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Facts:
Sps. Valino were the owners of a house of strong materials constructed somewhere in Caloocan, which
they bought in installment basis from Philippines Realty Co. (PRC). Sps Valino later on executed a chattel
mortgage on the house in favor of Associated Insurance and Surety Co. (AISC), which was registered
with the Chattel Mortgage Register. When the chattel mortgage took place, the title of the house was still
under the name of PRC. Eventually after completing payment, the house was registered in the name of
the Sps. Subsequently, a second mortgage was executed now a real estate mortgage over the same
house in favor of Isabel Iya.
After sometime, the chattel mortgage over the house was foreclosed and was subject to public auction, in
which AISC was awarded the property. PRC learned of the existence of the real estate mortgage over the
property; thus, PRC instituted a civil case wherein the Sps. Valino and Iya were impleaded as defendant,
praying before the court the exclusion of the residential house from the real estate mortgage in favor of
the defendant and the declaration and recognition of PRCs right over the property by virtue of the public
auction where PRC was awarded with the property. However, Iya defended that in virtue of the real estate
mortgage executed by the Sps. Valino, she acquired a real right over the property. Hence, the prior chattel
mortgage was null and void for non-compliance with form required by law.
Iya filed another civil action against Sps. Valino and AISC, praying before the court that the defendants
and any other person claiming interest on the mortgaged property be barred of all rights over the same.
PRC contends that the house and lot must be deemed as personal property, since at the time of the
execution of the chattel mortgage the property did not belong to the Sps. Hence, the chattel mortgage
was valid.
Issue: W/N the property in which was subject to a chattel and real estate mortgage is a personal property.
Held: No. A building certainly cannot be divested of its character of realty by the fact that the land on
which it is constructed belongs to another. To hold it otherwise, the possibility is not remote that it would
result in confusion, for to cloak the building with an uncertain status made dependent on the ownership of
the land, would create a situation where a permanent fixture changes its nature or character as the
ownership of the land changes hands.
Hence, as personal properties could only be the subject of chattel mortgage, the chattel mortgage
executed before the real estate mortgage in favor of Iya is null and void.
Issue:
Whether or not the steel towers are personal properties and are not subject to real property tax.
Whether or not the steel towers come within the term poles which are declared exempt from taxes under
Meralcos franchise.
Land, buildings, roads, and constructions of all kinds adhered to the soil;
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;
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 works;
The steel towers do not constitute buildings or constructions adhered to the soil nor are they in a way
analogous to each other since they are removable and merely attached to the ground by bolts. They are
not also 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. Lastly, they are not
machineries, receptacles, instruments or implements, and even if they were, they are not intended for
industry or works on the land. Hence, they are not immovable properties, which cannot be subjected to
real property tax.