the petitioner’s transportation business. BERKENKOTTER V. for use in the sawing of logs carried on in said building. 1962 FACTS: Mindanao Bus Company is a public utility engaged in transporting passengers and cargoes by motor trucks in Mindanao. Ago bought sawmill machineries and equipments from Grace Park Engineering. sugar-cane mill. It is interpreted similarly to the case of Berkenkotter vs. steel railway. and petitioner’s business is not carried on in a building. the installation of the sawmill machineries in the building of the Golden Pacific Sawmill. which Ago agreed to pay on installment basis. 1962 FACTS: Pastor D.” On 5 October 1926. so that instead of milling 150 tons daily.

Its bottom plate is not attached to any part of the foundation by bolts. BOARD OF ASSESSMENT APPEALS FACTS: This case is about the imposition of the realty tax on two oil storage tanks installed in 1969 by Manila Electric Company on a lot in San Pascual. they may. Inc. Province of Davao. Moreover. HELD: The law is clear that the machineries are personal properties and not part of the building because they were not placed by the owner. The municipal treasurer required Meralco to pay realty taxes on both tanks.). be considered as improvements on the land. . MERALCO FACTS: The case of Board of Assessment Appeals vs.. BOARD OF ASSESSMENT APPEALS VS. On the land the sawmill company erected a building which housed the machinery used by it.MERALCO V. It is not anchored or welded to the concrete circular wall. enhancing its utility and rendering it useful to the oil industry. DAVAO SAWMILL V.. the steel towers were not attached to any land or building. is the holder of a lumber concession from the Government of the Philippine Islands. The owner of the land claims that the machineries should be transferred to their ownership because of the provision in the contract that buildings and improvements will belong to the land owner at the end of the contract. Inc. barrio of Tigatu. CASTILLO FACTS: The Davao Saw Mill Co. is not in point because in that case the steel towers were regarded as poles and under its franchise Meralco’s poles are exempt from taxation. the land upon which the business was conducted belonged to another person. 328. The tanks are within the Caltex refinery compound. Manila Electric Company. They were removable from their metal frames. wherein Meralco’s steel towers were held not to be subject to realty tax. It has operated a sawmill in the sitio of Maa. Batangas which it leased in 1968 from Caltex (Phil. However. 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. HELD: The two storage tanks are not embedded in the land. nevertheless. screws or similar devices. 119 Phil. municipality of Davao. ISSUE: WON the tanks should be considered as real property.

T40785. Insofar as the pipeline uses valves. holding that Meralco Securities' oil pipeline is subject to realty tax. the same should be regarded as separate and distinct from the conveyance of the lot on which they stand. 1976. 65891[2] because it included a parcel of land which was not among those explicitly enumerated in the Certificate of Sale issued by the Deputy Sheriff. 39. The pipeline system in question is indubitably a construction adhering to the soil (Exh. Petitioner was issued a writ of possession in Civil Case No. Petitioner contends that the sale of these immovables necessarily encompasses the land on which they stand. SORIANO. but on which stand the immovables covered by the said Certificate. CENTRAL BOARD OF ASSESSMENT APPEALS FACTS: In this special civil action of certiorari. it has been held that – . Branch 1. HELD: The foregoing provision of the Civil Code enumerates land and buildings separately.[39] Thus. . SP No. Such 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. Rollo). however. The writ of possession was. in such a way that it cannot be separated therefrom without breaking the material or deterioration of the object. which by themselves are real properties of respondents spouses. pumps and control devices to maintain the flow of oil. 6643[1] for Sum of Money by the Regional Trial Court of Balanga. . Meralco Securities has apparently two pipeline systems. MERALCO SECURITIES INDUSTRIAL CORPORATION V.[40] (emphasis and italics supplied) In this case. It should be borne in mind that what are being characterized as real property are not the steel pipes but the pipeline system as a whole. This contention is not sustainable under the provisions of the Assessment Law. B. PETITIONER. considered immovable. . while it is true that a mortgage of land necessarily includes. considering that what was sold by virtue of the writ of execution issued by the trial court was merely the storehouse and bodega constructed on the parcel of land covered by Transfer Certificate of Title No. It is attached to the land in such a way that it cannot be separated therefrom without dismantling the steel pipes which were welded to form the pipeline. still a building by itself may be mortgaged apart from the land on which it has been built. HELD: Meralco Securities insists that its pipeline is not subject to realty tax because it is not real property within the meaning of article 415. Bataan. This can only mean that a building is. in the absence of stipulation of the improvements thereon. VS. SPOUSES RICARDO AND ROSALINA GALIT FACTS. it is in a sense machinery within the meaning of the Real Property Tax Code.R. Meralco Securities Industrial Corporation assails the decision of the Central Board of Assessment Appeals (composed of the Secretary of Finance as chairman and the Secretaries of Justice and Local Government and Community Development as members) dated May 6. Article 415[l] and [3] provides that real property may consist of constructions of all kinds adhered to the soil and everything attached to an immovable in a fixed manner. nullified by the Court of Appeals in CA-G.MARCELO R. the Real Property Tax Code and the Civil Code. by itself. p. buildings.

hence. the property occupied by him remained classified as forest or timberland. 2010 FACTS: Respondents build a concrete fence between their property and the property of the petitioners. In such a case. In fact. Unless the President issues a proclamation withdrawing these properties from public use. HELD: MIAA is not a GOCC. As such. As long as the airport lands and buildings are reserved for public use. which he could not have acquired by prescription. However. Petitioners assailed the building of the said fence on the ground that the property was theirs. Court of Appeals July 20. At any time. MIAA itself is owned solely by the Republic. a creek cannot be registered under the Torrens System in the name of any individual. Being public water. 2006 FACTS: The Parañaque City treasurer issued a notice of levy and the warrants of levy on the buildings and lands by the Manila International Airport Authority for non payment of real estate taxes from 1992-2001. The petitioners also failed to prove their claim of ownership.DELA CRUZ V. ISSUE: WON the properties of MIAA are owned by the state. The Republic remains the beneficial owner of the properties. ISSUE: WON the space between the two properties is a private property or a public domain.420 The phrase "others of similar character" includes a creek which is a recess or an arm of a river. It is property belonging to the public domain which is not susceptible to private ownership. MIAA v. and they are exempt from real estate tax. there is no disposable land to speak of. MIAA has granted the beneficial use of such portions for a consideration to a taxable person. FACTS: Petitioner possessed and occupied the land after it had been declared by the government as part of the forest reserve. the President can transfer back to the Republic title to the airport lands and buildings without the Republic paying MIAA any consideration. but an instrumentality of the government. Accordingly. their ownership remains with the State. portions of the airport lands and buildings that MIAA leases to private entities are not exempt from real estate tax. they remain properties of public dominion. Absent the fact of reclassification prior to the possession and cultivation in good faith by petitioner. they are not subject to levy on execution or foreclosure sale. CA USERO V. CA January 25. they are inalienable. HELD: The mere fact that there are water lilies on the space filled with water proves that there is a permanent stream of water or a creek there. Art. the land remained as part of the forest reserve until such time it was reclassified into alienable or disposable land at the behest of the Ramoses. the petitioners may utilize the rip-rapped portion of the creek to prevent the erosion of their property. . A positive act of the government is needed to declassify land which is classified as forest. and to convert it into alienable and disposable land for other purposes. Until such lands have been properly declared to be available for other purposes.

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