DELA CRUZ, EILEEN EIKA M.

PROPERTY

1. Davao Sawmill Co. vs Castillo

61 PHIL 709
GR No. L-40411
August 7, 1935

A tenant placed machines for use in a sawmill on the landlord's land.

FACTS:
Davao Sawmill Co., operated a sawmill. The land upon which the business was conducted was
leased from another person. On the land, Davao Sawmill erected a building which housed the
machinery it used. Some of the machines were mounted and placed on foundations of cement. In the
contract of lease, Davo Sawmill agreed to turn over free of charge all improvements and buildings
erected by it on the premises with the exception of machineries, which shall remain with the Davao
Sawmill. In an action brought by the Davao Light and Power Co., judgment was rendered against
Davao Sawmill. A writ of execution was issued and the machineries placed on the sawmill were levied
upon as personalty by the sheriff. Davao Light and Power Co., proceeded to purchase the machinery
and other properties auctioned by the sheriff.

ISSUE: Are the machineries real or personal property?

HELD:
Art.415 of the New Civil Code provides that Real Property consists of:

(1) Lands, buildings, roads and constructions of all kinds adhered to the soil;

xxx

(5) Machinery, receptacles, instruments or implements intended by the owner pf the tenement for an
industry ot 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;

Appellant should have registered its protest before or at the time of the sale of the property. While not
conclusive, the appellant's characterization of the property as chattels is indicative of intention and
impresses upon the property the character determined by the parties.

Machinery is naturally movable. However, machinery may be immobilized by destination or purpose

under the following conditions:

General Rule: The machinery only becomes immobilized if placed in a plant by the owner of the
property or plant.

Immobilization cannot be made by a tenant, a usufructuary, or any person having only a temporary
right.

Exception: The tenant, usufructuary, or temporary possessor acted as agent of the owner of the
premises; or he intended to permanently give away the property in favor of the owner.

As a rule, therefore, the machinery should be considered as Personal Property, since it was not
placed on the land by the owner of the said land.

2. Berkenkotter v. Cu Unjieng
DELA CRUZ, EILEEN EIKA M. PROPERTY

FACTS:
On 26 April 1926, the Mabalacat Sugar Company obtained from Cu Unjieng e Hijos, a loan
secured by a first mortgage constituted on 2 parcels of land "with all its buildings, improvements,
sugar-canemill, steel railway, telephone line, apparatus, utensils and whatever forms part or is a
necessary complement of said sugar-cane mill, steel railway, telephone line, now existing or that may
in the future exist in said lots.

On 5 October 1926, the Mabalacat Sugar Company decided to increase the capacity of its
sugar central by buying additional machinery and equipment, so that instead of milling 150 tons daily,
it could produce 250. Green proposed to the Berkenkotter, to advance the necessary amount for the
purchase of said machinery and equipment, promising to reimburse him as soon as he could obtain an
additional loan from the mortgagees, Cu Unjieng e Hijos, and that in case Green should fail toobtain
an additional loan from Cu Unjieng e Hijos, said machinery and equipment would become security
therefore, said Green binding himself not to mortgage nor encumber them to anybody until
Berkenkotter be fully reimbursed for the corporation's indebtedness to him.

Having agreed to said proposition made in a letter dated 5 October 1926, Berkenkotter, on 9
October 1926, delivered the sum of P1,710 to Green, the total amount supplied by him to Green
having beenP25,750. Furthermore, Berkenkotter had a credit of P22,000 against said corporation for
unpaid salary. With the loan of P25,750 and said credit of P22,000, the Mabalacat Sugar Co., Inc.,
purchased the additional machinery and equipment.

On 10 June 1927, Green applied to Cu Unjieng e Hijos for an additional loan of P75,000
offering as security the additional machinery and equipment acquired by said Green and installed in
the sugar central after the execution of the original mortgage deed, on 27 April 1927, together with
whatever additional equipment acquired with said loan. Green failed to obtain said loan. Hence, above
mentioned mortgage was in effect

ISSUE: Are the additional machines also considered mortgaged?

HELD:
Article 1877 of the Civil Code provides that mortgage includes all natural accessions,
improvements,growing fruits, and rents not collected when the obligation falls due, and the amount of
any indemnities paid or due the owner by the insurers of the mortgaged property or by virtue of the
exercise of the power of eminent domain, with the declarations, amplifications, and limitations
established by law, whether the state continues in the possession of the person who mortgaged it or
whether it passes into the hands of a third person.It is a rule, that in a mortgage of real estate, the
improvements on the same are included; therefore, all objects permanently attached to a mortgaged
building or land, although they may have been placed there after the mortgage was constituted, are
also included

Article 334, paragraph 5, of the Civil Code gives the character of real property to machinery,
liquid containers, instruments or implements intended by the owner of any building or land for use in
connection with any industry or trade being carried on therein and which are expressly adapted to
meet the requirements of such trade or industry. The installation of a machinery and equipment in a
mortgaged sugar central, in lieu of another of less capacity, for the purpose of carrying out the
industrial functions of the latter and increasing production, constitutes a permanent improvement on
said sugar central and subjects said machinery and equipment to the mortgage constituted thereon.

3. Lopez vs. Orosa, Jr. and Plaza Theatre, Inc.

G.R. Nos. L-10817-18. February 28, 1958.
Felix, J.
DELA CRUZ, EILEEN EIKA M. PROPERTY

Doctrine: In the absence of any specific provision of law to the contrary, a building is an immovable property,
irrespective of whether or not said structure and the land on which it is adhered to belong to the same owner.

Facts:
Sometime in May, 1946, Vicente Orosa, Jr., invited Lopez to make an investment in the theatre
business. Although Lopez expressed his unwillingness to invest of the same, he agreed to supply the lumber
necessary for the construction of the proposed theatre, and at Orosas request and assurance that the latter
would be personally liable for any account that the said construction might incur, Lopez further agreed that
payment therefore would be on demand and not cash on delivery basis. With this, Lopez delivered the lumber
which was used for the construction of the Plaza Theatre on May 17, 1946, up to December 4 of the same year.
The total cost of materials amounted to P62,255.85 but Lopez was only paid P20,848.50, thus leaving a balance
of P41,771.35. Orosa and Rustia, corporation president, promised Lopez to obtain a bank loan to satisfy the
balance, to which assurance Lopez had to accede. Unknown to Lopez, Orosa and Rustia already secured a loan
for P30,000 from the PNB with the Luzon Surety Company as surety, and the corporation in turn executed a
mortgage on the land and building in favor of said company as counter-security. As the land at that time was not
yet brought under the operation of the Torrens System, the mortgage on the same was registered on 16
November 1946, under Act 3344. Subsequently, when the corporation applied for the registration of the land
under Act 496, such mortgage was not revealed and thus OCT O-391 was correspondingly issued on October
25, 1947, without any encumbrance appearing thereon.

Persistent demand from Lopez caused Vicente Orosa, Jr. to execute, on 17 March 1947, an alleged
deed of assignment of his 420 shares of stock of the Plaza Theater, Inc., at P100 per share or with a total
value of P42,000 in favor of the creditor, and as the obligation still remained unsettled, Lopez filed on 12
November 1947, a complaint with the CFI Batangas against Vicente Orosa Jr. and Plaza Theatre, Inc., praying
that defendants be sentenced to pay him jointly and severally the sum of P41,771.35 with legal interest from the
filing of the action; that in case defendants fail to pay the same, that the building and the land owned by the
corporation be sold at public auction and the proceeds thereof be applied to said indebtedness. Plaintiff also
caused the annotation of a notice of lis pendens on said properties with the Register of Deeds.

The surety company upon discovery that the land was already registered under the Torrens System and
that there was a notice of lis pendens thereon, filed a petition for review of the decree of the land registration
court in order to annotate the lights and interests of the surety company over said properties. Lopez opposed by
asserting that the amount demanded by him constituted a preferred lien over the properties of the obligors; that
the surety company was guilty of negligence when it failed to present an opposition to the application for
registration of the property; and that if any annotation of the rights and interest of said surety would ever be
made, same must be subject to the lien in his favor. The court ruled that Orosa and the Plaza Theatre, Inc., were
jointly liable for the unpaid balance of the cost of lumber used in the construction of the building and the plaintiff
thus acquired the materialmans lien over the same; the lien being merely confined to the building and did not
extend to the land on which the construction was made.

Issue: Whether materialmans lien for the value of the materials used in the construction of a building attaches
to the building alone and does not extend to the land on which the building is adhered to.

Held:
No. While it is true that generally, real estate connotes the land and the building constructed thereon, it
is obvious that the inclusion of the building, separate and distinct from the land, in the enumeration of what may
constitute real properties could mean only one thing that a building is by itself an immovable property ( Leung
Yee v. Strong Machinery). In the absence of any specific provision of law to the contrary, a building is an
immovable property, irrespective of whether or not said structure and the land on which it is adhered to belong to
the same owner.

G.R. Nos. L-10837-38 May 30, 1958

4. ASSOCIATED INSURANCE and SURETY COMPANY, INC., plaintiff, vs.

ISABEL IYA, ADRIANO VALINO and LUCIA VALINO, defendants.
DELA CRUZ, EILEEN EIKA M. PROPERTY
Facts:
Valino & Valino were the owners and possessors of a house of strong materials in Rizal, which they
purchased on installment basis. To enable her to purchase on credit rice from NARIC, Valino filed a bond
(P11,000) subscribed by Associated Insurance and Surety Co Inc, and as a counter-guaranty, Valino executed
an alleged chattel mortgage on the aforementioned house in favour of the surety company. At the same time,
the parcel of land which the house was erected was registered in the name of Philippine Realty Corporation.

Valino, to secure payment of an indebtedness (P12,000) executed a real estate mortgage over the lot and the
house in favour of Iya.

Valino failed to satisfy her obligation to NARIC, so the surety company was compelled to pay the same pursuant
to the undertaking of the bond. In turn, surety company demanded reimbursement from Valino, and as they
failed to do so, the company foreclosed the chattel mortgage over the house. As a result, public sale was
conducted and the property was awarded to the surety company.

The surety company then learned of the existence of the real estate mortgage over the lot and the improvements
thereon; thus, they prayed for the exclusion of the residential house from the real estate mortgage and the
declaration of its ownership in virtue of the award given during bidding.

Iya alleged that she acquired a real right over the lot and the house constructed thereon, and that the auction
sale resulting from the foreclosure of chattel mortgage was null and void.

Surety company argued that as the lot on which the house was constructed did not belong to the spouses at the
time the chattel mortgage was executed, the house might be considered as personal property, and they prayed
that the said building be excluded from the real estate mortgage.

Issue: There is no question over Iyas right over the land by real estate mortgage; however, as the building
instructed thereon has been the subject of two mortgages, controversy arise as to which of these encumbrances
should receive preference over the other.

Held:
The building is subject to the real estate mortgage, in favour of Iya. Iyas right to foreclose not only the
land but also the building erected thereon is recognised.

While it is true that real estate connotes the land and the building constructed thereon, it is obvious that the
inclusion of the building, separate and distinct from the land, in the enumeration of what may constitute real
properties (Article 415), could only mean that a building is by itself an immovable property. Moreover, in view of
the absence of any specific provision to the contrary, a building is an immovable property irrespective of whether
or not said structure and the land on which it is adhered to belong to the same owner.

A building certainly cannot be divested of its character of a realty by the fact that the land on which it is
constructed belongs to another.

In the case at bar, as personal properties could only be the subject of a chattel mortgage and as obviously the
structure in question is not one, the execution of the chattel mortgage covering said building is clearly invalid and
a nullity. While it is true that said document was correspondingly registered in Chattel Mortgage Registry of
Rizal, this act produced no effect whatsoever, for 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.

5. Makati Leasing and Finance Corp., vs Wearever Textile Mills, Inc.,

122 SCRA 296
GR No. L-58469
May 16, 1983

FACTS
Wearever Textile Mills, Inc. executed a chattel mortgage contract in favor of Makati Leasing
and Finance Corporation covering certain raw materials and machinery. Upon default, Makati Leasing
DELA CRUZ, EILEEN EIKA M. PROPERTY
fi led a petition for judicial foreclosure of the properties mortgaged. Acting on Makati Leasings
application for replevin, the lower court issued a writ of seizure. Pursuant thereto, the sheriff enforcing
the seizure order seized the machinery subject matter of the mortgage. In a petition for certiorari and
prohibition, the Court of Appeals ordered the return of the machinery on the ground that the same can-
not be the subject of replevin because it is a real property pursuant to Article415 of the new Civil
Code, the same being attached to the ground by means of bolts and the only way to remove it from
Wearever textiles plant would be to drill out or destroy the concrete fl oor. When the motion for
reconsideration of Makati Leasing was denied by the Court of Appeals, Makati Leasing elevated the
matter to the Supreme Court.

ISSUE: Whether the machinery in suit is real or personal property from the point of view of the parties.

HELD
There is no logical justification to exclude the rule out the present case from the application of
the pronouncement in Tumalad v Vicencio, 41 SCRA 143. If a house of strong materials, like what was
involved in the Tumalad case, may be considered as personal property for purposes of executing a
chattel mortgage thereon as long as the parties to the contract so agree and no innocent third party
will be prejudiced thereby, there is absolutely no reason why a machinery, which is movable in its
nature and becomes immobilized only by destination or purpose, may not be likewise treated as such.
This is really because one who has so agreed is estopped from the denying the existence of the
chattel mortgage.

In rejecting petitioners assertion on the applicability of the Tumalad doctrine, the CA lays stress on the
fact that the house involved therein was built on a land that did not belong to the owner of such house.
But the law makes no distinction with respect to the ownership of the land on which the house is built
and We should not lay down distinctions not contemplated by law.

It must be pointed out that the characterization by the private respondent is indicative of the intention
and impresses upon the property the character determined by the parties. As stated in Standard Oil
Co. of New York v. Jaramillo, 44 Phil. 630, it is undeniable that the parties to a contract may, by
agreement, treat as personal property that which by nature would be a real property as long as no
interest of third parties would be prejudiced thereby.

The status of the subject matter as movable or immovable property was not raised as an issue before
the lower court and the CA, except in a supplemental memorandum in support of the petition filed in
the appellate court. There is no record showing that the mortgage has been annulled, or that steps
were taken to nullify the same. On the other hand, respondent has benefited from the said contract.

Equity dictates that one should not benefit at the expense of another.

As such, private respondent could no longer be allowed to impugn the efficacy of the chattel mortgage
after it has benefited therefrom.

Therefore, the questioned machinery should be considered as personal property.

6. Board of Assessment Appeals QC v MERALCO
Board of Assessment Appeals, Q.C. vs Meralco
10 SCRA 68 GR No. L-15334
January 31, 1964

FACTS
On November 15, 1955, the QC City Assessor declared the MERALCO's steel towers subject
to real property tax. After the denial of MERALCO's petition to cancel these declarations, an appeal
DELA CRUZ, EILEEN EIKA M. PROPERTY
was taken to the QC Board of Assessment Appeals, which required respondent to pay P11,651.86 as
real property tax on the said steel towers for the years 1952 to 1956.
MERALCO paid the amount under protest, and filed a petition for review in the Court of Tax Appeals
(CTA) which rendered a decision ordering the cancellation of the said tax declarations and the
refunding to MERALCO by the QC City Treasurer of P11,651.86.

ISSUE: Are the steel towers or poles of the MERALCO considered real or personal properties?

HELD
Pole long, comparatively slender, usually cylindrical piece of wood, timber, object of metal or
the like; an upright standard to the top of which something is affixed or by which something is
supported.

MERALCO's steel supports consists of a framework of 4 steel bars/strips which are bound by steel
cross-arms atop of which are cross-arms supporting 5 high-voltage transmission wires, and their sole
function is to support/carry such wires. The exemption granted to poles as quoted from Part II, Par.9 of
respondent's franchise is determined by the use to which such poles are dedicated.

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 should be taken and understood as part of MERALCO's electric
power system for the conveyance of electric current to its consumers.

Art. 415 of the NCC classifies the following as immovable property:

(1) Lands, buildings, roads and constructions of all kinds adhered to the soil;
xxx
(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;
xxx
(5) Machinery, receptacles, instruments or implements intended by the owner pf the tenement for an
industry ot 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;

Following these classifications, MERALCO's steel towers should be considered personal property. It
should be noted that the steel towers:

(a) are neither buildings or constructions adhered to the soil;

(b) are not attached to an immovable in a fixed manner they can be separated without breaking the
material or deterioration of the object;

are not machineries, receptacles or instruments, and even if they are, they are not intended for an
industry to be carried on in the premises.
7. Meralco vs CBAA
114 SCRA 260
Facts:
This case is about the imposition of the realty tax on two oil storage tanks
installed in 1969 byManila Electric Company on a lot in San Pascual, Batangas
which it leased in 1968 from Caltex (Phil.), Inc. The storage tanks are made of
steel plates welded and assembled on the spot. Their bottoms rest on a
foundation consisting of compacted earth as the outermost layer. The tank is not
DELA CRUZ, EILEEN EIKA M. PROPERTY
attached to its foundation. It is not anchored or welded to the concrete circular
wall. Its bottom plate is not attached to any part of the foundation by bolts,
screws or similar devices. The tank merely sits on its foundation.Pipelines were
installed on the sides of each tank and are connected to the pipelines of
theManila Enterprises Industrial Corporation. The Board concludes that 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 and required Meralco to pay realty taxes on
the two tanks.

Issue:
Whether or not the 2 oil tanks installed by Meralco in Batangas is a subject to a
realty tax.

Held:
The SC ruled 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. Thus, the two tanks should be held subject to realty tax because
they were considered real property. Henceforth, the petition is dismissed.
TheBoard's questioned decision and resolution are affirmed

8. G.R. No. L-46245 May 31, 1982

MERALCO SECURITIES INDUSTRIAL CORPORATION, petitioner, vs.
CENTRAL BOARD OF ASSESSMENT APPEALS, BOARD OF ASSESSMENT
APPEALS OF LAGUNA and PROVINCIAL ASSESSOR OF LAGUNA,
respondents.
Facts:
Pursuant to a pipeline concession issued under the Petroleum Act of 1949, Republic Act No. 387,
Meralco Securities installed from Batangas to Manila a pipeline system consisting of cylindrical steel pipes joined
together and buried not less than one meter below the surface along the shoulder of the public highway. The
pipes are embedded in the soil and are firmly and solidly welded together so as to preclude breakage or damage
thereto and prevent leakage or seepage of the oil. The valves are welded to the pipes so as to make the pipeline
system one single piece of property from end to end.
DELA CRUZ, EILEEN EIKA M. PROPERTY

In order to repair, replace, remove or transfer segments of the pipeline, the pipes have to be cold-cut by means
of a rotary hard-metal pipe-cutter after digging or excavating them out of the ground where they are buried. In
points where the pipeline traversed rivers or creeks, the pipes were laid beneath the bed thereof. Hence, the
pipes are permanently attached to the land.

Pursuant to the Assessment Law, Commonwealth Act No. 470, the provincial assessor of Laguna treated the
pipeline as real property and issued tax declarations, containing the assessed values of portions of the pipeline.

Meralco appealed the assessments to the defendants, but the latter ruled that pipeline is subject to realty tax.
The defendants argued that the pipeline is subject to realty tax because they are contemplated in Assessment
Law and Real Property Tax Code; that they do not fall within the category of property exempt from realty tax
under those laws; that Articles 415 & 416 of the Civil Code, defining real and personal property have no
applications to this case because these pipes are constructions adhered to soil and things attached to the land in
a fixed manner, and that Meralco Securities is not exempt from realty tax under petroleum law.

Meralco insists that its pipeline is not subject to realty tax because it is not real property within the meaning of
Art. 415.

Issue: Whether the aforementioned pipelines are subject to realty tax.

Held:
Yes, the pipelines are subject to realty tax. Section 2 of the Assessment Law provides that the
realty tax is due on real property, including land, buildings, machinery, and other improvements. This
provision is reproduced with some modification in Section 38, Real Property Tax Code, which provides
that there shall be levied, assessed, and collected xxx annual ad valorem tax on real property such as
land, buildings, machinery, and other improvements affixed or attached to real property xxx.
It is incontestable that the pipeline of Meralco Securities does not fall within any of the classes of exempt
real property enumerated in section 3 of the Assessment Law and section 40 of the Real Property Tax Code.
Pipeline means a line of pipe connected to pumps, valves and control devices for conveying liquids,
gases or finely divided solids. It is a line of pipe running upon or in the earth, carrying with it the right to the use
of the soil in which it is placed.
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, in such a way that it cannot be separated
therefrom without breaking the material or deterioration of the object.
The pipeline system in question is indubitably a construction adhering to the soil. 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.

WHEREFORE, the questioned decision and resolution are affirmed. The petition is dismissed. No costs.
9. Caltex vs Central Board of Assessment Appeals
GR No. L-50466 May 31, 1982

This case is about the realty tax on machinery and equipment installed by Caltex (Philippines) Inc., in its gas
stations located on leased land.

FACTS
Caltex loaned machines and equipment to gas station operators under an appropriate lease agreement or
receipt. The lease contract stipulated that upon demand, the operators shall return to Caltex the machines and
equipment in good condition as when received, ordinary wear and tear excepted.

The lessor of the land, where the gas station is located, does not become the owner of the machines and
equipment installed therein. Caltex retains the ownership thereof during the term of the lease.

The City Assessor of Pasay City characterized the said items of gas station equipment and machinery as taxable
realty. However, the City Board of Tax Appeals ruled that they are personalty. The Assessor appealed to the
Central Board of Assessment Appeals.
DELA CRUZ, EILEEN EIKA M. PROPERTY

The Board held on June 3, 1977 that the said machines are real property within the meaning of Ses. 3(k) & (m)
and 38 of the Real Property Tax Code, PD 464, and that the Civil Code definitions of real and personal property
in Articles 415 and 416 are not applicable in this case.

ISSUE: WON the pieces of gas station equipment and machinery permanently affixed by Caltex to its gas station
and pavement should be subject to realty tax.

HELD
Sec.2 of the Assessment Law provides that the realty tax is due on real property, including land, buildings,
machinery, and other improvements not specifically exempted in Sec.3 thereof.

Sec.3 of the Real Property Tax Code provides the following definitions:

k) Improvements a valuable addition made to property or an amelioration in its conditionmore than mere
repairs or replacement of wasteintended to enhance its value, beauty, or utility
m) Machinery machines, mechanical contrivances, instruments, appliances, and apparatus attached to the real
estateincludes the physical facilities available for productioninstallation and appurtenant service facilities.
The subject machines and equipment are taxable improvement and machinery within the meaning of the
Assessment Law and the Real Property Tax Code, because the same are necessary to the operation of the gas
station and have been attached/affixed/embedded permanently to the gas station site.

Improvements on land are commonly taxed as realty even though they might be considered personalty. It is a
familiar phenomenon to see things classified as real property for purposes of taxation which on general principle
might be considered personal property (Standard Oil Co., vs Jaramillo, 44 PHIL 630).

This case is also easily distinguishable from Board of Assessment Appeals vs. Manila Electric Co., (119 Phil.
328) where Meralco's steel towers were exempted from taxation. The steel towers were considered personalty
because they were attached to square metal frames by means of bolts and could be moved from place to place
when unscrewed and dismantled.

Nor are Caltex's gas station equipment and machinery the same as the tools and equipment in the repair shop of
a bus company which were held to be personal property not subject to realty tax (Mindanao Bus Co. vs. City
Assessor, 116 Phil. 501).

The Central Board of Assessment Appeals did not commit a grave abuse of discretion in upholding the City
Assessor's imposition of the realty tax on Caltex's gas station and equipment.

10. BENGUET CORPORATION, petitioner, vs. CENTRAL BOARD OF

ASSESSMENTAPPEALS, BOARD OF ASSESSMENT APPEALS OF
ZAMBALES, PROVINCIALASSESSOR OF ZAMBALES, PROVINCE OF
ZAMBALES, and MUNICIPALITY OFSAN MARCELINO, respondents.
[January 29, 1993, G.R. No. 106041]

FACTS:
On 1985, Provincial Assessor of Zambales assessed the said properties in issue as
taxableimprovements. The assessment was appealed to the Board of Assessment Appeals of theProvince of
Zambales. However, the appeal was dismissed mainly on the ground of the petitioner's failure to pay the realty
taxes that fell due during the pendency of the appeal.The petitioner elevated the matter to the Central Board of
Assessment Appeals, one of theherein respondents. In its decision dated March 22, 1990, the Board reversed
the dismissal of theappeal but, agreed that the tailings dam and the lands submerged thereunder shall be
subject torealty tax.For purposes of taxation the dam is considered as real property as it comes within theobject
mentioned in Article 415 of the New Civil Code, It is a construction adhered to the soilwhich cannot be separated
or detached without breaking the material or causing destruction onthe land upon which it is attached. The
DELA CRUZ, EILEEN EIKA M. PROPERTY
immovable nature of the dam as an improvement whichdetermines its character as real property, hence taxable
under Section 38 of the Real Property TaxCode.

ISSUES: 1.Whether or not the tailings dam is subject to realty tax?2.Whether or not it be considered as
immovable property?

HELD:
Yes, it is subject to realty tax and it is considered an immovable property. The petitioner does not
dispute that the tailings dam may be considered realty within the meaning of Article 415. It insists, however, that
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 although a considerable sum may have been spent in constructing
and maintaining it.
The Real Property Tax Code does not carry a definition of "real property" and simply says that the realty tax is
imposed on "real property, such as lands, buildings, machinery and other improvements affixed or attached to real property."
In the absence of such a definition, applying Article 415 of the Civil Code, which states that the following are considered
immovables: Section No. 1 Lands, buildings and constructions of all kinds adhered to the soil; Section no. 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.
Even without the tailings dam, the petitioner's mining operation can still be carried out because the primary function
of the dam is merely to receive and retain the wastes and water coming from the mine. There is no allegation that the water
coming from the dam is the sole source of water for the mining operation so as to make the dam an integral part of the mine.
In fact, as a result of the construction of the dam, the petitioner can now impound and recycle water without having to spend
for the building of a water reservoir.
And as the petitioner itself points out, even if the petitioner's mine is shut down or ceases operation, the dam may
still be used for irrigation of the surrounding areas.

From the definitions and the cases cited in relation to this case, it would appear that whether a structure constitutes an
improvement so as to partake of the status of realty would depend upon the degree of permanence intended in its construction
and use, The expression "permanent" as applied to an improvement does not imply that the improvement must be used
perpetually but only until the purpose to which the principal realty is devoted has been accomplished. It is sufficient that the
improvement is intended to remain as long as the land to which it is annexed is still used for the said purpose.

The Court is convinced 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. Moreover, 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.

Hence, petition was dismissed by the Supreme Court.

11. TUM10ALAD V. VICENCIO
Although a building is an immovable; the parties to a contract may by agreement treat as personal
property that which by nature is a real property however they are estopped from subsequently
claiming otherwise.

FACTS:
Alberta Vicencio and Emiliano Simeon received a loan of P4, 800 from Gavino and Generosa
Tumalad. To guaranty said loan, Vicencio executed a chattel mortgage in favor of Tumalad over their
house of strong materials which stood on a land which was rented from the Madrigal & Company, Inc.
When Vicencio defaulted in paying, the house was extrajudicially foreclosed, pursuant to their
contract. It was sold to Tumalad and they instituted a Civil case in the Municipal Court of Manila to
have Vicencio vacate the house and pay rent.

The MTC decided in favor of Tumalad ordering Vicencio to vacate the house and pay rent until they
have completely vacated the house. Vicencio is questioning the legality of the chattel mortgage on the
ground that 1) the signature on it was obtained thru fraud and 2) the mortgage is a house of strong
materials which is an immovable therefore can only be the subject of a REM. On appeal, the CFI
DELA CRUZ, EILEEN EIKA M. PROPERTY
found in favor of Tumalad, and since the Vicencio failed to deposit the rent ordered, it issued a writ of
execution, however the house was already demolished pursuant to an order of the court in an
ejectment suit against Vicencio for non-payment of rentals. Thus the case at bar.

ISSUE: Whether or not the chattel mortgage is void since its subject is an immovable

HELD:
NO. Although a building is by itself an immovable property, parties to a contract may treat as
personal property that which by nature would be real property and it would be valid and good only
insofar as the contracting parties are concerned. By principle of estoppel, the owner declaring his
house to be a chattel may no longer subsequently claim otherwise.

When Vicencio executed the Chattel Mortgage, it specifically provides that the mortgagor cedes, sells
and transfers by way of Chattel mortgage. They intended to treat it as chattel therefore are now
estopped from claiming otherwise. Also the house stood on rented land which was held in previous
jurisprudence to be personalty since it was placed on the land by one who had only temporary right
over the property thus it does not become immobilized by attachment.

[Vicencio though was not made to pay rent since the action was instituted during the period of
redemption therefore Vicencio still had a right to remain in possession of the property]