Property Case Digests

Property – Case Digest by Jose Parcon

10) Board of Assessment Appeals v. Meralco, January 1964

Facts:

Meralco’s electric power is generated by its hydroelectric plant in Laguna and is transmitted to the City of Manila by means of electric transmission wires, running from the province of Laguna to Manila. These transmission wires are attached on steel towers constructed by Meralco at intervals, from its hydroelectric plant in Laguna to Manila.

Respondent Meralco has constructed 40 of these steel towers in Quezon City on land belonging to it.

Petitioner, City Assessor of Quezon City declared the said steel towers for real property tax, which required Meralco to pay the amount of P11 651.86 as real property tax on the said steel towers.

Meralco paid the amount under protest, and filed a petition for review in Court of Tax Appeals (CTA), which ruled in favor of Meralco ordering the City treasurer of Quezon City to refund to Meralco the sum of P11 651.86.

Issue:

Whether or not the said steel towers of Meralco can be considered as real or immovable property.

Ruling:

The said steel towers of Meralco does fall under any of the enumerations provided for in Art. 415 (NCC). They are removable and merely attached to a square metal frame by means of bolts, which then unscrewed could easily be dismantled and moved from place to place. 

They can be separated without breaking the material. They are not machineries, receptacles, instruments or implements, and even if they were, they are not intended for industry or works on the land. Meralco is not engaged in an industry or works in the land in which the steel towers are constructed.

11) Serg’s Products, Inc. v. PCI Leasing, Aug. 22, 2000

Facts:

Respondent PCI Leasing & Finance, Inc. filed with RTC-QC a complaint for a sum of money, with an application for a writ of replevin.

Upon an ex-parte application of PCI Leasing, respondent judge issued a writ of replevin, directing its sheriff to seize and deliver the machineries and equipment to PCI Leasing after 5 days and upon the payment of necessary expenses.

In implementation of said writ, the sheriff proceeded to petitioner’s factory, seized one machinery with the word that he would return for the other machineries.

Petitioner filed a motion for special protective order, praying for a directive for the sheriff to defer enforcement of the writ of replevin.

The motion was opposed by PCI Leasing on the ground that the properties were still personal and therefore still subject to seizure and a writ of replevin.

In their reply, petitioner Serg’s Products, Inc., asserted that the properties sought to be seized were immovable as defined in Art. 415 (NCC), the parties’ agreement to the contrary notwithstanding. They argued that to give effect to the agreement would be prejudicial to innocent third parties.

Issue:

Whether or not the machineries sought to be seized inside the Serg’s factory remains to be treated as an immovable property under Art. 415 (NCC) or it has now become a personal property after the two parties signed an agreement treating the said machineries as personal property.

Ruling:

After agreeing to a contract stipulating that a real or immovable property be considered as personal or movable, a party is estopped from subsequently claiming otherwise. Hence such property is a proper subject of a writ of replevin obtained by the other party.

Under the principle of estoppel, a party to a contract is ordinarily precluded from denying the truth of any material fact found therein. In the present case, the Lease Agreement clearly provides that the machineries in question are to be considered as personal property.

12) Meralco v. Central Board of Assessment Appeals, May 31, 1982

Facts:

The case is about the imposition of the realty tax on two oil storage tanks installed in 1989 by Meralco. They are used for storing fuel oil for Meralco’s power plants.

The Central Board of Assessment Appeals, chaired by no less than the Secretary of Finance, ruled that the said oil storage tanks together with the foundation, walls, dikes, steps, pipelines and other appurtenances thereto constitute taxable improvements on the real property and liable for the realty tax and penalties amounting to P431 703.

Meralco contends that the said oil storage tanks do not fall within any of the kinds of real property enumerated in Art. 415 (NCC) and, therefore, they cannot be categorized as realty by nature, by incorporation, by destination nor by analogy.

Issue:

Whether or not the oil storage tanks owned by Meralco are considered real or immovable property.

Ruling:

The Court held 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.

The Court cited the US Supreme Court’s ruling in the case of Standard Oil Co. of New Jersey v. Atlantic City, which held that oil storage tanks were held to be taxable realty. And that for purposes of taxation, the term “real property” may include things, which should generally be regarded as personal property.