DAVAO SAW MILL VS CASTILLO AND DAVAO LIGHT AND POWER. CO.

INC

FACTS

Davao Sawmill Co. is the holder of a lumber concession from the Philippines, and the land

upon which the business was conducted belonged to another person.On the land, Davao Sawmill
erected a building which housed the machinery

(sawmill) used by it. In the contract of lease, Davao Sawmill agreed to turn over, free of charge, all

improvements and the building erected by it on the premises with the exception of machineries, which
shall remain with the Davao Sawmill. Another action was brought by the Davao Light and Power Co.
(mortgagee) where the judgment was rendered against Davao Sawmill (mortgagor). A writ of execution
was issued and the machineries placed on the sawmill were levied upon by the sheriff.

Davao Light and Power Co. proceeded to purchase the machinery and other properties

auctioned by the sheriff.

ISSUES

Whether or not the machinery involved is a

real property

Relevant ARGUMENTS

Davao Light and Power (Plaintiff- Apellant)

Art. 334, Paragraphs 1 and 5 of the Civil

Code:

Real Property consists of (1) Land, buildings, roads and constructions of all kinds adhering

to the soil; (5) Machinery, liquid containers, instruments or implements intended by the

owner of any building or land for use in connection with any industry xxx
Relevant DOCTRINE or PRONOUNCEMENT

As a rule, the machinery only becomes immobilized if placed in a plant by the owner of the property or
plant

It should be considered personal property, if the objects are placed by a mere tenant, usufructuary, or
any person having only a temporary right UNLESS, the person acted as the agent of the owner

Relevant DECISION

The machinery (saw mill) must be classified as personal property since it was agreed by both of the
parties that the machinery be returned to Davao Saw Mill on the expiration or abandonment of the
lease
20. MINDANAO BUS CO. V. CITY ASSESSOR DIGEST
G.R. No. L-17870 29 September 1962

FACTS:
Petitioner is a public utility company engaged in the transport of passengers and cargo by motor
vehicles. Petitioner likewise owned a land where it maintains a garage, a repair shop and
blacksmith or carpentry shops. The machineries are placed thereon in wooden and cement
platforms. The City Assessor of CDO then assessed a P4,400 realty tax on said machineries and
repair equipment. Petitioner appealed on the ground that the same are not real properties.

ISSUE: Whether or not the machineries and equipment are considered immobilized and thus
subject to a realty tax

HELD:

NO. The Supreme Court held that said machineries and equipment are not subject to the
assessment of real estate tax. Art. 415 of the NCC classifies the following as immovable property
xxx (5) 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;

Said equipment are not considered immobilized as they are merely incidental, not essential and
principal to the business of the petitioner. The transportation business could be carried on without
repair or service shops of its rolling equipment as they can be repaired or services 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. As such, the equipment in question are not deemed
real property and not subject to realty tax, because the transportation business is not carried on
in a building or permanently on a piece of land, as demanded by law.
Benguet Corp. vs CBAA 218 SCRA 271

Facts:
In 1985, the Provincial Assessor of Zambales assessed the petitioner's tailings dam as taxable
improvements.

Petitioner contended that the the dam cannot be subjected to realty tax as a separate and
independent property because it does not constitute an "assessable improvement" on the mine
because it is an integral part of the mine.
On the other hand, Solicitor General's argues that the dam is an assessable improvement
because it enhances the value and utility of the mine.

Issue: Whether or not the tailings dam in question is an "improvement" upon the land within the
meaning of the Real Property Tax Code and it classified as immovable property?

Held:
Yes.
The court ruled that the subject dam falls within the definition of an "improvement" because it is
permanent in character and it enhances both the value and utility of petitioner's mine. The
immovable nature of the dam defines its character as real property under Article 415 of the Civil
Code and thus makes it taxable under Section 38 of the Real Property Tax Code.

It is a construction adhered to the soil which cannot be separated or detached without breaking
the material or causing destruction on the land upon which it is attached. The immovable nature
of the dam as an improvement determines its character as real property, hence taxable under
Section 38 of the Real Property Tax Code. (P.D. 464).
RICARDO PRESBITERO vs, FERNANDEZ (Immovable – Calinisan)
Facts:
to execute in favor of the plaintiff, within 30 days from the time this judgment becomes final, a
deed of conveyance of Lot No. 788 of the cadastral survey of Valladolid, free from all liens and
encumbrances, and another deed of conveyance of a 7-hectare portion of Lot No. 608 of the
same cadastral survey, also free from all liens and encumbrances, or, upon failure to do so, to
pay to the plaintiff the value of each of the said properties
2) Presbitero was ordered by the lower court to
Pay Nava to settle his debts.

3) Nava's counsel still tried to settle this case

With Presbitero, out of court. But to no avail.

4) Thereafter, the sheriff

Levied upon and garnished the sugar quotas allotted to the plantation and
Adhered to the Ma-ao Mill District and registered in the name of
Presbitero as the original plantation owner.

5) the sheriff was not able to

Present for registration thererof to the Registry of Deeds.

6) the court then

Ordered Presbitero to segregate the portion of Lot 608 pertaining to Nava
From the mass of properties belonging to the defendant within a period to
Expire on August 1960.

7) Bottom-line, Presbitero did not meet his

obligations, and the auction sale was scheduled.

8) Presbitero died after

.9) RICARDO Presbitero, the estate administrator, then petitioned that the
Sheriff desist in holding the auction sale on the ground that the levy on the
Sugar quotas was invalid because the notice thereof was not registered
With the Registry of Deeds.
Issue:
W/N the sugar quotas are real (immovable) or personal properties.
Held:
1) they are real properties.
2) Legal bases: a) The Sugar Limitation
Law xxx attaching to the land xxx (p 631)
b) RA 1825xxx to be an
Improvement attaching to the land xxx (p 631)
c) EO # 873"plantation"
Xxx to which is attached an allotment of centrifugal sugar.
under the Express provisions of law, the sugar quota allocations are accessories to
The land, and cannot have independent existence away from a plantation.4)
Since the levy is invalid for non-compliance with law, xxx the levyAmount to no levy at all
The fact that the Philippine Trade Act of 1946 (U.S. Public Law 371-79th Congress) allows
transfers of sugar quotas and there cannot be a sugar plantation owner without land to which
the
quota is attached; and there can exist no quota without there being first a corresponding plantation.
does not militate against their immovability.

NAVARRO v. PINEDA

FACTS:
Defendant Pineda and his mother secured a loan from Plaintiff Navarro. In line with this, they
executed a chattel mortgage and real estate mortgage whereby the plaintiff pineda had
mortgage his house and truck and contained in one instrument as reg of deed and motor vehicle
office. On the other hand his mother the other plaintiff in case mortgage her land property.
When Navarro complaint fro the foreclosure of the mortgage due to the default of the plaintiff.
Pineda question the validity of the chattel mortgage over his house on the grounds that the
house being immovable property. Could not be subject chattel mortgage.

ISSUE:
Whether or not the house should be classified as a movable or immovable property?

HELD:
The court upheld the validity of the chattle mortgage. The S.C applied the doctrine of estoppel because
the house in question is treated as immovable property by the parties as Appellant pineda voluntarily had
grouped his house and motor vehicle as personal properties in the deed of chattel mortgage. Moreover
the law requires that house to become immovable it should constructed in a concrete manner built in
strong material and attached permanently to the soil. But the subject house which was not even declared
for taxation purposes was small and made of light construction materials: G.I. sheets roofing, sawali and
wooden walls and wooden posts.
ASSOCIATED INS. AND SURETY V.ISABEL IYA, VALINO defendants
Facts:
The debtor-mortgagor executed two mortgages
In favor of different mortgagees. The first was a chattel mortgage in
favor of Associated Insurance covering the house. The second was a
real estate mortgage over the same house and the lot on which the house
was situated in favor of Iya. Both mortgage obligations were not paid.
Hence, Associated Insurance foreclosed the chattel mortgage over the
house and eventually purchased the house during the auction. When the
real estate mortgage was about to be foreclosed, Associated Insurance
sought for the exclusion of the house claiming a preferential right over
it by virtue of the chattel mortgage and its subsequent foreclosure.
Iya the other mortgagee, in turn, questioned the validity of the chattel mortgage contract
contending that since the subject matter thereof was real property, the
same was not valid.
Issue: WON the subj. house is classified as real property?

Held: Yes. The court held that the house or building that constructed with strong material are considered
are immovable property the criterion is that its adherence to the soil.
The court also assailed the validity of chattel mortgage due the immovability of the house in which no
subject chattel mortgage and hence the associated insurance does not acquired preferential rights over the
house.
(Article 415), could only mean that a building is by itself an immovable property.
where the interest conveyed is in the nature of real property, the registration of the document in the
registry of chattels is merely a
futile act. Thus, the registration of the chattel mortgage of a building of strong materials produced no
effect as far as the building is concerned.
PIANSAY v. DAVID

As it may be true that the parties who agreed to attach the house in a chattel mortgage may be
bound thereto under the doctrine of estoppel, the same does not bind third persons.

FACTS: The Defendant Conrado david loan from the plaintiff uy kim. And in able to secured the loan he
excuted a chattel mortgage over his house. When the time that defendant was in default the plaintiff uy
kim extrajudicially foreclosed the said mortgage on her favor and subsequently sold it to other plaintiff
Salvador piansay. In the meantime Marcos mangubat the other mortgagee filed the collection of the loan
against the defendant after the judgment was rendered on his favor the house was levied upon at his
instance. And in that case plaintiff assailed the right of mangubat upon the execution of the house alleging
that he the lawful owner.
Whether or not the chattel mortgage of over the house was valid?
HELD: NO.
The SC held that A building or house constructed and built with strong materials is adhered to the soil to
which is attached. Hence even if the one party registered to chattel mortgage is merely futile act because of
its nature as real property. In this case the plaintiff has no right to foreclose the allege chattel mortgage on
their favor and It follows the sale of the house by the sheriff in auction. Also the validity constituting the
chattel mortgage overt the house between parties does not bind the third person as a consequence the
extrajudicial sale in question is null and void as defendant mangubat is concerned. Therefore the plaintiff
does not have a cause of action against defendant mangubat.
Capitol wireless inc. vs provincial assessor of batangas.

o Petitioner Capwire has signed agreements with other local and foreign telecommunications
companies covering an international network of submarine cable systems1 (including the Asia
Pacific Cable Network System or APCN). The agreements provide for ownership and other rights
among the parties over the network
o Petitioner claims that it is co-owner only of the so-called “Wet Segment” of the APCN, while the
landing stations or terminals and segments of APCN located in Nasugbu, Batangas are allegedly
owned by the Philippine Long Distance Telephone Corporation (PLDT). Capwire also alleges that
the Wet Segment is laid in international, and not Philippine, waters.

 However, for loan restructuring purposes,

o Capwise then submitted a Sworn Statement of True Value of Real Properties at the Provincial
Treasurer’s Office, Batangas City, Batangas Province, for the Wet Segment of the System (see
notes).
 In essence, the Provincial Assessor had determined that the submarine cable systems described in
Capwire's Sworn Statement of True Value of Real Properties are taxable real property.
RTC

 Dismissed the petition because Capwire:

o failed to follow the requisite of payment under protest
o failed to appeal to the Local Board of Assessment Appeals (LBAA), as provided for in Sections
206 and 226 of RA No 7160 (LGC)
CA

 Affirmed RTC
 Dismissed petition because of Capwire’s failure to comply with the requirements set in Sections 226
and 229 of LGC (failed to avail of remedies before administrative bodies like the LBAA and the
Central Board of Assessment Appeals (CBAA).

ISSUE: Whether the submarine communications cables are classified as taxable real property by the local
governments? – YES

HELD: Submarine or undersea communications cables are akin to electric transmission lines which are
qualify as "machinery" under art. 415 cc for the simple reason that such pieces of equipment serves the
owners business or tend to meet the needs of his industry or work that are on real estate.

Further, under Part VI, Article 7946 of the UNCLOS, the Philippines clearly has jurisdiction with
respect to cables laid in its territory that are utilized in support of other installations and structures
under its jurisdiction

r
 Laurel vs. Judge Abrogar

G.R. No. 155076

January 13, 2009

Facts: petitioner was charged with engaging in International Simple Resale (ISR) or the unauthorized
routing and completing of international long distance calls using lines, cables, antennae, and/or air wave
frequency and connecting these calls directly to the local or domestic exchange facilities of the country
where destined.

PLDT alleges that the “international phone calls” which are “electric currents or sets of electric impulses
transmitted through a medium, and carry a pattern representing the human voice to a receiver,” are ersonal
properties which may be the subject of theft. Art. 416(3) deems “forces of nature” (which includes
electricity” which are brought under the control by science, are personal property.

Laurel claims that a telephone call is a conversation on the phone or a communication carried out using
the telephone. It is not synonymous to electric currents or impulses. Hence, it may not be considered as
personal property susceptible of appropriation.. PLDT does not produce or generate telephone calls. It only
rovides the facilities or services for the transmission and switching of the calls. He also insists that “business”
is not personal property. It is not the “business” that is protected but the “right to carry a business.” This
right is what is considered as property. Since the services of PLDT cannot be considered as “property,” the
same may not be the subject of theft.

Issue: Is Laurel guilty of theft of personal property?

Held: YES. The Supreme Court agree to the contention of the PLDT that the telecommunication calls are
classified as personal property since it the same as electricity and gas may be seen and felt is a valuable
articles of merchandize brought and sold like personal property and is capable for appropriation by another.
Also it susceptible to severed for large quantity and of being transported from place to place. Therefore
telecommunication network were fall under art 416 cc as immovable property.
CALTEX PHILS. V. CENTRAL BOARD OF ASSESSMENT APPEALS

114 SCRA 296

Facts:

This case is about realty tax on machinery and installed by Petitioner Caltex on the leased
land. These items included underground tanks, elevated tank, elevated water tanks, water tanks,
gasoline pumps, computing pumps,
etc. These items are not owned by the lessor of the land wherein the
equipment are installed. Upon expiration of the lease agreement, the equipment should be
returned in good condition. The city assessor of Pasay City characterized the said items of gas station
equipment and machinery as taxable realty. The city board of tax appeals ruled that they are personalty.
The assessor appealed to the Central Board of Assessment Appeals

issue: whether or not the pieces of machines and equipment are real property ?

HELD: Yes, the said machine are considered real property.

The equipment and machinery as appurtenances to the gas station building or shed owned by Caltex
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 and fixed permanently to the gas station site or
embedded therein, Improvement on the lands are commonly tax as real property although for some
purposes they are considered as personal property.

k) Improvements — 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.

m) 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 (See sec. 3[f], Assessment Law).

Constructed The decision of the Court of Tax Appeals, which ordered the cancellation of the tax
declarations, were affirmed by the Supreme Court.
BOARD OF ASSESSEMENT APPEALS VS. MERALCO

Facts: On 20 October 1902, the Philippine Commission enacted Act 484 which authorized the
Municipal Board of Manila to grant a franchise to construct, maintain and operate an electric
street railway and electric light, heat and power system in the City of Manila
Meralco became the transferee and owner of the franchise. They transmitted the electric
power from Laguna tor manila by mean of electric transmission wires.
Meralco has constructed 40 of these steel towers within Quezon City, on land belonging to it.
On 15 November 1955, City Assessor of Quezon City declared the aforesaid steel towers for
real property tax under Tax Declaration 31992 and 15549. After denying Meralco’s petition to
cancel these declarations an appeal was taken by Meralco to the Board of Assessment Appeals
of Quezon City, which required Meralco to pay the amount of P11,651.86 as real property tax

Issue: Whether or not the steel towers of an electric company constitute real property for the
purposes of real property tax.?

HELD:
No, Meralco's steel towers are not considered real properties that can be subject to real
property tax.

Article 415 of the Civil Code states the following are immovable properties:

(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 do not come within the objects mentioned in above paragraphs.

They are not construction analogous to buildings nor adhering to the soil. 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 are also 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.
They are not machinery, receptacles, instruments or implements intended for industry or works
on the land. Meralco is not engaged in an industry or works on the land in which the steel
towers are constructed.

The decision of the Court of Tax Appeals, which ordered the cancellation of the tax declarations,
were affirmed by the Supreme Court.