Companya General De Tabacos De Filipinas v CA

Facts:

Phil. Milling Co. obtained a loan from RFC. To secure this loan the company executed a Deed of mortgage in favor
of RFC mortgaging their real and personal properties including 148,000 piculs of sugar quotas.

Earlier, Phil. Milling Co. mortgage their real and personal property in favor of PNB to secure a loan.

Later on, Gomez & Torres, the major stockholder of Phil. Milling Co. sold to Theo Davies & Co. (representative of
San Carlos Planters Assoc.) 18,000 piculs of sugar quota.

Theo Davies & Co. went to the District Office of Sugar Quota Administration to record the transfer but the SQA
declined to do so until necessary corrections were made and written conformity with the PNB.

Eventually, the Administrator authorized the transfer. Then, San Carlos Planters sold the 18,000 piculs of sugar
quota to individual sugar planters.

Thereafter, RFC (now DBP) filed an extrajudicial foreclosure of its mortgages and was held the highest bidder.

After the lapse of the redemption period, DBP sold the foreclosed properties to PNB.

After 2 years, PNB wrote to San Carlos Planter and the planters to restore the 18,000 piculs of sugar quota. But the
latter failed to do so.

Issue:

Whether sugar quota is a real property

Ruling:

The intangible property that is the sugar quota in question should be considered as real property by destination,
"an improvement attaching to the land entitled thereto.” Sugar quota allocations do not have existence independently of any
particular tract of land. They are essentially ancillary, not principal, assets, necessarily annexed to a specific sugar plantation or
land, improvements "attaching to the land entitled thereto."

Even if the sugar quota is assumed to be personal, not raid property, and hence not embraced in the mortgage of the
immovables created by the corresponding deeds, it would nevertheless still be covered by the chattel mortgage created in and by
the same deeds. Since, like the recording of a real estate mortgage, registration of a chattel mortgage also puts all persons on notice
of its existence, the legal situation would be exactly the same: the registration of the above described deeds of chattel (and real
estate) mortgage over the sugar quota, among other things, would also have charged all persons with notice thereof from the time
of such registration.