1. Tumalad v Vicencio; G.R. No.

L-30173; September 30, 1971

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 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]

2. Makati Leasing & Finance Corp. v. Wearever Textiles; G.R. 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
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 theparties 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.

3. Santos Evangelista v Alto Surety; G.R. No. L-11139; April 23, 1958
FACTS: Petitioner, Santos Evangelista, instituted Civil Case in the Court of First Instance of
Manila for a sum of money, he obtained a writ of attachment, which levied upon a house, built by
Rivera on a land situated in Manila and leased to him, by filing copy of said writ and the
corresponding notice of attachment with the Office of the Register of Deeds of Manila. In due
course, judgment was rendered in favor of Evangelista, who bought the house at public auction
held in compliance with the writ of execution issued in said case. When Evangelista sought to
take possession of the house, Rivera refused to surrender it, upon the ground that he had leased
the property from the Alto Surety & Insurance Co., Inc. and that the latter is now the true owner of
said property It appears that a definite deed of sale of the same house had been issued to
respondent, as the highest bidder at an auction sale held in compliance with a writ of execution
issued in Civil Case of the same court for the sum of money, had been rendered in favor
respondent herein, as plaintiff therein. Evangelista instituted the present action against
respondent and Ricardo Rivera, for the purpose of establishing his title over said house, securing
possession thereof, apart from recovering damages. After due trial, the CFI Manila rendered
judgment for Evangelista, sentencing Rivera and Alto Surety to deliver the house in question to
Evangelista and to pay him, jointly and severally until said delivery, plus costs. On appeal taken
by respondent, this decision was reversed by the Court of Appeals, which absolved said
respondent from the complaint, upon the ground that, although the writ of attachment in favor of
Evangelista had been filed with the Register of Deeds of Manila prior to the sale in favor of
respondent, Evangelista did not acquire thereby a preferential lien, the attachment having been

levied as if the house in question were immovable property, although in the opinion of the Court of
Appeals, it is "ostensibly a personal property.
ISSUE: Whether or not the house is personal property.
RULING: No, the said house is not a personal property, much less a debt, credit or other personal
property not capable of manual delivery, but immovable property. As explicitly held, in Laddera vs.
Hodges (48 Off. Gaz., 5374), "A true building (not merely superimposed on the soil) is immovable
or real property, whether it is erected by the owner of the land or by usufructuary or lessee. This is
the doctrine of our Supreme Court in Leung Yee vs. Strong Machinery Company, 37 Phil., 644. It
is true that the parties to a deed of chattel mortgage may agree to consider a house as personal
property for purposes of said contract (Luna vs. Encarnacion, * 48 Off. Gaz., 2664; Standard Oil
Co. of New York vs. Jaramillo, 44 Phil., 630; De Jesus vs. Juan Dee Co., Inc., 72 Phil., 464).
However, this view is good only insofar as the contracting parties are concerned. It is based,
partly, upon the principle of estoppel. Neither this principle, nor said view, is applicable to
strangers to said contract. Much less is it in point where there has been no contract whatsoever,
with respect to the status of the house involved as in the case at bar. WHEREFORE, the decision
of the Court of Appeals is hereby reversed, and another one shall be entered affirming that of
Court of Instance of Manila with the costs of the instance against respondent, the Alto Surety &
Insurance Co. Inc. It is so ordered.
4.
5.
6.
7.
8.

Tsai v Court of Appeals; G.R. No. 120098; October 2, 2001

Burgos, Sr. v Chief of Staff; G.R. No. L-64261; December 26, 1984
Lopez v Orosa and Plaza Theater; G.R. Nos. L-10817-18; February 28, 1958
Yap v Tanada; G.R. No. L-32917; July 18, 1988
Machinery and Engineering Supplies v. Court of Appeals; G.R. No. L-7057; October 29, 1954

3. Arts. 419-426
1. Province of Zamboanga v City of Zamboanga; G.R. No. L-24440; March 28, 1968
FACTS: After Zamboanga Province was divided into two (Zamboanga Del Norte and Zamboanga
Del Sur), Republic Act 3039 was passed providing that-"All buildings, properties, and assets belonging to the former province of Zamboanga and located
within the City of Zamboanga are hereby transferred free of charge in favor of the City of
Zamboanga."
Suit was brought alleging that this grant without just compensation was unconstitutional because
it deprived the province of property without due process. Included in the properties were the
capital site and capitol building, certain school sites, hospital and leprosarium sites, and high
school playgrounds.
ISSUES:
1. Are the properties mentioned, properties for public use or patrimonial property?
2. Should the city pay for said properties?
HELD:
1.

2.

If we follow the Civil Code classification, only the high school playgrounds are
for public use since it is the only one that is available to the general public,
and all the rest are patrimonial property since they are not devoted to public
use but to public service. But if we follow the law on Municipal Corporations,
as long as the purpose is for a public service, the property should be
considered for PUBLIC USE.
If the Civil Code classification is used, since almost all the properties involved
are patrimonial, the law would be unconstitutional since the province would be
deprived of its own property without just compensation. If the law on
Municipal Corporations would be followed, the properties would be of public
dominion, and therefore NO COMPENSATION would be required. It is the law
on Municipal Corporations that should be followed. Firstly, while the Civil Code
may classify them as patrimonial, they should not be regarded as ordinary
private property. They should fall under the control of the State, otherwise
certain governmental activities would be impaired.Secondly, Art. 424, 2nd
paragraph itself says "without prejudice to the provisions of special laws."

The court held that to resolve the issue it is important to identify the nature of the
properties in dispute. The properties that are devoted for public purpose are owned by
the province in its governmental capacity. Those that are not devoted for public use
remain as patrimonial property of the Province. The RA 3039 is held valid in so far as the
properties that are devoted for public use or owned by the province in its governmental

capacity and thus must retain its public purpose. Hence these governmental properties
need not be paid by the City of Zamboanga.
With respect to the patrimonial properties from the 50 lots in dispute, the RA 3039
cannot be applied in order to deprive the province of its own patrimonial properties that
are not devoted for public use. Hence the City of Zamboanga shall pay just compensation
to the Province of Zamboanga for these patrimonial properties.
2. Salas v Jarencio G.R. No. L-29788; August 30, 1972
3. Cebu Oxygen v Bercilles; G.R. No. L40474; August 29, 1975
4. Chavez v Public Estates Authority; G.R. No. 133250; July 9, 2002
Check applicable sections of the Local Govt Code (RA 7160) and Indigenous Peoples Act (RA 8371)
(to be continued)