Machinery and Engineering Supplies vs Court of Appeals and Pecson

Appeal for Certiorari

FACTS:
Petitioner filed a complaint for recovery of Machinery equipment sold and delivered to
defendants at their factory in Barrio Bigti, Norzagay, Bulacan. On March 13, 1953, respondent
judge iued an order commanding Provincial Sherriff to seize and and take immediate poseesion
of properties specified in the order.
On March 19, 1953, two deputy chiefs of Bulacan proceeded to Bigti for the purpose of carrying
the court’s order into effect. Leonardo Contreras, Manager of the company, and Pedro Torres, in
charge thereof, met the sheriffs, and Contreras handed a letter addressed to Atty Leopoldo Palad,
ex-officio Provincial Sheriff, signed by Atty Rodolfo Garcia, protesting againstseizure of
property in question, and on ground that they are not personal properties.
Roco, latter’s crew of technicians and laborers, Contreras, and Torres, went to the factory. Roco
insited in dismantling equipment on his own responsibility, alleging that bond was posted for
such eventuality, deputy sheriffs directed that some of the supports be cut.
On March 20,1953, defendant company filed an urgent motion, with counter-bond of P15,679,
for return of property seized. On the same day, trial court issued an order directing the Provincial
Sheriff of Bulacan to return Machinery and Equipment to the place where they were installed at
time of seizure.
On March 21, sheriffs returned the properties seized by depositing it along the road, near the
quarry of Defendant Company without benefit of inventory and w/o re-installing them in former
position and replacing destroyed posts.
On March 23, defendant’s counsel asked provincial sheriff if machinery and equipment dumped
would be re-installed to former position and condition. On March 24, Provincial sheriff filed an
urgent motion in court, manifesting that Roco had been asked furnish the office with expenses,
laborers, technical men and equipment, to carry into effect the order, to return seized properties
the way Roco found them on day of seizure. Roco refused. In March 30, Trial Court ordered
Provincial Sheriff and Plantiff to reinstate machinery and equipment removed to former position.
An urgent motion by Provincial Sheriff was denied, and on May 4, trial court ordered Plaintiff to
furnish provincial sheriff within 5 days with necessary funds, technical men, laborers,
equipments, and materials to re-instate property removed.
Petitioner thereupon instituted in the Court of Appeals a case bs Hon. Ponteciano Pecson, which
was subsequently dismissed.
Issue:
1.) WON Machiner and Equipment taken were Immovable Propery or not
2.) WON Property taken are subject to replevin
Ruling:Machinery and Equipment are Immovable Properties.
-When the sheriff repaired to the premises of respondent, Ipo Limestone Co., Inc., machinery
and equipment in question appeared to be attached to the land, particularly to the concrete
foundation of said premises, in a fixed manner, in such a way that the former could not be
separated from the latter "without breaking the material or deterioration of the object." Hence, in
order to remove said outfit, it became necessary, not only to unbolt the same, but , also, to cut
some of its wooden supports. Moreover, said machinery and equipment were "intended by the
owner of the tenement for an industry" carried on said immovable and tended." For these
reasons, they were already immovable property pursuant to paragraphs 3 and 5 of Article 415 of
Civil Code of the Philippines, which are substantially identical to paragraphs 3 and 5 of Article
334 of the Civil Code of Spain.
-It is a well settled rule that  when the restitution of what has been ordered, the goods in question
shall be returned in substantially the same condition as when taken (54 C.J., 590-600, 640-641).
- Ordinarily replevin may be brought to recover any specific personal property unlawfully taken
or detained from the owner thereof, provided such property is capable of identification and
delivery; but replevin will not lie for the recovery of real property or incorporeal personal
property
.
Standard Oil vs Jaranillo
FACTS:
On Nov, 27, 1922, Gervasia De la Rosa Vda.de Vera was lessee of a parcel of land situated in
Manila and owner of the house of strong materials built, upon which date she executed a
document in the form of chattel mortgage, purporting to convey to petitioner by way of mortgage
both leashold interest in said lot and building which stands thereon.
The clauses in said document are described to be property by mortgage:

(1) All of the right, title, and interest of the mortgagor in and to the contract of lease hereinabove
referred to, and in and to the premises the subject of the said lease;

(2) The building, property of the mortgagor, situated on the aforesaid leased premises.

After said document has been acknowledged and delivered, Petitioner presented document to
respondent Joaquin Jaramillo, as register of deeds of Manila, for purposes of recording document
in book of record of Chattel Mortgage. Upon examination of instrument, respondent was of
opinion that it was not chattel mortgage because interest mortgaged did not appear to be personal
property.

Issue: WON the property in question is a personal or real property.

Ruling. Uncertain as to whether deem property as personal or real.

- It is unnecessary here to determine whether or not the property described in the document
in question is real or personal; the discussion may be confined to the point as to whether a
register of deeds has authority to deny the registration of a document purporting to be a
chattel mortgage and executed in the manner and form prescribed by the Chattel
Mortgage Law.

- Based principally upon the provisions of section quoted the Attorney-General of the
Philippine Islands, in an opinion dated August 11, 1909, held that a register of deeds has
no authority to pass upon the capacity of the parties to a chattel mortgage which is
presented to him for record. A fortiori a register of deeds can have no authority to pass
upon the character of the property sought to be encumbered by a chattel mortgage. Of
course, if the mortgaged property is real instead of personal the chattel mortgage would
no doubt be held ineffective as against third parties, but this is a question to be
determined by the courts of justice and not by the register of deeds.

Ago vs CA

Facts:

Petitioner Pastor D. Ago bought sawmill machineries and equipment from respondent Grace
Park Engineering Domineering Inc. executing a Chattel Mortgage over said machineries and
equipments to secure payment of balance of price unpaid of P32,000, which petitioner agreed to
pay on installment basis.

Petitioner defaulted his payment, and in 1958, respondent executed extra-judicial foreclosure
proceedings of mortgage. Petitioner then executed Civil Case 53, to which both parties arrived at
a compromise agreement.

Petitioner continued to default in his payment, so respondents filed with the lower court a motion
for execution, which was granted. A writ of execution then followed.

Petitioner filed for a petition on Certiorari and prohibition with preliminary injunction with Court
of Appeals, to which the CA issued a Writ of preliminary injunction against sheriff, but it turned
out that latter had already sold machineries in question at a public auction. Respondent was the
only bidder for P15,000, although Certificate of Sale was not yet executed. CA ordered the
sheriff to suspend issuance of certificate of sale of sawmill machineries and equipment sold until
final decision of case. CA rendered the aforequoted decision.

Issues:

1.) WON CA erred in (1) Holding that rendition of compromise judgment in court on
January 1959 w sufficient notice; (2) in not resolving other issues raised before it, namely
(a) legality of public auction sale made by sheriff, and (b) nature of machineries in
question, whether immovable or movable.
Ruling: Issuance of Writ of Execution and sale to sheriff of surigao is Null and Void

Isue#1: CA erred in rendering judgment.

Sec.1 of Rule 35 of the Rules of Court states that

SECTION 1. How judgment rendered. — All judgments determining the merits of cases shall be
in writing personally and directly prepared by the judge, and signed by him, stating clearly and
distinctly the facts and the law on which it is based, filed with the clerk of the 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. It is the filing of
the signed decision with the clerk of court that constitutes rendition. Even if the order or
judgment has already been put into writing and signed, while it has not yet been delivered
to the clerk for filing it is still subject to amendment or change by the judge. It is only
when the judgment signed by the judge is actually filed with the clerk of court that it
becomes a valid and binding judgment. Prior thereto, it could still be subject to
amendment and change and may not, therefore, constitute the real judgment of the court.

- Regarding the notice of judgment, the mere fact that a party heard the judge dictating the
judgment in open court, is not a valid notice of said judgment. If rendition thereof is
constituted by the filing with the clerk of court of a signed copy (of the judgment), it is
evident that the fact that a party or an attorney heard the order or judgment being dictated
in court cannot be considered as notice of the real judgment. No judgment can be notified
to the parties unless it has previously been rendered. The notice, therefore, that a party
has of a judgment that was being dictated is of no effect because at the time no judgment
has as yet been signed by the judge and filed with the clerk.

SEC. 7. Service of final orders or judgments. — Final orders or judgments shall be served
either personally or by registered mail.

Issue#2

Legality of Public Auction Sale

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, which is as follows:

SEC. 16. Notice of sale of property on execution. — Before the sale of property on
execution, notice thereof must be given as follows:
 xxx           xxx           xxx

(c) In case of real property, by posting a similar notice particularly describing the
property for twenty days in three public places in the municipality or city where the
property is situated, and also where the property is to be sold, and, if the assessed value of
the property exceeds four hundred pesos, by publishing a copy of the notice once a week,
for the same period, in some newspaper published or having general circulation in the
province, if there be one. If there are newspapers published in the province in both the
English and Spanish languages, then a like publication for a like period shall be made in
one newspaper published in the English language, and in one published in the Spanish
language.

the sale made by the sheriff must be declared null and void.

Nature of Property – Property is immovable.

The record shows that after petitioner herein Pastor D. Ago had purchased the sawmill
machineries and equipments he assigned the same to the Golden Pacific Sawmill, Inc. in
payment of his subscription to the shares of stock of said corporation. Thereafter the sawmill
machinery and equipments were installed in a building and permanently attached to the ground.
By reason of such installment in a building, the said sawmill machineries and equipment became
real estate properties in accordance with the provision of Art. 415 (5) of the Civil Code, thus:

ART. 415. The following are immovable property:

xxx           xxx           xxx

(5) Machinery, receptacles, instruments or implements tended 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;

People’s Bank and Trust Co vs Dahican Lumber Company

FACTS:

On Sept. 18, 1948, Atlantic Gulf & Pacific Company of Manila, a West Virginia corporation
lisenced to do business in the Philippines – referred to as ATLANTIC – sold and assigned all
rights in Dahican Lumber Concession to Dahican Lumber Company – referreed to as DALCO –
for a sum of $500,000, of which only $ 50,000 was paid. To develop concession, DALCO
obtained various loan from the People’s Bank & Trust Company – referred to as the BANK –
amounting as of July 13, 1950, to P200,000. In addition, DALCON obtained, through the BANK
a loan of $250,000 from Import-Export Bank of Washington DC, evidenced by five promissory
of $50,000 each, maturing on different dates, executed by both DALCO and Dahican American
Lumber.
On july 13, 1950, DALCO executed in favor of the BANK a deed of mortgage covering 5
parcels of land situated in Camarines Norte together with all the buildings and other
improvements existing and all personal properties of mortgagor located in it place of business in
the municipalities of Mambulao and Capalonga, Camarines Norte. On the same date, DALCO
executed a 2nd mortgage on the same properties in favor of ATLANTIC to secure payment of
unpaid balance of sale price of lumber concession amounting to $450,000.

Both mortgages were registered in the Office of Register of Deeds In Camarines Norte, and in
addition, both DALCO and DAMCO pledged to the BANK 7,296 shares of stock for DALCO,
and 9,286 shares for DAMCO.

Upon DALCO and DAMCO’s failure to pay fifth promissory note upon maturity, the BANK
paid the same to Export-Import Bank of Washington, DC. And later assigned its former credit
and first mortgage succeeding it. Subsequently, the BANK gave both DALCO and DAMCO
until April 1, 1953, to pay overdue promissory note.

After July 13, 1950, DALCO purchased various machineries, equipment, spare parts, and
supplies in addition to, or in replacement of some of those already owned and used by it on date
aforesaid. BANK requested DALCO to submit the complete list of said property, but latter failed
to do so. In connection with the purchases, there appeared in the book of DALCO as due to
Connell Bros Company the sum of P452, 860.55 and to DAMCO the sum of P2,151,678.34.

On Dec. 16, 1952, the Board of Directors of DALCO, in a special meeting, passed a resolution
agreeing to rescind alleged sale of equipment, spare parts, and supplies by CONNEL and
DAMCO to it. Thereafter, corresponding agreements of rescission of sale were executed between
DALCO and DAMCO, and DALCO and CONNEL.

On Jan. 13, 1953, the BANK, in its own behalf and that of ATLANTIC. Demanded that said
agreements be cancelled by CONNEL and DAMCO refused. As a result, ATLANTIC and the
BANK commenced foreclosure proceedings in the Court of First Instance against DALCO and
DAMCO. On the same date an ex-parte application for appointment of a Receiver and Issuance
of Writ of Preliminary Injunction was filed. Court granted both remedies and appointed George
H. Evans as receiver. However, the court discharged receiver upon defendant’s motion.

On March 4 CONNEL filed a motion for intervention alleging that it was owner and possessor
of some equipments, spare parts, and supplies which DALCO had acquired subsequent to
execution of mortgage sought to be foreclosed and which plaintiffs claimed were covered by
Lien. Court granted the motion, as well as plaintiff’s motion to set aside order discharging the
receiver. Evans was reinstated as receiver.

The court issued an order transferring the venue of action to the CFI.

On Aug 30, 1958, the court ordered the sale of all machinery, equipment, and supplies of
DALCO, and the same were sold subsequently for a total consideration of P175,000, which was
deposited in court pending final determination of action. By similar agreement, ½(P87,500) of
this amount was considered as representing the proceeds obtained from sale of “undebated
properties”, and other half as representing those obtained from sale of “after acquired
properties”.

The court (1) condemns Dahican Lumber to pay unto people’s Bank P2000,000 with 7% Interest
per annum from July 13, 1950, plus another sum of P100,000 with 5% interest per annum from
July 13, 1950; plus 10% on both principal sums as attorney’s fees; (2) Condemn Dahican
Lumber to pay unto Atlantic Gulf P900,000 with 4% interest per annum from July 13, 1950, plu
10% on both principal as attorney’s fees; (3) Condem Dahican Lumber to pay upon Connell Bros
the sum of P435,860.55, and to Dahican Lumber Co the sum of P2,151,678.24 both with legal
interest from date of filing of repective answers, 10% of principal as attorney’s fees; (4) Order
that of the sum realized from sale of properties of P175,000, after deducting recognized
expenses, ½ be adjudicated unto plaintiffs, court no longer specifying share of each; a to the
other half, the same should be adjudicated unto both plaintiffs, and defendant Dahican American
and Conne bros.; whatever plaintiffs Dahican American and Connell Bros receive from the
P175,000 deposited in court shall be applied to judgments particularly rendered in favor of each;
and (5) Cost of receivership as to debated properties shall be borne by People’s Bank, Atlantic
Gulf, Connell Bros and Dahican American Lumber Co., pro rata.

Issue:

1.) WON “after acquired properties” covered by and subject to deed of mortgage are subject
of foreclosure

2.) WON mortgages are valid and binding on properties aforesaid in spite of the fact that
they were not registered in accordance with the Chattel Mortgage Law

Ruling: In consonance with the portion of this decision concerning the damages that the plaintiffs
are entitled to recover from the defendants, the record of this case shall be remanded below for
the corresponding proceedings.

Modified as above indicated, the appealed judgment is affirmed in all other respects. With costs.

-  Under the fourth paragraph of both deeds of mortgage, it is crystal clear that all property
of every nature and description taken in exchange or replacement, as well as all buildings,
machineries, fixtures, tools, equipments, and other property that the mortgagor may
acquire, construct, install, attach; or use in, to upon, or in connection with the premises —
that is, its lumber concession — "shall immediately be and become subject to the lien" of
both mortgages in the same manner and to the same extent as if already included therein
at the time of their execution.
 - Article 415 does not define real property but enumerates what are considered as such,
among them being machinery, receptacles, instruments or replacements intended by
owner of the tenement for an industry or works which may be carried on in a building or
on a piece of land, and shall tend directly to meet the needs of the said industry or works.

Board of Assessment Appeals vs Manila Electric Company

Facts:

On Oct. 20, 1902, 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 and its suburbs to the person or
persons making the most favorable bid. 

On Nov 15,1955, petitioner City Assessor of QC declared aforesaid steel towers for real property
tax under Tax Declaration 31992 and 15549. After denying respondent’s petition to cancel
declaration, an appeal was taken by respondent to the Board of Assessment Appeals of QC,
which required respondent to pay P11,651.86 as Real Property Tax on steel towers for the years
1952 – 1956. Respondent paid amount under protest, and filed a petition for review in the Court
of Tax Appeals, to which the court ordered the cancellation of said tax declaration and ordered
petitioner City Treasurer of QC to refund to respondent P11,651.86. Motion for Reconsideration
was denied .

CTA held that : (1) The steel towers come within the term “poles” which are declared exempt
from taxes under Part 2 Par. 9 of respondent’s franchise; (2) steel towers are personal properties
and are not subject to real property tax, and (3) The City Treasurer of QC is held responsible
from refund of amount paid.

The tax exemption privilege of the petitioner is quoted hereunder:

PAR 9. The grantee shall be liable to pay the same taxes upon its real estate, buildings,
plant (not including poles, wires, transformers, and insulators), machinery and personal
property as other persons are or may be hereafter required by law to pay ... Said
percentage shall be due and payable at the time stated in paragraph nineteen of Part One
hereof, ... and shall be in lieu of all taxes and assessments of whatsoever nature and by
whatsoever authority upon the privileges, earnings, income, franchise, and poles, wires,
transformers, and insulators of the grantee from which taxes and assessments the
grantee is hereby expressly exempted. (Par. 9, Part Two, Act No. 484 Respondent's
Franchise; emphasis supplied.)

It is evident, that the word "poles", as used in Act No. 484 and incorporated in the
petitioner's franchise, should not be given a restrictive and narrow interpretation, as to
defeat the very object for which the franchise was granted. The poles as contemplated
 thereon, should be understood and taken as a part of the electric power system of the
respondent Meralco, for the conveyance of electric current from the source thereof to its
consumers.

ISSUE: WON the steel towers constitute real properties. So that they can be subject to Real
Property Tac

Ruling:

Under Art. 415 of the Civil Code, the following are immovable property:

(1) Land, buildings, roads, and constructions of all kinds adhered to the soil;
xxxxxxxxx
(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;
xxxxxxxxx
(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 cannot
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.

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.

Philippine Refining Co vs Jarque

FACTS:

Philippine Refining Co and Francisco Jarque executed 3 mortgages on the motor vessels Pandan
and Zamora. The documents were recorded in the record of transfers and incumberances of
cesels for the port of Cebu and each was denominated as “Chattel Mortgage”. Neither of first 2
mortgages had appended an affidavid of good faith. The third mortgage contained such an
affidavit, but was not registered in the customs house until May 17, 193, or within the period of
30 days prior to commencement of insolvency proceedings against Francisco Jarque. A fourth
mortgage was executed by Francisco Jarque and Ramon Aboitiz on the motorship Zaragoza and
was entered in the chattel mortgage registry of the register of deeds on May 12, 1932, or again
within the thirty-day period before the institution of insolvency proceedings. 

A petition wa filed with the CFI which prayed that Jarque be an insolvent debtor, which was
granted, with the result that an assignment of all properties of insolvent was executed in favor of
Jose Corominas.

The judge declined to order foreclosure of mortgages, but sustained special defenses of fatal
defectiveness of mortgages

Issue:

1.) WON mortgages of vessels are governed by Chattel Mortgage Law

2.) WON an affidavit of Good Faith is needed to enforce a chattel mortgage on a vessel.

Ruling: Judgment is affrmed

- Vessels are considered personal property under the civil law. (Code of Commerce, article
585.) Similarly under the common law, vessels are personal property although
occasionally referred to as a peculiar kind of personal property. (Reynolds vs. Nielson
[1903], 96 Am. Rep., 1000; Atlantic Maritime Co vs. City of Gloucester [1917], 117 N.
E., 924.) Since the term "personal property" includes vessels, they are subject to
mortgage agreeably to the provisions of the Chattel Mortgage Law. (Act No. 1508,
section 2.) 

- The Chattell Mortgage Law in its section 5, in describing what shall be deemed sufficient
to constitute a good chattel mortgage, includes the requirement of an affidavit of good
faith appended to the mortgage and recorded therewith. The absence of the affidavit
vitiates a mortgage as against creditors and subsequent encumbrancers. (Giberson vs. A.
N. Jureidini Bros. [1922], 44 Phil., 216; Benedicto de Tarrosa vs. F. M. Yap Tico & Co.
and Provincial Sheriff of Occidental Negros [1923], 46 Phil., 753.) As a consequence a
chattel mortgage of a vessel wherein the affidavit of good faith required by the Chattel
Mortgage Law is lacking, is unenforceable against third persons.

McMicking vs Banco Espanol-Filipino

FACTS:

Prior to Feb 21, 1907, on Sanchez and Cue Suan as a Sociedad en comandita ere owners of
certain steamship, known a the Hock-Tay.
On Feb 21, said Sociedad borrowed from El Banco Espanol-Filipino P30,000 at 8% per
annum from Sept 21,1907 until paid, and gave as security paymen for said sum a chattel
mortgage executed and delivered in accordance with Act 1508 of the Philippine Commission.
Said mortgage was duly recorded in the office of Collector of Customs of the Port of Manila
on Feb 27, in the record of conveyance of titles, mortgages and hypothecations of vessels
documented at said port.

Said mortgage wa duly recorded in the office of the register of property of the City of Manila
on Sept 13, in accordance with Sec 4 of said act (1508)

Upon Oct 10, El Banco Espanol-Filipino caused to be delivered to sheriff of City of Manila
the chattel mortgage on steamer Hock-Tay, together with notice that terms of said mortgage
had been broken by mortgagors, and requested that sheriff sell mortgaged property in
accordance with Sec 14 of Act 1508.

Sheriff gave notice to said mortgagors of said request on part of said mortgagee that said ship
would be sold in accordance with the law. Due notice was given of the said mortgaged
property(Hock-Tay). The date fixed for sale of property is on Oct. 27, 1907.

On Oct 27, Manuel Ayala served upon said sheriff the notice:

"SIR: As captain of the steamer Hock-Tay, the judicial sale of which has been advertised by
you for the 28th instant, at 9 o’clock, a. m., I make demand upon you not to deliver to the
Banco Espanol-Filipino the sum of P4,441.92, which is the amount of the wages of the crew
and expenses of supplies now owing, and which, in accordance with the Code of Commerce,
constitute preferred claims; I make this claim in writing and under oath, as shown by the
attached affidavit. 

"CITY OF MANILA, PHILIPPINE ISLANDS,

"Manuel Ayala, being first duly sworn, says that he is the holder of a captain’s license
authorizing him to command vessels of any tonnage in Philippine waters; that he is at the
present time captain of the steamer Hock-Tay, registered in the port of Manila, P. I. That the
said steamer Hock-Tay has been attached by the sheriff of Manila, who has announced the
judicial sale thereof of the 28th instant to satisfy a credit with article 580 of the Code of
Commerce, the money due to the captain and other members of the crew for salaries is
entitled to preference over the claim of the bank; that the amounts owing by the ship for her
equipment and provisions are also entitled to preference; that the wages due the captain and
crew as shown by the shipping articles and account books of the vessel amount to the sum of
P2,840.19; that the sum of P1,601.73 is now owing to the affiant for provisions, equipment
and supplies furnished the vessel and expended during her last voyage upon proper
authority. 

"(Signed) MANUEL AYALA. 

"Subscribed and sworn to before me, etc.”

 On Oct 27, steamer was sold to highest bidder for the sum of P30,000.

On Oct 30, sheriff filed a complaint in the CFI, to which the attorneys of El Banco Filipino
and Manuel Ayal entered into agreement, which was then submitted to the lower court.

The lower court rendered judgment in favor of defendant, alleging sheriff to pat P756.66 and
the balance of said proceeds be paid to Banco Epanol-Filipino.

ISSUE: WON Ayala has right to collect amount due to other members of the crew

Ruling: Decision of Lower Court is affirmed, no cost

The lower court allowed Ayala to collect the amount that was due him, as well as the amount
which was due other members of the crew and which had been assigned to him. With
reference to the amounts which had been assigned to him he was the real party in interest
and, if he was entitled to recover at all he was entitled to recover not only what was due him
but what had been assigned to him. But under no theory could be recover the amount due to
the other members of the crew whose claims had not been assigned to him.

Said section 114 of the Code of Procedure in Civil Actions expressly provides that every
action must be prosecuted in the name of the real party in interest. This section of the code
recognizes the assignments of rights of action and also recognizes that when one has a right
of action assigned to him he is then the real party in interest and may maintain an action upon
such claim or right.

Art. 646 of the Code of Commerce provides:  

S"The vessel with her engines, rigging, equipment, and freights shall be liable for the pay
earned by the crew engaged per month or for the trip, the liquidation and payment to take
place between one voyage and the other. 

"After a new voyage has been undertaken, credits such as the former shall lose their right of
preference.”

MERALCO v. City Assessor

MANILA ELECTRIC COMPANY, Petitioner, v. THE CITY ASSESSOR AND CITY

TREASURER OF LUCENA CITY, Respondents.
G.R. No. 166102, August 05, 2015

FACTS:
On February 20, 1989, MERALCO received from the City Assessor of Lucena a notice that
electric facilities, classified as capital investment of the company: (a) transformer and electric
post; (b) transmission line; (c) insulator; and (d) electric meter, were subjected to real property
tax as of 1985. MERALCO appealed the Tax Declaration before the LBAA of Lucena City and
claimed that its capital investment consisted only of its substation facilities and that MERALCO
was exempted from payment of real property tax on said substation facilities.
The LBAA rendered a Decision finding that MERALCO was required to pay the City
Government of Lucena a 5% tax of its gross earnings, whereas the poles, wires, insulators,
transformers, and electric meters of MERALCO, these were real properties and held that: (1) the
steel towers fell within the term “poles” expressly exempted from taxes under the franchise of
MERALCO; and (2) the steel towers were personal properties under the provisions of the Civil
Code and, hence, not subject to real property tax.

The City Assessor of Lucena filed an appeal with the CBAA, which the CBAA affirmed the
LBAA judgment and which became final and executory.

MERALCO again received a letter from the City Treasurer of Lucena six years later, which they
were being assessed for real property delinquency on its machineries beginning 1990.
MERALCO argues that its transformers, electric posts, transmission lines, insulators, and electric
meters are not subject to real property tax, given that the definition of “machinery” under Section
199(o) of the Local Government Code, on which real property tax is imposed, must still be
within the contemplation of real or immovable property under Article 415 of the Civil Code
because it is axiomatic that a statute should be construed to harmonize with other laws on the
same subject matter as to form a complete, coherent, and intelligible system.

ISSUE:
Whether MERALCO is liable for real property tax on its transformers, electric posts (or poles),
transmission lines, insulators, and electric meters, beginning 1992.
HELD:
No. MERALCO is a public utility engaged in electric distribution, and its transformers, electric
posts, transmission lines, insulators, and electric meters constitute the physical facilities through
which MERALCO delivers electricity to its consumers. Each may be considered as one or more
of the following: a “machine,” “equipment,” “contrivance,” “instrument,” “appliance,”
“apparatus,” or “installation.”
Article 290(o) of the Rules and Regulations Implementing the Local Government Code of 1991
recognizes the following exemption:

Machinery which are of general purpose use including but not limited to office equipment,
typewriters, telephone equipment, breakable or easily damaged containers (glass or cartons),
microcomputers, facsimile machines, telex machines, cash dispensers, furnitures and fixtures,
freezers, refrigerators, display cases or racks, fruit juice or beverage automatic dispensing
machines which are not directly and exclusively used to meet the needs of a particular industry,
business or activity shall not be considered within the definition of machinery under this Rule.
(Emphasis supplied.)

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;

xxxx

(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;

xxxx

(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;

xxxx

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
constructions 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 or 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 on the land in which the steel supports or towers are constructed. (Emphases
supplied.)

The aforequoted conclusions of the Court in the 1964 MERALCO case do not hold true anymore
under the Local Government Code. Therefore, for determining whether machinery is real
property subject to real property tax, the definition and requirements under the Local
Government Code are controlling.

MERALCO maintaining that electric posts are not machinery subject to real property tax
because these are not exclusively used by MERALCO but likewise by other cable and telephone
companies, is however a factual issue with the Court cannot take cognizance as it is nota trier of
facts. The issue is best left to the determination of the City Assessor or his deputy who has been
granted authority to take evidence under Article 304 of the Rules and Regulations Implementing
the Local Government Code of 1991.

The Court finds that the transformers, electric posts, transmission lines, insulators, and electric
meters of MERALCO are no longer exempted from real property tax and may qualify as
“machinery” subject to real property tax under the Local Government Code. Nevertheless, the
Court declares null and void the appraisal and assessment of said properties of MERALCO by
the City Assessor in 1997 for failure to comply with the requirements of the Local Government
Code and, thus, violating the right of MERALCO to due process.

Nevertheless, the appraisal and assessment of the transformers, electric posts, transmission lines,
insulators, and electric meters of MERALCO as machinery under Tax Declaration were not in
accordance with the Local Government Code and in violation of the right to due process of
MERALCO and, therefore, null and void.