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LOPEZ V.

OROSA AND PLAZA THEATRE


103 SCRA 98
FACTS:
1. Lopez was engaged in business under the name Lopez-Castelo Sawmill.
2. Orosa, who lived in the same province as Lopez, one dayapproached Lopez and
invited the latter to make an investment inthe theatre business.
3. Orosa, his family and close friends apparently were forming acorporation named
Plaza Theatre.
4. Lopez expressed his unwillingness to invest. Nonetheless, therewas an oral
agreement between Lopez and Orosa that Lopezwould be supplying the lumber for the
construction of the theatre.The terms were the following: one, Orosa would be
personallyliable for any account that the said construction would incur; two,payment
would be by demand and not by cash on delivery.
5. Pursuant to the agreement, Lopez delivered the lumber for theconstruction. Lopez
was only paid one-third of the total cost.
6. The land on which the building has been erected was previously owned by Orosa,
which was later on purchased by the corporation.
7. Due to the incessant demands of Lopez, the corporation mortgaged its properties.
8. On an earlier relevant date, the corporation obtained a loan with Luzon Surety
Company as surety and in turn, the corporation executed a mortgage over the land and
building. In the registration of the land under Act 496, such mortgage wasnt revealed.
9. Also due to the demands of Lopez, Orosa issued a deed of assignment over his
shares of stock in the corporation.
10. As there was still an unpaid balance, Lopez filed a case against Orosa and Plaza
theatre. He asked that Orosa and Plaza theatre be held liable solidarily for the unpaid
balance; and in case defendants failed to pay, the land and building should be sold in
public auction with the proceeds to be applied to the balance; or
that the shares of stock be sold in public auction. Lopez also had lis pendens be
annotated in the OCT.
11. The trial court decided that there was joint liability between defendants and that the
materialmans lien was only confined tothe building.

ISSUES:
W/N the materialmens lien for the value of the materials used in the construction of the
building attaches to said structure alone and doesnt extend to the land on which the
building is adhered to?

HELD:
The contention that the lien executed in favor of the furnisher of materials used for the
construction and repair of a building is also extended to land on which the building was
constructed is without merit. For 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
in the enumeration of what may constitute real properties could only mean one thing
that a building is by itself an immovable property. Moreover, in 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.
Appelant invoked Article 1923 of the Spanish Civil Code, which providesWith respect
to determinate real property and real rights of the debtor, the following are preferred:
xxx Credits for reflection, not entered or recorded, and only with respect to other credits
different from those mentioned in four next preceding paragraphs. Close examination
of the abovementioned provision reveals that the law gives preference to unregistered
refectionary credits only with respect to the real estate upon which the refectionary or
work was made. This being so, the inevitable conclusion must be that the lien so
created attaches merely to the immovable property for the construction or repair of
which the obligation was incurred. Therefore, the lien in favor of appellant for the unpaid
value of the lumber used in the construction of the building attaches only to said
structure and to no other property of the obligors.

ASSOCIATED INSURANCE AND SURETY COMPANY V. IYA, ET. AL


103 SCRA 972

FACTS:

Spouses Valino were the owners of a house, payable on installments from Philippine
Realty Corporation. To be able to purchase on credit rice from NARIC, they filed a
surety bond subscribed by petitioner and therefor, they executed an alleged chattel
mortgage on the house in favor of the surety company.

The spouses didnt own yet

the land on which the house was constructed on at the time of the
undertaking.

After being able to purchase the land, to be able to secure

payment for indebtedness, the spouses executed a real estate mortgage in favor of
Iya.

The spouses were not able to satisfy obligation with NARIC, petitioner was compelled
to pay.

The spouses werent able to pay the surety company despite demands

and thus, the company foreclosed the chattel mortgage. It later learned of the real
estate mortgage over the house and lot secured
by the spouses. This prompted the company to file an action against the spouses. Also,
Iya filed another civil action against the spouses, asserting that she has a better right
over the property. The trial court heard the two cases jointly and it held that the surety
company had a preferred right over the building as since when the chattel
mortgage was secured, the land wasnt owned yet by the spouses making the
building then a chattel and not a real property.

HELD:
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. To hold it the other way, the
possibility is not remote that it would result in confusion, for to cloak the
building with an uncertain status made dependent on ownership of the land,

would create a situation where apermanent fixture changes its nature or character as
the ownership of the land changes hands. In the case at bar, as personal properties
may be the only subjects of a chattel mortgage, the execution of the chattel mortgage
covering said building is null and void.

BICERRA V. TENEZZA
6 SCRA 648

FACTS:
Bicerras were the owners of a house built on a lot owned by them and situated
in the municipality of Lagangilang. Tenezza forcibly demolished the house,
asserting that they are the rightful owners of the land. Failure to restore the house
and to deliver the materials by the defendants,
plaintiffs were forced to file an action against them for damages as well as praying that
the court hold them as the proper owners of the house. The court dismissed the case
for lack of jurisdiction.

ISSUES:
Whether or not the house demolished is still considered an immovable property?

HELD:
A house is classified as immovable property by reason of its adherence to the soil on
which it is built. The classification holds true regardless of the fact that the house may
be situated on land belonging to another owner. But once the house is demolished, it
ceases to exist as such and the hence its character as immovable likewise ceases.

STANDARD OIL CO. OF NEW YORK V. JARAMILLO 44 SCRA 630


Jun
28
FACTS:

De la Rosa was the lessee of a piece of land, on which a house she owns was built. She
executed a chattel mortgage in favor of the petitionerpurporting the leasehold interest
in the land and the ownership of house.

After such, the petitioner moved for its registration with the Register of Deeds, for the
purpose of having the same recorded in the book of record of chattel mortgages. After
examination, the respondent was in the opinion that the properties were not subjects of a
chattel mortgage.

HELD:

Position taken by the respondent is untenable. His duties are mainly ministerial only in
nature and no law confers upon him any judicial or quasi-judicial power. Generally, he
should accept the qualification of the property adopted by the person who presents
the instrument for registration and should place the instrument on record, upon payment
of the proper fee, leaving the effects of registration to be determined by the court if such
question should arise for legal determination.

The Civil Code supplies no absolute criterion in discriminating between real property and
personal property for purposes of the application of the Chattel Mortgage Law. The
articles state general doctrines, nonetheless, it must not be forgotten that under given
conditions, property may have character different from that imputed to it in the said
articles. It is undeniable that the parties in a contract may by agreement treat as
personal property that which by nature would be real property.

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 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.

PUNSALAN, JR. V. VDA. DE LACSAMANA


121 SCRA 331

FACTS:
Punsalan was the owner of a piece of land, which he mortgaged in favor of PNB. Due
to his failure to pay, the mortgage was foreclosed and the land was sold in a public
auction to which PNB was the highest bidder.
On a relevant date, while Punsalan was still the possessor of the land, it
secured a permit for the construction of a warehouse.
A deed of sale was executed between PNB and Punsalan. This contract was amended
to include the warehouse and the improvement thereon. By virtue of these

instruments, respondent Lacsamana secured title over the property in her name.
Petitioner then sought for the annulment of the deed of sale. Among his allegations was
that the bank did not own the building and thus, it should not be included in the said
deed.
Petitioners complaint was dismissed for improper venue. The trial court held
that the action being filed in actuality by petitioner is a real action involving his
right over a real property.

HELD:
Warehouse claimed to be owned by petitioner is an immovable or real
property. Buildings are always immovable under the Code. A building treated
separately from the land on which it is stood is immovable property and the mere fact
that the parties to a contract seem to have dealt with it
separate and apart from the land on which it stood in no wise changed its character as
immovable property.

PRUDENTIAL BANK V. PANIS


153 SCRA 390

FACTS:
Spouses Magcale secured a loan from Prudential Bank. To secure payment,
they executed a real estate mortgage over a residential building. The mortgage
included also the right to occupy the lot and the information about the sales patent
applied for by the spouses for the lot to which the building stood. After securing the first
loan, the spouses secured another from the same bank. To secure payment,
another real estate mortgage was executed over the same properties.
The Secretary of Agriculture then issued a Miscellaneous Sales Patent over the land
which was later on mortgaged to the bank.
The spouses then failed to pay for the loan and the REM was extrajudicially foreclosed
and sold in public auction despite opposition from the spouses. The respondent court
held that the REM was null and void.

HELD:
A real estate mortgage can be constituted on the building erected on the land
belonging to another.
The inclusion of building distinct and separate from the land in the Civil Code
can only mean that the building itself is an immovable property.
While it is true that a mortgage of land necessarily includes in the absence of
stipulation of the improvements thereon, buildings, still a building in itself may be
mortgaged by itself apart from the land on which it is built. Such a mortgage would still
be considered as a REM for the building would
still be considered as immovable property even if dealt with separately and apart from
the land.
The original mortgage on the building and right to occupancy of the land was executed
before the issuance of the sales patent and before the government was divested
of title to the land. Under the foregoing, it is evident that the mortgage
executed by private respondent on his own
building was a valid mortgage.
As to the second mortgage, it was done after the sales patent was issued and thus
prohibits pertinent provisions of the Public Land Act.

SERGS PRODUCTS AND GOQUIOLAY V. PCI LEASING AND FINANCE

338 SCRA 499

FACTS:
PCI filed a case for collection of a sum of money as well as a writ of replevin
for the seizure of machineries, subject of a chattel mortgage executed by
petitioner in favor of PCI.

Machineries of petitioner were seized and petitioner filed a motion for special
protective order. It asserts that the machineries were real property and could not be

subject of a chattel mortgage.

HELD:
The machineries in question have become immobilized by destination because
they are essential and principal elements in the industry, and thus have become
immovable in nature.

Nonetheless, they are still proper subjects for a chattel mortgage.

Contracting parties may validly stipulate that a real property be considered as


personal.

After agreement, they are consequently estopped from claiming

otherwise.

NAVARRO V. PINEDA
9 SCRA 631

FACTS:
Pineda and his mother executed real estate and chattel mortgages in favor of Navarro,
to secure a loan they got from the latter. The REM covered a parcel of land owned by
the mother while the chattel mortgage covered a residential house.

Due to the

failure to pay the loan, they asked for


extensions to pay for the loan. On the second extension, Pineda executed a PROMISE
wherein in case of default in payment, he wouldnt ask for any additional extension and
there would be no need for any formal demand. In spite of this, they still failed to pay.
Navarro then filed for the foreclosure of the mortgages. The court decided in his favor.

HELD:
Where a house stands on a rented land belonging to another person, it may be
the subject matter of a chattel mortgage as personal property if so stipulated in the

document of mortgage, and in an action by the mortgagee for the foreclosure, the
validity of the chattel mortgage cannot be assailed
by one of the parties to the contract of mortgage.

Furthermore, although in some instances, a house of mixed materials has been


considered as a chattel between the parties and that the validity of the contract
between them, has been recognized, it has been a constant criterion that with
respect to third persons, who are not parties to the
contract, and specially in execution proceedings, the house is considered as immovable
property.

CALTEX PHILS. V. CENTRAL BOARD OF ASSESSMENT APPEALS 114 SCRA 296


Details
Category: Property, Ownership and Its Modifications

FACTS:
The City Assessor characterized the items in gas stations of petitioner as taxable
realty. These items included underground tanks, elevated tank, elevated water
tanks, water tanks, gasoline pumps, computing pumps, etc. These items are not
owned by the lessor of the land wherein the
equipment are installed. Upon expiration of the lease agreement, the equipment
should be returned in good condition.

HELD:
The equipment and machinery as appurtenances to the gas station building or shed
owned by Caltex and which fixtures are necessary to the operation of the gas station,
for without them the gas station would be useless, and which have been attached and
fixed permanently to the gas station site or embedded therein, are taxable
improvements and machinery within the meaning of the Assessment Law and the
Real Property Tax Code.

PIANSAY V. DAVID 12 SCRA 227


Details
Category: Civil Law Jurisprudence
FACTS:
David secured a loan from Vda. De Uy Kim, and to secure the payment, he executed a
chattel mortgage over a house in favor of Kim. Due to failure to pay, the CM was
foreclosed and Kim was the highest bidder in the public auction. Kim then sold the
house to Mangubat. The latter then filed charges against David for the collection of
loan and praying that the deed of sale issued by Kim in favor of Piansay be declared
null and void. The trial court held David liable to Mangubat but dismissed the complaint
with
regard Kim and Piansay.
Kim and Piansay then filed charges against David and Mangubat. Due to the civil case,
David demanded from Piansay the payment of rentals for the use of the house, which
the latter claims to be his property.

HELD:
Regardless of the validity of a contract constituting a chattel mortgage on a house, as
between the parties to the said contract, the same cannot and doesnt bind third
persons who arent parties to the aforementioned contract or their privies. As a
consequence, the sale of the house in
question in the proceedings for the sale of the house in question in the
proceedings for the extrajudicial foreclosure of said chattel mortgage, is null and
void insofar as Mangubat is concerned and didnt confer upon Kim as buyer in said sale,
any dominical right in and to said house.