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    Cases To REad2

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    Rose Gee
    The Mindanao Bus Company appealed a realty tax assessment on equipment in its repair shop. The Court of Tax Appeals upheld the assessment. The Supreme Court reversed, finding that under Article 415(5) of the Civil Code, for machinery to be considered immovable property and subject to realty tax, it must be essential to carrying on the business in a building or on land. Here, the equipment was only used for repairs and maintenance, and was not essential to the company's transportation business, which was not conducted in a building or on land. Therefore, the equipment was not real property subject to realty tax.

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    Cases To REad2

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    Rose Gee
    30 views4 pages
    The Mindanao Bus Company appealed a realty tax assessment on equipment in its repair shop. The Court of Tax Appeals upheld the assessment. The Supreme Court reversed, finding that under Article 415(5) of the Civil Code, for machinery to be considered immovable property and subject to realty tax, it must be essential to carrying on the business in a building or on land. Here, the equipment was only used for repairs and maintenance, and was not essential to the company's transportation business, which was not conducted in a building or on land. Therefore, the equipment was not real property subject to realty tax.

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    The Mindanao Bus Company appealed a realty tax assessment on equipment in its repair shop. The Court of Tax Appeals upheld the assessment. The Supreme Court reversed, finding that under Article 415(5) of the Civil Code, for machinery to be considered immovable property and subject to realty tax, it must be essential to carrying on the business in a building or on land. Here, the equipment was only used for repairs and maintenance, and was not essential to the company's transportation business, which was not conducted in a building or on land. Therefore, the equipment was not real property subject to realty tax.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    30 views4 pages

    Cases To REad2

    Uploaded by

    Rose Gee
    The Mindanao Bus Company appealed a realty tax assessment on equipment in its repair shop. The Court of Tax Appeals upheld the assessment. The Supreme Court reversed, finding that under Article 415(5) of the Civil Code, for machinery to be considered immovable property and subject to realty tax, it must be essential to carrying on the business in a building or on land. Here, the equipment was only used for repairs and maintenance, and was not essential to the company's transportation business, which was not conducted in a building or on land. Therefore, the equipment was not real property subject to realty tax.

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    Mindanao Bus Company vs City Assessor

    Posted on June 24, 2013


    Mindanao Bus Company vs City Assessor
    116 PHIL 501
    GR No. L-17870
    September 29, 1962
    FACTS
    The City Assessor of Cagayan de Oro City assessed a realty tax on several
    equipment and machineries of Mindanao Bus Co. These equipment were placed on
    wooden or cement platforms and can be moved around in the bus companys repair
    shop. The bus company appealed the assessment to the Board of Tax Appeals on
    the ground that the same are not realty. The Board of Tax Appeals of the City,
    however, sustained the city assessor. Thus, the bus company appealed to the Court
    of Tax Appeals, which likewise sustained the city assessor.
    HELD
    Art. 415 of the NCC classifies the following as immovable property:
    xxx
    (5) Machinery, receptacles, instruments or implements intended by the owner pf 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;
    Note that the stipulation expressly states that the equipment are placed on wooden
    or cement platforms. They can be moved around and about in petitioner's repair
    shop.
    Before movables may be deemed immobilized in contemplation of Article 415 (5), it
    is necessary that they must first be essential and principal elements of an
    industry or works without which such industry or works would be unable to function
    or carry on the industrial purpose for which it was established.
    In this case, the tools and equipment in question are by their nature, not essential
    and principal elements of Mindanao Bus Co.s business of transporting passengers
    and cargoes by motor trucks. They are merely incidentals acquired as movables
    and used only for expediency to facilitate and/or improve its service. Even without
    such tools and equipments, its business may be carried on.
    Aside from the element of essentiality the Art.415 (5) also requires that the industry
    or works be carried on in a building or on a piece of land. A sawmill would also be

    installed in a building on land more or less permanently, and the sawing is


    conducted in the land/building.
    However, in the instant case, the equipments in question are destined only to repair
    or service the transportation business, which is not carried on in a building or
    permanently on a piece of land, as demanded by law. The equipments in question
    are not absolutely essential to the petitioner's transportation business, and
    petitioner's business is not carried on in a building, tenement or on a specified land.
    As such, the equipments in question are not deemed real property because the
    transportation business is not carried on in a building or permanently on a piece of
    land, as demanded by law.
    The transportation business could be carried on without the repair or service shop,
    if its rolling equipment is repaired or serviced in another shop belonging to another.
    Therefore, the imposition of realty tax on the maintenance and repair equipment
    was not proper because the properties involved were not real property under Article
    415 (5).
    Posted in Case Digests, Movable Property vs Real Property, Property
    | Tagged 116 PHIL 501, 1962,Article 415, Cagayan de Oro City, Case
    Digest, City Assesor, Civil Code, equipment, immovable property,L17870, machines. property, Mindanao Bus Company, movable
    property, personal property, Property Case Digest, Property cases, real
    property, realty tax, September 1962, September 29 | Leave a reply
    Leung Yee vs Strong Machinery Co
    Posted on June 22, 2013
    Leung Yee vs Strong Machinery Co.
    37 PHIL 644
    GR No. L-11658
    February 15, 1918
    FACTS
    The Compania Agricola Filipina (CAF) purchased from Strong Machinery Co. rice
    cleaning machines which CAF installed in one of its buildings.
    As security for the purchase price, CAF executed a chattel mortgage on
    the machines and the building on which they had been installed.
    When CEF failed to pay, the registered mortgage was foreclosed and Strong
    Machinery Co. purchased the building. This sale was annotated in the Chattel
    Mortgage Registry.
    Later, Strong Machinery Co. also purchased from Agricola the lot on which the
    building was constructed. The sale wasn't registered in the Registry of Property
    BUT Strong Machinery Co. took possession of the building and the lot.

    However, the same building had been previously purchased by Leung Yee, a creditor
    ofAgricola, at a sheriff's sale despite his knowledge of the prior sale in favor
    of Strong Machinery Co.. The sale to Leung Yee was registered in the Registry of
    Property.
    ISSUES
    1. Was the property's nature changed by its registration in the Chattel Mortgage
    Registry?
    2. Who has a better right to the property?
    HELD
    1. Where the interest conveyed is of the nature of real property, the placing of the
    document on record in the Chattel Mortgage Registry is a futile act.
    Chattel Mortgage refers to the mortgage of Personal Property executed in
    the manner and form prescribed in the statute.
    Since the building is REAL PROPERTY, its sale as annotated in the Chattel
    Mortgage Registry cannot be given the legal effect of registration in the Registry of
    Real Property.
    The mere fact that the parties decided to deal with the building as personal
    property does not change its character as real property.
    Neither the original registry in the chattel mortgage registry, nor the annotation in
    said registry of the sale of the mortgaged property had any effect on the building.
    1. Art. 1473 of the New Civil Code provides the following rules on determining
    ownership of property which has been sold to different vendees:

    If Personal Property grant ownership to person who 1st possessed it


    in good faith

    If Real Property grant ownership to person who 1st recorded it in the


    Registry

    If no entry grant to person who 1st possessed in good faith


    If no proof of possession grant to person who presents oldest title
    Since Leung Yee purchased the property despite knowledge of the previous
    purchase of the same by Strong Machinery Co., it follows that Leung Yee was not a
    purchaser in good faith.
    One who purchases real estate with knowledge of a defect or lack of title in his
    vendor cannot claim that he has acquired title thereto in good faith as against the
    true owner of the land or of an interest therein. The same rule must be applied to
    one who has knowledge of facts which should have put him upon such inquiry and

    investigation as might be necessary to acquaint him with the defects in the title of
    his vendor.
    Good Faith, or the want of it, is a state or condition of mind which can only
    be judged of by actual or fancied tokens or signs. (Wilder vs. Gilman, 55Vt.,
    504, 505; Cf. Cardenas Lumber Co. vs. Shadel, 52 La. Ann., 2094-2098; Pinkerton
    Bros. Co. vs. Bromley, 119Mich., 8, 10, 17.)
    Honesty Of Intention is the honest lawful intent constituting good faith. It
    implies afreedom from knowledge and circumstances which ought to put a
    person on inquiry.
    As such, proof of such knowledge overcomes the presumption of good faith.
    Following the rule on possessory rights provided in Art. 1473, Strong Machinery
    Co. has a better right to the property since it first purchased the same ahead of
    Leung Yee, the latter not being a purchaser in good faith.

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