Tumalad v.

Vicencio, 41 SCRA 143 (1971) FACTS:  Defendants-Appellants Vicencio and Simeon executed a chattel mortgage over their house in favor of Plaintiffs-Appellees Sps. Tumalad.  The mortgage was executed to guarantee a loan of P4,800 received from plaintiffs. It stipulated that failure to pay the loan would result in the property being sold at an auction sale.  Defendants defaulted. An auction sale was conducted and plaintiffs were the highest bidders.  They filed an ejectment suit against the defendants which was decided in their favor.  Defendants appealed to the Court of Appeals which then certified the same to the Supreme Court. ISSUE: WoN the chattel mortgage is void ab initio, the subject property being real and not personal property. RULING: NO. The chattel mortgage is valid and binding.  While the general rule announced by the Court in Lopez is that “a building is by itself an immovable property irrespective of whether or not said structure and the land on which it is adhered to belong to the same owner,” the rule admits of certain exceptions.  In the case of Manarang and Manarang v. Ofilada, the 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 v. Jaramillo.  In the contract now before the Court: o The document itself is designated as a Chattel Mortgage; and o 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. [ESTOPPEL] DISPOSITION: Judgment reversed. [There was another issue about a period of redemption which justified the dismissal of the ejectment case.]

Ishable Manila Electric Co. v. Central Board of Assessment Appeals, 114 SCRA 273 (1982) FACTS:  MERALCO put up two oil storage tanks on land owned by Caltex [leased land].  According to MERALCO, “the tank is not attached to its foundation. It is not anchored or welded to the concrete circular wall… The tank merely sits on its foundation…”  On the other hand, respondent Board avers that “the area where the two tanks are located is enclosed with earthen dikes with electric steel poles on top thereof and is divided into two parts as the site of each tank… Tank No. 2 is supported by a concrete foundation with an asphalt lining about an inch thick.”  Board’s conclusion: “While the tanks rest or sit on their foundation, the foundation itself and the walls, dikes, and steps, which are integral parts of the tanks, are affixed to the land while the pipelines are attached to the tanks.” o The tanks and their appurtenances constitute taxable improvements.  Hence, this special civil action for certiorari. ISSUE: WoN the MERALCO tanks constitute real, hence, taxable property. RULING: YES. They are held to be taxable realty.  The Real Property Tax Code provides that improvements on land are not exempt from taxation, viz: Sec. 38. Incidence of Real Property Tax. — They shall be levied, assessed and collected in all provinces, cities and municipalities an annual ad valorem tax on real property, such as land, buildings, machinery and other improvements affixed or attached to real property not hereinafter specifically exempted.  Improvements are defined in Section 3 of the same: k) Improvement. — is a valuable addition made to property or an amelioration in its condition, amounting to more than mere repairs or replacement of waste, costing labor or capital and intended to enhance its value, beauty or utility or to adapt it for new or further purposes.  The Court held 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. DISPOSITION: Petition dismissed. Ishable .

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